Chapter 4: Products and Services Flashcards

1
Q

What is the definition of customer-oriented quality?

A

a product’s ability to fulfill a customer’s needs as much as possible

From this perspective, quality is the positive (over) fulfillment of customer requirements

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2
Q

What does the product policy encompass?

A

Encompasses all decision-making criteria that relate to development of market-related performance.

Criteria in product design or an enterprise’s entire performance program:
1. The conception of the particular products, and
2. The conception of the product or services program

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3
Q

What is the system of conception levels?

A

Has established itself for the design of products or of a product or services strategy

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4
Q

What are characteristics of the core product?

A

Describes the actual need that should be satisfied (e.g. mobility is not a NEED. Saving time, coming from A to B is a need)

This can be different for the same products
(Example: shoes for dry feet for some target groups, fashion for another target group)

It is crucial to be guided by the core product when designing the basis product.

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5
Q

What is the characteristic of a basic product?

A

Is the core element of either the physical design or the service chain
(Example: at a hairdresser’s salon = haircut, hotel = bed in the manifestation of a core product as a place to sleep)

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6
Q

What does the expanded product include?

A

Includes every additional element of a product
==> usually it is a whole system of different physical performance components or service offers.
(Example: Hotel it is the room including the offers of TV, WiFi, bathroom, possibly with whirlpool)

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7
Q

What does the augmented product include?

A

Includes additional service elements that enhance the good’s or service’s value,
(Example: a nice sitting area or individual room service)

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8
Q

What does the potential product include?

A

Includes all goods or services available to a customer for potential use
(Example: the wellness center or business center of a hotel)

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9
Q

What does the product levels show?

A

Product levels show that from a product view, the boundaries between physical goods and services blur. (A physical performance element such as a bathtub is a source of services (bathing, relaxing)

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10
Q

What is the definition of service-dominant logic?

A

the conviction that marketing of all products, including physical products has to be designed in the sense of service marketing is establishing-

In this logic, Services are often rated as ultimate marketing objectives in the sense of problem solutions.

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11
Q

What is one key difference between physical product manufacturing and service provision?

A

One key property of services is that the service provision (e.g. a haircut) coincides with the service consumption.
==> the quality of this service is often determined by the experince during service provisoin (e.g. the experience during a flight)
As a result, one is drawn to the conclusion that product design and performance should be discussed together.

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12
Q

What does the change of marketing depend on?

A
  • on the core product one starts with
  • treating product primarily as a physical performance (and thus a storable unit) or as a service
  • whether one operates on a B (producer) or C (end-customer) market

==> Different focuses in product design and marketing as a whole derive from the type of good or service

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13
Q

What is the definition of a product?

A

“something that is fit for the satisfaction of a need or the fulfillment of a desire”.
==> a marketable good or service that creates a benefit for an end customer.

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14
Q

Which strategies are there if a company is successful with their product to grow their company?

A
  • some successful companies adhere to one basic product
  • If there is a decision to change the goods and services program, there can be an
    ==> expansion or narrowing (in depth of range or breadth of range) or a fundamental structural change (a shift in emphasis or product variation)
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15
Q

When a company wants to expand or narrow down, they have two directions they can go with their product variation.
Which two are they and what do they mean?

A

Depth of range
How many goods and services are provided for the solution of an identical problem

Breadth of range
How many types of goods and services are provided for different problems

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16
Q

If a company wants to expand in their breadth of range, they can choose between three directions which are they?

A

Vertical diversificatoin
==> including new products along the added-value chain or into a product system
(e.g. if a ski manufacturer also operates a skiing area)

Horizontal diversification
fundamentally new products on the same performance level
(e.g. when tennis rackets or even surfboards are included in the range of products in addition to skis

Lateral diversification
fundamentally new product areas
(e.g. if a ski manufacturer offers life insurance)

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17
Q

What is it called, if a company expands their depth of range?

A

Product differentiation

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18
Q

What is it called if a company narrows down their depth of range?

A

Standardization

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19
Q

What is it called when a company narrows down their breadth of range?

A

Specialization

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20
Q

What is the definition of Performance processes?

A

Performance processes start from preparatory work and lead, via transformation (for material performance) or delivery to customers or their objects (for services), to performance marketed in the sales market

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21
Q

What are three characteristics of performance processes?

A
  • they depend on product properties and on the industry
  • they have a physical process level (e.g. installation, assembly etc.) and an informational level (e.g. implementation of customer wishes)
  • they are closely connected with the customer process and is triggered by customer requirements.
    Finally customer satisfaction is the ultimate goal of the process
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22
Q

What does Efficiency mean? What need does it represent?

A

Efficiency = do things right

Need for cost-quality optimization

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23
Q

What does effectivity mean? What need does it represent?

A

Do the right things

Need for strategic focus

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24
Q

In what ways is the customer the catalyst for performance for a relevant target group?

A

Either directly and personally
==> as an initiator of a specific product category

Or latently and impersonally
==> e.g. in the form of a changing need that market research has identified

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25
Q

How does the performance process work?

A

The performance process ranges from the explicit or latent customer enquiry to order clarification, construction or design to work preparation.

This is then followed by procurement from suppliers, production, assembly and shipping, and finally, to end-customer service (e.g. the completion of the whole train, that closes the circular flow)

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26
Q

What does design thinking methodically include?

A

Design thinking methodically includes:

  • thinking from the product outward as an independent and important approach to the whole business process.
  • Developing methods for promoting innovation in companies, based on strong customer orientation and by building prototypes among other things
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27
Q

What does a performance process start and end with?

A

Performance lead from intermediate goods and services via transformation (with physical goods) or via performance on customers or their objects (for services) to goods and services sold on markets.
–> the basic structure of performance processes thus starts with input and leads to output via throughput.

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28
Q

What is the added value?

A

The added value created by the company is the difference between the vlaue of the input and the value of the output.

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29
Q

Which requirements does the performance process have to meet?

A

The performance process has to meet the requirements of efficiency (do something right in the sense of high quality and reasonable cost) and effectiveness (do the right thing in the sense of the right products in terms of sustainablity and quality for customers and users)

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30
Q

During the performance process, what is the focus at the strategic level?

A

Focus at the strategic level: determining the output range
Meaning: what goods and services a company provides
(determining the provisions of added value or goods and services
==> production breadth and production depth)

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31
Q

What are the starting points for the strategic decision?

A
  • Customer needs
  • Company internal and external resources
  • Strategic behavior of compatitors.
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32
Q

What are the possible roles of a company in a value chain?

A

Layer Player Model

Market Maker Model

Integrated Model

Orchestral Model

33
Q

What is the layer player model?

A

Be responsible for one step of the value chain

E.g.: A chip company that only produces chips for several computer firms

34
Q

What is the Market Maker Model?

A

a company or organization that connects buyers and sellers. They act as a middleman or facilitator to enable transactions but typically don’t own the product or service being traded

35
Q

What is the integrated Model?

A

Do and produce everything yourself

36
Q

What is the orchestral Model

A

Rely on outsourcing solely

37
Q

What are economies of scale?

A

A size-conditioned reduction of performance’s average costs through specializing

E.g. Assembly line production at Ford motor company

38
Q

What are economies of scope?

A

Synergies resulting from efficiency and costs and quality advantages during an increase in performance breadth)

E.g. production (and sales) of product variants at Swatch; production of both skimmed milk and butter at Emmi

39
Q

What do these two economies generate?

A

A company exists in an area of tension between the priorities of those two economies. These two economies generate a certain target conflict.

40
Q

What are economies of learning?

A

Reducing the cost per piece because you are getting better and more efficient at it.

E.g. Healthcare (therefore: required min. no. of cases for surgeries)

41
Q

What are economies of networks
(Network economies)

A

Production-side: decreasing marginal cost

Demand-side:
increasing marginal utility

occur when the value of a product or service increases as more people use it. It’s a powerful concept in economics and business that drives growth in many modern platforms and technologies.

42
Q

What influences the decision of the product range?

A

How broad a company’s product range should be depends mostly on the costs for expanding the horizontal range.
These include:
- Costs for different product versions
- Planning complexity costs
- Etc.
Ultimately, a company’s resources (production facilities, competencies) define costs.

In addition, the breadth of range depends on customer’s willingness to pay for individualization and thus on the demand structure and on competitor’s behavior.

43
Q

What does the vertical business area pertain?

A

The vertical business area pertains to which goods and services should be produced inside the enterprise and which should be outsourced.

44
Q

What is the advantage and the disadvantage of producing more goods and services inside the company?

A

+ Reduction in transaction cost

  • Costs of hierarchical coordination within the organization
45
Q

What are the disadvantages and advantages of outsourcing?

A

+ Concentration on core competencies

  • New dependencies from handover to supplier
46
Q

Which steps have to be considered in operational decisions

A

Input
Planning of the requirements of production factors
==> Material disposition

Throughput
Planning the implementation
==> Capacity management

Output
Planning the production range
==> Range management

47
Q

What does the operational performance process pertain?

A

Pertains to the decisions of which goods and services should be produced when and how.

48
Q

What is the operations research method?

A

Standardized planning tools in virtually every industry for the production and planning often build on the operatins research method.
The starting point for planning reduction and controlling is the decision about a type of business.

49
Q

Production planning (especially work preperation and work controlling) is strongly influenced by the type of business:

How does it look like in industrial production?

A

High degree of individualization, flexible production scheduling.

50
Q

Production planning (especially work preperation and work controlling) is strongly influenced by the type of business:

How does it look like in Artisan production?

A

Small-scale production, traditional technique, attention to detail

51
Q

Production planning (especially work preperation and work controlling) is strongly influenced by the type of business:

How does it look like in a Publishing company system?

A

Whole company is a cluster of contracts for the purchase of intermediate goods and services, production and distribution. Independent companies provide decentralized goods and services.

52
Q

What are the advantages of physical production compared to service provision?

A

Customers hardly notice outsourcing if it is done in a way that is technically competent

Intermediate and end products can be stored and

At the end of production, products can be checked for quality before they reach the customer.

53
Q

What does the equation for determining the optimal order quantity look like?

A

Q = Wurzel von average * F * S over C * P

Q = optimum amount for each order (in pcs.)

F = Annual demand in units (e.g. 400 pcs)

S = Costs per order/retooling (e.g. CHF 20)

C = Storage costs in % (e.g. 20% for cooling)

P = Purchasing price per unit (e.g. CHF 5/pc)

54
Q

What is the definition of service?

A

An act that is performed on a human being or an object without the transformation of material goods

55
Q

What is a service product?

A

If the service (possibly in combination with physical goods) is able to generate a benefit for the customer, one can speak of a service product

56
Q

What is the benefit of a service product most of the time?

A

With modern service products, this benefit is often a contribution to the desired self-concept, mostly on the basis of:

- A problem solution  (e.g. integrated risk insurance)
- Wellbeing  (e.g. health service)
- An experience  (e.g. leisure service) and
- A physical or psychological development and transformation of the individual  (e.g. education, project therapy, style advice)
57
Q

What are features of a service? And what are the consequences for producers and consumers?

A
  • Intangibility (no transformation of goods)
    ==> Non-transparency of the service, no transfer of title, increased risk for customers
  • Principle of uno actu (congruence of consumption and production; service is provided on the customer or its property)
    ==> Involvement of the customer (e.g. physical presence), lack of storage capability/transcience, Harmonization of supply and demand
  • Heterogenous service i.e. dependent on external factor
    ==> Individual unpredictable quality: need for quality management, measures to manage customers and co-customers
  • Significance of personal contact
    ==> Promotion of quality of interaction, quality management
58
Q

Which features of servies are the starting point of every

A

Intangibility and the conguence of consumption and production that are defined by the nature of the product or service, as well as the dependence on an external factor and the significance of personal contact

From the starting point follow secondary features which lead to consequences for producers and consumers

59
Q

What are the features and risks due to intandibility?

A
  • A certain non-transparency of the service results from intangibility.
    The service cannot be tested in advance.
    (e.g. during booking one does not know how well one will sleep in a hotel)
    • The feature of a service not representing a title (property)
      ==> the services reputation and use of a brand can be transferred by a licese agreement for example

A high risk for the customer during purchase is a consequence of the non-transparency and the lack of property rights to a product that cannot re-sell at best pass on as a gift
==> the challenge for service management is reducing the insecurity for example through confidence-building brands, communication or materialization of quality (e.g. spacious bank lobbies that communicate security etc.)

60
Q

What does the congruence of consumption and production require?

A

The congruence of consumption and production always requires the presence of the customer.
They have to at least be physically present to receive the service.

Example car:
If the service is performed on a car, the vehicle has to be takes to the service location at the agreed time.

61
Q

What is meant with “services are dependent on external factors”?

A

Many see dependence on the “external factor” as one of the essential features of services.
In a service process it is often the involvement of customers and co-customers that is understood by dependence on an external factor
All services posit a more or less strong involvement of the customer
- Customers have to go to the service location,
- make preparations (e.g. brush their teeth before a dentist appointment) participate in the service process (e.g. in a self-service restuarant)
- or ensure a subsequent performance (e.g. participation in therapy after an operaion.)
In addition co-customers influence the atmosphere for example the atmosphere on a flight

62
Q

What is the significance of personal contact in services?

A

A large number of services require personal contact between the service-provider and the customer.
Even abstract services include personal contact, at the latest during a critical incidence.
Example:
Customer complaints in a call center.

The autonomous competent peresonal interaction has special relevance for quality because a superior cannot supervise the service provider (e.g. an operating doctor, a teacher during lessons) during a service provision.

Additional performance dimensions like the emotional aspect of social interaction arise during personal contact.
As core performances harmonize, these qualities will take on greater significance

63
Q

What does the Demarcation between service and material good mean?

A

There are smooth transitions between material goods and services.
==> an absolute boundary between services and physical products thus hardly exists.
The classification of companies and products can therefore only be an approximate demarcation based on the focus of the performance contents

64
Q

What is the relationship between result of the service and the process experience?

A

The result of the service and the process experience are quality-related dimensions that can partly balance one another.
If for example the result of the service (haircut) is not very good but the process (the service) was excellent, the customer is still satisfied with the overall service.

65
Q

Why is the service chain model of great significance?

A

During performance design and control, one has to consider that quality cannot be delegated to an end control.

Every single element of a service and the experience as a whole contributes to quality perception.
Some elements are especially critical
- Such as the start of a service process (the first impression counts)
- And the end of the service process
Due to the significance of the performance process in perceived quality, the service chain model is especially important

66
Q

What is the definition of a service chain?

A

A service chain describes a service as a process with a sequence of activities that the cusotmer or object passes through

67
Q

How many service chains are there in a non-variable service?

A

In the case of a non-variable service (e.g. an administrative act like the issue of an approval) there is only one service chain.

68
Q

What is a service network?

A

In the case of a service network (e.g. in the health or leisure sector), there is a service chain for every respective customer, because they all activate their service sequence by their individual demand inside a service network.

69
Q

How can service chains be structured?

A

Service chains can be structured in sequence diagrams with varying degrees of accuracy.
==> These different levels of detail enable different depths of viewing service sequences

70
Q

What is an integrated service design?

A

An increasingly important element of service design is so-called integrated service design

Service design means the integrated coordination of service chains, customer information and the physical design or tangibilization.

71
Q

What are information and visibility lines?

A

It is important to define so-called information and visibility lines from the customer’s perspective

In the context of service design one has to determine what the guest is supposed to see or what should be done beyong the visibility line and also what information the guest should receive.

72
Q

What is a prosumer? What are benefits of prosumers?

A

In many service concepts the customer performing specific sub-services himself is part of the overall experience.
The customer becomes a “prosumer”.
==> This re-delegatoin of services to the customer cuts costs, for example when customers clear up after themselves or carry files from one office to another.
It also enables an enhancement of the service quality perceived by the customer because he experiences benefits like:
- Higher self-determination
e.g. regarding choice or service intensity
- Higher authenticity thanks to an individual appreciation of the service co-created

73
Q

What are moment of truths?

A

Another important element is personal interaction (moment of truth) between service customer and service producer.

Service actions performed by people can be measured on a scale between purely technical and interactive activities.
Physical activities often involve the intersection of human and machine, for example activities in a call center, clearing up dishes in a restaurant or scanning articles in a supermarket.

On the other hand, interactive service contacts are more important in holistic-experience services or problem solving, for example sports lessons, personal tours at a tourist attraction or consulting.

74
Q

What is identity?

A

Even though the quality of personal interaction is important for all functions of interpersonal contacts, communicating identity is especially important for service contacts.

Simply put: identity can be defined as an individual’s or a collective’s ability to view itself as autonomous and causative and thus different from it s environment.

Social interaction makes it possible to experience differences or similiarities with the environment
Particularly in a service context, a counterpart’s action can be triggered in the context of interaction, for example if someone orders something or receives an order from a service provider.
==> One can experience causality.

75
Q

What is an extended service chain?

A

An extended service chain is suitable for representing the service expereince from the customer’s perspective.
Often a service customer is a regular buyer. The conclusion of one service act leads to the next within the customer buying cycle.

The customer sees everything that happens in front of the visibility line.
However, this perception is influenced by interactions, design etc.

76
Q

What are service blueprints?

A

Detailed service chains depciting production-relevant factor the customer may not be able to see, like outsourcing, information processes etc. can be called service blueprints.

77
Q

What questions are asked on a strategic level about the production of physical products?

A

On a strategic level, the same questions arise with the production of physical products:
- Questions about service breadth
(different kinds of service chains)
- Questions about service depth
(which elements of the service chain should be provided by the company)

78
Q

Which two topics have special significance on the operational level?

A
  1. Production and demand control
  2. Employment of service providers for direct customer contact
79
Q

Employment of service providers for direct customer contact comes with special empowerment of employees. Management’s supervision is no longer possible.

Which important preconditions for this empowermenet are included here?

A
  • Being embedded in a service culture that outlines both the characteristics features and limits of the service
    (What do we decline to do for customers even if they ask for it?)
    • Suitable tools and work equipment, especially database and software for the increasing number of information-based services
    • Managmenet’s confidence-based leadership and support of the service employee in direct customer contact.
      Often, one proceeds from the ideal image of an upside-down pyramid
      ==> in this way, management is a “supporter” of the “team” providing good and services through direct customer contact.