Final Exam Questions Flashcards
CHAPTER ONE.
Describe the four broad “processing” categories of service, and provide examples for each of them.
- People processing (directed at people’s tangible self) e.g. Haircut or healthcare
- Possession processing (directed at tangible possessions) e.g. Refueling, recycling.
- Mental Stimulus processing (directed at people’s intangible minds) e.g. education
- Information Processing (directed at intangible assets) e.g. accounting.
CHAPTER ONE.
What is so special about services marketing that it needs a special approach?
- No ownership
- Customers obtain temporary rentals, hiring of personnel, or access to facilities
- Pricing often based on time
- Customers choice criteria may differ from renting versus purchase
- Can’t own people but can hire expertise/labor - Services cannot be inventoried after production
- Service performances are perishable - Customers may be involved in production process
- e.g. self service
- Customer behavior can help or hinder productivity. - Intangible elements dominate value creation
- Value added by labor and expertise of service personnel - Other people are often part of the service product
- Achieve competitive edge through perceived quality of employees
- Manage customer behavior - Greater variability in operational inputs and outputs
- Often difficult for customers to evaluate services
- Time factor assumes great important
- Offer convenience of extended service hours, even 24/7
- Minimize waiting time - Distribution channels take different forms
- Tangible activities must be delivered through physical channels
- Use electronic channel e.g. internet, phone, to deliver intangible, info based activities.
CHAPTER TWO.
Explain the three-stage model of service consumption.
- Pre-Purchase stage= customers identify an underlying need. Start looking for a solution, search for relevant info and obtain advice from friends/family. Evaluate options, and based on benefits vs. risks they will make a decision. Form expectations before service is delivered.
- Service delivery stage= Contact with service provider when placing order. Customers evaluate the quality of the service and whether or not it meets their expectations.
- Post-Purchase stage= Customers continue evaluating service quality and determine if expectations were met. It will affect loyalty to the provider as well as the amount of positive/negative recommendations made to others.
CHAPTER TWO.
Describe search, experience, and credence attributes and give examples of each.
- Search attributes
- Characteristics that can be readily evaluated prior to purchase
- These include tangible elements as color, texture, taste, sounds, and visual. - Experience attributes
- Features that can be evaluated only during service delivery
- Include nature of interaction with staff & customers, ambiance of service facility, outcome of the service e.g. haircut result, cleaned clothes etc. - Credence attributes
- Characteristics that are difficult to evaluate even after the service purchase and consumption
- Includes variety of professional services where the customer is dependent on the expertise of the service provider e.g legal advice, investment counseling.
CHAPTER TWO.
Why does consumer perception of risk play an important role in choosing between alternative service offers? How can firms reduce consumer risk perceptions?
- Perceived risk is an important aspect as customers face a great deal of uncertainty
- Even more important when the purchase requires a substantial amount of resources.
- Difficult to evaluate prior to purchase making customers worried about the probability of a negative outcome
Firms can reduce perceived risk:
- Performance warranties
- money-back guarantees
- 24/7 access to toll-free customer service phone line
CHAPTER THREE.
What is the difference between important and determinant attributes in consumer choice decisions?
Importance attributes=Customers often rank order different attributes of a service in terms of their relative importance. They may not necessarily be important attributes.
Determinant attributes= Attributes that actually influence a consumers decision, generally done by ranking attributes in terms of importance.
CHAPTER FOUR
Explain what is meant by core product and supplementary services.
Core Product= Basic function/nature of the service offering. E.g. Mobile Phone.
Supplementary services= Adds value to the core product.
- Different segments may seek different levels of supplementary services
- The cost of providing an increased level of supplementary service can add to the perceived value, which may lead to the ability to raise the price without loosing customers.
- They can differentiate one business from the next
CHAPTER FOUR
Explain the “flower of service” concept and identify each of its petals. What insights does this concept provide for service marketers?
The flower of service illustrates the relationship between the core service and its supplementary services. The core product is represented by the center of the flower, while the supplementary services (Facilitating and Enhancing) are represented by the petals. It is used to identify supplementary services needed to increase attractiveness of the overall service.
Facilitating
- Information
- Order taking
- Billing
- Payment
Enhancing
- Consultation
- Hospitality
- Safekeeping
- Exceptions
CHAPTER FIVE
What are the different options for service delivery? For each of the options, what factors do service firms need to take into account when using that option?
- Customers visit service site
- Service providers go to their customers
- Service transactions conducted remotely (at arms length).
Convenience is a key drive of channel choice often favoring at arm’s lengths channels. However, customers rely more on personal channels when the perceived risk is high and when there are social motives behind the transaction.
CHAPTER FIVE
Why is franchising a popular way to expand distribution of an effective service concept? What are some disadvantages of franchising, and how can they be mitigated?
Franchising has become a popular way to expand delivery of an effective service concept, including all the 7 P’s, to multiple sites, without the level of investment capital that would be needed for rapid expansion of company owned and managed sites.
CHAPTER SIX
How can the pricing tripod approach to service pricing be useful in setting a good pricing point for a particular service?
Tripod Legs:
- Cost-based pricing (price to cover costs)
- Value-based pricing (price based on the value perceived by customer)
- Competition-based pricing (price based on what competition is charging).
CHAPTER SIX
What is revenue management, how does it work and what type of service operations benefit most from good revenue management systems and why?
- Revenue management is concerned with strategies for maximising the revenue that can be derived from the sale of available capacity at any given time.
- It is important for organisations whose capacity is relatively fixed, which serve large numbers of customers from multiple market segments, and which face wide swings in demand as well as competitive pricing pressure.
- Challenge is to work within the constraints listed above to maximize revenue. Different prices are charged at different times, different service segments and for different markets e.g. hotels/airlines.
- Must capture significant customers to fill most/all of firm’s perishable capacity without excessive price discounting that creates consumer surplus for customers, who would have been willing to pay more.
- Mathematical modeling plays an important role
- Software advances have made it possible to firms to use historical databases to predict future demands at different prices, making it easier to make better pricing decisions.
CHAPTER SEVEN
What are some challenges in service communications and how can they be overcome?
Services are performances not objects, so their benefits can be difficult to communicate to customers, particularly when the service does not involve tangible actions to customers or their possessions.
Intangibility creates 4 problems:
- Abstractness
- Generality
- Nonsearchability
- Mental Impalpability
(See table 7.1 for how to overcome)
CHAPTER SEVEN
What roles do personal selling, advertising, and public relations play in a) attracting new customers to visit a service outlet and b) retaining existing customers?
A)-Personal Selling (most often used in business marketing) where sales calls play a large role in informing corporate clients about a supplier’s products.
-Advertising and public relations are widely used communication tactics in both the corporate and consumer arenas.
B) -Personal selling provides a good opportunity to retain existing customers by carefully listening to their needs and addressing concerns. Sales people can offer information and consultation (2 of the petals of the Flower of Service) during sales calls, which adds value for customers.
- Advertising can help retain existing customers by reminding them about the service and motivating them to purchase. Can also be used to inform existing customers about new services.
- Public relations generate goodwill for a company and remind current customers of a firm’s existence.
CHAPTER EIGHT.
How does flow charting help us to understand the difference between people processing services, possession processing services, mental stimulus processing services and information services?
- Flowing charting displays the nature & sequence of the different steps in delivering service.
- Way to understand the complete customer experience
- For example, the people processing flow chart of staying at a hotel is far different than the mental stimulus process of seeing a weather forecast.
