Marketing Management Topic 13

Marketing Management, 14e (Kotler/Keller)
Chapter 13 Designing and Managing Services

1) Which of the following is a characteristic of a service?
A) It is essentially tangible.
B) It does not result in the ownership of anything.
C) Its production is majorly tied to a physical product.
D) Services are typically produced and consumed at different times.
E) A client’s presence is not required for rendering a service.

B Page Ref: 356 Objective: 1 Difficulty: Easy

2) Which of the following is an example of a pure tangible good?
A) massage
B) shampoo
C) e-mail
D) restaurant meal
E) air travel

B Page Ref: 356 Objective: 1 Difficulty: Easy

3) To which of the following categories of services does a cell phone belong?
A) major service with accompanying minor services
B) major service with accompanying minor goods
C) pure service
D) pure tangible good
E) tangible good with accompanying services

E Page Ref: 356 Objective: 1 Difficulty: Easy

4) A computer falls into the ________ category of service mix.
A) pure tangible good
B) tangible good with accompanying services
C) hybrid
D) major service with accompanying minor goods
E) pure service

B Page Ref: 356 Objective: 1 Difficulty: Easy

5) Which of the following is an example of a hybrid service?
A) teaching
B) car
C) restaurant meal
D) soap
E) air travel

C Page Ref: 357 Objective: 1 Difficulty: Easy

6) A flight with complementary drinks is an example of a ________.
A) major service with accompanying minor goods and services
B) pure service
C) pure tangible good
D) tangible good with accompanying services
E) hybrid

A Page Ref: 357 Objective: 1 Difficulty: Easy

7) Which of the following is an example of a pure service?
A) air travel
B) psychotherapy
C) baby oil
D) a laptop
E) a restaurant meal

B Page Ref: 357 Objective: 1 Difficulty: Easy

8) Which of the following is true for services?
A) All services are people-based, while goods are equipment-based.
B) Service providers can be both for-profit or nonprofit.
C) All service companies follow the same process to deliver their services.
D) The client’s presence is a hindrance during the service delivery process.
E) Service providers develop similar marketing programs for personal services and business services.

B Page Ref: 357 Objective: 1 Difficulty: Easy

9) Some services require that the client be present to conduct the service. Which of the following is an example of such a service?
A) pest control
B) furniture polishing
C) surgery
D) car repairing
E) tax services

C Page Ref: 357 Objective: 1 Difficulty: Easy

10) Services high in ________ have characteristics that the buyers can evaluate before purchase.
A) search qualities
B) experience qualities
C) credence qualities
D) privacy qualities
E) storing qualities

A Page Ref: 357 Objective: 1 Difficulty: Easy

11) Services high in ________ qualities have characteristics that the buyer can evaluate after purchase.
A) privacy
B) experience
C) credence
D) search
E) stock

B Page Ref: 357 Objective: 1 Difficulty: Easy

12) Services high in ________ are those services that have characteristics the buyer normally finds hard to evaluate even after consumption.
A) trial qualities
B) search qualities
C) experience qualities
D) privacy qualities
E) credence qualities

E Page Ref: 357 Objective: 1 Difficulty: Easy

13) Which one of the following would be considered high in credence qualities?
A) an interior of a house
B) a restaurant
C) a haircut
D) psychotherapy
E) a computer

D Page Ref: 357 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

14) Which one of the following is highest in search qualities?
A) a play at a theater
B) a meal at a restaurant
C) a haircut
D) psychotherapy
E) a computer

E Page Ref: 357 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

15) Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. This is known as the ________ aspect of services.
A) inseparability
B) intangibility
C) variability
D) perishability
E) heterogeneity

B Page Ref: 358 Objective: 1 Difficulty: Easy

16) Which of the following will most help service providers overcome the limitation of intangibility of services when positioning itself?
A) using brand symbols
B) sharing services
C) working with larger groups
D) cultivating non-peak demand
E) creating a service blueprint

A Page Ref: 358 Objective: 1 Difficulty: Easy

17) A brand that is action-oriented and causes consumers to engage in physical actions appeals to the ________ dimension of brand experience.
A) sensory
B) affective
C) behavioral
D) intellectual
E) social

C Page Ref: 358 Objective: 1 Difficulty: Easy

18) BRZ Shoes targets the youth market with vibrant, visually appealing ads in modern styles. BRZ ads appeal to the ________ dimension of brand experience.
A) sensory
B) affective
C) behavioral
D) intellectual
E) social

A Page Ref: 358 Objective: 1 Difficulty: Easy

19) BRZ Shoes positions itself as a young, adventurous brand. Its logo and brand communication try to give consumers a feeling of excitement and bravery. These ads appeal to the ________ dimension of brand experience.
A) sensory
B) affective
C) behavioral
D) intellectual
E) social

B Page Ref: 358 Objective: 1 Difficulty: Easy

20) ________ refer(s) to logos, symbols, characters, and slogans that service providers use in order to make the service and its key benefits more tangible.
A) Brand engagement
B) Brand orientation
C) Brand elements
D) Brand loyalty
E) Brand equity

C Page Ref: 359 Objective: 1 Difficulty: Easy

21) Which of the following is true regarding services?
A) Services are typically produced, stored, and then consumed.
B) Services are generally low in experience and credence qualities.
C) Service providers develop similar marketing programs for personal services and business services.
D) There is less risk associated with the purchase of services than with the purchase of goods.
E) Provider-client interaction is a special feature of services marketing.

E Page Ref: 359 Objective: 1 Difficulty: Easy

22) The fact that services are typically produced and consumed simultaneously is known as the ________ aspect of services.
A) perishability
B) intangibility
C) heterogeneity
D) inseparability
E) variability

D Page Ref: 359 Objective: 1 Difficulty: Easy

23) Service quality depends on who provides them, when and where, and to whom. Thus, services are highly ________.
A) inseparable
B) tangible
C) variable
D) perishable
E) intangible

C Page Ref: 359 Objective: 1 Difficulty: Easy

24) Which of the following will help a service provider overcome the limits imposed by the inseparability of services?
A) using differential pricing
B) working with larger customer groups
C) providing complementary services
D) concentrating on physical evidence and presentation
E) standardizing the service process

B Page Ref: 359 Objective: 1 Difficulty: Easy

25) Which of the following steps will help service firms to increase their quality control?
A) standardizing the service-performance process
B) providing complementary services to customers
C) giving personnel authority in handling situations
D) adopting differential pricing
E) cultivating nonpeak demand

A Page Ref: 360 Objective: 1 Difficulty: Easy

26) In order to map out the service process, the points of customer contact, and the evidence of service from the customer’s point of view, service firms should develop a ________.
A) marketing plan
B) service floor plan
C) Gantt chart
D) business plan
E) service blueprint

E Page Ref: 360 Objective: 1 Difficulty: Easy

27) Jake had an appointment at the doctor’s, but couldn’t make it on time because he was caught in traffic. By the time he reached the doctor’s office, the doctor had already begun with the next patient. This illustrates the ________ of services.
A) variability
B) heterogeneity
C) perishability
D) intangibility
E) homogeneity

C Page Ref: 361 Objective: 1 AACSB: Analytic skills Difficulty: Easy

28) When a theater sells matinee movie tickets at low prices, it aims to shift some demand from the peak to the off-peak period. What is the strategy that the theater is said to be adopting?
A) It is providing complementary services.
B) It is increasing peak-time efficiency.
C) It is using linear pricing.
D) It is using differential pricing.
E) It is sharing services.

D Page Ref: 361 Objective: 1 Difficulty: Easy

29) A travel agency offers weekend discounts for car rentals. What can be deduced from this?
A) It is increasing peak-time efficiency.
B) It is using differential pricing.
C) It is using linear pricing.
D) It is cultivating peak demand.
E) It is providing complementary services.

B Page Ref: 361 Objective: 1 Difficulty: Easy

30) In which of the following cases is a service provider trying to increase non-peak demand?
A) A fine dining restaurant is promoting a breakfast service in addition to its popular lunch and dinner options.
B) An upscale restaurant has a cocktail lounge where customers can wait until a table is ready.
C) AXA Bank set up automated teller machines so that its customers could avoid standing in line.
D) Chesterton College hired part-time teachers as enrollment increased significantly.
E) Big department stores usually hire extra staff to handle the rush during the holiday season.

A Page Ref: 361 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

31) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote minivacation weekends for non-business customers as well. What is the Caesar Park Hotel trying to do?
A) It is implementing premium pricing.
B) It is trying to cultivate nonpeak demand.
C) It is promoting complementary services.
D) It is putting reservation systems in place.
E) It is implementing differential pricing.

B Page Ref: 361 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

32) Cocktail lounges in restaurants are examples of ________.
A) differential pricing
B) cultivating nonpeak demand
C) complementary services
D) reservation systems
E) shared services

C Page Ref: 361 Objective: 1 Difficulty: Easy

33) Which of the following is an example of a complementary service?
A) Big department stores usually hire extra staff to handle the rush during the holiday season.
B) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote minivacation weekends for non-business customers as well.
C) More paramedics are on hand to assist physicians during times when emergency admissions are highest.
D) AXA Bank set up automated teller machines so that its customers could avoid standing in line.
E) Chesterton College hires part-time teachers when enrollment goes up.

D Page Ref: 361 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

34) Walmart has decided to hire extra clerks during the holiday season. It is said to be ________.
A) matching its supply with the existing demand
B) generating non-peak demand
C) increasing its customer participation
D) sharing its services
E) facilitating for its future expansion

A Page Ref: 361 Objective: 1 Difficulty: Easy

35) Kaya, a chain of skin clinics, requests each new visitor to fill up their own details on a printed form. This is a step in ________.
A) increasing its peak-time efficiency
B) creating nonpeak demand
C) increasing consumer participation
D) sharing its services
E) facilitating its future expansions

C Page Ref: 361 Objective: 1 Difficulty: Easy

36) Customers today want separate prices for each service element and they also want the right to select the elements they want. The customers are said to be pressing for ________.
A) complementary services
B) perishable services
C) variable services
D) unbundled services
E) shared services

D Page Ref: 362 Objective: 2 Difficulty: Easy

37) Often, a service problem arises from a customer’s lack of understanding or ineptitude. Which of the following can help to minimize customer failures?
A) giving customers exclusive primary service packages
B) redesigning processes to simplify service encounters
C) using differential pricing and shared services
D) minimizing service intangibility
E) working with more customers at the same time

B Page Ref: 364 Objective: 2 Difficulty: Easy

38) ________ refers to the normal work of preparing, pricing, distributing, and promoting the service to customers.
A) Interactive marketing
B) Internal marketing
C) External marketing
D) Promotional marketing
E) Direct marketing

C Page Ref: 365 Objective: 3 Difficulty: Easy

39) ________ refers to training and motivating employees to serve customers well.
A) External marketing
B) Promotional marketing
C) Direct marketing
D) Internal marketing
E) Interactive marketing

D Page Ref: 365 Objective: 3 Difficulty: Easy

40) ________ describes the employees’ skill in serving the client.
A) External marketing
B) Internal marketing
C) Promotional marketing
D) Direct marketing
E) Interactive marketing

E Page Ref: 365 Objective: 3 Difficulty: Easy

41) Susanna wanted to check out a new salon in her locality, so she decided to go for a hair styling session. She was very happy with the way her stylist connected and related with her concerns. She is judging the service based on its ________.
A) promotional marketing
B) functional quality
C) technical quality
D) search qualities
E) external marketing

B Page Ref: 365 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

42) In which of the following does a customer respond to the technical quality of a service?
A) Sara’s preferred hair stylist is some miles away, but Sara goes to him because his styles suit her looks.
B) Kathy tries out a new restaurant every week, because she likes to experience the variety.
C) Bill has gone to the same chiropractor for the past fifteen years, because he is friendly and takes the time to listen to Bill.
D) Ray avoids going to the bank as far as possible because the manager is rude and unhelpful.
E) Alex has no interest in theater, but goes often because her best friend loves plays.

A Page Ref: 365 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

43) In which of the following does a customer respond to the functional quality of a service?
A) Sara’s preferred hair stylist is some miles away, but Sara goes to him because his styles suit her looks.
B) Kathy tries out a new restaurant every week, because she likes to experience the variety.
C) Bill has gone to the same chiropractor for the past fifteen years, because he is friendly and takes the time to listen to Bill.
D) Ray’s mechanic charges high prices for service, but his work is good and worth the price.
E) Alex has no interest in theater, but goes often because her best friend loves plays.

C Page Ref: 365 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

44) Firms have decided to raise fees and lower service for those customers who barely pay their way and to coddle big spenders to retain their patronage as long as possible. This is an example of organizing customers by ________.
A) retailer convenience
B) profit tiers
C) psychographic characteristics
D) social influence
E) customer preference

B Page Ref: 366 Objective: 3 Difficulty: Easy

45) Charles Schwab’s best customers are instantly directed to customer service representatives, while other customers have to wait longer. Charles Schwab is trying to ________.
A) monitor its service systems
B) empower the customers
C) retain the patronage of profitable customers
D) increase consumer participation
E) standardize the service-performance process

C Page Ref: 366 Objective: 3 Difficulty: Easy

46) The ________ rates the various elements of the service bundle and identifies required actions.
A) company performance analysis
B) voice of customer measurement
C) customer factor measurement
D) importance-performance analysis
E) customer importance analysis

D Page Ref: 367 Objective: 3 Difficulty: Easy

47) Customers who view a service as homogeneous ________.
A) only patronize a preferred service provider
B) judge services on the basis of the providers
C) care less about the provider than about the price
D) pick a service provider based on functional attributes
E) opt for the service with the highest price, irrespective of quality

C Page Ref: 368 Objective: 3 Difficulty: Easy

48) Belling Hotels provides complimentary breakfast buffets to all its guests. This is an example of a ________.
A) primary service package
B) service interface
C) service support
D) service frequency
E) secondary service feature

E Page Ref: 369 Objective: 3 Difficulty: Easy

49) Although Brenda previously used the U.S. Postal Service because it offered better prices on package shipping, she now uses only FedEx, because it gives her the facility of shipping from any FedEx Kinkos location 24 hours a day. Which of the following factors led to Brenda’s customer switching behavior?
A) inconvenience
B) pricing
C) response to service failure
D) ethical problems
E) involuntary switching

A Page Ref: 371 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

50) Angela switched to a new hair stylist after getting a bad haircut from her previous stylist. This is an example of which of the following factors leading to customer switching behavior?
A) service encounter failure
B) core service failure
C) response to service failure
D) involuntary switching
E) competition

B Page Ref: 371 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

51) Dean recently had a BRZ broadband connection installed. However, the connection was bad and he didn’t get the quality he required. He contacted BRZ about the problem, but the company did not solve his problem. Dean switched to Blue Broadband. Which of the following was the cause of Dean’s switching behavior?
A) involuntary switching
B) competition
C) response to service failure
D) service encounter failures
E) inconvenience

C Page Ref: 371 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

52) MGC Inc. organizes a company-wide picnic once a year. The organizers arranged for the best possible menu thinking that food would be a priority, but the staff were disappointed because the activities were very poorly planned. What kind of a gap is apparent here?
A) gap between perceived service and expected service
B) gap between service delivery and external communications
C) gap between service-quality specifications and service delivery
D) gap between management perception and service-quality specification
E) gap between consumer expectation and management perception

E Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

53) Which of the following is an example of a gap between management perception and the service-quality specifications?
A) The college brochure showed state-of-the-art classrooms, but when the visitors walked in, they saw peeling walls and dull lighting.
B) A nurse visits a patient to show care, but the patient interprets this as an indication that something is very wrong.
C) The hotel administrators think that guests want better food, but guests are more concerned with the courtesy of the waiters.
D) A service center manager has asked his subordinates to provide fast service, but has not specified a time for the service to be performed.
E) Customer service representatives are asked to give ample time to each customer, but must serve a minimum of 50 customers a day.

D Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

54) The customer service representatives at a call center have been asked to handle each call in not more than five minutes. A recent customer survey by the company revealed that customers appreciate it when employees take the time to answer their questions fully and listen to their grievances. What kind of service gap is apparent here?
A) gap between perceived service and expected service
B) gap between service delivery and external communications
C) gap between service-quality specifications and service delivery
D) gap between management perception and service-quality specification
E) gap between consumer expectation and management perception

D Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

55) The customer service representatives at a call center have been asked to handle each call in not more than five minutes. At the same time, they have been asked to answer all customer queries in detail and provide appropriate solutions. What kind of service gap is apparent here?
A) gap between perceived service and expected service
B) gap between service delivery and external communications
C) gap between service-quality specifications and service delivery
D) gap between management perception and service-quality specification
E) gap between consumer expectation and management perception

C Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

56) Which of the following is an example of a gap between service delivery and external communications?
A) The employees at GBL have been asked to take time to listen to customers, but they must serve them fast as well.
B) Amanda chose to shop at Alison’s Fashions because the store’s website offered on-the-spot alterations. However, when she did buy a dress, she had to wait a week to get it altered.
C) Customers at LUX appreciate the personalized services the salespeople offer, but do not like the store design.
D) Clearwater Spa attendants are well-trained in massage therapy and the services they offer, but customers rarely return because they don’t like the attendants’ impersonal service.
E) When sales dropped, Styx modernized its stores in order to retain customers, but didn’t realize that the product quality was the main problem.

B Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

57) Ellen came across an ad for a new restaurant which promised authentic French cuisine. When she ate there, however, she was disappointed to find that the food was mediocre and not very authentic. Which of the following gaps of service performance does this demonstrate?
A) gap between service-quality specifications and service delivery
B) gap between perceived service and expected service
C) gap between service delivery and external communications
D) gap between consumer expectation and management perception
E) gap between management perception and service-quality specification

C Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

58) When Aaron went to his doctor for his annual checkup, he was asked to undergo a number of tests. Although the doctor assured Aaron that the tests were routine, Aaron thinks that the doctor is hiding a grave problem from him. What kind of a gap is apparent here?
A) gap between perceived service and expected service
B) gap between service delivery and external communications
C) gap between service-quality specifications and service delivery
D) gap between management perception and service-quality specification
E) gap between consumer expectation and management perception

A Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

59) The most important determinant of service quality is ________ which refers to the ability to perform the promised service dependably and accurately.
A) empathy
B) assurance
C) responsiveness
D) reliability
E) tangibles

D Page Ref: 374 Objective: 4 Difficulty: Easy

60) The customer service representatives at G.K.’s customer service center must know as much about the products as possible, so that they can help the customers solve their difficulties without sounding hesitant or unsure of themselves. Which of the following determinants of service quality are they being asked to demonstrate?
A) responsiveness
B) assurance
C) empathy
D) reliability
E) tangibility

B Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

61) Josh gets his bike serviced at Dean’s Garage even though there’s another garage much closer to home. He prefers Dean’s because the work is usually done quickly and the staff try to solve the issues with the bike as soon as possible. Dean’s Garage excels at which of the following five determinants of service quality?
A) reliability
B) responsiveness
C) assurance
D) empathy
E) tangibles

B Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

62) The ________ determinant of service quality refers to the knowledge and courtesy of employees and their ability to convey trust and confidence in the service they provide.
A) conscientious
B) assurance
C) empathy
D) reliability
E) responsiveness

B Page Ref: 374 Objective: 4 Difficulty: Easy

63) Leo’s manager has asked him and his teammates to demonstrate caring towards customers. They are instructed to learn the customers’ names, and use the customers’ names while interacting with them. Repeat customers should get special attention, and the team members should remember their preferences and habits. The manager is asking the team to be ________.
A) assuring
B) candid
C) empathetic
D) reliable
E) responsive

C Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

64) Gloria goes to the same bagel shop every morning because the workers there remember her name and know her order. They always make her feel welcome. The employees of this bagel shop excel at which of the following determinants of service quality?
A) reliability
B) responsiveness
C) assurance
D) empathy
E) tangibles

D Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

65) The zone of ________ is a range where a service dimension is deemed satisfactory, anchored by the minimum level consumers are willing to accept and the level they believe can and should be delivered.
A) immunity
B) tolerance
C) reliability
D) assurance
E) flexibility

B Page Ref: 374 Objective: 4 Difficulty: Easy

66) According to the dynamic process model, two different types of expectations have opposite effects on perceptions of service quality. One of these is that ________.
A) increasing customer expectations of what the firm will deliver improve the perceptions of overall service quality
B) increasing customer expectations of what the firm will deliver decrease the perceptions of overall service quality
C) decreasing customer expectations of what the firm should deliver decrease the perceptions of overall service quality
D) decreasing customer expectations of what the firm will deliver improve the perceptions of overall service quality
E) increasing customer expectations of what the firm should deliver improve the perceptions of overall service quality

A Page Ref: 374 Objective: 4 Difficulty: Moderate

67) When customers calculate the perceived economic benefits of a continuously provided service in relationship to the economic costs, they are gauging the ________.
A) private equity
B) brand equity
C) payment equity
D) customer-service equity
E) product-service equity

C Page Ref: 375 Objective: 4 Difficulty: Easy

68) A ________ refers to any place at which a company seeks to manage a relationship with a customer, whether through people, technology, or some combination of the two.
A) customer-service interface
B) product-customer interface
C) tangible user interface
D) attentive user interface
E) crossing-based interface

A Page Ref: 375 Objective: 4 Difficulty: Easy

69) Regular maintenance and repair costs are known as ________.
A) service contract costs
B) out-of-pocket costs
C) fixed costs
D) facilitating services costs
E) value-augmentation costs

B Page Ref: 376 Objective: 5 Difficulty: Easy

70) The product’s purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value gives the ________.
A) service warranty cost
B) out-of-pocket cost
C) life-cycle cost
D) facilitating services cost
E) value-augmentation cost

C Page Ref: 376 Objective: 5 Difficulty: Easy

71) Expensive equipment manufacturers not only install the equipment but also train the staff and undertake the maintenance and repair activities of the equipment. By doing so, they are providing ________.
A) payment equity
B) value-augmenting services
C) differential pricing
D) facilitating services
E) a primary service package

D Page Ref: 377 Objective: 5 Difficulty: Easy

72) When Johnson Controls reached beyond its climate control equipment and components business to manage integrated facilities by offering products and services that optimize energy use, it was said to be providing ________.
A) facilitating services
B) a primary service package
C) value-augmenting services
D) service contracts
E) service warranties

C Page Ref: 377 Objective: 5 Difficulty: Easy

73) When sellers agree to provide free maintenance and repair services for a specified period of time at a specified contract price, they are offering ________.
A) a complementary service
B) payment equity
C) a service blueprint
D) differential pricing
E) an extended warranty

E Page Ref: 377 Objective: 5 Difficulty: Easy

74) The private non-profit sector is a provider of services.

TRUE Page Ref: 356 Objective: 1 Difficulty: Easy

75) A service is essentially intangible.

TRUE Page Ref: 356 Objective: 1 Difficulty: Easy

76) A service results in ownership on the part of the client.

FALSE Page Ref: 356 Objective: 1 Difficulty: Easy

77) The production of a service is never tied to a physical product.

FALSE Page Ref: 356 Objective: 1 Difficulty: Easy

78) Soap is an example of a pure tangible good.

TRUE Page Ref: 356 Objective: 1 Difficulty: Easy

79) Salt is an example of a hybrid.

FALSE Page Ref: 356 Objective: 1 Difficulty: Easy

80) A hybrid consists of unequal parts of goods and services, with services being in the majority.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

81) A pure service requires a capital-intensive good, but the primary item is a service.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

82) All services require the client to be present.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

83) The search qualities of a service are the characteristics the buyer can evaluate before purchase.

TRUE Page Ref: 357 Objective: 1 Difficulty: Easy

84) Credence qualities of a service are difficult to evaluate before purchase, but easy to evaluate after consumption.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

85) The experience qualities of a good or service can be evaluated after purchase.

TRUE Page Ref: 357 Objective: 1 Difficulty: Easy

86) Furniture is high in credence qualities.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

87) While goods meet personal needs, services meet business needs.

FALSE Page Ref: 357 Objective: 1 Difficulty: Easy

88) Services have five distinctive characteristics, one of these being "pure service."

FALSE Page Ref: 358 Objective: 1 Difficulty: Easy

89) Intangibility with regards to a service means that the service cannot be duplicated across providers.

FALSE Page Ref: 358 Objective: 1 Difficulty: Easy

90) Service companies try to demonstrate their service qualities through physical evidence and presentation.

TRUE Page Ref: 358 Objective: 1 Difficulty: Easy

91) Inseparability in the context of a service means that there is a provider-client interaction involved as the provider is part of the service.

TRUE Page Ref: 359 Objective: 1 Difficulty: Easy

92) A service provider can work with larger groups to get around the limitations of inseparability.

TRUE Page Ref: 359 Objective: 1 Difficulty: Easy

93) The quality of services is independent of who provides them.

FALSE Page Ref: 359 Objective: 1 Difficulty: Easy

94) Customers want unbundled services, with separate prices for each service element and the right to select the elements they want.

TRUE Page Ref: 362 Objective: 2 Difficulty: Easy

95) External marketing describes the training and motivation required by employees in order to properly serve the customers.

FALSE Page Ref: 365 Objective: 3 Difficulty: Easy

96) Interactive marketing describes the employees’ skill in serving the client.

TRUE Page Ref: 365 Objective: 3 Difficulty: Easy

97) Clients judge service not only by its technical quality but also by its functional quality.

TRUE Page Ref: 365 Objective: 3 Difficulty: Easy

98) Importance-performance analysis rates the various elements of the service bundle and identifies required actions.

TRUE Page Ref: 367 Objective: 3 Difficulty: Easy

99) Customers who view a service as fairly homogeneous care less about the provider than
about the price.

TRUE Page Ref: 368 Objective: 3 Difficulty: Easy

100) What the customer expects from a service is called the primary service package.

TRUE Page Ref: 369 Objective: 3 Difficulty: Easy

101) Secondary service features are the features that the customer himself adds to the service.

FALSE Page Ref: 369 Objective: 3 Difficulty: Easy

102) Pricing has no negative effect on customer loyalty.

FALSE Page Ref: 371 Objective: 4 Difficulty: Easy

103) If the expected service falls below the perceived service, customers are disappointed.

FALSE Page Ref: 373 Objective: 4 Difficulty: Easy

104) Responsiveness is a company’s willingness to help customers and provide prompt service.

TRUE Page Ref: 374 Objective: 4 Difficulty: Easy

105) Reliability refers to the company’s willingness to help customers and provide them with prompt service.

FALSE Page Ref: 374 Objective: 4 Difficulty: Easy

106) The appearance of physical facilities, equipment, personnel, and communication materials are the tangibles that convey service quality to consumers.

TRUE Page Ref: 374 Objective: 4 Difficulty: Easy

107) The zone of tolerance for a service is the perceived economic benefits in relationship to the economic costs.

FALSE Page Ref: 374 Objective: 4 Difficulty: Easy

108) The payment equity for a service is a range from the minimum level of service consumers are willing to accept to the level they believe can and should be delivered.

FALSE Page Ref: 375 Objective: 4 Difficulty: Easy

109) A customer-service interface is defined as any place at which a company seeks to manage a relationship with a customer.

TRUE Page Ref: 375 Objective: 4 Difficulty: Easy

110) If the length of the downtime increases, the cost incurred decreases.

FALSE Page Ref: 376 Objective: 5 Difficulty: Easy

111) A product’s purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value is known as the product’s activity cost.

FALSE Page Ref: 376 Objective: 5 Difficulty: Easy

112) Out-of-pocket costs are what the customer spends on regular maintenance and repair costs.

TRUE Page Ref: 376 Objective: 5 Difficulty: Easy

113) Value-augmenting services include installation, staff training, maintenance and repair services, and financing.

FALSE Page Ref: 377 Objective: 5 Difficulty: Easy

114) List and briefly explain with examples the five categories of service offerings.

The five categories of service offerings are: a. Pure tangible goods: These are tangible goods with no accompanying services. For example, soap or toothpaste. b. Tangible good with accompanying services: The tangible good is accompanied by one or more services. Typically, the more technologically advanced the product, the greater the need for high-quality supporting services. For instance, car or computer. c. Hybrid: It is an offering of equal parts goods and services. For example, a meal in a restaurant. d. Major service with accompanying minor goods and services: This offering requires a capital-intensive good, but the primary item is a service. For instance, an air travel that is accompanied by snacks and drinks. e. Pure service: This refers primarily to an intangible service. For example, psychotherapy or massage. Page Ref: 356-357 Objective: 1 Difficulty: Moderate

115) List and briefly explain the four distinctive characteristics of services.

The four distinctive service characteristics that greatly affect the design of marketing programs are: a. Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, buyers will look for evidence of quality by drawing inferences from the place, people, equipment, communication material, symbols, and price. b. Inseparability: Services are typically produced and consumed simultaneously. Both the provider and the client are a part of the service. c. Variability: Because services depend on who provides them and when and where, and to whom, services are highly variable. Service buyers are aware of this variability and often talk to others before selecting a service provider. d. Perishability: Services cannot be stored, so their perishability can be a problem when demand fluctuates. That is why public transportation companies must own much more equipment because of rush-hour demand than if demand were even throughout the day. Page Ref: 358-361 Objective: 1 Difficulty: Moderate

116) List three steps that service firms can take to increase quality control over services and reduce variability.

Three steps that service firms can take to increase quality control and reduce variability in services are: a. Invest in good hiring and training procedures: Recruiting the right employees and providing them with excellent training is crucial, regardless of whether employees are highly skilled professionals or low-skilled workers. Better-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness, and communication. b. Standardize the service-performance process throughout the organization: A service blueprint maps out the service process, the points of customer contact, and the evidence of service from the customer’s point of view. c. Monitor customer satisfaction: Service firms can employ suggestion and complaint systems, customer surveys, and comparison shopping. Customer needs vary in different areas. This allows firms to develop region-specific customer satisfaction programs. Firms can also develop customer information databases and systems for more personalized service, especially online. Page Ref: 360 Objective: 1 Difficulty: Moderate

117) Several strategies exist for managing the supply and demand of services. List the strategies for managing each and give an example of each strategy.

Several strategies can produce a better match between service demand and supply. On the demand side, these strategies include the following: a. Differential pricing: This will shift some demand from peak to off-peak periods. For example, low matinee movie prices and weekend discounts for car rentals. b. Nonpeak demand: This can be cultivated. For instance, McDonald’s pushes its breakfast service, and hotels promote minivacation weekends. c. Complementary services: These can provide alternatives to waiting customers. For example, cocktail lounges in restaurants and automated teller machines in banks. d. Reservation systems: These are one of the many ways to manage the demand level. For instance, airlines, hotels, and physicians employ them extensively. On the supply side, these strategies include the following: a. Part-time employees: They can serve peak demand. For example, colleges add part-time teachers when enrollment goes up and stores hire extra clerks during holiday periods. b. Peak-time efficiency: These routines can allow employees to perform only essential tasks during peak periods. For instance, paramedics assist physicians during busy periods. c. Increased consumer participation: This frees service providers’ time. For example consumers can fill out their own medical records or bag their own groceries. d. Shared services: These can improve offerings. For instance, several hospitals can share medical-equipment purchases. e. Facilities for future expansion: This can be a good investment. For example, an amusement park can buy surrounding land for later development. Page Ref: 361 Objective: 1 Difficulty: Moderate

118) Define customer failures and list four methods to tackle them.

Customer failures refer to situations where service problems arise from a customer’s lack of understanding or ineptitude. Some of the methods to solve such situations include the following: a. Redesigning processes and redefining customer roles to simplify service encounters b. Incorporating the right technology to aid employees and customers c. Creating high-performance customers by enhancing their role clarity, motivation, and ability d. Encouraging "customer citizenship" so that customers help customers Page Ref: 364 Objective: 2 Difficulty: Moderate

119) Marketing excellence with services requires excellence in three broad areas. List and explain the three areas.

The three areas in which services require excellence are: a. External marketing: This describes the normal work of preparing, pricing, distributing, and promoting the service to customers. b. Internal marketing: This describes training and motivating employees to serve customers well. c. Interactive marketing: This describes the employees’ skill in serving the client. Clients judge service not only by its technical quality but also by its functional quality. Page Ref: 365 Objective: 3 Difficulty: Moderate

120) List the eight different variables that influence service outcome and customer loyalty.

The eight major variables that influence service outcome and customer loyalty are: a. Pricing: High price, price increases, unfair pricing, or deceptive pricing prompt customers to change their loyalty. b. Inconvenience: If a customer is made to wait for his appointment or service, there is a chance that he will think of shifting his loyalty. c. Core service failure: Service failures, billing errors, or service catastrophe influence service outcome and customer loyalty. d. Service encounter failures: If the customer service representative is uncaring, impolite, unresponsive, or unknowledgeable, the service outcome and customer loyalty is influenced. e. Response to service failure: If the customer service representative exhibits negative response or reluctant response or no response at all, the customer’s loyalty is likely to shift. f. Competition: A customer’s loyalty changes if he finds a better service. g. Ethical problems: If a customer thinks that the service provider is a cheat or his services are unsafe, then he starts looking for another service provider. h. Involuntary switching: If the customer has to shift his base or the service provider has to close down, the customer’s loyalty undergo an involuntary shifting. Page Ref: 371 Objective: 4 Difficulty: Moderate

121) The service-quality model highlights the main requirements for delivering high service quality. Which are the five gaps that cause unsuccessful delivery?

The five gaps that cause unsuccessful customer service delivery are as follows: a. The gap between consumer expectation and management perception: The management does not always correctly perceive what customers want. b. The gap between management perception and service-quality specification: The management might correctly perceive customers’ wants but not set a performance standard. c. The gap between service-quality specifications and service delivery: The employees might be poorly trained, or incapable of or unwilling to meet the standard, or they may be held to conflicting standards, such as taking time to listen to customers and serving them fast. d. The gap between service delivery and external communications: The consumers’ expectations are affected by statements made by company representatives and ads. e. The gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. Page Ref: 373-374 Objective: 4 Difficulty: Moderate

122) Based on the service-quality model, researchers have identified five determinants of service quality. List and briefly explain each.

The five determinants of service quality are: a. Reliability: It is the ability to perform the promised service dependably and accurately. b. Responsiveness: It refers to the willingness to help customers and to provide prompt service. c. Assurance: It is the knowledge and courtesy of employees and their ability to convey trust and confidence. d. Empathy: It refers to the provision of caring, individualized attention to customers. e. Tangibles: It is the appearance of physical facilities, equipment, personnel, and communication materials. Page Ref: 374 Objective: 4 Difficulty: Moderate

123) Traditionally, customers have had three specific worries about product service. What are they?

Manufacturers of equipment—small appliances, office machines, tractors, mainframes, airplanes—all must provide product-support services. The three specific worries about product services that customers face are: a. They worry about reliability and failure frequency. For example, a farmer may tolerate a combine that will break down once a year, but not two or three times a year. b. They worry about downtime. The longer the downtime, the higher the cost. The customer counts on the seller’s service dependability which refers to the seller’s ability to fix the machine quickly or at least provide a loaner. c. They worry about out-of-pocket costs, which refers to the amount they have to spend on regular maintenance and repair costs. Page Ref: 376 Objective: 5 Difficulty: Moderate

124) There are five categories of service offerings depending upon whether or not the service component is minor or major. In which of the five categories would you place a haircut?

A hair salon would be considered a pure service because the service provided by a hair salon is primarily intangible in nature. Page Ref: 357 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

125) Give an example of a pure service provided by a company.

Student answers may vary. Examples of a pure service include babysitting, psychotherapy, career counselling, or a massage. Page Ref: 357 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

126) Bryson’s is a mid-sized hotel chain that is entering a competitive market. The chain needs to differentiate its service from that of competitors, positioning itself as a hotel with excellent service at an affordable price. However, the intangible nature of services makes this difficult to demonstrate. How can Bryson’s convey its message effectively to prospective guests using marketing tool of place?

Student answers may vary. Bryson’s should try to demonstrate its service quality through physical evidence and presentation. Bryson’s can use ‘place’, i.e., the hotels themselves, by designing the hotels to reflect its desired attributes. The hotel design should not be too ornate or fancy, but not too basic either. Page Ref: 358 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

127) In developing a service blueprint, The Flower Shop has outlined each step in the delivery process of the service it provides. Which characteristic of services is The Flower Shop attempting to minimize?

By developing a service blueprint, Beth’s Inc. is making an attempt to reduce the variability of the service. Because the quality of services depends on who provides them, when and where, and to whom, services are highly variable. A service blueprint will standardize the entire service process. Page Ref: 360 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

128) Fingerpainted organizes art camps and craft activities for children. The company has noticed that demand is highest during summer vacations and drops during the year. What can Fingerpainted do to attract customers at other times of year?

Student answers may vary. Fingerpainted can use differential pricing to shift some demand from peak to non-peak periods, pricing courses outside vacations lower than vacation courses. It can try to generate non-peak demand by introducing specialized courses for weekends or a few evenings a week. Page Ref: 361 Objective: 1 AACSB: Analytic skills Difficulty: Moderate

129) Debbie’s is a specialty bakery that sees a huge volume of orders during the holiday season. The owner knows that orders triple during the three-month period and the current staff cannot handle the volume. What supply strategy can Debbie’s use to handle the demand?

Debbie’s can employ people on contract just for the holiday season to help the company cope with the spike in demand. Page Ref: 361 Objective: 2 AACSB: Analytic skills Difficulty: Moderate

130) Bryson’s is a mid-sized hotel chain that is entering a competitive market. The chain needs to differentiate its service from that of competitors, positioning itself as a hotel chain with excellent service at an affordable price. How can it achieve this using internal marketing?

Student answers may vary. Internal marketing describes training and motivating employees to serve customers well. Employees must be trained to provide the required service quality, as well as motivated to achieve that level. Bryson’s can use incentives for the best performers in order to encourage this. Page Ref: 365 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

131) When Hayley had some problems with the applications on her cell phone, she gave her cell phone to the service center for a software update. The service center returned the phone to Hayley the next day, with the software update complete. Two days later, the service center called Hayley to enquire if the phone was functioning well. Which area of services marketing does this incident illustrate? Why is this important?

This situation illustrates interactive marketing, which deals with the employees’ skill in serving the client. This is important because clients judge a service not only by its technical quality (how successful it was) but also by its functional quality (the attitude of the employees performing the service). Page Ref: 365 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

132) Some WesternSlope Cleaning customers have long-term contracts for full-service cleaning, while others call the company as and when they require a particular service. The long-term customers have their queries handled by the company’s customer service representative. The rest of its customers are directed towards voice messages when they want their inquiries to be processed. What strategy is the company adopting to achieve marketing excellence?

The company is trying to differentiate its high-profit tier customers from its low-profit tier customers. Page Ref: 366-367 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

133) Retail chain REB wants to find out how its customers perceive its services and what it can do to improve these. What methods can the company use to discover this?

REB can audit service performance, both their own and competitors’, on a regular basis. It can collect voice of the customer (VOC) measurements to probe customer satisfiers and dissatisfiers. It can use comparison shopping, mystery or ghost shopping, customer surveys, suggestion and complaint forms, and service-audit teams to find out customer reactions to the company. Page Ref: 367 Objective: 3 AACSB: Analytic skills Difficulty: Moderate

134) Clearwater Spa operates on the premise that service quality is the main reason that customers come to the spa, and the attendants are trained to provide excellent service. Despite this, the spa rarely has repeat customers. Clearwater began collecting feedback from customers to find out the reason for this. The management realized that although the customers were happy about the services they did not like the ambience. What kind of a gap is causing the unsuccessful service delivery in this situation?

In this situation, there is a gap between the consumers’ expectations and the managements’ perception. Management does not always correctly perceive what customers want. The spa management believes that customers want service quality, when the ambience is the real customer demand. Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

135) The manager of a computer service center knows that quick service is the top priority for customers. Accordingly, the employees are encouraged to solve customer difficulties fast, but there is no set time period for service delivery. Which gap could cause unsuccessful service delivery in this situation?

In this situation, there exists a gap between the management perception and the service-quality specification. Although, the management has correctly perceived the customers’ want, it has not set a specific performance standard for employees. Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

136) In the customer support center where Carl works, employees are taught to make conversation to put customers at their ease. As customers don’t like being kept waiting, they must also try to minimize the time that customers spend waiting for service. Thus, when there are a number of customers lined up, Carl usually has to decide whether to answer a customer’s questions in detail or move on quickly to the next customer. The firm’s standards are not clear on how they want him to perform. When asked, his boss answers, "You make the decision." This is an example of which service-quality gap?

This is an example of a gap between the service-quality specifications and service delivery. Employees are held to conflicting standards, having to decide between taking time to listen to customers and serving them fast. Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

137) The advertisement for a pool reads "a vinyl pool from Parker’s for just $5000." When David contacted the firm for the pool, the customer service representative tells David that the total cost will be $8000. When David enquires about the extra $3000, the customer service representative says that is for installation. Which service-quality gap does this situation demonstrate?

This is an example of a gap between service delivery and external communications. Consumer expectations are affected by statements made by company representatives and ads. Here, the ad promised a pool for one price, but the actual price is much higher than the consumer is led to expect. Page Ref: 373 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

138) The last time Betty visited Zing’s, the dinner served was excellent. Tonight is her anniversary and she was looking forward to an enjoyable evening. After the meal, she starts feeling that the service was not up to par and the evening was not as successful as she had hoped. According to the service-quality model, which gap is obvious here?

The gap prevalent here is the gap between perceived service and expected service. This gap occurs when the customer misperceives the service quality. Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

139) A cosmetics store sees to it that customers who walk in are assisted by store personnel. These personnel are trained to ask customers questions, find out what they want, and make suggestions accordingly. Which of the five determinants of service quality is reflected here?

The determinant of service quality that is reflected here is the empathy. The outlet not only cares about its customers, but also gives them individualized attention. Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

140) Josh travels often on business trips. He usually uses the services of the Sunshine Cab Company to take him to the airport and pick him up from the airport. Though the fares are usually higher than those of other private taxi companies, he prefers to use Sunshine cabs because they’re always on time and have well-maintained cabs. Which determinant of service quality does this demonstrate?

This demonstrates the determinant of reliability, which is the ability to perform the promised service dependably and accurately. Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

141) Package delivery company UPS uses distinctive brown trucks that have become almost an icon. Explain why such physical facilities are important for UPS while it provides package delivery services.

Services are intangible. But when they are given a tangibility by using physical facilities, equipment, personnel, or communication material, customers find it easier to determine the service quality and distinguish the services of one firm from that of its competitor. Thus, UPS’s trucks help the company differentiate its services from its competitors’. Page Ref: 374 Objective: 4 AACSB: Analytic skills Difficulty: Moderate

142) An oil drilling company ordered a number of pumpjacks for its operations. The pumpjack is an essential part of its operations and the company needs the equipment to be operational at all times. How can the pumpjack manufacturer demonstrate its service dependability?

The manufacturer can demonstrate its dependability by being prompt to repair the equipment when it fails, and providing replacements when the repairs will take a long time. Page Ref: 375 Objective: 5 AACSB: Analytic skills Difficulty: Moderate

143) An oil drilling company ordered a pumpjack for its operations. The pumpjack manufacturing company not only set up the machine but also provided training to the people who needed to use it. It also let the drilling company know that it would be undertaking the maintenance and repair services for the pumpjack. What kind of a service is the manufacturing company providing?

The manufacturing company is said to be providing facilitating services. Page Ref: 377 Objective: 5 AACSB: Analytic skills Difficulty: Moderate