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REVIEW QUESTION – UNIT 1 Chapter 1

1. Define the following terms: goods, services, products. Goods: objects, devices, or things Services: deeds, efforts, performance Products: refers to both good and services 2. What can be learned from the service imperative? The ____ reflects the view that the intangible aspects of products are becoming the key features that differentiate the products in the marketplace. 3. Why is it difficult to distinguish between many goods and services? Use the scale of market entities and the molecular model concept to explain your answer. Scale of market entities: Goods are tangible dominant (physical possession w/less service) while services are intangible dominant (lacking physical possession and can be only experienced)

Molecular model: Representation of the relationship b/w tangible and intangible elements Evaluation of goods is based on physical aspects of the product Evaluation of services based on the experiental aspects provided to the customer

4. Utilizing the servuction model, describe your classroom experience.

Servicescape – classroom temperature and powerpoint slides Contact personnel/service Providers – the interaction with university professor Other customers – positive learning influence from my classmates (team collaboration) Invisible organization and systems – The acceptable university rules, procedures

5. How would your servuction model, discussed in question 4, change as you describe the experience at a local restaurant? If too cold – I would leave. Bad interaction with ordering clerk – I never come back, other smoking customers – I would leave, not able to come at 12 when restaurant opens at 1 – will not go there 6. How does the organization and systems dimension of the servuction model differ from the other three dimensions? What is the purpose of the organization and systems dimension?

They are invisible and reflect the rules, procedures, and processes but still have profound influence on customer’s experience 7. As you consider the table that provides Worldwide GDP information, a mix of countries comprise the top 10 service economies. These countries sometimes differ greatly, yet still generate large service economies. Please explain. Shift from agriculture, manufacturing to services 8. Discuss the keys to delivering effective self-service technologies.

9. Describe online services that help humanize the online experience. 10. Discuss the four approaches to using sustainability as an effective business positioning strategy. Additional chapter material: Do you understand the three different frameworks for understanding services marketing? Services Marketing Mix, Servuction Model, Services Theater Framework What is the danger of “unscripted” employee behavior? What can managers do to prevent it? What lessons-to-learn did a service “crisis” of Domino’s Pizza offer to service managers? What is meant by a “service-dominant logic”? Service-dominant (S-D) logic is meta-theoretical framework for explaining value creation, through exchange, among configurations of actors. The underlying idea of S-D logic is that humans apply their competences to benefit others and reciprocally benefit from others' applied competences through service-for-service exchange (Vargo and Lusch, 2004

What are the unique characteristics of services? (See also Chapter 3)

REVIEW QUESTIONS: 1. Define the following terms: goods, services, products. In general, goods are defined as objects, devices, or things, whereas, services are defined as deeds, efforts, or performances. The term product refers to both goods and services. 2. What can be learned from the service imperative? Today’s business environment is experiencing the emergence of new service industries and the “service imperative,” where the intangible aspects of the product are becoming more and more the key features that differentiate product in the marketplace. There are countless examples of firms using the service imperative to drive their businesses forward to profit and growth. 3. Why is it difficult to distinguish between many goods and services? Use the scale of market entities and the molecular model concept to explain your answer. The distinction between goods and services is not always perfectly clear. In reality, most services contain some tangible components, while most goods also contain intangible components. It is difficult to say whether a pure service or a pure good even exist. The scale of market entities helps us understand whether the product under consideration is tangible dominant or intangible dominant.

4. Utilizing the servuction model, describe your classroom experience. Answers will vary, but at the core should be a description of the visible servicescape, contact personnel/service providers, other customers, and invisible organization and systems. 5. How would your servuction model, discussed in question 4, change as you describe the experience at a local restaurant? Answers will vary, but at the core should be a description of the visible servicescape, contact personnel/service providers, other customers, and invisible organization and systems. 6. How does the organization and systems dimension of the servuction model differ from the other three dimensions? What is the purpose of the organization and systems dimension? The organization and systems dimension is invisible to the customer. Of course, the visible components that comprise the servuction model cannot exist in isolation, and indeed, they have to be supported by invisible components that tie together the organization and its systems. Invisible organization and systems reflects the rules, regulations, and processes upon which the organization is based.

7. As you consider the table that provides Worldwide GDP information, a mix of countries comprise the top 10 service economies. These countries sometimes differ greatly, yet still generate large service economies. Please explain. Countries that industrialized their economies first eventually come under attack by other countries that are newly making the transition from an agricultural to an industrial economy. These “newcomer ” countries offer lower product costs that attract industry. Consequently, as industrial sectors flow from one country to the next, the countries they abandon begin to more heavily rely on the growth of their service sectors as the mainstay of their economies. All developed economies now have large service sectors; and Japan, France, and Great Britain have service economies at least as developed as that of the United States. Leading the pack are Hong Kong and the Bahamas. 8. Discuss the keys to delivering effective self-service technologies. Self-service technologies are purposely created to automate routine interactions between customers and providers with the goal of providing convenience and efficiency to both parties. A self-service must provide the customer a benefit (e.g., convenience, an opportunity to customize, costsavings, timesavings, etc.). An SST that is implemented purely to decrease the operating cost of the firm will most likely not be well-received. 9. Describe online services that help humanize the online experience. E-services play a critical role in the transformation of the customer’s online experience that progresses over time from a functional experience to a more personalized experience. E-service humanizes the Net by providing various customer service activities while simultaneously reducing the online firm’s operating costs. 10. Discuss the four approaches to using sustainability as an effective business positioning strategy. The four areas include: eco-efficiency, environmental cost leadership, beyond compliance leadership, and eco-branding. Eco-efficiency focuses on the concept of the “double dividend.” Companies that attempt to reduce wastes and inefficiencies within the system see positive results both financially and environmentally. Environmental cost leadership involves developing a radical innovation that will allow the company to be more environmentally friendly while maintaining cost competitiveness. Beyond compliance leadership involves companies wanting to increase their sustainability efforts, but also wanting these efforts to be acknowledged by the public. These companies often spend money on environmental certifications, such as LEEDS building certifications. The first-movers in an industry in this case have the greatest advantage. Those who take the first initiative are seen as innovative, while the rest of the companies within the industry are forced to follow suit.

Eco-branding strategies focus on the use of marketing differentiation based on the environmental attributes (e.g., organic, vegan, or fair-trade status) of products. There are three basic prerequisites that often exist for firms to successfully execute this approach: consumers must be willing to pay for the costs of ecological differentiation; reliable information about the product’s environmental performance must be readily available to the consumer; and the differentiation must be difficult to imitate by competitors.

Chapter 3 Review 1. Briefly describe how the unique service characteristics of intangibility, inseparability, heterogeneity, and perishability apply to your educational experience in your services marketing class. Intangibility means that services lack physical substance and therefore cannot be

touched or evaluated like goods. Services marketing class is an educational experience. Inseparability reflects the interconnection between service providers and their customers. The professors of services marketing classes engage in face-toface interaction with their students, who are directly involved in the educational experience. Heterogeneity pertains to the variability inherent in the service delivery process. The services marketing class has variability from semester to semester, student to student, and professor to professor. Perishability refers to the service provider’s inability to store or inventory services. Services (like services marketing class) that are not used at their appointed time cease to exist (missing class).

2. Why is the pricing of services particularly difficult in comparison with the pricing of goods? Typically, products' prices are often based on cost-plus pricing. This means that the producing firm figures the cost of producing the product and adds a markup to that figure. The challenge involved in pricing services is that there is no cost of goods sold. The primary cost of producing a service is labor.

3. What strategies have the insurance industry utilized in its attempt to minimize the effects of intangibility? Of the companies that have actively attempted to minimize the effects, have some companies done a better job than others? Please explain. Tangible clues are the physical evidence that surrounds the service. In the absence of a physical product to evaluate, consumers look for tangible clues to base evaluations. Insurance firms have attempted to minimize the effects of intangibility by using tangible clues in their advertising such as Prudential's "piece of the rock." Yes, some companies have done a better job. Answers will vary. Other uses of tangible clues include the appearance of personnel, the office decor, and the quality of paper used to produce insurance policies and company brochures.

4. Discuss the implications of having the customer involved in the production process. The customer's involvement in the service production process is an operation's nightmare. Customers influence the type of demand, the cycle of demand, and the

duration of the service production process. However, on the positive side, since service customers are part of the process they can often produce some of the service themselves, thereby, increasing the amount of service that can be provided by a single provider. Due to consumer involvement, service factories must be built with the consumer's presence in mind. Another consideration is the level of customer involvement necessary. Do customers need to be physically present throughout the experience, or just to start and stop the process, or do they just need to be mentally present. The level of involvement will impact the design of facilities as well as location decisions.

5. Discuss the reasons that centralized mass production of services is limited. The problems pertaining to mass production are twofold. First, because the service provider is directly linked to the service being produced, an individual service provider can produce only a limited supply. Hence, meeting the demand of the mass market with a single provider becomes a major challenge. The second problem directly relates to the consumer's involvement in the production process. How can a service firm market to a geographically widespread target market from a single location? The use of multi-site locations is one solution.

6. Why are standardization and quality control difficult to maintain throughout the service delivery process?

Each service organization may have several people providing the same basic service. As individuals, each employee has their own unique personality and set of skills and will likely interact with customers differently than other employees. Even when dealing with the same provider from one service encounter to another variations in the delivery process are likely to occur.

7. Which is better for consumers: (1) a customized service or (2) a standardized service? Explain. The answer depends on the needs of the consumers. Customization may provide services that meet the exact needs of the consumer, however, the price for the service is likely to be higher, the delivery process will be slower, and there is

uncertainty associated with the final outcome. On the other hand, standardization may not meet an individual's specific needs but is likely to be cheaper, delivered faster, and the uncertainty associated with the final outcome will be minimized.

8. What are the limitations associated with a service firm’s inability to maintain inventories? The primary difficulty associated with the inability to maintain service inventories is balancing supply and demand. In addition, the lack of inventories limits the firm's ability to separate production and consumption by time and space. Statistical sampling techniques that ensure quality control of goods inventories are of little use in service settings. Finally, because of no inventories, marketing and operations must work much closer together than in traditional manufacturing settings.

Chapter 13 REVIEW QUESTIONS:

1. Discuss the following types of complaints: instrumental, noninstrumental, ostensive, and reflexive. Which types of complaints are voiced the most?

2. Previous research has found that 96 percent of unhappy customers do not complain. Why is this so?

3. Which type of company is more likely to hear from unhappy customers—a company that produces goods or a company that provides services? Please explain.

4. Discuss the following types of failure outcomes: voice, exit, and retaliation.

5. Describe the basic differences between organic and mechanistic approaches to service recovery. 6. A national restaurant chain has hired you to categorize customer complaints. Discuss the basic difference between the four main failure identification categories, and provide restaurant-related examples of each.

7. Define and discuss the subclass failures associated with the implicit/explicit request failure category. 8. What is the service recovery paradox? What should managers learn from the service recovery paradox?

9. Define perceived justice. How is perceived justice used to evaluate a firm’s service recovery efforts?

10. After a customer voices a complaint to an employee or a manager, what does it mean to “close the loop”? Why is this particular step important in handling complaints?...