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Chapter 12—Services and Nonprofit Organization Marketing TRUE/FALSE 1. A barber shop is an example of a service business. Answer: True Rationale: A barber shop provides a service (haircuts), making it an example of a service business. 2. Services tend to exhibit more search qualities than do tangible goods. Answer: False Rationale: A search quality is a characteristic that can be easily assessed before purchase, and tangible goods tend to exhibit more search qualities than do intangible goods. Services exhibit more experience and credence qualities. 3. Services are considered inseparable because most services cannot be felt or touched in the same way most goods can be sensed. Answer: False Rationale: This describes the characteristic of intangibility. 4. Greta, the owner of House Mouse Cleaning Services, must be physically present when she cleans a house or office. The need for her presence as the service is performed is an example of the intangibility of services. Answer: False Rationale: The need for her presence and the customer’s presence is an example of how services are produced and consumed simultaneously (inseparability). 5. Heterogeneity of services means the quality of a service may not be consistent. Answer: True Rationale: Heterogeneity in services refers to variability in quality due to factors like human involvement, making consistent quality challenging. 6. Hotels will often offer deep discounts on weekends and during the off-season; for the same reason, airlines will adopt a similar pricing strategy during off-peak hours. These services cannot be stored, warehoused, or inventoried because they are perishable. Answer: True Rationale: Hotels and airlines use dynamic pricing strategies to adjust prices based on demand fluctuations, particularly during off-peak times, as their services are perishable and cannot be stored or inventoried like physical goods. 7. Responsiveness is the service quality component most valued by customers. Answer: False Rationale: Reliability has been found to be the component most important to consumers. 8. Karen has a gluten allergy, which means she is unable to eat certain foods. The chef at her favorite restaurant understands Karen’s situation and is always happy to modify his recipes for her when she dines there. The chef is providing assurance to Karen. Answer: False Rationale: The chef is exhibiting empathy—caring, individualized attention—to Karen. 9. The gap model of service quality identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality. Answer: True Rationale: The gap model of service quality identifies five gaps (such as knowledge gap, policy gap) that can lead to discrepancies between customer expectations and service delivery, affecting perceived service quality. 10. The only type of service processing required for a comedian entertaining at a local club is information processing. Answer: False Rationale: Comedians require mental stimulus processing. 11. The core service is the most basic benefit the consumer is buying. Answer: True Rationale: The core service is the fundamental benefit or service a consumer seeks when purchasing a product or service. 12. Most service organizations market only one specific service Answer: False Rationale: Most service organizations market more than one service. 13. Vera is designing a promotional strategy for a company that provides premium boarding services for pampered animals. Her promotions should use personal information sources and stress the tangible cues associated with the service. Answer: True Rationale: Promotional strategies for premium boarding services for pampered animals should utilize personal information sources (such as testimonials or personalized messages) and stress tangible cues (such as luxurious facilities or personalized care) to appeal to the target market's desire for high-quality service. 14. Revenue-oriented pricing focuses on maximizing the surplus of income over costs. Answer: True Rationale: Revenue-oriented pricing aims to maximize the difference between revenue and costs, ensuring a surplus of income over expenses, which aligns with maximizing profitability. 15. Many businesses have found that it is more expensive to hang on to the customers they have than to focus only on attracting new ones. Answer: False Rationale: Many businesses have found that it is more cost-effective to hang on to the customers they have than to focus only on attracting new ones. 16. Chesapeake Energy Corporation was recognized by Fortune Magazine as one of the top companies to work for. Fortune mentioned that Chesapeake Energy provides its employees many perks, including the opportunity to take free scuba-diving lessons in Chesapeake’s on-site Olympic-size pool. This example illustrates relationship marketing in action. Answer: False Rationale: Chesapeake Energy is actually practicing internal marketing. Relationship marketing is focused on customers, not employees. 17. U.S. service firms such as financial institutions and construction, engineering, and insurance companies will have a difficult time expanding to global markets because competing foreign firms possess many competitive advantages. Answer: False Rationale: These U.S. firms have the greatest potential for globalization because of their existing competitive advantages. 18. A nonprofit organization is an organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. Answer: True Rationale: Nonprofit organizations are defined by their primary goal of achieving social, educational, charitable, or other non-business-related objectives rather than maximizing profit. 19. Nonprofit organizations do not charge prices for the services they provide. Answer: False Rationale: Nonprofit organizations do charge for the services they provide, though they often use terms such as fees, donations, tuition, fares, fines, or rates. 20. Nonprofit managers do not need to worry about developing marketing strategies. Answer: False Rationale: Although nonprofit organizations have a different purpose than for-profit businesses and operate in different environments, managers of these organizations need to develop marketing strategies to bring about mutually satisfying exchanges with target markets. 21. One marketing issue unique to nonprofit organizations is that these organizations must often target those who are apathetic about or strongly opposed to receiving their services. Answer: True Rationale: Nonprofit organizations often face the unique challenge of persuading individuals who may be indifferent or even opposed to their mission to support or utilize their services. 22. Nonprofit organizations may or may not require special facilities for distribution of their services. Answer: True Rationale: Nonprofit organizations may require special facilities for distributing their services, depending on the nature of the services they provide and the target populations they serve. 23. The advertising budgets of most nonprofits are too small to pay for the running of public service advertisements to promote their programs, activities, or services. Answer: False Rationale: The sponsor of a public service advertisement does not pay for the time or space. Instead, it is donated by the medium. MULTIPLE CHOICE 1. A(n) _____ is the result of applying human or mechanical efforts to people or objects. A. application processor B. profit intermediary C. tangible product D. service E. nonprofit organization Answer: D Rationale: This is the definition of a service. 2. “Girls Just Wanna Have Funds” is a Washington, DC, support group that consists mostly of young women who offer tips on budgeting and debt relief. As they state on their Web site, their goal is to help women break financial ceilings “one stiletto at a time.” Girls Just Wanna Have Funds is providing a _____ that is helpful to women who want to be financially savvy. A. synergy B. tangible resource C. tangible product D. service E. good Answer: D Rationale: A service is the result of applying human or mechanical efforts to people or objects. 3. Xoom.com is a San Francisco-based online money transfer company that provides consumer remittance services. With the Xoom bank deposit service, consumers can send money directly to bank accounts in several countries around the world. Xoom.com would be classified as a: A. good. B. tangible resource. C. tangible product. D. service. E. nonprofit organization. Answer: D Rationale: A service is the result of applying human or mechanical efforts to people or objects. 4. All of the following are unique characteristics that distinguish services from goods EXCEPT: A. intangible. B. inseparable. C. searchable. D. heterogeneous. E. perishable. Answer: C Rationale: Services are intangible, inseparable, heterogeneous, and perishable. 5. A service cannot be touched, seen, tasted, heard, or felt in the same manner in which goods can be sensed and, therefore, is referred to as being: A. impervious. B. extraneous. C. synergistic. D. perishable. E. intangible. Answer: E Rationale: The basic difference between services and goods is that services are intangible performances. 6. A(n) _____ is a characteristic that can be easily assessed prior to purchase, such as the softness of a mattress or the color of curtains. A. search quality B. intangible attribute C. experience quality D. credence quality E. heterogeneity feature Answer: A Rationale: Search quality is a characteristic that can be easily assessed before purchase. 7. Maribeth and Asher are trying to think of someplace to take their kids this weekend. Asher thinks it might be fun to take the kids to Coco Key, an indoor waterpark located in a nearby city. However, since no one in the family has ever been to Coco Key before, they will be unable to assess the _____ of the waterpark until they actually visit. A. tangible attribute B. experience quality C. creative quality D. credence quality E. heterogeneity feature Answer: B Rationale: An experience quality is a characteristic that can only be assessed after use. 8. “Girls Just Wanna Have Funds” is a Washington, DC, support group that consists mostly of young women who offer tips on budgeting and debt relief. Since you cannot evaluate the quality of the financial advice until after you have received it, this is an example of the _____ characteristic of service. A. reliability B. heterogeneous satisfaction C. search quality D. temporal quality E. experience quality Answer: E Rationale: Experience quality is described as a characteristic that can be assessed after use. 9. A characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience is referred to as _____ quality. A. search B. experience C. credence D. abstract E. inert Answer: C Rationale: Medical and consulting services are examples of services that exhibit credence qualities. 10. Alec had his gall bladder removed, but he was unconscious during the operation. In fact, even though he has an incision, he really has no way of knowing if the service was actually performed even after it was allegedly performed. That is because medical services such as this exhibit _____ qualities. A. credence B. perishable C. experience D. search E. homogeneous Answer: A Rationale: A credence quality is a characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience. 11. Which of the following services would be most likely to exhibit strong credence qualities? A. A math tutorial service B. The repair of a leaky drain C. The preparation of a dead body for burial D. Tax return preparation E. A landscaping service that mows lawns Answer: C Rationale: A credence quality is a characteristic that cannot easily be assessed even after purchase and experience. 12. Which unique characteristic of services means that consumers must be present during the production? A. Intangibility B. Inseparability C. Heterogeneity D. Perishability E. Connectivity Answer: B Rationale: Inseparability is the inability of the production and consumption of a service to be separated. 13. Auto repair, manicures, and landscaping are all services that are produced and consumed at the same time. All of these services exhibit the service characteristic of: A. inseparability. B. intangibility. C. heterogeneity. D. perishability. E. variability. Answer: A Rationale: Inseparability is the inability of the production and consumption of a service to be separated. 14. It is difficult for most of us to talk about mistakes we have made. Unfortunately, for organizations like Consumer Credit Counseling to help you work through your financial issues, you must be willing to honestly discuss your financial condition. In other words, for these organizations to help, you must be actually involved in the process of developing your financial plan, which points to the _____ nature of services. A. intangible B. inseparable C. heterogeneous D. perishable E. flexible Answer: B Rationale: Inseparability is when services or goods are produced and consumed at the same time. 15. Which unique characteristic of services is the variability of the inputs and outputs of services, which causes services to tend to be less standardized and less uniform than goods? A. Intangibility B. Inseparability C. Heterogeneity D. Perishability E. Flexibility Answer: C Rationale: Because services have greater heterogeneity, or variability of inputs and outputs, they tend to be less standardized. 16. It is difficult to achieve consistency and standardization of services because of which service characteristic? A. Customization B. Simultaneous production and consumption C. Intangibility D. Perishability E. Heterogeneity Answer: E Rationale: Heterogeneity means that a service tends to be less standardized and uniform than goods. 17. A reading service for the visually impaired requires each reader applicant to prepare and submit a one-hour interview tape of material chosen by the service to determine whether the reader has pleasing vocal characteristics and is accent free so that it is not necessary to use the same reader every time. The reading service is trying to limit problems associated with the service characteristic of: A. tangibility. B. credence quality. C. heterogeneity. D. simultaneous production and consumption. E. flexibility. Answer: C Rationale: Heterogeneity means that a service tends to be less standardized and uniform than goods. 18. The consistency and reliability of a service can be increased by: A. making sure that consumers are present during the production of the service. B. eliminating credence quality. C. standardization and training, D. Simultaneous production and consumption E. raising prices. Answer: C Rationale: Mechanization can also increase consistency and reliability. 19. Due to service _____, services cannot be stored, warehoused, or inventoried. A. tangibility B. variability C. intangibility D. perishability E. heterogeneity Answer: D Rationale: Perishability is the inability of services to be stored, warehoused, or inventoried. 20. David and Kathy like to take their young son, Chaz, to Moe’s for lunch after church on Sundays. While they like to eat at Moe’s at any time, Sunday is particularly good because it’s “kids-eat-free” day at Moe’s southwestern grill. Until Moe’s began the reduced pricing program, Sundays were very slow. Now it is one of the busiest days of the week. This price reduction was a way to contend with the service characteristic of: A. variability. B. perishability. C. intangibility. D. inseparability. E. simultaneous production and consumption. Answer: B Rationale: Differential pricing tries to even out demand. This is important because services cannot be stored, inventoried, or warehoused. 21. One of the reasons consumers can purchase cheap flights or hotel rooms on Web sites such as Expedia.com and Hotels.com is due to the fact that airlines cannot sell the seat on a specific flight after the plane takes off and hotels cannot recoup the revenue from that room for that night once the night passes. Which unique characteristic of services does this illustrate? A. Intangibility B. Inseparability C. Perishability D. Simultaneous production and consumption E. Variability Answer: C Rationale: Services cannot be stored, inventoried, or warehoused. 22. All of the following are service components customers use to evaluate service quality EXCEPT: A. validity. B. empathy. C. assurance. D. responsiveness. E. reliability. Answer: A Rationale: Customers evaluate service quality through five components: reliability, responsiveness, assurance, empathy, and tangibles. 23. Which component of a service is the ability to perform the service dependably, accurately, and consistently? A. Responsiveness B. Reliability C. Assurance D. Empathy E. Tangibles Answer: B Rationale: Reliability is performing the service right the first time. 24. Canyons ski resort is so positive that guests will enjoy their visit that they offer a money-back guarantee for special lift tickets purchased at the resort Web site. Canyons’ “You’ll-Love-It-Or-It’s-Free-Guarantee” provides consumers which of the following service quality aspects? A. Tangibility B. Responsiveness C. Sympathy D. Responsibility E. Reliability Answer: E Rationale: Reliability is the ability to perform the service dependably, accurately, and consistently. 25. Virtual Bellhop is a company that ships awkward sporting goods to vacation destinations so its customers do not have to worry about lugging them through airports or having them damaged in transit. Thus far, its record for getting the sporting equipment to the correct destination for the vacationer is perfect. This indicates that the company excels at which component of service quality? A. Tangibles B. Empathy C. Reliability D. Flexibility E. Assurance Answer: C Rationale: Reliability is the ability to perform the service dependably and consistently. 26. Which component of service quality represents the ability to provide prompt service? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: B Rationale: This describes responsiveness. 27. Jonathon had a problem when submitting an exam in his online marketing class and he received a score of zero, so he sent an e-mail to the professor explaining his problem. He was really worried because the exam was due that evening, and he was very pleased when the professor replied within an hour telling him that he scored a 90 on the exam. The professor’s prompt reply to his inquiry is an example of which service quality component? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: B Rationale: Responsiveness is the ability to provide prompt service. 28. Which service quality component is the knowledge and courtesy of employees and their ability to convey trust? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: C Rationale: This is a description of assurance. Skilled employees treat customers with respect and make customers feel that they can trust the firm to exemplify assurance. 29. Buying a car through eBay may result in a low price, but how do you know you will be getting a good car? One nice feature provided by eBay is the “feedback rating” that provides ratings and comments from people who have made purchases from that seller before. Which service quality component does the feedback rating address? A. Empathy B. Assurance C. Tangibles D. Flexibility E. Responsiveness Answer: B Rationale: Assurance refers to the knowledge and courtesy of the employees and their ability to convey trust. Customer ratings would provide this information. 30. Service personnel who exhibit caring, individualized attention to customers are addressing which service quality component? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: D Rationale: Empathy is providing caring, individualized attention to customers. 31. Emily’s nephew is on the autism spectrum, and she has read stories on the Internet about how vaccines supposedly cause autism. Though Emily knows this theory has been debunked and that vaccines are safe, she is surprised that she feels a bit worried when she takes her own child into the pediatrician for her shots. Emily is glad her pediatrician does not think her fears are silly and will answer all of her questions without making her feel stupid for asking them. By which of the following components of service quality is Emily most likely to rate her pediatrician? A. Empathy B. Assurance C. Tangibles D. Reliability E. Responsiveness Answer: A Rationale: Empathy refers to providing caring and individualized attention to customers. 32. The physical evidence of a service, including the physical facilities, tools, and equipment used to provide the service, represents which component of service quality? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: E Rationale: Tangibles are the physical evidence of the service. 33. James recently went to a new health clinic because he had a sore throat that wouldn’t go away. He was not familiar with this clinic and was a bit surprised when the doctor came in and was wearing blue jeans, a flannel shirt, and tennis shoes. The doctor and nurse took proper care of James, but it seemed strange to him that the doctor was dressed that way. Which component of service quality does this illustrate? A. Reliability B. Responsiveness C. Assurance D. Empathy E. Tangibles Answer: E Rationale: Tangibles are the physical evidence of the service. 34. The model of service quality that identifies five disparities that can cause problems in service delivery and influence customer evaluations of service quality is referred to as the _____ model. A. gap B. theory of reasoned action C. attribution D. dual-coding E. Fishbein Answer: A Rationale: The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality. 35. Starbucks management has been trying to refocus on the things that originally made the company so successful. For example, Starbucks stores across the United States recently shut down for a short period of time for retraining, and the company has worked to make sure you can smell the fresh ground coffee aroma when you enter the store. However, when questioned, consumers tend to focus on the need for pricing incentives such as a frequent purchasing program. According to the _____, there may be a difference between what customers want and what Starbucks management thinks customers want. A. gap model of service quality B. service pyramid C. four dimensions of service quality D. service paradigm E. service delineation matrix Answer: A Rationale: The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluation of service quality. 36. First Community Bank spent a considerable amount of money updating its lobby with plush sofas, a large-screen television, and a refreshment counter with popcorn and soft drinks. However, very few customers spend time in the lobby. In fact, most customers want to be in and out of the bank, with their financial transaction completed as quickly as possible. The gap model of service quality would suggest that a gap exists between: A. the service quality specifications and the service that is actually provided. B. what the company provides and what the customer is told it provides. C. the service customers receive and the service they want. D. what customers want and what management thinks customers want. E. what management thinks customers want and the quality specifications management develops to provide the service. Answer: D Rationale: Management thinks people want to spend time in a really nice bank lobby, but consumers seem much more concerned with timely service, which is characteristic of gap 1 in the gap model. Thus, what the customers really want seems different from what management thinks they want. 37. To improve its friendliness, the First National Bank hired Joy Taylor as a greeter. Joy’s job is to sit at a desk near the front lobby and greet customers as they enter with a warm, friendly smile along with a “Good Morning” or “Good Afternoon.” Unfortunately, Joy is also required to answer the bank’s main telephone line. Since she spends most of her day on the telephone, Joy rarely gets to flash her smile or greet anyone who is entering the bank. In fact, Joy is on the phone so much that she doesn’t really even seem friendly. This is an example of a gap between: A. the service quality specifications and the service that is actually provided. B. what the company provides and what the customer is told it provides. C. the service customers receive and the service they want. D. what customers want and what management thinks customers want. E. what management thinks customers want and the quality specifications management develops to provide the service. Answer: A Rationale: The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluation of service quality. This is an example of gap 3––the gap between the service quality specification and the service that is actually provided. 38. Purchasing your clothes online can be fun, allowing you to shop from companies around the world without leaving your home. You can also often get great prices on the items you purchase. However, you could get stuck with a product that doesn’t look nearly as nice in reality as it does on your computer screen. Lands’ End takes this concern away with its “Guaranteed Period” promise. Lands’ End will happily return your purchase price on any item you purchase for any reason. If Lands’ End ever failed to follow through with this promise, it would represent a gap between: A. what management thinks customers want and the quality specifications that management develops to provide the service. B. what the company tells the customer it provides and what is actually provided. C. service quality specifications and employee training. D. what customers want and what management thinks customers want. E. none of these. Answer: B Rationale: This is an example of gap 4––the gap between what the company provides and what the customer is told it provides. 39. If a customer expects to wait three hours for an auto repair but the repair is finished just one hour later, the customer’s evaluation of service quality will be high. However, a two day wait would result in a lower evaluation. The two day wait would illustrate a gap between: A. service quality specifications and the service that is actually provided. B. the service customers receive and the service they want. C. what the company provides and what the customer is told it provides. D. what customers want and what management thinks customers want. E. what management thinks customers want and the quality specifications management develops to provide it. Answer: B Rationale: Gap 5 is the gap between the service that customers receive and the service they want. 40. All of the following are types of service processing that can occur EXCEPT: A. people processing. B. product processing. C. possession processing. D. information processing. E. mental stimulus processing. Answer: B Rationale: Service processes can be placed into one of four categories: people processing, possession processing, mental stimulus processing, and information processing. 41. Which category of service processing takes place when the service is directed at a customer? A. People processing B. Possessions processing C. Information processing D. Mechanical processing E. Personal processing Answer: A Rationale: This is the definition of people processing. Text examples are transportation services and health care. 42. Trina is a physical fitness trainer who tries to get to know her clients and their specific fitness goals. Trina understands that she is in the _____ processing business. A. people B. mechanical C. possession D. mental E. information Answer: A Rationale: People processing takes place when the service is directed at a customer. 43. Which type of service processing occurs when the service is directed at customers’ physical possessions, such as lawn care, dry-cleaning, and veterinary services? A. People processing B. Possession processing C. Mental stimulus processing D. Information processing E. Tangible processing Answer: B Rationale: This is a description of possession processing. 44. Which of the following services is an example of possession processing? A. A theatrical performance B. An x-ray of a broken bone C. An advertising agency D. Marriage counseling E. Heating system repair Answer: E Rationale: Possessions processing occurs when the service is directed to the customers’ physical possessions. 45. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. Which category of service processing does TeamBuilds offer? A. Possession processing B. Information processing C. Mental stimulus processing D. People processing E. Homogeneous processing Answer: C Rationale: Mental stimulus processing refers to services directed at people’s minds. 46. Which of the following services is an example of mental stimulus processing? A. Taxi cab service B. Insurance C. A professional tennis match D. Veterinarian care E. A haircut Answer: C Rationale: Mental stimulus processing refers to services directed at people’s minds. 47. Which type of service processing uses technology or brainpower directed at customer’s assets? A. People processing B. Possession processing C. Mental stimulus processing D. Information processing E. Technology processing Answer: D Rationale: This is the definition of the information processing category of service processes. 48. Which of the following services is an example of information processing? A. Drafting a will B. Having a prescription filled C. Getting a down comforter dry cleaned D. Taking a class at the local community college E. Ordering a pizza for delivery Answer: A Rationale: Information processing describes services that use brainpower directed at a customer’s assets. 49. The most basic benefit the consumer is buying in a service is referred to as the: A. primary service B. inherent service C. core service D. tangible service E. complete service Answer: C Rationale: This is the definition of core service. 50. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. TeamBuilds’ _____ service is improved work team relationships. A. primary B. core C. niche D. supplementary E. foundation Answer: B Rationale: Core service is the most basic benefit the consumer is buying. 51. Western Union is in the business of providing a medium for international money transfers. Through the services of Western Union, a Mexican working in the United States can transfer a portion of his or her earnings to family members still living in Mexico. The wire transfer of funds is the _____ service the company provides. A. supplementary B. benchmarked C. core D. primary E. fundamental Answer: C Rationale: Core service is the most basic benefit the consumer is buying. 52. A group of services that support or enhance the core service is called: A. secondary services B. peripheral services C. additional services D. supplementary services E. complementary services Answer: D Rationale: This is the definition of supplementary services. 53. Western Union is in the business of providing a medium for international money transfers. Through the services of Western Union, a Mexican working in the United States can transfer a portion of his or her earnings to family members still living in Mexico. The company is now planning to move into areas traditionally handled by banks, such as offering its customers checking accounts and loans. If it does follow through and provide these additional services, Western Union will exemplify _____ services. A. complementary B. secondary C. peripheral D. supplementary E. additional Answer: D Rationale: Supplementary services are a group of services that support or enhance the core service. 54. _____ is the strategy that uses technology to deliver customized services on a mass basis. A. Mass standardization B. Aggregated service C. Technological processing D. Mass customization E. Aggregated marketing Answer: D Rationale: Mass customization can deliver customized services on a mass basis, which results in giving each customer whatever he or she asks for. 55. At the My M&M’s Web site, customers can design their own versions of the famous candy. Customers choose from 25 M&M'S colors; write a message, add clip-art, or even a face to each M&M, and select specific packaging. This is an example of: A. a cooperative service. B. mass customization. C. aggregated standardization. D. a market development strategy. E. mental stimulus processing. Answer: B Rationale: Mass customization is a strategy that uses technology to deliver customized service on a mass basis. 56. TruGreen offers lawn care, shrub care, carpet cleaning, and industrial lawn services. These different services combine to make TruGreen’s: A. service mix. B. standardization strategy. C. component services. D. customized services. E. distribution strategy. Answer: A Rationale: Each part of the service mix should make a different contribution to achieving the firm’s goals. 57. After years of expansion, Starbucks recently closed 600 of its poorer performing stores. Many of the stores closed were near other Starbucks locations. In those areas, management felt that the company had too many outlets, which was boosting the company’s cost unnecessarily. Decisions concerning the number of outlets are a part of the _____ strategy of service organizations. A. distribution B. promotion C. production D. product E. demand/supply Answer: A Rationale: Distribution strategies for service organizations focus on convenience, number of outlets, direct versus indirect distribution, location, and scheduling. 58. All of the following are key factors in the distribution strategy for services EXCEPT: A. customization B. convenience for customers C. number of intermediaries and outlets D. scheduling of service deliveries E. location Answer: A Rationale: Customization is a key factor in the product component of the service marketing mix. 59. All of the following are recommended promotional strategies for services EXCEPT: A. concentrating on franchising B. stressing tangible cues C. using personal information sources D. creating a strong organizational image E. engaging in post purchase communications Answer: A Rationale: Franchising is a distribution decision. 60. The _____ of a service most clearly reveals the relationship between its target market strategy and its distribution strategy. A. convenience B. location C. customization D. promotion E. number of intermediaries and outlets Answer: A Rationale: The location of a service most clearly reveals the relationship between its target market strategy and its distribution strategy. 61. Sir Paul McCartney and Alicia Silverstone are two of the many celebrities serving as spokespeople for the animal rights group People for the Ethical Treatment of Animals (PETA). Both are committed to vegetarianism. In terms of promotion strategy, they will be considered a(n) _____ information source. A. cue control B. non-source-controlled C. impersonal D. remote E. personal Answer: E Rationale: A personal information source is someone consumers are familiar with, such as celebrities. 62. Allstate Insurance says “You’re in good hands with Allstate,” and Prudential Life Insurance shows a rock in its commercials because it wants to convey stability. These companies are using what type of promotion strategy? A. Stressing tangible cues B. Stressing homogeneity C. Using personal information sources D. Providing packaging cues E. Communicating service integration signals Answer: A Rationale: A tangible cue is a concrete symbol, like hands or a rock, of the service offering. 63. The three categories of pricing objectives for services are: A. sales-, quality-, and location oriented B. quality-, value-, and consumer oriented C. revenue-, operations-, and patronage oriented D. turnover-, volume-, and capacity oriented E. equity-, cost-, and revenue oriented Answer: C Rationale: The three categories of pricing strategies are revenue-, operations-, and patronage-oriented pricing. 64. A focus on maximizing the surplus of income over costs is a(n) _____ pricing objective for service firms. A. revenue-oriented B. operations-oriented C. market-share–oriented D. patronage-oriented E. service-quality Answer: A Rationale: This is a description of a revenue-oriented pricing objective. 65. Which of the following is an example of post purchase communication? A. An airline hires an actor to film a series of humorous commercials touting the airline’s service. B. An insurance company designs a new “umbrella” logo to indicate that its customers are well-protected by coverage. C. A fast-food restaurant issues standardized uniforms for all its employees. D. A hotel sends an email survey to a Henri a week after his stay, asking him to comment on the quality of the service he received. E. An income tax preparer offers a 20% discount for any customers who use the service in January. Answer: D Rationale: Post purchase communication refers to the follow-up activities that a service firm might engage in after a customer transaction. 66. Determining costs can be extremely difficult for a service provider who has adopted a(n) _____ pricing objective and may limit the usefulness of the objective. A. market-share-oriented B. operations-oriented C. revenue-oriented D. patronage-oriented E. break-even Answer: C Rationale: Revenue-oriented objectives require calculations of income and costs, which can be difficult for many services. 67. Which service pricing objective seeks to match supply and demand by varying prices? A. Revenue oriented B. Operations oriented C. Patronage oriented D. Externally oriented E. Equilibrium oriented Answer: B Rationale: Operations-oriented pricing seeks to match supply and demand by varying prices (e.g., matching hotel demand to the number of available rooms). 68. Monday and Tuesday nights are traditionally slow nights in the restaurant business. So LaRosa’s Italian Restaurant offers “all-you-can-eat spaghetti night” on Mondays and Tuesdays. For the price of a regular spaghetti dinner, customers can eat all the spaghetti they want on those nights. Because it is focusing on coordinating supply and demand by varying prices, the restaurant is using a(n) _____ pricing objective for service firms. A. revenue-oriented B. operations-oriented C. image-focused D. patronage-oriented E. equity-oriented Answer: B Rationale: A focus on matching supply and demand by varying prices to ensure maximum use of productive capacity at any specific point in time is an operations-oriented pricing objective for service firms. 69. A focus on maximizing the number of customers using a service is a(n) _____ pricing objective for service firms. A. maximization of demand B. patronage-oriented C. profitability-oriented D. operations-oriented E. revenue-oriented Answer: B Rationale: This is the definition of patronage-oriented pricing. 70. A continuing problem for most Minor League Baseball (MiLB) teams is low attendance. Event and venue sponsors want to see fans in the stadiums, and the players appreciate fan support. Given this information, which pricing strategy would you recommend MiLB teams use? A. Operations-oriented pricing B. Peak profitability pricing C. Patronage-oriented pricing D. Supply–demand pricing E. Revenue-oriented pricing Answer: C Rationale: Patronage-oriented pricing tries to maximize the number of customers using the service. 71. Most movie theaters offer discount ticket prices to students and senior citizens. This illustrates the _____ pricing objective. A. subsidized B. operations-oriented C. profitability-oriented D. service quality E. patronage-oriented Answer: E Rationale: A focus on maximizing the number of customers using a service is a patronage-oriented pricing objective for service firms. 72. Any one-at-a-time sale, such as a movie theater ticket, a meal at a restaurant, or public transportation fare, is called a(n) _____ transaction. A. patronage B. interactive C. distinct D. affiliation E. discrete Answer: E Rationale: This defines a discrete transaction. 73. Because many services involve a process of continuous interaction between the service organization and the customer, _____ marketing is an important strategy. A. interactive B. relationship C. patronage D. nonprofit E. affiliation Answer: B Rationale: Relationship marketing is a means of attracting, developing, and retaining customer relationships. 74. One of the main responsibilities of sport marketers is to keep their loyal customers as heavy users and escalate lower-level users into loyal customers. An effective tool for accomplishing this goal would be _____ marketing. A. interactive B. relationship C. patronage D. nonprofit E. affiliation Answer: B Rationale: Relationship marketing involves ongoing interaction between the service provider and the customer. It is a means of attracting, developing, and retaining customer loyalty. 75. At which level of relationship marketing does the firm only use pricing incentives to encourage customers to continue doing business with it? A. Level 1 B. Level 2 C. Level 3 D. Level 4 E. Level 5 Answer: A Rationale: Level 1 using pricing incentives such as frequent-flyer programs. 76. The level of relationship marketing that is least likely to be effective in the long term because its advantage is easily imitated by other firms is based on: A. personal communications B. social bonds C. service delivery heuristics D. pricing incentives E. structural bonds Answer: D Rationale: This level uses pricing incentives that can easily be imitated by other firms. 77. Mountain Express is a company that provides grocery delivery service to several small communities in Idaho. The company gives a 2 percent discount on all food orders to customers after they have used the service ten times. An additional percentage discount is offered for each additional 15 orders up to a maximum of 8 percent. The relationship marketing strategy used by Mountain Express is based on: A. following service delivery paradigms. B. building social bonds. C. building financial bonds. D. opening personal communication channels. E. creating structural bonds. Answer: C Rationale: Building financial bonds includes the use of price incentives. 78. Which level of relationship marketing uses pricing incentives but also seeks to build social bonds with customers? A. Level 1 B. Level 2 C. Primary level D. Secondary level E. Supplemental level Answer: B Rationale: Level 2 designs services to meet customer needs and includes financial incentives but also seeks to build social bonds with customers. 79. A management consulting business stays in touch with its business customers through phone calls and greeting cards. It periodically sends out needs-assessment questionnaires and designs new services to meet the needs revealed in these surveys. This is an example of relationship marketing based on: A. financial bonds B. social bonds C. service delivery D. patronage bonds E. structural bonds Answer: B Rationale: Building social bonds includes staying in touch with customers, learning about their needs, and designing services to meet those needs. 80. Building value-added services that are not readily available from other firms into the delivery system defines relationship marketing based on the creation of: A. financial bonds B. social bonds C. service delivery paradigms D. personal communication channels E. structural bonds Answer: E Rationale: This is level 3 of relationship marketing and includes the financial and social bonds from previous levels but adds value-added services to create structural bonds. 81. Hyatt Regency’s Platinum Card Program allows members to bypass any line at the check-in desk and get immediate check-in service. In this example, _____ are developed by offering value-added services that are not readily available from other hotel chains. A. price incentives B. social bonds C. service delivery paradigms D. personal communication channels E. structural bonds Answer: E Rationale: This example is similar to the example in the text. 82. Relationship marketing programs that are based on _____ bonds have the strongest potential for sustaining long-term relationships with customers. A. financial and individual B. social and structural C. financial, social, and structural D. financial and patronage E. financial and structural Answer: C Rationale: Level 3 marketing programs, which use all three components, are the strongest relationship marketing programs. 83. Treating employees as customers and developing systems and benefits that satisfy their needs is known as _____ marketing. A. organizational quality B. relationship C. internal D. job-faceted E. job-satisfaction Answer: C Rationale: This is the definition of internal marketing. 84. Which of the following is not an example of a program that companies design and institute in order to satisfy its employees? A. On-site day care B. Transportation services C. Flextime D. Concierge services E. Work from home Answer: A Rationale: Many companies design programs in order to retain satisfied employees. Providing transportation to and from work is not an example given in the text. 85. Which country is the world’s largest exporter of services? A. Germany B. Japan C. The United States D. China E. Canada Answer: C Rationale: The United States is the leading exporter of services, but competition in international services is increasing rapidly. 86. To be successful in the global marketplace, service firms must first: A. develop pricing incentives to encourage customers to begin doing business with them. B. design marketing mix elements that account for each country’s unique environment. C. hire employees who are familiar with the local culture. D. determine the nature of their core product. E. build strong social bonds with their foreign customers. Answer: D Rationale: Determining the nature of the core product is the first task of a service firm that hopes to succeed in the global marketplace 87. A _____ seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment. A. nonprofit organization B. synergistic entity C. company with no equity D. service provider E. patronage-oriented organization Answer: A Rationale: This is the definition of a nonprofit organization. 88. People for the Ethical Treatment of Animals (PETA) is the largest animal rights organization in the world. PETA works for better treatment of animals instead of achieving profits, market share, or return on investment. PETA is an example of a: A. patronage-oriented organization B. synergistic entity C. company with no equity D. service provider E. nonprofit organization Answer: E Rationale: A nonprofit organization seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment. 89. Most nonprofit organizations perform all of the following marketing activities EXCEPT: A. identify the customers they wish to serve or attract B. develop, manage, and eliminate programs and services C. decide on prices to charge D. schedule events or programs E. Most nonprofit organizations perform all of the above. Answer: E Rationale: Most nonprofit organizations perform all of these activities. Nonprofits usually charge for their services, though they often use other terms, such as fees, donations, tuition, fares, fines, or rates, rather than prices. They also often refer to their customers as clients, members, or another similar term. 90. The predominant form of nonprofit organization in the United States is: A. farms B. arts museums and programs C. private-sector volunteer organizations D. social service firms E. government Answer: E Rationale: The cost of government (i.e., taxes) is the biggest single item in the American family budget. 91. All of the following are examples of nonprofit organizations EXCEPT: A. GEICO, an insurance company. B. the Muscular Dystrophy Association. C. the Make-a-Wish Foundation. D. Kiwanis International, a service organization. E. the United Auto Workers, a labor union. Answer: A Rationale: GEICO is a for-profit business. 92. _____ refers to the effort of nonprofit organizations to bring about mutually satisfying exchanges with their target markets. A. Autonomous marketing B. Public affairs marketing C. Social targeting D. Social marketing E. Nonprofit organization marketing Answer: E Rationale: This is the definition of nonprofit organization marketing. 93. Habitat for Humanity renovates vacant houses and sells them at no-interest mortgage rates to low-income home buyers. The organization relies on volunteers to provide the labor and funding for its renovations. Habitat for Humanity is best described as a(n): A. image-oriented organization B. for-profit organization C. nonprofit organization D. service branch E. source-based organization Answer: C Rationale: A nonprofit organization exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. 94. Nonprofit organizations face a unique challenge because the target market of the nonprofit organization is often: A. the community where it is located B. the people who provide the funding C. a paid administrator D. apathetic or strongly opposed individuals E. the government Answer: D Rationale: The target market for many nonprofit services is often apathetic, disinterested, or opposed individuals who nonetheless may need the service. Alternatives A, B, and C are as likely to be targeted by for-profits as nonprofits. 95. Many nonprofit organizations are pressured or required to serve the maximum number of people by targeting the average user, which pressures them to adopt which type of targeting strategy? A. Niche B. Undifferentiated C. Multi-segmented D. Uniform E. Unidimensional Answer: B Rationale: Undifferentiated targeting strategies focus on average users. 96. If a benefit is indirect to the customer, the marketer may find a challenge in promoting a product with little: A. benefit complexity B. feature charisma C. benefit strength D. personalization E. benefit exchange Answer: C Rationale: The benefit strength of many nonprofit offerings is quite weak or indirect. 97. Gifts in Kind International is a nonprofit organization that gathers new and used merchandise and distributes it to charities nationwide. Traditional promotional tools may be inadequate to motivate its target markets because of: A. nonprofit product volunteer policies B. the absence of consumer involvement C. lack of prices for the products D. direct distribution E. infrequent use of target markets Answer: B Rationale: Involvement may range from extremely high (join the military, stop smoking) to low (prevent forest fires, don’t litter), which is a much wider range than consumer products usually experience. 98. Susan G. Komen for the Cure is the largest breast cancer organization in the United States. Komen’s annual Race for the Cure series of 5K runs and fitness walks are organized to raise funds for the organization as well as to raise public awareness of the disease. Komen’s Race for the Cure is an example of a _____ strategy. A. target market B. distribution C. product D. promotion E. direct marketing Answer: D Rationale: The organization is using runners to promote its message. 99. _____ is an announcement in mass media for which no charge is made and which promotes programs, activities, or services of federal, state, or local governments or the programs, activities, or services of nonprofit organizations. A. Non-sponsored advertising B. Public service advertising C. Societal marketing D. Cause-related marketing E. Social advertising Answer: B Rationale: Unlike a commercial advertiser, the sponsor of the public service advertisement does not pay for the time or space. 100. The Monroe Job Training for the Disabled program wants to notify the community about its upcoming rummage sale. As an experienced marketer and director of the program, you plan to visit several local radio and televisions stations to request: A. cooperative advertising B. non-sponsored advertising C. primary advertising D. public service advertising E. nonprofit advertising Answer: D Rationale: An announcement in mass media for which no charge is made and which promotes programs, activities, or services of nonprofit organizations is called public service advertising. 101. In a nonprofit organization, _____ are often concerned with partially or fully defraying costs rather than achieving a profit. A. nonfiscal costs B. pricing objectives C. cause-related goals D. equity earnings E. liquidity fees Answer: B Rationale: In nonprofit organizations, pricing objectives are concerned with partially or fully defraying costs and are not focused on achieving a profit like they are in the profit sector. 102. In many nonprofit situations, the consumer is not charged a tangible price yet must absorb time costs, embarrassment costs, or effort costs. These costs are called the organization’s: A. liquidity fees B. financial costs C. fiscal prices D. nonfinancial prices E. retained earnings Answer: D Rationale: The importance of those costs is illustrated by the large number of eligible citizens who do not take advantage of so-called free services for the poor. 103. All of the following are key characteristics distinguishing the pricing decisions of nonprofit organizations from those of the profit sector EXCEPT: A. separation between payers and users B. nonfinancial prices C. indirect payment D. cost allocation E. below-cost pricing Answer: D Rationale: A fifth characteristic is pricing objectives. Boutique Hotels In an industry where guests are tired of cookie-cutter hotels, some consumers are looking for personalized service, which can be found in boutique hotels. Boutique hotels cater to their guests’ sense of their personal image as being discriminating, more sophisticated, and more hip. Frequently, these guests don’t want to be where the crowds are. This is a small but growing market niche. There are no generally recognized rules for boutique hotels, but they tend to be small and service oriented, with high-style decor and top-notch restaurants. Employees are called cast members. Amenities include cordless phones, DVR players hooked up to HD televisions, Aveda brand bath and hair products, and down comforters and pillows. 104. Refer to Boutique Hotels. The service provided by employees at boutique hotels cannot be touched, seen, or felt in the same manner as the hair and bath products and can be described as: A. unknowable B. tangible C. intangible D. credible E. incomprehensible Answer: C Rationale: Services are intangible because they cannot be touched, seen, or felt in the same manner as goods. 105. Refer to Boutique Hotels. To evaluate the quality provided by boutique hotels, customers can assess the quality only after staying. This is which quality characteristic? A. experience B. relational C. credence D. search E. synergistic Answer: A Rationale: An experience quality is a characteristic that can be assessed only after use. 106. Refer to Boutique Hotels. Since boutique hotels are typically independently owned and/or part of small chains, people who seek out boutique hotels cannot be sure of what type of amenities or specific services they will be provided. In other words, the services provided by boutique hotels tend to be relatively high in: A. instability B. inseparability C. intangibility D. heterogeneity E. perishability Answer: D Rationale: There is no way to standardize the services offered, and in fact, one of the benefits of boutique hotels is the uniqueness of their offerings. 107. Refer to Boutique Hotels. When a guest asks an employee for directions to a local gallery or museum, the service received cannot be stored or warehoused. This service, therefore, is characterized as: A. inseparable B. perishable C. intangible D. unstable E. homogeneous Answer: B Rationale: Services cannot be stored, warehoused, or inventoried and, therefore, are perishable. 108. Refer to Boutique Hotels. Which type of processing occurs most often at a hotel that wants to provide personalized service? A. People processing B. Possession processing C. Information processing D. Equipment processing E. Supplementary processing Answer: A Rationale: People processing takes place when the service is directed at a customer. 109. Refer to Boutique Hotels. Boutique hotels encourage employees to develop personal relationships with guests. The hotels offer value-added services that are not available at traditional hotels. At which level of relationship marketing are these hotels operating? A. First B. Second C. Third D. Fourth E. Fifth Answer: C Rationale: The hotels are operating at the third level of relationship marketing, which involves creating value-added service not available elsewhere. 110. Refer to Boutique Hotels. Boutique hotels not only call their employees cast members, but they compete for their talent, provide them with all the training needed, stress teamwork, and give employees freedom to make decisions. In order to provide the level of service guests require, boutique hotels need to engage in _____ marketing. A. interactive B. relationship C. internal D. nonprofit E. affiliation Answer: C Rationale: Internal marketing is providing the employees with the desire and the ability to offer superior service. Cincinnati Museum Center The Cincinnati Museum Center is home to the Cincinnati History Museum, the Duke Energy Children’s Museum, and the Museum of Natural History and Science. The Cincinnati History Museum displays materials and related aspects of the history of Cincinnati and the surrounding region. Costumed interpreters throughout the museum allow visitors the unique opportunity to make a personal connection with the past. The educational and dramatic exhibits at Duke Energy Children’s Museum allow kids to climb, crawl, explore and learn about themselves and the world around them. And the Museum of Natural History and Science gives children hands-on, inquiry based experiences in science, technology, engineering and math. 111. Refer to Cincinnati Museum Center. The museum charges an admission, but only enough to defray its cost of maintaining the exhibits because it doesn’t have the typical business goals. Cincinnati Museum Center is an example of a(n): A. nonprofit organization B. subgovernment entity C. unprofitable transaction D. service-oriented firm E. social marketing company Answer: A Rationale: Nonprofit organizations exist to achieve some goal other than the usual business goals of profit, market share, or return on investment. 112. Refer to Cincinnati Museum Center. The visitors to the Cincinnati Museum Center represent the museum’s: A. service entity B. promotional tools C. target market D. benefit strength E. benefit complexity Answer: C Rationale: The people the museum wishes to attract are its target market. 113. Refer to Cincinnati Museum Center. The _____ makes it difficult for the Cincinnati Museum Center to prioritize its objectives and evaluate its performance. A. creation of a benefit strength B. lack of a financial objective C. inability to promote the exhibits D. absence of service qualities E. presence of intangible factors Answer: B Rationale: Prioritizing objectives and performance evaluation are more difficult without a financial objective. Service qualities are present in the exhibits themselves, and there is no reason why the Museum Center cannot promote the exhibits. 114. Refer to Cincinnati Museum Center. The product decisions associated with the Museum Center exhibits: A. deal with benefits that are both short term and simplistic. B. illustrate the unimportance of service quality. C. are very high involvement. D. prove word-of-mouth promotion would be the best communication tool to use. E. suggest nonfinancial objectives will be used to set prices. Answer: C Rationale: The benefits desired are long term, and service quality determines whether the objective is achieved. Word-of-mouth and financial objectives do not deal with product decisions. 115. Refer to Cincinnati Museum Center. A decision to use public service announcements about the various exhibits and attractions and to broadcast them in the Cincinnati area is an example of a _____ decision the Museum Center would need to make. A. product B. service C. distribution D. promotion E. price Answer: D Rationale: Communication with potential target markets is an example of promotion. Got Milk? Just because consumers live in a big city doesn’t mean they can’t have fresh milk right from the farm. Many dairy farms, such as Oberweis Dairy and Smith Brothers Farms, offer home delivery of fresh milk, just like in the old days. While some of these services are established and have been around since the 1920s, New York City–based Manhattan Milk started up in 2008. For $20 or more, depending on what is ordered, consumers anywhere in Manhattan can enjoy organic milk, butter, yogurt, and cheese from Pennsylvania Amish farms and eggs from Vermont. Unlike most store-bought milk, theirs is not homogenized and is free of hormones typically given to cows to produce more milk. 116. Refer to Got Milk? Manhattan Milk is an example of a: A. retail operation B. service C. wholesale intermediary D. facilitator E. manufacturer Answer: B Rationale: A service is the result of applying human or mechanical efforts to people or objects. 117. Refer to Got Milk? Manhattan Milk has a high _____ quality because its quality can only be assessed after its use. A. experience B. credence C. cognitive D. search E. perceptual Answer: A Rationale: An experience quality is a characteristic that can be assessed only after use. 118. Refer to Got Milk? One important aspect of Manhattan Milk’s service is the ability to deliver the milk within 48 hours of being milked from the cow. This service quality component of the ability to perform the service dependably, accurately, and consistently is referred to as: A. assurance B. empathy C. reliability D. tangibles E. consistency Answer: C Rationale: Reliability is the ability to perform a service right the first time. 119. Refer to Got Milk? Oberweis Dairy has been in business for over 80 years, and customers trust this provider. Which component of service quality does this trust exemplify? A. Creativity B. Assurance C. Empathy D. Tangibility E. Reliability Answer: B Rationale: Assurance is the knowledge and courtesy of employees and their ability to convey trust. 120. Refer to Got Milk? Customers place orders at Manhattanmilk.com two days before the delivery date. The Internet allows Manhattan Milk to customize each customer’s order to his or her preferences. This is an example of: A. a supplementary product. B. an intangible product. C. mass customization. D. a promotion strategy. E. internal marketing. Answer: C Rationale: Mass customization is a strategy that uses technology to deliver customized services on a mass basis. The Ritzy Canine The Ritzy Canine Carriage House looks like several other Manhattan boutique hotels. The lobby features a crystal chandelier, brocade-patterned wallpaper, gold-framed mirrors, and antique chairs. Room service and salon service are available as well as exercise facilities. There is also a masseuse on staff. The Ritzy Canine is a high-end doggy “hotel” and “spa” where dogs are the only guests, and they are lavishly cared for. The $175-a-night Windsor Suite even has a DVD player. Without such extras, a one-day visit will cost $40 to $50, depending on the size of the dog. 121. Refer to The Ritzy Canine. Before leaving a dog at The Ritzy Canine, its owner would more than likely inspect the facilities and use _____ qualities to evaluate the establishment. A. experience B. credence C. investigative D. search E. standardized Answer: D Rationale: A search quality is a characteristic that can be easily assessed before purchased. 122. Refer to The Ritzy Canine. While it is difficult for dog owners to evaluate the service their pooch will receive, they are impressed with the upscale design and amenities offered. To cope with the problems of service _____, the facilities at The Ritzy Canine are upscale in design to give the impression of excellent treatment. A. perishability B. homogeneity C. intangibility D. inseparability E. heterogeneity Answer: C Rationale: Intangibility is the inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed. 123. Refer to The Ritzy Canine. Research has shown that consumers evaluate service quality on five components. When customers rate the people who supervise the dog activities as being “dog people” who have an understanding of the needs of dogs and their owners, they are concerned with the _____ component. A. reliability B. responsiveness C. standardization D. empathy E. flexibility Answer: D Rationale: Empathy represents caring, individualized attention to customers. 124. Refer to The Ritzy Canine. Which category of service processing is used at The Ritzy Canine? A. Possession B. Mental stimulus C. Physical stimulus D. Information E. People Answer: A Rationale: The dogs are physical possessions of the customers. 125. Refer to The Ritzy Canine. Supervised doggy care is the _____ service product, and dog massages would be _____ service products. A. central; peripheral B. primary; secondary C. core; supplementary D. essential; superfluous E. supplementary, core Answer: C Rationale: The core service is the most basic benefit the consumer is buying (dog care), whereas the supplementary services are a group of services that support or enhance the core service (special treatment). 126. Refer to The Ritzy Canine. What type of promotion strategy would you expect The Ritzy Canine to use? A. Engaging in post purchase research B. Forging prepurchase commitments C. Using motivational behavior D. Creating a strong organizational image E. Using outsourced information sources Answer: D Rationale: The company creates an image by managing its environment. See the description of its lobby. Grizzly Watching Have you ever wanted to spend your vacation up close and personal with a grizzly bear? Great Bear Nature Tours is one of the many lodges that provide such a service. Great Bear, located in British Columbia, is actually a lodge built on a floating barge. The lodge can handle up to ten guests in what the Wall Street Journal calls rustic but upscale accommodations in double rooms that begin at a rate of $1,418 per night, including bear-watching tours. Although bear hunting still brings tourists to Canada, bear watching is a growing attraction. On a bear-watching tour, the guide, who is often unarmed, will take you close enough to get a good view of a grizzly in the wild. In fact, one of the favorite tours allows you to watch bears swipe at salmon as they swim upstream to spawning grounds. While bear watching sounds dangerous, bear attacks are not common. However, just to be careful, many tour guides carry pepper spray. Tour guides say they are able to keep tour members safe by watching the bears and reading their body movements. 127. Refer to Grizzly Watching. The bear-watching vacation experience can vary greatly depending on many factors, including the lodge itself and the tour guide. For example, lodging can run from a “rustic” room with little more than a bed to a plush room with all the modern amenities. This is an example of the _____ characteristic of services. A. intangible. B. inseparable. C. heterogeneous. D. perishable. E. homogeneous. Answer: C Rationale: Heterogeneity refers to the variability of the inputs and outputs of services, which causes services to tend to be less standardized and less uniform than goods. 128. Refer to Grizzly Watching. If Great Bear Nature Tours rated and rewarded its tour guides based on the number of bears seen by guests, the tour guides might be willing to accept more risk in seeking out the bears than guests would really want. This could result in which service quality gap? A. A gap between what customers want and what management thinks customers want B. A gap between what management thinks customers want and the quality specification that management develops to provide the service C. A gap between the service quality specifications and the service that is actually provided D. A gap between what the company provides and what the customer is told it provides E. A gap between the service that customers receive and the service they want Answer: B Rationale: The lodge has set a quality specification based on what it thinks guests want, number of bears seen, when guest want to see bears, but not in unsafe situations. 129. Refer to Grizzly Watching. The height of the bear-watching season is in the fall during salmon spawning season. Tourists love to watch bears capturing salmon as the salmon swim upstream to spawn. If a bear-watching tour lodge raises its prices during this season, it is practicing: A. revenue-oriented pricing B. operations-oriented pricing C. target market pricing D. patronage-oriented pricing E. cumulative pricing Answer: B Rationale: Operations-oriented pricing seeks to match supply and demand by varying prices. 130. Refer to Grizzly Watching. Instead of pricing guests separately for their room, breakfast, tours, and so on, Great Bear Nature Tours charges a _____ price of $1,418 per night, including bear-watching tours. A. bundled B. supplementary C. core service D. intangible E. unbundled Answer: A Rationale: Prices that reflect multiple aspects of related services are termed bundled prices. 131. Refer to Grizzly Watching. At Great Bear Nature Tours, the owners are careful to treat both guests and employees very well. In fact, some employees have commented that the employees are treated like they were guests. This is an example of: A. knowing your target market B. interior/exterior marketing C. internal marketing D. gap theory E. unbundled marketing Answer: C Rationale: Internal marketing means treating employees as customers. ESSAY 1. What is a service? Describe the importance of services to the U.S. economy and what the demand for services is projected to be in the coming years. Answer: A service is the result of applying human or mechanical efforts to people or objects. Services involve a deed, a performance, or an effort that cannot be physically possessed. Today, the service sector substantially influences the U.S. economy, accounting for 81 percent of both U.S. gross domestic product and U.S. employment. The demand for services is expected to continue. According the BLS, service occupations will be responsible for nearly all net-job growth through the year 2016. Much of this demand results from demographics. An aging population will need services provided by nurses, home health care professionals, therapists, and social workers. Two-career families need services provided by child-care workers, housecleaners, and landscapers. Also increasing will be the demand for information managers, such as computer engineers and systems analysts. 2. Compare and contrast search quality, experience quality, and credence quality. Describe their significance for the marketing of services. Answer: SEARCH QUALITIES are characteristics that can be easily assessed before purchase. The emphasized tangible characteristics of a service would be evaluated by the consumer in this case. Automatic versus standard transmission in a car, the color of the new paint on a house, or the size of a hamburger at a fast-food restaurant are all examples of search components. EXPERIENCE QUALITIES are those that can only be discerned after use. Services such as restaurants, housecleaning, and haircuts would fit in this category. CREDENCE QUALITIES are associated with specialized services for which the consumer might not have the experience or expertise to evaluate service quality even after consumption. Legal, tax, and medical services have credence qualities. These characteristics make it harder for marketers to communicate the benefits of an intangible service than to communicate the benefits of tangible goods. Thus, marketers often rely on tangible cues to communicate a service’s nature and quality. 3. Services have four unique characteristics that distinguish them from goods. Name and briefly define each of these four characteristics. Use the example of an airline to help describe each of the four characteristics. Answer: INTANGIBILITY. Services are intangible; that is, they cannot be touched, seen, tasted, heard, or felt in the same manner in which goods can be sensed. An airline provides travel services. Although there are some aspects that are tangible (such as the plane, the staff, and the food), the service benefit of fast travel is intangible. INSEPARABILITY. Services are often sold and then produced and consumed at the same time. For airline service, first the ticket is sold. At some later time, the service is produced and consumed simultaneously as the airplane flies to the destination point. HETEROGENEITY. Consistency and quality control are often difficult to achieve in a service because services are dependent on their labor force, and services are produced and consumed at the same time. In airline travel, a passenger cannot get exactly the same service experience from flight to flight. The length of the flight, flight comfort, flight attendants’ service, food, neighboring passengers, and many other factors will vary. PERISHABILITY. Services cannot be stored, warehoused, or inventoried. An empty airline seat produces no revenue and cannot be saved for the next flight. However, by overbooking flights, passengers can be saved up and used to fill later flights. 4. Describe the five gaps identified in the gap model of service quality that can cause problems in service delivery and influence customer evaluations of service quality. Discuss ways that marketers can close each gap. Answer: GAP 1 is the gap between what customers want and what management thinks customers want. An important step in closing this gap is to keep in touch with what customers want by doing research on customer needs and customer satisfaction. GAP 2 is the gap between what management thinks customers want and the quality specifications that management develops to provide the service. This gap is the result of management’s inability to translate customers’ needs into delivery systems within the firm, so management should concentrate on implementing service elements to better meet customers’ needs. GAP 3 is the gap between the service quality specifications and the service that is actually provided. Management needs to ensure that employees have the skills and the proper tools to perform their jobs, and training, encouraging teamwork, and hiring employees with the proper attitude can assist in this goal. GAP 4 is the gap between what the company provides and what the customer is told it provides. This is clearly a communications gap, so to close this gap, companies need to create realistic customer expectations through honest, accurate communication about what the firms can provide. GAP 5 is the gap between the service that customers receive and the service they want. This gap can be positive or negative, and providers need to have a better understanding of what customers want and what they actually deliver. 5. Define core services and supplementary services. Give an example of each for the following services: a wedding consultant, a lawn-care service, and tutoring service. Answer: The service is made up of a bundle of activities that include the core service, which is the most basic benefit being purchased, and supplementary services that support or enhance the core service. A wedding consultant’s core service would be planning a wedding. A supplementary service might be promising an error-free wedding. The wedding consultant could also include additional services like honeymoon planning. The core service for a lawn-care service is a green, mowed yard. Supplementary services could include cleaning the driveway, planting and maintaining flower borders, and watering when the home owner is out of town. The core service for a tutoring service is education. Supplementary services could include mentoring, improvement in other classes than the one for which tutoring is needed, and a better self-image. Students, of course, should generate many additional answers. 6. What are the five key issues to remember when developing distribution strategies for service organizations? Answer: • Convenience to customers • Enough outlets to satisfy customers’ needs • Whether to provide direct or indirect distribution • Location of service • Scheduling of when services will be available 7. There are four promotional strategies for dealing with the unique features of services. Name these strategies and give examples of each, using American Airlines (or another air carrier you are familiar with) as your example service. Answer: STRESSING TANGIBLE CUES. The most obvious tangible cue is the aircraft itself because this is an equipment-based service. Other tangible cues can be stressed during in-flight service, such as special meal and beverage services, provision of promotional items such as playing cards featuring the American Airlines (AA) logo, or other methods of making intangible services more tangible. USING PERSONAL INFORMATION SOURCES. Personal sources of information can help to reduce a customers’ perceived risk in choosing a service. An endorsement of a famous actor or political figure who prefers to use AA would be beneficial. AA should also seek to stimulate positive word-of-mouth communication among present and prospective customers. CREATING A STRONG ORGANIZATIONAL IMAGE. Service marketers should attempt to create strong organizational images. One way to create an image is to manage the evidence of the service. This would mean that AA should create a good appearance of the flight crews and other employees, keep the aircraft clean, and provide other tangible goods (items featuring the AA logo). ENGAGING IN POSTPURCHASE COMMUNICATION. Postpurchase communication can be accomplished with postcard surveys, in-flight brochures, or personal interviews. Customers should be shown that their feedback is sought and their patronage is appreciated. 8. Describe the two unique challenges faced by service providers as they decide on a pricing strategy to use. Answer: (1) In order to price a service, it is important to define the unit of service consumption. For example, should pricing be based on completing a specific service task or should it be time based? (2) For services that are composed of multiple elements, the issue is whether pricing should be based on a bundle of elements or whether each element should be priced separately. 9. Name and briefly define the three categories of pricing objectives for services. Answer: REVENUE-ORIENTED PRICING focuses on maximizing the surplus of income over costs. A limitation of this approach is that for many services, determining costs can be difficult. OPERATIONS-ORIENTED PRICING seeks to match supply and demand by varying prices. Prices can be increased during peak times and decreased during slow times. PATRONAGE-ORIENTED PRICING tries to maximize the number of customers using the service. Pricing according to different market segments’ ability to pay and offering methods of payment that increase the likelihood of purchase are strategies used for this pricing objective. 10. What is the difference between internal marketing and relationship marketing? Why are these types of marketing important to service marketing? Answer: INTERNAL MARKETING means treating employees as customers and developing systems and benefits that satisfy their needs. A firm that engages in internal marketing practices activities such as competing for talent, offering a vision, training employees, stressing teamwork, giving employees more freedom to make decisions, measuring and rewarding quality, and knowing employees’ needs. The quality of a firm’s employees is an important part of service quality. Employees who like their jobs and are happy with their company are more likely to deliver high-quality service. Internal marketing provides a strong foundation for the external marketing of services. RELATIONSHIP MARKETING is a means for attracting, developing, and retaining customer relationships. Satisfied customers who are loyal will buy additional services from the firm and are unlikely to switch to a competitor. Satisfied customers are also likely to engage in positive word-of-mouth communications, thereby bringing in new customers. Because many services involve a process of continuous interaction between the service organization and the customer, relationship marketing is an important strategy. It is often more cost-effective to hang on to existing customers than to attract new ones. 11. Relationship marketing can be practiced at three levels, with each level adding a new kind of bond with the customer. Name and describe each of these levels, using a legal service to illustrate each level. Answer: LEVEL 1: FINANCIAL BONDS. This level of relationship marketing is based mainly on pricing incentives that encourage customers to continue doing business with a firm. A legal service could offer discounts to long-term customers or to customers who use the service frequently or regularly. LEVEL 2: SOCIAL BONDS. This level also uses pricing incentives but additionally seeks to build social bonds with customers. This means staying in touch with clients, learning about their needs, and designing the service to meet those needs. For example, the legal service could send thank-you cards or call clients to see if they were satisfied and ask about other desired services. LEVEL 3: STRUCTURAL BONDS. This level of relationship marketing uses financial and social bonds but adds structural bonds. Structural bonds are developed by building value-added services into the service that are not readily available from other firms. This might include exclusive after-hours phone numbers for special clients; transportation services to and from legal hearings or the legal offices; fax, computer, or express document services; or permanent office space reserved for special clients’ use. 12. Briefly explain what service firms must do to be successful in the global marketplace. Answer: To be successful in the global marketplace, service firms must first determine the nature of their core product. Then the marketing mix elements (additional services, place, promotion, pricing, distribution) should be designed to take into account each country’s cultural, technological, and political environment. 13. What is nonprofit organization marketing? How does nonprofit marketing affect economic activity in the United States? Answer: Nonprofit organization marketing is the effort by nonprofit organizations to bring about mutually satisfying exchanges with target markets by using the same marketing activities as for-profit businesses. Unlike for-profit organizations, nonprofits do not have a bottom-line orientation. Nonprofit organizations account for over 20 percent of the economic activity in the United States. Government organizations collect revenues that amount to more than a third of the U.S. gross domestic product. 14. What is a nonprofit organization? Discuss the marketing activities performed by nonprofit organizations. Answer: A nonprofit organization is an organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. Nonprofit organizations include a wide variety of entities ranging from the government to private, not-for-profit churches. Although nonprofit organizations differ substantially in size and purposes and operate in quite different environments, most perform common marketing activities: • Identify customers (such as clients, patients, members, or sponsors) they wish to serve or attract • Explicitly or implicitly specify objectives • Develop, manage, and eliminate programs and services • Decide on prices (such as fees, donations, tuition, fares, or rates) to charge • Schedule events or programs and determine where they will be held or where services will be offered • Communicate their availability through brochures, signs, public service announcements, or advertisements 15. Discuss three issues relating to target markets that are unique to nonprofit organizations. Provide an example of each issue. Answer: APATHETIC OR STRONGLY OPPOSED TARGETS. While private-sector organizations develop market segments that are most responsive to their offerings, nonprofit organizations must develop marketing programs aimed at relatively unresponsive targets or people strongly opposed to receiving their services. This includes targets for services such as vaccinations, family planning, aid for substance abuse, and psychological counseling. PRESSURE TO ADOPT UNDIFFERENTIATED SEGMENTATION STRATEGIES. Some nonprofit organizations fail to recognize the advantages of segmentation, or they use an undifferentiated approach for apparent economies of scale and low per-capita costs. Other organizations are required to serve the maximum number of people by targeting the average user. Unfortunately, there are few “average” users, and most nonprofit organizations benefit from differentiated strategies. COMPLEMENTARY POSITIONING. Nonprofit organizations strive to provide services to those individuals or groups who are not adequately served by private-sector organizations. Thus, the goal is to complement rather than compete with the efforts of others. For example, a nonprofit organization would seek to identify underserved market segments (low-income families) and develop marketing programs that match their needs (low-cost health care or free vaccinations). 16. Discuss the three product-related distinctions between business and nonprofit organizations. Answer: BENEFIT COMPLEXITY. Nonprofit organizations market complex behaviors and ideas, such as the need to exercise or to stop smoking. The benefits are complex, long term, and intangible. BENEFIT STRENGTH. The benefit strength of many nonprofit offerings is quite weak or indirect. Most private-sector service organizations can claim direct, personal benefits. INVOLVEMENT. Nonprofit organizations market products that elicit a wide range of involvement levels, from very low involvement (don’t litter) to very high involvement (stop smoking). Traditional promotional tools may be inadequate to motivate product adoption in either of these extreme cases. 17. Discuss the limitations nonprofit marketers face when making promotion decisions and describe how they overcome these limitations. Answer: Many nonprofit organizations are prohibited from advertising, thus limiting their range of promotion options. Most federal agencies fall into this category. Other nonprofit organizations do not have the resources to retain advertising agencies, promotion consultants, or marketing staff members. Despite these limitations, nonprofit organizations sometimes have access to professional volunteers or donated media time or space. Professionals at advertising agencies or market research firms can donate services. Sales promotion activities that make use of other existing services or resources can be used. Public service announcements are similar to advertisements, but the media donate the time or space. Finally, some nonprofit agencies have been successful in offering forums for people to share experiences, which is an application of peer-to-peer communications. 18. List and describe the five key characteristics that distinguish the pricing decisions of nonprofit organizations from those of the profit sector. Answer: PRICING OBJECTIVES. Nonprofit organizations are concerned with revenue production but only to defray costs, not to achieve profits for distribution to stockholders. Income redistribution takes the form of equitable allocation among individuals and households or across geographic or political boundaries. NONFINANCIAL PRICES. Consumers often absorb nonmonetary costs rather than paying a monetary price. These nonmonetary costs may consist of the cost of time, embarrassment costs, or effort costs. INDIRECT PAYMENT. Indirect payment is received to cover a broad range of services. Indirect payment may take the form of taxes or other dues that help pay for free services provided by libraries, police departments, or fire departments. SEPARATION BETWEEN PAYERS AND USERS. Services distributed to one group are largely paid for by those in another group (usually those in a better financial situation). BELOW-COST PRICING. Often, products and services are provided below cost. Nonprofit organizations do this to remain socially responsible. Test Bank for MKTG Charles W. Lamb, Jr. Hair, Joseph F., Carl McDaniel 9781285091860

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