question

Services

answer

- all economic activities whose output is not a physical product or construction - generally consumed at the time it is produced - provides added value through intangibles

question

4 ways services can be directed

answer

Services directed at people's bodies (tangible) Services directed at people's tangible possessions Services directed at people's minds (intangible) Services directed at intangible assets/possessions

question

Tangibility spectrum

answer

Goods and services are on a spectrum of tangibility (ex. intangible services are dependent on tangible goods)

question

5 ways to categorize/define service

answer

Service industries and companies Services as products Services as experiences Customer service Service dominant logic

question

Service dominant logic

answer

Idea that products are valued for the service that they provide

question

5 ways that technology influences services

answer

Potential for new service offerings New ways to deliver services Enabling both customers (self-service) and employees (CRM) Extending the global reach of services The Internet is a service

question

Characteristics that distinguish services compared to goods

answer

Intangibility Heterogeneity Inseparability Perishability

question

Intangibility

answer

Services cannot be felt/seen/smelled etc.

question

Heterogeneity

answer

No 2 services/customers are alike --> results from human interaction

question

Inseparability

answer

Simultaneous production and consumption Leads to customer impact

question

Perishability

answer

Cannot save, store, resell, or return services

question

Services triangle

answer

Framework of groups that develop, promote, and deliver service promises Top: company Bottom Right: customers Bottom left: employees Right side (company --> customers): External marketing communication Bottom (employees --> customers): interactive/real time marketing Left side (company --> employees): internal marketing communications

question

Services marketing mix (8 P's)

answer

Elements company uses to communicate with customers Original 4P's: product, place, price, promotion Expanded mix: people, physical evidence, process

question

Servuction system

answer

breaks service delivery into 2 part process: visible to customer and not visible to customer Top tier (invisible to customer): invisible organization and systems Visible to customer: Bottom tier: inanimate environment, service personnel Both point to customer/other customers

question

3 types of properties of consumer products

answer

Search qualities Experience qualities Credence qualities

question

Credence qualities

answer

Attributes that customer finds hard to evaluate even after purchase and consumption

question

Continuum of product evaluation

answer

Continuum from easiest to hardest to evaluate Goods fall towards left, services fall towards the right Goods on the left high in search qualities Goods in the middle high in experience qualities Goods on the right high in credence qualities

question

6 stages of consumer decision making and evaluation

answer

Need recognition Information search Evaluation of service alternatives Service purchase Consumer experience Post-purchase evaluation

question

Which source do consumers of services rely on more, customer opinion sources or promotional services?

answer

Customer opinion services (personal)

question

Is perceived risk higher or lower for services compared to goods?

answer

Higher

question

Are you more or less likely to choose the first option you encounter when choosing a service compared to choosing a good?

answer

More likely

question

Which stage tends to dominate the evaluation process?

answer

Consumer experience

question

Elements/ideas that contribute to consumer experience

answer

Services as processes Service provision as drama Service roles and scripts Compatibility of service customers Customer co-production Emotions and mood

question

Service as theater

answer

Idea that providing services is like putting on a theater production Both create impression for audience (customers) via management of actors (employees) and setting (service environment)

question

Service roles

answer

Combinations of social cues that guide and direct behavior in a given setting

question

Service script

answer

Logical sequence of events expected by customer

question

Customer co-production

answer

Customer participates in service provision (more than just influencing it)

question

Moods vs. emotions

answer

Moods are transient and occur at specific times/situations whereas emotions are more intense, stable and pervasive

question

Attribution of dissatisfaction

answer

Customers can attribute dissatisfaction to producer, retailer, or themselves

question

Is brand loyalty higher for goods or services? Why?

answer

Higher for services Costly to change brands, awareness of substitutes is limited, higher risk to switch services

question

Customer expectations

answer

Beliefs about service delivery that serve as standards or reference points against which performance as judged

question

Spectrum of customer expectations of service

answer

Top: Desired service Bottom: adequate service In between: zone of tolerance

question

Desired service

answer

Highest level of service that customer hopes to receive --> wished for level of service performance

question

Adequate service

answer

Bare minimum level of service customer is willing to accept --> minimum tolerable exception Threshold of acceptable service

question

Zone of tolerance

answer

Extent to which customers recognize and are willing to accept the variation between adequate service and desired service Range in which customers do not particularly notice service performance

question

Which is more stable, adequate service or desired service level?

answer

Desired service level

question

For more important service dimensions/factors, how does that affect the spectrum of customer expectations?

answer

Zone of tolerance becomes smaller Both levels (adequate and desired) shift up (higher expectations)

question

2 sources of desired service expectations

answer

Personal needs Lasting service intensifiers

question

Lasting service intensifiers

answer

Individual stable factors leading the customer to a heightened sensitivity to service 2 types: derived service expectations, personal service philosophy

question

5 sources of adequate service expectations

answer

Temporary service intensifiers Perceived service alternatives Self-perceived service role Situational factors Predicted service

question

4 sources of both desired and predicted service expectations

answer

Explicit service promises Implicit service promises Word of mouth Past experiences

question

What does a service marketer do if expectations are unrealistic?

answer

Marketers scared to ask customers about expectations because they are afraid they are unrealistic/will raise them Most people just expect performance, won't really have unrealistic expectations Most important thing is to act based on feedback --> don't like empty promises

question

Should a company try to delight a customer? (textbook) 2 factors to consider

answer

Service delight: profound positive emotional state resulting from exceeding customer expectations 3 types of service features: musts, satisfiers, delights Consider benefits and costs --> staying power, competitive implications

question

Do customer service expectations continually escalate?

answer

Adequate service expectations are very dynamic --> vary with delivery or promises rise Expectations rise quickly in highly competitive industries Desired service expectations don't change

question

5 service quality dimensions

answer

Reliability Responsiveness Assurance Empathy Tangibles

question

Service quality

answer

Determined by service quality dimensions

question

5 factors that affect customer satisfaction

answer

Service quality Product quality Price Situational factors Personal factors

question

Customer satisfaction

answer

Customer evaluation of a product or service and if it has met their needs and expectations

question

Reliability

answer

Ability to perform promised service dependably and accurately --> delivering on promises

question

Responsiveness

answer

Willingness to help customers and provide prompt service --> flexibility and ability to meet customer needs

question

Assurance

answer

Employee knowledge and courtesy and ability to inspire trust and confidence --> attentiveness and promptness

question

Empathy

answer

Individualized attention given to customers, customers want to feel important to and understood by the firms --> personalized and customized service

question

Tangibles

answer

Appearance of physical facilities, equipment, personnel, and written materials --> signal quality and continuity

question

Nordic model of service quality

answer

Separates quality into technical quality and functional quality Consider service product, service delivery, and service environment

question

4 core dimensions used to judge websites w/ no questions or problems

answer

Efficiency Fulfillment Reliability Privacy

question

3 dimensions used to judge service recovery online

answer

Responsiveness Compensation Contact

question

Service encounters (cascade)

answer

Touchpoints, moments of interaction with the firm Cascade is linking them together All contribute to perception of service quality

question

Types of service encounters

answer

Remote encounters Telephone encounters Face to face encounters

question

Evidence of service (3 types)

answer

People Process Physical Evidence

question

Customer gap

answer

Gap between customer expectations and customer perceptions

question

Gap 1

answer

Not knowing what customers expect Gap between company perceptions of customer expectations and customer expectations

question

Key factors causing Gap 1

answer

Inadequate marketing research orientation Inadequate use of marketing research Insufficient relationship focus

question

Gap 2

answer

Not selecting the right service quality designs and standards Gap between company perceptions of customer expectations and customer-driven service designs and standards

question

Key factors causing Gap 2

answer

Poor service design Absence of customer-driven standards Inappropriate physical evidence and servicescape

question

Gap 3

answer

Not delivering to service design and standards Gap between Customer-driven service design and standards and service delivery

question

Key factors causing Gap 3

answer

Deficiencies in HR policies Customers who do not fulfill roles Problems with service intermediaries Failure to match supply and demand Inadequate service recovery

question

Gap 4

answer

Not matching performance to promises Gap between service delivery and external communications to customers

question

Key factors causing Gap 4

answer

Lack of integrated marketing communications Ineffective management of customer expectations Over promising Inadequate horizontal communications

question

Draw the gaps model.

answer

See book pg. 103

question

Types of marketing research (list at least 5)

answer

Complaint solicitation Critical incident studies Researching customer needs Relationship and SERVQUAL surveys Exit surveys/post-transaction surveys Service expectation meetings and reviews Process checkpoint evaluations Market-oriented ethnography Monitoring user generated content Netnography Mystery shopping Customer panels Lost customer research Future expectations research Database marketing research

question

SERVQUAL survey

answer

Survey involving 21 survey attributes, grouped into 5 service quality dimensions Give 2 ratings: one reflecting expectation and one reflecting perception Used to calculate gap scores and evaluate performance

question

Disconfirmation paradigm

answer

Criticism of the SERVQUAL method 3 components: - done post-experience, expectations have been influenced by the actual experience - Doesn't make sense to do it before experience either because factors used to evaluate expectations may change (customers don't know what they want) - Customer's view of experience is influenced by expectations --> expectations are measured twice

question

3 ways to analyze market research findings

answer

Graph expectation and perception scores Zone of tolerance charts Importance/performance matrices

question

Relationship marketing

answer

strategic way of doing business that focuses on keeping and improving relationships with current customers rather than on acquiring new ones

question

Bucket theory

answer

Sales/marketing pour customers into the top, holes in the bucket are lost customers, decreased sales --> if you don't plug the holes, bucket will never be full

question

Evolution of customer relationships

answer

Customers as strangers --> acquaintances --> friends --> partners Attractiveness --> satisfaction --> satisfaction and trust --> satisfaction and trust and commitment

question

Customers as strangers

answer

Customers who are not in the market/have not yet encountered the product Could also be customers of competitors Focus on attracting the customer and acquiring their business

question

Customers as acquaintances

answer

Customers who are familiar, have used or tried the product but not necessarily loyal to it Focus on meeting customer's expectations and satisfying customer needs

question

Customers as friends

answer

Repeated customer, starts to receive value in the exchange relationship Firm learns more about their needs and can create products that meet them New key element is trust Focus on retaining customer's business

question

Customers as partners

answer

Level of trust deepens, receive highly customized product offerings and interactions New key element is commitment, idea of reciprocity Focus on enhancing relationship, use information about customers more effectively than competitors

question

3 types of customer expectations for relationships

answer

Transactional expectations Active relational expectations Passive relational expectations

question

Benefits of relationship marketing for customers

answer

Confidence benefits Social benefits Special treatment benefits

question

Benefits of relationship marketing for firms

answer

Economic benefits Customer behavior benefits HR Management benefits

question

Customer lifetime value (CLV)

answer

Average revenues generated per relevant period over customer lifetmie Accounts for sales, sales of added products, referrals, and costs

question

What should you do if CLV is negative?

answer

Spend more $$ to make it positive Change target segment Shift to an offensive strategy

question

Customer pyramid

answer

Pyramid of customer profitability tiers Lead tier Iron tier Gold tier Platinum tier Least profitable customers on bottom to most profitable customers on top Top -- less cost to maintain, more profit also via higher spending

question

80/20 rule

answer

20% of customers produce 80% of the profits (platinum tier)

question

Platinum tier

answer

Most profitable customers, heavy users of the product, not overly price sensitive, willing to invest and try new product offerings, committed customers

question

Gold tier

answer

Heavy users but may minimize risk by switching vendors More focused on value/discounts Not as loyal

question

Iron tier

answer

Customers who provide volume necessarily to utilize the firm's capacity but not very loyal, profitability/usage levels don't merit special treatment

question

Lead tier

answer

Customers who are actually costing the company Demand more attention via trying to increase their spending or mediate problems they cause for other customers Least profitable However, could argue that they actually drive the market

question

Draw the relationship development model.

answer

See pg. 152.

question

3 Relationship Drivers

answer

Relationship bonds Core service provision Switching barriers

question

Outcomes of strong customer relationship

answer

Customer benefits Firm benefits

question

4 types of relationship bonds

answer

Financial bonds Social bonds Customization bonds Structural bonds

question

2 types of switching barriers

answer

Customer inertia Switching costs

question

What is core service provision derived from?

answer

Satisfaction Perceived service quality Perceived value

question

Challenges of relationship marketing

answer

Customer is not always right Serving the wrong segment Not profitable in the long term due to non-profitable customers Difficult customers Some customers do not want relationships

question

3 findings on customer profitability

answer

Improvement in customer satisfaction has a significant and positive impact on financial performance Link between satisfaction and firm performance is asymmetric --> negative satisfaction more adversely impacts performance compared to similar changes in positive satisfaction Strength of this link varies across industries and firms

question

Offensive marketing

answer

Attracting new/more/better customers Higher service drives higher profits via increased market share, positive reputation, and price premiums (all via increased sales)

question

Defensive marketing

answer

Focusing on customer retention Shown that longer customer retention leads to higher profits Cheaper to retain customers than obtain new ones Higher service drives higher customer retention and profits via lower costs, increased volume of purchases, price premiums, and strengthened WOM (all via higher margins)

question

Service quality/customer intention relationship

answer

Higher service drives behavioral intentions, which drives both sales and positive behavior, such as praising the firm, remaining loyal

question

Customer equity

answer

Total of discounted lifetime values summed up over all the firm's customers (summing up CLV's)

question

3 drivers of customer equity

answer

Value equity Brand equity Relationship equity

question

Return on marketing

answer

Examine impact of service on financial return but also other aspects of marketing (compare strategies for marketing based on financial return)

question

Balanced scorecards (4 perspectives)

answer

Strategic measurement systems that evaluate firm performance on measures beyond just financial performance 4 perspectives: financial measures, operation perspective, innovation + learning perspective, customer perspective

question

3 forms of service standardization

answer

Substitution of technology for personal contact and human effort Improvement in work methods Combination of both

question

Service standards

answer

Measurements of service --> ex. length of time a transaction takes, accuracy with which operations are performed

question

Customer-defined standardization (standards)

answer

Operational goals measured on pivotal customer requirements that are visible to/measured by customers from their viewpoint as opposed to company concerns such as productivity or efficiency Does NOT mean uniformity of actions

question

Goal-setting

answer

Set specific targets for actions and behaviors Setting service standards = formalization of goal-setting

question

Hard customer-defined service standards

answer

Customer priorities that can be counted, timed, or observed through audits Ensure reliability and responsiveness

question

Soft customer-defined standards

answer

Customer priorities that provide direction, guidance, and feedback to employees in ways to achieve customer satisfaction Measure customer perceptions and beliefs as opposed to timings or audits

question

One-time fixes

answer

Technology, policy, procedure changes that address customer requirements on a large scale --> can be implemented at outlets as a one time change that does not affect employees or require training/motivation

question

2 ways to measure behavior and actions

answer

Hard measurements (counts, timed actions, audits, don't require customer opinion) Soft measurements (document customer opinion, SERVQUAL, etc.)

question

Process for setting customer-defined standards

answer

1. Identify existing or desired service encounter sequence. 2. Translate customer expectations into behaviors and actions. 3. Select behaviors/actions for standards. 4. Set hard or soft standards. 5. Develop feedback mechanisms (hard or soft). 6. Establish measures and target levels. 7. Track measures against standards. 8. Provide feedback about performance to employees. 9. Update target levels and measures.

question

How do you select behaviors and actions for standards?

answer

Need to be important to customers Focus on performance that needs to be improved/maintained Possible and accepted by employees Predictive rather than reactive Challenging but realistic

question

Servicescape

answer

Physical environment in which service is performed Encompasses facility exterior, facility interior, and other tangibles

question

3 types of servicescape usage

answer

Self-service --> focus on marketing goals Remote service --> focus on productivity, operational efficiency Interpersonal service --> attract, satisfy and facilitate needs of both

question

4 roles of servicescape

answer

Package Facilitator Socialiser Differentiator

question

Package (servicescape role)

answer

Environment wraps the service, conveys an external image of what is inside/what type of service is being received

question

Facilitator (servicescape role)

answer

Aids the performance of persons in the environment, affects flow of activity

question

Socializer (servicescape role)

answer

Design of servicescape aids socialization of employees and customers and conveys expected roles

question

Differentiator (servicescape role)

answer

Differentiates a firm from competitors, signals market segment that the service is intended for

question

Stimulus-organism-response theory

answer

Underlying framework of servicescape Servicescape --> affects customers and employees --> respond accordingly and also interact

question

2 forms of behavior in the servicescape:

answer

approach and avoidance

question

Internal responses to the servicescape

answer

Affects cognition, emotion (pleasure/displeasure, degree of excitement), and physiology

question

Environmental dimensions of the servicescape

answer

Ambient conditions Spatial layout and functionality Signs, symbols, and artefacts

question

Service profit chain

answer

Focused on employee satisfaction and employee retention Internal service quality --> Employee satisfaction --> employee retention and productivity --> external service value All of which lead to revenue growth Feeds into customer satisfaction --> customer loyalty --> revenue growth and profitability Employee satisfaction and customer satisfaction are highly interdependent

question

Boundary spanners

answer

Employees operating at the front line and interacting with customers

question

Emotional labor

answer

goes beyond physical or mental labor, crucial to delivering quality service Aligning of displayed emotions with organizationally desired emotions (smiling, eye content, sincerity, etc.)

question

Strategies to manage emotional labor

answer

Screen for emotional labor activities/tendencies Teach emotional management skills and appropriate behavior Fashion the physical work environment Allow employees to air their views Put management on the front line Give employees a break Hand off demanding customers to managers

question

3 Sources of conflict for front-line employees

answer

Person/role conflict Organization/client conflict Inter-client conflict

question

Internal marketing

answer

Strategies used to ensure that employees are willing and able to deliver quality, customer-minded service

question

4 ways to build customer-oriented workforce

answer

Hire the right people Develop people to deliver service quality Provide needed support systems Retain the best people

question

Inverted services marketing triangle

answer

Puts Employees and customers at the top (most important) and customers at the bottom

question

Spectrum of customer participation in service delivery

answer

Low, moderate, high

question

Low customer participation in service delivery

answer

Customer presence is required during service delivery

question

Moderate customer participation in service delivery

answer

Customer inputs required for service creation

question

High customer participation in service delivery

answer

Customer co-creates the service

question

3 Customer roles in service delivery

answer

Customers as productive resources (self-ticketing) Customers as contributors to satisfaction (ask questions, complain, etc.) Customers as competitors (could do something themselves)

question

Internal exchange vs. external exchange

answer

Internal exchange: do service yourself External exchange: have someone do it (service provider)

question

3 strategies for enhancing customer participation

answer

Define customers' jobs (help oneself, help others, WOM) Recruit, educate, and reward customers Manage the customer mix

question

Benefits of electronic distribution

answer

Consistent delivery Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback

question

Challenges of electronic distribution

answer

Price competition Inability to customize Changes in consumer behavior Security concerns Increased competition from widening geographies

question

Service principal vs. service deliverer

answer

Principal: originator Deliverer: intermediary

question

Functions of service intermediaries

answer

Coproduce the service Make services locally available --> convenience Function as glue by building trust relationship

question

Types of intermediaries

answer

Franchisees Agents and brokers

question

Benefits of company owned channels

answer

Control Consistency Ownership of customer relationship

question

Drawbacks of company owned channels

answer

Bearing of financial risk Lack of local knowledge

question

Franchising (benefits and drawbacks)

answer

Franchisor develops and licenses service format that is then delivered by other parties Benefits: consistency, increased knowledge of local markets, greater expansion potential, shared financial risk Drawbacks: difficulty in maintenance, publicized disputes, inconsistent quality, upward communication

question

Agent

answer

Intermediary who acts on behalf of service provider or customer and is authorized to make agreements between principal and customer

question

Broker

answer

Brings buyers and sellers together while assisting in negotiation Paid by the party who hired them

question

Common problems with intermediaries

answer

Channel conflict over objectives and performance Difficulty controlling quality and consistency across outlets Tension between empowerment and control Channel ambiguity

question

Channel conflict vs. channel ambiguity

answer

Conflict: do not agree over how channel should operate Ambiguity: unclear roles and responsibilities leading to confusion

question

3 strategies to manage intermediaries

answer

Control strategies Empowerment strategies Partnership strategies

question

Reference price

answer

Price stored in memory of good or a service --> price last paid, average price paid, price most frequently paid

question

3 key differences between pricing of services and pricing of goods

answer

Customers have inaccurate/limited reference pricing for services Price is a key signal of quality in services Non-monetary costs

question

Why do customers lack accurate reference prices for services?

answer

Service variability limits knowledge Providers are unwilling to estimate prices Individual customer needs may vary Collection of price info is overwhelming Prices are not visible

question

Types of non-monetary costs

answer

Time costs Search costs Convenience costs Psychological costs

question

3 approaches to pricing services

answer

Competition-based Cost-based Demand-based

question

Cost-based pricing

answer

Price = direct costs + overhead costs + profit margin Ex. cost-plus pricing or fee for service

question

Competition-based pricing

answer

Charging the same prices charged by other firms in the same industry or market (using other prices as an anchor) Used when services are standardized Ex. price signalling or going-rate pricing

question

Demand-based pricing

answer

Based on customer perceptions of value Setting prices based on what the customer is willing to pay

question

4 customer perceptions of value

answer

Value is low price Value is everything I want in a service Value is all that I get for all that I give Value is the quality I get for the price that I pay

question

Pricing strategies for value is low price

answer

Discounting Odd pricing Synchro pricing (place, time, quantity, differentials) Dynamic pricing Penetration pricing

question

What is the opposite of penetration pricing?

answer

Price skimming

question

Pricing strategies for value is everything I want in a service

answer

Prestige pricing Price skiming

question

Pricing strategies for "value is the quality that I get for the price that I pay"

answer

Value pricing Marget segmentation pricing

question

Pricing strategies for "value is all that I get for all that I give"

answer

Price framing Price bundling Complementary pricing Results-based pricing

question

Types of complementary pricing

answer

Loss leadership Two-part pricing Captive pricing

question

Service recovery

answer

Response to service failure

question

Service recovery paradox

answer

Failure occurs, customers are initially dissatisfied, but experience a high level of excellent service recovery, lead them to be even more satisfied and more likely to repurchase than if no problem had occurred at all

question

4 Types of complainers

answer

Passives, voicers, irates, and activists

question

Passives

answer

Least likely to take action Doubt the effectiveness of complaining Negative view of complaining

question

Voicers

answer

Complain to the service providers but less likely to go to third parties, spread negative WOM, or switch providers Company's best friend Complaining has social benefits and see complaining as positive

question

Irates

answer

Engage in negative WOM and switch providers May complain to provider Unlikely to complain to third parties Don't really believe in complaining but just mad and will switch Negative view of complaining

question

Activists

answer

Will complain to everyone, will go to third parties Alienated from marketplace Positive view of complaining

question

3 types of fairness in service recovery

answer

Outcome fairness Procedural fairness Interactional fairness

question

8 Service recovery strategies

answer

Make the service fail-safe: do it right the first time Encourage and track complaints Act quickly Provide adequate explanations Treat customers fairly Cultivate relationships with customers Learn from lost customers Learn from recovery experiences Act before being forced to do so through legislation

question

Service guarantees

answer

Pledge or assurance that product offered by firm will be performed as promised

question

Why are service guarantees good?

answer

Forces customer focus Sets clear standards Alleviates customer risk perception

question

4 Types of service guarantees

answer

Satisfaction guarantees service attribute guarantees External guarantees Internal guarantees

question

4 Characteristics of effective guarantees

answer

Unconditional Meaningful Easy to understand Easy to invoke

question

5 properties of intangibility

answer

Incorporeal existence Generality Abstractness Non-searchability Impalpability

question

Incorporeal existence

answer

Service does not occupy space, showing service is difficult

question

Generality

answer

Many service and service promises are described in generalities --> makes differentiation difficult

question

Abstractness

answer

Do not correlate directly with objects

question

Non-searchability

answer

Service is performance, can't be previewed or tried in advance

question

Mental impalpability

answer

Services are difficult to interpret - complex, difficult to grasp

question

5 approaches to match service promises with delivery

answer

Address service intangibility Manage service promises Manage customer expectations Manage customer education Manage internal marketing communication

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