Marketing Chapter 12

ANS: A This is the definition of a nonprofit organization.

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

ANS: C Medical and consulting services are examples of services that exhibit credence qualities.

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

ANS: B This is the definition of patronage-oriented pricing.

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

ANS: A State Farm is a for-profit business.

All of the following are examples of nonprofit organizations EXCEPT: a. State Farm, an insurance company b. the American Heart Association c. the American Humane Society d. the Rotary Club, a service organization e. the Brotherhood of Electrical Workers, a union

ANS: D A fifth characteristic is pricing objectives

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

ANS: A A tangible cue is a concrete symbol, like hands or a rock, of the service offering.

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

ANS: A Level 1 using pricing incentives such as frequent-flyer programs.

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

ANS: A Heterogeneity causes inconsistency and lack of standardization. Training helps to alleviate these conditions.

Community Trust Bank has always prided itself on the friendliness of its employees. However, the results of a recent mystery shopper study indicated that the bank tellers rarely greeted customers or thanked them after the transaction. As a result, all bank employees who have customer contact are going through a training program to enhance customer service. What unique aspect of services is Community Trust attempting to address? a. Heterogeneity b. Perishability c. Intangibility d. Simultaneous production and consumption e. Unfocused targeting

ANS: E Reliability is the ability to perform the service dependably, accurately, and consistently.

FedEx advertises that your documents will "Absolutely Positively" be delivered tomorrow morning. FedEx is providing which of the following service quality aspects to its users? a. Tangibility b. Responsiveness c. Assurance d. Responsibility e. Reliability

ANS: B 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.

Geyser Falls Water Park charges less for weekday admission than it does for weekend attendance. It also has a lower ticket price for patrons who arrive at 4 P.M. Because it is focusing on coordinating supply and demand by varying prices, it is using a(n) _____ pricing objective for service firms. a. revenue-oriented b. operations-oriented c. image-focused d. patronage-oriented e. equity-oriented

ANS: B 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.

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

ANS: C A nonprofit organization exists to achieve some goal other than the usual business goals of profit, market share, or return on investment.

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

ANS: E This example is similar to the USA Network example in the text.

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

ANS: C The benefit strength of many nonprofit offerings is quite weak or indirect.

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

ANS: B 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.

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

ANS: D 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.

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

ANS: A Inseparability is the inability of the production and consumption of a service to be separated.

Management-labor mediation, child care, and college preparation classes 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

ANS: B Undifferentiated targeting strategies focus on average users.

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. Multisegmented d. Uniform e. Unidimensional

ANS: E A focus on maximizing the number of customers using a service is a patronage-oriented pricing objective for service firms.

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

ANS: D 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.

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

ANS: E A nonprofit organization seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment.

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

ANS: B This is an example of gap 4--the gap between what the company provides and what the customer is told it provides.

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

ANS: C The hotels are operating at the third level of relationship marketing, which involves creating value-added service not available elsewhere.

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

ANS: C Internal marketing is providing the employees with the desire and the ability to offer superior service.

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

ANS: D 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.

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

ANS: C Services are intangible because they cannot be touched, seen, or felt in the same manner as goods

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

ANS: A An experience quality is a characteristic that can be assessed only after use.

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

ANS: B Services cannot be stored, warehoused, or inventoried and, therefore, are perishable.

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

ANS: A People processing takes place when the service is directed at a customer.

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

ANS: C Mass customization is a strategy that uses technology to deliver customized services on a mass basis.

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

ANS: A An experience quality is a characteristic that can be assessed only after use.

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

ANS: B A service is the result of applying human or mechanical efforts to people or objects.

Refer to Got Milk? Manhattan Milk is an example of a: a. retail operation b. service c. wholesale intermediary d. facilitator e. manufacturer

ANS: B Assurance is the knowledge and courtesy of employees and their ability to convey trust.

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

ANS: C Reliability is the ability to perform a service right the first time.

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

ANS: C Internal marketing means treating employees as customers.

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

ANS: B 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.

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

ANS: A Prices that reflect multiple aspects of related services are termed bundled prices.

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. heterogeneity e. unbundled

ANS: C 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.

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. intangibility b. inseparability c. heterogeneity d. perishability e. homogeneity

ANS: B Operations-oriented pricing seeks to match supply and demand by varying prices.

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

ANS: D Communication with potential target markets is an example of promotion.

Refer to Smithsonian Children's Exhibit. A decision to use public service announcements about the microbe exhibit and to broadcast them in the Washington, DC, area is an example of a _____ decision the Smithsonian would need to make. a. product b. service c. distribution d. promotion e. price

ANS: A Nonprofit organizations exist to achieve some goal other than the usual business goals of profit, market share, or return on investment.

Refer to Smithsonian Children's Exhibit. 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. The Smithsonian is an example of a(n): a. nonprofit organization b. subgovernment entity c. unprofitable transaction d. service-oriented firm e. social marketing company

ANS: C 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

Refer to Smithsonian Children's Exhibit. The product decisions associated with the Smithsonian exhibit: 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

ANS: C The people the Smithsonian wishes to attract are its target market.

Refer to Smithsonian Children's Exhibit. The visitors to the exhibit represent the Smithsonian Institution's: a. service entity b. promotional tools c. target market d. benefit strength e. benefit complexity

ANS: D A search quality is a characteristic that can be easily assessed before purchased.

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

ANS: D Empathy represents caring, individualized attention to customers.

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

ANS: C 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).

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

ANS: D The company creates an image by managing its environment. See the description of its lobby.

Refer to The Ritzy Canine. What type of promotion strategy would you expect The Ritzy Canine to use? a. Engaging in postpurchase research b. Forging prepurchase commitments c. Using motivational behavior d. Creating a strong organizational image e. Using outsourced information sources

ANS: A The dogs are physical possessions of the customers.

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

ANS: C Intangibility is the inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed.

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

ANS: C Level 3 marketing programs, which use all three components, are the strongest relationship marketing programs

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

ANS: D Empathy is providing caring, individualized attention to customers.

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

ANS: E A personal information source is someone consumers are familiar with, such as celebrities.

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. nonsource-controlled c. impersonal d. remote e. personal

ANS: B Core service is the most basic benefit the consumer is buying.

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

ANS: D 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.

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. nonsponsored advertising c. primary advertising d. public service advertising e. nonprofit advertising

ANS: D This level uses pricing incentives that can easily be imitated by other firms.

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

ANS: C This is the definition of core service.

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

ANS: E The cost of government (i.e., taxes) is the biggest single item in the American family budget.

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

ANS: C The three categories of pricing strategies are revenue-, operations-, and patronage-oriented pricing.

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

ANS: D It is using volunteers to promote its message

Throughout the United States, dancers are joining hands, arms, and legs to present a Virtual Kickline Performance as a sign of their unified support for National Dance Week (NDW) and its mission statement. The purpose of NDW is to educate the American public on the cultural contributions of dance to our society and raise public awareness to the benefits of dance in our culture. This Virtual Kickline Performance is an example of a _____ strategy. a. target market b. distribution c. product d. promotion e. direct marketing

ANS: C This is the definition of internal marketing

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

True. Nonprofit organizations do not try to gain profits.

True/False: 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.

True. This is an important issue

True/False: An important issue in developing the service offering is whether to customize it or standardize it.

False. Chesapeake Energy is actually practicing internal marketing. Relationship marketing is focused on customers, not employees.

True/False: 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.

False. The need for her presence and the customer's presence is an example of how services are produced and consumed simultaneously (inseparability).

True/False: 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.

True. Heterogeneity=not the same and homogeneity=the same

True/False: Heterogeneity of services means the quality of a service may not be consistent.

ANS: C The United States is the leading exporter of services, but competition in international services is increasing rapidly.

Which country is the world's largest exporter of services? a. Germany b. Japan c. The United States d. China e. Canada

ANS: B Unlike a commercial advertiser, the sponsor of the public service advertisement does not pay for the time or space.

_____ 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. Nonsponsored advertising b. Public service advertising c. Societal marketing d. Cause-related marketing e. Social advertising

ANS: E This is the definition of nonprofit organization marketing.

_____ 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

True. 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.

True/False: 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.

False. Service firms may adopt patronage-oriented pricing to try to maximize the number of customers using the service.

True/False: Service firms may adopt patronage-oriented pricing to try to maximize the surplus of income over costs.

False. This describes the characteristic of intangibility.

True/False: Services are considered inseparable because most services cannot be felt or touched in the same way most goods can be sensed.

False. 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.

True/False: Services tend to exhibit more search qualities than do tangible goods.

True. Nonprofit organizations typically use those terms instead of price.

True/False: Terms such as fees, donations, tuition, fares, or rates are typically used instead of price for nonprofit organizations.

False. The sponsor of a public service advertisement does not pay for the time or space. Instead, it is donated by the medium.

True/False: 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.

True. The core service refers to the benefit the consumer gets from buying

True/False: The core service is the most basic benefit the consumer is buying

True. There are five gaps that cause problems.

True/False: The gap model of service quality identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality.

False. Comedians require mental stimulus processing.

True/False: The only type of service processing required for a comedian entertaining at a local club is information processing.

False. This is empathy

True/False: The service characterized by caring, individualized attention to customers is referred to as sympathy

False. This would be an example of responsiveness.

True/False: The speed with which an ambulance can get to an accident site is an indication of the reliability dimension of service quality

False. These U.S. firms have the greatest potential for globalization because of their existing competitive advantages.

True/False: 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.

True. Promotions should stress the tangible cues associated with the service.

True/False: 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.

ANS: C Reliability is the ability to perform the service dependably and consistently.

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

ANS: D A service is the result of applying human or mechanical efforts to people or objects

"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

ANS: E Experience quality is described as a characteristic that can be assessed after use.

"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

ANS: C Patronage-oriented pricing tries to maximize the number of customers using the service.

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

ANS: A This is a description of a revenue-oriented pricing objective

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

ANS: B Building social bonds includes staying in touch with customers, learning about their needs, and designing services to meet those needs.

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

ANS: C Heterogeneity means that a service tends to be less standardized and uniform than goods.

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

ANS: E The basic difference between services and goods is that services are intangible performances.

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

ANS: A Search quality is a characteristic that can be easily assessed before purchase

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

ANS: D This is the definition of a service

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

ANS: A Distribution strategies for service organizations focus on convenience, number of outlets, direct versus indirect distribution, location, and scheduling.

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

ANS: A 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.

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. homogeneity

ANS: A Customization is a key factor in the product component of the service marketing mix.

All of the following are keys factor 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

ANS: A Franchising is a distribution decision.

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 postpurchase communications

ANS: A Customers evaluate service quality through five components: reliability, responsiveness, assurance, empathy, and tangibles.

All of the following are service components customers use to evaluate service quality EXCEPT: a. validity b. empathy c. assurance d. responsiveness e. reliability

ANS: B Service processes can be placed into one of four categories: people processing, possession processing, mental stimulus processing, and information processing.

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

ANS: C Services are intangible, inseparable, heterogeneous, and perishable.

All of the following are unique characteristics that distinguish services from goods EXCEPT: a. intangible b. inseparable c. searchable d. heterogeneous e. perishable

ANS: B Relationship marketing is a means of attracting, developing, and retaining customer relationships.

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

ANS: E 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.

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

ANS: B Assurance refers to the knowledge and courtesy of the employees and their ability to convey trust. Customer ratings would provide this information.

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

ANS: A Empathy refers to providing caring and individualized attention to customers.

Courtney's mother died of breast cancer, and she is afraid of getting cancer. When she went to get a baseline mammogram, she wanted a facility where the personnel would not think her fears were silly and would answer all of her questions without making her feel stupid for asking them. By which of the following components of service quality is Courtney most likely to rate the mammogram provider? a. Empathy b. Assurance c. Tangibles d. Reliability e. Responsiveness

ANS: B An experience quality is a characteristic that can only be assessed after use.

David and Kathy are trying to decide where to go on vacation. David has suggested a cruise. Since neither of them have been on a cruise before, they will be unable to assess the _____ of a cruise until they actually take the vacation. a. tangible attribute b. experience quality c. creative quality d. credence quality e. heterogeneity feature

ANS: B Differential pricing tries to even out demand. This is important because services cannot be stored, inventoried, or warehoused.

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

ANS: C Revenue-oriented objectives require calculations of income and costs, which can be difficult for many services.

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

ANS: A People processing takes place when the service is directed at a customer.

Don at North Jersey Car & Limo knows that he is in the _____ processing business. As a result, he tries to get to know his clients and their interests. a. people b. mechanical c. possession d. mental e. information

ANS: D Perishability is the inability of services to be stored, warehoused, or inventoried.

Due to service _____, services cannot be stored, warehoused, or inventoried. a. tangibility b. variability c. intangibility d. perishability e. heterogeneity

ANS: D 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.

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

ANS: B Gap 5 is the gap between the service that customers receive and the service they want.

If a customer expects to wait one week for a pair of shoes to be mended but is told that the shoes are ready to be picked up less than 24 hours after leaving them at the repair shop, the customer's evaluation of service quality will be high. However, a two-week wait would result in a lower evaluation. The two-week gap 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

ANS: B Inseparability is when services or goods are produced and consumed at the same time.

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. intangibility b. inseparability c. heterogeneity d. perishability e. flexibility

ANS: E Heterogeneity is the variability of the inputs and outputs of services, which causes services to tend to be less standardized and uniform than goods.

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

ANS: E Tangibles are the physical evidence of the service.

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

ANS: B Responsiveness is the ability to provide prompt service.

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

ANS: C Building financial bonds includes the use of price incentives.

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

ANS: B Relationship marketing involves ongoing interaction between the service provider and the customer. It is a means of attracting, developing, and retaining customer loyalty.

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

ANS: C Services cannot be stored, inventoried, or warehoused

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

ANS: D A service is the result of applying human or mechanical efforts to people or objects.

PayPal allows you to pay for items that you buy at online sites such as eBay without exposing your credit card or bank account number. To use PayPal, you simply select "PayPal" when checking out at the online store and then allow PayPal to pay directly from a credit card or from your PayPal balance or linked bank account. PayPal would be classified as a: a. good b. tangible resource c. tangible product d. service e. nonprofit organization

ANS: A The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluation of service quality

Starbucks management has been trying to refocus on the things that 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 gap 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

ANS: C Mental stimulus processing refers to services directed at people's minds.

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

ANS: B Mass customization is a strategy that uses technology to deliver customized service on a mass basis.

The ability of customers to go online to design their own dining room table or sofa at Norwalkfurniture.com is an example of: a. a cooperative service b. mass customization c. aggregated standardization d. a market development strategy e. mental stimulus processing

ANS: A Mass customization uses technology to deliver customized service on a mass basis.

The catalog and online retailer Lands' End offers custom-fit chinos via the Web. For a price of $54, U.S.-based customers can select their style and fit preferences, enter details about their body shape, and receive a pair of custom-made pants in their mailbox two to four weeks later. For Lands' End, this means that the company avoids stocking up to 2.8 billion different styles and sizes of garments. Instead, Lands' End orders each unit to be individually fashioned by a contract manufacturer that ships directly to the consumer. Lands' End is using: a. mass customization b. supplementary service c. component service d. customized service e. nonprofit marketing

ANS: A The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality

The model of service quality that identifies five gaps 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

ANS: E Tangibles are the physical evidence of the service performed.

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

ANS: A 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.

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

True. The services are perishable.

True/False: 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.

True. A service organization is an organization that provides a service.

True/False: Insurance companies are examples of service organizations.

False. 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.

True/False: 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.

False. Although nonprofit organizations have a different purpose than for-profit businesses and operate in different environments, most perform marketing activities that involve the four Ps. See the Nonprofit Mix at a Glance box.

True/False: Nonprofit organizations do not use all four Ps of marketing

True. Nonprofit organizations may or may not require special facilities for distribution of their services.

True/False: Nonprofit organizations may or may not require special facilities for distribution of their services.

ANS: D Supplementary services are a group of services that support or enhance the core service.

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

ANS: C Core service is the most basic benefit the consumer is buying.

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

ANS: A This is the definition of people processing. Text examples are transportation services and health care.

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

ANS: B Reliability is performing the service right the first time.

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

ANS: B This describes responsiveness.

Which component of service quality represents the ability to provide prompt service? a. Reliability b. Responsiveness c. Assurance d. Empathy e. Tangibles

ANS: B Level 2 designs services to meet customer needs and includes financial incentives but also seeks to build social bonds with customers.

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

ANS: A Information processing describes services that use brainpower directed at a customer's assets.

Which of the following services is an example of information processing? a. Investment advice b. A funeral service c. Pet neutering d. The fitting of orthodontic braces e. Attendance at a Major League Baseball game

ANS: C Mental stimulus processing refers to services directed at people's minds.

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

ANS: E Possessions processing occurs when the service is directed to the customers' physical possessions.

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

ANS: C A credence quality is a characteristic that cannot easily be assessed even after purchase and experience.

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

ANS: B Operations-oriented pricing seeks to match supply and demand by varying prices (e.g., matching hotel demand to the number of available rooms).

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

ANS: C 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.

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

ANS: B This is a description of possession processing.

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

ANS: D This is the definition of the information processing category of service processes.

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

ANS: C Because services have greater heterogeneity, or variability of inputs and outputs, they tend to be less standardized.

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

ANS: B Inseparability is the inability of the production and consumption of a service to be separated.

Which unique characteristic of services means that consumers must be present during the production? a. Intangibility b. Inseparability c. Heterogeneity d. Perishability e. Connectivity

ANS: D Mass customization can deliver customized services on a mass basis, which results in giving each customer whatever he or she asks for.

_____ 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