Service Marketing (Chapter 3, 4, 5) Quiz 2

Services Marketing

"THE" dominant force in marketing.

two-sided blueprint

A blueprint that takes into account both employee and customer percep- tions of how the se- quence of events actually occurs.

penetration strategy

A positioning strategy that increases com- plexity by adding more services and/or en- hancing current ser- vices to capture more of a market.

specialization positioning strategy

A positioning strategy that reduces complex- ity by unbundling the different services offered.

volume-oriented positioning strategy

A positioning strategy that reduces diver- gence to create prod- uct uniformity and reduce costs

external search

A proactive approach to gathering information in which the consumer collects new informa- tion from sources out- side the consumer's own experience.

reservation system

A strategy to help smooth demand fluctuations in which consumers ultimately request a por-tion of the firm's services for a particular time slot.

perishability

A distinguishing characteristic of services in that they cannot be saved, their unused capacity cannot be reserved, and they cannot be inventoried.

intangibility

A distinguishing characteristic of services that makes them unable to be touched or sensed in the same manner as physical goods.

inseparability

A distinguishing characteristic of services that reflects the interconnections among the service provider, the customer involved in receiving the service, and other customers sharing the service experience.

heterogeneity

A distinguishing characteristic of services that reflects the variation in consistency from one service transaction to the next.

stations

A location at which an activity is performed within a service blueprint.

divergence

A measure of the degrees of free- dom service personnel are allowed when pro- viding a service.

complexity

A measure of the number and in- tricacy of the steps and sequences that consti- tute a process. divergence A me

perceived-control perspective

A model in which consumers evaluate services by the amount of control they have over the perceived situation.

physical cue

A moti- vation, such as thirst, hunger, or another bi- ological cue that pro- vides a stimulus to the consumer.

internal search

A pas- sive approach to gath- ering information in which the consumer's own memory is the main source of infor- mation about a product.

niche positioning strategy

A positioning strategy that increases divergence in an oper- ation to tailor the ser- vice experience to each customer.

critical incident

A specific interaction between a customer and a service provider.

nonpeak demand development

A strategy in which service providers use their downtime to prepare in advance for peak periods or by marketing to a different target markets that follow different demand pattern than the firm's traditional market segment.

consumer management

A strategy service personnel can implement that minimizes the impact of "other customers" on each individual customer's service experience (e.g., separating smokers from nonsmokers in a restaurant).

third parties

A supply strategy in which a service firm uses an outside party to service customers and thereby save on costs, person- nel, etc.

customer participation

A supply strategy that increases the supply of service by having the customer perform part of the service, such as providing a salad bar or dessert bar in a restaurant.

linear compensatory approach

A systematic model that proposes that the consumer creates a global score for each brand by multiplying the rating of the brand on each at- tribute by the impor- tance attached to the attribute and adding the scores together.

lexicographic approach

A systematic model that proposes that the consumer make a decision by examining each attri- bute, starting with the most important, to rule out alternatives. This approach describes so-called "lazy decision makers" who try to minimize the effort involved

multisite locations

A way service firms that mass produce combat inseparability, involving multiple locations to limit the distance the consumers have to travel and staffing each location differently to serve a local market.

evoked set

Alternatives that the consumer ac- tually remembers at the time of decision making.

commercial cue

An event or motivation that provides a stimulus to the consumer and is a promotional effort on the part of the company.

focused factory

An operation that concen- trates on performing one particular task in one particular part of the plant; used for promoting experience and effectiveness through repetition and concentration on one task necessary for success.

one-sided blueprint

An unbalanced blueprint based on manage- ment's perception of how the sequence of events should occur.

social cue

An event or motivation that pro- vides a stimulus to the consumer, obtained from the individual's peer group or from significant others.

factories in the field

Another name for multisite locations.

script perspective

Argues that rules, mostly determined by social and cultural variables, exist to facilitate interactions in daily repetitive events, including a variety of service experiences.

process time

Calculat- ed by dividing the activity time by the number of locations at which the activity is performed.

nonsystematic evaluation

Choosing among alternatives in a random fashion or by a "gut-level feeling" approach.

systematic evaluation

Choosing among alter- natives by using a set of formalized steps to arrive at a decision.

activity-based costing (ABC)

Costing method that breaks down the organization into a set of activities, and activities into tasks, which convert materials, labor, and technology into outputs.

switching costs

Costs that can accrue when changing one service provider to another.

rationing

Direct allo- cations of inputs and outputs when the de- mands placed on a system by the environ- ment exceed the sys- tem's ability to handle them.

decoupling

Disasso- ciating the technical core from the servuc- tion system.

unbundling

Divesting an operation of differ- ent services and con- centrating on providing only one or a few ser- vices in order to pursue a specialization posi- tioning strategy.

cognitive dissonance

Doubt in the consu- mer's mind regarding the correctness of the purchase decision.

divergent scripts

Employee/consumer scripts that "mis- match" and point to areas in which con- sumer expectations are not being met.

convergent scripts

Employee/consumer scripts that are mutu- ally agreeable and en- hance the probability of customer satisfaction.

hard technologies

Hardware that facili- tates the production of a standardized product.

• the type of demand, • the cycle of demand, and • the length of the service experience.

In the end, the service customers ultimately determine:

perfect-world model

J. D. Thompson's model of organizations proposing that opera- tions' "perfect" effi- ciency is possible only if inputs, outputs, and quality happen at a constant rate and re- main known and certain. "as if the mar- ket will absorb the single kind of product at a continuous rate and as if the inputs flowed continuously at a steady rate and with specified quality."

smoothing

Managing the environment to re- duce fluctuations in supply and/or demand.

anticipating

Mitigating the worst effects of supply and demand fluctuations by plan- ning for them.

script congruence

Occurs when the ac- tual scripts performed by customers and staff are consistent with the expected scripts. Chapter 4: Services Consumer Behavior 101 Copyright 2010 Cengage Learning. All Rights Reserve

consideration set

Of the brands in the evoked set, those con- sidered unfit (e.g., too expensive, too far away, etc.) are elimi- nated right away. The remaining alternatives are termed the con- sideration set. internal search

1. isolating the technical core; 2. production-lining the whole system; 3. creating flexible capacity; 4. increasing customer participation; and 5. moving the time of demand.

Operations Solutions for Service Firms These strategies can be classified into five broad areas:

1. Available for Service

Operations for a firm at this level of competitiveness are viewed as a "necessary evil."

service-dominant logic

Philosophical viewpoint that the primary role of marketers is to deliver service. Consequently, goods are simply a means of rendering a service to the customer

expansion preparation

Planning for future ex- pansion in advance and taking a long-term orientation to physical facilities and growth.

bottlenecks

Points in the system at which consumers wait the longest periods of time.

fail points

Points in the system at which the potential for malfunc- tion is high and at which a failure would be visible to the cus- tomer and regarded as significant.

creative pricing

Pricing strategies often used by service firms to help smooth demand fluctuations, such as offering "matinee" prices or "early bird specials" to shift demand from peak to nonpeak periods.

search attributes

Product attributes that can be determined prior to purchase.

experience attributes

Product attributes that can be evaluated only during and after the production process.

credence attributes

Product attributes that cannot be evaluated confidently even im- mediately after receipt of the good or the service.

script norms

Proposed scripts developed by grouping together events commonly mentioned by both employees and custo- mers, and then order- ing those events in their sequence of occurrence.

soft technologies

Rules, regulations, and procedures that facili- tate the production of a standardized product

complimentary services

Services provided for consumers to minimize their perceived waiting time, such as driving ranges at golf courses, arcades at movie theaters, or reading materials in doctors' offices.

personal sources of information

Sources such as friends, family, and other opinion leaders that consumers use to gather information about a service.

capacity sharing

Strategy to increase the supply of service by forming a type of co-op among service provi- ders that permits co-op members to expand their supply or service as a whole.

buffering

Surrounding the technical core with input and output com- ponents to buffer envi- ronmental influences

customization

Taking advantage of the variation inherent in each service encounter by developing services that meet each customer's exact specifications.

unfulfilled desire

The need for a product or service due to a con- sumer's dissatisfaction with a current product or service.

information search

The phase in the prepur- chase stage in which the consumer collects information pertaining to possible alternatives.

technical core

The place within an orga- nization where its pri- mary operations are conducted.

financial risk

The possibility of a mone- tary loss if the pur- chase goes wrong or fails to operate correctly.

performance risk

The possibility that the item or service purchased will not perform the task for which it was purchased.

standardization

The goal of standardization is to produce a consistent service product from one transaction to the next.

• the directions in which processes flow; • the time it takes to move from one process to the next; • the costs involved with each process step; • the amount of inventory buildup at each step; and • the bottlenecks in the system.

The Art of Blueprinting One of the most common techniques used to analyze and manage complex production processes in pursuit of operational efficiency is flowcharting. Flowcharts identify:

consumption process

The activities of buying, using, and disposing of a product.

production-line approach

The applica- tion of hard and soft technologies to a ser- vice operation in order to produce a stan- dardized service product.

buying, using, and disposing.

The consumption of goods can be divided into three activities:

blueprinting

The flow- charting of a service operation.

service cost per meal

The labor costs asso- ciated with providing a meal on a per-meal basis (total labor costs/ maximum output per hour).

1. Available for Service 2. Journeyman 3. Distinctive Competencies Achieved 4. World-Class Service Delivery

The manner in which "operational competitiveness" is embraced by various service firms can be described by four stages:

2. Journeyman

The motivation to jump to Stage 2 of operational competitiveness is often provided by the arrival of competition.

shortage

The need for a product or service due to the consumer's not having that partic- ular product or service.

maximum output per hour

The number of people that can be processed at each station in one hour.

evaluation of alternatives

The phase of the prepurchase stage in which the consumer places a value or "rank" on each alternative.

physical evidence / tangible clues

The physical characteristics that surround a service to assist consumers in making service evaluations, such as the quality of furnishings, the appearance of personnel, or the quality of paper stock used to produce the firm's brochure.

physical risk

The pos- sibility that if something does go wrong, injury could be inflicted on the purchaser.

social risk

The possi- bility of a loss in per- sonal social status associated with a par- ticular purchase.

psychological risk

The possibility that a purchase will affect an individual's self- esteem.

problem awareness

The second phase of the prepurchase stage, in which the consumer determines whether a need exists for the product.

awareness set

The set of alternatives of which a consumer is aware.

plant-within-a-plant (PWP)

The strategy of breaking up large, unfocused plants into smaller units buffered from one another so that each can be focused separately.

"other customers"

The term used to describe customers that share a service experience.

expectancy disconfirmation theory

The theory proposing that consumers evalu- ate services by com- paring expectations with perceptions.

stimulus

The thought, action, or motivation that incites a person to consider a purchase.

consumer decision process

The three-step process consumers use to make purchase decisions; includes the prepurchase stage, the consumption stage, and the postpurchase evaluation stage.

activity time

The time required to perform one activity at one station.

cost-plus pricing

Typically, a tangible product's price is often based on This means that the firm selling the product calculates the cost of producing the product and adds a predetermined markup to that figure.

3. Distinctive Competencies Achieved

Upon entering Stage 3 of operational competitiveness, operations have reached a point where they continually excel, reinforced by the personnel management function and systems that support the customer focus.

Customer habit—

costs associated with changing established behavior patterns.

Loyal customer discounts—

discounts that are given for maintaining the same service over time, such as accident-free auto insurance rates. Such discounts are sacrificed when switching from one supplier to the next.

intangibility inseparability' heterogeneity perishability

four unique characteristics of service

Organizational image

is usually the result of the firm's own positioning strategy in the marketplace.

perishability

means that services cannot be saved; unused capacity in services cannot be reserved, and services themselves cannot be inventoried.

Inseparability of Production and Consumption

refers to the fact that whereas goods are first produced, then sold, and then consumed, services are sold first and then produced and consumed simultaneously

Heterogeneity

refers to the potential for service performance to vary from one service transaction to the next

intangible

services are performances rather than objects.

tangibilize

the use of personal sources of information to help spread word-of-mouth communications about service alternatives, and the creation of strong organizational images to reduce the amount of perceived risk associated with service purchases

prepurchase, consumption and postpurchase evaluation

three primary stages of the consumer decision making——the consumer must be using a process or model to make his or her decision.

Cognitive costs

—costs in terms of the time it takes simply thinking about making a change in service providers.

Learning costs

—costs such as time and money that are associated with learning new systems, such as new versions of software packages.

nonstore choice

—deciding to purchase from a catalog, the Internet, or a variety of mail-order possibilities

store choice

—deciding to purchase from a particular outlet,

Emotional costs

—the emotional turmoil that one may experience when severing a long- term relationship with a provider. Emotional costs are particularly high when a personal relationship has developed between the client and the provider.

Transaction costs

—the monetary costs associated with first-time visits, such as new x-rays when changing dentists.

Search costs

—the time costs associated with seeking out new alternatives.