Regarding multi-attribute models, what is the difference between the linear compensatory

approach and the lexicographic approach?

Explain the relationship between physical evidence and formation of customer perceptions and
expectations.

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Discuss the difference between ethics and social responsibility.

Describe the relevance of a “search attribute as it applies to service marketing ethics.”

Discuss the relationship between a “Code of Ethics” and “corrective control.”

Discuss how internal response moderators influence the customer’s response to the services-
cape.

Compare the communication skills necessary to conduct Type 1, Type 2, and Type 3
transactions. Which type of service staff should a firm recruit?

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Describe a service situation in which a novice consumer performer reduces the satisfaction for an
expert. Suggest management activities that could reduce the problem.

Discuss the use of employee uniforms as physical evidence as they relate to the unique service
characteristic of heterogeneity.

Why do consumers of services perceive higher levels of risk associated with their purchases
compared to goods purchases?

What is buffering? How do the strategies of anticipating, smoothing, and rationing relate to
buffering?

Discuss the pros and cons of increasing customer participation in the service delivery process.

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What is meant by the term “other customers” and why is their influence so much greater
for services compared to goods?

Define price bundling and provide three reasons why it makes sense for service firms to engage
in mixed bundling practices.

Why is developing an effective process strategy particularly important for service firms?

What are the limitations associated with a service firm’s inability to maintain inventories?
How does the public feel about the ethical behaviors of businesspeople?

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Discuss the relevance of employee satisfaction as it relates to the service-profit chain.

Explain the relevance of the perceived-control model as it relates to the post consumption stage.

How does profiling disruptive customers assist customer contact personnel in dealing with
“customers from hell”?

Who is typically more brand loyal—a consumer of goods or a consumer of services? Please
explain.

Define what it means to develop communication objectives in SMART terms. State three
objectives that abide by the SMART guidelines.

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Which is better for consumers: (1) A customized service or (2) A standardized service? Please
explain.

Discuss some specific examples of how the customer's involvement in the service encounter
influences the operational efficiency of the average service firm.

Discuss the knowledge gap and what factors contribute to the size of the knowledge gap?

How does the communication gap relate to success in e-business (See E-Services in Action)?

In what types of organizations would it be best to avoid empowerment approaches?

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Discuss the different types of risk.

From your own experience, give three examples of when you have been served badly and
explain them in terms of the coping strategies.

In general terms, discuss the purpose of consumer behavior models like the consumer decision
process model depicted in Figure.

Why is the development of an effective positioning strategy particularly important for service
firms?

Why should service employees be considered when developing communications materials?

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What problems arise in turning professional service providers into proactive marketing
personnel?

Define flat-rate pricing and provide an explanation for why a service firm may want to pursue a
flat-rate pricing strategy.

Why is it difficult to distinguish between many goods and services? Use the scale of market
entities and the molecular model concept to explain your answer.

Since 2005, sales have been robust for both Boeing and Airbus with their various planes. In early
January 2008, their combined orders were for nearly 7,000 planes, valued at more than $750
billion before discounts. As the world moved toward a recession due to the mortgage crisis, they
faced several tough questions: Hav

How do you personally feel about motorcycles? Do you have one? Would you rent one? Would a
rally attract you? Imagine this: It is an early week in August 2006, and your town of Sturgis, with
all of 6,500 people, situated on the rolling Dakota plains nestled against the Black Hills, is
playing host to half a million bi

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What are the tradeoffs associated with increasing/decreasing divergence and

increasing/decreasing complexity.

Explain how a manager might use the conceptual model of service quality to improve the quality
of his/her own firm.

What do you think is McDonald’s near-term and long-term potential? What makes you think
this?

You are a skilled machinist for Boeing and have always been quite proud of participating in the
building of giant planes. You have just received notice of another lengthy layoff, the second in
five years. Discuss your likely attitudes and actions.

Debate this issue: McDonald’s is reaching the limits of its ability to grow without drastic
change. (The side that espouses drastic change should give some attention to the most likely
directions for such, and be prepared to defend these expansion possibilities.)

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You do not have to agree with Bogle’s planning strategy. Playing the devil’s advocate
(one who argues for the opposite viewpoint), persuasively present another perspective. (You may
want to do some research on American Funds, and also review Chapter 17, the exploits of
Edward Lampert, hedge fund manager extraodinai
Do you think the swoosh logo has become too widespread, that it is turning off many people?

Discuss synergy in mergers. Why does synergy so often seem to be lacking despite expectations?

Which is better? With the success of Bethune in motivating his employees for strong positive
change in the organization, one would think Theory Y is the only way to go. McGregor certainly
thought so and predicted that giving workers more participation, freedom, and responsibility
would result in high productivity. So,

“The success of Vanguard is due to media exploitation of what would otherwise be a very
ordinary firm.” Discuss.

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Bethune gave great credit to his open-door policy when he became CEO. Do you think this was a
major factor in the turnaround? How about changing the paint of the planes?

“The success of Nike was strictly fortuitous and had little to do with great decision
making.” Evaluate this statement.

Compare Bethune’s management style with Lorenzo’s. What conclusions can you draw?

How wise do you think it was for Airbus to “bet the company” on the super-jumbo A380,
the world’s largest jet?

You have been given the assignment by Edward Rensi in 1993 to instill a recommitment to
improved customer service in all domestic operations. Discuss in as much detail as you can how
you would go about fostering this among the 13,700 domestic outlets.

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Given that all decision makers will sometimes make bad calls, how might the batting averages of
correct decisions be improved? Can they really be improved?

Herb Kelleher has not retired. He is going to continue until 70, or later. Somehow, his appetite
for growth has increased as he has grown older. He has charged you with developing plans for
expanding into longer hauls, and maybe to South and Central America, and even to Europe. Be
as specific as you can in developing s

Why do you think people continue to buy front-end load mutual funds with 5–6 percent
commission fees when there are numerous no-load funds to be had?

1. Based on the Scale of Market Entities, is health care tangible dominant or intangible
dominant? Please explain. 2. Using the Servuction model as a point of reference, categorize the
factors that influenced this service encounter. (Typical responses should be similar to those
provided in Exhibit I). 3. Develop a
Why do you think the major airlines so badly overlooked the possibilities in short hauls at low
prices? A strategic window is an opportunity in the marketplace, one not at present well served
by competitors, that fits well with the firm’s competencies. Strategic windows often last for
only a short time (although Sou

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In recent years Nike has moved strongly to develop markets for running shoes in the Far East,
particularly in China. Discuss how Nike might go about stimulating such underdeveloped
markets.

Herb Kelleher has just retired and you are his successor. Unfortunately, your personality is far
different from his: you are an introvert and far from flamboyant, and your memory for names is
not good. What would be your course of action to try to preserve the great employee dedication
of the Kelleher era? How successf

The so-called Legacy Airlines saw revenues and profits resurging by the end of 2007, to the
detriment of Southwest and the other discount carriers. What is your assessment of this situation
from Southwest’s standpoint? Is this only a short-term phenomenon, or is the discounter
model—low fares and rapid, mostly dome

Discuss online services that help humanize the online experience.

Do you think Airbus’s more passenger-friendly planes gave it a significant competitive

advantage? Why or why not? Discuss as many aspects of this as you can.

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As a Starbucks senior executive, what strategy would you recommend to combat

McDonald’s invading your turf?

In what ways might airline customers be segmented? Which segments or niches would you
consider Southwest’s prime targets? Which segments probably would not be?

A major stockholder grumbles, “Management worries too much about Airbus, and to hell
with the stockholders.” Evaluate this statement. Do you think it is valid?

Be a Devil’s Advocate (one who argues an opposing viewpoint to test the decision). Array
all the rationale you can for not deemphasizing the swoosh. Be persuasive.

Do you think Boeing should have anticipated the impact of Asian economic difficulties long
before it did?

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How would you feel personally about a five-hour transcontinental flight with only a few peanuts,
and no other food or movies? Would you be willing to pay quite a bit more to have more
amenities?

Do you think Beal’s rejuvenation efforts could have been better handled? Support your
conclusions.

It is 1994 and Bethune has just taken over. He has asked you as his staff adviser to prepare a
report on improving customer service as quickly as possible. He has also asked you to design a
program to inform potential business and nonbusiness customers of this new commitment. Be as
specific as possible in your recommen

Is it likely that McDonald’s will really realize $1 billion in additional revenues coming from
imitating Starbucks?

Discuss the keys to delivering effective self-service technologies.

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Can publicity ever take the place of massive advertising expenditures?

Discuss the importance of market share in the fast-food industry.

Evaluate the effectiveness of Southwest’s unions.

Bethune was quoted as saying, “You can make an airline so cheap nobody wants to fly it.”
Debate this issue, and the related issue of how can an airline make itself sufficiently unique so
that it can command higher prices than competitors.

Do you think the athletic goods industry has limited potential? Or is it still a growth industry?
Your opinions, and rationale, please.

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Given that you think the demands of a major retailer are completely unreasonable, what would
you do if you were Mr. Fireman: give in completely, hold to your principles, negotiate, or what?
Recognizing the importance of major customers has come belatedly to some sellers, probably
none more belatedly than Reebok. These

Discuss the four approaches to utilizing sustainability as an effective business positioning

strategy.

Do you see any limitations to the viability and growth of Harley in the future? Discuss how these
might be countered.

What can be learned from the service imperative?

Rank and discuss the projected growth rates of the nine service supersectors. What do you
believe is driving the growth of the three most highly ranked supersectors?

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Debate this contention: Market share is overemphasized in this industry. (Both sides in their
debate may want to consider whether this assertion may or may not apply to other industries.)

On August 18, 1993, a fare war erupted. To initiate its new service between Cleveland and
Baltimore, Southwest announced a $49 fare (a sizable reduction from the then standard rate of
$300). Its rivals, Continental and US Air, retaliated. Before long, the price was $19, not much
more than the tank of gas it would then

Evaluate the causes and the consequences of frequent top executive changes such as Continental
experienced in the days of Lorenzo?

How could anyone criticize Fireman for signing up Shaquille O’Neal to a lucrative
endorsement contract? Discuss.

A business columnist writes: Boeing could “have told customers ‘no thanks’ to more
orders than its factories could handle . . . [It] could have done itself a huge favor by simply
building fewer planes and charging more for them.” (Holman W. Jenkins Jr., “Boeing’s
Trouble: Not Enough Monopolistic Arrogance,â

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As a McDonald’s senior executive, what long-term expansion mode would you recommend
for your company?

Could Lorenzo’s confrontation with Continental’s unions have been more constructively
handled? How?

A major schism has developed in the executive ranks of Harley-Davidson. Many executives
believe a monumental mistake is being made not to gear up production to meet the burgeoning
worldwide demand for Harleys. Others see the present go-slow approach to increasing
production as more prudent. Persuasively support your po

How do you personally feel about the continuity of management at Boeing during these difficult
times? Should some heads have rolled? What criteria would you use in your judgment of
whether to roll heads or not? Management shake-ups during adversity can range from practically
none to widespread head-rolling. In the fir

How do you motivate employees to give a high priority to customer service?

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It is 1985, and you are a staff assistant to CEO Fireman of Reebok. Reebok’s production of
shoes can hardly meet the burgeoning demand. The future seems unlimited. However, you sense
a danger on the horizon, and that is not paying sufficient attention to your major customers,
particularly Foot Locker. Design a progra

Assume you are to give a lecture to your class on the desirability of a niche strategy, and you cite
southwest as a classic example. But suppose a classmate asks: “If a niche strategy is so great,
why didn’t the other airlines practice it?” How will you respond? In deciding what
specific niches to seek, these c

How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be?
What leads you to this conclusion?

How do you account for the reluctance of competitors to imitate the successful efforts of another
firm in their industry? Under what circumstances is imitation likely to be embraced?

How would you feel about devoting an hour or more to quality circle meetings every week or so,
on your own time? If your answer is, “No Way,” do you think this is a fair attitude on your
part? Why or why not? Invitation to Research: Can you find any U.S. firms that are still using
quality circles? Quality circles

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Do you think it likely that Southwest will remain dominant in its niche despite the array of
discount carriers? Why or why not?

If it had more quickly anticipated the drying up of the Asian market for planes, could Boeing
have prevented most of the problems that confronted it? Discuss.

In your judgment, do you think Nike could have achieved its present success without this unique
but simple logo? The Nike “swoosh” is one of the world’s best-recognized logos. In the
very early days of Nike, a local design student at Portland State University was paid $35 for
creating it. The curvy, speedy-look

Explain how a service supersector can have minimal projected growth yet still have many job
opportunities available.

Can a corporate climate be too upbeat? Discuss. A corporate or organizational culture can be
defined as the system of shared beliefs and values that develops within an organization and
guides the behavior of its members.6 Such a culture can be a powerful influence on performance
and customer satisfaction: If employee

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Discuss the pros and cons for expansion of Southwest beyond short hauls. Which arguments do
you see as most compelling?

Do you think there is a point where a low-price/no frills strategy would be detrimental to
customer satisfaction? What might it depend on? Southwest consistently earned high ratings for
its customer satisfaction, higher than those of its giant competitors. Yet, these major airlines all
offered more food service than S

“The high-growth, market-share policy should not bother any franchisee. It simply creates
opportunities to invest in more restaurants.” Evaluate this statement. In 1980 Wayne Kilburn
and his wife, Mary Jane, took over the only McDonald’s in Ridgecrest, California, a town of
26,000. The Kilburns prospered in the

“The tariff increase on Japanese motorcycles in 1983 gave Harley-Davidson badly needed
breathing room. In the final analysis, politics is more important than management in competing
with foreign firms.” What are your thoughts?

As you consider the table that provides Worldwide GDP information, a mix of countries
comprise the top 10 service economies. These countries sometimes differ greatly, yet still
generate large service economies. Please explain.

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As a staff assistant to Vaughan Beals when he first took over, you have been charged to design a
strategy to bring a mystique to the Harley-Davidson name. How would you propose to do this?
Be as specific as you can, and defend your reasoning.

You are John Brennan, CEO. It is 2009, and TIAA-CREF is turning out to be a formidable
competitor, and is gaining fast on your first-place position in the industry. What actions would
you take, and why? Discuss all ramifications of these actions that you can think of?

“Harley-Davidson’s resurgence is only the purest luck. Who could have predicted, or
influenced, the new popularity of big bikes with the affluent?” Discuss.

Does the size of McDonald’s give it a powerful advantage over its competitors? Why or why
not?

To date McDonald’s has shunned diversification into unrelated food operations as well as
nonfood options. Discuss the desirability of such diversification efforts.

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You are the leader of the machinists’ union at Eastern. It is 1986 and Lorenzo has just
acquired your airline. You know full well how he broke the union at Continental, and rumors are
flying that he has similar plans for Eastern. Describe your tactics under two scenarios: a. You
decide to take a conciliatory stance.

Be a Devil’s Advocate (and argue a dissenting view). Develop all the persuasive arguments
you can that Cantalupo’s limited expansion policies will doom the company’s growth
and invite competitive inroads.

A Harley-Davidson stockholder criticizes present management: “It is a mistake of the greatest

magnitude that we abdicate a decent share of the European motorcycle market to foreign
competitors simply because we do not gear up our production to meet the demand.” Discuss.

Define the following terms: goods, services, products.

Debate the issue of endorsements for athletes. How much is too much? Where do we draw the
line? Should we go only for the few famous? Or should we gamble on lesser-knowns eventually
making it big and offer them long-term contracts? Argue the two sides of the issue: aggressive
and conservative.

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What are the differences in passive and active fund management? How significant are they?

What explanation can you give for competitors’ inability for so long to match the standards
of McDonald’s? Some strategies are easily countered or duplicated by competitors. Price
cutting is the most easily countered. A price cut can often be matched within minutes. Similarly,
a different package or warranty is ea

As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should
have gone well beyond the heavyweight bikes into lightweights. What arguments would you
present for this change in strategy, and what specific recommendations would you make for such
a new course of action? What contrary argume

Are you surprised that such an American icon as McDonald’s is so successful in Russia? Do
you agree with the very “disciplined” approach to store openings in Russia? At lunch time
on a recent day, Khamzat Khasbulatov was sitting in the world’s busiest McDonald’s in
Pushkin Square in Moscow, and watching the

Compare Bethune’s handling of employees with that of Kelleher of Southwest Airlines in

Chapter 18. Are there commonalities? Contrasts?

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Gordon Bethune’s approach to salvaging Continental seems almost too good to be true.
Surely he has shown some management flaws or missteps? What could he have done better?
Your recommendations please.
The Thanksgiving Day nonstop transcontinental experiment went fairly well, although customers
and even flight attendants expressed some concern about the long, five-hour flight with no food
and no entertainment. No one complained about the price. Debate the two alternatives of going
ahead slowly with the transcontinent

How can arrogance in an organization be combatted?

Do you think Harley-Davidson made the right decision by expanding conservatively? Why or
why not? Defend your position. The sales forecast—the estimate of sales for the periods
ahead—serves a crucial role because it is the starting point for all detailed planning and
budgeting. A volatile situation presents some h

Philip Knight is concerned about the criticisms of labor abuses in some of his Asian contractors.
He fears that Congress will enact punitive and restrictive legislation. He charges you with getting
to the heart of the problem, and proposing remedies. This will have to be done quickly since
Knight has been ordered to ap

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Is there a danger in catering too much to major customers? Discuss.

“Vanguard seems too good. There must be a downside.” Discuss.

How does the organization and systems dimension of the Servuction Model differ from the other
three dimensions? What is the purpose of the organization and systems dimension?

How can replacement workers—in this case, pilots and skilled maintenance people hired at
substantially lower salaries than their unionized peers at other airlines—be sufficiently
motivated to provide top-notch service and a constructive esprit de corps?

Debate the issue of a “get-tough” attitude of corporate management toward franchisees

even if it riles some, versus involving them more in future directions of the company. In
particular, be prepared to address the challenge of bringing customer satisfaction up to traditional
standards.

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A price cut is the most easily matched marketing strategy, and usually provides no lasting
advantage to any competitor. Identify any circumstances where you see it desirable to initiate a
price cut and potential price war.

“Eventually—and this may come sooner than most think—there will no longer be any
choice locations anywhere in the world for new hamburger outlets. As a McDonald’s
stockholder, I’m getting worried.” Discuss.
Analysis of growth, price-recovery, and productivity components (continuation of 13-23)
Suppose that during 2009, the market for Meredith’s special-purpose machines grew by 3%.
All increases in market share (that is, sales increases greater than 3%) are the result of
Meredith’s strategic actions. Calculate how much

Revenue allocation, bundled products Heavenly Resorts operates a five-star hotel with a world-
recognized championship golf course. Heavenly has a decentralized management structure, with
three divisions: Lodging (rooms, conference facilities) Food (restaurants and in-room service)
Recreation (golf course, tennis court

Balanced scorecard (H. Kaplan, adapted) Caltex, Inc., refines gasoline and sells it through its
own Caltex l3as Stations. On the basis of market research, Caltex determines that 60% of the
overall gasoline market consists of “service-oriented customers,” medium- to high-income
individuals who are willing to pay a h

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Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the
company? Discuss, considering as many factors bearing on this decision as you can.

Be a Devil’s Advocate (One who opposes a position to establish its merits and validity).
Your mutual fund has a major investment in Harley- Davidson, and you are concerned with
Vaughn Beals’s presence at motorcycle rallies hobnobbing with black-jacketed motorcycle
gangs. He maintains this is the way to cultivate a

Costs of quality (CMA, adapted) Costen, Inc., produces cell phone equipment. Jessica Tolmy,
Costen’s president, decided to devote more resources to the improvement of product quality
after learning that her company had been ranked fourth in product quality in a 2006 survey of
cell phone users. Costen’s quality-impr

Quality improvement, relevant costs, relevant revenues. TechnoPrint manufactures and sells
20,000 high-technology printing presses each year. The variable and fixed costs of rework and
repair are as follows: TechnoPrint’s current presses have a quality problem that causes
variations in the shade of some colors. Its

Variance analysis, multiple products. The Detroit Penguins play in the American Ice Hockey
League. The Penguins play in the Downtown Arena (owned and managed by the City of Detroit,
which has a capacity of 15,000 seats (5,000 lower-tier seats and 10,000 upper-tier seats). The
Downtown Arena charges the Penguins a per-t

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Accounting for a main product and a byproduct. (Cheatham and Green, adapted) yum, Inc. is a
producer of potato chips. A single production process at yum, Inc. yields potato chips as the
main product and a byproduct that can also be sold as a snack. Both products are fully processed
by the splitoff point and there are n

Joint Cost Allocation. Memory Manufacturing Company (MMC) produces memory modules in a
two-step process: chip fabrication and module assembly. In chip fabrication, each batch of raw
silicon wafers yields 500 standard chips and 500 deluxe chips. Chips are classified as standard or
deluxe on the basis of their density (t

Joint cost allocation: sell immediately or process further. Iowa Soy Products (ISP) buys soy
beans and processes them into other soy products. Each ton of soy beans that ISP purchases for
$300 can be converted for an additional $200 into 500 lbs of soy meal and 100 gallons of soy oil.
A pound of soy meal can be sold at

Job costing, rework Solutions Corporation is a manufacturer of computer chips based in San
Jose. It manufactures two types of computer chips, CS1 and CS2. The costs of manufacturing
each CS1 chip, excluding rework costs, are direct materials, $60; direct manufacturing labor,
$12; and manufacturing overhead, $38. Defect

Cost allocation to divisions. Rembrandt Hotel & Casino is situated on beautiful Lake Tahoe in
Nevada. The complex includes a 300-room hotel, a casino, and a restaurant. As Rembrandt’s
new controller, cu are asked to recommend the basis to be used for allocating fixed overhead
costs to the three divisions in 2008. You

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Process further or sell, byproduct. (CMA, adapted) Newcastle Mining Company (NMC) mines
coal, puts it through a one-step crushing process, and loads the bulk raw coal onto river barges
for shipment to customers. NMC’s management is currently evaluating the possibility of
further processing the raw coal by sizing and

Joint costs and byproducts. (W. Crum) Royston, Inc. is a large food processing company. It
processes 120,000 pounds of peanuts in the Peanuts Department at a cost of $1 60,000 to yield
10,000 pounds of product A, 60,000 pounds of product B, and 20,000 pounds of product C.
Product A is processed further in the Salting D