Introduction To Services Marketing: General Content Multiple Choice Questions

Chapter 1
Introduction to Services Marketing
GENERAL CONTENT
Multiple Choice Questions
1. There are several reasons why the services sector is increasing in almost all countries
around the world. Which is not one of the contributing reasons?
a. The knowledge-based industries are growing.
b. Countries are less dependent on agriculture.
c. Some manufacturing firms are now focusing on marketing services as well.
d. The construction and manufacturing industries are booming.
e. More companies are outsourcing some of their service components.
(d; Moderate; p. 6)
2. Service markets are shaped by all of the following except ____________.

a. government policies
b. social changes
c. global economic change
d. business trends
e. advances in information technology
(c; Easy; p. 9)
3. The following are all business trends transforming service markets except
____________.
a. push to increase shareholder value
b. growth of franchising
c. new agreements on trade in services
d. marketing emphasis by non-profit organizations
e. focus on quality and customer satisfaction
(c; Moderate; p. 9)
4. The three broad categories of things processed in services are ____________,

____________, and ____________.
a. people; physical objects; data
b. people; organizations; documents
c. people; data; projects
d. physical objects; data; documents
e. physical objects; organizations
(a; Easy; p. 15)
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5. The two considerations used to categorize service are ____________ and
____________.
f. promotion versus place; price versus product
g. place versus time; people versus ideas
h. place versus people; time versus money
i. people versus possession; tangible versus intangible
j. people versus intangible; tangible versus possession
(d; Moderate; p. 15)
6. A useful way to distinguish between goods and services is to place them on a

continuum from ____________ to ____________.
a. practical; impractical
b. tangible-dominant; intangible-dominant
c. low; high
d. reliable; unreliable
e. prepared; unprepared
(b; Easy; p. 19)
7. Which of the following is an example of co-production?

a. Withdrawing from an ATM.
b. Eating fast food.
c. Touring an aquarium.
d. Buying a stereo.
e. Selling items on eBay.
(a; Challenging; p. 20)
8. Customers being turned away or having to wait is an implication of which aspect of

services?
a. People may be a part of the service experience.
b. Intangible elements usually dominate value creation.
c. Services are often difficult to visualize and understand.
d. Customers may be involved in co-production.
e. Most services cannot be inventoried.
(e; Easy; p. 20)
9. The three additional Ps of services marketing that extend the original four Ps of
marketing are _____________, _____________, and _____________.
a. product; price; place; promotion
b. prospects; process; people; promotion
c. physical environment; process; people
d. prosperity; process; people; promotion
e. physical environment; prosperity; planning; process
(c; Moderate; p. 23)
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10. The service framework for developing effective service strategies excludes
_________________.
a. understanding service products, consumers and markets
b. managing the competitive landscape
c. applying the 4 Ps to services
d. managing the customer interface
e. implementing profitable service strategies
(b; Moderate; p. 25)
A movie theater seat is an example of _____________.

a. renting durable goods
b. closely engaging customers in the service process
c. renting portions of a larger physical entity
d. the centrality of time to services
e. differences in customer choice criteria
Education is an example of a/an _____________ service.

a. people-processing
b. information processing
c. mental stimulus processing
d. possession-processing
e. physical processing
Service firms have reservations systems because.

a. intangible elements usually dominate value creation.
b. most service products cannot be inventoried.
c. distribution may take place through non-physical channels
d. customers may be involved in co-production
e. all of the above
Cinema is an example of a/an _____________ service.

Hotel is an example of a/an _____________ service.

An example of Information processing service is¬¬¬______________

a. Hairstylist
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b. Cinema
c. Banking
d. Hotel
e. Restaurant
An example of Mental stimulus processing service is__________

a. Hair-cutting
b. Cinema
c. Banking
d. Plumping
e. Restaurant
An example for a service that offers access to physical environments as a form of rental
is ____________
a. Hair-cutting
b. Dry cleaning
c. Museum
d. Kindergarten
e. Management consultancy
An example for a service that offers labor and expertise rental is ____________
a. Cinema
b. Bus
c. Museum
d. Gyms
e. Management consultancy
Poor task executed by customer may hurt productivity, spoil service experience and
curtail benefits is the implication of___________
a. Most service products cannot be inventories
b. Service is intangible
c. People may be part of service experience
d. Customer may be involved in co-production
e. Time factor often assumes great important
Service producers need to focus on recruit, train and reward employees

because_________
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Service producers need to focus educate customer to perform effectively and provide
customer support because______________
Which of the following fields would be least likely to be described as intangible-

dominant?
a. Manufacturing
b. Education
c. Insurance
d. Banking
e. Engineering
Which of the following products is an example of intangible dominant?

a. A Funeral
b. A Car rental
c. A hotpot restaurant
d. Magazine subscription
e. Math tutoring
Which of the following is not a marketing problem caused by intangibility of services?

a. Services lack the ability to be stored
b. Services lack patent protection
c. Services are difficult to price
d. Services are difficult to communicate to consumers
e. Consumers are involved in the service production process
True/False
11. In most highly developed nations, services account for between three-fifths and four-
fifths of the GDP.
(True; Easy; p. 6)
12. Typically service jobs are not well-paid positions and require little education.
(False; Easy; p. 7)
13. When migrants from developing countries move back to their own countries after
living and working abroad in developed countries, there will be a vacuum in the
employment market of developing economies.
(False; Challenging; p. 10)
14. Systems and networks access and usage is an example of the ownership of services.
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(False; Moderate; p. 13)
15. Other customers typically do not impact the satisfaction of other consumers in
service settings.
(False; Easy; p. 20)
16. Time is of great importance in services so operations managers have to be concerned

about minimizing customer waiting time.
(True; Easy; p. 22)
17. Failures are inevitable in service industries.

(True; Moderate; p. 23)
18. Marketers should not attempt to shape customer roles and behaviors.
19. The appearance of buildings, landscaping, vehicles, and uniforms provide tangible
evidence of a firm’s service quality.
20. Servicescape is only a consideration if customers have to enter a service factory.

Short Answer
21. What are the five broad categories within the non-ownership framework?
Rented goods, defined space and place rentals, labor and expertise rental, access to
shared physical environments, and systems and networks: access and usage.
(Moderate; p. 13)
22. Define services.
Services are economic activities offered by one party to another. Often time-based
performances are used to bring about desired results in recipients themselves or in
objects or other assets for which purchasers have responsibility. In exchange for
their money, time and effort, customers expect to obtain value from access to good,
labor, professional skills, facilities, networks and systems. However, they do not
normally take ownership of any of the physical elements involved.
(Moderate; p. 19)
23. Provide an example of a service that lies at each end of the tangible-dominant to
intangible-dominant spectrum.
Low—tailored clothing
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High—Internet banking
(Moderate; p. 19)
24. What are the eight common differences between products and services?
1) Most service products cannot be inventoried, 2) intangible elements usually

dominate value creation, 3) services are often difficult to visualize and understand,
4) customers may be involved in co-production, 5) people may be part of the service
experience, 6) operational inputs and outputs tend to vary more widely, 7) the time
factor frequently assumes great importance, and 8) distribution may take place
through non-physical channels.
(Challenging; p. 20)
25. What are the three vital roles of promotion and education?
Providing needed information and advice, persuading target customers of the merits
of a specific brand or service products, and encouraging customers to take action at
specific times.
(Moderate; p. 23)
Essay
26. Give an example of how the Internet is changing the face of service industries.
The Internet is transferring power from suppliers to customers, particularly in

consumer markets. For example, travel agencies are being replaced by Web sites like
Orbitz, Travelocity, and Priceline. These sites allow customers to shop around for
the best prices with greater ease. They have in effect changed the distribution system
to favor the consumer.
(Moderate; p. 11)
27. How can firm develop effective marketing strategies?
Firms need to start first understanding why service the service sector is developing so
fast, and what forces are driving it. Then firms must understand consumer need and
behavior. They can do this using the three-stage model of service consumption to
explore how customer make decision, respond to services encounters and evaluate
service performance. After that, they need to position their offerings to ensure
commercial viability. The position must be so distinctive and defensible that the firm
can attract a sufficient volume of business from the target customers. The next step is
to apply the 4 Ps of traditional marketing into services, with the understanding that
services require attention to different elements because services are different from
goods. At the same time, firms have to manage the interface between the customers
and the service firms. Hence, there are 3 additional Ps to be managed – process,
which includes balancing demand and capacity, physical environment, and people.
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Finally, in order to be profitable, firms need to build relationships with customers to
retain their loyalty, handle customer feedback and have service recovery systems in
place, make sure that firms are productivity but maintain standards of service
excellence and have a culture that focuses the firm on the service profit chain, while
integrating the three key functions of marketing, operations and human resources.
(Moderate; p. 25)
APPLICATION CONTENT
28. A movie theater seat is an example of _____________.

a. renting durable goods
b. closely engaging customers in the service process
c. renting portions of a larger physical entity
d. the centrality of time to services
e. differences in customer choice criteria
29. Education is an example of a/an _____________ service.

30. Service firms have reservations systems because.

a.intangible elements usually dominate value creation.
b.most service products cannot e inventoried.
c.distribution may take place through non-physical channels
d.customers may be involved in co-production
e.all of the above
31. Which of the following is the best example of a supplementary service?

a. Appliance maintenance
b. Hotel room rental
c. Fast food consumption
d. House cleaning
e. Landscaping
(a; Moderate; pp. 22)
32. Online educational programs offered by the University of Phoenix are an example of
_____________.
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a. revolutionary products/services
b. collective products/services
c. additional services
d. supplementary services
e. core products/services
(e; Moderate; p. 22)
True/False
33. China is experiencing rapid economic growth and this stimulates demand for
production and business services.
(False; Easy; p. 7)
34. IBM is a good example of a firm that has shifted from manufacturing intensive
operations to service intensive operations.
35. The Internet is transferring power from suppliers to customers, especially in

consumer markets.
36. Less than 15 percent of service jobs around the world are carried out remotely.
37. The best way to help customers visualize your service is to highlight
credentials/experience and educate consumers to make good choices.
Short Answer
38. Give an example of a government policy that has stimulated the transformation of a
service industry.
Deregulation of the telecommunications industry has stimulated competition and

altered fee structures.
(Moderate; p. 10)
39. Give an example of an industry where the Internet has transferred power from
suppliers to customers.
The travel industry.

(Moderate; p. 11)
40. Give an example of a service that offers labor and expertise rental.
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Car repair, surgery, management consultancy, etc.
(Easy, p. 13)
41. Give an example of a service that offers access to physical environments as a form of
rental.
Museums, theme parks, trade shows, gyms, zoos, ski resorts, golf courses, toll roads,
etc.
(Easy; p. 13)
42. Give an example of an industry where production and consumption are separable.
Dry cleaning, lawn mowing, weather forecasting, etc.

(Moderate; p. 16)
Essay
43. Describe the possible differences in customer choice criteria between car rentals and
outright purchases.
Renters typically reserve a specific vehicle class or category rather than a specific
brand or model. For example, rental car companies offer sub-compact, compact,
mid-size, and luxury models. The brand of a subcompact may be a Volkswagen
Beetle or a Geo Metro. Physical characteristics like color, upholstery, and the
number of cup holders are more important to buyers. Consumer consideration of
rental locations, insurance coverage, cleanliness of the vehicle and facilities, and
ease of the reservation system are also considerations for rental services that differ
from car dealerships.
44. Provide an example of a service industry where customers are involved in co-
production and explain the implications and marketing-related tasks that would be
associated with that service.
Theme parks are a good example of customer co-production services. Implications

include customers having to visit the facility and participate in rides, shows, and
other activities to benefit from the service. Picking the wrong ride at the wrong time
may cause the customer to wait in a long line and decrease the value of their service
experience. Marketing-related tasks include developing user-friendly equipment and
facilities and training customers to perform effectively. For example, theme parks
can provide schedules and maps to assist customers in making better and more
efficient plans.
(Moderate; p. 20)
45. Describe the seven Ps of service that would be involved in a banking service.
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Product elements of banking would include aspects like checks and plastic ATM
cards. Place and time would concern issues of teller and office accessibility along
with 24-hour access to ATMs for certain smaller transactions. Price and user outlays
would include costs incurred traveling to the bank or ATMs and making tradeoffs
with fees incurred from out of network bank use. Promotion and education include
television commercials, free checking offers, and notifications of account changes in
the mail. Physical environment aspects include facility layouts and tellers dressing in
business attire. Process elements include efficient and correct handling of
transactions by both employees and ATMs. Finally, people aspects include the
friendliness of tellers and other customer service representatives, as well as other
customers.
Chapter 2
Customer Behavior in a Services Context
GENERAL CONTENT
1. The three stages in the consumer decision making process are ____________,
____________, and ____________.
f. pre-awareness stage, pre-purchase, purchase stage
g. pre-purchase stage, awareness stage, post-purchase stage
h. service encounter stage, pre-purchase stage, post-purchase stage
i. pre-purchase stage, awareness stage, purchase stage
j. pre-purchase stage, service encounter stage, post-purchase stage
2. The key concepts in the pre-purchase stage include all the following except
____________.
f. servuction system
g. evoked set
h. perceived risk
i. zone of tolerance
j. credence attributes
3. The prepurchase stage begins with ____________.

f. perceived risk
g. formation of expectations
h. moments of truth
i. evoked set
j. need arousal
4. Tangible characteristics that customers can evaluate prior to purchase are termed
____________.
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f. search attributes
g. experience attributes
h. credence attributes
i. satisfaction attributes
j. capital attributes
5. Characteristics that customers find hard to evaluate even after consumption are
termed ____________.
f. search attributes
g. experience attributes
h. credence attributes
i. satisfaction attributes
j. capital attributes
6. Which of the following is NOT a type of perceived risk in purchasing and using
services?
f. Functional
g. Permanent
h. Financial
i. Physical
j. Social
7. Consumer preferences for involvement in the service process may reflect which of the
following factors?
f. Variability in price structures.
g. Willingness to travel to a service facility.
h. Desire to be served by employee’s face-to-face.
i. A and C only.
j. B and C only.
8. The service operations system does not include ____________.

a. physical facilities
b. equipment
c. other customers
d. technical core
e. personnel
9. In the theater metaphor, the elements include all but the following ____________.
a. positions
b. roles
c. scripts
d. service facilities
e. personnel
10. During the post-purchase stage, consumers may make satisfaction judgments that
___________ their experience.
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f. negatively confirm, positively confirm, disconfirm
g. positively disconfirm, confirm, negatively disconfirm
h. disconfirm, positively confirm, negatively disconfirm
i. negatively disconfirm, positively disconfirm, positively confirm
j. positively confirm, negatively confirm, negatively disconfirm
To develop effective marketing strategies, marketers must understand how people make
decisions about buying and using service, what the experience of service delivery and
consumption is like for customers, and ____________.
a. how they evaluate competitors
b. how they evaluate the experience
c. how often they utilize competitors
d. how often they complain to the service firm
e. the length of their relationship with the service firm
An example of a service high in credence attribute is _____________.

a. Extreme sports
b. vacation
c. spa
d. musical performance
e. surgery
Dental customers ____________ to avoid delays and ensure effective use of dental
professionals' time.
a. sit quietly in the waiting room
b. commit positive word-of-mouth
c. confirm and honor appointments
d. should get to know hygienists
e. provide accurate histories
All of followings are example of search attributes in restaurant service

EXCEPT_________
a. Menu
b. Decoration
c. Price
d. Staff uniform
e. Restaurant atmosphere
A client concerns weather her financial situation would really get better after using
financial consulting service is an example of__________
a. Financial risk
b. Functional risk
c. Sensory risk
d. Physical risk
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e. Temporal risk
Jamie don't want to go to dentist and take care of his bad teeth because he think it will be
very painful is an example of ___________
a. Psychological risk
b. Social risk
c. Sensory risk
d. Physical risk
e. Temporal risk
According to the Servuction System, factors that influence the customer's service
experience include all of the following EXCEPT____________
a. Price
b. Contact Personnel
c. Inanimate environment
d. Other customers
e. Technical core
Which of the following components of the Servuction System is NOT visible to

consumers?
a. Contact Personnel
b. Inanimate environment
c. Other customers
d. Technical core
e. Service Delivery System
A customer attempted to pay his bill with his American Express credit card; however,
the service firm did not accept American Express. Which of the following components of
the Servuction Model influenced the customer's experience?
a. The other customers
b. Contact personnel
d. Technical core
e. Service provider
A customer felt extremely comfortable because of the relaxation music that staff play
inside the spa. Which of the following components of the Servuction Model influenced
the customer's experience?
a. The other customers
d. Technical core
e. Service provider
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A customer had a bad experience with the coffee shop as he got a bad argument with his
friends. Which of the following components of the Servuction Model influenced the
customer's experience?
a. Other customers
d. Technical core
e. Service provider
Which one of the following methods is less likely to be the solution that customer will
reach for to reduce their perceived risks
a. Searching for independent reviews and ratings
b. Watching TV commercial
c. Looking for guarantees and warranties
d. Seeking information from family and friends
e. Examining tangible cues of services
The minimum level of service customers will accept without being dissatisfied is
___________
a. Desired service
b. Adequate service
c. Predicted service
d. Tolerable service
e. Acceptable service
Service provider promises, word - of - mouth, and past experience will affect to
customers' ___________ - the level of service customers actually anticipate receiving.
a. Desired service
b. Adequate service
___________ , the type of service customers hope to receive, is a combination of what

customers believe can and should be delivered based on personal needs.
a. Desired service
b. Adequate service
The zone between Desired Service and Adequate Service is __________

a. Zone of acceptance
b. Zone of satisfaction
c. Zone of tolerance
d. Zone of variation
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e. Zone of possibility
One example of Technical core in Servuction system in a hotel is _______

a. The software to manage availability of room
b. The music played in the lobby
c. The lavender scent in the room
d. The uniform of the staff
e. The bill for customers
The Theator is a useful metaphor for understanding service encounter. In this metaphor,
service facilities are considered as___________
a. Scripts
b. Roles
c. Stage
d. Actors
e. Blue printings
True/False
11. The evoked set can be derived from past experience or competing firms.
12. Credence attributes are the characteristics that can only be assessed after customers
have gone through the service.
13. Everything else being equal, when customers are risk-averse, they will choose the
service with the lowest risk perception.
(True; Easy; p. 38)
14. Evidence management is a somewhat disorganized approach to presenting customers

with coherent evidence of a firm’s abilities, like employee dress and furnishings.
15. Customers that have no relevant prior experience with a firm may base pre-purchase
expectations on word-of-mouth comments, news stories, or the firm’s own
marketing efforts.
(True; Easy; p. 40)
16. Consumers will desire a particular level of service, but are willing to accept an
adequate level of service and the gap between the two levels is called the zone of
acceptance.
16
17. A service encounter is a period of time during which you, as a customer, interact
with a service provider.
(True; Easy; p. 43)
18. High-contact encounters between customers and service organizations differ sharply
from low-contact encounters.
19. Experience shows that successful personal relationships, built on trust, cannot be
created and maintained simply through telephone and e-mail contact.
20. Service personnel may play roles that are very different from their own personalities.
Short Answer
21. Service consumption can be divided into what three principal stages?
Prepurchase, service encounter, and post-purchase.

(Easy; p. 34)
22. Give an example of a prepurchase risk-reduction strategy.
Seeking information from respected personal sources (relying on a firm that has a
good reputation, looking for guarantees and warranties, visiting facilities, asking
knowledgeable employees, examining tangible cues, or using the Web to compare
offerings).
(Moderate; p. 36)
23. Give an example of a social risk involved in using a service.
What will my friends think of me if they learned I used this service?

(Easy; p. 37)
24. Define “high-contact service.”
A high contact service entails interaction throughout the service delivery process
between customers and the organization.
(Easy; p. 45)
25. What is the service delivery system?
The visible part of service operations system as well as the customer and other
customers make up the service delivery system.
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(Moderate; p. 47)
Essay
26. Describe what is meant by adequate service, predicted service, and zone of tolerance.
Adequate service is the minimum level of service a customer will accept without
dissatisfaction. Predicted service is the level of service that the customer actually
anticipates the firm will provide. The zone of tolerance is the extent of variation of
service customers are willing to accept. Adequate service falls at the bottom of the
zone of tolerance, whereas predicted service is likely in the middle of the zone of
tolerance.
(Moderate; p. 42)
27. Describe the servuction system for a high-contact service like an upscale restaurant.
The service operations system of a restaurant would consist of the kitchen and cooks
at its technical core that would be backstage. The interior and exterior of the facility,
visible equipment, and wait staff are also part of the service operations system, but
are visible to the customer. Other customers would also patronize the restaurant at
the same time and might have an impact on customer perceptions. The visible
facilities, backstage technical core, staff, and other customers comprise the service
delivery system. Together, they make up the servuction system.
APPLICATION CONTENT
28. To develop effective marketing strategies, marketers must understand how people
make decisions about buying and using service, what the experience of service
delivery and consumption is like for customers, and ____________.
a.how they evaluate competitors
b.how they evaluate the experience
c.how often they utilize competitors
d.how often they complain to the service firm
e.the length of their relationship with the service firm
(b; Challenging; p. 36)
29. An example of a service high in credence attribute is _____________.

f. Extreme sports
g.vacation
h.spa
i. musical performance
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j. surgery
30. XL Capital portrays its logo as a giant obelisk between cliffs and a lighthouse to
____________.
f. build trust with its clientele and generate a moment of truth.
g.demonstrate its size and fundamental strength in protecting companies from risk.
h.provide detailed information about its financial solubility.
i. provide a visual example of its prowess to enhance experiential attributes.
j. act as an advertisement that highlights important aspects of the company.
31. For customers of credit card companies, which of the following statements are true?
f. When they make calls to the call center, these are usually the few moments of
truth.
g. There is very little of the theater performance.
h. They usually experience high-contact with the service personnel.
i. Only A and B.
j. All of the above.
(d; Challenging; p. 47)
32. Dental customers ____________ to avoid delays and ensure effective use of dental
professionals’ time.
f. sit quietly in the waiting room
g.commit positive word-of-mouth
h.confirm and honor appointments
i. should get to know hygienists
j. provide accurate histories
(c; Easy; p. 49)
True/False
33. For B2B services, trade shows can be a way to create a need and engage customers’
interest.
(True; Easy; p. 35)
34. McAfee uses free trial to create more search attributes to assist prospective
customers.
(True; Easy; p. 38)
35. Airlines are considered a low-contact service when compared to auto repair.
36. Thoughtful banks place a telephone beside their ATMs so that customers can call a
real person.
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(True; Easy; p. 45)
37. A dental hygienist confirming needs and setting appointment dates with patients is
part of the service script for teeth cleaning.
Short Answer
38. How many needs be triggered in the pre-purchase stage?
People’s unconscious mind (dreams, ego need, personal identity etc.)

Physical conditions (hunger, thirst, pain etc.)
External sources (firm’s advertising, third party websites etc.)
(Moderate, p. 35)
39. Give an example of a service’s search attribute.
Restaurant—restaurant positioning (type of food, location, parking availability).

(Easy; p. 36)
40. Give an example of a restaurant’s credence attribute.
Kitchen hygiene.
(Moderate; p. 36)
41. What types of risks might be inherent in making an online textbook purchase?
Financial—extra fees or failure to receive the book.

Physical—book shows up damaged.
Temporal—book does not show up before class starts.
Functional—book does not help the student pass the class.
(Moderate; p. 37)
42. What type of risk reduction strategy would you suggest a golf course employ to
reduce customer fears about rain cancellations?
Provide rain checks that allow consumers to continue play at a later date.
(Moderate; p. 38)
Essay
43. Describe how the three-stage model of service consumption could explain consumer
behavior in a low-contact service like investing.
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The three-stage model of service consumption begins with the prepurchase stage
where consumers become aware of a need. Also in this stage is information search,
where needs are clarified, possibly through surfing the Web and making phone calls.
In the case of an investing service this might involve reading the Web site
information for various Web sites like eTrades or Schwab. Evaluating alternatives is
also in this stage. In the investment scenario this might involve more Web site
analysis, phone calls and e-mail with account representatives. The second stage is
the service encounter stage. Here, service is requested from the supplier, in this case
via e-mail or Web site transaction. The final stage is the post-encounter stage. Here
the investor determines how well the firm performed over a period of time and
makes a determination about future transactions with the firm.
44. Describe how a firm like AOL can reduce customer perceptions of risk?
AOL can create more search attributes by offering free trials. The Internet provider
offers potential customers free service for a limited time. This allows consumers to
utilize the service without cost with the hope that consumers will be hooked on the
service by the end of the free trial period.
(Moderate; p. 38)
45. How can advertising help reduce customer risk perceptions of a service firm like
Visa credit cards?
Advertising helps customers visualize service benefits. The only tangible thing a
credit card consumer receives is a plastic card. The advertisements therefore tend to
highlight intangible aspects of the card. Advertisements may show exciting products
and vacations that can be bought with the card. Supplementary services like low
interest rates or fees are also advertised.
(Moderate; p. 38)
Chapter 3
Positioning Services in Competitive Markets
GENERAL CONTENT
1. Brand positioning can do all of the following except ____________.

a. generate interest in a service
b. create awareness for a service
c. meet customers’ needs for a service
d. differentiate a service
e. increase adoption of a service
(c; Challenging; p. 58)
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2. Which of the following is NOT one of the four basic focus strategies?
a. Service focused
b. Unfocused
c. Fully focused
d. Refocused
e. Market focused
(d; Easy; p. 59)
3. A ____________ is composed of a group of buyers who share common

characteristics, needs, purchasing behavior, or consumption patterns.
a. target class
b. class
c. focal segment
d. market segment
e. target segment
4. A(n) ____________ is one that a firm has selected from among those in the broader
market and may be defined on the basis of several variables.
a. general segment
b. segmentation field
c. target segment
d. holistic segment
e. mass customization
(c; Easy; p. 60)
5. The same individuals may set different priorities for attributes according to all
EXCEPT which of the following?
a. The purpose of using the service.
b. Who makes the decision.
c. The timing of use.
d. Whether the individual is using the service alone or with a group.
e. The cost of the service.
6. Which of the following is the best example of a determinant characteristic for airline
travel?
a. Oxygen masks
b. Plane size
c. Quality of food and drinks
d. Having cocktail service
e. Floatation devices
22
7. ____________, refers to an explicit form of positioning strategy that is based upon
offering several price-based classes of service concept, each based on packaging a
distinct level of service performance across many attributes.
a. Service tiering (phân cấp)
b. Service conscription
c. Broad-basing
d. Price-setting
e. Matching
8. Which of the following is NOT one of the four principles of positioning according to
Jack Trout?
a. A company must maintain a strong labor base.
b. A company must establish a position in the minds of its targeted customers.
c. The position should be singular, providing one simple and consistent message.
d. The position must set a company apart from its competitors.
e. A company cannot be all things to all people—it must focus its efforts.
(a; Moderate; p. 65)
9. Market analysis addresses all of the following factors EXCEPT ____________.

a. overall level of demand
b. trend of demand
c. government regulations
d. geographic location of demand
e. market analysis addresses all of the above factors
(c; Easy; p. 68)
10. Competitive analysis addresses all of the following factors EXCEPT ____________.
a. examines competitors’ strengths
b. identifies competitors’ future positioning
c. examines competitors’ current positioning
d. examines competitors’ weaknesses
e. suggests opportunities for differentiation
Which of the following is most likely the determinant attribute for customers of bus
service.
a.number of bus
b.Reach
c.bus times
d.online booking of services
e.Staff attitude
A company that offers a wide range of services to a narrowly defined target segment is
using ____________ strategy
23
a.Market focus
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
Mc Donald serves a broad customer base with a largely standardized product. Which of
the followings best describe their strategy?
a.Market focus
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
Disney creates fantasy for children all over the world with their TV Channel, Retail store,
Theme Park, etc... Which of the followings best describe their strategy?
a.Market focus
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
_____________strategy often looks attractive because firm can sell multiple services to a
single buyer.
a.Market focus
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
_____________strategy often allows companies to charge premium price because of their

expertise in the market
a.Market focus
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
Companies that use ____________strategy might be in danger of being "Jacks of all

trades and masters of none".
a.Market focus
24
b.Fully focus
c.Service focus
d.Customer focus
e.Unfocus
Which one of the following is NOT a basic elements to write a good positioning
statement:
a.Target Audience
b.Range of Price
c.Frame of Reference
d.Point of Different
e.Reason to Believe
True/False
11. It is usually a good idea for firms to try to appeal to all potential buyers in a market,
because customer variety leads to full capacity.
12. Market niches that seem too narrow to offer sufficient sales in one country are
indicative of globally narrow market niches.
13. A fully-focused organization concentrates on a narrow market segment, but has a

wide range of services.
14. One of the reasons why firms with a narrow product line elect to serve multiple
segments is to create a portfolio of customers that hedge against low demand risks.
(True; Challenging; p. 59)
15. A service-focused firm offers a narrow range of services to a fairly broad market.
16. A target segment should only be selected on the basis of their sales and profit
potential.
17. No service attribute can be easily quantified because of the intangibility of services.
18. Positioning plays a pivotal role in marketing strategy, because it links market
analysis and competitive analysis to environmental analysis.
25
19. The objective of internal corporate analysis is to identify the organization’s
resources, any limitations or constraints, its goals, and how it values shape the way it
does business.
(True; Easy; p. 68)
20. The best way to anticipate possible competitive responses is to identify all current or
potential competitors and to put oneself in their own management’s shoes by
conducting an internal corporate analysis for each of these competitors.
Short Answer
21. What are the two dimensions along which a company’s focus can be described?
Market and service.

(Easy; p. 59)
22. What are the characteristics of an unfocused service category?
Serving broad markets and providing a wide range of services.

(Moderate; p. 59)
23. Distinguish between important and determinant attributes
Important attributes represent what customer’s value in a service, whereas

determinant attributes are those that actually determine buyers’ choices between
competing alternatives.
(Moderate; p. 63)
24. Why is it possible to segment customers according to price levels?
Customers have different sensitivities to price. Price insensitive customers are

willing to pay a relatively high price to obtain high levels of service. Price sensitive
customers look for inexpensive service with relatively low levels of performance.
(Moderate; p. 64)
25. What are the three types of analysis to consider when developing a market
positioning strategy?
Market analysis, internal analysis, and competitor analysis.

(Moderate; p. 67)
Essay
26
26. Explain what a fully-focused and a market-focused strategy are and discuss the
opportunities and risks inherent in selecting each strategy.
A fully-focused organization provides a limited range of services to a narrow and

specific market segment. Opportunities in this strategy include developing
recognized expertise that retains a competitive advantage over other firms. A risk is
that the market may be too small to generate the volume of business necessary.
A market-focused organization concentrates on a narrow segment with a wide range

of services. This strategy offers the opportunity to sell multiple services to a single
customer that enhances the value of promotional efforts. Managers need to ensure
that the firm has the ability to excel at many different tasks and understand what
services go together per customer purchasing practices and preferences.
27. What are the advantages of positioning charts?
Graphic representations of a firm’s profile and product positions are much easier to
understand than tables of quantitative data or paragraphs of writing. Charts and
maps can help to achieve a “visual awakening.” By allowing senior managers to
compare their business with that of competitors and understand the nature of
competitive threats and opportunities, visual presentations can highlight gaps
between how customers (or potential customers) see the organization and how
management sees it. This can thus help confirm or get rid of beliefs that a service or
a firm occupies a unique position in the marketplace.
(Moderate; p. 76)
APPLICATION CONTENT
28. Bright Horizons strategy included which of the following?

a. Marketing services to employers instead of parents.
b. Hiring inexpensive labor.
c. Commoditized service offerings.
d. Heavy regulatory oversight.
e. All of the above are strategies employed by BH.
29. Segmentation variables at Contiki Holidays include all of the following EXCEPT
____________.
a. geographic
b. income
c. lifestyle
d. household size
27
e. age
30. Which of the following is most likely the determinant attribute for customers of
CEVA Logistics, who have global operations?
a. number of trucks
b. reach
c. delivery times
d. mode of delivery
e. online booking of services
31. Capsule hotels originated from _____________.

a.New York
b.London
c.Japan
d.India
e.Malaysia
(c; Easy; p. 65)
32. Grant Thornton, the fifth largest firm in the accounting industry, has successfully
positioned itself as offering ____________ and having ____________.
a.high investment yield; “a passion for the business of accounting”
b.limited financial obligation; “a desire to exceed expectations”
c.easy access to partners; “a passion for the business of accounting”
d.low employee turnover; “a desire to exceed expectations”
e.high asset turnover; “a passion for the business of accounting”
True/False
33. United Church Homes & Services offers housing to retirees. This is an example of a
market focused strategy.
34. Rentokil started off as a firm that manufactured rat poison and a pesticide for killing
leeches.
35. Yotel and Qbic are capsule hotel chains.

(True; Easy; p. 65)
36. Bright Horizons used low-cost strategies to achieve their competitive advantage.
28
37. Google has expanded its offerings to include Google Earth and You Tube in order
increase sales and attract new customers.
Short Answer
38. Give an example of service tiering in the airline industry.
Classes (first, business, economy),

(Easy; p. 64)
39. Give an example of an industry that utilizes service tiering.
Hotels, airlines, car rentals, hardware and software support, healthcare insurance,
cable television, and credit cards.
(Easy, p. 64)
40. Give an example of a key service attribute used in transportation services.
punctuality.
(Easy; p. 64)
41. What were the main benefits of capsule hotels when they first started up?
Convenience and price.

(Easy; p. 65)
42. Give an example of a service firm that used the blue ocean strategy to make
competition irrelevant.
Cirque du Soleil changed the image of circus shows with its brand of ballet and
theater.
(Moderate; p. 69)
Essay
43. Discuss the analysis that took place to develop Bright Horizons and the ways in
which they overcame unappealing industry characteristics.
Bright Horizons (BH) is a childcare company that was born from an industry with
many unappealing characteristics. The firm’s analysis showed an industry with no
barriers to entry, chronically low margins, high labor intensity, no proprietary
technology, low economies of scale, weak brand distinction, and heavy regulatory
oversight. Instead of establishing new independent centers, BH formed partnerships
29
with companies to provide daycare services to employees with small children. The
advantages over traditional methods included a powerful, low-cost marketing
channel, a partner to supply the capital to build and outfit the centers, a partner with
a vested interest in the success of the programs, and proximity benefits to parents.
(Moderate; p. 57)
44. How did Rentokil Initial grow from a manufacturer of rat poison, to the world’s large
business support services company?
Through growth within the firm and buying over other companies, Rentokil Initial
has developed an wide range of products that includes testing and safety services;
security; parcels delivery; interior plants landscaping (including sale or rental of
tropical plants); specialized cleaning services; pest control; rental and cleaning of
uniforms; clinical waste collection and disposal; personnel services; and a washroom
solutions service. The firm sees its core competence as “the ability to carry out high
quality services on other people’s premises through well-recruited, well-trained, and
motivated staff.” Promoting use of additional services to existing customers is an
important part of the firm’s strategy. Initial Integrated Services offers clients full
integration of services. Clients purchase sector-specific solutions that deliver
multiple services but features just “one invoice, one account manager, one helpdesk,
one contract and one motivated service team”. Rentokil Initial’s success lies in its
ability to position each of its many business and commercial services in terms of the
company’s core brand values, which include providing superior standards of
customer care and using the most technically advanced services and products.
(Moderate; p. 61)
45. Discuss who Smart Communication Ltd’s customers are and some of the unique
ways Smart Communication Ltd goes about servicing them.
Smart Communications Ltd’s customers are the low-income group in Philippines.

When they wanted to target that group of customers, they looked at Proctor and
Gamble for ideas on how to keep product prices low. They found that there are
micropacks for items such as shampoo, soaps, and food at low-ticket prices.
Therefore, when they launched their mobile service to the low-income group, they
offered prepaid pricing plans with airtime in small packages, with prices in small
denominations that started from as low as US$0.50. This strategy turned out to be a
resounding success.
(Moderate; p. 62)
Chapter 4
Developing Service Products: Core and Supplementary Elements
30
GENERAL CONTENT
1. ____________ facilitate use of the core product and add value and differentiation to
the customer’s overall experience.
f. Fixed services
g. Value-added provisions
h. Marketing theories
i. Supplementary services
j. Service providers
2. ____________ supply the central, problem-solving benefit that customers seek.

f. Core products
g. Supplementary services
h. Delivery processes
i. Sustaining processes
j. Conditional services
3. ____________ augment the core product, both facilitating its use and enhancing its
value and appeal.
f. Core products
g. Supplementary services
h. Delivery processes
i. Sustaining processes
j. Conditional services
(b; Easy; p. 86)
4. A company’s ____________ helps to determine which supplementary services should

be included.
f. location
g. delivery system
h. key service representative
i. service atmosphere
j. market positioning strategy
(e; Easy; p. 88)
5. The order-taking process should be ____________, ____________, and

____________ so that customers do not waste time and endure unnecessary mental
physical effort.
a. short; curt; abrupt
b. simple; slow; effortful
c. short; sweet; ineffective
d. powerful; simple; abrupt
31
e. polite; fast; accurate
(e; Easy; p. 90)
6. ____________ represent a special type of order taking that entitles customers to a

specific unit of service.
f. Suggestions
g. Reservations
h. Trackers
i. Repossessions
j. Contracts
(b; Moderate; 90)
7. At its simplest, ____________ consists of immediate advice from a knowledgeable

service person in response to the request: “What do you suggest?”
f. billing
g. payment
h. consultation
i. hospitality
j. selling
(c; Easy; p. 92)
8. Which of the following is NOT considered an example of a hospitality element?

f. Greeting
g. Toilets and washrooms
h. Advice
i. Food and beverages
j. Transport
9. Which of the following is NOT one of the eight basic steps to developing and
delivering a branded customer experience?
f. Target profitable customers, employing behavior segmentation rather than
demographics.
g. Achieve a superior understanding of what your targeted customers value.
h. Design facilities that delight your customers and reduce complaints.
i. Give employees the skills, tools, and supporting processes needed to deliver the
defined customer experience.
j. Make everyone a brand manager.
10. Which of the following is NOT one of the seven categories of new services?
a. Target profitable customers, employing behavior segmentation rather than
demographics.
b. Achieve a superior understanding of what your targeted customers value.
c. Design facilities that delight your customers and reduce complaints.
32
d. Give employees the skills, tools, and supporting processes needed to deliver the
defined customer experience.
e. Make everyone a brand manager.
____________ services tend to be the most demanding in terms of supplementary

elements.
a.Information Processing
b.People Processing
c.Possession Processing
d.Mental Stimulus Processing
DHL offers customers the opportunity to track the movements of their packages, which
have been assigned a unique identification number. This is an example of ____________.
a.order-taking
b.safekeeping
c.information
d.consultation
e.exceptions
Customers who visit Giordano outlets are greeted with a cheerful "Hello" and "Thank
you" when they enter and leave the store. That is an example of ____________ .
a.Consultation
b.Hospitality
c.Exceptions
d.Courtesy
e.Safekeeping
Singapore Airlines Raffles Class is an example of a(n) ____________.

a.branded house
b.endorsed brand
c.house of brands
d.sub-brand
e.clear strategy
A company's ____________ helps to determine which supplementary services should be

included.
a.Location
b.delivery system
c.key service representative
d.service atmosphere
e.market positioning strategy
33
Which one of the following is NOT a facilitating service?
a.Information
b.Consultation
c.Order Taking
d.Billing
e.Payment
One example for Information in The flower of service is__________

a.Foods and Drinks
b.Greetings from staff
c.Train Schedule
d.Invoice
e.Seats
A thoughtful bank would position their ATM machine at brightly and visible location.
This is an example of_______________
a.Counseling
b.Information
c.Hospitality
d.Safekeeping
e.Exception
Handling customer complaints is included in__________

a.Counseling
b.Information
c.Hospitality
d.Safekeeping
e.Exceptions
Giordano, an international clothing retailer greets their customers with "hello" when they
enter the store and "thank you" when they leave, even if they did not buy anything.
Giordano is enhancing their core service with _________
a.Counseling
b.Information
c.Hospitality
d.Courtesy
e.Exception
Virgin Group applies its brand name to multiple offerings in unrelated fields from airline
industry to finance. This is an example of __________branding strategy.
a.Branded House
34
b.Subbrands
c.Endorsed Brands
d.House of Brands
e.Private Brands
An example of House of Brands is ____________

a.Mobifone has lots of service package such as MobiGold, MobiQ, MobiStudent, etc...
b.Mc Donald promotes their special item Big Mac
c.Addidas opens their new store chain Addidas Neo
d.GGG operates Kichikichi, Ashima, Sumo BBQ in Vietnam
e.Disney uses the name for a wide range of services aiming at children
Creating E-banking channel to complement current banking service is__________

a.Style change
b.Service Improvement
c.Supplementary service innovations
d.Process line extensions
e.Product line extension
Changing the color in restaurant is______________

a.Service improvements
b.Supplementary service innovations
c.Major service innovations
d.Major process innovations
e.Style changes
A beach hotel starts to accept credit cards for payment, this is an example of __________
e.Style changes
First Bus employees recently received their staff uniform. The blazer now includes a
pocket on the inside so hold a mobile phone; an item given to all drivers to report
emergencies or breakdown? The new blazer's development to service is classed as:
e.Style changes
35
True/False
11. Information processing services tend to be the most demanding in terms of

supplementary elements.
12. The search for competitive advantage rarely centers on supplementary services.
13. The delivery process surrounding the core product of an overnight hotel stay includes
scheduling, nature of process, customer role and service level.
(True; Easy; p. 87)
14. Service marketers need to create a coherent offering in which each element is
compatible with the others and all are mutually reinforcing.
(True; Easy; p. 88)
15. Core products are surrounded by supplementary elements from each of the eight
clusters of supplementary services.
16. To obtain full value from any good or service, customers need relevant information.
17. Hospitality represents a more subtle approach to consultation because it involves

helping customers better understand their situations.
18. “Exceptions” involve supplementary services that fall outside the routine of normal
service delivery.
19. Branding can only be used at the company level for service businesses.
20. Supplementary service innovations are the most common type of innovation.
Short Answer
21. What three components must the value proposition address and integrate?
Core products, supplementary services, and delivery processes.
36
(Moderate; p. 86)
22. What four things must the design of the service offerings address?
How the different service components are delivered to the customer, the nature of
the customer’s role in those processes, how long delivery lasts, and the prescribed
level and style of service to be offered.
(Moderate; p. 87)
23. List three examples of order-taking elements in order entry.
On-site order fulfillment.

Mail/telephone order placement.
E-mail/Web site order placement.
(Moderate; p. 90)
24. Give two examples of billing elements.
Periodic statements of account activity.

Invoices for individual transactions.
Verbal statements of amount due.
Machine display of amount due.
Self-billing (computed by the customer).
(Moderate; p. 91)
25. Give an example of a consultation element.
Advice—personal counseling, tutoring/training in product use, or management or

technical consulting.
(Easy; p. 92)
37
Essay
26. Describe the four types of “exceptions” listed in the chapter.
Special requests are one type of exception. These involve a departure from normal
operating activities and are common in travel and hospitality industries. Problem-
solving refers to an exception where normal service fails to run smoothly as a result
of accidents, delays, etc. Handling of complaints/complements/suggestions help
service providers react quickly to failures and thrive off of complements. Restitution
is the final type of exception listed. This involves repaying customers for severe
performance failures.
27. Discuss the three factors that discriminate between successful and unsuccessful new
financial services.
The three factors that lead to success in new financial services are market synergy,
organizational factors, and market research factors. Market synergy refers to the
ability of new offerings to fit well with the existing image of a firm, to meet
customer needs, and to receive strong support from a firm and its branches.
Organizational factors include strong interfunctional cooperation and coordination
and a clear direction for the development team. Finally, market research is conducted
early in the development process with a clear idea of the type of information needed.
APPLICATION CONTENT
28. DHL offers customers the opportunity to track the movements of their packages,
which have been assigned a unique identification number. This is an example of
____________.
f. order-taking
g. safekeeping
h. information
i. consultation
j. exceptions
29. Customers who visit Giordano outlets are greeted with a cheerful “Hello” and
“Thank you” when they enter and leave the store. That is an example of
____________ .
f. consultation
g. hospitality
h. exceptions
38
i. courtesy
j. safekeeping
30. Which of the following is an example of a special request in advance of service

delivery?
f. Dietary requirements
g. Complaints
h. Warranties
i. Refunds
j. Suggestions
(a; Easy; p. 95)
31. Singapore Airlines Raffles Class is an example of a(n) ____________.

f. branded house
g.endorsed brand
h.house of brands
i. sub-brand
j. clear strategy
32. Which of the following is NOT one of British Airways seven distinct air travel
products?
a.Deluxe service (First Class)
b.Club World (Business Class)
c.Club Britain (Business Class)
d.Club Europe (Business Class)
e.Euro-Traveler (Economy Class)
True/False
33. For self-service payment, customers may make payment by inserting coins,
banknotes, tokens or cards into machines.
(True; Easy; p. 91)
34. Singapore Airlines is well recognized for both their superior meals and attentive
cabin crew.
35. The difference between a product and a service is that a product is a bundle of output
while a service is a bundle of supplementary services.
39
36. The term “branded house” is used to describe firms like Virgin Group, that uses
distinct individual brand names to cover a range of diverse service offerings in
unrelated fields.
37. Westin hotels are wholly owned subsidiaries of Marriott Group that are usually not
identified as part of Marriott to protect Westin’s exclusive image.
Short Answer
38. What are the two roles of supplementary services?
Facilitating or enhancing.
(Moderate; p. 88)
39. Give two examples of facilitating services.
Information, order-taking (billing, payment).

(Moderate; p. 88)
40. Give two examples of enhancing services.
Consultation, hospitality (safekeeping, exceptions).

(Moderate; p. 88)
41. What are the branding alternatives for service firms?
Branded house, subbrands, endorsed brands, and house of brands.

(Moderate; p. 97)
42. Provide an example of a major process innovation.
University of Phoenix competes with other universities by delivering their courses

online or in rented facilities at night. It does not have any permanent campus.
40
Essay
43. Explain how the core product, supplementary services, and delivery processes are
integrated in the context of an overnight hotel stay.
The core product refers to the overnight rental of a bedroom. Its components are
service level (e.g. luxury versus economy), scheduling (how long the room is
available), nature of the process (in this case people processing), and the customer’s
role in consumption of the room. Supplementary services include things like
parking, room service, reservations, and a breakfast buffet. Delivery of both the core
and the supplementary services is provided electronically, via hotel employee, or by
the customer. Phone use and pay TV are automatically billed to the room. Room
service and check-in are provided by a hotel employee. Most breakfast buffets are
self-service, requiring the customer to take action.
(Moderate; p. 87)
44. Discuss how multi-brand strategies can succeed and what the strategies should be
based on in the hotel industry.
Many hotel chains offer groups of sub-brands or endorsed brands. For example,
Hilton Hotels Corporation has ten sub-brands, while Marriott International has
fifteen. To succeed, each sub-brand must offer a distinct value to customers. For
example, catering to the ultra wealth at one end of the spectrum with one brand and
also serving the economy class with another brand. Accommodations, amenities, and
service must be consistent with the level of customer sought. Target considerations
include, short-term versus extended stay, business versus pleasure, and ability to pay
matched with customer needs and desires.
45. Explain where Sun Microsystems falls on the spectrum of branding alternatives and
discuss what their strategy involves.
Sun Microsystems utilizes a sub-branded strategy. The company offers a

comprehensive hardware and software support program with four different levels of
support. These range from bronze to platinum. Different levels of support give
customers the flexibility to tradeoff price for increased service. For example, 24/7
service is costly, but potentially necessary for some high-powered business
customers.
Chapter 5
Distributing Service through Physical and Electronic Channels
41
GENERAL CONTENT
1. When customers visit the service site, which factor/(s) must be considered in the
design of the service?
f. How expensive the service is.
g. Convenience of the location.
h. Operational hours.
i. A & B only.
j. B & C only.
2. _______________ is a key driver of channel choice.

f. Risk reduction
g. Convenience
h. Colorful photos of the product
i. Internet access
j. Lower prices
3. A truck stop is a good example of a ____________.

k. centralized control center
l. single-source facility
m. k-minus strategy
n. multi-purpose facility
o. cash cow
4. Which of the following is NOT one of the factors that encourage extended operating
hours?
k. Availability of employees to work during “social” hours.
l. Economic pressure from consumers.
m. Changes in laws.
n. Economic incentives to improve the use of assets.
o. Automated self-service facilities.
5. The four interesting innovations for service delivery arising from the Internet are all of
the following EXCEPT _____________.
k. creation of websites as a delivery channel for information-based services
l. DVDs that can store huge amounts of information
m. development of “smart” mobile phones linking users to the Internet wherever they
are
n. usage of voice recognition technology that allows customers to give information
and request service by speaking into a microphone
42
o. smart card containing a microchip acting as an electronic purse containing digital
money
6. All of the factors below are luring customers into virtual stores EXCEPT
____________.
k. potential for better prices
l. ease of search
m. broader selection
n. opportunities for networking
o. 24-hour service with prompt delivery
7. Integrating mobile devices into the service delivery infrastructure can be used as a
means to ____________ services, ____________ customers to opportunities or
problems, and ____________ information in real time to ensure that it is continuously
accurate and relevant.
f. Access; alert; update
g. Complement; alert; conceal
h. Access; attract; conceal
i. Access; guide; conceal
j. Complement; guide; conceal
8. ____________ has become a popular way to expand delivery of an effective service

concept, embracing all of the seven Ps, to multiple sites, without the level of
investment capital that would be needed for rapid expansion of company-owned and
managed sites.
k. The Internet
l. International trade
m. Franchising
n. Sole proprietorship
o. Limited partnership
(c; Easy; p. 126)
9. Franchisors usually seek to exercise control over all aspects of the service
performance through tightly defined ____________.
k. service standards
l. procedures
m. scripts
n. physical presentations
o. all of the above
(e; Easy; p. 126)
10. A local presence may be necessary when exporting information-based services for
which of the following reasons?
43
k. Appeasing local citizens.
l. Conducting secondary research.
m. Building personal relationships.
n. Bargaining for cheaper facilities.
o. Restructuring out of date systems.
Which one of the following methods is NOT a banking service that can be delivered
remotely?
a.Face-to-face.
b.Internet.
c.Mobile phone.
d.Call centers.
Customers would NOT prefer self-service channels when________

a.The services are perceived as complex and high risks
b.Customers look for functional aspects of the transaction
c.Customers are highly confidence and knowledge about the service
d.Customers are technology savvy
e.Customers seeking for convenient
What would NOT be distributed in service context?

a.Information flow
b.Promotion flow
c.Performance flow
d.Negotiation flow
e.Product flow
Which would NOT be an available distribution option for car wash service?
a.Customer goes to service organization
b.Service organization comes to customer
c.Customer and services organization transact remotely
d.All options would be suitable for carwash service
Which service would not suitable for remote transaction

a.House cleaning
b.Banking
c.Psychology consultation
d.Retail shop
e.CD rentings
44
Who is NOT going to choose electronic self-service channels over personal channels?
a.Customers with higher confidence
b.Customers with higher knowledge
c.Customers who look for functional aspects of service
d.Customers with social motives
e.Customers who like technology
Following are success factors for franchisors EXCEPT____________

a.The ability to achieve a larger size with a more recognitzable brand name
b.Offering franchisees fewer supporting services but longer term contracts
c.Building controlling relationship with franchisees
d.Having lower overhead per outlet
e.Providing accurate and realistic information for franchisees
True/False
11. Service delivery is shifting to arm’s length transactions for many services due to
advances in telecommunications.
(True; Easy; p. 112)
12. The convenience of service factory locations and operational schedules assumes
great importance when a customer has to physically present throughout the service
delivery or even just to initiate and terminate the transaction.
13. In general, service providers are more likely to visit corporate customers at their
premises than to visit individuals in their homes.
14. Physical logistics services now find themselves competing with telecommunications
services. This is a result of the instantaneous delivery capability of information-
based products.
15. All customers will eventually voluntarily shift from high-contact delivery
environments to new electronic channels.
16. The need for economies of scale often restricts choice of location for service
facilities.
17. A ministore is a single-site service business that involves creating an innovative

service factory.
45
18. Franchising is not an appealing strategy for growth-oriented service firms because
franchisees tend to be less motivated and less concerned about quality than managers
in company-owned stores.
19. An ongoing problem of franchising is that when franchisees gain experience, they
may start to feel that they should not be paying the various fees to the franchisor.
20. People, possession, and information-based services have strikingly similar

requirements on an international distribution strategy.
Short Answer
21. List the six options for service delivery (three natures of interaction between the
customer and service organization; two availabilities of service outlets) and provide
an example of a service that falls into each category.
Single Site Multiple Sites

Customer goes to the service organization theater bus service
Service organization comes to customer house painter mail delivery
Arm’s length credit card telephone
(Moderate; p. 112)
22. Describe arbitrage in the context of service provider pricing.
Arbitrage in service refers to customers taking information or benefits from an

expensive service and then placing an order with another, less-expensive service.
23. Give an example of a service with a locational constraint.
Ski resorts need to be in the mountains (beach resorts need to be at the beach).
(Moderate; p. 117)
24. List the five factors that encourage extended operating hours.
Economic pressure from consumers, changes in laws, economic incentives to

improve the use of assets, availability of employees to work during “unsocial” hours,
and automated self-service facilities.
46
25. List two of the four service delivery innovations facilitated by technology that are
described in the chapter.
1) Development of “smart” mobile phones and PDAs, and Wi-Fi high-speed

Internet, 2) usage of voice recognition technology, 3) creation of Web sites that
provide information, take orders and deliver information, and 4) commercialization
of smart cards containing microchips that store detailed customer information.
(Moderate; p. 121)
Essay
26. Describe the three ways information-based services can be distributed internationally
and give an example of each.
Information-based services can be exported to a local service factory. Movies made

in the United States are often shown in other countries. Customers can also be
imported to receive information-based services, as in the case of universities. The
other way information-based services can be distributed internationally is via
telecommunications export and then local transformation. This is how major credit
cards like Visa are able to offer customers financial services abroad.
(Moderate; p. 129)
27. Discuss the impacts of the cost globalization driver on people processing, possession
processing, and information-based processing service categories.
People processing may be affected by cost because of variable labor rates in labor-
intensive services. There would be a large difference in the cost of running a service
in a third-world country versus a developed nation. Variable labor rates may also
affect possession processing, as in automotive services. Skilled labor may be
difficult to come by, as in Somalia, or may be abundant, as in Germany. Major cost
elements of information-based services can be centralized and minor cost elements
localized.
APPLICATION CONTENT
28. ______________ is an example of a service where the main mode of delivery is for
the service provider to go to their customers.
k. Banyan Tree Resorts
l. Barnes and Nobles
m. Royal Flying Doctor
n. Starbuck
47
o. Dunkin’ Donuts
29. Elaborate statistical analysis, in the form of ____________, is sometimes used to aid
decisions on where to locate supermarkets and similar large stores relative to
prospective customers’ homes and workplaces.
k.binary regression
l. cluster analysis
m.structural equation models
n.gravity models
o.predictive models
30. Which one of the following methods is NOT a banking service that can be delivered
remotely?
k. Face-to-face.
l. Internet.
m.Mobile phone.
n. Call centers.
o. All of the above are bank service delivery methods.
31. Firms like Dunkin’ Donuts and Subway sharing space with quick service restaurants
is an example of a(n) ____________.
k.single source market
l. economy of scale
m. ministore
n.economy of scope
o.multi-brand strategy
32. Which of the following is an example of a franchised service firm?

k.Saks
l. Wal-Mart
m. Barnes & Noble
n.Starbucks
o.Pier One Imports
(a; Easy; p. 126)
True/False
33. Shanghai’s Maglev train helps to overcome the locational constraint of having the
airport sited in a far away place.
48
34. Taco-Bell’s K-Minus strategy is an example of an innovation in locating in multi-
purpose facilities.
35. First Direct is an example of a bank with too many branches.

36. First Direct describes itself as the largest virtual bank in the world.
37. Yellow pages has come up with a global positioning service so that customers can
click and download information to help them get from one place to another.
Short Answer
38. Give an example of a firm where the service provider visits the customers.
Compass Group, the largest food service organization in the United Kingdom and
Ireland.
(Moderate; p. 113)
39. What kind of service can DHL offer to its B2B and B2C clients?
It can store and arrange for express delivery of spare parts for aircraft (B2B
delivery). They can pick up defefctive cell phones from customers’ homes and return
the repaired phone to the customer (B2C pick up and delivery).
40. Give two examples of firms that locate themselves in multi-purpose facilities.
1) Laundromats, toilets, ATMs internet access, restaurants and inexpensive hotels in

at truck stops 2) Oil companies with small retail stores that sell car supplies, food,
and household products.
(Moderate, p. 119)
41. What are the three options for exporting people processing services?
Export the service concept, import customers, or transport customers to new

locations
42. Give an example of a firm that imports customers to its service facility.
Vail ski resort in Colorado (any specialist hospital).
49
(Easy; p. 128)
Essay
43. Describe Aggreko’s core business with specific reference to which of the six service
delivery options they employ.
Aggreko describes itself as “The world leader in temporary utility rental solutions.”
They provide mobile generators, oil-free air compressors, and temperature control
devices to businesses and governments around the globe. They would be categorized
as “Service organization comes to customer” and “Multiple Sites” because they
maintain 100 depots in 28 countries, while serving customers in 60 countries.
(Moderate; p. 114)
44. Describe the key drivers of how consumers choose between personal, impersonal,
and self-service channels.
Complex and high-perceived risk services, people tend to rely on personal channels.
Higher confidence and knowledge about a service and/or the channel are more likely
to lead to use of impersonal and self-service channels. Customers who look for the
instrumental aspects of a transaction prefer convenience that also leads to impersonal
and service channels. Customers with social motives tend to use personal channels.
The most convenient channel is also the most likely to be selected.
45. How do service processes affect international market entry for people processing,
possession processing and information-based service categories?
For people processing services, the service provider needs to have a local geographic
presence, stationing the necessary personnel, buildings, equipment, vehicles and
supplies within reasonably easy reach of target customers. For possession-processing
services, a local presence is required when the supplier must come to repair or
maintain objects in a fixed location. This is regardless of whether customers drop off
items at a service facility or personnel visit the customer’s site. For information-
based services, this includes two categories, mental processing service and
information processing services. They are the most interesting from the point of
view of global strategy development. Data is transmitted or changed to create value.
In theory, none of the information-based services require face-to-face contact with
customers.
Chapter 6
Setting Prices and Implementing Revenue Management
50
GENERAL CONTENT
1. Which of the following is NOT an objective for service pricing?

k. Build supply.
l. Build demand.
m. Seek profit.
n. Cover costs.
o. Build a user base.
(a; Easy; p. 136)
2. ____________ recognizes that resource expenses are linked to the variety and
complexity of goods and services produced and not just on physical volume.
p. Break-even analysis
q. Variable cost
r. Fixed cost
s. Activity-based costing
t. Semi-fixed cost
3. ____________ is defined as the sum of all the perceived benefits minus the sum of all
the perceived costs of service.
p. Net value
q. Consumer surplus
r. Gross value
s. Moderate value
t. Consumer demand
4. ____________, also known as customized or personalized pricing, refers to the

practice of price discrimination.
k. Critical ratio pricing
l. Dynamic pricing
m. Collective pricing
n. Fixed pricing
o. Classical pricing
(b; Easy; p. 142)
5. Which of the following intensifies price competition?

p. Non-price-related costs of using competing alternatives are high.
q. Wider distribution of competitor and or substitution offers.
r. Personal relationships have been established.
s. Switching costs are high.
t. Customer need for time and location specificity.
51
`
6. Which of the following reduces price competition?
k. Increasing the number of competitors.
l. Increasing the number of substituting offers.
m. Wider distribution of competitor and/or substitution offers.
n. High switching costs for consumers.
o. Increasing surplus capacity in the industry.
7. Revenue management is the most effective when applied to firms characterized by all
the following conditions EXCEPT ______________.
a. perishable inventory
b. relatively fixed capacity
c. varying customer price sensitivity
d. fixed inventory
e. variable demand
8. Price elasticity is computed as ____________.

a. percentage change in demand / percentage change in price
b. percentage change in price / percentage change in demand
c. percentage change in supply / percentage change in price
d. percentage change in demand / percentage change in supply
e. percentage change in price / percentage change in supply
9. Which of the following is NOT an example of a non-physical fence?

p. Time or duration of use.
q. Group membership.
r. Service level.
s. Flexibility of ticket usage.
t. Location of reservation.
10. Putting service pricing into practice includes thinking of all the following questions
EXCEPT ____________.
p. What should be the specified basis for pricing?
q. How much to charge?
r. What kind of customers should be charged more?
s. Who should collect payment?
t. When should payment be made?
(c; Easy; p. 158)
Which of the following is NOT an example of a non-physical fence?

a. Time or duration of use.
b. Group membership.
52
c. Service level.
d. Flexibility of ticket usage.
e. Location of reservation.
Which of the following is the best example of a service industry that utilizes price
complexity?
a. Fast food
b. Education
c. Cellular phone
d. Moving/transportation
e. Medical
A buyer's perception of value is considered a trade-off between

a. product value and psychic cost
b. total customer value and total customer cost
c. image value and energy cost
d. service value and monetary cost
e. personnel value and time cost
Total customer cost consists of all of the following components except:

a. monetary cost
b. social cost
c. time cost
d. psychological cost
e. physical cost
Service high on experience and credence attributes such as surgery would create high
_______________
a. monetary cost
b. social cost
c. time cost
d. psychological cost
e. physical cost
Which situation is NOT going to increase the price competition?

a. Higher number of competitors
b. Larger amount of substituting offers
c. Wider distribution of competitors
d. Lower demand
e. Reducing surplus capacity
Which circumstance is NOT going to help the service organization to reduce price
competitions
a. Non-price related cost of using competitors products are high
b. Personal relationships matter
c. Switching cost are high
53
d. Economic downturn makes customers become more price sensitive
e. Time and location specificity reduces choice
One example of basic product rate fences in hotel industry is:

a. Size and furnishing of a hotel room
b. Free breakfast at the hotel
c. Time of booking
d. 5 consecutive days of stays
e. Personal butler
Which one of the following is NOT a non-physical fences based on buyer characteristics?
a. Time of booking or reservation
b. Frequency or volume of consumption
c. Group membership
d. Size of customer group
e. Geographic location
Following ways help firms to improve customers' fairness perception

EXCEPT_____________
a. Use unpublished prices and frame fences as discounts
b. Use service recovery or deal with overbooking
c. Use bundling to hide discounts
d. Take care of loyal customer
e. Design price schedules and frame fence that are logical, clear and fair
The cost of an evening at the theater for a couple with young children usually far exceeds
the price of the two tickets. It can include expenses such as hiring a babysitter, travel,
parking, food and drink. These expenses are called________________
a. Moneytary cost
b. Operating cost
c. Incidental expenses
d. Physical cost
e. Psychological cost
True/False
11. Pricing is less complex in services than it is in manufacturing.

12. Customers will often pay more for services than they think they are worth.
13. Because quality is subjective, all customers have the expertise to assess the quality
and value they receive.
54
14. Business owners often fail to recognize the fixed costs that need to be recouped when
providing service.
15. Customers often incur significant financial costs in searching for, purchasing, and
using a service, above and beyond the purchase price paid to the supplier.
16. Shopbots help consumers combat dynamic pricing online.

17. Shopbots collect price and product information from multiple electronic vendors and
provide it to consumers.
18. Psychological costs relate to unpleasant sensations affecting any of the five senses.
19. Firms do not need to consider post-purchase costs, as they occur after the firm has
already secured a purchase.
20. Firms that are always reacting to competitors’ price changes run the risk of pricing
higher than might really be necessary.
Short Answer
21. What three components are considered in a pricing strategy?
Costs, competition, and value to customer.

(Moderate; p. 137)
22. What are the four distinct categories of non-monetary costs?
Time costs, physical costs, psychological costs, and sensory costs.

(Moderate; p. 143)
23. Under what situations can price competitions be reduced?
Some situations that reduce price competition are: when non-price-related costs of
using competing alternatives are high; when personal relationships matter; when
switching costs are high and when time and location specificity reduces choice.
(Moderate; p. 146)
55
24. What are rate fences? Provide examples to aid your explanation.
Rate fences can be either physical or non-physical. Physical fences refer to product
differences that may be due to different prices, such as the seat location in a theatre,
or the size and furnishing of a hotel room. Non-physical fences refer to consumption,
transaction or buyer characteristics. For example, they include staying a certain
length of time in a hotel, playing golf on a weekday afternoon, cancellation or
change penalties, or booking a certain length of time ahead.
(Moderate; p. 150)
25. How can firms have revenue management practices and yet still have customer
satisfaction, trust and good will?
They can design such that price schedules and fences are clear, logical and fair. High
published prices should be used, and fences should be framed as discounts rather
than surcharges. The benefits of revenue management should be communicated to
customer. Bundling is also a way to ‘hide’ discounts. Loyal customers should be
taken care of first, and finally, there should be service recovery procedures in place
to make up for overbooking.
Essay
26. Discuss how service firms can minimize non-monetary purchase costs.
Service firms have several options available for reducing the non-monetary costs
associated with service purchases. Operations experts can assist in reducing the time
required to complete purchases, delivery, and consumption. Psychological costs can
be reduced by eliminating or redesigning unpleasant or inconvenient procedures,
educating customers, and retraining staff to be friendlier and more helpful. Physical
efforts can be reduced during either the search or delivery process. More attractive
visual environments, reduced noise, more comfortable furniture and curtailing
offensive smells can decrease sensory costs.
27. Describe the concept of price elasticity and draw a graph comparing consumers with
high and low elasticity.
Price elasticity refers to the amount of impact price has on sales. Consumers are said
to be price elastic if small changes in price result in large changes in sales.
Consumers are said to be price inelastic if price has little effect on sales. Figure 6.16
depicts a comparison of these two groups.
(Moderate; p. 149)
56
APPLICATION CONTENT
28. Which of the following is NOT a firm that uses dynamic pricing?
p.Easyinternetcafe.com
q.Yahoo.com
r. Tickets.com
s. Amazon.com
t. All of the above firms use dynamic pricing.
(b; Moderate; p. 134 & 142)
29. Which of the following is NOT listed in the chapter as a firm that uses online reverse
auctions?
p.Priceline.com
q.Hotwire.com
r. eBay.com
s. Lowestfare.com
t. All of the above use online reverse auctions.
30. The amount of seats reserved for each class of American Airlines passengers on a
flight is referred to as a ____________.
p. field
q. row
r. column
s. bucket
t. gamble
57
31. Which of the following is the best example of a service industry that utilizes price
complexity?
p.Fast food
q.Education
r. Cellular phone
s. Moving/transportation
t. Roofing
32. Which of the following is the best example of a service firm that attracts customers
with low base prices and then piles on additional fees.
p.Rental cars
q.Fast food
r. Education
s. Roofing
t. Consulting
(a; Moderate; p.153)
True/False
33. Amazon.com is a good example of a firm that aggravated its customers with dynamic
pricing.
34. Tickets.com is a good example of a firm that successfully generated more revenue by
implementing dynamic pricing.
35. Airlines, hotels, and car rental firms are not very good at varying prices in response
to the price sensitivity and needs of different market segments.
36. Yield management computers can determine who is likely to not show up or take
other flights.
37. Freight companies often use a combination of distance and weight or shape of parcel
as a basis to price their services.
58
Short Answer
38. Name two e-tailers that utilize traditional auction models.
eBay and Yahoo!

(Moderate, p. 142)
39. Give an example of a tradeoff between monetary and non-monetary costs associated
with patronizing a dental clinic.
Paying a higher price for closer proximity or a shorter wait.

(Easy; p. 145)
40. Draw a graph of the relationship between price per seat on an airline and demand for
seats. Label each price bucket.
See Figure 6.18.

41. Relate fairness perceptions to DVD rental late fees.
Late fees for DVD rentals should not exceed the potentially lost revenue from rental
fees during the late period if fairness perceptions are considered.
42. Describe how rate fences should be used in a hair salon service.
Rate fences may be perceived as less fair if they are framed as surcharges instead of
discounts. A hair salon should thus set a higher weekend price and offer a discount
for weekday service.
(Moderate; p. 156)
Essay
43. Describe how airlines utilize revenue management to enhance profitability.
Revenue management involves setting prices according to predicted demand levels

among different market segments. Airlines utilize massive databases on past travel to
forecast demand and attempt to allocate optimal capacity to the least price sensitive
segments. For example, business travelers pay higher prices for booking flights
closer to travel dates, whereas vacationers book in advance. Higher demand travel
dates also garner higher prices.
59
44. Give an example of a service firm that uses service recovery to compensate for
overbooking and discuss how the firm compensates.
A Westin beach resort frees up capacity by offering guests who are departing the
next day the option of spending their last night a luxury hotel near the airport or in
the city at no cost. Guests gain variety and experience luxury that delights. The hotel
benefits by relieving needed capacity in exchange for a small cost.
(Moderate; p. 157)
45. Discuss how a health club could strategically manage capacity via payment
schedules.
Member usage patterns seem to be closely related to payment schedules. Members

seem to use the health club in the month immediately following payment and then
steadily decline in usage until the next payment. Members with monthly payment
plans use the facilities with greater frequency. This indicates that capacity could be
reduced and profits maintained by charging annual fees that are due outside of peak
months.
(Moderate; p. 160)
Chapter 7
Promoting Services and Educating Customers
GENERAL CONTENT
1. ____________ and ____________ represent important ways to add value to a product.

p. Reciprocation; classification
q. Information; classification
r. Information; consultation
s. Reciprocation; consultation
t. Reciprocation; mediation
2. One approach to training customers, recommended by advertising experts is to

____________.
u. train employees like customers
v. use radio advertising
w. show service delivery in action
x. design palpable service environments
y. explain service procedures in advance
60
3. In ____________ services, where much of the firm’s expertise is hidden, firms may
need to illustrate equipment, procedures, and employee activities that are taking place
____________.
u. high-contact; front-stage
v. low-contact; backstage
w. high-contact; backstage
x. low-contact; front-stage
y. high-contact; intangibly
4. Which of the following is NOT one of the four problems for marketers seeking to
promote a service’s benefits?
u. Distribution
v. Abstractness
w. Generality
x. Non-searchability
y. Mental impalpability
5. ____________ outside peak demand periods poses a serious problem for service
industries with ____________, like hotels.
p. Low demand; high fixed costs
q. Low demand; low fixed costs
r. High demand; high fixed costs
s. High demand; low fixed costs
t. High demand; low variable costs
6. Which of the following would be classified under generality in intangibility?

p. Safety.
q. A hamburger.
r. An airline seat.
s. Facility appearance.
t. Expert advice.
7. Ads based on ____________ strategies are often perceived as more informative than
____________ ads.
u. visualization; text-only
v. expert; power
w. visualization; affective
x. utilitarian; text-only
y. visualization; expert
8. Which of the following represents a broad target audience category?
61
p. Donors
q. Competitors
r. Employees
s. Contractors
t. Franchisers
9. Which of the following is NOT a common educational and promotional objective in

service settings?
u. Build awareness of and interest in an unfamiliar service or brand.
v. Reposition a service relative to competing offerings.
w. Familiarize customers with service processes in advance of use.
x. Encourage trial of competing products.
y. Recognize and reward valued customers and employees.
10. Which of the following is NOT a communication task for which marketers use the
Internet?
p. Promoting consumer awareness and interest.
q. Providing information and consultation.
r. Facilitating two-way communications with customers through e-mail and chat
rooms.
s. Enabling customers to place orders.
t. Reducing service demand through electronic tracking.
a
QN=12 Virgin Atlantic's advert promotes their 9 inch seatback screens audio and video
system with the message "Play with yourself - 9 inches of pleasure" is an example of
marketing communication help company to:
a. Position and differentiate service
b. Stimulate or dampen demand to match the capacity
c. Promote contribution of personnel and backstage operations
d. Add value through communication content
e. Facilitate customer involvement in production
b
QN=13 Which of the following is an example of marketing communications help to
stimulate or dampen demand to match the capacity
a. DHL advert shows the image of one of its staff with the message "Dedicated to going
beyond your expectation"
b. Alton tower gives away 2 free ticket for audience of The Sun newspaper
c. Easy Jet advertisement with the message "Your low cost hub!"
d. The ads with the picture of KFC founder Colonel Sander carrying a tray of KFC foods
and claiming himself as "woman's best friend"
62
e. FedEx advertisement showcased the awards it received for being rated as highest in
customer satisfaction for air, ground and international delivery
D
QN=14 Which of the following is not a recommended guideline for developing service
communications?
a. Tangibilize the intangible
b. Promise what is possible
c. Reduce consumer fears about the variation in performance
d. Make the service more abstract
e. Feature the working relationship between provider and customer
C
QN=15 Which of the following is a NOT role played by service marketing
communications?
a. Add value through communication content.
b. Facilitate customer involvement in service production.
c. Positioning to attract investors.
d. Stimulate or dampen demand to match capacity.
e. Position and differentiate the service.
D
QN=16 Which of the following is NOT an example of intangible abstract concept in
service promotion
a. Financial security
b. Expert advice
c. Safe transportation
d. Working timetable
e. Friendly staff
c
QN=17 Starbucks shows how coffee beans are cultivated, harvested and produced,
highlighting its use of the finest and freshest. This is an example of _________
a. Position and differentiate service
b. Stimulate or dampen demand to match the capacity
c. Promote contribution of personnel and backstage operations
d. Add value through communication content
e. Facilitate customer involvement in production
c
QN=18 Which of the following is NOT an element of a service's firm communication
mix?
a. Personal Selling
b. Sales Promotion
c. Positioning Strategy
d. Advertising
63
e. Publicity and Public Relation
D
QN=19 Which of the following is NOT a question in the check list for marketing
communication planning?
a. Who is the target audience?
b. What do we need to communicate and achieve
c. How should we communicate this?
d. How much should we spend?
e. When do the communications need to take places
a
QN=20 Productions channels communicate with the target audience
through_____________
a. Front line staff
b. Advertising
c. Public Relations
d. Direct Marketing
e. Word-of-mouth
A
QN=21 Marketing channels communicate with the target audience through following
sources EXCEPT___________
a. Front line staff
b. Advertising
c. Public Relations
d. Direct Marketing
e. Trade shows
E
QN=21 Following sources are originating within the organization thus they are controlled
by service firms EXCEPT___________
a. Front line staff
b. Advertising
c. Public Relations
d. Direct Marketing
e. Word-of-mouth
E
QN=22 Which of the following form of publicity is most porpular for B2B context?
a. Front line staff
b. Advertising
c. Public Relations
d. Direct Marketing
e. Trade-show
64
True/False
11. Communications is more than just advertising, public relations and professional
salespeople. It is also where marketers explain and promote the value proposition of
their offering.
12. Customers do not need training to help them perform well because they already
know what they want.
13. Publicizing price discounts is one way to encourage self-service on an ongoing basis.
14. In low-contact services, frontline personnel are central to service delivery.

15. Advertising and promotions do little to help change the timing of customer usage.
16. Mental impalpability refers to the fact that intangibles cannot be searched or
inspected before they are purchased.
17. Communication messages originate only from the marketing and service delivery
channels of the firm.
18. Sales promotion includes sampling, coupon, sign-up rebates, gifts, prize promotions
and special events.
19. Direct marketing involves efforts to stimulate positive interest in an organization and
its products by sending out news releases, holding press conferences, staging special
events, and sponsoring newsworthy activities put on by third parties.
20. Blogs (Web logs) are frequently modified Web pages in which entries are listed in
chronological sequence.
Short Answer
21. Give an example of an intangible abstract concept in service promotion.
65
Financial security (expert advice, safe transportation).
(Moderate; p. 173)
22. List an advertising strategy used to overcome mental impalpability aspects of a

service.
Case-history episode (service-process episode, service-consumption episode).

(Moderate; p. 172)
23. List an advertising strategy used to overcome non-searchability aspects of a service.
Consumption documentation (reputation documentation).

(Moderate; p. 172)
24. List the five W’s in the checklist for marketing communications planning.
Who is our target audience, what do we need to communicate and achieve, how
should we communicate this, where should we communicate this, and when do the
communications need to take place?
25. What are some communications tasks that marketers use the internet for?
Creating consumer awareness and interest; providing information and consultation;

allowing two-way communications with customers through email and chat rooms;
encouraging product trial; allowing customers to place orders; measuring the
effectiveness of specific advertising or promotional campaigns.
(Moderate; p. 181)
Essay
26. Describe the differences between traditional marketing communication strategies and
service business communication strategies.
Traditional marketing communication strategies were largely shaped by the needs

and practices associated with manufactured goods. Services require consideration of
intangibility of service performances, customer involvement in production, the role
of customer contact personnel, the difficulty in evaluating many services, and the
need to bring demand and supply into balance. Service quality is often subjective
and identical service performances may mean different things to different customers.
Most services also cannot be inventoried like manufactured goods and may be
subject to delivery constraints.
27. Discuss some of the key planning considerations of marketing communications.
66
Planning a marketing communications campaign should reflect a good
understanding of the service product and how well prospective buyers can evaluate
its characteristics in advance of purchase. It is therefore essential to understand
target market segments and their exposure to different media, as well as consumers’
awareness of the product and their attributes toward it.
(Moderate; p. 174)
APPLICATION CONTENT
28. ____________ uses the metaphor of reaching the top to appeal to their customers.
u. Prudential
v. Allstate
w.Accenture
x. MasterCard
y. Merrill Lynch
29. Tesco’s success is built on ____________.

u. direct marketing
v. advertising
w.personal selling
x. sales promotion
y. public relations
30. SAS International Hotels devised which of the following sales promotions targeted at
older consumers?
u.First to provide senior citizen discounts.
v.Provided a discount percent equivalent to their age.
w. A free hotel room if large family gatherings were held at the hotel.
x.Free ballroom service for large family gatherings.
y.Discount for large family gatherings.
31. ____________ refers to a group of technologies for distributing audio or video

programs over the Internet using a publisher/subscriber method.
z. Podcasting
aa.Webcasting
bb.Websiting
cc.Webenabling
dd.Webscribing
67
32. _____________ technology facilitates the rise of user-generated content.
u.Podcasting
v.Narrowcasting
w. TiVo
x.YouTube
y.Web 2.0
(e; Challenging; p. 185)
True/False
33. Accenture is a good example of a firm that helps it clients achieve high performance.
34. UPS is strongly associated with brown, which gives it the image of being reliable and
trustworthy.
35. Advertising serves to build awareness, inform, persuade, and remind.

36. DHL gained significant favorable publicity when it safely transported two giant
pandas from Chengdu, China to the National Zoo in Washington, D.C.
37. Pinstorm built a very successful model based on banner advertising.

Short Answer
38. Give an example of how Starbucks can show the contribution of service personnel
and backstage operations.
Starbucks has publicity materials and web pages showing customers what service
personnel are doing behind the scenes. Starbucks shows how coffee beans are
cultivated, harvested and produced, highlighting its use of the finest and freshest.
(Challenging, p. 171)
39. Give an example of a metaphor used to communicate a firm’s value proposition.
“You’re in Good Hands”—Allstate (Prudential’s use of the Rock of Gibraltar)

(Moderate; p. 173)
68
40. What form of communication, or communication medium, has made Google
immensely successful?
Word-of-mouth.
41. According to the chapter, why are BP’s bright green and yellow, Texaco’s red, black
and white, and Sunoco’s blue, maroon, and yellow so strikingly different?
Corporate design is particularly important for companies operating in competitive

markets. Gasoline is a particularly competitive industry and firms need to be easily
recognizable in different locations.
42. What is one of the most widely recognized corporate symbols in the world?
McDonald’s golden arches.

(Easy; p. 190)
Essay
43. Discuss mental impalpability and provide two examples of strategies in advertising
used by some firms to overcome mental impalpability.
Mental impalpability refers to the complexity, multidimensionality, or novelty of a

service such that it is difficult for consumers to understand what the experience of
using the service will be like and what benefits will result. An example of a firm that
utilizes advertising strategies to combat mental impalpability is Accenture, who uses
a golfing situation with Tiger Woods as a metaphor for the high-performance
business that Accenture can provide. Another example is the “priceless” experience
expressed by MasterCard advertising that shows all of the tangible and intangible
aspects of purchases that can be made with their service.
(Moderate; p. 173)
44. Discuss the impact that technology like TiVo has on marketing communications
efforts.
TiVo is the modern version of a VCR. It allows customers to pause and fast-forward
through programs. This technology allows consumers to skip commercials.
Developing a communications plan needs to account for this, specifically with
respect to employing alternative communications strategies. More interesting/
entertaining commercials that customers desire to watch and product placement in
television shows are some of the options available.
(Moderate; p. 184)
69
45. Discuss how firms use symbols as a basis for corporate branding.
Companies have succeeded in creating tangible, recognizable symbols to connect

with their corporate brand names. Animal motifs are common physical symbols for
services. Examples include the eagles of the US Postal Service (AeroMexico and
Eagle Star Insurance also feature an eagle), the lions of ING Bank and the Royal
Bank of Canada, the ram of the investment firm T. Rowe Price, the Chinese dragon
of Hong Kong’s Dragonair and the kangaroo on Qantas Airlines. Merrill Lynch, the
global financial services company, used its famous slogan, “We’re Bullish on
America” as the basis for its corporate symbol—a bull. Easily recognizable corporate
symbols are especially important when services are offered in markets where the
local language is not written in Roman script or where a significant proportion of the
population is are unable to read.
Chapter 8
Designing and Managing Service Processes
GENERAL CONTENT
1. Blueprinting is a more complex form of ____________.

u. linear graphing
v. flow charting
w. Cox & Snell analysis
x. non-linear graphing
y. cluster analysis
(b; Easy; p. 200)
2. The first step in developing a service blueprint is ____________.

z. to reach a consensus on which activities are more important than others
aa. to identify all the key activities involved in creating and delivering the service
bb. to identify the links between a set of alternative service possibilities
cc. to identify the key employees who will be enacting the service blueprint
dd. to identify the key customers who will be participating in the service
(b; Easy; p. 203)
3. Service blueprints ____________, and how these are supported by backstage activities
and systems.
z. enhance servicescape features such as furniture and lighting
aa. complicate employee handling of special requests
bb. clarify the interactions between customers and employees
cc. enhance customer technical know-how
dd. diminish customer complaining capacity
70
4. The line of ____________ divides front-stage activities from backstage activities.
z. service standards and scripts
aa. physical evidence
bb. internal physical interaction
cc. internal IT interaction
dd. visibility
5. Which of the following is NOT a key component of a service blueprint?

z. Line of transference
aa. Line of interaction
bb. Line of visibility
cc. Backstage actions by customer contact personnel
dd. Front-stage actions by customer contact personnel
6. The ____________ or ____________ includes both the ____________ and

____________ of a service facility.
u. roll; retrieval; implicit aspects; explicit aspects
v. stage; servicescape; exterior; interior
w. stage; service area; customers; employees
x. roll; canopy; employees; equipment
y. roll; service area; front-stage; backstage
7. Server ____________ ensure that service staffs do things correctly, as requested, in

the right order, and at the right speed.
u. kanbans
v. poka-yokes
w. jidokas
x. banzais
y. sodokus
8. Service process redesign efforts typically focus on achieving all EXCEPT which of
the following key performance measures?
u. Reduced number of service failures.
v. Reduced cycle time.
w. Enhanced productivity.
x. Increased profitability.
y. Increased customer satisfaction.
9. Service process redesign can be categorized into all EXCEPT which of the following
types?
71
z. Getting rid of non-value adding steps.
aa. Shifting to self-service.
bb. Delivering direct service.
cc. Separating services.
dd. Redesigning the physical aspect of service processes.
10. Which of the following is NOT an advantage of self-service technologies?

u. Greater choice of products
v. Higher perceived level of customization.
w.Convenience of location.
x. Greater control over service delivery.
y. Cost and time savings.
True/False
11. A blueprint specifies in some detail how a service process should be constructed.
12. A key characteristic of service blueprinting is that it makes little or no distinction

between what customers experience “front-stage” and the activities of employees
and support processes “backstage.”
13. A drawback of service blueprints is that they cannot give managers the opportunity
to identify potential fail points in the process where there is a significant risk of
things going wrong and diminishing service quality
14. Blueprints can pinpoint the stages in the process where customers commonly have to
wait.
15. Part of the challenge of implementing poka-yokes in service contexts is the need to
address not only server errors, but also customer errors.
16. Service staff poka-yokes usually focus on preparing the customer for the encounter,
understanding and anticipating their role in the service transaction, and selecting the
correct service or transaction.
17. Service process redesign encompasses reconstitution, rearrangement, or substitution

of service processes.
72
18. Customer participation refers to the actions and resources supplied by customers
during the service production and/or delivery process, including all but emotional
inputs.
19. A key problem with self-service technologies is that so few of them incorporate
service recovery systems.
20. SST is only better than the interpersonal alternative if it saves time, provides ease of
access, cost savings, or some other benefits.
Short Answer
21. What is flowcharting?
Flowcharting is a technique for displaying the nature and sequence of the different
steps in delivery service to customers.
(Moderate; p. 200)
22. List the nine components of a service blueprint.
1. Definition of standards for each front-stage activity.

2. Physical and other evidence for front-stage activities.
3. Main customer actions.
4. Line of interaction.
5. Front-stage actions by customer contact personnel.
6. Line of visibility.
7. Backstage actions by customer contact personnel.
8. Support processes involving other service personnel.
9. Support processes involving information technology.
23. How can firms prevent customer failures?
They can employ the three-step approach: 1) systematically collect information on

the most common failure points, 2) identify their root causes and 3) create strategies
to prevent the failures identified.
(Moderate; p. 212)
24. What does SST stand for?
Self-service technology.
73
(Easy; p. 219)
25. What three questions does Mary Jo Bitner suggest managers should put in their
firms’ SSTs to the test with?
Does the SST work reliably? Is the SST better than the interpersonal alternative? If
it fails, what systems are in place to recover?
(Moderate; p. 221)
Essay
26. Discuss the potential company benefits, potential customer benefits, and challenges
and limitations of the direct service approach to managing the service delivery
process.
Potential company benefits of the direct service approach include eliminating store
locations, expanding the customer base, and company differentiation. This is
because the direct approach takes a service to a customer. The benefits to customers
include increased convenience and improved access to the service. Challenges and
limitations involved in direct service include logistical burdens, cost, and a need for
credibility and trust. Reducing physical locations is often traded for an increase in
field staff and vehicles, which then must efficiently travel from one location to
another to serve customers.
(Moderate; p. 216)
27. Discuss the potential company benefits, potential customer benefits, and challenges
and limitations of the bundled service approach to managing the service delivery
process.
Potential company benefits of the bundled service approach include company

differentiation, customer retention, and increased per capita service use. These are
due to customers paying slightly less for each component, but more overall because
of the combination of services. Potential benefits to the customer include increased
convenience and customized service. Customers are better serviced because they do
not have to interact with multiple service organizations to achieve multiple similar
objectives. Challenges and limitations include an extensive understanding of the
target customer and the perception of wastefulness.
(Moderate; p. 216)
APPLICATION CONTENT
28. How many “acts” does a meal at Chez Jean consist of?
74
u.One act
v.Two acts
w. Three acts
x.Four acts
y.Five acts
29. Banks ensure eye contact by requiring tellers to record ____________ on a checklist
at the start of a transaction.
z. the customer’s eye color
aa. the customer’s bank account number
bb. the customer’s shirt size
cc. the customer’s account type
dd. the customer’s nationality
(a; Easy; p. 211)
30. Examples of preparing customers for service encounters include all of the following
EXCEPT ____________.
z.printing dress code requests on invitations
aa. sending reminders of dental appointments
bb. printing guidelines on customer cards
cc. billing customers for services rendered
dd. all of the above are examples of preparing customers for service
encounters
31 Marriage counseling is a service that requires a ____________ level of participation

from customers.
z. minimal
aa. high
bb.moderate
cc. low
dd.absolute
32. The internet kiosk with a touchscreen in Vienna, Austria is getting popular for the
following reasons EXCEPT ____________.
ee.it is conveniently located
ff. it saves customers from having to deal with other undesirable customers
gg. it is accessible 24/7
hh. it doesn’t make mistakes, unlike employees
ii. it has easy access to websites
Examples of preparing customers for service encounters include all of the following
EXCEPT ____________.
75
a.
printing dress code requests on invitations
b.
sending reminders of dental appointments
c.
printing guidelines on customer cards
d.
billing customers for services rendered
e.
all of the above are examples of preparing customers for service encounters
Front staff's uniform is an example of which element in a service Blueprint

a.
Front stage activities
b.
Physical evidence
c.
Line of visibility
d.
Support processes and supplies
e.
Potential fail points
In order to manage the customer experience well, firms can also build emotionprints
which look at customer's ____________ at each stage of service process.
a.
Waiting time
b.
Potential failure
c.
Thinking
d.
Feeling
e.
Sensing
d
QN=18
Which of the following is NOT the symptom that indicates the necessity of service
redesign?
a.
A lot of information exchange
b.
76
Increasing processing of exceptions
c.
Data is not useful
d.
Staff being familiar with the current process
e.
A high ratio of checking or control activities to value-adding activities
e
QN=19
Blueprints identify all of the following in service process EXCEPT__________
a.
The direction in which processes flow
b.
The time it takes to move from one process to the next
c.
The cost involved with each process site
d.
The amount of inventory build-up at each steps
e.
All of the above is identified in a blueprint
b
QN=20
Which of the following service has the lowest customer's participation level ?
a.
ATM cash withdraw
b.
Weather forecast TV program
c.
Hair cutting
d.
Education
e.
Car repair
b
QN=21
_______________include specitific times set for the completion of each task and the
acceptable wait between each customer activities.
a.
Front stage invisible activities
b.
Service standards and targets
c.
Customer waiting points
77
d.
Fail points
e.
Front stage visible activities
True/False
33. Restaurants are often quite theatrical in their use of physical evidence (such as
furnishing, décor, uniforms, lighting, and table settings).
34. “Risk of excessive wait” points in a restaurant service blueprint provided in the
chapter occur mainly in the backstage processes.
35. “Failure” points in the restaurant service blueprint provided in the chapter only occur
in the backstage processes.
36. Poke-yokes originated from Total Quality Management methods in manufacturing.

37. A good example of a service poka-yoke is a surgeon whose surgical instrument trays
have indentations for each instrument.
Short Answer
38. What are the acts that “restaurant drama” can be divided into?
Activities that take place before the core product is encountered, delivery of the core
product, and subsequent activities while still involved with the service provider.
(Moderate, p. 204)
39. What is the only fail point in the service blueprint that was listed as physical
evidence in the restaurant drama?
Food taste, quality.

(Moderate; p. 208)
40. Which aspect of service process redesign did FedEx employ when it transferred more
than 50 percent of its transactions from call centers to its Web site?
Shifting to self-service.
(Moderate; p. 215)
78
41. When a rental car customer is not interested in filling out paperwork or processing
payment and check of the rental car, this is an example of which service process
redesign?
Eliminating non-value adding steps.

(Moderate; p. 215)
42. How is the patient a partial employee?
While doctors have a legal and ethical duty to help their patients, they can only
succeed if the doctor and patient cooperate with each other.
(Moderate; p. 218)
Essay
43. Describe and draw a flowchart for a possession processing service.
When you use your DVD player, the picture quality on the TV screen is poor. Fed
up with the situation, you search the Online Yellow Pages to find a repair store in
your area. At the store, the neatly–dressed technician checks your machine carefully
but quickly. He tells you that it needs to be adjusted and cleaned. You are impressed
by his professional manner. The estimated price seems reasonable. You are also
pleased that repairs are guaranteed for 3 months, so you agree to the work and are
told that the player will be ready in three days’ time. The technician disappears into
the back office with your machine and you leave the store. When you return to pick
up the product, the technician explains the work that he did and demonstrates that
the machine is now working well. You pay the agreed price and leave the store with
your machine. Back home, you plug in the player, insert a DVD, and find that the
picture is now much improved. See Figure 8.2 for diagram
44. Describe how poke-yokes contribute services as a fail-safe method.
Server poka-yokes ensure that service staff do things correctly, as requested, in the
right order and at the right speed. Examples include surgeons whose surgical
instrument trays have indentations for each instrument. For a given operation, all of
the instruments are nested in the tray so it is clear if the surgeon has not removed all
instruments from the patient before closing the incision. Some service firms use
poka-yokes to ensure that certain steps or standards in the customer-staff interaction
are adhered to. At one restaurant, servers place round coasters in front of those
diners who have ordered a decaffeinated coffee and square coasters in front of the
others. Customer poka-yokes usually focus on preparing the customer for the
encounter (including getting them to bring the right materials for the transaction and
to arrive on time, if applicable), understanding and anticipating their role in the
service transaction, and selecting the correct service or transaction.
79
(Moderate; p. 211)
45. Which kinds of services are the easiest to offer using SSTs. Explain why.
Information-based services can easily be offered using SSTs. These services include
not only such supplementary services as getting information, placing orders and
reservations and making payment, but also delivery of core products in fields such as
banking, research, entertainment and self-paced education. One innovation that has
had a great impact in the Internet age has been the development of on-line auctions,
led by eBay. No human auctioneer is needed to go between buyers and sellers.
Many companies have developed strategies designed to encourage customers to
serve themselves through the World Wide Web. They hope that this will result in
customers reducing the use of more expensive alternatives like direct contact with
employees, use of intermediaries like brokers and travel agents, or voice-to-voice
telephone.
(Moderate; p. 219)
Chapter 9
Balancing Demand against Productive Capacity
GENERAL CONTENT
1. Which of the following is NOT one of the productive capacity forms in a service
context?
z. Physical facilities designed to contain customers
aa. Physical equipment used to process people, possessions, or information
bb. Customers
cc. Labor
dd. Infrastructure
2. Which of the following is NOT one of the conditions that fixed-capacity firms may
face?
a. Excess capacity.
b. Demand exceeds desired capacity.
c. Demand and supply are well-balanced.
d. Ideal demand exceeds capacity.
e. Excess demand.
3. Which of the following is the correct action for a firm to take that wants to reduce
demand and has insufficient capacity?
ee. Take no action.
80
ff. Consider override for most desirable segments.
gg. Consider priority systems for most desirable segments.
hh. Increase prices or encourage use in other time slots.
ii. Lower prices selectively.
4. Which of the following is NOT one of the ways to change the overall level of capacity
to match demand variations?
z. Use part-time employees.
aa. Ask customers to share.
bb. Invite customers to perform self-service.
cc. Cross-train employees.
dd. Share facilities with the supplier.
5. All of the following are questions to ask about demand patterns and their underlying
causes EXCEPT ____________.
ee. Do demand levels follow a predictable cycle?
ff. What are the underlying causes of these cyclical variations?
gg. How much demand are competitors receiving?
hh. Do demand levels seem to change randomly?
ii. Can demand for a particular service over time be disaggregated by market
segment?
6. Which of the following is NOT one of the five basic approaches to managing
demand?
ee. Taking no action and leaving demand to find its own levels.
ff. Reduce demand in peak periods.
gg. Increase demand when there is excess capacity.
hh. Inventory capacity until demand increases.
ii. Inventory demand by creating a formalized queuing system.
(d; Easy; p. 236)
7. Marketing strategies can be used to shape demand in all ways EXCEPT

____________.
ee. modify mode of delivery
ff. use price and other cost to manage demand
gg. change product elements
hh. modify time and place of delivery
ii. use promotion and education
(a; Easy; p. 237)
8. Which of the following is NOT one of the alternative queuing configurations

discussed?
z. Single line/single servers at sequential stages
81
aa. Multiple line to single servers (“snake”)
bb. Parallel lines to multiple servers
cc. Designated lines to designated servers
dd. “Take a Number” (single or multiple servers)
9. All of the following are ways to make waits more bearable EXCEPT ____________.
a. encourage group waits
b. keep customers occupied while waiting
c. make customers feel comfortable during waits
d. let customers know how long they are expected to wait
e. provide the customers with no explanation for the wait
(e; Easy; p. 243)
10. Which of the following is NOT one of the benefits of having a reservations system?
a. Helps service personnel to serve more effectively.
b. Helps in pre-selling the service.
c. Helps customers to avoid queuing.
d. Helps firms to keep some time aside for emergency jobs.
e. Allows demand to be controlled.
True/False
11. The term “productive capacity” refers to the resources or assets that a firm can
employ to create goods and services.
12. Medical clinics, hotels, and passenger aircrafts are all examples of physical facilities
designed to contain goods and services.
13. Financial success in businesses with limited capacity depends largely on how
capacity is used.
14. Optimum and maximum capacities are never one and the same (e.g. a sport
performance).
15. One way to stretch capacity is to ensure slack time is encountered.

16. Demand patterns are usually random.

82
17. Good records of a firm’s transactions can help one to understand demand patterns.
18. When a firm wants to inventory demand via a reservation system and has insufficient
capacity it should lower prices selectively.
19. We need to have queuing or reservations systems because demand cannot be

inventoried.
20. Yield analysis forces managers to recognize the opportunity cost of selling capacity
for a given date to a customer from one market segment when another might
subsequently yield a higher rate.
Short Answer
21. What are the four supply and demand conditions that a fixed-capacity service may
face?
Excess demand, demand exceeds optimum capacity, demand and supply are well
balanced, and excess capacity.
(Moderate; p. 232)
22. What are the two basic approaches to fluctuating demand?
Adjust the level of capacity to meet variations in demand.

Stretch or shrink existing capacity.
23. List the six actions managers can take to adjust capacity as needed.
Schedule downtime during periods of low demand.

Use part-time employees.
Rent or share extra facilities and equipment.
Ask customers to share.
Invite customers to perform self-service.
Cross train employees.
24. List the four key marketing strategies that can be employed to reshape demand.
83
Use price and other costs to manage demand, change product elements, modify the
place and time of delivery, and promotion and education
25. What are thee strategies that can be employed when considering a modification to the
place and time of service delivery?
No change, varying the times when the service is available, and offering the service
to customers at new locations.
(Moderate; p. 238)
Essay
26. Describe four of the ten propositions on the psychology of waiting lines.
Waiting lines create dissatisfied customers for a number of reasons. The ten
propositions describe characteristics that can increase or decrease satisfaction. First,
unoccupied time feels longer than occupied time. The solution is to find a way to
occupy customers, perhaps with other services. Second, pre- and post-process waits
feel longer than in-process waits. Express/electronic check-in and speedy billing can
reduce dissatisfaction here. Third, anxiety makes waits seem longer. Here again,
occupying customers can help reduce negative effects. Fourth, uncertain waits are
longer than known, finite waits. Adjusting to a wait of known length is easier
because customers can see a finish line approaching.
27. Describe what the term “yield” means in the context of a reservation strategy.
The term “yield” refers to the average revenue received per unit of capacity. Firms
should aim to maximize this yield to enhance profitability. Yield analysis forces
managers to consider the opportunity cost of selling capacity for a given date to one
customer segment when another might yield a higher rate. Reservation systems can
provide the detailed information necessary to support an optimal strategy from both
a historical perspective and current updates.
(Moderate; p. 245)
APPLICATION CONTENT
28. Mont Tremblant uses all the following ways to attract guests during summer
EXCEPT _____________.
jj. water sports on the lake
kk. face painting
84
ll. balloon sculpting
mm. wind surfing
nn. roller-blading
29. The demand on a city bus is likely to vary by all EXCEPT which of the following?
z.Time of day.
aa.Day of the week.
bb. Season of the year.
cc.Population density in the city.
dd. All of the above will likely cause demand to vary on a city bus.
30. ____________ is usually the first variable to be proposed for bringing demand and
supply into balance.
ee.Price.
ff. Place.
gg. Personnel.
hh. Product.
ii. Promotion.
31. One way for car washes to decrease the number of visitors to the existing site is to
ee.Offer free pickup and delivery of cars to be washed.
ff. Offer mobile car wash services.
gg. Add more service options.
hh. Increase prices to get the most out of current customers.
ii. Educate customers on when they should have their cars washed.
32. New York City’s 911 service uses education to ______________.

ee.attract new callers
ff. show callers when peak periods are
gg. discourage undesirable demand
hh. channel calls to medical services
ii. encourage callers to use their services
True/False
33. A subway can increase the capacity on a route after all seats have been occupied.
85
34. During the SARS period when travel and tourism was affected, staff were sent for
training or encouraged to resign.
35. A good example of inventorying demand is a haircut that can be set up and prepared
for one day and executed the next.
36. One of the most direct ways for a hotel to reduce excess demand at peak periods is to
charge customers more money to use the service during those periods.
37. Airlines place restrictive conditions on fares for tourists to prevent business travelers
from traveling on economy class.
Short Answer
38. Describe how optimum and maximum capacities may differ in the restaurant
industry.
A full restaurant may deteriorate service because the staff is rushed and there is a
greater likelihood of errors and delays.
(Moderate; p. 232)
39. Give a situation where optimal and maximum capacities are the same.
Live theater or a sports performance.

(Moderate; p. 232)
40. Discuss why a subway car has elastic capacity.
A subway car has elastic capacity because it is designed to seat perhaps 40 and allow
another 60 to stand with adequate space. Under rush hour conditions it can supply
space for 200, though the space would be extremely cramped.
(Moderate, p. 233)
41. How did BMW occupy customers while they were waiting for their cars to be
serviced?
BMW owners could wait in comfort at the BMW service centers. The waiting areas
are furnished with designer furniture, plasma TV mounted on walls, Wi-Fi hotspots,
magazines and freshly brewed cappuccino.
86
42. Which company is taking advantage of reservations system to do business?
PrimeTimeTables is an exclusive online company that helps customers to get table

reservations at the most popular dining spots, where only people who are somebody,
or have the proper connections can get a table.
Essay
43. Describe how ski resorts manage traditionally seasonal supply and demand
fluctuations.
Traditionally ski resorts only operated during the winter months, shutting down for
the summer. Realizing that hiking and mountain biking were coming into vogue, as
well as the value of offering other summer activities, resorts began opening in the
summertime. This allowed the firms to smooth the seasonal demand and create value
out of unused capacity. Chairlifts used for skiing and restaurants used for feeding
customers now operate year round instead of laying dormant for half of the year.
(Easy; p. 229)
44. Describe how Disney decided to deal with long lines.
Disney implemented virtual waiting lines at their most popular attractions in

response to long waiting lines and subsequent customer dissatisfaction. Customers
pick up a special pass called FASTPASS, which tells them how close to the front of
the line they are without actually standing in line. This causes lines to self-regulate
such that customers who are not close to the front, do not stand around taking up
space and find alternative things to do. This enhances both customer satisfaction and
has been shown to increase profit because customers will spend money elsewhere
instead of idling in line. Disney provides this service at no charge extra.
(Moderate; p. 242)
45. Discuss how PrimeTimeTables can be successful in their business and the problems
they face in the provision of their service.
Mr Riffaud is the president of Personal Concierge International. This company is a

leader in providing exclusive concierge service in the United States. In the process,
Mr Riffaud has built a large network of contacts with exclusive restaurants. This is
one of the ways in which he manages to obtain those hard-to-get reservations at the
most popular dining spots. His clients are delighted with his service and have been
flooding him with requests for reservations. However, there have been protests from
restaurant owners. They feel that he is upsetting their reservations management
system, and also selling their tables for a price. Even though Mr Riffaud does cancel
unsold reservations, restaurant owners felt that these could have been sold to other
customers who really wanted to have a table.
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Chapter 10
Crafting the Service Environment
GENERAL CONTENT
1. Service environments, also called ____________ relate to the style and appearance of
the physical surroundings and other experiential elements encountered by customers
at service delivery sites.
a) service planes
b) servicescapes
c) service boxes
d) servicetomies
e) service vaults
(b; Easy; p. 254)
2. The field of ____________ studies how people respond to specific environments.

A. organizational behavior
B. marketing
C. environmental psychology
D. strategic management
E. financial management
3. In environmental psychology the typical outcome variable is ____________ or

____________ of an environment.
a) service; repurchase
b) control; reproach
c) control; avoidance
d) control; sensibility
e) approach; avoidance( tiếp cận, tránh né)
4. The two dimensions of Russell’s model of affect are ____________ and

____________.
a. centrality; dominance
b. pleasure; arousal
c. centrality; permanence
d. pleasure; regret
e. fullness; looseness
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5. The ____________ complex a(n) ____________ process becomes, the more powerful
is its potential impact on ____________.
a) more; affective; cognition
b) more; cognitive; affect
c) less; cognitive; services
d) less; affective; cognition
e) less; cognitive; affect
6. If a service environment is inherently ____________, one should avoid increasing

____________ levels, as this would move customers into the “distressed” region of
Russell’s model.
a. pleasant; arousal
b. pleasant; excitement
c. pleasant; relaxation
d. unpleasant; arousal
e. unpleasant; excitement
7. Which of the following is NOT one of the dimensions of the service environment?
a) Exterior facilities
b) General infrastructure
c) Store layout
d) Interior displays
e) Location
8. Which of the following is an ambient condition?

a. Facility layout
b. Displays
c. Music
d. Location
e. Price
(c; Easy; p. 260)
9. Of the following, which is NOT an ambient condition that irritates shoppers according
to Alain d’Astous?
a) Store is too small
b) Store is not clean
c) Too hot inside the store or the shopping center
d) Music inside the store is too loud
e) Bad smell in the store
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10. Of the following, which is NOT an environmental design condition that irritates
shoppers according to Alain d’Astous?
a. Arrangement of store items is always the same.
b. No mirror in the dressing room.
c. Unable to find what one needs.
d. Directions within the store are inadequate.
e. Store is too small.
True/False
11. Service consumers use service environment as an important quality proxy.

12. Servicescapes help to shape the desired feelings and reactions in customers and
employees.
13. In practice, the large majority of service encounters are routine, involving a high
level cognitive processing and little affect.
14. Ambient conditions refer to those characteristics of the environment pertaining to our
five senses.
15. Functionality refers to the floor plan, size and shape of furnishings, counters, and
potential machinery and equipment, and the ways in which they are arranged.
16. The use of orange is commonly associated with its ability to encourage verbal
expression.
17. Spatial layout refers to the ability of items to facilitate the performance of service
transactions.
18. Signs are frequently used to teach and reinforce behavioral rules in service settings.
19. The appearance of both service personnel and customers can reinforce or detract
from the impression created by the service environment.
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20. Marketing communications attempt not to attract customers who will enhance the
ambiance with their presence because of potential legal ramifications.
Short Answer
21. What are the three important ways in which the service environment and its
accompanying atmosphere impact buyer behavior?
As a message-creating medium, an attention-creating medium, and an affect-creating

medium.
(Moderate; p. 254)
22. What is the primary focus of the Mehrabian-Russell Stimulus-Response Model?
It shows that feelings or affect are central to how we respond to environmental

stimuli to which we are exposed.
(Moderate; p. 256)
23. What are the three stages of the Mehrabian-Russell Stimulus-Response Model?
The three stages are environmental stimuli, affect, and response.

(Moderate; p. 256)
24. List the four key things that signs can be used for in a servicescape.
Labels, giving directions, communicating the service script, and behavioral rules.
25. List the four tools that managers can use to guide their design of the service process.
Careful observation, feedback and ideas from frontline staff and customers, field
experiments, and blueprinting.
(Moderate; p. 268)
Essay
26. Describe the challenge inherent in using signs, symbols, and artifacts in a
servicescape and discuss when this task is particularly important.
The challenge for servicescape designers is to clearly guide customers through the
process of service delivery and teach the service process in as intuitive a manner as
possible. This task is particularly important where there are a high proportion of new
91
or infrequent customers and/or a high degree of self-service. Customers become
disoriented and frustrated when they cannot derive clear signals from a servicescape.
(Moderate; p. 264)
27. Describe what is meant by an holistic view of a service environment and provide
examples.
Designers must consider the total service experience when designing servicescapes.
Consumer response is based on a reaction to the total service experience, not
individual aspects of the service. For example, a beautifully stained hardwood floor
is not perfect flooring if it does not match its surroundings. The service may be
attempting to generate a deliberately grungy look as in the case of some teen
clothing stores and a high-class floor would look out of place.
(Moderate; p. 266)
APPLICATION CONTENT
28. According to Adrian North, the key to driving unwanted people away is
____________.
A. unfamiliarity
B. laws
C. direct recourse
D. indirect recourse
E. segmentation
(a; Easy; p. 261)
29. Which of the following fragrances would you use to boost energy levels and help
make customers feel happy and rejuvenated?
a) Lemon
b) Black pepper
c) Lavender
d) Eucalyptus
e) Rose
30. Which of the following is the best example of problems created by inappropriate
color usage?
a. Blue chairs in Canada
b. Black bags in London
c. Yellow cars in Switzerland
d. Green buses in Israel
e. Red buses in London
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31. The Hong Kong Tourism Board used ______________ to create harmony among
elements and ensure that people feel good in the environment.
A. scent
B. color
C. feng shui
D. music
E. spatial layout
(c; Easy; p. 264)
32. The term ____________, used by Dennis Nickson and his colleagues, would most
apply to sales associates at Victoria’s Secret or Calvin Klein.
a. restricted labor
b. value-added labor
c. functional labor
d. aesthetic labor(lao động thẩmmĩ)
e. synergistic labor
Which one of the following colors would be LEAST likely used for a low-involment
decisions?
a.
Blue
b.
Red
c.
Yellow
d.
Orange
e.
Pink
a
QN=11
The Generator youth hotel in London has their lobby designed like a bar because they
cater to the guests who love fun and have low budgets. This example illustrates which
way that servicescape affects to buyer behavior?
a.
As a message-creating medium
b.
As an attention-creating medium
c.
As an effect-creating medium
d.
As an mood-creating medium
e.
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As an relationship-creating medium
a
QN=12
One example of service environment helps to facilitate the service encounter and enhance
productivity is__________
a.
Childcare center draws toy outline on walls to floors to show where toys should be placed
after use.
b.
Las Vegas built reproductions of Paris, pyramids of Egypt, and canals of Vienne in order
to attract families.
c.
Kipton Hotel design their lobby assemble to a family living room rather than big hotel
lobby to create the friendly environment
d.
Restaurant provide clean table cloth to indicate the hygiene of their food
b
QN=14
Which of following ideas is not TRUE according to Mehrabian-Russell Stimulus-
Response Model?
a.
Service environments will affect to people weather consciously or unconsciously
b.
Thinking rather than Felling would drive people's responses to environment
c.
Affective Responses include Pleasure and Arousal
d.
Subsequence behavior responses include approach and avoidance
d
QN=15
Base on Russel Model of Affect , the felling that they would have when customers are in
a rush and have to wait in a long queue is___________
a.
Exciting
b.
Relaxing
c.
Boring
d.
Distressing
e.
Sleepy
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a
QN=16
Base on Russel Model of Affect , the felling people would have when waiting for
Chistmas festival in front of The Big Chapel is ___________
a.
Exciting
b.
Relaxing
c.
Boring
d.
Distressing
e.
Sleepy
c
QN=17
Russell's model of affect proposes that emotional response to environments can be
described along the two main dimension of ____________
a.
Pleasure and Exciting
b.
Relaxing and Exciting
c.
Pleasure and Arousal
d.
Exciting and Distressing
e.
Pleasure and Sleepy
e
QN=18
Which of the following service provider have the highest level of arousal in their
services?
a.
Park Operator
b.
Car Repair Store
c.
Clothing Retail Shop
d.
Hair Cutting Store
e.
Mountain Climbing club
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QN=19
Which of the following is NOT true about Arousal in Russell's model of Affect?
a.
Arousal depends on how much an individual like or dislike the environment
b.
Arousal refers to how stimulated the individual feels
c.
Arousal depends on information rate or load of an environment
d.
Complex services usually have higher level of Arousal
e.
Services with surprising elements would have higher level of Arousal
b
QN=20
According to Russell's Model of Affect, which of the following felling would be most
suitably targeted by a Paint Ball Service Operator?
a.
Relaxing
b.
Exciting
c.
Depressing
d.
Stimulating
e.
Breathtaking
a
QN=21
According to Russell's Model of Affect, which of the following felling would be most
suitably targeted by a Spa
a.
Relaxing
b.
Exciting
c.
Pleasant
d.
Stimulating
e.
Pleasing
c
QN=22
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According to Russell's Model of Affect, which of the following activities a restaurant
manager should do when the restaurant are crowded to calm their customers?
a.
Increase level of yellow and red of their lighting
b.
Turn on dance music
c.
Using lavender scent
d.
Ordering their employees to introduce new menu items to customers
e.
Increase the temperature of the room
c
QN=23
Which type of music could help service companies to avoid jay customers?
a.
Pop
b.
Rock
c.
Classical
d.
Jazz
e.
Dance
d
QN=24
Perfect Teeth Dental Spa in Chicago use strawberry - scented nitrous oxide to help
patient overcome fear. Which dimension in service environment is used in this example?
a.
Exterior Facility
b.
Store layout
c.
Artifacts
d.
Ambient Conditions
e.
Social Dimension
b
QN=25
The term ____________is used to capture the important of the physical image of service
personnel who serve customer directly
97
a.
Front Stage personnel
b.
Aesthetic Labor
c.
Emotional Labor
d.
Relational Labor
e.
Back Stage Personnel
c
QN=26
A university is considering changing the type of chairs in lecture theater to make it more
comfortable for the students to concentrate. This element is an example of__________ in
Bitner's model of Servicescape
a.
Signs and Artifacts
b.
Exterior Facilities
c.
Spatial Layout
d.
Ambient conditions
e.
Social dimensions
a
QN=27
Which dimension in Bitner's model of Servicescape will guide customers through the
process of service delivery?
a.
Signs and Artifacts
b.
Exterior Facilities
c.
Spatial Layout
d.
Ambient conditions
e.
Social dimensions
d
QN=28
When a customer complains that the store is
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True/False
33. Facing competition from numerous casinos in other locations, Las Vegas has been
trying to reposition itself away from being an adult destination to a somewhat more
wholesome family fun resort.
34. According to the Mehrabian-Russell Stimulus-Response Model, people avoid

crowded environments because there of the number of people rather than being
deterred by the unpleasant feeling of crowding, people being in the way, or lacking
perceived control.
35. A spa environment should be designed with low arousal and high pleasantness.
36. Fast music environments have been shown to generate more revenue and get
customers to spend longer amounts of time in an environment than slow music
environments.
37. Staff acting as Cinderella, or seven drawfs at Disney theme parks are part of the
service environment.
Short Answer
38. Describe how movie theaters in the United States are responding to falling
attendance.
Several upstart boutique chains have buildings with different theme and have
lavishly decorated bars and restaurants and supervised playrooms for children.
(Moderate; p. 255)
39. Discuss how the United Kingdom uses music to discourage jaycustomers in the
subway system.
The strategy is to play classical music that is apparently painful to vandals’ and
loiterers’ ears.
(Moderate; p. 261)
40. Describe one of the two examples from the book that show a link between scent and
increased spending.
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Gamblers put more quarters in slot machines when a Vegas casino was scented with
a pleasant artificial smell. (People were willing to pay around $10 more for Nike
sneakers when they tried them on in a floral scented room.)
(Moderate, p. 262)
41. A community center that designs classrooms in a U-shaped manner to facilitate

bringing people together is considering which aspect of crafting the service
environment?
Spatial layout.
(Easy; p. 263)
42. List the five guidelines for parking design described in the chapter.
Provide friendly warnings, keep paint fresh, provide safety lighting, provide
maternity parking, and help customers remember where they parked their vehicle.
(Moderate; p. 265)
Essay
43. Describe how Spain’s Guggenheim Museum in Bilbao designs its servicescape to
attract visitors.
The design of the building communicated several different kinds of messages to its
audience. It is shaped like a ship and blends in with the environment of the river. The
museum is a mixture of regular forms built in stone and curved forms made of
titanium, and huge glass walls for natural light to penetrate the museum. Because of
the glass walls, visitors inside the museum can see the surrounding hills. The
titanium panels outside have been arranged to look like fish scales, in keeping with
the image of being by the Nervion river. Outside the museum, a 43-foot-tall shaped
structure of a “topiary terrier” (a breed of dog), made up of pots of fresh pansies
(flowers) greets visitors. There is also a huge spider sculpture called ‘Maman’ done
by the Louise Bourgeoris, the twentieth-century leading sculptor, who was born in
Paris but made her home in New York. Even the design of the galleries is meant to
hint at what visitors can expect inside. The shapes of the galleries and the content of
the galleries complement each other.
44. Describe the design flaws of the Jordan Sheraton Hotel.
The new Sheraton Hotel, located in Jordan, opened without clear signage that would
guide guests from the ballrooms to the restrooms. Existing signs were etched in
muted gold on dark marble pillars, likely causing them not to stand out.
Unfortunately, more obvious signs might not have been deemed appropriate because
of the focus on elegant décor. There is certainly a tradeoff that was made in this case.
100
(Moderate; p. 267)
45. Describe the design flaws of the new airport lounge in a major Asian city.
At the new airport lounge, a series of connected glass panels hung from the ceiling,
which luggage would regularly catch on, causing the panels to shake and disconnect.
The designers did not consider the extent of foot traffic through the area when laying
out the servicescape.
(Moderate; p. 267)
Chapter 11
Managing People for Service Advantage
GENERAL CONTENT
1. From the customer’s perspective which of the following is the most important aspect
of service?
a) Management’s responsiveness to occurrences of failure.
b) Timely delivery of service.
c) Efficient handling of special requests.
d) The encounter with service staff.
e) A fair price.
2. Service employees are important to customers and competitive positioning, because

the front line ____________.
A. is the most visible part of the firm
B. contains more employees than management
C. is often the first to deal with customer complaints
D. is better trained at dealing with customers than are managers
E. all of the above
(a; Easy; p. 278)
3. Emotional labor is when employees ____________.

a. find it hard to be emotional because they are too overworked
b. have a gap between what they feel inside, and what management expects them to
display to their customers
c. have to keep their emotions under control at the work place
d. feel happy all the time because they enjoy their jobs
e. are emotionally stressed by all the demands of their jobs
4. Training is most effective at reducing ____________.
101
A. person/role stress
B. organization/client conflict
C. interclient conflict
D. interorganizational conflict
E. intraorganizational conflict
5. Outcomes of the “Cycle of Failure” for firms include ____________ and

____________.
a) low service quality; low employee turnover
b) low service quality; high employee turnover
c) high service quality; low employee turnover
d) high service quality; high employee turnover
e) mediocre service quality; unpredictable employee turnover
(b; Easy; p. 282)
6. The “Cycle of Failure” includes all of the following EXCEPT ____________.

a. emphasis on rules
b. emphasis on attracting new customers
c. adequate pay and job security
d. low skill levels
e. use of technology to control quality
7. Companies that engage in a “Cycle of Success” are more likely to have which of the
following?
a) Happier employees
b) More loyal customers
c) Higher profit margins
d) Better wages
e) All of the above
(e; Easy; p. 284)
8. Employees should be trained in all these areas EXCEPT ____________.

a. organizational culture
b. organizational revenue
c. service knowledge
d. interpersonal skills
e. product knowledge
(b; Easy; p. 289)
9. A strategy of empowerment is most likely to be appropriate when which of the

following factors are present within the organization and its environment?
A. The business strategy is not too customized
B. The organization uses routine technology.
C. The business environment is stable.
102
D. Customer interactions are relational as opposed to transactional.
E. All of the above.
10. The definition of a team includes all of the following EXCEPT ____________.
a) have complementary skills
b) are committed to a common purpose
c) have well-rounded personalities
d) hold themselves mutually accountable
e) have a set of performance goals
The cycle of failure includes all following EXCEPT_____________

a. Low customer turnover
b. Low profit margins
c. Narrow design of jobs to accommodate low skill level
d. Minimizaton of selection effort
e. Customer dissatisfaction
The customer cycle of failure begins with_____________

a. High customer turnover
b. Repeated emphasis on attracting new customers
c. Employees can't response to customer's problems
d. No continuity in relationship with customers
e. Customer dissatisfaction
The cycle of Mediocrity is mostly to be found in _____________

a. Companies that operate on lots of rules and procedures
b. Companies that have low profit margin
c. Companies that focus on high productivity by simplifying work processes and paying
the lowest possible wages
d. Companies with long-term view that seek to grow by investing in their people
e. Companies that emphasis on customer loyalty and retention
c
QN=15 The companies that engage in the Cycle of Mediocrity are LEAST likely to have
_______________
a. Emphasis on rules rather than pleasing customers
b. Customer Dissatisfaction
c. High employee turnover
d. High customer turnover
e. Indifferent and hostility employees
e
QN=16 The Employee Cycle of Success contains all of the followings
EXCEPT__________
103
a. Broaden job designs
b. Extensive training
c. Intensive selection effort
d. Empowerment of frontline personnel
e. Promotion based on longetivity
b
QN=17 The Service Talent Cycle, which is the guiding framework for succesful in HR
practices, starts with:
a. Motivating employees with full range of rewards
b. Hiring the right people
c. Empowering frontline staff
d. Extensive training
e. Developing high performance service delivery team.
C
QN=18 Frontline staff who work in service companies that are not customer oriented are
likely to have _____________
a. Person/Role conflict
b. Inter-client conflict
c. Organization/client conflict
d. Structural conflict
e. Service delivery conflict
c
QN=19 Service firms often ask employee to cross-sell and up-sell in order to improve
sales revenue. However, some customers feel uncomfortable and disatisfy when service
staff introduce new products. This could lead to increase in ___________ for the staff
a. Person/Role conflict
d. Structural conflict
e. Service delivery conflict
D
QN=19 _____________ orcurs when there is gap between the way frontline staff fell
inside and the emotions that management requries them to display to their customers
a. Person/role conflict
d. Emotional labor
e. Aesthetic labor
a
QN=20 When frontline staff describe customers as overdemanding, unreasonable,
arrogant; they are likely to have ___________
104
d. Procedure conflictt
e. Emotional stress
B
QN=21 Asking jumping queue customers to behave is a stressful and unpleasant task for
service staff. This cause of role stress in front line position is called _________________
d. Procedure conflictt
e. Emotional stress
E
QN=22 Investing in front stage personnel is important for service firms. All of the
following statement about frontline staff is true EXCEPT ________
a. Frontline is a core part of the product
b. Frontline is the service firm
c. Frontline is the brand
d. Frontline determines productivities
e. All of these statement are true
True/False
11. Employee satisfaction typically has little impact on customer satisfaction.

12. E-mail and telephone service interactions are just as visible as face-to-face
interactions.
13. Boundary spanners work in some of the most demanding jobs in service firms.
14. Customer contact personnel have to attend to both operational and marketing goals
and this causes person/role conflict.
15. The “Cycle of Mediocrity” is most often found in large, bureaucratic organizations
like regulated oligopolies.
16. Great references from past employers are not a form of behavioral observation.
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17. Interpersonal skills include visual communication, attentive listening, and body
language and tend to be specific to each service setting.
18. Technical skills encompass all the required knowledge related to processes.
19. Empowerment is suitable for all situations.

20. Suggestion involvement empowers employees to make recommendations through

formalized channels.
Short Answer
21. What are the three main causes of role stress in frontline positions?
Person/role, organization/client, and interclient conflicts.

(Moderate; p. 280)
22. What are the three levels of employee involvement?
Suggestion involvement, job involvement, and high involvement.

(Moderate; p. 293)
23. What is job content?
Job content is when employees are satisfied just by knowing that they are doing a
good job.
(Moderate; p. 295)
24. How should goals be designed, so that they are effective?
Achieving important goals is a reward in itself. Goals that are specific, difficult but
achievable, and accepted by the staff are strong motivators. They result in higher
performance than no goals, or unclear goals (e.g., ‘do your best’), or goals that are
impossible to achieve. In short, well communicated and mutually accepted goals are
effective motivators.
25. Define service culture.
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A service culture includes shared perceptions of what is important in an organization
and shared values and beliefs of why those things are important.
(Moderate; p. 296)
Essay
26. Discuss why call centers are important or unimportant to customer perceptions of
service firms. Give an example to back up your argument.
Call centers can play a critical role in customer perceptions of a service firm. This is
particularly important for remote service firms like credit card companies. The call
to the service center may be the only time the customer interacts with personnel from
the company. That interaction may frame the customer’s entire perception of the
firm with one call. It is also likely that the customer is calling because of a problem
or special request. Handling that one problem or request well could be the difference
between retaining and losing the customer.
(Moderate; p. 278)
27. How can firms build a strong service culture?
A strong service culture is one where the entire organization focuses on the frontline, and
understands that it is the lifeline of the business. They practice the inverted pyramid,
which shows that the role of top management and middle management is to support the
frontline in their task of delivering service excellence to their customers. In firms with a
passion for service, top management is informed and actively involved. They achieve
this by regularly talking to and working with frontline staff and customers, even spending
time serving customers themselves.
(Moderate; p. 298)
APPLICATION CONTENT
28. Cora Griffth has nine rules of success for excellent service as a waitress. They
include all of the following EXCEPT ____________.
A. getting things right the first time
B. listening first
C. anticipating customers’ wants
D. treating customers like family
E. taking pride in one’s work
29. One of Ritz-Carlton’s hiring principle is ____________.

a. maintain a tight knit group
107
b. hire people with the right personality
c. “training, training, training”
d. customer service is first
e. new hires lead the way
30. Excellent service firms use all of the following to identify the best job candidates
EXCEPT ____________.
a) observing behavior
b) conducting personality tests
c) interviewing applicants
d) viewing transcripts
e) providing applicants with realistic job previews
(d; Easy; p. 288)
31. If a Nordstrom sales associate replaces shirts at no cost to the client, it is an example
of ____________.
A. centralized decision-making
B. service theft
C. employee empowerment
D. service sabotage
E. rule setting
(c; Easy; p. 292)
32. Singapore Airlines uses teams for all of the following EXCEPT ____________.
a. train staff
b. provide emotional support
c. assess staff
d. promote staff
e. mentor cabin crew
True/False
33. According to John Wooden, “Too often, the big talkers are the big doers.”
34. The Ritz-Carlton uses personality profiles to select the best applicants.
35. Training in Dial-a-Mattress includes showing staff how to create images in the
customers’ minds.
36. All employees are eager to be empowered.
108
37. Southwest Airlines illustrates a high-involvement company.

Short Answer
38. The suggested salary to attract top performers is in the range of what percentile of the
market?
The range is from the 65th to 80th percentile.

(Moderate; p. 286)
39. Give two reasons for using multiple interviewers?
Multiple interviewers reduce the risk of “similar-to-me” biases and people are more
careful in their evaluations when they know someone else is evaluating the same
applicant.
40. Give an example of a company where applicants get to work for two paid days prior
to final selection interview.
Au Bon Pain
(Moderate, p. 289)
41. Give an example of an organization that helps company’s build a service culture.
Up Your Service! College.

(Moderate; p. 291)
42. What is the key philosophy of Singapore Airlines?
The team concept, or teamwork.

(Easy; p. 294)
Essay
44. How is Cora Griffith’s work strategy indicative of the “Cycle of Success?”
Cora Griffith’s nine rules of success exemplify the “Cycle of Success.” She is
enthusiastic about her job and develops outstanding service relationships with both
existing and new customers. Her philosophy is marked by listening to customers,
anticipating their needs, maintaining efficiency, and continuing to learn. She gives
109
credit to the owners of the café for showing her the value of customer care. This
agrees with the “Cycle of Success” tenets of hiring and retaining motivated
employees that provide higher quality, customer-pleasing service.
(Challenging; p. 276 & 284)
43. Discuss the causes and implications of low-pay/high turnover human resource
strategies.
Failure to measure all relevant costs is a key contributor to the cycle of failure. A
firm saves money on pay, but loses money through employee and customer
channels. Inherent in high turnover situations are the costs of constant recruiting,
hiring, and training costs. New employees are also less productive than seasoned
employees due to learning curves. Attracting new customers costs much more than
retaining current customers because of continued advertising and promotional
campaigns.
45. Describe how Disney selects the right people.
Disney is comprised of a multitude of frontline and behind-the-scenes employees.

As such, they categorize employees by their potential for on-stage or backstage
work. On-stage refers to cast members who are assigned roles that require an
appearance, personality, and skill that matches a desired presentation to customers
(e.g. playing Snow White at a Disney theme park). Backstage are likewise suited for
their positions (e.g. computer operators). Each is selected for their jobs based on
intrinsic qualities that cannot be taught.
(Moderate; p. 286)
Chapter 12
Managing Relationships and Building Loyalty
GENERAL CONTENT
1. Which of the following is NOT one of the advantages to incremental profits of a loyal
customer?
ee. Profit from increased purchases.
ff. Profit from decreased advertising.
gg.Profit from reduced operating costs.
hh.Profit from referrals to other customers.
ii. Profit from price premiums.
(b; Easy; p. 309)
2. In the worksheet for calculating customer lifetime value, sources of annual revenues
include all EXCEPT _____________.
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jj. Annual account fee
kk.sales
ll. service fees
mm. value of referrals
nn.account management
3. Steps to building a foundation of loyalty include all EXCEPT _____________.

ee. delivering customer satisfaction
ff. delivery service quality
gg. segmenting the market to match customer needs and firm capabilities
hh. acquiring customers who fit the core value proposition
ii. managing the customer base through effective tiering
4. The wheel of loyalty is composed of which of the following three main components?
ee. Create loyalty bonds; deliver quality service; segment the market
ff. Create loyalty bonds; build higher level bonds; deliver quality service
gg.Build a foundation for loyalty; create bundling; build higher level bonds
hh.Build a foundation for loyalty; create loyalty bonds; reduce churn drivers
ii. Create loyalty bonds; understand customer value; understand service value
5. Firms should not assume that the “right customers” are always the ___________.
A. ones that are easily delighted
B. high spenders( ng có chỉ tiêu cao)
C. price sensitive customers
D. average income earners
E. least costly to acquire
6. Which of the following is NOT one of the four customer tiers discussed by Zeithaml,
Rust, and Lemon?
ee. Platinum
ff. Gold
gg. Bronze( chính quyền)
hh. Iron
ii. Lead
(c; Easy; p. 316)
7. Which of the following are the three main zones of the satisfaction-loyalty
relationship?
jj. Direction; institution; affluence
kk. Defection; indifference; affection
ll. Detection; elimination; subversion
mm. Detection; affluence; rejection
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nn. Direction; intention; rejection
8. Which of the following is NOT one of the strategies for developing loyalty bonds
with customers?
jj. Deepening the relationship
kk. Lag-based bonds
ll. Social bonds
mm. Customization bonds
nn. Structural bonds
9. Which of the following is NOT one of the key strategies used to reduce customer
defections?
z. Eliminate nuisance customers.
aa. Address key churn drivers.
bb. Implement effective complaint handling and service recovery procedures.
cc. Increase switching costs.
dd. Analyze customer defections and monitor declining accounts.
(a; Easy; p. 324)
10. The key questions to ask when defining a firm’s customer relationship strategy
include all EXCEPT _____________.
jj. What is the increase in profit from increase the share-of-wallet with our current
customers?
kk. How much customization or one-to-one marketing and service delivery is suitable
and profitable?
ll. How will top management feel about our strategy?
mm. How should our value proposition change to increase customer loyalty?
nn. How much time and resources can we provide to CRM right now?
e
QN=13 Loyalty customers are less likely to be price sensitive and more likely to pay
regular price. In other words, service firms have more profit derived from _________
a. Increased purchase
b. Reduced operating cost
c. Reduced advertising cost
d. Referals to other customers
e. Premium price
b
QN=14 Service companies enjoy lower operating cost for loyal customers because loyal
customers________________
a. often purchase in greater quantities
b. Make fewer mistakes and make more use of self-service options
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c. Provide positive word-of-mouth recommendations
d. Willingly pay regular price for service
e. Are lest price sensitive
a
QN=15 When asked for reason of loyalty, one customer states " You can get better
service than drop-in customers. They know exactly your preference". This benefit
customer received from being loyal is called___________
a. Confidence benefits
b. Risk reducing benefits
c. Social benefits
d. Relational benefits
e. Special treatment benefits
E
QN=16 When asked for reason of loyalty, one customer states " I like to drink coffee
there, they know who I am and remember what I like. Once I forgot to bring my wallet
with me and they told me to pay whenever I wanted ". This benefit customer received
from being loyal is called___________
a. Confidence benefits
b. Risk reducing benefits
c. Social benefits
d. Relational benefits
e. Special treatment benefits
d
QN=16 Building foundation for loyalty include all following activities EXCEPT
____________
a. Acquiring the customers who fit with the service's value proposition
b. Tiering service to manage customer base
c. Segmenting the market
d. Giving customers loyalty rewards
e. Delivering Quality service
C
QN=17 Reducing churn drivers include ____________
a. Acquiring the customers who fit with the service's value proposition
b. Tiering service to manage customer base
c. Increasing switching cost
d. Giving customers loyalty rewards
e. Delivering Quality service
b
QN=18 Which of the following is higher-level bond service firms should build?
a. Quality service
b. Customization service
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c. Higher tier-service level
d. Recognition and appreciation
e. Financial rewards
A
QN=19 Vanguard Group, a growth leader in the mutual fund industry, apply a low
redemtion rate strategy in order to attract only long-term investor. This strategy help the
company to:
a. Build a foundation for loyalty
b. Create loyalty bonds
c. Reduce churn driver
d. Provide loyalty reward
e. Improve service quality
c
QN=19 The group of customer who usually provide the bulk of the customer base but
only a small profit margin is _____________
a. Platinium
b. Diamond
c. Gold
d. Iron
e. Lead
A
QN=20 The customers who are least price sensitive and most commited to the firm is
called________
a. Platinium
b. Diamond
c. Gold
d. Iron
e. Lead
A
QN=21 Extremely dissatisfied customers who stay at the end of _____________could
become______________
a. Zone of defection, apostles
b. Zone of Affection, apostles
c. Zone of indifferent, Terrorists
d. Zone of Defection, terrorists
e. Zone of Affetion, tersorists
A
QN=22 According to Susan Keveaney research, the reason that cause the largest
propotion of customers who switch to another service provider is ___________
a. Core service failures
b. Disatisfactory service encounter
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c. High, deceptive or unfair pricing
d. Inconvenience in term of time, location or delays
e. Poor response to service failure
True/False
11. Defection describes customers who stop buying from a company and transfer their
brand affinity to another supplier.
12. In the B2B context, the smaller firms as a group have a lot of bargaining power.
13. Customers remain loyal to a firm because they experience relational benefits.
14. Most people can think of dozens of service firms they truly like and where they are
committed to going back to.
15. Special treatment benefits include being known by name by the service provider.
16. Good relationships start with a good fit between customer needs and company
capabilities.
17. Successful customer relationships cannot be built if a firm is selective about the
segments they target.
18. Many service firms put too much emphasis on value without enough consideration of
the number of customers they will serve.
19. The lead customer tier tends to generate moderate revenue, but only a small amount
of business.
20. The two ends of the customer satisfaction/loyalty relationship are terrorist and
apostle.
Short Answer
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21. Define loyalty in a service context.
Loyalty is a customer’s willingness to continue patronizing a firm over the long-

term, preferably exclusively, and recommending the firm’s products to others.
(Easy; p. 308)
22. Why do firms benefit from a price premium with loyal customers?
New customers often benefit from introductory promotional discounts, whereas

long-term customers are more likely to pay regular prices and will pay even more
when highly satisfied.
(Moderate; p. 309)
23. What are the three clusters of benefits that customers derive from relationships with
the firm?
Confidence benefits, social benefits and special treatment benefits.

(Moderate; p. 312)
24. Describe the “Iron” customer segment discussed by Zeithaml, Rust, and Lemon.
These are the bulk of the customer base. They give the firm economies of scale and
are often only marginally profitable.
25. Explain what a “structural bond” means.
Structural bonds are mostly seen in B2B settings and aim to stimulate loyalty
through joint investment and sharing of information, processes, and equipment.
(Moderate; p. 323)
Essay
26. Describe the wheel of loyalty.
According to the wheel of loyalty, customer loyalty is derived from three main
components. The first is building a foundation for loyalty. Here, the market is
segmented to match customer needs and firm capabilities, customers are selected to
match the core value proposition, services are tiered, and quality service is delivered.
The second component is creating customer loyalty bonds. This component involves
building social, customization, and structural bonds. It also involves rewarding
(financial, recognition, bonuses) and deepening the relationship through cross selling
and bundling of services. The third component reduces churn drivers through
effective complaint handling and increasing switching costs. All of these processes
116
are enabled through frontline staff, account managers, membership programs, and
CRM systems.
27. Discuss the framework of the five key processes involved in a CRM strategy.
The first key process is strategy development that involves the assessment of
business strategy. This is typically the responsibility of top management. Once
developed, it should guide the development of customer strategy, including the
choice of target segments and tiers, the design of loyalty bonds, and churn
management. Value creation, the second process, translates the business and
customer strategies into specific propositions. The value to customers includes all
benefits delivered through tier rewards, loyalty rewards, and customization. Value to
the firm should include reduced customer acquisition, retention costs, and increased
profit. Multichannel integration is the third process. This simply refers to the need to
interact consistently across different interfaces (e.g. face-to-face and online). The
fourth process is information management. A firm’s ability to maintain multichannel
consistency and provide value creation, etc. rests on its management of information.
Customer information (demographics, etc.) and churn information (turnover) are key
aspects of information of which firms need to be aware. Finally, performance
assessment allows a firm to know how well it is doing on creating value, achieving
market and service delivery performance objectives, and its CRM process
performance overall.
APPLICATION CONTENT
28. Vanguard’s success is measured by which of the following?

a) Low redemption rates (tỉ lệ quy đổi thấp)
b) High redemption rates
c) Low customer turnover
d) High customer turnover
e) Portfolio stability
29. Which of the following is NOT an aspect of ING Direct’s no-frills strategy?
a. High interest rates
b. Offers only a handful of basic products
c. Lures low-maintenance customers
d. Firing customers who don’t fit the profile
e. Increased contact with the bank
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30. Which of the following is NOT an example of common CRM applications?
jj. Data collection
kk. Data analysis
ll. Market reinvestment(tái đầu tư)
mm. Sales force automation
nn. Call center automation
31. Common CRM applications include all of the following EXCEPT _____________.
ee.Data collection
ff. Marketing automation
gg. Data entry
hh. Sales force automation
ii. Finance automation
(e; Easy; p. 328)
32. Common failures in CRM implementation include all of the following EXCEPT
_____________.
oo. employee enthusiasm about CRM
pp. inadequate support from top management.
qq. inadequate understanding of customer lifetime value
rr. lack of coordination
ss. failure to reengineer business processes
True/False
33. DHL’s less powerful accounts generate significantly lower profitability than their
major accounts.
34. Vanguard Group is very careful about acquiring the right type of customer.
35. ING Direct could be called the fast-food model of consumer banking because it is
about as no-frills as it gets.
36. Customer satisfaction (based on the ACSI) is highly related to the stock price of
individual firms.
37. Part of British Airways’ strategy is that customers can earn BA points and air miles
on other airlines.
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Short Answer
38. What did DHL find out about its large and small accounts?
DHL discovered that each of its major accounts brings a lot of business, but has
below average margins. In contrast, its smaller, less powerful accounts show higher
profitability.
39. Describe how Vanguard Group keeps its costs down to attract the right type of
customer.
Vanguard focuses on index funds that create lower management fees and higher long
term returns. They also do little advertising and have a policy of not trading.
(Moderate; p. 315)
40. Give an example of a firm discussed in the chapter that successfully built a strategy
on serving customer segments that were neglected by established players that didn’t
perceive them as sufficiently “valuable.”
Enterprise Rent-A-Car or Charles Schwab.

(Moderate, p. 316)
41. Describe the difference between miles and points on British Airways.
Miles refer to distance flown and are redeemed for air travel rewards. Points earned,
upgrade members to higher silver or gold tiers.
(Moderate; p. 321)
42. Explain how AOL got itself into legal trouble with poor churn management.
AOL rewarded its call center employees with bonuses for “saving” over 50 percent
of customers who called in to cancel their service. Rather than retain customers
through quality service, they attempted to retain them by making it aggravating to
leave the service.
Essay
43. Discuss how Vanguard Group’s pricing is set up to reward the right kind of
customers.
119
For many of Vanguard’s investors, only a one-time upfront fee is charged that goes
into the fund to compensate all current investors for the administrative costs of
selling new shares. The fee basically subsidizes long-term investors, and penalizes
short-term investors. They also created Admiral shares for their loyal investors,
which carry an expense fee one-third below ordinary shares. These efforts keep
administrative and sales costs to the firm down, which are passed along to their loyal
investors.
44. Discuss how tiering helps a leading U.S. market research agency better understand
its customers.
This agency uses the four-tier pyramid suggested by Zeithaml, Rust, and Lemon.
Platinum clients are large accounts that are willing to plan a certain amount of
research during the year and also able to commit to the timing, scope, and nature of
the projects. They make capacity management easy and provide high margins
because of the size of the projects. Gold accounts are similar, but represent a more
price sensitive segment. These accounts are still fairly large, but unwilling to commit
to a specified amount of work during the year. Iron accounts spend a moderate
amount in research and commission work on a project-by-project basis. They seek
the lowest price and often do not allow the research firm time to finish a quality job.
Lead accounts request isolated, low cost projects, which are quick and dirty and
often invite multiple bids on their business. These accounts also tend to be high
maintenance, as they do not understand research well enough.
(Moderate; p. 317)
45. Discuss the benefits offered by British Airways to its Gold tier members.
Gold tier members at British Airways receive a host of benefits for their patronage
and the value of their patronage. Members can be guaranteed a seat in economy even
when a flight is fully booked and the member gives more than 24 hours of notice,
essentially bumping another consumer from a lower tier. They receive the highest
priority on standbys and advance notification of delays over 4 hours from the United
States or Canada. They are checked in first and may board the aircraft at their
leisure. Members are given access to the first class departure lounge even when not
flying on British Airways. They receive an additional 50 percent bonus for air miles
and free cabin upgrades for achieving a certain amount of points within a year.
(Moderate; p. 320)
Chapter 13
Complaint Handling and Service Recovery
GENERAL CONTENT
120
1. Which of the following is NOT one of the options customers take when they are
dissatisfied with a service encounter?
oo. Take legal action.
pp. Vent their anger on the service equipment.
qq. Do nothing.
rr. Complain to the service firm.
ss. Give negative word of mouth.
(b; Easy; p. 340)
2. Which of the following is NOT one of the reasons why customers complain that is
listed in the book?
jj. Better understand the failure
kk.Vent their anger
ll. Help improve the service
mm. Obtain restitution or compensation
nn.For altruistic reasons
(a; Easy; p. 341)
3. On average, what percentage of customers complains when they are unhappy with
service?
ee. 0 percent
ff. 5–10 percent
gg. 15–25 percent
hh. 30–50 percent
ii. 60–75 percent
(b; Easy; p. 341)
4. ____________ involves the employees of the firm who provide the service recovery
and their behavior toward the customer.
oo.Procedural justice
pp.Legal justice
qq.Interactional justice
rr. Relational justice
ss. Outcome justice
5. Which of the following is NOT one of the guidelines provided for the Front Line on
how to handle customer complaints?
jj. Consider compensation
kk.Keep the customer informed of progress
ll. Explain the problem from the service firm’s point of view
mm. Acknowledge the customer’s feelings
nn.Act fast
121
6. The ____________ refers to the sometimes-observed effect that customers who
experience a service failure and then have it resolved to their full satisfaction are more
likely to make future purchases than are customers who have no problem in the first
place.
jj. referent renewal paradox
kk. referent contribution paradox
ll. referent acquisition paradox
mm. service recovery paradox
nn. service renewal paradox
7. Effective service recovery procedures should be ____________, ____________,

____________, and ____________.
z. proactive, engaged, universal, empowered
aa. planned, engaged, universal, trained
bb.proactive, planned, trained, empowered
cc. trained, engaged, flexible, spontaneous
dd.trained, engaged, universal, empowered
8. All EXCEPT which of the following are reasons that service guarantees are powerful
tools for both promoting and achieving service quality?
jj. Guarantees reduce consumer complaining, increasing customer satisfaction and
information from customers.
kk. Guarantees force firms to focus on what their customers want and expect in each
element of the service.
ll. Guarantees set clear standards, telling customers and employees alike what the
company stands for.
mm. Guarantees building “market muscle” by reducing the risk of the purchase
decision and developing long-term loyalty.
nn. Guarantees force service organizations understand why they fail and encourage
them to identify and overcome potential fail points.
9. Which of the following is NOT one of the criteria that service guarantees should be
designed to meet?
oo. Easy to understand and communicate
pp. Meaningful to the customer
qq. Conditional
rr. Easy to invoke
ss. Credible
(c; Easy; p. 354)
10. All of the following are jaycustomers EXCEPT ___________.

oo.The Cheat
pp.The Rule Breaker
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qq.The Belligerent
rr. The Deadbeat
ss. The Hooligan
c
QN=10 The customers who are likely to abuse service employees when they are not to be
blamed are called _________
a. The Cheat
b. The Rule Breaker
c. The Belligerent
d. The Deadbeat
e. The Vandal
e
QN=11 The customers who abuse service equipment and facilities are
called____________
a. The Cheat
b. The Rule Breaker
c. The Belligerent
d. The Deadbeat
e. The Vandal
a
QN=12 How many failures can a service firm commit before the recovery paradox is
wiped out?
a. One failure
b. Two failures
c. Three failures
d. Four failures
e. Five failures
b
QN=13 Which of the following is NOT one of the elements of effective service recovery?
a. Do the job right the first time
b. Seek alternative recompense strategies
c. Identify service complaints
d. Resolve complaints effectively
e. Learn from the recovery experience
d
QN=14 Service personnel are often abused by_________
a. The Cheat
b. The Rule Breaker
c. The Family Feuder
d. The Belligergent
e. The Vandal
123
e
QN=15 Which of the following activities is NOT a good method to cure vandalism?
a. Increasing lighting
b. Installing cameras
c. Educating customers on using equipments
d. Asking customer to provide security deposits to pay for any damage that they cause
e. Setting more rules
a
QN=16 Installing surveilance system would helps to prevent following jay customers
except?
a. The Belligerent
b. The Thief
c. The Cheat
d. The Vandal
a
QN=17 Which of the following customer response to service failure should be
encouraged by the service providers?
a. Complain to the service firms
b. Complain to the third party
c. Swithch to another service providers
d. Negative word of mouth
e. Take legal action
b
QN=18 David Needleman, JetBlue's CEO, sent a personal e-mail to all customer in the
company's database to explain what caused the problem, apologized profusely and
detailed its service recovery report. This is example of a service firm understand that
customers seek for _________ when they make complain.
a. Procedural justice
b. Interactional justice
c. Outcome justice
d. Personal justice
e. Legal justice
a
QN=19 Which one of the following is an example of outcome justice customers expect?
a. The airline provide vouchers or refunds when flights is delayed
b. Waiters apologize when the soup is cold
c. Managers come and explain what happen to waiting customers
d. It's free when customer call to make complain on their Internet service
e. Customers would not have to provide any proof for their complains
124
QN=20 When customers want the problem to be fixed, they prefer ________
a. Taking to staff
b. Using Email
c. Sending a letter
d. Producing negative word of mouth
e. Take legal action
B
QN=21 When a service firm features service improvements that resulted from customer
feedback, it is reducing which customers' complaining barrier?
a. Inconvenience
b. Doubtful payoff
c. Unpleasantness
d. Anger
e. Financial cost
C
QN=22 When a service firm allows anonymous feedback, it is reducing which customers'
complaining barrier?
a. Inconvenience
b. Doubtful payoff
c. Unpleasantness
d. Anger
e. Financial cost
D
QN=23 The Bugs Burger Bug Killers Guarantee includes:
- You don't owe us a penny until all the pests on your premises have been eradicated
- If you're ever dissatisfied with the BBBK's service, you will received a refund for as
much as 12 months of service
- If a guest spots a pest on your premises, the exterminator will pay for the guest's meal or
room, send a letter of apology and pay for a future meal or stay.
- If your premises are closed down because of the presence of roaches or rodents, BBBK
will pay any fines, as well as all lost profit, plus $5,000
This is an example of
a. Single attribute - specific guarantee
b. Multi attribute - specific guarantee
c. Full satisfaction guarantee
d. Combined guarantee
a
QN=24 Customers are much more likely to take advantage of a firm's service recovery
effort if______________
a. They believe that they were treated unfairly
b. The service firm is small
c. The service recovery procedure is convenience
125
d. They have personal relationship with employees
e. The service quality is high
True/False
11. Complaining behavior can be influenced by role perceptions and social norms.
12. People in lower socioeconomic levels are more likely to complain than those in
higher levels.
13. Procedural justice concerns the compensation that a customer receives as a result of
the losses and inconveniences incurred because of a service failure.
14. Interactional justice involves the employees of the firm who provide the service
recovery and their behavior toward the customer.
15. Service recovery is an umbrella term for systematic efforts by a firm to correct a
problem following a service failure and retain a customer’s goodwill.
16. Proper service recovery can be accomplished by making it easy for customers to give
feedback, enabling effective service recovery, and establishing appropriate
compensation levels.
17. Service recovery efforts should be fairly rigid to makes sure the same recovery is
achieved each time.
18. Compensation should be based on the positioning of the firm, the severity of the
failure, and who the specific affected customer is.
19. Service guarantees are always appropriate.

20. A jaycustomer is defined in the book as one who acts in a thoughtless or abusive
way, causing problems for the firm, its employees, and other customers.
126
Short Answer
21. What are the three main response options for customers who experience service
failures?
Take public action, take private action, or take no action.

(Moderate; p. 340)
22. What is procedural justice?
It concerns the perceived fairness of the policies and rules that any customer will
have to go through in order to seek fairness.
(Moderate; p. 342)
23. What is the true impact of a customer defection?
When a dissatisfied customer defects, the firm loses more than just the value of the
next transaction. It may also lose a long-term stream of profits from that customer. In
addition, I may lose profits from anyone else who switches suppliers or is stopped
from doing business with that firm because of negative comments from an unhappy
friend.
(Moderate; p. 345)
24. Explain what is meant by “the service recovery paradox.”
The service recovery paradox occurs when customers are more satisfied following a
failure and recovery than if no failure had occurred at all.
(Moderate; p. 346)
25. Explain a situation where a service firm should not implement a service guarantee.
Firms that currently have poor or uncontrollably variant service performance should
not implement service guarantees because they will have to enact the service
guarantee more frequently than might be profitable.
(Easy; p. 355)
Essay
26. Discuss the four common service recovery mistakes made by organizations.
The first mistake managers make is disregarding evidence that shows that service
recovery provides a significant financial return. This is generated by a focus on cost
cutting and failing to respect and retain their customers. Another mistake is failing
to invest enough in actions that would prevent service issues. Here again, cost is a
127
key driver, limiting training and education. Poorly trained front-line staff is not
capable of performing necessary service recoveries. A third mistake is when
customer service employees fail to display good attitudes. Customers respond to the
attitudes of the employees they encounter. Poor attitudes decrease the effectiveness
of other recovery efforts like recompense. The final mistake is that organizations
make it difficult to complain or give feedback. Complaints help organizations
recognize problems with their services and also allow for recovery attempts.
Limiting complaints reduces customer retention and allows faulty service procedures
to continue unchecked.
27. Explain what is meant by a “combined guarantee.”
Combined guarantees stem from the ambiguity inherent in traditional “full

satisfaction” guarantees. The guarantee combines the wide scope of a full
satisfaction guarantee with the low uncertainty of specific performance standards.
The combined guarantee was shown to be superior to the pure full satisfaction or
attribute-specific guarantee designs. Specific performance standards are guaranteed,
but should the consumer be dissatisfied with any other element of the service, the
full satisfaction coverage of the combined guarantee applies.
(Moderate; p. 355)
APPLICATION CONTENT
28. Which of the following services best represents how little complaining consumers
actually do?
oo. TARP
pp. Land’s End
qq. Hampton Inn
rr. FedEx
ss.A public bus company
(e; Easy; p. 341)
29. How many failures can a service firm commit before the recovery paradox is wiped
out?
jj. One failure
kk. Two failures
ll. Three failures
mm. Four failures
nn. Five failures
128
30. Which of the following is NOT one of the elements of effective service recovery?
jj. Do the job right the first time
kk. Seek alternative recompense strategies
ll. Identify service complaints
mm. Resolve complaints effectively
nn. Learn from the recovery experience
31. When Marriott Long Wharf Hotel faces the situation of overbooking, all of the
following are steps to recover the situation EXCEPT ____________.
tt. upgrade the guest to a suite
uu. helping the guest get a room in another hotel
vv. giving the guest money to pay for the cab fare
ww. giving the guest complimentary continental breakfast
xx. call the guest later at the other hotel to make sure he is alright
32. Recent research shows that the amount of a guarantee payout has no effect on
consumer cheating. Which of the following is one of the important managerial
implications of this?
jj. Guarantees can be restricted to new customers because of the propensity for
repeat customers to cheat.
kk. Guarantees can be kept low to prevent rewarding cheaters.
ll. Managers can reap the marketing rewards of higher guarantees without increased
payouts due to consumer cheating.
mm. Managers cannot expect to recover the difference in guarantees for
different types of consumers.
nn. Guarantee levels can be used to dissuade consumer cheating.
True/False
33. Customers who complain are more likely to be white-collar workers than blue-collar
workers.
34. Hampton Inn’s 100 percent satisfaction guarantee is a good example of a service
guarantee that goes wrong and hurts a firm’s financial performance.
35. Conditional guarantees are more effective.

36. The Cheat is the kind of jaycustomer who delays payments.
129
37. Hampton Inn has developed a way to identify guests who appear to be cheating and
give them a lot of personalized attention and follow-up from the company.
Short Answer
38. Who are airline customers most likely to complain about an unsatisfactory meal?
Flight attendants.
(Easy; p. 342)
39. The story about the desk clerk at the Marriott Long Wharf Hotel in Boston is a good
example of what aspect of effective service recovery?
Planned service recovery.

40. How function does a service guarantee serve for firms?
It is one way for particularly customer-focused firms to institutionalize professional

complaint handling and effective service recovery.
(Moderate; p. 350)
41. Give an example of a single attribute-specific guarantee.
Any of three popular pizzas that guarantee they will be served within 10 minutes of
ordering on weekdays between 12:00 a.m. and 2:00 p.m.
(Moderate, p. 355)
42. Give an example of a full-satisfaction guarantee.
Land’s End guarantee: “If you are not completely satisfied with any item you buy
from us, at any time during your use of it, return it and we will refund your full
purchase price.”
(Moderate; p. 355)
Essay
43. Describe the three complaint barriers for dissatisfied consumers and explain how a
firm can reduce these barriers.
Inconvenience, doubtful payoff, and unpleasantness are the three key barriers to
complaining. Inconvenience consists of difficulty in finding the right complaint
procedure or the effort involved in the procedure. Firms can reduce inconvenience
130
through customer service hotlines, e-mail addresses, phone book listings, brochures,
etc. Doubtful payoff refers to a consumer’s belief that complaining will result in any
positive response. Minimizing doubtful payoff can be accomplished by having solid
and recognized service recovery procedures in place. Service improvements that
result from customer feedback should be prominently featured. Unpleasantness
results from fear of being treated poorly, being hassled, or feeling embarrassed.
Firms can reduce these fears by thanking customers for feedback, training the
frontline staff not to hassle or belittle customers, and through allowing anonymous
feedback.
44. Describe a service guarantee offered in the chapter that instills confidence and one
that does not.
The LL Bean Guarantee represents a total service guarantee that is not limited to
certain components of the service or qualified by situational factors. Their guarantee
instills consumer confidence allowing customers to return anything purchase at any
time if it proves to be not what is expected.
The Merchants Home Loan Guarantee exemplifies the opposite policy. Their
policies are conditional. There are many obligations that the customer has to bear as
well, in the loan transaction, just as the company has responsibilities. For example,
to determine the level of service received, there are guidelines like the customer was
educated and understood the loan process, the closing documents were reviewed
prior to closing, the customer was treated courteously etc.
45. Discuss the perceived advantages of Hampton Inn’s 100 percent satisfaction
guarantee.
The guarantee provides many advantages to Hampton Inn. Customers like it

because they are confident that they will be satisfied. Another important aspect is
that it helps managers identify new opportunities for quality improvement. In
essence, it increased the pressure and exposed leaks in the system, providing
financial incentives to fix the holes. Ultimately, the guarantee has helped generate
increased consistency across the service delivery for Hampton Inn and allowed for
much greater customer retention.
(Moderate; p. 360)
Chapter 14
Improving Service Quality and Productivity
GENERAL CONTENT
131
1. The common perspective on quality includes all of the following EXCEPT
____________.
oo. transcendent view
pp. user-based definition
qq. manufacturing-based approach
rr. process-based approach
ss. value-based definition
2. The ____________ is supply based, and is concerned primarily with engineering and
manufacturing practices.
tt. transcendent view
uu. user-based definition
vv. manufacturing-based approach
ww. product-based approach
xx. value-based definition
(c; Easy; p. 368)
3. Which of the following is NOT a broad dimension of service quality?

jj. Tangibles
kk. Reliability
ll. Responsiveness
mm. Transcendence
nn. Assurance
(d; Easy; p. 369)
4. ____________ and ____________ typically measure satisfaction with all major

customer service processes and products.
tt. Total market surveys; ordinary surveys
uu.Regular surveys; ordinary surveys
vv.Regular surveys; reverse surveys
ww. Regular surveys; split surveys
xx.Total market surveys; annual surveys
5. The ____________ is the difference between what service providers believe

customers expect and customers’ actual needs and expectations
ee. interpretation gap
ff. standard gap
gg.knowledge gap
hh.service quality gap
ii. internal communications gap
132
6. The ____________ is the difference between what a service provider communicates

and what it actually delivers to the customer.
oo. interpretation gap
pp. communications gap
qq. perceptions gap
rr. standards gap
ss. knowledge gap
7. Which of the following is NOT one of the six service quality gaps?
oo. The knowledge gap.
pp. The proportion gap.
qq. The policy gap.
rr. The delivery gap.
ss. The perceptions gap.
8. Which of the following is the prescription for the perception gap?

tt. Ensure the right service processes and specify standards.
uu. Ensure that performance meets standards.
vv. Learn what customers expect.
ww. Tangibilize and communicate the service quality delivered.
xx. Ensure that communications promises are realistic.
9. Which of the following is one of the customer-driven approaches to improving

productivity?
tt. Ask customers not to use third parties.
uu. Limiting customer involvement in production.
vv. Changing the timing of customer demand.
ww. Reducing backstage elements of production.
xx. Reducing front-stage elements of production.
10. Which of the following is NOT one of the six steps that can help smooth the path of
customer change?
yy. Develop customer trust.
zz. Understand customers’ habits and expectations
aaa. Develop innovation and limit trial.
bbb. Pretest new procedures and equipment.
ccc. Publicize the benefits.
133
d
QN=11
Which of the following is the best example of the source of a delayed flight caused by
front-stage personnel?
a.
Air traffic
b.
Late food service
c.
Late fuel
d.
Gate agents cannot process passengers quickly enough
e.
Poor announcement of departures
a
QN=12
Companies that focus on developing the best services take the ___________ view on
quality
a.
Trancedence
b.
Manufacturing-based
c.
User-based
d.
Value-based
e.
Consumer-based
b
QN=12
Companies that improves service quality by focusing to meet all services' specifications
and standards, take the __________view on service quality
a.
Trancedence
b.
Manufacturing-based
c.
User-based
d.
Value-based
e.
Consumer-based
134
e
QN=13
In SERVQUAL, service quality dimensions include following EXCEPT __________
a.
Tangibles
b.
Reliability
c.
Responsiveness
d.
Assuarance
e.
Responsibility
a
QN=14
Using SERVQUAL to evaluate quality of the service, a bank ask customers to provide
feedback on the user-friendliness of their ATM machines. Which dimension in
SERVQUAL does the question aim at?
a.
Tangibles
b.
Reliability
c.
Responsiveness
d.
Assuarance
e.
Emphathy
c
QN=15
Using SERVQUAL to evaluate quality of the service, a bank ask customers if their staff
are always willing to help customers. Which dimension in SERVQUAL does the
question aim at?
a.
Tangibles
b.
Reliability
c.
Responsiveness
d.
Assuarance
e.
Emphathy
135
e
QN=16
give customers personal attention. Which dimension in SERVQUAL does the question
aim at?
a.
Tangibles
b.
Reliability
c.
Responsiveness
d.
Assuarance
e.
Emphathy
d
QN=17
always smile when greeting customers. Which dimension in SERVQUAL does the
question aim at?
a.
Tangibles
b.
Reliability
c.
Responsiveness
d.
Assuarance
e.
Emphathy
b
QN=18
To close the _____________Gap, services companies need to invest in intensive training
to ensure that their employees are understand and accept service goals, standards, and
priorities
a.
Knowledge
b.
Policy
c.
Delivery
d.
Communication
e.
136
Perception
d
QN=18
Service companies that promote unrealistic promises in their advertisments are most
likely to have _____________
a.
Knowledge Gap
b.
Policy Gap
c.
Delivery Gap
d.
Communication Gap
e.
Perception Gap
a
QN=19
Quality Gap is the accumulate outcomes of all preceding gaps. To close the Quality Gap,
service firms must successfully address ________ and _________
a.
Knowledge Gap; Perception Gap
b.
Knowledge Gap ; Policy Gap
c.
Policy Gap ; Delivery Gap
d.
Communication Gap; Perception Gap
e.
Delivery Gap ; Perception Gap
e
QN=20
Which of the following customer feedback collection tools enable service recovery?
a.
Total market surveys
b.
Annual surveys
c.
Transactional surveys
d.
Mystery shopping
e.
Service feedback cards
137
d
QN=21
Results from which of the following customer feedback collection tools are LEASE
likely to represent quality of service firm?
a.
Total market surveys
b.
Annual surveys
c.
Transactional surveys
d.
Mystery shopping
e.
Service feedback cards
b
QN=22
Which Analyzing and Addressing service quality problems tool allows service firms to
separate between important and trivial causes
a.
Fish bone diagram
b.
Pareto chart
c.
Blueprinting
d.
Poka-yoka
e.
Servuction system
a
QN=23
Which Analyzing and Addressing service quality problems tool allows service firms to
find out potential causes for service problems
a.
Fish bone diagram
b.
Pareto chart
c.
Blueprinting
d.
Poka-yoka
e.
Servuction system
138
QN=24
Using Fishbone Diagram, service firms find out potential causes for service problems
from following categories EXCEPT ___________
a.
Customers
b.
Facilities Equipment
c.
Front stage Personnel
d.
Procedures
e.
Management
True/False
11. Making service processes more efficient results in a better quality experience for
customers and ensures improved benefits for them.
12. The standards gap is the difference between specified delivery standards and the
service provider’s actual performance on these standards.
13. The service quality is the difference between what customers expect to receive and
their perceptions of the service that is actually delivered.
14. The perception gap is the difference between what is, in fact, delivered and what
customers perceive they have received.
15. Hard measures are those that cannot be easily observed and must be collected by
talking to customers, employees, and others.
16. Organizations that are known for excellent service make use of hard measures rather
than soft measures.
17. Transactional surveys are typically conducted after customers have completed a
specific transaction.
18. Control charts offer a simple method of displaying performance on hard measures
over time against specific quality standards.
139
19. Typically the cost of an unhappy customer is lower than the cost of service recovery.
20. Because customers are often involved in service production, operations managers
need to low at how customer outputs can be more productive.
Short Answer
21. Explain the transcendent view of quality.
The transcendent view of quality is synonymous with innate excellence: a mark of

uncompromising standards and high achievement. It argues that people learn to
recognize quality only through the experience gained from repeated exposure.
22. Explain what is meant by the “user-based definition” of service quality.
Here, quality is in the eye of the beholder. This subjective definition equates to
maximum satisfaction.
(Moderate; p. 369)
23. Describe one of the primary components of the prescription for the policy gap.
Establish the right service processes and specify standards. These can be done by
getting the customer service processes right, developing tiered service products that
meet customer expectations, and setting, communicating and reinforcing measurable
customer-oriented service standards for all work units.
(Moderate; p. 372)
24. What is the collection of customer feedback tools that a firm can use?
Total market survey, annual survey on overall satisfaction, transactional survey,

service feedback cards, mystery shopping, unsolicited feedback, focus group
discussions and service reviews.
(Moderate; p. 376)
25. List the four ways to improve service productivity.
Careful control of costs at every step of the process, reduce waste of materials and
labor, replace workers with automated machines and customer-operated self-service
technologies, and broaden the variety of tasks that a service worker can perform.
(Moderate; p. 388)
140
141
Essay
26. Discuss what could be involved in the prescription for “The Delivery Gap.”
The delivery gap can be rectified by ensuring that customer service teams are
motivated and able to meet service standards. This can be accomplished by
improving recruitment in human resources and selecting employees that fit the
necessary skill set and abilities to perform the job well. Once hired, employees need
to be well trained on the technical and soft skills needed to perform effectively.
Employee roles also should be clarified, ensuring that employees understand how
their job contributes to customer satisfaction. Cross-functional service teams and
empowered managers can better offer customer-centric service delivery and problem
resolution. Finally, performance should be measured and regular feedback should be
provided to continue the cycle of excellence.
(Moderate; p. 372)
27. Explain what SERVQUAL is and how it is used in services.
SERVQUAL is a self-report tool used to measure customer satisfaction with service

encounters. Valarie Zeithaml and her colleagues developed the instrument. It is
based on the premise that customers can evaluate a firm’s service quality by
comparing their perceptions of its service with their own expectations. The scale
contains 22 perception items and a series of expectation items that reflect the five
dimensions of service quality. The scale indicates high quality when perceived
performance exceeds expectations and low quality when expectations exceed
perceived performance. Services can use this tool to understand the level of quality
at which customers perceive them and determine which dimensions of service
quality would most improve those perceptions.
(Moderate; p. 396)
APPLICATION CONTENT
28. FedEx approaches quality management from which of the following perspectives?
yy. Percent of packages on time
zz.Percent of flights arriving safely
aaa. Baseline of zero failures
bbb. Low turnover
ccc. High Turnover
29. Which of the following is the best example of the source of a delayed flight caused
by procedures?
oo. Cutoff too close to departure time
142
pp. Late cabin crews
qq. Late cabin cleaners
rr. Weather
ss. Oversize baggage
30. Which of the following is the best example of the source of a delayed flight caused
by front-stage personnel?
tt. Air traffic
uu. Late food service
vv. Late fuel
ww. Gate agents cannot process passengers quickly enough
xx. Poor announcement of departures
31. Which of the following is one of Holiday Inn’s hotel areas that show a particularly
strong impact on revenue per available room?
oo. Dining facilities
pp. The lobby
qq. The exterior
rr. Public restrooms
ss. Kitchen facilities
32. ____________ is the authentication or identification of individuals based on physical

characteristics or traits.
oo. Service amping
pp. Decryption
qq. Biometrics
rr. Encryption
ss. Electronic access
(c; Easy; p. 392)
True/False
33. Fedex’s Service Quality Indicator is a 10-item measure of satisfaction and service
quality from the customers’ viewpoint.
34. FedEx was one of the first company’s to understand the need for a firm-wide index
of service quality that embraced all the key activities that had an impact on
customers.
143
35. A study by Holiday Inn actually showed that as the number of defects per hotel
increase, the amount of revenue per room increases.
36. The Return on Quality perspective from Holiday Inn suggests that the focus of
preventative maintenance should be on the hotel exterior, the guest rooms, and guest
bathrooms.
37. Self-service pumps with credit card readers increase gas station productivity, but lead
to higher costs because of additional fees.
Short Answer
38. Describe what is meant by the 80/20 rule in the context of an airline.
The 80/20 rule refers to 80 percent of failures being explained by 20 percent of

causal variables. In an airline this would mean that late flights are caused by only
four or five factors.
(Moderate, p. 382)
39. What is a key element of gaining customer acceptance of new procedures and
technology?
Teach customers to use innovation and promote trial. Assign service personnel to
demonstrate new equipment and answer questions—providing reassurance as well as
educational assistance.
(Moderate; p. 391)
40. Give an example of biometric test usage in a service environment.
Disneyworld provides season pass holders with access to services facilities using a
biometric card.
41. What is ISO 9000?
ISO 9000 is a certification that a company meets a predetermined set of quality

management standards that are independently assessed.
144
42. List a major service firm from the chapter that has received the Malcolm-Baldrige
National Quality Award.
The Ritz-Carlton (FedEx, and AT&T).

Essay
43. Describe what is involved when an auditor conducts a quality analysis at Holiday Inn
hotels.
The franchisor’s quality assurance reports examine different areas of each hotel.
Two of the areas relate to the guest rooms (bedroom and bathroom) and ten relate to
the commercial areas (exterior, lobby, public restrooms, dining facilities, etc). Each
area typically has 10–12 items that can pass or fail inspection and inspectors note the
number of defects in the entire hotel.
44. Discuss the advantages of using a customer’s physical characteristics to increase

productivity in the delivery of service quality.
Biometrics refers to the practice of using physical characteristics to identify an

individual. In the context of service productivity, its use provides several
advantages. Customer processing can be more secure and accurate, as physical
characteristics are more difficult to replicate than account/access numbers and
passwords. Biometrics allow for more thorough use of self-service options, as it is
more difficult to lose physical characteristics (e.g. a fingerprint) than it is to forget a
password or account number. Other applications include voice recognition for call-
centers, self-service banking, and home shopping.
45. Discuss what the six sigma approach is and how it can be applied to service quality
and productivity.
Six sigma was originally developed by Motorola engineers in the mid-1980’s to

address complaints from sales reps about having to fulfill too many warranty
obligations. Six sigma, statistically, means achieving a quality level of only 3.4
defects per million opportunities. Over time six sigma has evolved from a defection
reduction approach to an overall business improvement approach that can now be
applied to services. Process improvements and process design/redesign form the
cornerstone of the six sigma approach. Many services use this strategy to reduce
defective encounters, reduce cycle times, and improve productivity. For example, GE
Capital applied six sigma to reduce the backroom costs of selling consumer loans,
credit card insurance, and payment protection.
145
Chapter 15
Organizing for Change Management and Service Leadership
GENERAL CONTENT
1. In the service profit chain, profitability, customer loyalty and customer satisfaction is
due to _____________.
oo. complacent reactionism
pp. satisfied, loyal and productive employees
qq. conducive servicescape
rr. crossfunctional teams
ss. reduction management
2. Which of the following is one of the three functions that are tightly linked in effective
service firms?
oo. The management function.
pp. The outputs function.
qq. The inputs function.
rr. The servicescape function.
ss. The human resources function.
3. Which of the following is a component of service performance discussed under the

marketing function?
jj. Service quality
kk. Service delivery
ll. Productivity
mm.Workforce
nn. Role of operations
4. Which of the following is a component of service performance discussed under the

operations function?
tt. Role of marketing
uu. Competitive appeal
vv. Introduction of new technology
ww. Customer profile
xx. Workforce
146
5. Management keeps the current situation going through all of the following EXCEPT
_____________.
tt. Planning
uu. Design
vv. Budgeting
ww. Controlling
xx. Problem solving
6. All of the following are qualities that effective leaders in service organizations should
have EXCEPT ___________.
ddd. love for the business
eee. ways of communicating that is easily understood
fff. see service quality as foundation for competing
ggg. recognize the part played by employees in delivering service
hhh. diplomatic
7. Organizational culture includes all of the following EXCEPT ____________.

yy. shared perceptions or themes regarding what is important in the organization
zz. shared values about what is right and wrong
aaa. shared understanding about what works and what doesn’t work
bbb. shared beliefs, and assumptions about why these things are important
ccc. diverse styles of working and relating to others
(e; Easy; p. 422)
8. Which of the following is NOT one of the six key factors that influence an
organization’s working environment?
yy. Flexibility
zz.Responsibility
aaa. Standards
bbb. Power
ccc. Clarity
9. _____________ is when leaders are able to display the behaviors that they expect of
managers and other employees.
yy. Role modelling
zz. Motivational management
aaa. Affiliative leadership
bbb.Authoritative leadership
ccc. Political maneuvering
10. Which of the following is NOT one of the aspects of leadership in the future?
tt. Leadership coming from emerging countries, with different styles.
147
uu. Collaborative, using the team approach.
vv. Leadership from behind, sharing power with others.
ww. Building collective efforts.
xx. Controlling employees so they do not act on impulse.
a
QN=10
_______________are service firms with uncaring workforces; thus customers only
patronize them because there is no other althernatives
a.
Service losers
b.
Service nonenities
c.
Service professioners
d.
Service leaders
e.
Service winners
a
QN=11
_______________are considered as 'crème da la crème' in their industry because of their
oustanding service and delightful customers.
a.
Service losers
b.
Service nonenities
c.
d.
Service leaders
e.
Service winners
b
QN=12
_______________are dominated with traditional operation mindsets; therefore, receive
customers' indifference
a.
Service losers
b.
Service nonenities
c.
d.
148
Service leaders
e.
Service winners
e
QN=13
Which one of the following is NOT characteristic of leadership?
a.
Concerned with development of vision and strategies, and empowerment of people to
overcome obstacles, make vision happen
b.
Emphasis on emotional and spiritual resources
c.
Works through people and culture
d.
Produces useful change, especially non-incremental change
e.
Works through hierachy and systems
a
QN=14
Which one of the following is a characteristic of leadership?
a.
Concerned with development of vision and strategies, and empowerment of people to
overcome obstacles, make vision happen
b.
Involves keeping current situation operating through planning, budgeting, organizing,
staffing, controlling, and problem solving
c.
Emphasizes physical resources—raw materials, technology, capital
d.
Works through hierarchy and systems
e.
Keeps current system functioning
d
QN=15
Operation fuctions are responsible for_____________
a.
Target right customers and build relationships
b.
Offer solutions the meet customers' needs
c.
Achieve both productivity and customers' satisfaction
d.
Achieve high productivity to ensure acceptable costs
149
e.
Recruite and retain best employees for each job
b
QN=16
Adhering to consistent service quality standards is the responsibility of ____________
a.
Marketing fuction
b.
Operational function
c.
Financial function
d.
Human Resource Fuction
e.
Manufacturing Fuction
b
QN=17
In the Service Profit Chain, which drive customer satisfaction?
a.
Customer loyalty
b.
Value
c.
Quality
d.
Productivity
e.
Employee Loyalty
c
QN=18
In the Service Profit Chain, which drive employee satisfaction?
a.
Customer loyalty
b.
Top management leadership
c.
Internal quality
d.
Service Quality
e.
Employee Loyalty
150
True/False
11. All service leaders have a strong focus on their customers only.
12. There is a strong relationship between customer satisfaction and shareholder value.
13. Implementing the Service Profit Chain requires a complete understanding of how
marketing, accounting and human resources work together.
14. Controlling workers is a practice most likely seen in the “service losers” category of
service performance.
15. In service losers, marketing only plays a tactical role.

16. Consistently meeting or exceeding customer expectations across multiple dimensions

is a practice most likely seen in the “service leader” category of service performance.
17. The company names of the “service professionals” level of service performance are
synonymous with service excellence and an ability to delight customers.
18. Planning is designed to produce orderly results, not change.

19. “Management by walking around” is an approach that exemplifies unsuccessful

managers.
20. Organizational climate represents the tangible surface layer on top of the
organization’s underlying culture.
Short Answer
21. List the links in the Service-Profit Chain.
Customer loyalty drives profitability and growth, customer satisfaction drives

loyalty, value drives customer satisfaction, quality and productivity drives value,
employee loyalty drives service quality and productivity, employee satisfaction
151
drives employee loyalty, internal quality drives employee satisfaction, and top
management leadership underlies the chain’s success.
22. What are the four levels of service performance according to the chapter?
Service losers, service non-entities, service professionals, and service leaders.

(Moderate; p. 414)
23. What is the main reason that customers patronize service losers?
Lack of viable alternatives.

(Moderate; p. 416)
24. What is the dominant operations mindset for a service non-entity?
Achieving cost savings through standardization.

25. Describe the competitive appeal of the “professional” level of service performance.
Customers seek out the firm, based on its sustained reputation for meeting customer
expectations.
Essay
26. Describe the qualities of a service leader.
A service leader offers its customers superior value and quality. It has marketing
strategies that beat the competition, yet it is viewed as a trustworthy organization
that is ethical. It leads in operations through superior processes and innovative use of
technology. It is also recognized as an outstanding place to work, with empowered,
customer-oriented, and satisfied employees. Attaining service leadership requires a
coherent vision and unified message from a strong, effective leadership team.
(Moderate; p. 417)
27. Distinguish the difference between management and leadership.
Management involves keeping the current situation operating through planning,

budgeting, organizing, staffing, controlling and problem solving. Leadership, on the
other hand, is concerned with the development of vision and strategies, and the
empowerment of people to overcome obstacles and make the vision happen.
Leadership reacts to changes in the competitive environment and is built and enacted
through people and culture.
152
(Moderate; p. 418)
APPLICATION CONTENT
28. Pernille Spiers-Lopez is president of ______________.

tt. Fedex
uu. Southwest Airlines
vv. Marriott
ww. IKEA North America
xx. Stena Lines
29. According to Ms Spiers-Lopez, all of the following are characteristics of effective

leadership EXCEPT ____________.
ddd. being authentic
eee. not being afraid to make mistakes
fff. trusting the people around
ggg. being an effective communicator
hhh. not being afraid to change one’s mind
30 What is service science?

yy. Study of how excellent service can be achieved.
zz. An approach for developing service operation that can create value for our
customers.
aaa. An approach to enable us to study, design and manage effective service
systems that create value for our customers.
bbb. A study of various disciplines in the sciences, like logistics management.
ccc. An approach to designing and managing complex service systems.
31. Leadership is a part of managerial work because the rate of change has been
increasing. Even lower level managers now spend up to ____________ of their time
leading.
tt. 10 percent
uu. 20 percent
vv. 25 percent
ww. 30 percent
xx. 35 percent
32. The notion of ____________ is central to the professional lives of Cirque Du Soleil
employees.
153
tt. stretch
uu. bind
vv. hang
ww. wince
xx. edge
True/False
33. Ideally, service firms should be organized in ways that enable the three functions of
marketing, operations, and human resources to work closely together so that the
organization can be responsive to its various stakeholders and achieve success in its
chosen markets.
34. Top-level executives of outstanding service organizations spend incredible amounts

of time setting profit goals and focusing on market share.
35. Organizations that are devoted to satisfying their current customers may miss
important shifts in the marketplace and find them turning into has-beens.
36. Companies who work for years building a loyal workforce with a strong service ethic
may find that such a culture can easily be destroyed through change in leadership.
37. Cirque Du Soleil claims that they didn’t reinvent the circus, they simply repackaged
a way of presenting the circus show in a much more modern way.
Short Answer
38. Give an example from the chapter of a firm is able to achieve competitive advantage
through stretch.
Cirque Du Soleil
(Easy, p. 419)
39. List one of Cirque Du Soleil’s main competitors.
Cirque Eloize (Cirque Eos, Barnum’s Kaleidoscope).

154
40. Describe Cirque Du Soleil’s critical financial issue.
Cirque’s core market is becoming crowded with competition, it is becoming more

difficult to find and retain top performers, and it is unclear how much longer they
can continue to fill 1,000-seat theaters at high admission prices with what are
essentially variations on the same product.
41. What did Sam Walton, founder of Wal-Mart, highlight the role of managers as?
Servant leaders.
42. Daniel Goldman found which leadership style to be the most effective for achieving
positive change and why was that so?
Authoritative leaders are the most effective because they have the skill and
personality to move people toward a vision. These leaders build confidence with a
“Come with me” approach.
(Moderate; p. 424)
Essay
43. Why does IKEA North America have a strong culture of caring for its employees?
This results from Ms Spiers-Lopez’s own personal values. She believes strongly that
family should be the number one priority, and so tries to keep regular hours at work
and avoid business travel on weekends. She also expects those employees who have
families to make them a priority. Recognizing her caring for the family lives of her
employees, Ms Spiers-Lopez was given the Family Champion Award by Working
Mother. Under her leadership, IKEA North America also provides benefits offered
by few retail stores in the United States. For example, even part-timers who work 20
hours a week have full medical and dental insurance, which covers their partners and
children.
44. Describe how William Bratton was able to make his officers very effective in their
work.
Bratton believed in putting his key managers face-to-face with the problems that
were of greatest concern to the public. When he became chief of the New York
Transit Police, Bratton found that none of the senior staff officers used the subway.
So he required all transit police officials, including himself, to ride the subway to
work and to meetings, even at night, instead of traveling in cars provided by the city.
In that way, senior officials experienced the reality of the problems faced by millions
155
of ordinary citizens and by police officers who strove to keep order. His managers
were able to deploy their police officers more effectively, to areas where there were
more subway crimes being committed.
45. Describe how Mitchell T. Rabkin of Beth Israel Hospital learnt the power of role
modeling.
One of our trustees, the late Max Feldberg, head of the Zayre Corporation, asked me
one time to take a walk around the hospital with him and inquired, "Why do you
think there are so many pieces of paper scattered on the floor of this patient care
unit?”
“Well, it’s because people don’t pick them up,” I replied.
He said, "Look, you're a scientist. We'll do an experiment. We'll walk down this
floor and we'll pick up every other piece of paper. And then we'll go upstairs, there's
another unit, same geography, statistically the same amount of paper, but we won't
pick up anything.”
So this 72-year old man and I went picking up alternate bits of the litter on one floor
and nothing on the other. When we came back 10 minutes later, virtually all the rest
of the litter on the first floor had been removed and nothing, of course, had changed
on the second.
And "Mr. Max" said to me, "You see, it's not because people don't pick them up, it's
because you don't pick them up. If you're so fancy that you can't bend down and
pick up a piece of paper, why should anybody.
156

Introduction To Services Marketing: General Content Multiple Choice Questions

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Introduction To Services Marketing: General Content Multiple Choice Questions

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Chapter 1

Introduction to Services Marketing

Multiple Choice Questions

2. Service markets are shaped by all of the following except ____________.

4. The three broad categories of things processed in services are ____________,

6. A useful way to distinguish between goods and services is to place them on a

7. Which of the following is an example of co-production?

8. Customers being turned away or having to wait is an implication of which aspect of

A movie theater seat is an example of _____________.

Education is an example of a/an _____________ service.

Service firms have reservations systems because.

Cinema is an example of a/an _____________ service.

Hotel is an example of a/an _____________ service.

An example of Information processing service is¬¬¬______________

An example of Mental stimulus processing service is__________

Service producers need to focus on recruit, train and reward employees

Which of the following fields would be least likely to be described as intangible-

Which of the following products is an example of intangible dominant?

Which of the following is not a marketing problem caused by intangibility of services?

16. Time is of great importance in services so operations managers have to be concerned

17. Failures are inevitable in service industries.

20. Servicescape is only a consideration if customers have to enter a service factory.

22. Define services.

1) Most service products cannot be inventoried, 2) intangible elements usually

The Internet is transferring power from suppliers to customers, particularly in

27. How can firm develop effective marketing strategies?

Multiple Choice Questions

28. A movie theater seat is an example of _____________.

29. Education is an example of a/an _____________ service.

30. Service firms have reservations systems because.

31. Which of the following is the best example of a supplementary service?

35. The Internet is transferring power from suppliers to customers, especially in

Deregulation of the telecommunications industry has stimulated competition and

The travel industry.

Dry cleaning, lawn mowing, weather forecasting, etc.

Theme parks are a good example of customer co-production services. Implications

Multiple Choice Questions

3. The prepurchase stage begins with ____________.

8. The service operations system does not include ____________.

An example of a service high in credence attribute is _____________.

All of followings are example of search attributes in restaurant service

Which of the following components of the Servuction System is NOT visible to

___________ , the type of service customers hope to receive, is a combination of what

The zone between Desired Service and Adequate Service is __________

One example of Technical core in Servuction system in a hotel is _______

14. Evidence management is a somewhat disorganized approach to presenting customers

Prepurchase, service encounter, and post-purchase.

22. Give an example of a prepurchase risk-reduction strategy.

23. Give an example of a social risk involved in using a service.

What will my friends think of me if they learned I used this service?

24. Define “high-contact service.”

25. What is the service delivery system?

Multiple Choice Questions

29. An example of a service high in credence attribute is _____________.

38. How many needs be triggered in the pre-purchase stage?

People’s unconscious mind (dreams, ego need, personal identity etc.)

39. Give an example of a service’s search attribute.

Restaurant—restaurant positioning (type of food, location, parking availability).

40. Give an example of a restaurant’s credence attribute.

Financial—extra fees or failure to receive the book.

Multiple Choice Questions

1. Brand positioning can do all of the following except ____________.

5. The order-taking process should be , , and