Chapter 1

New perspectives on marketing in the service economy

Multiple Choice Questions
1.
A service is any act, performance or __________ that one party can offer to another and that is
essentially __________ and does not result in the __________ of anything.
a.
product; tangible; ownership
b. experience; tangible; production
experience; intangible; ownership
d. product; intangible; ownership
thing; of value; transfer
c.
e.
Answer: c
Diff:
2
Page: 6
2.
Which of the following can NOT be classified as a consumer service?
a.
Architecture
b. Telecommunications
c.
Restaurant
d. Football match
e.
Airline
Answer: a
Diff: 2
Page:6
3.
Which of the following types of value are NOT provided by services?
a.
Time
b. Experiential
c.
Place
d. Problem generating
e.
Form
Answer: d
Diff: 3
Page: 7
4.
Arrange the following aspects of the customer value framework in sequential order:
1. develop positioning strategy
2. develop distinctive service concepts
3. understand target consumer needs and behaviours
4. create service value propositions

1, 2, 4, 3
a.
b. 3, 1, 4, 2
3, 4, 2, 1
d. 1, 3, 2, 4
2, 4, 1, 3
c.
e.
Answer: b
Diff: 2
Page: 8
5.
Which of the following services could be said to be the most intangible?
a.
Airline
b. Hotel
c.
Consultancy firm
d. Fast food outlet
e.
Taxi firm
Answer: c
Diff:2
Page: 9
6.
Soft drinks would be considered as __________ while a lawyer’s advice would be considered
__________.
a.
balanced; tangible dominant
b. intangible dominant; balanced
balanced; intangible dominant
d. tangible dominant; balanced
tangible dominant; intangible dominant
c.
e.
Answer: e
Diff:2
Page: 9
7.
Activities or amenities that enhance the use of the core offering are called:
a.
supplementary product elements
b. extended product concepts
supplementary service elements
d. optional extras
accessory products
c.
e.
Answer c
Diff: 1
Page: 10
8.
Which of the following could a retailer of flat screen televisions offer as supplementary services?
a.
Financing
b. Installation
c.
In-home consultation
d. After-sales service
e.
All of the above
Answer: e
Diff: 1
Page: 10
9.
IBM, once known mainly as a manufacturer of computers and office machines, now offers four main
groups of services which are:
a.
legal services, business consulting, integrated technology and maintenance
b. strategic outsourcing, business consulting, logistics consulting and maintenance
strategic outsourcing, logistics consulting integrated technology and maintenance
d. strategic outsourcing, marketing research, integrated technology and maintenance
strategic outsourcing, business consulting, integrated technology and maintenance
c.
e.
Answer: e
Diff: 3
Page: 10
10.
It has been suggested that in the last 20 years countries like Australia and New Zealand have moved
much of their low technology manufacturing, which is labour intensive, to less developed economies
such as Indonesia, Malaysia or China. What is this process being labelled as?
a.
b.
c.
d.
e.
Deregulation
Globalisation
Hollowing out effect
Privatisation
Economies of scale effect
Answer: c
Diff: 2
Page: 11
11.
Which of the following is NOT a reason for the rapid growth of services?
a.
b.
c.
d.
e.
Government deregulation of service industries
Banning advertising and promotional activities for professional services
Privatisation of previously government-controlled services
The emergence of a global middle class demanding more and better services
Professional services and franchises competing globally
Answer: b
Diff: 3
Page: 13
12.
In a service encounter, value is created through __________ without obtaining _________ of any
__________ good.
a.
monetary exchanges; ownership; intangible
b. utility exchanges; allocation; valuable
utility functions; transfer; tangible
d. service processes; transfer; tangible
service processes; ownership; tangible
c.
e.
Answer: e
Diff: 3
Page: 13
13.
Which of the following organisations could be classified as a global franchise network?
a.
Coffee world
b. H & R Block
Snap printing
d. All of the above
a and b only
c.
e.
Answer: e
Diff: 2
Page: 13
14.

15.

16.

Which of the following is NOT one of the four generic differences between goods and services?
a.
b.
c.
d.
e.
Homogeneity
Intangibility
Simultaneity
Perishability
Variability
Answer: a
Diff: 2
Page: 14
Which one of the following is NOT an example of an intangible component of a restaurant meal?
a.
b.
c.
d.
e.
The cleanliness of employees' uniforms
The waiter or waitress taking the customer's order
The availability of credit card payment
Calling a taxi on behalf of the customer to take the customer home
Advice provided by the wine steward
Answer: a
Diff: 2
Page: 14
During a stay in a hotel, which of the following is NOT a tangible component?
a.
The complimentary newspaper
b. The towels
c.
The hotel bed
d. The wake up call
The room key
e.
Answer: d
Diff: 2
Page: 15
17.

18.

19.

The phrase ‘customers are asked to buy promises’ refers to the fact that:
a.
intangible aspects are often not delivered
b. consumers try out and then select services
consumers cannot try out services in advance
d. intangible aspects can be quantified and measured
all services received are the same
c.
e.
Answer: c
Diff:1
Page: 15
In a visit to a dentist surgery, which of the following would NOT be classed as physical evidence?

Healthy plants in the waiting room

a.
b. Uniforms worn by the dentist and staff
c.Teeth cleaning, x-rays and filling
d. Framed university degrees
e.
Business cards listing professional affiliations
Answer: c
Diff: 2
Page: 15
The _________ a product or service is to __________ in advance of purchase and use, the greater the
__________ for the customer.
a.
harder; evaluate; experience value;
b. easier; evaluate; perceived risk;
easier; pay for; enjoyment; increase;
d. more difficult; understand; time risk;
harder; evaluate; perceived risk;
c.
e.
Answer: e
Diff: 2
Page: 15
20.
One of the characteristics that make services different is that customers have a:
a.
production role but no consumption role
b. consumption role but no production role
neither production role nor consumption role
d. consumption and advisory role
c.
e.
both production and consumption role
Answer: e
Diff: 2
Page: 16
21.

22.

23.

24.

Although many services require customers to be present for the production and consumption of those
services to take place, which of the following services does NOT require customers to be present?
a.
University lecture
b. Car repairs
c.
Medical diagnosis
d. Fitness training
e.
A stay in a hotel
Answer: b
Diff: 1
Page: 16
It has been suggested that services have many causes to their quality control problem. Which of the
following is NOT a cause to this problem?
a.
The variability of employees' skills and knowledge
b. The decentralised nature of many services
The presence of service personnel and other customers
d. The rapid growth of the services industry in the last three or four decades
The fact that many services involve a simultaneous consumption in the production process
c.
e.
Answer: d
Diff: 3
Page: 16
Characteristics of a service that consumers find hard to evaluate even after purchase and
consumption are called:
a.
search qualities
b. experience qualities
credence qualities
d. intangible qualities
variable qualities
c.
e.
Answer: c
Diff: 3
Page: 16
Attributes which can be discerned only during consumption are called:
a.
search quality
b. experience quality
c.
credence quality
d. tangible quality
heterogenous quality
e.
Answer: b
Diff: 1
Page: 16
25.
Which of the following is NOT a way that service marketers can smooth demand levels to match
capacity?
a.
Offer price reductions at non-peak times
b. Reduce productive capacity to match predicted fluctuations
Use promotional campaigns to increase demand in non-peak times
d. Have necessary facilities, equipment and staff always on standby
Charge premium prices during peak times
c.
e.
Answer: d
Diff: 1
Page: 15
26.
Since service operations’ inputs and outputs tend to vary more widely than those in the manufacturing
industry, which of the following variables can affect customer satisfaction?
a.
Staff
b. Automatic tasks
c.
Attitudes
d. Speed and quality of performance
e. all of the above
Answer: e
Diff: 2
Page: 18
27.
Lovelock suggests services can be grouped into clusters based on which of the following marketing-
relevant characteristics?
a.
Relationships with customers
b. Customisation versus standardisation
Degree of tangibility/intangibility of service processes
d. The place of service delivery
All of the above
c.
e.
Answer: e
Diff: 2
Page: 19
28.

29.

30.

31.

Which of the following best represents a discrete service encounter?

a.
b.
c.
d.
e.
Retail banking
Power supplier
Mobile phone company
Emergency surgery
University
Answer: d
Diff: 2
Page: 20
Lovelock suggests service processes can be classified based on which of the following?
a.
b.
c.
d.
e.
Whether the activity is directed at people or their possessions
Whether the activity is tangible or intangible
Whether the individual involved is part of the target segment
b and c
a and b
Answer: e
Diff: 3
Page: 21
Which of the following best represents a service directed at physical possessions?
a.
b.
c.
d.
e.
Fitness centre
Landscaping and lawn-mowing
Education
Legal services
Beauty salon
Answer: b
Diff: 2
Page: 21
Which of the following best represents a service directed at people’s minds?
a.
Banking
b. Beauty salon
c.
Insurance
d. Laundry and dry cleaning
e. Arts and entertainment
Answer: e
Diff: 1
Page: 21
32.
Which of the following mental-stimulus processes are not able to be transmitted to customers in
distant locations?
a. Music
b. Teaching
c.
Religious service
d. Training
e.
None of the above
Answer: e
Diff: 1
Page: 21
33.
As service delivery systems rely more heavily on information technology and self-service, the
__________ component of the service operations system is shrinking and the service itself is moving
from higher to lower levels of __________.
a.
visible; contact
b. invisible; experience
visible; satisfaction
d. invisible; cost effectiveness
visible; cost effectiveness
c.
e.
Answer: a
Diff: 3
Page: 25
34.
Which of the following elements of a service business are not visible to customers in high contact
services?
a.
Exterior facilities
b. Technical core
Service personnel
d. Other customers
Interior facilities
c.
e.
Answer: b
Diff:1
Page: 25
35.
Which of the following elements of a service business are visible to customers in low contact services?
a.
Self-service equipment such as ATMs
b. Advertising
c.
Corporate website
d. Billing/statements
e.
All of the above
Answer: e
Diff: 1
Page: 25
36.
Bitner, Booms and Tetreault suggest 7 Ps of service by adding which of the following into the
traditional 4Ps?
a.
People
b. Physical evidence
c.
Packaging
d. Process
e. a, b and d
Answer: e
Diff: 2
Page: 28
37.
In high- and medium-contact service, a trusting relationship between client and service provider
sometimes develops to the extent that the person delivering the service becomes __________ from
the service.
a.
independent
b. dependent
c.
separable
d. inseparable
e.
none of the above
Answer: d
Diff: 1
Page: 28
38.
Which of the following terms has been used to describe such elements as the physical layout,
ambience, background music and seating?
a.
Fixed costs
b. Service quality
c.
Servicescape
d. Variable costs
e.
Backstage
Answer: c
Diff: 1
Page: 29
39.
Contact between customers and service personnel via face to face or through media such as
telecommunication and mail is known as:
a.
customer service
b. critical phase
moments of truth
d. people processing
critical incidents
c.
e.
Answer: c
Diff: 3
Page: 30
40.
Which of the following statements represents the interdependence of marketing and other functional
areas such as information technology?
a.
Front line staff in high-contact services have been given more authority and empowered to make
decisions
b. In technology-driven firms, operations managers have primary responsibility for technology
infrastructures and interfaces such as websites
c.
d. Human resource strategies ensure that all employees understand the organisation’s goals and are
Research and development specialists design and implement innovative delivery systems
provided with required training in customer service
All of the above
e.
Answer: e
Diff: 3
Page: 30
Chapter 2
Customer behaviour, culture and service encounters
Multiple Choice Questions
1.

2.

3.

4.

The inherent social nature of services means that cultural norms will impact on consumer decision
making. This is particularly noticeable in:
a.
b.
high contact services
medium contact services
c.all service situations
d.
e.
all of the above
a and b only
Answ: e
Diff: 1
Page: 36
In a typical model of a customer’s decision process, which of the following is NOT part of the pre-
purchase stage?
a. Mood states
b. Recognition of needs
c. Evaluation of alternatives
d. Information search
e. All of the above
Answ: a
Diff: 1
Page: 37
In a typical model of a decision making process, which of the following is NOT part of the service
encounter stage?
a.
Mood states
b. Information search
Understanding consumer needs and values
d. Control theory
Role and script theory
c.
e.
Answ: b
Diff: 2
Page: 37
Understanding customers’ intrinsic needs and values is part of:

pre-purchase phase
a.
b. service-encounter phase
post-purchase phase
d. all of the above
none of the above
c.
e.
Answ: b
Diff: 3
Page: 37
5.
All of the following are dimensions of Hofstede's cultural values except:
a.
power distance
b. individualism
c.
face
d. uncertainty avoidance
e.
masculinity
Answ: c
Diff: 2
Page: 38
6.
Which of the following refers to a society in which the hierarchy is strong and power is centralised at
the top?
a.
b.
Lower power distance
Low uncertainty risk
c.Higher power distance
d.
e.
Low uncertainty risk
All of the above
Answ: c
Diff: 2
Page: 38
7.
In a collectivist culture the emphasis in relationship is NOT on:
a.
dependence
b. conformance
consideration of the individual
d. consideration of the in-group to which one belongs
c.
e.
interdependence
Answ: c
Diff: 2
Page: 38
8.
As a result of being high on uncertainty avoidance, Asian consumers are likely to ______________.
a.
be highly brand-name conscious and brand loyal
b. show a greater insistence on quality
be active users of reference groups and opinion leaders
c.
d. a and c only
e. a, b and c
Answ: e
Diff: 3
Page: 39
9.
In a/n __________ culture, differences in social status between client and service result in reduced
opportunities for client loyalty based on social bonding.
a.
collectivist
b. low power distance
c.
individualist
d. high power distance
e.
low uncertainty avoidance
Answ: d
Diff: 2
Page: 39
10.
Which of the following is not valued in a feminine culture?
a.
Caring for others
b. Nurturing roles and attitude
Quality of life
d. Performance
Maintenance of warm personal relationships
c.
e.
Answ: d
Diff: 2
Page: 40
11.
A consumer discussing, with a friend, the friend’s experiences at a new hairdresser would come under
which stage of the three stage consumption model?
a.
b.
Pre-purchase stage
Experience validity stage
c.Service experience stage
d.
e.
Post-encounter stage
Consumption stage
Answ: a
Diff: 2
Page: 45
12.
Which particular attributes of services do consumers find most difficult to evaluate?
a.
b.
Credence attributes
Search Attributes
c.Service attributes
d.
Experience attributes
e.
Financial attributes
Answ: a
Diff: 2
Page: 46
13.
Attributes such as style, colour and feel are ________ properties which can be evaluated pre-purchase;
__________ properties can only be evaluated during consumption and consumers may not be able to
confidently evaluate __________ properties.
a.
search; experience; credence
b. physical; experiential; value
search; functional; credence
d. tangible; physical; emotional
search; experience; psychological
c.
e.
Answ: a
Diff: 3
Page: 45/6
14.

15.

16.

In selecting a service provider consumers may encounter many risks. Which of the following services
contains the highest level of risk?
a.
Buying a chocolate bar
b. Hiring consultancy services
Visiting a retail clothing outlet
d. Hiring a house cleaning service
Taking a coat to the dry cleaners
c.
e.
Answ: b
Diff: 2
Page: 46
Several factors may enhance risks and uncertainty in the mind of a service purchaser. Which of the
following is NOT likely to be one of them?
a.
When service is relatively new
b. When the service is complex
When the purchase is important to the customer
d. When customer is making a repeat purchase
When the customer is relatively inexperienced
c.
e.
Answ: d
Diff: 3
Page: 46
Which of the following factors may reduce risk and uncertainty when a consumer is looking to select a
service?
a.
b. The consumer's lack of experience in using that service
The intangibility of the service
c.
The level of contact the consumer may have with the organisation during the purchase and
consumption phase
d. The complexity of the service
e.
The importance of the purchase to the consumer
Answ: c
Diff: 3
Page: 46
17.
For an overseas student selecting an Australian or New Zealand university, which of the following
information sources are likely to be the least important to the student in making his/her decision?
a.
University websites
b. Discussions with university staff members over the telephone
Opinion of friends who have visited and experienced the university
d. Opinion of potential employers at the student's home country
Opinion of academic staff at the student's home school
c.
e.
Answ: a
Diff: 3
Page: 46
18.
All of the following are types of risk that are of concern to potential customers except:
a.
financial risk
b. psychological risk
social risk
d. process risk
functional risk
c.
e.
Answ: d
Diff: 1
Page: 47
19.
Consumers who are worried about what their peer groups (or other significant influences on their life)
think when they purchase an item of clothing at a particular retail outlet are concerned about what
type of risk?
a.
Financial risk
b. Communication risk
Performance risk
d. Psychological risk
Social risk
c.
e.
Answ: e
Diff: 2
Page: 47
20.
In a high-risk purchase situation, which of the following statements is incorrect?
a.
Western consumers tend to go through an extended information search process
b. Asian consumers tend to be more passive consumers than Western consumers
Asian consumers tend to use only internal information sources
d. Western consumers tend to consider all attributes of each brand
Asian consumers may prevent the problem recognition stage from occurring
c.
e.
Answ: c
Diff: 3
Page: 49
21.
All of the following are good strategies for an organisation to reduce risk on behalf of its customers
except:
a.
giving a guarantee or a warranty
b. lowering the price of the service
giving out more information on the services offered
d. spending money on the branding of the company
managing the physical evidence of the company effectively
c.
e.
Answ: b
Diff: 3
Page: 49
22.
Which of the following factors has the potential to influence customer satisfaction with the service
purchased?
a.
How their questions are answered
b. How their physical possessions are treated
How they are treated generally by service personnel
d. The appearance of both the interior and exterior of service facilities
All of the above
c.
e.
Answ: e
Diff: 2
Page: 51
23.
A customer going into their bank’s branch to cash an offshore cheque is an example of a __________
service, while using the bank’s ATM to withdraw cash is a __________ service.
a.
personal; automatic
b. low-contact; medium-contact
high-contact; low-contact
d. medium-contact; high contact
personal; technology
c.
e.
Answ: c
Diff: 3
Page: 52
24.
For a high-contact service, which of the following is the least important in shaping customer
perceptions?
a.
Ability of customer service personnel to answer questions
b. Authority of customer service personnel to rectify problems
Cleanliness of service facility
d. Corporate websites
Comfortable seating
c.
e.
Answ: d
Diff: 1
Page: 52
25.
Which of the following factors are known to influence customers’ evaluation of service encounters?
a.
Mood
b. Emotion
c.
Affect
d. None of the above
e. All of the above
Answ: e
Diff: 2
Page: 53
26.
Because many services are experiential, it stands to reason that a customer’s __________ at the time
of the encounter may influence their evaluation of the service.
a.
role
b. script
c.
mood
d. purchasing power
e.
affect
Answ: c
Diff: 1
Page: 53
27.
Which of the following statements does NOT describe consumers in a positive mood?
a.
They are more efficient information processors
b. They are less likely to want value for money
They are easier to serve
d. They are less likely to be argumentative
Their positive mood can enhance experiences
c.
e.
Answ: b
Diff: 2
Page: 53
28.
In a service encounter, customers as well as employees have a role to play, and the satisfaction of both
parties depends on:
a.
role ambiguity
b. role conflict
cognitive effort
d. role congruence
c.
e.
scripts
Answ: d
Diff: 2
Page: 53
29.
Which of the following is NOT a disadvantage of a highly scripted service?
a.
Consumers often see it as a set of ‘mindless behaviours’
b. Customer requests are often not appropriate for highly scripted responses
Good for responding quickly to varying customer needs
d. Often little attention is paid to incoming information
Some customers prefer unscripted encounters
c.
e.
Answ: c
Diff: 1
Page: 55
30.
A website offers viewers the option of customising the information provided to include local time and
weather, local currency rates and local events. This is an example of:
a.
comfort
b. behavioural control
cognitive control
d. value for money
negative experience reduction
c.
e.
Answ: b
Diff: 3
Page: 56
31.
When the pilot realises during a flight that the plane will arrive late at the scheduled destination,
passengers are immediately notified of the length of the delay. This is an example of giving customers:
a.
informational assistance
b. behavioural control
cognitive control
d. customer service
value for money
c.
e.
Answ: c
Diff: 2
Page: 56
32.

33.

34.

35.

Which of the following is NOT considered as a fundamental need that a customer may have in a
service setting?
a.
Fairness
b. Respect
c.
Mood
d. Security
e.
Esteem
Answ: c
Diff: 1
Page: 58
When a customer contacts their bank, travel agent or telephone company, respect can be
demonstrated (or violated) by various things. Which of the following may NOT be one of them?
a.
Customer’s knowledge of script
b. The waiting time to be served
How pleasant the waiting time is viewed as
d. The product knowledge of the staff
The convenience of operating hours or locations
c.
e.
Answ: a
Diff: 2
Page: 59
A customer who has many dealings with his/her bank over a year has many encounters with them. All
of the following events may violate his/her respect if the customer encountered it except:
a.
long waiting time to be served
b. unfriendly customer service personnel
bank staff's unreliability in returning phone calls
d. preferential treatment given to another customer
lack of product knowledge of the staff when asking about particular services
c.
e.
Answ: e
Diff: 3
Page: 59
__________ represents the dignity based on a correct relationship between a person and the groups
to which that person belongs.
a.
Dignity
b. Self-esteem
c.
Face
d. Status
e.
Pecking order
Answ: c
Diff: 2
Page: 59
36.
A psychological contract is an implicit agreement between parties, concerning what each party gives
and gets in the relationship. A psychological contract is an example of:
a.
distributional fairness
b. legal fairness
process fairness
d. procedural fairness
none of the above
c.
e.
Answ: a
Diff: 3
Page: 61
37.

38.

39.

Which of the following statements is true?

a.
Satisfactorily resolved critical incidents can enhance brand loyalty
b. Critical incidents have a significant impact on customer satisfaction
Customers are not always right and can exhibit bad behaviour
d. Critical incidents can occur pre- and post-consumption and during the service process
All of the above
c.
e.
Answ: e
Diff: 2
Page: 62
Why is it important to acknowledge the employee’s viewpoint when examining service encounters?
a.
b.
c.Customers do not always obey instructions
Bad customer behaviour is often a problem
Customers are not always right
d.
e.
All of the above
a and b only
Answ: d
Diff: 1
Page: 63
Satisfaction is an attitude judgement based on the customer’s experience of the service encounter.
Which of the following is not a satisfaction judgement?
a.
b.
Positive disconfirmation
Negative disconfirmation
c.Confirmation
d.
e.
All of the above
None of the above
Answ: e
Diff: 2
Page: 63
40.
Smart firms manage customer’s __________ at each step in the ______ encounter so that customers
expect what a firm can ______.
a.
b.
c.
d.
e.
expectations, service, deliver
needs, service, deliver
expectations, initial, deliver
expectations, service, organise
needs, initial, organise
Answ: a
Diff: 2
Page: 64
Chapter 3
Positioning services in competitive markets
Multiple Choice Questions
1.

2.

3.

4.

Marketing strategy is built on:

a.
segmentation
b. positioning
c.
targeting
d. all of the above
e. a & b only
Answ: d
Diff: 1
Page: 72
According to George Day, first and foremost a business must set itself apart from its:
a.
customers
b. suppliers
c.
d. customers who are not part of its target
competitors
e.
none of the above
Answ: c
Diff: 1
Page: 72
A service-focused firm offers:
a.
a limited range of services to a specific market segment
b. a wide range of services to a narrow segment
a wide range of services to a broad market
d. a narrow range of services to a fairly broad market
none of the above
c.
e.
Answ: d
Diff: 2
Page: 73
A market-focused firm offers:
a.
a limited range of services to a specific market segment
b. a wide range of services to a narrow segment
a wide range of services to a broad market
d. a narrow range of services to a fairly broad market
none of the above
c.
e.
Answ: b
Diff: 2
Page: 73
5.

6.

7.

A fully-focused firm offers:

a.
a limited range of services to a specific market segment
b. a wide range of services to a narrow segment
a wide range of services to a broad market
d. a narrow range of services to a fairly broad market
none of the above
c.
e.
Answ: a
Diff: 2
Page: 73
An unfocused firm offers:
a.
a limited range of services to a specific market segment
b. a wide range of services to a narrow segment
a wide range of services to a broad market
d. a narrow range of services to a fairly broad market
none of the above
c.
e.
Answ: c
Diff: 2
Page: 73
A dentist treats the needs of each patient on the basis of their specific dental condition. This is an
example of:
a.
segmentation
b. mass marketing
mass segmentation
d. micro segmentation
mass customisation
c.
e.
Answ: d
Diff: 2
Page: 75
8.
A __________ is a group of buyers who share common characteristics, needs, reasons to purchase,
__________ and __________.
a.
target market; income levels; age
b. market segment; purchasing behaviour; consumption patterns
target market; consumption behaviours; geographic area
d. market segment; physical features; education levels
potential market; hobbies; religious beliefs
c.
e.
Answ: b
Diff: 3
Page: 75
9.
Effective segmentation involves:
a.
grouping buyers so there is as much dissimilarity within the segment as there is between segments
b. grouping buyers so there is as much similarity within the segment as there is between segments
grouping buyers so there is similarity between segments but dissimilarity within segments
d. grouping buyers so there is dissimilarity between segments but similarity within segments
none of the above
c.
e.
Answ: d
Diff: 3
Page: 75
10.
Which of the following is NOT used as a basis for business to profile consumer market segmentation?
a.
Psychographic
b. Demographic
Market size
d. Behavioural
c.
e.
Geographic
Answ: c
Diff: 1
Page: 75
11.
Business-to-business market segments are usually defined and profiled with reference to all of the
following except:
a.
nature of rivalry
b. industry type
size, location and strategic importance of firms
d. the nature of purchasing situation
anticipated purchasing volume
c.
e.
Answ: a
Diff: 1
Page: 75
12.
When there is a strategic imperative to pursue a niche or focus business strategy, a service firm may
use ___________ as a further segmentation variable.
a.
past yield
b. past performance
potential performance
d. potential behaviour pattern
potential yield
c.
e.
Answ: e
Diff: 3
Page: 75
13.
All of the following may prove useful and significant as an additional segmentation variable in a
service setting except:
a.
aesthetic preferences
b. quality and value expectations
promotional campaigns
d. socio-cultural differences
special requirements
c.
e.
Answ: c
Diff: 1
Page: 76
14.
All of the following criteria can be used to evaluate different market segments except:
a.
actionability
b. sustainability
c.
accessibility
d. measurability
e.
variability
Answ: e
Diff: 3
Page: 76
15.
Target segments should be selected on the basis of all of the following except:
a.
sales and profit potential
b. strategic fit with organisation’s resources
strategic fit with organisation’s management style
d. strategic fit with organisation’s business strategy
strategic fit with organisation’s other markets served
c.
e.
Answ: c
Diff: 1
Page: 76
16.
___________ are those which have to be met by all competing service providers in order to be in the
prospective customer’s evoked set.
a.
Determinant attributes
b. Importance attributes
Expected attributes
d. Core attributes
Supplementary attributes
c.
e.
Answ: b
Diff: 2
Page: 78
17.
__________ are often some way down the list of service characteristics that are important to
purchasers, but they are attributes by which customers see compelling differences between
competing alternatives.
a.
Determinant attributes
b. Importance attributes
Expected attributes
d. Core attributes
Supplementary attributes
c.
e.
Answ: a
Diff: 2
Page: 78
18.
______ is the process of establishing and maintaining a distinctive place in the market for an
organisation and/or its individual product offerings.
a. Segmentation
b. Targeting
c.
Competitive advantage
d. Positioning
e. Profiling
Answ: d
Diff: 2
Page: 79
19.
In developing a successful positioning strategy, developing a ‘distinctive’ product can allow
competition with established brands. Which of the following organisations most exemplifies this
concept?
a.
b.
White Lady funerals
David Jones
c.Myers
d.
e.
Alex Gow Funerals
Woolworths
Answ: a
Diff: 3
Page: 79
20.
SIA’s use of ‘The Singapore Girl’ to convey an image of exoticism and effortless and impeccable
customer service and attention is an example of:
a. repositioning
b. distinctive positioning
c.
product positioning
d. price positioning
e. company positioning
Answ: b
Diff: 1
Page: 79
21.
In building a successful positioning strategy there are a number of significant points. Which of the
following is a point of difference?
a.
b.
Service attributes
Parity
c.Contention
d.
e.
All of the above
b and c only
Answ: a
Diff: 1
Page: 81
22.
Points of parity (POP) refer to the fact that the company brand offering is:
a.
b.
unique to the organisation
can be shared with competing organisations
c.relevant
d.
e.
has a distinct attribute
believable and credible
Answ: b
Diff: 1
Page 82
23.
Keller and Kotler consider three necessary criteria for an attribute to be POD. These are:
a.
b.
relevance, distinctiveness, believability
distinctiveness, originality, parity
c.believability, parity, relevance
d.
originality, believability, relevance
Answ: a
Diff: 2
Page 83
24.
A positioning statement can be developed that enables a service organisation to define its ideal place
in the market by answering the following questions except:
a.
where in the market should we compete?
b. who are our target markets?
what is our service product or concept?
d. what do we want our service product to become?
how are we positioned in the market?
c.
e.
Answ: e
Diff: 1
Page: 84
25.
When a company positions its offerings on substantive attributes which are known from research to
be important to customers, it is called:
a.
repositioning
b. copy positioning
positioning maps
d. product positioning
attribute positioning
c.
e.
Answ: d
Diff: 1
Page: 84
26.
The research involved in developing a positioning strategy can help a company to answer which of the
following questions?
a.
Which customers do we currently serve?
b. How do the benefits of our current services compare to competitors?
Do we have any compelling differences from competitive offerings?
d. What do our customers expect from us?
All of the above
c.
e.
Answ: e
Diff: 1
Page: 86
27.
___________ involves changing an existing position.
a.
Positioning
b. Depositioning
c.
Repositioning
d. Prepositioning
e.
Expositioning
Answ: c
Diff:1
Page: 86
28.
Which of the following is NOT a reason why a company might reposition?
a.
Counter competitive positioning
b. Remain relevant and appealing to current markets
Needs or behaviours have changed
d. Target new or additional segments
Current marketing efforts are successful
c.
e.
Answ: e
Diff: 2
Page: 86
29.
The more __________ the prospective service purchase, the more important _________ are to the
decision-making process.
a.
tangible; extrinsic brand cues
b. intangible; intrinsic brand cues
intangible; extrinsic brand cues
d. expensive; price discounts
tangible; intrinsic brand cues
c.
e.
Answ: b
Diff: 2
Page: 86
30.
Which of the following is NOT an undesirable outcome through poor positioning of a service?
a.
The organisation or one of its services is pushed into a position where it faces head-on
competition from stronger competitors
b. The service has no position at all in the marketplace because no one has ever heard of it
c.
d. The organisation’s service position is confused and nobody understands what its distinctive
The organisation attracts customers from outside its target segment
competence really is
The organisation is pushed into a position that no one else wants because there is little customer
demand there
e.
Answ: c
Diff: 3
Page: 87
31.
Which kind of analysis requires an organisation's management to identify its resources, limitations,
constraints, values and goals?
a.
Market analysis
b. Internal corporate analysis
Competitive analysis
d. Internal marketing analysis
Departmental analysis
c.
e.
Answ: b
Diff: 2
Page: 87
32.
__________ determines the overall nature, level, trend and geographic location of demand.

Market analysis
a.
b. Internal corporate analysis
Competitive analysis
d. Internal marketing analysis
Departmental analysis
c.
e.
Answ: a
Diff: 2
Page: 87
33.
___________ gives a marketing strategist a sense of their organisation’s respective strengths and
weaknesses which, in turn, may suggest opportunities for differentiation.
a.
Internal analysis
b. Corporate analysis
Competitive analysis
d. Market analysis
Segment analysis
c.
e.
Answ: c
Diff: 1
Page: 87
34.
When determining the overall nature, level and trend of demand and the geographical location of the
demand it is useful to undertake a:
a.
b.
competitive analysis
an internal corporate analysis
c.market analysis
d.
e.
competitive analysis
positioning analysis
Answ: c
Diff: 1
Page: 87
35.
Marketers need to anticipate competitive responses for which of the following reasons?
a.
An existing competitor may reposition themselves to compete more effectively
b. A competitor may be able to offer a higher service level and do so
A stronger competitor may be targeting the same niche with a superior service concept
d. None of the above
All of the above
c.
e.
Answ: e
Diff: 2
Page: 88
36.
Why might an organisation use a positioning map?
a.
b. To see whether they have a competitive advantage over the competition
To see how many competitors are in the market
c.
To discover the dimensions which are most important to customers
d. To discover the levels of customer satisfaction relative to the competition
To discover what position new entrants might move into in the market
e.
Answ: b
Diff: 3
Page: 89
37.
Which of the following statements may NOT be true?
a.
As conditions change, research must be repeated and positioning maps redrawn to reflect the
dynamic nature of the marketplace
b. New market entrants may mean that a formerly distinctive position is lost
Repositioning of existing competitors may mean that a formerly distinctive position has been lost
d. Sometimes different maps have to be drawn for different market segments
Same maps need to be used by a firm for all its segments
c.
e.
Answ: e
Diff: 3
Page: 89
38.

39.

40.

The attributes selected for use in a positioning map must be:

a.
financially desirable to the business
b. important to the potential consumer
meaningful to the potential consumer
d. a and c
b and c
Answ: e
c.
e.
Diff: 3
Page: 89
A positioning ____ is, of course, only as good as the ______ of the information used for constructing it.
a.
b.
strategy; quality
map; versatility
c.strategy; map
d.
e.
plan; quality
plan; market
Answ: a
Diff: 2
Page 89
When marketers attempt to create competitive advantages for their service product offerings they
need to take into account:
a.
b.
c.
d.
e.
what will attract customers
how to appeal to customers
key data
segmentation
all of the above
Answ: e
Diff: 2
Page 92
Chapter 4
Developing service products: core and supplementary service
elements
Multiple Choice Questions
1.
The strategy of surrounding the core product with supplementary value-adding services is known in
product-marketing circles as the process of creating the:
a.
product
b. service product
supplementary product
d. augmented product
expected product
c.
e.
Answ: d
Diff: 2
Page: 97
2.

3.

4.

What Levitt called ‘the total product concept’ consists of all of the following except:
a.
supplementary product
b. core product
expected product
d. augmented product
potential product
c.
e.
Answ: a
Diff: 2
Page: 97
In Levitt’s ‘total product concept’ the basic benefit the customer is buying is the:
a.
core product
b. expected product
 augmented product
d. potential product
none of the above
c.
e.
Answ: a
Diff: 2
Page: 97
Pricing, delivery, appearance of facilities and personnel, and personality of service people are included
in which of the following bands of Levitt’s ‘total product concept’?
a.
Core product
b. Expected product
Augmented product
d. Potential product
None of the above
c.
e.
Answ: b
Diff: 2
Page: 97
5.
Everything potentially feasible to attract and hold customers is included in which of the following
bands of Levitt’s ‘total product concept’?
a.
Core product
b. Expected product
Augmented product
d. Potential product
None of the above
c.
e.
Answ: d
Diff: 2
Page: 98
6.

7.

8.

Delivery ______concern the place and manner of service______, and how we have been ________.
a.
b.
processes; delivery; treated
services; provided; advised
c.actions; attributes; treated
d.
e.
processes; delivery; advised
experiences; delivery; advised
Answ: a
Diff: 2
Page: 98
The manner in which a service is provided and the physical environment is often referred to as the:
a.
b.
c.
d.
e.
service atmosphere
service environment
servicescape
service metrics
service blueprint
Answ: c
Diff: 2
Page: 100
___________ are indispensable to delivery and consumption of the core service.
a.
Core services
b. Supporting services
Facilitating services
c.
d. Supplementary services
e. Augmented services
Answ: c
Diff: 3
Page: 101
9.
Which of the following types of services generally offer more supplementary services?
a.
People-processing
b. Possession-processing
c.
Information-processing
d. Mental-stimulus-processing
e. All equally do
Answ: a
Diff: 3
Page: 110
10.

11.

12.

Which of the following is NOT a supporting service in Lovelock’s ‘Flower of Service’?

a.
Consultation
b. Hospitality
c.
Safekeeping
d. Exceptions
e.
Technical facilitation
Answ: e
Diff: 1
Page: 100
Which of the following is NOT a facilitating service in Lovelock’s ‘Flower of Service’?
a.
b.
c.
d.
e.
Billing
Payment
Technical systems
Information
Order taking
Answer: c
Diff: 1
Page: 100
Supplementary services hold strategic value for a firm because they:
a.
are less expensive to offer
b. encourage consumer trial and switching
create a barrier to consumer switching
d. can be offered instead of expensive staff contact
are more flexible and can be changed quickly
c.
e.
Answ: c
Diff: 2
Page: 101
13.
The four groups of facilitating services are:
a.
information, order-taking, billing, payment
b. consultation, information, order-taking, billing
order-taking, information, exceptions,
d. hospitality, information, order-taking, billing
c.
e.
exceptions, hospitality, safe-keeping, order-taking
Answ: a
Diff: 2
Page: 101-104
14.
Creating a formal relationship with customers is important for some service providers. Which of the
following is least likely to require this form of relationship?
a. Banks
b. Insurance companies
c.Medical benefits funds
d. All of the above
e. None of the above
Answ: e
Diff: 3
Page: 102
15.
Some service firms require a formal membership relationship with customers so they can:
a.
gather as much information as possible for use by their other companies
b. screen out consumers who don’t meet basic enrolment criteria
charge higher prices for the added membership benefits
d. gather relevant information
b and d
c.
e.
Answ: e
Diff: 3
Page: 102
16.
Bills for services should NOT be:
a.
timely
b. accurate
c.
illegible
d. complete
e.
itemised
Answ: c
Diff: 1
Page: 103
17
Examples of order taking are divided into three main elements which are:
a.
membership in organisations, professional appointments, applications
b. subscription services, order entry, admissions to restricted facilities
applications, order entry, bookings
d. order entry, bookings subscription services
order entry, bookings, professional appointments
c.
e.
Answ: c
Diff: 2
Page: 103
18.
Which of the following is NOT a benefit of consultation?
a.
Allows development of a tailored solution for customers
b. Facilitates formation of a trusting relationship
Provides opportunities to convey value offered
d. Helps customers to better understand their own situation
Allows offering of a standardised service
c.
e.
Answ: e
Diff: 2
Page: 105
19.
An auto repair service has a coffee machine and magazines in its waiting room and offers pick up and
delivery from customers’ places of work. These are examples of:
a.
the facilitating service element of augmentation
b. the enhancing service element of hospitality
the enhancing service element of augmentation
d. the facilitating service element of hospitality
the support service element of atmospherics
c.
e.
Answ: b
Diff: 3
Page: 106
20.
A motel offers parking facilities for recreational vehicles, a kennel area for pets and a storage facility
for excess baggage. These are examples of:
a.
the facilitating service element of augmentation
b. the enhancing service element of hospitality
the enhancing service element of safekeeping
d. the facilitating service element of hospitality
the support service element of atmospherics
c.
e.
Answ: c
Diff: 2
Page: 107
21.
If required, an airline offers special meals for diabetic passengers, complimentary game packs and
nappies for children, wheelchair access to its lounges and a special area for religious observances.
These are examples of:
a.
the supplementary exception of special requests
b. the enhancing service element of hospitality
the facilitating service element of safekeeping
d. the supplementary exception of problem solving
the support service element of atmospherics
c.
e.
Answ: a
Diff: 3
Page: 107/8
22.
Exceptions involve a group of supplementary services that fall outside the routine of normal service
delivery. Which of the following is NOT one of the types of such exceptions?
a.
Special requests
b. Problem solving
Handling payment
d. Handling complaints
c.
e.
Restitution
Answ: c
Diff: 2
Page: 108
23.
Most __________ services represent _______ to _______ needs.
a.
augmented; responses; customers
b. supplementary; answers; organisations
supplementary; information; customers
d. supplementary; responses; customers
core; responses; customers
c.
e.
Answ: d
Diff: 2
Page: 108
24.
Which of the following statements is NOT true?
a.
Value-adding supplementary services enhance the core offering
b. People-processing services tend to be more demanding in terms of supplementary elements
Possession-processing services often place heavy demands on safekeeping elements
d. Supplementary elements do not assist in differentiation
Companies competing on low-cost often offer fewer supplementary elements
c.
e.
Answ: d
Diff: 3
Page: 110
25
The provision of services within the fast food industry is an excellent example of:
a.
service factory
b. mass service
service shop
d. professional service
labour intensity
c.
e.
Answ: a
Diff: 1
Page: 111
26.
Which of the following is most aptly applied to the ‘mass service’ classification within the system
created by Maister and later expanded by Schmenner?
a.
Low degree of personal, interaction, customisation and labour intensity
b. Low degree of personal interaction and customisation but high in labour intensity
High degree of personal interaction and customisation and low in labour intensity
d. High in personal interaction, customisation and labour intensity
Low in personal interaction, customisation and high in labour intensity
c.
e.
Answ: b
Diff: 2
Page: 111
27.
In the development process of a service product strategy, what are the three essential elements that
must be considered by a service firm?
a.
Nature and benefits of the service, place and manner of service provision, and requisite enabling
resources
b. Nature and benefits of the service, place and manner of service provision, and the organisation's
financial resources
c.
Nature and benefits of the service, customer's perception of quality, and requisite enabling
resources
d. Customer's perception of quality, place and manner of service provision, and requisite enabling
resources
e.
Customer's perception of quality, place and manner of service provision, and the organisation's
financial resources
Answ: a
Diff: 3
Page: 111
28.
____________________ defines the essential nature of the service(s) to be offered with reference to
the nature and needs of the market(s) to be targeted, and leads to a specification of what resources
will be required to make the concept a reality.
a.
The strategic service concept
b. The service marketing concept
The service operations concept
d. The service production concept
The service production and consumption concept
c.
e.
Answ: a
Diff: 1
Page: 111
29.
Which of the following best describes a service shop?
a.
High degree of personal interaction and customisation, low in labour intensity
b. High degree of personal interaction, customisation and labour intensity
Low degree of personal interaction and customisation but high in labour intensity
d. Low degree of personal interaction, customisation and labour intensity
Low degree of personal interaction, high degree of customisation and labour intensity
c.
e.
Answ: a
Diff: 2
Page: 111
30.
Which of the steps in the planning, creating and delivering of services involves clarifying specific
benefits offered to customers and the costs incurred in return?
a.
The market positioning statement
b. The market opportunity analysis
Service operations concept
d. Strategic service concept statement
Service marketing concept
c.
e.
Answ: e
Diff: 3
Page: 112
31. When developing service products, core and supplementary service elements, core products,
supplementary services, reliability levels and accessibility are all part of the:
a.
b.
c.
d.
e.
strategic service concept
market positioning
service marketing concept
service operations concept
none of the above
Answ: c
Diff: 2
Page: 112
32.
Which of the following could be considered as a product line extension for a service organisation?
a.
The introduction of online book purchasing over the Internet
b. The first creation of search engines for the Internet
A retailer offering financial services to its customers
d. An airline that instigates a new route to a different destination for its customers
A restaurant that now offers credit card payment facilities
Answ: d Diff: 2 Page: 114
c.
e.
33.
Heany proposed seven categories of innovation which include:
a.
major service innovations
b. major process innovations
supplementary service innovations
d. service redesign
all of the above
c.
e.
Answ: e
Diff: 1
Page: 113/4
34.
Services marketing is involved with providing a service rather than a physical product. Which of the
following is not a part of the provision of services?
a.
Facilities
b. Equipment
c.
Employees
d. Communication
e. All of the above
Answ: e
Diff: 1
Page: 115
35.
In the framework for service design ‘increased perception of control’ is provided by which service
redesign concept?
a.
Bundled the service
b. Direct service
c.
Self-service
d. Pre-service
e.
Physical service
Answ: c
Diff: 1
Page: 115
36.
The process of reengineering involves _____ processes to achieve _________________performances.
a.
analysing and organising; faster and better performances
b. analysing and redesigning; faster and smoother performances
analysing and redesigning; faster and better performances
d. analysing and redesigning; efficient and economic performances
analysing and organising; efficient and economic performances
c.
e.
Answ: c
Diff: 2
Page: 116
37.
According to Ulrike de Brentani there are at least four areas that require particular attention in the
process used for creating, developing and launching new services. Which of the following is NOT one
of them?
a.
Unique value proposition and differentiation
b. New service synergy
Customer involvement
d. Back stage’s role during the new service development process
Front-line role during the new service development process
c.
e.
Answ: d
Diff: 2
Page: 116
38.
Which of the following stages can be called the first stage in the new service development process?
a.
Concept testing
b. Idea generation
Test marketing
d. New service strategy development
Screening and evaluation
c.
e.
Answ: d
Diff: 3
Page: 117
39.
Non-controllable external brand communications involving word of mouth and publicity are all aspects
of:
a.
the service brand
b. the service communication
the service initiation
d. the service disseminations
the service experience
c.
e.
Answ: a
Diff: 2
Page: 120
40.
A brand in which the product brand name dominates but the corporate name is still featured is
referred to as:
a.
endorsed brands
b. house brands
development brands
d. company brands
none of the above
c.
e.
Answ: a
Diff: 1
Page: 123
Chapter 5
Distributing services through physical and electronic channels
Multiple Choice Questions
1.
Which of the following are included in the typical sales cycle distribution flow for an intangible service?
a.
b.
Information and promotion flow
Negotiation flow
c.Product flow
d.
e.
All of the above
a and c only
Answ: d
Diff: 1
Page: 131
2.
Electronic channels can be used in a variety of service transactions alone. Which of the following is a
service that could be maintained only through electronic channels?
a.
b.
c.
d.
e.
Banking
Forward hotel reservations
ATMs
Airline bookings
None of the above
Answ: c
Diff: 1
Page: 131
3.
Which of the following best describes ‘arm's length’ transactions?
a.
transactions in which the customer meets the service personnel face-to-face
b. transactions in which the customer never meets the service personnel face-to-face
transactions in which the service personnel provide their services over the phone
d. transactions in which the service personnel provide their services through an intermediary
transactions in which the customer is not the user of the services
c.
e.
Answ: b
Diff: 2
Page: 132
4.
Which of the following could be said to be a service delivery where the service organisation comes to
the customer and has a single service outlet?
a.
House cleaning services
b. A restaurant
c.
An airline
d. Travel agency services
Bus service
e.
Answ: a
Diff: 2
Page: 133
5.
Which of the following is NOT a method of service delivery?
a.
Customer goes to service organisation
b. Customer goes to intermediaries
Service organisation comes to customer
d. Customer and service organisation interact electronically
Customer and service organisation transact at arm’s length
c.
e.
Answ: b
Diff: 2
Page: 133
6.
Which of the following is a product that could most effectively be delivered to consumers through the
Internet?
a.
b.
Information based products
International based products
c.Customer to business products
d.
e.
Business to business products
Business to customer based products
Answ: a
Diff: 2
Page: 134
7.
With the improvement in electronic methods and the greater understanding of the use of these
methods organisations can confidently predict that:
a.
b.
c.
d.
e.
the incidence of face to face contact will be eliminated in the future
that the incidence of face to face contact will be minimised
that there will always be a percentage of customers who prefer face to face contact
that a dislike of electronic methods will mean a return to face to face transactions
none of the above
Answ: c
Diff: 3
Page: 135
8.
Consumers who value the functional aspects of a transaction and more convenience will be more
likely to use:
a.
b.
personal channels
impersonal channels
self-service channels
face to face channels
b and c

c.
d.
e.
Answ: e
Diff: 2
Page: 135
9.
Which of the following is NOT based on a self-service based technology?
a.
b.
Airport check-in
Distance learning
c.Information hotline
d.
e.
Package tracking
None of the above
Answ: e
Diff: 2
Page: 135
10.
Which of the following best describes the influence that technology has created a major shift in the
way products are provided in the service industries?
a.
b.
Hi-tech hi-touch
Hi-involvement low-touch
c.Hi-tech low-touch
d.
e.
Low-tech hi-touch
Low-tech low-touch
Answ: c
Diff: 2
Page: 136
11.
Which of the following are benefits that increase customer satisfaction when the service is provided
by self-service technologies?
a.
b.
Consistent service quality
Customer transaction satisfaction
c.Customer choice
d.
e.
Customer overall satisfaction with the service
All of the above
Answ: e
Diff: 3
Page: 137
12.
Which of the following characteristics are most likely to apply to adopters of self-service technologies?
a.
b.
c.
To be female
To be well educated
To be male
d.
e.
All of the above
b, c, only
Answ: d
Diff: 2
Page: 138
13.
Another finding is that self-service technology (SST) _________ are better predictors of SST _______
than individual ______.
a.
b.
c.performances; adoption; differences
characteristics; performance; differences
characteristics; adoption; differences
d.
e.
differences; adoption; differences
differences; adoption; characteristics
Answ: b
Diff: 1
Page: 138
14.
Which of the following is NOT a consideration when determining where to put a physical ‘bricks and
mortar’ distribution centre?
a.
b.
Cost
Staff preference
c.Customer convenience
d.
e.
Customer preference
Easy access
Answ: b
Diff: 3
Page: 138
15.
An automated kiosk such as those offered by bank and building society ATMs is an example of:
a.
b.
a multipurpose facility
a mini store
c.a convenience store
d.
e.
a retail store
none of the above
Answ: b
Diff: 1
Page 138
16.
Airport terminals such as those in Singapore’s Changi have increased their offerings from a straight
airport facility to shopping and entertainment centres. This is an example of:
a.
b.
c.
locational constraints
locating in multipurpose facilities
ministores
d.
e.
extended product
multinational facilities
Answ: b
Diff: 1
Page 139
17.
Which of the following services would it be most appropriate for the customer to go to at a central
location?
a.
b.
c.
d.
e.
General medical treatment
Specialist medical treatment
Invasive medical treatment
Complex inpatient treatment
c and d
Answ: e
Diff: 2
Page 139
18.
Which of the following is NOT a reason why, in the past, traditional schedules were only available for
between 40 and 50 hours a week?
a.
b.
c.
d.
e.
Consumer preferences
Social norms
Legal requirements
Union agreements
All of the above
Answ: a
Diff: 2
Page: 140
19.
Which of the following is NOT a factor in the changing availability of services to the general public?
a.
b.
c.
d.
e.
Changes in legislation
Economic pressure from the government
Economic pressure from the public
Automated self service facilities
Economic incentives to improve asset utilisation
Answ: b
Diff: 2
Page 141
20.
Advances in _________and computer _________have spurred many new approaches to
________delivery.
a.
b.
c.service; technology; telecommunications
telecommunications; technology; service
technology; service; telecommunications
d.
e.
telecommunications; complexity; service
telecommunications; technology; international
Answ: a
Diff: 1
Page 142
21.

22.

23.

24.

More recently, entrepreneurs have taken advantage of the Internet to create new services. Which of
the following is NOT one of the four innovations of particular interest?
a.
b.
c.Usage of voice recognition technology
Development of ‘smart’ mobile telephones
Wi-Fi high-speed Internet technology that can link users to the Internet wherever they may be
d.
e.
Commercialisation of ‘smart cards’
None of the above
Answ: e
Diff: 2
Page 142
Many organisations are supplementing their ‘bricks and mortar’ venues with an online presence.
Which of the following is a potential disadvantage to this practice?
a.
b.
c.
d.
e.
It requires a high capital investment
It could diminish the appeal of the ‘bricks and mortar’ venues
It does not guarantee extra sales
It may not lead to long term growth
All of the above
Answ: e
Diff: 3
Page 144
Which of the following factors is encouraging a move from conventional services towards internet
purchasing?
a.
b.
c.
d.
e.
ease of access to information
24/7 availability
prompt delivery
busier lifestyles
all of the above
Answ: e
Diff: 2
Page: 144
Many service organisations find it cost effective to use intermediaries to outsource some of their tasks.
An example of this, with regard to hotel and airline bookings, is to:
a.
b.
develop a call centre at the site
increase part time staffing levels
c.
d.
e.
use a travel agent
increase awareness
none of the above
Answ: c
Diff: 2
Page: 144
25.
Franchising has become a popular way to expand delivery of an effective service concept which
embraces all of:
a.
b.
c.
d.
e.
the wheel of retailing
the flower of service
the 5 P’s of marketing
the 7 P’s
the incidence of intermediaries
Answ: d
Diff: 1
Page: 145
26.
Franchising is being used extensively in both consumer and B2B industries. The reason for this includes:
a.
b.
c.
d.
e.
franchisees are highly motivated to succeed
it avoids over extending the parent company
the franchisee rarely fails to succeed
the parent company has greater control
standards are able to be strictly supervised
Answ: a
Diff: 2
Page: 145
27.
When an organisation develops a franchisee arm, the advantages of delegating activities to
franchisees is that:
a.
b.
c.the franchisee can improve on company standards
the franchisee can personalise the service
the franchisee can adapt processes to meet needs
d.
e.
franchisors can release some of the control
none of the above
Answ: e
Diff: 3
Page: 146
28.
The force behind service-based operations success in the international market is influenced by:
a.
b.
market drivers
competition drivers
c.technology drivers
d.
e.
cost drivers
all of the above
Answ: e
Diff: 1
Page: 147/8
29.
The use of globalised corporate banking, insurance and management consulting are examples of:
a.
b.
common customer needs drivers
cost drivers
c.market drivers
d.
e.
technology drivers
competition drivers
Answ: c
Diff: 2
Page: 147/8
30.
Which of the following products could be classified as having the characteristics which will meet a
common customer need?
a.
b.
Pens
Electronic devices
c.Computer hardware
d.
e.
Cigarettes
All of the above
Answ: e
Diff: 2
Page: 148
31.
Which of the following countries could most readily be described as having a high context culture?
a.
b.
England
United States of America
c.China
d.
e.
Brazil
France
Answ: c
Diff: 1
Page: 149
32.
Which of the following cannot be classified as a barrier for a service firm to enter the export market?
a.
b.
c.
d.
e.
Firm size
Investment required
Country-of-origin bias
Restrictions in target company
None of the above
Answ: a
Diff: 3
Page: 149
33.

34.

35.

36.

People-processing services need direct contact with their customers and the best methods of doing
this are by:
a.
b.
exporting the service concept
importing customers
c.exporting customers
d.
e.
importing the service concept
a and b
Answ: e
Diff: 1
Page: 152
Which of the following is not a possession-processing service that can be offered by service
organisations?
a.
b.
Repair
Maintenance
c.Entertainment
d.
e.
Freight transport
Cleaning
Answ: c
Diff: 1
Page: 153
The two categories of information-based services—mental processing services and information
processes—can include which of the following?
a.
b.
International film show in Australia or New Zealand
Foreign students studying in Australia or New Zealand
c.Downloading information
d.
e.
All of the above
a and b only
Answ: d
Diff: 2
Page: 154
The process of diagrammatically considering every activity needed to create and deliver a service is
called _____________.
a.
process printing
b. blueprinting
diagrammatic processing
d. flow printing
c.
e.
blue charting
Answ: b
Diff: 2
Page: 154
37.
___________ developed and popularised service blueprinting after studying techniques for industrial
process design and control of workflows.
a.
Shostack
b. Zeithaml
c.
Bitner
d. Kotler
e.
Sviolka
1Answ: a
Diff: 1
Page: 155
38.
Some basic requirements must be met for a service blueprint to be effective. Which one of the
following may NOT be one of them?
a.
b. The blueprint must identify and handle errors, bottlenecks, reiterations and so forth
The blueprint must show time dimensions in diagrammatic form
c.
The blueprint, based on research and experience, must precisely define how much variation from
standards can be allowed in execution
d. The blueprint must show process dimensions in diagrammatic form
None of the above is a basic requirement
Answ: d Diff: 3
e.
Page: 155
39.
Blueprinting identifies potential _________, where there is significant risk of things going wrong and
diminishing service quality.
a.
tactical error points
b. strategic error points
fail points
d. operational error points
inconsistent service points
Answ: c
c.
e.
Diff: 2
Page: 155
40.
Wirtz and Mattila found the _________ is more important than _________ alone in achieving
customer satisfaction and loyalty.
a.
attitude of staff; apology
b. recovery process; compensation
recovery delivery; apology
d. attitude of staff; compensation
compensation offered; apology
Answ: b Diff: 2
c.
e.
Page: 160
Chapter 6
Understanding costs and developing pricing strategy
Multiple Choice Questions
1.
Which of the following objectives might a service organisation pursue?
a.
Revenue-orientated objectives
b. User-oriented objectives
Patronage-oriented objectives
d. a and b only
a, b and c
c.
e.
Answ: e
Diff: 2
Page: 166
2.
When price is set and used with the aim of maximising sales, cash flow and/or profits, we may say that
the pricing objective is primarily:
a.
operations-oriented
b. patronage-oriented
c.
revenue-oriented
d. production-oriented
e.
consumption-oriented
Answ: c
Diff: 2
Page: 166
3.
Which of the following is NOT a way in which pricing can be used for strategic purposes?
a.
b.
c.
d.
e.
Position a service organisation
Reward and retain customers
Manage demand
Target new customers
None of the above
Answ: e
Diff: 1
Page: 168
3.
In some cases, __________ demand might be more important than achieving maximum____, as long
as basic ______requirements are met.
a.
b.
maximising; profit; profit
basic; profit; needs
c.actualising; profit; profit
d.
e.
maximising; exposure; profit
minimising; sales; profit
Answ: a
Diff :2
Page: 168
4.

5.

6.

7.

Price can play a strategic role in which of the following ways?

a.
Symbolise quality
b. Differentiate a service from its competitors
Symbolise value offered
d. Manage demand
All of the above
c.
e.
Answ: e
Diff: 2
Page: 169
The _________ to be recovered set a floor to the price that may be charged for a specific service.
a.
costs
b. value
c.
competitors price
d. elasticity
e.
price
Answ: a
Diff: 1
Page: 169
The ___________ of the service to the customer sets a ceiling to the price that may be charged.
a.
costs
b. value
c.
competitors price
d. elasticity
e.
price
Answ: b
Diff: 1
Page: 169
Companies seeking to make a profit must recover the full costs associated with producing and
marketing a service, and then add a margin sufficient to yield a satisfactory profit. This is known as:
a.
value-based pricing
b. yield-based pricing
marginal-cost pricing
d. cost-based pricing
c.
e.
activity-based pricing
Answ: d
Diff: 1
Page: 169
8.
A cost management system which links resource expenses to the variety and complexity of products
produced, not just to the physical volume, is known as:
a.
activity-based costing
b. volume-based costing
product-based costing
d. yield-based costing
margin-based costing
c.
e.
Answ: a
Diff: 3
Page: 170
9.
Which of the following benefits can be achieved by using activity-based costing?
a.
Determining differences in costs of serving different customers
b. Determining different activities associated with each customer
Determining the amount of each activity demanded by different customers
d. Determining profitability for different customers
All of the above
c.
e.
Answ: e
Diff: 3
Page: 171
10.
Research by Zeithaml suggests four broad expressions of value. Which of the following is NOT one of
them?
a.
Value is low price
b. Value is what I want in a product
Value is benefits minus costs
d. Value is the quality I get for the price I pay
Value is what I get for what I give
c.
e.
Answ: c
Diff: 1
Page: 172
11.
How do we compute net value?
a.
Total perceived benefits minus total perceived costs
b. Total benefits minus fixed costs
Total benefits minus variable costs
d. Total benefits minus semi-variable costs
Total benefits minus marginal costs
c.
e.
Answ: a
Diff: 1
Page: 172
12.

13.

14.

A service provider can increase the net value of a service by doing all of the following except:
a.
adding benefits
b. adding supplementary services
cutting costs
d. combination of a, b and c
adding costs
c.
e.
Answ: e
Diff: 3
Page: 173
Which of the following is NOT a way that a marketer can increase the net value of the service?
a.
Increasing the amount of time involved in service purchase, delivery and consumption
b. Reducing any unwanted physical effort the customers may make to obtain the service
Minimising unpleasant sensory experiences
d. Minimising unwanted mental or psychological effort
Reducing the amount of time involved in service purchase, delivery and consumption
c.
e.
Answ: a
Diff: 3
Page: 173
A customer who perceives high levels of __________ worries about how comfortable and secure they
will feel with a particular service provider.
a.
temporal risk
b. performance risk
psychological risk
d. social risk
financial risk
c.
e.
Answ: c
Diff: 3
Page: 175
15.
Price competition reduces with each of the following, except when:
a.
personal relationships matter to customers
b. there is increased surplus capacity in the industry
customers want to use services at specific times and locations
d. saving time and effort are more important to customers
switching costs are high
c.
e.
Answ: b
Diff: 3
Page: 176
16.

17.

18.

19.

A customer who perceives high levels of __________worries that their choice of service provider may
not meet with the approval of family or friends.
a.
temporal risk
b. performance risk
psychological risk
d. social risk
financial risk
c.
e.
Answ: d
Diff: 1
Page: 176
A customer who perceives high levels of _________ worries about the time and effort needed to find,
evaluate and select a service provider.
a.
 temporal risk
b. performance risk
psychological risk
d. social risk
financial risk
c.
e.
Answ: a
Diff: 1
Page: 176
When a firm has a relatively undifferentiated service compared to its competitors, price competition
intensifies. Which of the following is not an example of price competition?
a.
b.
increased number of competitors
increased substitute offers
c.decreased capacity in the industry
d.
e.
increased surplus capacity in the industry
wider distribution of the service
Answ: c
Diff: 2
Page: 177
Price competition intensifies with each of the following except:
a.
increased number of competitors
b. switching costs are high
wider distribution of competitors
d. increased surplus capacity in the industry
wider distribution of substitute offers
c.
e.
Answ: b
Diff: 2
Page: 177
20.
___________ is concerned with obtaining the best possible yield over time from each available unit of
capacity.
a.
Dynamic pricing
b. Yield management
Value-based pricing
d. Demand-based pricing
None of the above
c.
e.
Answ: b
Diff: 2
Page: 177
21.

22.

23.

Which of the following sectors of service marketing use the concept of revenue management?
a.
b.
Travel industry
Hotel industry
c.Airline industry
d.
e.
Restaurant industry
All of the above
Answ: e
Diff: 2
Page: 179
Which of the following are conditions that could encourage the use of revenue management?
a.
b.
Capacities are relatively fixed
Service is sold in advance
c.Variable and uncertain demand
d.
e.
All of the above
a and b only
Answ: d
Diff: 2
Page: 179
In terms of the ‘building the service model and creating customer value’ model, which of the following
could be classified as fixed and predictable?
a.
b.
Movies
Hotels
c.Restaurants
d.
e.
Golf courses
Rental cars
Answ: a
Diff: 1
Page: 180
24.
When can a service be said to be price-elastic?
a.
Where a large increase in price has the effect of a large increase in sales
b. Where a large decrease in price has the effect of a small increase in sales
Where a small decrease in price has the effect of a large increase in sales
d. Where a small increase in price has the effect of a small increase in sales
Where a small increase in price has the effect of a small decrease in sales
c.
e.
Answ: c
Diff: 1
Page: 181
25.
Which of the following does NOT demonstrate the principle of the use of physical rate fences to
support revenue management?
a.
b.
Seat location
Size of a hotel room
c.Furnishing of a hotel room
d.
e.
Product bundle
Having to pay cancellation fees
Answ: e
Diff: 2
Page: 183
Page: 1
26.
Which of the following is an amenities rate fence?
a.
Personal butler
b. Free golf cart
Size of rental car
d. Theatre seat location
Class of travel
c.
e.
Answ: b
Diff: 1
Page: 183
27.
Marketing’s task in helping maximise ARGE involves all of the following except:
a.
providing the sales force with specific sales target on specific dates for each segment
b. providing guidelines for what prices to charge each segment at specific points in time
identifying the principal market segments that might be attracted to service facilities
c.
d. forecasting the volumes of business that might be obtained from each segment at specific price
levels
monitoring price over time
e.
Answ: e
Diff: 3
Page: 184
28.
Services often invite performance and pricing abuses for which of the following reasons?
a.
Customers may not be present when the work is being performed
b. Customers may not have the technical skills necessary to evaluate performance
Quality and benefits may be difficult to evaluate even after delivery
d. Customers may not be able to assess the amount, if any, of work done
All of the above
c.
e.
Answ: e
Diff: 3
Page: 186
29.
Which of the following will assist in reconciling yield management with customer satisfaction and good
will?
a.
Using bundling to ‘hide’ discounts
b. Using service recovery to compensate for overbooking
Building in ‘loyalty multipliers’ for regular customers
d. Designing price schedules that are clear and fair
All of the above
c.
e.
Answ: e
Diff: 1
Page: 187
30.
The basis for pricing may be:
a.
admission
b. time taken
c.
completion of a task
d. a & b
e.
all of the above
Answ: e
Diff: 1
Page: 188
31.
To provide a simple and effective way for consumers to pay for the service they require it is possible to
use intermediaries such as:
a.
b.
travel agents
banks
c.ticket agents
d.
e.
all of the above
a and c only
Answ: e
Diff: 1
Page: 189
32.
Which of the following is NOT an example of a prepaid method of payment for services?
a.
b.
E-tag
Telephone cards
c.Debit cards
d.
e.
Credit cards
c and d only
Answ: e
Diff: 1
Page: 190
33.
When deciding on a cost for the service which is being offered it is important to consider:
a.
b.
customer price sensitivity
the right customer
c.the right time
d.
e.
the right price
the right inventory unit
Answ:
a
Diff: 1
Page: 191
34.
Pricing information is less important for services _______ in _______ as customers evaluation is likely
made with reference to quality concerns.
a.
low; value
b. high; value
c.
high; criticality
d. low; criticality
e.
high; cost
Answ: c
Diff: 2
Page: 192
35.
A service organisation may take into consideration all of the following costs when using the cost-based
pricing, except:
a.
semi-variable costs
b. marginal costs
fixed costs
d. opportunity costs
variable costs
c.
e.
Answ: d
Diff: 3
Page: 195
36.
Building rent is an example of:
a.
variable cost
b. semi-variable cost
fixed cost
c.
d. marginal cost
none of the above
Answ: c
e.
Diff: 1
Page: 195
37.
__________ often vary widely from one situation to another, depending on the type of service and
the number of people.
a.
Variable costs
b. Semi-variable costs
Fixed costs
d. Marginal costs
None of the above
Answ: b
c.
e.
Diff: 2
Page: 195
38.
Which of the following best describes semi-variable costs?
a.
Costs that fluctuate with what is consumed but may not be linked directly to customer demand
and the volume of services provided
b. Costs that do not fluctuate with what is consumed but may be linked directly to customer demand
and the volume of services provided
c.
Costs that fluctuate even if no services are provided and may be linked directly to economic
environment
d. Costs that fluctuate with what is consumed and may be linked directly to customer demand and
the volume of services provided
Costs that do not fluctuate with what is consumed and may not be linked directly to customer
demand and the volume of services provided
e.
Answ: a
Diff: 2
Page: 195
39.
Costs incurred by the train operator for an additional sale of a single seat in a train, is an example of:
a.
variable cost
b. semi-variable cost
fixed cost
d. marginal cost
none of the above
Answ: d
c.
e.
Diff: 1
Page: 195
40.
Which of the following is the difference between the variable costs to the seller and the price charged
to the purchaser?
a.
Institutional overhead
b. Semi-variable cost
Contribution margin
d. Break-even point
Total benefits
Answ: c
c.
e.
Diff: 2
Page: 195