Services and Nonprofit Organization Marketing TRUE/FALSE 1. A barber shop is an example of a service business. ANS: T 2. Services tend to exhibit more search qualities than do tangible goods. ANS: F A search quality is a characteristic that can be easily assessed before purchase, and tangible goods tend to exhibit more search qualities than do intangible goods. Services exhibit more experience and credence qualities. 3. Services are considered inseparable because most services cannot be felt or touched in the same way most goods can be sensed. ANS: F This describes the characteristic of intangibility. 4. Greta, the owner of House Mouse Cleaning Services, must be physically present when she cleans a house or office. The need for her presence as the service is performed is an example of the intangibility of services. ANS: F and consumed simultaneously (inseparability). 5. Heterogeneity of services means the quality of a service may not be consistent. ANS: T 6. Hotels will often offer deep discounts on weekends and during the off-season; for the same reason, airlines will adopt a similar pricing strategy during off-peak hours. These services cannot be stored, warehoused, or inventoried because they are perishable. ANS: T 7. Responsiveness is the service quality component most valued by customers. ANS: F Reliability has been found to be the component most important to consumers. 8. Karen has a gluten allergy, which means she is unable to eat certain foods. The chef at her favorite dines there. The chef is providing assurance to Karen. ANS: F The chef is exhibiting empathy²caring, individualized attention²to Karen. 9. The gap model of service quality identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality. ANS: T 10. The only type of service processing required for a comedian entertaining at a local club is information processing. ANS: F Comedians require mental stimulus processing. 11. The core service is the most basic benefit the consumer is buying. ANS: T 12. Most service organizations market only one specific service ANS: F Most service organizations market more than one service. 13. Vera is designing a promotional strategy for a company that provides premium boarding services for pampered animals. Her promotions should use personal information sources and stress the tangible cues associated with the service. ANS: T 14. Revenue-oriented pricing focuses on maximizing the surplus of income over costs. ANS: T 15. Many businesses have found that it is more expensive to hang on to the customers they have than to focus only on attracting new ones. ANS: F Many businesses have found that it is more cost-effective to hang on to the customers they have than to focus only on attracting new ones. 16. Chesapeake Energy Corporation was recognized by Fortune Magazine as one of the top companies to work for. Fortune mentioned that Chesapeake Energy provides its employees many perks, including example illustrates relationship marketing in action. ANS: F Chesapeake Energy is actually practicing internal marketing. Relationship marketing is focused on customers, not employees. 17. U.S. service firms such as financial institutions and construction, engineering, and insurance companies will have a difficult time expanding to global markets because competing foreign firms possess many competitive advantages. ANS: F These U.S. firms have the greatest potential for globalization because of their existing competitive advantages. 18. A nonprofit organization is an organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment. ANS: T 19. Nonprofit organizations do not charge prices for the services they provide. ANS: F Nonprofit organizations do charge for the services they provide, though they often use terms such as fees, donations, tuition, fares, fines, or rates. 20. Nonprofit managers do not need to worry about developing marketing strategies. ANS: F Although nonprofit organizations have a different purpose than for-profit businesses and operate in different environments, managers of these organizations need to develop marketing strategies to bring about mutually satisfying exchanges with target markets. 21. One marketing issue unique to nonprofit organizations is that these organizations must often target those who are apathetic about or strongly opposed to receiving their services. ANS: T 22. Nonprofit organizations may or may not require special facilities for distribution of their services. ANS: T 23. The advertising budgets of most nonprofits are too small to pay for the running of public service advertisements to promote their programs, activities, or services. ANS: F The sponsor of a public service advertisement does not pay for the time or space. Instead, it is donated by the medium. MULTIPLE CHOICE 1. A(n) _____ is the result of applying human or mechanical efforts to people or objects. a. application processor b. profit intermediary c. tangible product d. service e. nonprofit organization ANS: D This is the definition of a service. women who offer tips on budgeting and debt relief. As they state on their Web site, their goal is to a _____ that is helpful to women who want to be financially savvy. a. synergy b. tangible resource c. tangible product d. service e. good ANS: D A service is the result of applying human or mechanical efforts to people or objects. 3. Xoom.com is a San Francisco-based online money transfer company that provides consumer remittance services. With the Xoom bank deposit service, consumers can send money directly to bank accounts in several countries around the world. Xoom.com would be classified as a: a. good. b. tangible resource. c. tangible product. d. service. e. nonprofit organization. ANS: D A service is the result of applying human or mechanical efforts to people or objects. 4. All of the following are unique characteristics that distinguish services from goods EXCEPT: a. intangible. b. inseparable. c. searchable. d. heterogeneous. e. perishable. ANS: C Services are intangible, inseparable, heterogeneous, and perishable. 5. A service cannot be touched, seen, tasted, heard, or felt in the same manner in which goods can be sensed and, therefore, is referred to as being: a. b. c. d. e. impervious. extraneous. synergistic. perishable. intangible. ANS: E The basic difference between services and goods is that services are intangible performances. 6. A(n) _____ is a characteristic that can be easily assessed prior to purchase, such as the softness of a mattress or the color of curtains. a. search quality b. intangible attribute c. experience quality d. credence quality e. heterogeneity feature ANS: A Search quality is a characteristic that can be easily assessed before purchase. 7. Maribeth and Asher are trying to think of someplace to take their kids this weekend. Asher thinks it might be fun to take the kids to Coco Key, an indoor waterpark located in a nearby city. However, since no one in the family has ever been to Coco Key before, they will be unable to assess the _____ of the waterpark until they actually visit. a. tangible attribute b. experience quality c. creative quality d. credence quality e. heterogeneity feature ANS: B An experience quality is a characteristic that can only be assessed after use. women who offer tips on budgeting and debt relief. Since you cannot evaluate the quality of the financial advice until after you have received it, this is an example of the _____ characteristic of service. a. reliability b. heterogeneous satisfaction c. search quality d. temporal quality e. experience quality ANS: E Experience quality is described as a characteristic that can be assessed after use. 9. A characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience is referred to as _____ quality. a. search b. experience c. credence d. abstract e. inert ANS: C Medical and consulting services are examples of services that exhibit credence qualities. 10. Alec had his gall bladder removed, but he was unconscious during the operation. In fact, even though he has an incision, he really has no way of knowing if the service was actually performed even after it was allegedly performed. That is because medical services such as this exhibit _____ qualities. a. credence b. perishable c. experience d. search e. homogeneous ANS: A A credence quality is a characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience. 11. Which of the following services would be most likely to exhibit strong credence qualities? a. A math tutorial service b. The repair of a leaky drain c. The preparation of a dead body for burial d. Tax return preparation e. A landscaping service that mows lawns ANS: C A credence quality is a characteristic that cannot easily be assessed even after purchase and experience. 12. Which unique characteristic of services means that consumers must be present during the production? a. Intangibility b. Inseparability c. Heterogeneity d. Perishability e. Connectivity ANS: B Inseparability is the inability of the production and consumption of a service to be separated. 13. Auto repair, manicures, and landscaping are all services that are produced and consumed at the same time. All of these services exhibit the service characteristic of: a. inseparability. b. intangibility. c. heterogeneity. d. perishability. e. variability. ANS: A Inseparability is the inability of the production and consumption of a service to be separated. 14. It is difficult for most of us to talk about mistakes we have made. Unfortunately, for organizations like Consumer Credit Counseling to help you work through your financial issues, you must be willing to honestly discuss your financial condition. In other words, for these organizations to help, you must be actually involved in the process of developing your financial plan, which points to the _____ nature of services. a. intangible b. inseparable c. heterogeneous d. perishable e. flexible ANS: B Inseparability is when services or goods are produced and consumed at the same time. 15. Which unique characteristic of services is the variability of the inputs and outputs of services, which causes services to tend to be less standardized and less uniform than goods? a. Intangibility b. Inseparability c. Heterogeneity d. Perishability e. Flexibility ANS: C Because services have greater heterogeneity, or variability of inputs and outputs, they tend to be less standardized. 16. It is difficult to achieve consistency and standardization of services because of which service characteristic? a. Customization b. Simultaneous production and consumption c. Intangibility d. Perishability e. Heterogeneity ANS: E Heterogeneity means that a service tends to be less standardized and uniform than goods. 17. A reading service for the visually impaired requires each reader applicant to prepare and submit a one-hour interview tape of material chosen by the service to determine whether the reader has pleasing vocal characteristics and is accent free so that it is not necessary to use the same reader every time. The reading service is trying to limit problems associated with the service characteristic of: a. tangibility. b. credence quality. c. heterogeneity. d. simultaneous production and consumption. e. flexibility. ANS: C Heterogeneity means that a service tends to be less standardized and uniform than goods. 18. The consistency and reliability of a service can be increased by: a. making sure that consumers are present during the production of the service. b. eliminating credence quality. c. standardization and training, d. Simultaneous production and consumption e. raising prices. ANS: C Mechanization can also increase consistency and reliability. 19. Due to service _____, services cannot be stored, warehoused, or inventoried. a. tangibility b. variability c. intangibility d. perishability e. heterogeneity ANS: D Perishability is the inability of services to be stored, warehoused, or inventoried. 20. slow. Now it is one of the busiest days of the week. This price reduction was a way to contend with the service characteristic of: a. variability. b. perishability. c. intangibility. d. inseparability. e. simultaneous production and consumption. ANS: B Differential pricing tries to even out demand. This is important because services cannot be stored, inventoried, or warehoused. 21. One of the reasons consumers can purchase cheap flights or hotel rooms on Web sites such as Expedia.com and Hotels.com is due to the fact that airlines cannot sell the seat on a specific flight after the plane takes off and hotels cannot recoup the revenue from that room for that night once the night passes. Which unique characteristic of services does this illustrate? a. Intangibility b. Inseparability c. Perishability d. Simultaneous production and consumption e. Variability ANS: C Services cannot be stored, inventoried, or warehoused. 22. All of the following are service components customers use to evaluate service quality EXCEPT: a. validity. b. empathy. c. assurance. d. responsiveness. e. reliability. ANS: A Customers evaluate service quality through five components: reliability, responsiveness, assurance, empathy, and tangibles. 23. Which component of a service is the ability to perform the service dependably, accurately, and consistently? a. Responsiveness b. Reliability c. Assurance d. Empathy e. Tangibles ANS: B Reliability is performing the service right the first time.