Designing and Managing Services 120-158 Answer Key

120) The ________ determinant of service quality refers to the knowledge and courtesy of employees and their ability to convey trust(Credibility) and confidence(Comptence) in the service they provide. A) conscientious B) assurance C) empathy D) reliability E) responsiveness Answer: B Diff: 1 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 121) Leo's manager has asked him and his teammates to demonstrate caring towards customers. They are instructed to learn customers' names, and use names while interacting with them. Repeat customers should get special attention, and the team members should remember their preferences and habits. The manager is asking the team to be ________. A) assuring B) candid C) empathetic D) reliable E) responsive Answer: C Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Analytical thinking; Application of knowledge 122) Gloria goes to the same bagel shop every morning because the workers there remember her name and remember her order. They always make her feel welcome. The employees of this bagel shop excel at which of the following determinants of service quality? A) reliability B) responsiveness C) assurance D) empathy E) tangibles Answer: D Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Analytical thinking; Application of knowledge 31 123) The zone of ________ is a range where a service dimension is deemed satisfactory, anchored by the minimum level consumers are willing to accept and the level they believe can and should be delivered. A) immunity B) tolerance C) reliability D) assurance E) flexibility Answer: B Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 124) According to the dynamic process model, two different types of expectations have opposite effects on perceptions of service quality. One of these is that ________ overall service quality. A) increasing customer expectations of what the firm will deliver improve the perceptions of B) increasing customer expectations of what the firm will deliver decrease the perceptions of C) decreasing customer expectations of what the firm should deliver decrease the perceptions of D) decreasing customer expectations of what the firm will deliver improve the perceptions of E) increasing customer expectations of what the firm should deliver improve the perceptions of Answer: A Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 125) When customers calculate the perceived economic benefits of a continuously provided service in relationship to the economic costs, they are gauging the ________ equity. A) private B) brand C) payment D) customer-service E) product-service Answer: C Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 32 126) A(n) ________ interface refers to any place at which a company seeks to manage a relationship with a customer, whether through people, technology, or some combination of the two. A) customer-service B) product-customer C) tangible user D) attentive user E) crossing-based Answer: A Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 127) Pricing has no negative effect on customer loyalty. Answer: FALSE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 128) If expected service falls below perceived service, customers are disappointed. Answer: FALSE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 129) Responsiveness is a company's willingness to help customers and provide prompt service. Answer: TRUE Diff: 1 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 130) Reliability refers to the company's willingness to help customers and provide them with prompt service. Answer: FALSE Diff: 1 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 131) The appearance of physical facilities, equipment, personnel, and communication materials are the tangibles that convey service quality to consumers. Answer: TRUE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 33 132) The zone of tolerance for a service is the perceived economic benefit in relationship to the economic cost. Answer: FALSE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 133) Aida decided to switch doctors after she had to wait two and a half hours at her scheduled appointment to see her doctor. She experienced the ethical problem factor that leads to customer switching behavior. Answer: FALSE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 134) The payment equity for a service is a range from the minimum level of service consumers are willing to accept to the level they believe can and should be delivered. Answer: FALSE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 135) A customer-service interface is defined as any place at which a company seeks to manage a relationship with a customer. Answer: TRUE Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 34 136) List the eight different variables that influence service outcome and customer loyalty. Answer: The eight major variables that influence service outcome and customer loyalty are: 1. Pricing: High price, price increases, unfair pricing, or deceptive pricing prompt customers to change their loyalty. 2. Inconvenience: If a customer is made to wait for his appointment or service, there is a chance that he will think of shifting his loyalty. 3. Core service failure: Service failures, billing errors, or service catastrophe influence service outcome and customer loyalty. 4. Service encounter failures: If the customer service representative is uncaring, impolite, unresponsive, or unknowledgeable, the service outcome and customer loyalty is influenced. 5. Response to service failure: If the customer service representative exhibits negative response or reluctant response or no response at all, the customer's loyalty is likely to shift. 6. Competition: A customer's loyalty changes if he finds a better service. 7. Ethical problems: If a customer thinks that the service provider is a cheat or his services are unsafe, then he starts looking for another service provider. 8. Involuntary switching: If the customer has to shift his base or the service provider has to close down, the customer's loyalty undergoes an involuntary shifting. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 137) The service-quality model highlights the main requirements for delivering high service quality. Which are the five gaps that cause unsuccessful delivery? Answer: The five gaps that cause unsuccessful customer service delivery are as follows: 1. The gap between consumer expectation and management perception: The management does not always correctly perceive what customers want. 2. The gap between management perception and service-quality specification: The management might correctly perceive customers' wants but not set a performance standard. 3. The gap between service-quality specifications and service delivery: The employees might be poorly trained, or incapable of or unwilling to meet the standard, or they may be held to conflicting standards, such as taking time to listen to customers and serving them fast. 4. The gap between service delivery and external communications: The consumers' expectations are affected by statements made by company representatives and ads. 5. The gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 35 138) Based on the service-quality model, researchers have identified five determinants of service quality. List and briefly explain each. Answer: The five determinants of service quality are: 1. Reliability: It is the ability to perform the promised service dependably and accurately. 2. Responsiveness: It refers to the willingness to help customers and to provide prompt service. 3. Assurance: It is the knowledge and courtesy of employees and their ability to convey trust and confidence. 4. Empathy: It refers to the provision of caring, individualized attention to customers. 5. Tangibles: It is the appearance of physical facilities, equipment, personnel, and communication materials. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Reflective thinking 139) Clearwater Spa operates on the premise that service quality is the main reason that customers come to the spa, and the attendants are trained to provide excellent service. Despite this, the spa rarely has repeat customers. Clearwater began collecting feedback from customers to find out the reason for this. The management realized that although the customers were happy about the services, they did not like the ambience. What kind of a gap is causing the unsuccessful service delivery in this situation? Answer: In this situation, there is a gap between the consumers' expectations and the managements' perception. Management does not always correctly perceive what customers want. The spa management believes that customers want service quality, when the ambience is the real customer demand. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 140) The manager of a computer service center knows that quick service is the top priority for customers. Accordingly, the employees are encouraged to solve customer difficulties fast, but there is no set time period for service delivery. Which gap could cause unsuccessful service delivery in this situation? Answer: In this situation, there exists a gap between the management perception and the servicequality specification. Although, the management has correctly perceived the customers' want, it has not set a specific performance standard for employees. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 36 141) In the customer support center where Carl works, employees are taught to make conversation to put customers at ease. As customers don't like being kept waiting, they must also try to minimize the time that customers spend waiting for service. Thus, when there are a number of customers lined up, Carl usually has to decide whether to answer a customer's questions in detail or move on quickly to the next customer. The firm's standards are not clear on how they want him to perform. When asked, his boss answers, "You make the decision." This is an example of which service-quality gap? Answer: This is an example of a gap between the service-quality specifications and service delivery. Employees are held to conflicting standards, having to decide between taking time to listen to customers and serving them fast. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 142) The advertisement for a pool reads "a vinyl pool from Parker's for just $5,000." When David contacted the firm for the pool, the customer service representative tells David that the total cost will be $8,000. When David enquires about the extra $3,000, the customer service representative says that is for installation. Which service-quality gap does this situation demonstrate? Answer: This is an example of a gap between service delivery and external communications. Consumer expectations are affected by statements made by company representatives and ads. Here, the ad promised a pool for one price, but the actual price is much higher than the consumer is led to expect. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 143) The last time Betty visited Zing's, the food was excellent. Tonight is her anniversary and she was looking forward to an enjoyable evening. After the meal, she starts feeling that the service was not up to par and the evening was not as successful as she had hoped. According to the service-quality model, which gap is obvious here? Answer: The gap prevalent here is the gap between perceived service and expected service. This gap occurs when the customer misperceives the service quality. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 144) A cosmetics store sees to it that customers who walk in are assisted by store personnel. Personnel are trained to ask customers questions, find out what they want, and make suggestions accordingly. Which of the five determinants of service quality is reflected here? Answer: The determinant of service quality that is reflected here is empathy. The outlet not only cares about its customers, but also gives them individualized attention. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 37 145) Josh travels often on business trips. He usually uses the services of the Sunshine Cab Company to take him to the airport and pick him up from the airport. Though the fares are usually higher than those of other private taxi companies, he prefers to use Sunshine cabs because they're always on time and have well-maintained cabs. Which determinant of service quality does this demonstrate? Answer: This demonstrates the determinant of reliability, which is the ability to perform the promised service dependably and accurately. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 146) Package delivery company UPS uses distinctive brown trucks that have become almost an icon. Explain why such physical facilities are important for UPS while it provides package delivery services. Answer: Services are intangible. But when they are given a tangibility by using physical facilities, equipment, personnel, or communication material, customers find it easier to determine the service quality and distinguish the services of one firm from that of its competitor. Thus, UPS's trucks help the company differentiate its services from its competitors'. Diff: 2 LO: 14.4: How can companies improve service quality? AACSB: Application of knowledge 147) Regular maintenance and repair costs are known as ________ costs. A) service contract B) out-of-pocket C) fixed D) facilitating services E) value-augmentation Answer: B Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 148) A product's purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value gives the ________ cost. A) service warranty B) out-of-pocket C) life-cycle D) facilitating services E) value-augmentation Answer: C Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 38 149) Expensive equipment manufacturers not only install the equipment but also train the staff and undertake the maintenance and repair activities of the equipment. By doing so, they are providing ________. A) payment equity B) value-augmenting services C) differential pricing D) facilitating services E) a primary service package Answer: D Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 150) When Johnson Controls reached beyond its climate control equipment and components business to manage integrated facilities by offering products and services that optimize energy use, it was said to be providing ________. A) facilitating services B) a primary service package C) value-augmenting services D) service contracts E) service warranties Answer: C Diff: 3 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Application of knowledge 151) When sellers agree to provide free maintenance and repair services for a specified period of time at a specified contract price, they are offering ________. A) a complementary service B) payment equity C) a service blueprint D) differential pricing E) an extended warranty Answer: E Diff: 1 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 152) If the length of downtime increases, the cost incurred decreases. Answer: FALSE Diff: 1 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 39 153) A product's purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value is known as the product's activity cost. Answer: FALSE Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 154) Out-of-pocket costs are what the customer spends on regular maintenance and repair costs. Answer: TRUE Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 155) Value-augmenting services include installation, staff training, maintenance and repair services, and financing. Answer: FALSE Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 156) Traditionally, customers have had three specific worries about product service. What are they? Answer: Manufacturers of equipment — small appliances, office machines, tractors, mainframes, airplanes — all must provide product-support services. The three specific worries about product services that customers face are: 1. They worry about reliability and failure frequency. For example, a farmer may tolerate a combine that will break down once a year, but not two or three times a year. 2. They worry about downtime. The longer the downtime, the higher the cost. The customer counts on the seller's service dependability which refers to the seller's ability to fix the machine quickly or at least provide a loaner. 3. They worry about out-of-pocket costs, which refers to the amount they have to spend on regular maintenance and repair costs. Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Reflective thinking 157) An oil drilling company ordered a number of pumpjacks for its operations. The pumpjack is an essential part of its operations and the company needs the equipment to be operational at all times. How can the pumpjack manufacturer demonstrate its service dependability? Answer: The manufacturer can demonstrate its dependability by being prompt to repair the equipment when it fails, and providing replacements when the repairs will take a long time. Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Application of knowledge 40 158) An oil drilling company ordered a pumpjack for its operations. The pumpjack manufacturing company not only set up the machine but also provided training to the people who needed to use it. It also let the drilling company know that it would be undertaking the maintenance and repair services for the pumpjack. What kind of a service is the manufacturing company providing? Answer: The manufacturing company is said to be providing facilitating services. Diff: 2 LO: 14.5: How can goods marketers improve customer-support services? AACSB: Application of knowledge 41