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14MBAMM303
VTU Question Bank and Answers
Module 1
1. What are Services? (June 13, Dec 14)
A service is any act or performance that one party can offer to another that is essentially
intangible & does not result in the ownership of anything its production may or may not
tied to a physical product.
3. Write the stages in process for setting Customer defined service standards? (June
15)
1. Identify existing or desired service encounter sequence
2. Translate customer expectations into behaviors/actions
3. Select behaviors/actions for standards
4. Set hard or soft standards
5. Develop feedback mechanisms Measure by audits or operating data Hard Soft Measure by
transaction- based surveys
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Module 2
1. Explain the Role of Service Quality in Offensive and Defensive Marketing? (June
14)
Offensive Marketing:
In this method, profit is obtained through sales, but the methodology adopted is sales increase
through repetition and higher market share. In this method, the services are charges higher
than that of competitive, Sales promotion and advertising are huge in this method.
This method is possible only for those companies which have a good reputation.
Defensive Marketing:
In this method the emphasis is on customer retention. This is because; we know that lost
customer must be replaced by a new customer when the replacement comes at the high cost
because of high advertising and promotion expenses. New customers may not be profitable in
the short term.
Eg: In cell phone industry, capturing the customer from other company is very expensive. A
greater degree of service improvement is necessary who make a customer switch from
competitor than to retain a current customer. In general, longer a customer remains with the
company, it is both profitable and companies relationship with the customer will improve.
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If the customer is served properly he generates more profits every year and stay with the
company. Longer the company keeps the customer, the more money it makes.
Cost, Volume, Price Premium and Word of Mouth.
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Desired Service:
This is the level of service which customer hopes to receive or wished for level of
performance. desired service is a mixture of what customer believes can be and should
be.
E.g. Give a cloth to dry cleaner to remove dirt and stain. Desired service is to remove dirt and
stain. In the opinion of the customer this can be done and should be done.
Similarly if you go to a placement services to register your name, the following will be the
desired service.
a. Find you a Job.
b. Find you a right Job.
c. Find you right Job at right geographical location.
d. Find you right Job, right location & right salary.
That is what you hope and with for but you also know that due to economic reason or
availability of ideal job opening as above, you may have to think of something else. You
want something but you know pretty well that it is not possible. For this reason, a customer
holds another lower level expectation. This lower level of expectation is called adequate
service. This level of service is acceptable to the customer.
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Module 3
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Module 4
1. Describe the four basic waiting line strategies, and given an example of each one
preferably based on your experience as a consumer? (June 13)
Employ operational logic.
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Employ operational logic: If customer wait is common, then the first step for the organization is
to analyse the operational process to remove the influences. It may be possible to redesign the
system so that the queue can move faster Eg. Additional counters at bank, post office during all
hours or technological improvements to be made (use of computers or ATM) when queue is
inevitable, the organization should take a decision on What kind of queuing system to used or
how to configure the queue. Queue configuration refers to the number of queues, their location,
space requirement etc., There are several possibilities.
Establish a reservation process: When waiting cannot be avoided, a reservation system can
help to spread the demand. Hotels, transport companies. Theatres and many other service
providers use reservation system to avoid long waits. The idea behind reservation system is that
the service should be available positively when the customer arrives. In addition to the reduction
in the waiting time, the reservation system has the added benefit of potentially shifting the
demand to less desirable time periods.
The danger this system is that if the customer does not turn up then and alternative arrangement
has to be made. E.g., a customer who books a room in a hotel, does not turn up then the hotel
staff will be in a dilemma as to how long should they wait.
Develop feedback mechanisms Measure by audits or operating data Hard Soft Measure
by transaction- based surveys
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Step 1: Customer defined standards is what customer expects, it is a link between customer
expressed expectations and companys action to deliver these expectation...To do these identify
the existing service encounter sequence.
Step 2: What do the customers expect further?
Step 3:
a) Which behavior or action of the employer is most important to the Customers Company and
offered products and services? Customer defined standard tells the company what is most
important to the customers. This is what company should concentrate on.
b) There may be attributes in which company needs to improve. This should be focused and
company should make every effort to improve it.
Step 4: Examine if hard/soft standard chosen are appropriate.
Examine the suitability of accepting to implement the standards-skills/suitability etc.
Step 5: Feedback should be developed once standards are implemented. For eg: Soft standards
need employee monitoring, Ie., Employee monitoring is done by superior listening in when the
employee is attending to customers call. The purpose of this monitoring is to prove feedback to
employee on their performance superior monitoring an employees handling of a customer
service call, for example, should focus not so much on how quickly the employee gets the
customer off the phone but how adequately he/she handles customer request.
Step 6: Establish a Standard and set target level
Without setting a target level, the company lacks a way to qualify whether the standards have
been met or not, this method adopted is as follows. Each time a complaint was made to the
company and each time problem was resolved, employee should log the time.
They should also ask the customer his/her satisfaction with the performance in resolving the
complaint. The company will then plot this information for each complaint on the chart to
determine how well the company was performing and where the company wished to be in the
future.
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Reliability
Tangible
Responsiveness
Assurances
Empathy
Reliability: Reliability means, ability to perform the promise to service dependably and
accurately. Reliability means that the company delivers as per the promises. Customers want to
do business with a company which keeps up the promise.
Tangible: Tangible means, appearance of physical facilities, equipments personnel and written
materials. All of these provide physical image of the service. This is very important particularly
to the new customers who will use this as criteria to evaluate quality. A Service industry
emphasizes tangibles in their strategy which includes hospitability in services when the
customers visit the establishment to receive services. While tangibles are used by
service companies to enhance their image, provide continuity and signal quality to the customers.
Responsiveness: Responsiveness means willingness to help customers and provide prompt
service. This deals with attentiveness and promptness in dealing with customer request questions,
complaints and problems. Responsiveness is communicated to the customers in an indirect way
as follows,
Assurances: Assurance means, employees knowledge and courtesy and their ability to inspire
trust and confidence. This dimension is likely to be particularly important for services that
customer perceives as having high risk and feel uncertain about their ability to evaluate
outcomes. e.g., Medical, Banking and Legal Services
Empathy: Empathy means caring and individualized attention to the customers. The essence of
empathy is to convey the message that the customers are unique and special. Customers want to
feel that he is important to the company and to the service provider.
Personnel at small service firms often know the customers by name and build relationship with
them and meet their requirements and preferences. Such a small firm competes with large firms;
the ability to empathetic may give the small firm a clear advantage.
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Module 5
1. Explain the Benefits and Challenges for Franchisers of Service? (June 14)
Benefits:
Consistency in outlets
Challenges:
o Difficulty in maintaining and motivating franchisees
o Highly publicized disputes and conflict
o Inconsistent quality
2. What type of behavior are influenced by the service scape? (Dec 13)
Individual behavior : It is observed that when individuals react to places. The behavior takes 2
forms. 1. Approach 2. Avoidance.
Approach behaviours include all positive behaviours that might be directed at a particular place
such as desire to stay. Avoidance behavior reflect the opposite, a desire not to stay. This behavior
is influenced by the environment.
The environment, in addition to attracting or determining entry can also influence the customers,
and employees in executing their plan once inside the servicescape. Each individual comes to a
particular service organization with a goal or purpose that may be aided or hindered by setting.
Take a hotel situation when a customer enters. He needs easy access to parking, clear sign
boards, directing him to reception, efficient food service, clean rooms etc., The ability of an
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employee to do their hobs is also influenced by the servicescape. Adequate space, proper
equipment, comfortable temperature all these contribute to employees comfort and job
satisfaction.
Social Interaction: In addition to the effect of servicessape on individual behavior, servicescaoe
influence the nature and quality of employee interactions, most directly in interpersonal service.
The social interaction is affected by the physical container in which it occurs. The physical
container can affect the nature of social interaction in terms of the duration of interaction and
progression of events. In some service situation, the firm may want to limit the duration of
service. Environmental variables such as seating arrangements, size, time limit the social
interaction occurring between customers and other customers (Cinema) or in a train. The close
physical proximity of passengers on the train will in itself prescribe certain patterns of behavior.
The physical setting decides the nature of social interaction. Friendship formation,
participation, helping others have are been influenced by environment conditions. It is also found
that proper physical setting will also help employees in developing friendship, group work etc.,
One of the challenges in designing environments is to enhance individual approach behaviours
and encourage the appropriate social interactions is that the best design from one person or group
may not be best design for others.
3. What are the various managerial issue regarding various type of behavior? (Dec 14)
Self service firms want to predict and manage customer behavior.
Main concern for manager would be
1. Customer attraction
2. Customer satisfaction
3. Customer retention
Remote service firms Managerial problem will be
1. Productivity
2. Increase in efficiency
3. Team work
Interaction service a. Behaviour of customers and employees
Environment and behavior
People respond to environment in different ways i.e., they 1. Respond 2. Cognitively 3.
Emotionally. 4. Psychologically
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The response of customer influence how they behave in he environment. We will discuss one
by one. 1. Environment and Cognition 2. Environment and emotion 3. Environment and
physiology.
4. Define Penetration pricing, Prestige pricing & Skimming pricing? (June 13)
Penetration Pricing:
Penetration pricing is a strategy in which new services are introduced at low prices to stimulate
trial and widespread use. The strategy is appropriate when (1) sales volume of the service is very
sensitive to price, even in early stages of introduction (2) a service faces threats of strong
potential competition very soon after introduction; and (3) there is no class of buying willing to
pay a higher price to obtain the service.
Prestige Pricing
This is a special from demand based pricing by service marketers who offer high quality or
status services. For certain services restaurants, health clubs, airlines, and hotels a higher
price is charged for the luxury end of the business. Some customers of service companies who
use this approach may actually value the high price because it represents prestige or a quality
images. Others prefer purchasing at the high end because they are given preference in seating or
accommodations and are entitled to other special
benefits. In prestige pricing, demand may actually increase as price increases because the costlier
service has more value in reflecting quality or prestige.
Skimming Pricing
This is a strategy in which new services are introduced at high prices with large promotional
expenditures. In this situation many customers are more concerned about obtaining the service
than about the cost of the service allowing service providers to skim the customers most willing
to pay the highest prices.
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Module 6
Food & choice of restaurant, type of insurance required, banking facilities etc.
Lifestyle
Time is valued
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Psychological Factors
Determinants are motivation, perception, liking & beliefs & attitudes influence buying
behavior.
Motive or Drive is a need that is sufficiently pressing to direct the person to seek
satisfaction of need.
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Module 7
1. Explain the Strategies for Enhancing Customer Participation? (June 14)
Strategies for Enhancing Customer Participation:
I. Define customers jobs: The organization first determines what types of participation it wants
from customers, thus beginning to define the customers job. Identifying current level of
customer participation can serve as a starting point.
Once the desired level of participation is clear the organization can define more specifically what
the customers job entails. The customers job description will vary with the type of service &
the organizations desired position within its industry. The job might entail.,
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Recruit, Educate and Reward Customers: Once the customer role is clearly defined the
organization can think in terms of facilitating that role.
In a sense the customer becomes a partial employee of the organization at the same level. As
with the employees customer participation in service production & delivery will be facilitated
when.
1. Recruit the right customers
2. Educate and train customers to perform effectively
3. Reward customers for their contributions
4. Avoid negative outcomes of inappropriate customer participation
II. Manage the customer mix: E.g., Single college students who want to party & families with
small children who want quiet-it may find two groups do not merge.
The process of managing multiple & sometimes conflicting segments is known as compatibility
management (C.M).
Compatibility management will be critically important for some businesses (such as Public
transportation, hospitals & clubs)
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Research on complaints is one of the easiest type of research for firms to conduct, leading many
companies to depend solely on complaints to stay in touch with customers. complaint broadly
to include all commentsboth negative & positive as well as questions from customers.
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other financial incentives are important to customers, they are generally not difficult for
competitors to imitate since the only customized element of the marketing mix is price. Eg.
Swiss air, Luftansa offer big gifts and discounts for fliers exceeding certain Kilometers in a year.
Level 2: Level 2 strategies bind customers to the firm through more than pricing incentives.
While price is still assumed to be important, level 2 retention marketers build long-term
relationships through social as well as financial bonds. Customers are viewed as clients not
nameless faces and become individuals whose needs and wants the firm seeks to understand.
Services are customized to fit individual needs and marketers find ways of staying in touch with
their customers, thereby developing social bonds with them. For example in a study of customer
firm relationships in the insurance industry, it was found that behaviours such as staying
Level 3: Level 3 strategies are the most difficult to imitate and involve
(1) Structural as well as
(2) Financial and
(3) Social bonds between the customer and the firm.
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often when the service provider is serving customers in turn (a bank teller, a ticketing agent, a
doctor) or is serving many customers simultaneously (teachers, entertainers).
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