Question bank for Marketing of Services

Paper code-MBA-Mk01
By Sachin Chauhan

(100)Objective Questions:

Q.1. Services are:

(a) Deeds (b) Acts

(c) Performance (d) All the above

Q.2. an economy is called a service economy when the contribution of service sector to
the GDP is more than:

(a) 45% (b) 50%

(c) 60% (d) 75%

Q.3. Name of the country which has been declared as first service economy is:

(a) Russia (b) Japan

(c) China (d) USA

Q.4. Which one is not the characteristic of services:

(a) Intangible (b) Inseparability

(c) Ownership (d) Variability

Q.5. Reasons for growth of services in India:

(a) Economic Affluence (b) Cultural changes

(c) Development of markets (d) All the above

Q.6. which one is incorrect:

(a) Service Quality includes access, reliability and responsiveness

(b) Service Quality is the delivery of excellent or superior service relative to customer
expectation
(c) Service Quality may be judge through satisfaction of customer’s need
(d) Service Quality means better than best

Q.7. Factors influencing consumer behaviour:

(a) Cultural and Social (b) Personal and Physical

 (c) Psychological (d) All the above

Q.8. How do consumer develop expectations:

Match the following:

Levels of Service Performance Customer Response

Exceeding maximum expected level Satisfied

Maximum service level Delighted
Adequate service level Highly dissatisfied
Minimum service level Indifferent
Below minimum level Dissatisfied

Q.9. Stages of market segmentation does not include:

(a) Search (b) Selection

(c) Organizing (d) Strategy

Q.10. Targeting depends upon:

(a) Positioning (b) Segmentation

(c) Quality (d) Price

Q.11. Positioning is :

(a) Mental image (b) Picture in consumer’s mind

(c) Integral part of strategy (d) All the above

Q.12. Augmented mix involves:

(a) Product, Price, Place & Promotion (b) People

(c) Process (d) Physical evidence
(e) All the above (f) None of the above

Q.13. Service Product Development stages:

Arrange these stages in correct form

(a) Screening (b) Testing the concept

(c) Practical Development (d) Launch
(e) Market Testing (f) Generation of ideas
(g) Business Analysis/evaluation
Q.14. Approaches to pricing of services are:

(a) Cost based pricing (b) Competition based pricing

(c) Demand based pricing (d) All the above

Q.15. The service provider needs to have :

(a) Direct contact with customer (b) Contact with Distributor

(c) Contact with Retailer (d) Contact with Wholesaler

Q.16. The popularly used channels for distribution of services :

(a) Franchising (b) Agents and Brokers
(c) Electronic channels (d) All the above

Q.17. Components of the communication program:

(a) Identify the target audience

(b) Determine the promotion objectives
(c) Develop the messages
(d) Select the media vehicle
(e) Set up system for feedback and feed forward
(f) All the above
(g) None of the above

Q.18. The service interaction process includes the phases:

Which one is correct?

(a) The joining phase: Marketing personnel interact with the customers and persuade
sometimes to sell the service

(b) The intensive consumption phase: A critical phase wherein the service process
aims at solving consumer problems

(c) Detachment phase: Payment and registration for next visit

(d) All the above

Q.19. Technology occurs in services in the form:

(a) Delivery (b) On line marketing

(c) Performance (d) All the above

Q.20. People in services augmented mix involves:

(a) Customer (b) Employee
(c) Both (a) & (b)

Q.21. Classification of products into goods, services and ideas is determined by the:

(a) degree of labour intensiveness. (b) type of markets

(c) dominant component (d) skills of the service provider
Q-22- Services can be meaningfully analysed by using a five category classification
scheme including type of market, degree of labour intensiveness, degree of customer
contact, skills of service provider, and

(a) degree of competition within the service industry

(b) goal of the service provider
(c) market share of the service provider
(d) employee structure of the service provider

Q-23- The appearance of the production facilities and the interpersonal skills of actual
service providers are critical in ---------------- services

(a) low-contact (b) equipment-based

(c) industrial (d) high contact

Q-24- In service marketing , the most important link to the customer is:

(a) effective advertising (b) well trained contact employees

(c) good word of mouth communication (d) the tangible aspects of services

Q-25- Legal and general insurance uses “the umbrella” to communicate protection to its
customers. This illustrates the company’s attempt to help customers understand the
service by:

(a) emphasizing tangible clues in promoting the service

(b) personal selling of the service
(c) utilizing publicity techniques to enhance the service
(d) distributing the service directly through television

Q-26- Because of a service’s --------------- , standardization and quality are extremely

difficult to control

(a) intangibility (b) inseparability

(c) homogeneity (d) heterogeneity

Q-27- The necessary interaction between service provider and customer that allows a
service to be delivered is called

(a) customer contact (b) service exchange

 (c) marketing (d) relationship marketing

Q-28- Which one of the following group of people would be considered client publics for
a hospital?

(a) patients (b) insurance companies

(c) doctors (d) nurses
Q-29- The system in which an industrial seller sets a price for a product and the customer
pays that price is known as –

(a) bid (b) negotiated

(c) administered (d) fixed

Q-30- Of the following media, which one is used LEAST frequently by business to
business marketers?

(a) direct mail (b) trade publications

(c) personal selling (d) television

Q-31- Classification of products into goods, services, and ideas is determined by the:

A) degree of labour intensiveness.

B) type of markets.

C) dominant component.

D) skill of the service provider.

E) degree of consumer contact.

Q-32- Which of the following is generally viewed as a business or industrial service?

A) Hair care services

B) Marketing research

C) Dry cleaning

D) Therapeutic massages
 E) Chimney cleaning

Q-33- Of the following alternatives which service is the most people-based?

A) Dry cleaning

B) Carpet cleaning

C) Swimming instruction

D) Airline flight

E) Hotel accommodations

Q-34- Services can be meaningfully analysed by using a five-category classification

scheme including type of market, degree of labour-intensiveness, degree of
customer contact, skill of service provider, and

A) degree of competition within the service industry.

B) goal of the service provider.

C) market share of the service provider.

D) employee structure of the service provider.

E) production environments.

Q-35- The appearance of the production facilities and the interpersonal skills of actual
service providers are critical in __________ services.

A) low-contact

B) equipment-based

C) industrial
 D) high-contact

E) nonprofessional

Q-36- In service marketing, the most important link to the customer is

A) effective advertising.

B) good word-of-mouth communication.

C) well-trained contact employees.

D) the tangible aspects of the service.

E) exceptional service quality.

Q-37- A Bank supplies products that fall primarily at which of the following points on
the tangibility continuum?

A) Totally tangible

B) Tangibly dominant

C) Neutral

D) Intangibly dominant

E) Totally intangible

Q-38- As Bob and Sarah Wallace meet with the account representative at Midland Bank,
they are shown a sample of what their monthly statement will look like.
Providing such sample documents allows Midland to add tangibility to which
one of the following qualities?

A) experience
 B) credence

C) search

D) perishability

Q-39- Alex Knox, a young dentist, finds that he is not bringing in enough revenue to
cover his expenses. He would like to schedule more patients, but he finds that in
almost every time slot he is seeing an existing patient. Alex's problems with
expanding his practice deal with the aspect of service called:

A) perishability.

B) credence.

C) inseparability.

D) heterogeneity.

Q-40- Legal and General Insurance uses "the umbrella" to communicate protection to its
customers. This illustrates the company's attempt to help customers understand
the service by:

A) emphasising tangible cues in promoting the service.

B) personal selling of the service.

C) utilising publicity techniques to enhance the service.

D) distributing the service directly through television.

Q-41- Marketers for the airline industry sometimes find it difficult to promote their
product because unused aeroplane seats cannot be stored. This problem
illustrates which one of the following unique features of services?

A) Intangibility
 B) Inseparability

C) Perishability

D) Heterogeneity

Q-42- The owner of the Beauty Spot beauty salon has difficulty in standardising and
controlling the quality of service the customers in her salon receive. This
problem illustrates which one of the following unique features of services?

A) Intangibility

B) Inseparability

C) Perishability

D) Heterogeneity

Q-43- Which one of the following can be considered a high-contact service?

A) Postal service

B) Car repair

C) Health care

D) Banking

E) Dry cleaning

Q-44- Delta Airlines runs a series of television commercials that show its personnel
going out of their way to help customers. An important secondary audience for
these ads is:

A) the Civil Aviation Authority.

 B) competitors.

C) customers.

D) Delta employees.

E) all air travelers.

Q-45- Adam's Pool Service charges £50 for swimming pool cleaning performed prior to
May 15 and £75 for jobs performed after that date. This pricing structure
provides the benefits to Adam's of:

A) price leaders.

B) smoothing demand fluctuations.

C) increasing service tangibility.

D) tying prices to service costs.

Q-46- Marketing activities conducted by individuals and organisations to achieve some

goal other than ordinary business goals such as profit is:

A) nonbusiness marketing.

B) organisational marketing.

C) individual marketing.

D) enterprise marketing.

Q-47- An advertising campaign that tries to persuade people to avoid drinking and
driving is an example of:

A) service advertising
 B) social marketing

C) campaign marketing

D) product advertising

Q-48- A group of individuals who have an interest in or concern about an organisation, a

product, or a social cause is an:

A) direct consumer.

B) client consumer.

C) target public.

D) general public.

E) indirect consumer.

Q-49- A university's student body would be considered its __________ public, and
parents, alumni, and trustees would be included as its __________ public.

A) client; general

B) specialised; general

C) target; simple

D) general; client

E) target; market

Q-50- According to the text, the direct consumers of a nonprofit organisation are its

A) general public.
B) consumer public.

C) member public.

D) client public.

E) nonbusiness public.

Q-51-Because of a service's __________, standardisation and quality are extremely

difficult to control.

A) intangibility

B) inseparability

C) homogeneity

D) heterogeneity

E) perishability

Q-52- The necessary interaction between service provider and customer that allows a
service to be delivered is called

A) customer contact.

B) service exchange.

C) marketing.

D) relationship marketing.

E) service contact.
Q-53- A problem encountered by service companies that change high-contact services
into low-contact services is that the

A) service becomes more expensive to deliver.

B) quality of the service usually declines.

C) service becomes less personalised.

D) time required to deliver the service increases.

Q-54- High-contact services include which of the following examples?

A) Photo developing

B) Cinemas

C) Car repairs

D) Garden landscaping

E) Medical services

Q-55- Consumers look closely at service quality when comparing competing services
because

A) they perceive all services to be essentially the same.

B) all services are priced about the same.

C) quality is the only relevant service characteristic.

D) services are very difficult to evaluate.

Q-56- Consumers' service expectations are influenced by advertising, word-of-mouth

communication, and
 A) recommendations from friends.

B) past experiences with the service.

C) news stories about the service.

D) the tangibles of the service.

E) credence qualities.

Q-57- Which one of the following is an intangible dominant product?

A) Flowers

B) Perfume

C) Food

D) Mortgage

E) Car

Q-58- Beauticians find it difficult to market their product because the customer must be
involved in the production of the product (i.e., the facial). This problem
illustrates which one of the following unique features of services?

A) Intangibility

B) Inseparability

C) Perishability

D) Heterogeneity
Q-59- Kregger Rug Cleaning Service offers potential customers one room of carpet
cleaned free. Kregger makes this offer in an effort to satisfy which one of the
following quality areas for service?

A) value

B) experience

C) credence

D) search

Q-60- After returning from a consultation with her accountant, Janice determined that the
service she received was poor because the accountant was rude and abrupt. The
aspects of the product that Janice assessed are called ------- qualities.

A) search

B) experience

C) credence

D) tangible

Q-61- Which one of the following services is NOT labour intensive?

A) Education

B) Hair care

C) Insurance

D) Fitness centre

E) Legal counsel
Q-62- Which one of the promotion elements is probably the most powerful for services?

A) Publicity

B) Advertising

C) Personal selling

D) Sales promotion

Q-63- A high-contact service is one in which

A) the customer and service provider must meet frequently.

B) the customer must be physically present to receive the service.

C) the service provider must be present when the service is provided.

D) a great deal of physical touching is required.

Q-64- Which marketing activity does NOT occur in nonbusiness marketing?

A) Distribution

B) Exchange

C) Profits

D) Negotiation

E) Persuasion

Q-65- Combat Cancer Society engages in activities designed to influence attitudes toward
smoking. This type of activity is called ---------marketing.

A) services
 B) product

C) social

D) business

Q-66- What is the marketing objective of nonbusiness organisations?

A) To provide an idea or service to the public

B) To obtain a desired response from a target market or public

C) To obtain a return on social investment

D) To determine the target market and to create and maintain a satisfying

marketing mix

Q-67- Which one of the following groups of people would be considered client publics
for a hospital?

A) Patients

B) Insurance companies

C) Doctors

D) Nurses

E) Pharmaceutical sales representatives

Q-68- The first sign that a nonbusiness organisation has become aware that it is
performing marketing activities is through ----- decisions:

A) target-public

B) distribution
 C) promotional

D) price

E) competitive

Q-69- Children with muscular dystrophy who receive treatments developed through
research programs funded by MDA would represent __________ for this
charitable organisation.

A) target publics

B) target population

C) general publics

D) focus groups

E) client publics

Q-70- __________ is the value of the benefit that is given up by selecting one alternative
rather than another.

A) Benefit loss

B) Opportunity cost

C) Privileged cost

D) Selection cost

E) Exchange loss

Q-71-Which one of the following is an example of low contact service?

(a) Health contrast (b) Hotels

 (c) Beautician (d) Repairs

Q-72-Demographic segmentation covers which factor for dividing the market?

(a) Climate (b) Age of people

(c) Quantity used (d) Social Class

Q-73-What do you understand by the term inseparability of services.

(a) products and services are inseparable

(b) services cannot be separated from the seller of services
(c) Services are inseparable from price
(d) None of these

Q-74-Which one is not the example of business to business services.

(a) Printing (b) Accountancy

(c) Package Holidays (d) None of these

Q-75-Which one of the following creates a problem in service marketing?

(a) Irregular service quality (b) Lack of resources

(c) After sales service (d) All of them

Q-76-Variation between desired service and adequate service is called?

(a) Zone of tolerance (b) Danger Zone

(c) Safe zone (d) Zone of incompatibility

Q-77-Which term is used for pricing insurance services?

(a) Commission (b) Fee

(c) Tool (d) Premium

Q-78-Discriminating pricing is also known as:

(a) Flexible pricing (b) Backward pricing

(c) Forward pricing (d) None of these

Q-79-A market based method of pricing which focuses on the consumer is willing to pay
is known as:

(a) Skimming (b) Penetration

 (c) Backward pricing (d) None of these

Q-80-Personal selling uses which of the following as its effective tool.

(a) Oral communication (b) Internet

(c) Written communication (d) All of these

Q-81-Which of the following is non paid form of communication?

(a) Sales promotion (b) internet

(c) Advertising (d) word of mouth

Q-82-Marketers tangibles the intangible services by providing:

(a) Physical Evidence (b) Smiling Employer

(c) Creative Advertisements (d) None of these

Q-83- Liberalization was introduced to Indian economy in the year-----------------

(1991)

Q-84- ------------------- is a method of financing in the form of equity participation

(Venture capital)
Q-85- A---------------------- is an agreement under which a firm acquires a right to made
use of a capital asset
(Lease)
Q-86- A------------------ refers to to find raised by a financial service company by pooling
the savings of the public
(Mutual fund)

Q-87- Market of treasury bills is controlled by the -----------------

(Central government)

Q-88- Prestige pricing means pricing above the---------------------

(Market price)

Q-89- ---------------- is concerned with process of services.

(Quality management)

Q-90- --------------- is an example of “All service less goods”

(Consoling)

Q-91- -------------- involves a personal touch

(Personal selling)

Q-92- ----------------- is necessary to convert suspect into a prospect

(Persuasion)
Q-93- One of the vitally important self driven vehicle of communication is ------------
(Word of mouth)

Q-94- ------------------ involved is the biggest disadvantage of electronic media.

(Cost)

Q-95- ----------------- has become a popular media of communication due to globalization

(Internet)

Q-96- --------------- is the ultimate goal of services marketing.

(Customer satisfaction)

Q-97- ------------------- is a popular base for market segmentation in services marketing.

(Demographic variable)

Q-98- Psychographic segmentation considers--------------------- as the base for dividing

the market
(Life style)

Q-99- Services are of-------------------- nature.

(variable/heterogeneous)

Q-100- Proper------------------ of services is necessary for branding.

(Positioning)

(20) Long questions:

Q-1- What do you understand by service? Give characteristics of services.

Q-2- What is the difference between Product and Services?

Q-3-What are the basis for service classification? Give examples of services for
different basis.

Q-4- What are customer expectations for service? How zone of tolerance is more
important in service marketing?

Q-5- What do you understand by Positioning of services also define marketing

Segmentation approach in services.

Q-6- How Service marketing mix differs from Product marketing mix?

Q-7- What are the main objectives of Service Pricing? Explain strategies/
 approaches in Service pricing.

Q-8- Explain various types of intermediaries for service delivery along with their
role and importance.

Q-9- What is the role and importance of communication in service marketing?

Explain different types of communication.

Q-10- Discuss various determinants of service quality with suitable examples.

Q-11- Explain marketing mix decisions of Banking Industry. How you can do
Market Segmentation in Banking Industry?

Q-12- Explain marketing mix decisions of Insurance Industry. How market

Segmentation can be done in Insurance Industry?

Q-13- Give the marketing strategy which is adopted in Telecom Industry. How
market Segmentation can be done in Telecom Industry?

Q-14- What are the major issues before any Housing Finance Institution?

Q-15- With special reference to Credit Cards, suggest an appropriate marketing

mix for Financial services.

Q-16- Explain marketing of services in global perspective. What are the factors
Influencing globalization of services?

Q-17- Explain what key decisions are taken in global marketing of services? What
Strategies are adopted for global market entry in service industry?

Q-18- What are the reasons that service organization going global?

Q-19- “The emergence of global customers is giving an opportunity to several

companies to propagate common brand values across several nations.”
Discuss.

Q-20- Discuss the benefits and pitfalls of globalization.

CASE STUDY:

CASE –I-

Target
Sushil booked a table in a restaurant for 12 people at the beginning of the Diwali period to
celebrate the festive season with his family and friends. He had been a regular visitor to
Moti Restaurant and had developed loyalty for this place famous for South Indian food.
Most of his friends were from the south so he preferred to treat them at Moti.
Another reason for his selection was that the parton of Moti, Raj Kumar knew him
well. Since he was regular visitor, he was quite confident that this dinner would be a
success.
Three days before the scheduled get-together dinner Sushil spoke to Raj Kumar and
asked him to increase the booking to 16. He looked busy but informed Sushil it would be
quite in order and he looked forward to seeing Sushil and party later that week.
As per programme, all sushil’s friends met at his residence at 7 p.m. on the appointed
day and after having a cup of coffee left for Moti to be there at the scheduled time of 8.30
p.m. They were all relaxed exchanged jokes on their way and reached the restaurant at 8.20
p.m. with slight difficulty, they located parking place at three different locations for the four
cars in which they were traveling.
The guests arrived at the restaurant on time and Sushil was taken aback to find that the
table has been set only for 12 persons. Raj Kumar came over seeing a large group gathered
around the small table laid in one corner of the dining room. Sushil remained Raj Kumar of
his earlier conversation which he had with him three day ago He asked him to recollect that
the booking had been increased from 12 to 16, and suggested that it may be an oversight
that he had forgotten to set the table for 16 people. Sushil then asked him to reset the table
immediately for 16 people to avoid any embarrassment to him and and his guests.
To Sushil’s great amazement and embarrassment Raj Kumar denied that Sushil had
asked for a booking for 16 people. He,rather, told Sushil that he had not phoned him at all
this week to make amendments in the booking. “You must have been mistaken” said Raj
Kumar.
Sushil tried to make him admit his mistake but Raj Kumar was too rigid and
continued to take a stand that he had not received any such call and that the booking was
for 12 people only. The restaurant was full and sushil asked Raj Kumar to resolve the
matter as his guests had been standing for more than ten minutes. Raj Kumar expressed his
helplessness and said there was nothing he could do at the moment.
At such time, Sushil knew that there was no where else they could go at this time.
Sushil and his wife along with another couple opted to wait and let 12 members of the group
seat themselves. It was after a long wait that they could be accommodated with the group.
This could happen only when the guests sitting next to them left after their meal.
All of them settled for the dinner but discussions mostly centered around the service
provided by the restaurant. At the end of the dinner Sushil checked the bill and did not
leave any tip for waiters. Before leaving the restaurant Sushil met Raj Kumar in private
and explained him that he would not be visiting him again. Raj Kumar admitted that he
may have been hasty but thought Sushil was being unreasonable as it was his busiest
evening and he should make allowances.
Sushil never visited the restaurant again and his friends too stayed away. They
narrated this incident to many people.

Questions for Discussion

1. What were the pitfalls in the service delivery?

2. How would you react to the behaviour of Raj Kumar?
3. Had you been Raj Kumar, what could you have done to turn this problem into a
situation which would have won the customers for ever?
 4. What are the problems and issues which cause such situations and such behaviour
of service providers?

CASE-II-

Bouleau & Huntley

Cross-Selling Professional Services into the Philippines
A professional firm specializing in pension fund audits seeks to extend the firm s
relationships with
existing clients in the Philippines by offering consulting services. But the first attempt at
cross selling is a flop. What has gone wrong and why?

Juan Miguel Duavit, a new partner and co-director in the-Manila office of Bouleau &
Huntley, pondered over what had gone wrong earlier in the day at his meeting 'with
National Metals Corporation, a major metals manufacturer, where his carefully prepared
consulting presentation had been greeted by a bewildered silence.

THE FIRM

Duavit, 42, had joined Bouleau & Huntley three months earlier, in March 2004. Bouleau &
Huntley was a multinational corporation with headquarters in New York, that specialized
in pension funds auditing and human resources management. Its Manila office had been
serving clients in the Philippines for the past 15 years. The firm was founded in 1923 by
Robert Bouleau, a New York actuary, and William Huntley, an insurance executive, who
had noted that American corporations were rapidly creating new pension funds for their
executives. The two men recognized that this trend would create vast new opportunities for
a professional firm that could advise firms properly and audit their plans every year, as
required by the law. Within ten years, Bouleau & Huntley had become the leader of a new
profession, with a well-established presence in the United States. Subsequently, it began
opening offices overseas. By 2004, Bouleau & Huntley was a worldwide firm with 42 offices,
325 partners, and revenues in excess of US$950 million. The firm continued to flourish with
its combination of high-quality professionalism an~ aggressive marketing. New divisions
had been launched in four areas closely related to pension funds: .executive compensation,
personnel management, insurance consulting, and reinsurance consulting.

Expansion into the Philippines

The Philippines had a Retirement Act, the Republic Act No. 764.1, which required that an
employee facing compulsory retirement at 65 must receive from his employer a retirement
benefit based on the final monthly salary and the number of years worked with the firm.
Most companies turned to the private insurance industry for pension' schemes. Having
repeatedly been sought out by various prestigious clients in the Philippines, Bouleau &
Huntley opened its Manila office in 1989. By 2004, the firm had 11 partners and 120
employees in the Philippines, operating from its headquarters in Metro Manila, .with ~mall
satellite offices in Cebu and Luzon. Total revenues in the Philippjnes were 545 million pesos
(approximatelyUS$10million). The firm's mission, as 'stated by its director, Jose Arellano,
was "to serve large international companies active in the Philippines and to develop a
national clientele among leading Filipino companies." In addition, the Manila office had
been assigned the task of experimenting with expansion .into other types of
professional . activities that could be adopted worldwide throughout Bouleau & Huntley.

Duavit Changes Jobs

Juan Miguel Duavit graduated from the prestigious University of Philippines(UP). After a
two-year stint With Sun Corporation as a brand manager, he spent two years in the United
States, obtaining an MBA from the Wharton Scpool. On returning to the Philippines, he
joined the glass division of Glasscore, holding several jobs in marketing and strategic
planning over a four-year period. Through a UP classmate, he was recruited by the Manila
office of Ascent Strategic Consultants (ASC), where he enjoyed a very successful career for
12 years, with the last seven as a partner. However, over time, he began to' feel restless. His
personal interest in the "soft" side of consulting problems, dealing with people rather than
profits and efficiency alone, was not shared by the leadership in ASC. It was through Jose
Arellano, one of his neighbors in the plush Sangun district, that Duavit first became
familiar with Bouleau & Huntley. Both men served on the board of the private school
attended by their children and had come to know each other socially. Over dinner one
evening, Arellano suggested that his friend think seriously about joining Bouleau &
Huntley. "Our strategy committee in New York is constantly pushing me to develop new
lines of professional activity," he told Duavit. "What you have done with ASC is of real
interest to us, and I am sure that you would enjoy working with our personnel management
and' compensation partners." Warming to his theme, Arellano continued: We've been
hugely successful in our major activity of pension fund auditing. Worldwide, we have 350
Fortune 500 companies as our steady clients. Historically, it's been a very profitable
business, enjoying steady growth as the pension funds themselves grow in size. However,
this has attracted new competition and the business is becoming more price sensitive than in
the past. In addition, it is heavily influenced either positively or negatively by regulatory
and national political decisions totally beyond our control. . In the Philippines, we're doing
reasonably well, but we could certainly use additional revenues, if only to enhance our
average revenue per partner and, of course our bonuses. We should enter new professional
areas, such as the strategy and general management consulting that you know so well.
The synergies with our own main line of activity . are obvious. With someone like you on
board, and with the team we will help you build up, it should be possible to generate
additional cash flow from existing clients, as well as gain new clients for the firm.

Further conversations during the subsequent months explored these opportunities and
confirmed their mutual interest. Both men agreed that a vast potential existed in the
Philippine~ among leading Filipino companies, as well as with the Asian affiliates of
multinational groups headquartered in Manila. Arellano made several long-distance calls
and exchanged confidential faxes with the managing director and most senior partners of
the firm about hiring Duavit on a quasi-equal basis to himself, in recognition of his
extensive experience and in anticipation of expected benefits. Finally, over lunch at the
Manila Hotel one day, Arellano offered Duavit an immediate directorship, a new departure
for Bouleau &' Huntley, plus a compensation package so generous that it was "impossible
to refuse." Not only would Duavit receive a fixed compensation equal to his current total
remuneration, but there was a provision for a large bonus (up to 30 percent of his salary) on
incremental business from existing clients and up t6 50 percent for the
s1,lccessfulacquisition of new clients.

Working at Bouleau 8«,Huntley

So Duavit joined the Manila office of Bouleau & Huntley in March 2004. His,' new
colleagues welcomed him warmly, but he was surprised to find them somewhat reticent
about discussing their own clients. Duavit ascribed this to professional respect for
confidentiality. He set to work, following up several leads of his own and within three
months had brought in two new consulting clients. He was also involved in arranging for
Bouleau& Huntley to audit a supplementary pension fund that one of his former employers
was creating for its senior executives. He had started building up a team 'of four younger
consultants, including one bright young man who, after spending two years in Bouleau &
Huntley's compensation practice, had decided to move on to strategic work. Duavit was
already looking forward to the day when he could propose that this enthusiastic consultant
should become the first junior partner of the new-Manila practice. Despite these early
successes, he was still concerned by the reserved attitude among his colleagues. One day
when he was lunching with three of them, he answered their questions about his work at
ASC. Describing a project that he had directed the previous year to reorganize a major oil
company, he encountered a mixture of disbelief and incomprehension. "Do you mean that
you and your colleagues actually restructured this enormous company last year?" one of
them asked. "Yes," Duavit replied We helped them simplify their structure, reduce the
number of levels from 11to 6 and even helped them relocate 482 people, saving about 644
million peso (US$II.6 million)in overhead costs. Then we streamlined their management
information and planning system. Total fees amounted to 81 million peso (US$1.5million)
for 15 months of continued work by a team that ranged in size from four to seven
consultants. "Hey, what happened to their pension funds? interjected another of his
colleagues. "Nothing, I believe," responded Duavit, slightly surprised. "Being nationalized,
they only had the usual social security employee benefits. Do you want an introduction to
their CEO to sell him one of your schemes? "No, I was just curious," the other replied.
"You might try to get the name of the guy who set up their last pension fund," another
actuary partner suggested. Duavit could see that his kind of work was not their "cup of
tea," and he found it just as hard to understand the arcane workings of the assignments in
which his actuarial colleagues were involved. He also marveled at the enormous fee the firm
charged for what seemed to him was tedious and repetitious work. He was also deeply
impressed by two things: their extensive use of "precooked" computer programs that
seemed to be doing all the work, and the ease with which they obtained repeat business 0
year after year without any need for the costly and time-consuming "developmental" work
required in his own type of consulting. All they did was send a letter of renewal at
the end of each year, with a prepared space for the :company to sign. It seemed so easy!
One Friday. afternoon, just before 5 p.m., Duavit was beginning to check a 50-page report
due at the client's the following Monday an~ he still had to write a proposal before goirig
home for the weekend. Two of his partner colleagues poked their heads in at his open
doorway. They were carrying raincoats and umbrellas and were evidently leaving for h
ome. Quickly sizing up the situation, one of them, Victor Vasquez, remarked cheerily:
"My dear pare [the Filipino equivalent of "pal" or "chap"], you're obviously in the wrong
business! You should have gotten an actuarial degree like us, instead of wasting your time
at Wharton! See you on Monday! Cheers!"

A PRESENTATIONAT NATIONAL
METALSCORPORATION
Two weeks later, Duavit felt he was finally beginning to make progress. After much
lobbying,' Vasquez had agreed to open the door to his largest client, National Metals
Corporation, a company involved in refining and marketing copper, chromium, and nickel.
Since Duavit had led an ASC consulting team for Amix in Indonesia several years earlier,
he knew the metals business and was certain. that he could do something beneficial for
Vasquez's client. At National Metals Corporation's main administrative offices in Makati
City, Vasquez led Duavit along a series of tortuous corridors to the office of Carlos
Aseniero. Duavit was abit surprised to find that his colleague's principal contact was a
harassed-looking little man in a cluttered office. Aseniero greeted them politely and cleared
several files off the chairs so that the two visitors could sit down. After the introductions
were made and Vasquez had confirmed that the audit report would be ready on the
promised date, Duavit launched into his presentation. He delivered a thorough but succinct
analysis of five years of published figures, complete with diagrams he had prepared that
very morning, comparing overall profitability, days of inventory, and asset rotation for
National Metals corporation and three of its Asian competitors. Duavit concluded what he
considered to be a stimulating. IS-minute presentation by inviting Aseniero to' make use of
Bouleau & Huntley's strategic consulting services to help National Metals Corporation
carve "out a market share and improve profitability. Expecting an interested response;
Duavit was amazed to be greeted by complete silence in the room. Not only Aseniero but
also Vasquez. Appeared some what they had just heard. Seeking to regain the initiative,
Duavit asked Aseniero, "Do you think that your boss would be interested in pursuing these
issues further?" Looking slightly ill at ease, the other replied: You have to understand that
my office reports to the assistant finance director, reflecting the immense amounts of money
the company is investing in this pension fund. The fund is also . used as collateral for some
of the company's borrowings. I don't believe that my boss, Mr. Perez, participates in
strategy discussions with our board. Of course, I could ask him to arrange an appointment
with our director general [CEO], but I'm told he's a very busy man. "Thank you, Mr
Aseniero," Vasquez said, rising to his feet and holding out his hand. "My colleague and I
really appreciate your willingness to take time out of your busy schedule." Duavit also
shook hands with Aseniero and thanked him but found it difficult to hide his
disappointment. Then, the two partners left the office and retraced their way back to gte
reception area. "What happened?" Duavit asked as the two of them climbed back into
Vasquez's large new BMW. "I thought that I gave him a very convincing line. Wasn't he
interested? Or did he simply not understand?" Vasquez eased the BMW out of the parking
lot and smiled wryly. "I think you scared him rather than impressed him, my friend. And
you scared me, too. At one point, when you proposed raising the ante to the level of his
superior, I thought that I was going to lose him as a client.. .Never again!" . Duavit
remained silent for a long time. It was becoming clear to him that the actuarial partners
appeared to be more interested in using him and his work to bring in new clients for their
own practice, rather than the other way around. Yet, he liked what Jose Arellano had told
him about Bouleau & Huntley's combination of professionalism and aggressive marketing.
Obviously,' a lot still needed to be done before the synergies he and Arellano had dreamed
about could be achieved. '~Well, I won't give up that easily!" Duavit said eventually, as
Vasquez accelerated onto Ayala Avenue. "Victor, let's think this experience through and
decide, 'together with our other partners, what we should do differently if we want to
succeed as a team. Have you ever heard of cross-selling?". "No, as a matter of fact, I have
not "Vasquez answered; "but Jose has given me "the task of setting up the agenda for our
yearly Manila Partners meeting in Makati City next month. I still have nothing for the
morning of the third day. How much time do you need?"

Study Questions
1. What do you see as the key differences between pension fund auditing and management
consulting? How good is the fit between the two?
2. Evaluate the visit to National Metals Corporation. What happened?
3. What are the lessons of this experience?
4. What actions should Bouleau & Huntley take now?

CASE-III-

Four Customers in Search of Solutions

Segmenting Hong Kong's Telecommunications Market (A)

Four residential line subscribers call their telephone company to complain about a variety
of different problems. How should the company respond in each case?

Among the many residential customers of the telephone company are four individuals living
in a middle-class suburb, Sha Tin, in Kowloon, Hong Kong.Each of them has a telephone-
relatedproblem and decides to call the company about it.

Leung Yew Wah

Leung grumbles constantly about the amount of his home telephone bill, which is, in fact, in the
top two percent of all residential phone bills in Hong Kong. He makes many calls to the United
States and Canada on weekday evenings, almost daily calls to Macau around mid-day, and calls
to Shenzhen, Mainland China on most weekend. One day, Leung receives a telephone bill, which
is even higher than usual. On reviewing the bill, he is convinced that he has been overcharged, so
he calls the telephone company's customer service department to complain and request an
adjustment.

Sherry Tanaka
Tanaka has missed several important calls recently, because her line was busy. Her two teenage
children surf the Internet for several hours almost every day. She phones the telephone company
to determine possible solutions to this problem. Tanaka's' telephone bill is at the median level for
a household subscriber. Most of the calls from her house are local, but there are occasional
international calls to Japan and the Philippines. She does not subscribe to any value added
services. .

Chong Siew Lam

During the past several weeks, Chong has been distressed to receive a series of obscene telephone
calls. It sounds like the same person each time. She .calls the telephone company to see if they
can put a stop to this harassment: Her phone bill is in the bottom ten percent of all household
subscriber bills and virtually all her calls are local.

Victor Hung
For more than a week the phone line at Hung's house has been making strange humming and
crackling noises, making it difficult to hear What the other person is saying. After two of his
friends" comment on these distracting noises, Hung calls the telephone company and reports the
problem. His guess is that it is being caused by the answering machine, which is getting old and
.

sometimes loses messages. Hung's phone bill is at the 75th percentile for a household subscriber.
Most of the calls are local, usually on evenings and weekends, although there are a few calls
to Shenzhen, too.
Study Questions
1. Based strictly on the information in the case, how many possibilities do you-see to
segment the residential telephone market?
2. As a customer service representative at the telephone company, how. would you address
each of the problems and complaints reported?
3. Review the product line of your local telephone company. Then, examine whether there
would be any marketing opportunities for your telephone company relative to the types of
complaints reported.:

CASE-IV-

RESTAURANT SERVICE
Subash, after going through an article about the good South Indian food at Southend was tempted
to try it out with his family last Saturday. The contents of the coverage were too tempting and he
could almost taste the food while going through the article. They all were looking forward to
having dinner there. Subash tried to contact the manager on phone but couldn't reach him as the
telephone was busy. So he could not book the table for his family. He opted to drive out without
any reservation and reached the area in which this restaurant was located. After great difficulty
and enquiring from many people he reached the building in which the restaurant was located. He
looked around for directions or signboards but could not find anything that could lead him to the
restaurant. He looked for parking space but could not locate any. He found about 2S to.30 cars
parked outside residential apartments. There was no authorised parking and no one from the
restaurant was able to guide the cars. After parking the car, they entered the building which was
poorly lit. .No signs were up to direct customers. On enquiring from one of the visitors, they
found out the entrance gate. It was difficult to enter the gate as many two wheelers were parked in
front of this gate and they had to practically jump over a few to reach the steps
leading to the restaurant. The passage to the restaurant was through a stairway and more than 50
people were standing shoulder to shoulder and there was lot of push and pull on account of the to
and fro movement of the people. Some young boys were in a hurry to get out and some young
couples were standing in the middle of the corridor. It looked like a scene from a movie interval.
With great resistance, Subash asked about the restaurant from one of the persons in the crowd and
h~ was told to proceed straight and turn left.
H:e was relieved to see the board carrying the sign "Dining Hall" on a 12" x 6" wooden plate. He
was quite relieved and proceeded to the dining hall.. Another surprise was in store for him when
he was stopped by a restaurant boy Sundram who was compiling the waiting list. Sundram was
as5jgned the job of registering the guests, locating empty tables and directing people to the dining
table. The restaurant did not accept advance reservations. Even the serial number of the waiting
list was not adhered to. Ha table for four was vacated, four guests were seated ignoring the groups
who had been waiting for longer. The principle of first come
first served basis was not followed. It was already 8 p.m. At this time it was too late to go
somewhere else. So he registered himself and got the waiting slip. After getting the waiting slip
Subash asked Sundram, how long they would be required to wait? Hit is too long, they would
prefer to try another South Indian restaurant a kilometer away. Sundram replied that compared to
other restaurants in the vicinity, it should not take that long and they may have to wait not more
than fifteen minutes. During the waiting period Subash started talking to another guest, Ramesh
standing next to him. Ramesh was a regular customer of this restaurant and told Subash that
Southend is a South Indian restaurant most popular for South Indian food. Being moderately
priced it is very popular with ,people of middle income groups. In spite of long waits, good food
and its affordability is the factor urging the people to wait around standing
in the open. Still no waiting area is available for the customers. An open space and staircase near
the restaurant serves as the waiting area. In the rainy season there is no shelter and people take
shelter under the stairways. In the summer people use their own umbrellas or trees in the
courtyard of the building in which this restaurant is located. Parking is a problem here. Hyou are
a first timer, it will take ten minutes from the parking to the restaurant gate. There is no
authorised parking. You have to create parking space for yourself and then ask at least twice or
thrice about the location and directions to reach the place. This place is poorly lit and
occasionally people are found sleeping on the stairs. The toilets are located about fifty yards from
the restaurant and to find them you must enquire from the waiter inside or a person assigned at
the gate who registers your name for the waiting slips. He enquires about the number
of people accompanying the guest. As soon as a table gets vacated, he announces the guests by
shouting at the top of his voice and gestures them with his hand. He always looks in a hurry.
People who are waiting for the turn, make repeat enquiries from him. He is always answering the
enquiries of many customers simultaneously. His poor knowledge of the local language and
English creates confusion among the customers. Half.of them do not understand and some of
them misunderstand. Southend has good public relations. Many times, favourable articles have
appeared in the supplements of national dailies of repute having very large circulations. . Subash
and his family was eagerly waiting for their call but even after half an hour their name was not
announced. They were getting anxious and restless and felt they have made a wrong decision. It
was only after one hour that they were seated inside the dining hall. By this time everybody had
lost their patience, and tempers were high. Subash ordered the food. It was undoubtedly tasty.
They had their fill. To express their anger of a long wait and unorganised customer handling they
paid the bill but did not leave any tip. Tips from the cUstomer was the yardstick for measuring
the restaurant's performance and this matter w~ reported by the waiter to the restaurant manager.
The manager called Sundram to find out the details about this transaction.

QUESTIONS:

1. Comment upon the elements of physical evidence at Southend. How are these inputs likely to
affect the consumers of Southend?

2 What are the steps you would take to improve the service process at Southend ?

CASE-V

Raman Raghavan, the recently appointed area manager of Total Assurance Ltd., was discussing
the matter of area office performance with his assistant, Ganesh Moorthy, Ganesh Moorthy. The
company had come into being after the liberalization of the life insurance sector. The company
had received technical experience from one of the leading insurance companies of Europe. The
competition with the established player Life Insurance Corporation (LIC) of India and other new
entrants had made the task of marketing difficult. Presently, Total Assurance was not a very big
player. In the long run, the company needed to grow and achieve a critical mass of business in
order to become and remain profitable. The lack of substantial growth in the business. Raman
was new in the present job and he was asked to provide an overall assessment of the business
prospects in his area. The General Manager felt that the agent productivity of the area office was
not up to the mark and this area needed strengthening" Mr. Ganesh Moorthy, Assistant Area
Manager, remarked that the previous Area Manager, Mr. Shankaran, had never carried out the
formal performance appraisal. Mr. Shankaran felt that he was constantly in touch with his sales
force and therefore knew their strengths and weaknesses intimately. Consequently, the formal
appraisal would serve no purpose. The company relied almost totally on its agent sales force for
its sales performance. Unlike companies such as LIC whose agents worked part time, the
company believed that its agents should carry out their sales promotion work on full time basis.
Accordingly, its agents received a substantial commission on the premium income of the first-
year (average 70% of the agent's income), a small retainer (20%), and bonus for renewal of
annual insurance policies such as health and personal accident insurance, etc. (10%). The
commission on the premium income offered by the company at 14% of the first year's premium
was one of the highest amonges the life insurance companies. Overall, the average total income
of its agents was on par with the industry average. The premiums charged by the company were
slightly higher by 5% compared to the industry average. This enabled the company to pay the
additional commissions to its agents.
The following organizational structure existed in the area office of the company.
Area Manager
---------------------------
The Selection of Agents and Salespersons

In the past, the company had advertised for the admission of the agents. The overwhelming
response had made the job of selection nearly impossible. Therefore, after the initial recruitment,
the company relied mainly on the word-of-mouth recommendations of the existing agents for
further recruitment for both expansion and replacement. The company application form, in
addition to the details of name, address, age, height, weight, marital status, education, and
previous employment details, demanded to know about previous insurance selling experience,
present employment, current earnings, personal property details, amount of life insurance,
membership details of clubs/associations, and names and addresses of three referees. The
candidate also had to state the reasons for joining an insurance company and, in particular, Total
Assurance Ltd, and the reasons why the candidate thinks he will be successful.
Current Employment Statistic

The present agents age wise distribution was as follows:

Age Group Total no of Agents

1.8to 20 5
21 to 25 26
26 to 30 34
31 to 36 10
36 to 40 8
40+ 5
Total 88

The mean age of the area office agents was 27 years. The marital status of the agents is as
shown below:

Marital Status Total Percent

Single 55 63
Married 33 37
Total 88 100

Similarly, the statistics regarding the period of employment with the company were as
follows:
Below 1 year 46%
1 to 2 years 28%
Over 2 years 23%
[The company began operations only three years ago.]
Eighty per cent of the agents had changed the job at least once in the last three years (whether
with the company or not), and 57% had changed their job more than once.
The majority (70%) of the agents had completed 12 standard , 18% of the agents had
studied beyond this level with 12% of the agents having an education of 10th standard or
equivalent. They all could speak the local language and English.

The Situation at Present

There was overwhelming pressure for the company to grow at a substantial rate to achieve the
breakeven point. The longer it took to achieve the breakeven point, harder would be the long term
struggle. During .the initial meeting with the General Manager before taking up the present
assignment, the General Manager had mentioned the performance of the sales force as an area of
concern. The company also needed to establish and publicize the achievements of high efficiency
agents and reward them to motivate other employees. Objectivity in the performance
measurement vis-a-vis industry benchmarking was also considered to be an option. The area of
job changes and loss of trained agents to other upcoming companies was also considered to be an
area of grave concern. The time for putting the house in order had arrived.

Question
1. What in your opinion are the main impediments to the good performance of the
agents?
2. What should be the main criteria for evaluation of a candidate for recruitment?
3. Are there any special personality characteristics essential for selling of insurance?
4. Are there any motivational drawbacks amongst the present agents?
5. What criteria should be used for performance evaluation?

CASE-VI

City Bank .

Historically was a private sector bank floated in the pre-independence days of India. The bank
with its headquarters based in Mumbai, .in western India, was in existence for well over 80
years.It had good connections with the business community and was a financially prosperous
bank thanks to its special connections with a particularly prosperous business community. In the
post independence era, it was nationalized under the special ordinance, and subsequently, it lost
its independence of action. Its policies and operations were lumped together with the other
nationalized banks. Thus began an era of retail banking expansion. In June 1969, at the time of
nationalization, it had about 200 branches. By the end of the year 2000, it had over 2000 branches
spread over a number of states. The major area of operation, however, continued to be western
India.

Despite nationalization, the conservative lending policies historically practiced by the bank
remained in place, and it continued to lend with relative prudence and 'wisdom. It was also
publicity shy and operated quietly. Consequently, it did not become involved with any of the
lending scandals or notorious stock market swindles like some other banks. In the meantime,
privatization of nationalized companies and banks became an important agenda for the union
government. The United Indian Bank, with due regards to asset and capital adequacy norms
decided to raise capital funds for expansion by way of public issue at a small premium to the face
value of the shares. This would also have an effect of diluting the shareholding of the union
government. .
Despite the depressed state of the capital market, the issue was .oversubscribed many times partly
due to the bank's reputation and the reasonable amount of the share premium demanded. While
the prospectus for the issue and other communications had stated that the proceeds from the issue
were to be used for improvement of bank's operations, the board of directors of the bank still had
to decide on the methods for expansion. One of the ideas floating around was expansion in the
ATM network. .
The bank currently had a very small network of around 25 ATM locations in a few major
town. Ironically, while the ATM machines located at branches continued to remain idle, there
were long queues formed at the cashier's counter. Most of those in the queue were retail
customers.
The types of transactions available via the bank's ATM card are very limited. However, it is
participating in a joint ATM card scheme floated by a number of other nationalized banks. In
addition, the bank has been contemplating the introduction of telebanking with remote access via
Internet. At present the bank operations are not fully computerized, which also had to be looked
into. The bank is, contemplating expansion into the non-life general insurance sector in
collaboration with a non-life insurance company. It has also launched a depository services
scheme.

Question
1. Describe the aspects of consumer behavior that may affect the use of ATMs.
2. Describe the ways and means by which the bank could popularize the use of ATMs.
3 By popularizing the use of ATM cards, apart from the reduction in the cost of retail
banking operations, what other opportunities to earn higher margins arise ?
5 Can retail banking continue to remain a profitable basis for the bank operations ?

CASE-VII

KeepYourPromises
Sunny and his wife Rekha both had degrees in Hotel Management with specialisation in catering
and hospitality respectively. Both were working at Host, a restaurant located in the midst of the
busy business locality. Just hundred meters away was the stock-exchange where hundreds of
people gathered everyday to exchange business transactions. The one kilometer of market had
offices of many prestigious companies of India, reputed business houses, consultants,
multinational companies and industrial houses. The area was known as the financial district of the
city. Because of the educational and work experience, Sunny worked in the restaurant kitchen
and Rekha supervised the dinning area and handled the billing and cash register. The restaurant
having space limitations had no scope of expanding its operations. So, for the past ten years they
were doing same routine work. . Sunny and Rekha were keen on starting a enterprise of their own
and were looking for the right type of business and opportunity. Rekha being in the dinning area
was always observing the guests coming to the Host. She observed that most of the guests coming
for lunch were people belonging to the financial trade like investors, stock brokers, bankers and
their business operations were concentrated at the stock exchange. Since the lunch break was only
for half an hour. Half of the break time went in the to and fro movement to the eating place. They
were always found to be intent. on finishing their lunch rather than enjoying it. Many of the
guests were seen talking on their cellular phones even while eating. Sunny and Rekha once
visited the stock exchange to know the work place of their guests and realised how hard pressed
for time they were. They were convinced that if they could offer these customers an appealing
lunch at their workplace, they can certainly develop a clientele. Moreover, the customers will be
able to relish the lunch as they will be able to utilise the to and fro movement.
They started talking to a select list of potential customers about the service they wanted to
introduce. They found that their concept ~as acceptable to most of them. A demand for onsite
food service was established. Sunny and Rekha worked on the economies of this service and
established that they could build a very profitable business.

Questions for Discussion

1. How could Sunny and Rekha create a market niche for their service offerings ? What
are the characteristics of the niche? What is the customer base?
2. What value-added services did they start offering the clients ? Explain at least three of
them.