Chapter 4

Developing Service Concepts: Core and Supplementary Elements

GENERAL CONTENT

Multiple Choice Questions

1. ____________ supply the central, problem-solving benefit that customers seek.

a. Core products
b. Supplementary services
c. Delivery processes
d. Sustaining processes
e. Conditional services
(a; Easy; p. 89)

2. ____________ augment the core product, both facilitating its use and enhancing its
value and appeal.
a. Core products
b. Supplementary services
c. Delivery processes
d. Sustaining processes
e. Conditional services
(b; Moderate; p. 89)

3. A company’s ____________ helps to determine which supplementary services should

be included.
a. location
b. delivery system
c. key service representative
d. service atmosphere
e. market positioning strategy
(e; Easy; p. 100)

4. The order-taking process should be ____________, ____________, and

____________ so that customers do not waste time and endure unnecessary mental
physical effort.
a. short; curt; abrupt
b. simple; slow; effortful
c. short; sweet; ineffective
d. powerful; simple; abrupt
e. polite; fast; accurate
(e; Easy; p. 94)

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5. ____________ represent a special type of order taking that entitles customers to a
specific unit of service.
a. Suggestions
b. Reservations
c. Trackers
d. Repossessions
e. Contracts
(b; Moderate; 94)

6. At it’s simplest, ____________ consists of immediate advice from a knowledgeable

service person in response to the request: “What do you suggest?”
a. billing
b. payment
c. consultation
d. hospitality
e. selling
(c; Easy; p. 96)

7. Which of the following is NOT considered an example of a hospitality element?

a. Greeting
b. Toilets and washrooms
c. Advice
d. Food and beverages
e. Transport
(c; Moderate; p. 98)

8. Which of the following is NOT one of the eight basic steps to developing and
delivering a branded customer experience?
a. Target profitable customers, employing behavior segmentation rather than
demographics.
b. Achieve a superior understanding of what your targeted customers value.
c. Design facilities that delight your customers and reduce complaints.
d. Give employees the skills, tools, and supporting processes needed to deliver the
defined customer experience.
e. Make everyone a brand manager.
(c; Moderate; p. 106)

9. Which of the following is NOT a category of new service innovation?

a. Supplementary service innovations
b. Product line extensions
c. Major product innovations
d. Process line extensions
e. Self-sustaining innovations
(e; Easy; p. 106)

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10. The three factors that contribute the most to achieving success of new service
development in order of importance are:
a. Market research factors, organizational factors, market synergy
b. Market synergy, organizational factors, market research factors
c. Organizational factors, market synergy, market research factors
d. Market synergy, market research factors, organizational factors
e. Market research factors, market synergy, organizational factors
(b; challenging; p. 111)

True/False

11. Service marketers need to create a coherent offering in which each element is
compatible with the others and all are mutually reinforcing.
(True; Easy; p. 85)

12. The search for competitive advantage rarely centers on supplementary services.
(False; Moderate; p. 89)

13. All service elements must be delivered in a prescribed sequence.

(False; Moderate; p. 90)

14. Consumption of the core product is sandwiched between use of supplementary

services that are needed earlier or later in the delivery sequence.
(True; Easy; p. 91)

15. Core products are always surrounded by the same eight supplementary elements as
they evolve.
(False; Easy; p. 92)

16. To obtain full value from any good or service, customers need relevant information.
(True; Moderate; p. 92)

17. Hospitality represents a more subtle approach to consultation because it involves

helping customers better understand their situations.
(False; Easy; p. 97)

18. “Exceptions” involve supplementary services that fall outside the routine of normal
service delivery.
(True; Moderate; p. 98)

19. Information processing services tend to be the most demanding in terms of

supplementary elements.
(False; Moderate; p. 100)

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20. Style changes represent the simplest type of innovation, typically involving no
changes in either process or performance.
(True; Easy; p. 106)

Short Answer

21. What three components must the value proposition address and integrate?

Core products, supplementary services, and delivery processes.

(Moderate; p. 89)

22. What four things must the design of the service offerings address?

How the different service components are delivered to the customer, the nature of
the customer’s role in those processes, how long delivery lasts, and the prescribed
level and style of service to be offered.
(Moderate; p. 89)

23. List three examples of order-taking elements in order entry.

On-site order fulfillment.

Mail/telephone order placement/E-mail/Web site order placement.
(Moderate; p. 94)

24. Give two examples of billing elements.

Periodic statements of account activity.

Invoices for individual transactions.
(Verbal statements of amount due.)
(Machine display of amount due.)
(Self-billing computed by the customer.)
(Moderate; p. 95)

25. Give an example of a consultation element.

Advice—personal counseling, tutoring/training in product use, or management or

technical consulting.
(Easy; p. 96)

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Essay

26. Describe the four types of “exceptions” listed in the chapter.

Special requests are one type of exception. These involve a departure from normal
operating activities and are common in travel and hospitality industries. Problem-
solving refers to an exception where normal service fails to run smoothly as a result
of accidents, delays, etc. Handling of complaints/complements/suggestions help
service providers react quickly to failures and thrive off of complements. Restitution
is the final type of exception listed. This involves repaying customers for severe
performance failures.
(Challenging; p. 99)

27. Discuss the three factors that discriminate between successful and unsuccessful new
financial services.

The three factors that lead to success in new financial services are market synergy,
organizational factors, and market research factors. Market synergy refers to the
ability of new offerings to fit well with the existing image of a firm, to meet
customer needs, and to receive strong support from a firm and its branches.
Organizational factors include strong interfunctional cooperation and coordination
and a clear direction for the development team. Finally, market research is conducted
early in the development process with a clear idea of the type of information needed.
(Challenging; p. 111)

APPLICATION CONTENT

Multiple Choice Questions

28. Airlines make use of ____________ systems, based on telephone or Web site
reservations. This provides enormous cost savings for airlines because it reduces
____________.
a. Ticketless; gross revenue charges
b. Partial; gross revenue charges
c. Ticketless; travel agent commissions
d. Partial; travel agent commissions
e. Ticketless; net revenue charges
(c; Moderate; p. 94-95)

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29. ____________ came up with the novel idea of an arrivals lounge for its terminals to
serve passengers arriving early in the morning after a long overnight flight from the
Americas, Asia, Africa, and Australia.
a. Singapore Airlines
b. British Airways
c. Delta Airlines
d. Continental Airlines
e. Trans World Airlines
(b; Moderate; p. 98)

30. Which of the following is an example of a special request in advance of service

delivery?
a. Dietary requirements
b. Complaints
c. Warranties
d. Refunds
e. Suggestions
(a; Easy; p. 99)

31. Singapore Airlines Raffles Class is an example of a(n) ____________.

a. branded house
b. endorsed brand
c. house of brands
d. sub-brand
e. clear strategy
(d; Challenging; p. 101)

32. Which of the following is NOT one of British Airways seven distinct air travel
products?
a. Deluxe service (First Class)
b. Club World (Business Class)
c. Club Britain (Business Class)
d. Club Europe (Business Class)
e. Euro-Traveler (Economy Class)
(c; Moderate; p. 104)

True/False

33. Firms actually benefit from late payments, because they reduce the amount of
accounts payable.
(False; Moderate; p. 96)

34. Singapore Airlines is well recognized for both their superior meals and attentive
cabin crew.
(True; Moderate; p. 98)

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35. Providers of more intangible services offer a “menu” of products, representing
carefully prescribed value-added supplementary service built around the core
offering.
(True; Easy; p. 101)

36. Westin hotels are wholly owned subsidiaries of Marriott Group that are usually not
identified as part of Marriott to protect Westin’s exclusive image.
(False; Moderate; p. 102)

37. The term “branded house” is used to describe firms like Virgin Group, that uses
distinct individual brand names to cover a range of diverse service offerings in
unrelated fields.
(False; Moderate; p. 101)

Short Answer

38. What are the two roles of supplementary services?

Facilitating or enhancing.
(Moderate; p. 91)

39. Give two examples of facilitating services.

Information, order-taking (billing, payment).

(Moderate; p. 92)

40. Give two examples of enhancing services.

Consultation, hospitality (safekeeping, exceptions).

(Moderate; p. 92)

41. Why do firms benefit from prompt payments?

It reduces the amount of accounts receivable that is counted as a liability.

(Moderate; p. 96)

42. Draw the flowchart that might be involved in eating in a fast-food restaurant.

See Sign & Park/Enter  Review Menu  Pick up  Find Table  Clear Table
Drive into Resturant Order Meal & Meal & Eat & Leave
Lot Pay
(Moderate, p. 108)

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Essay

43. Explain how the core product, supplementary services, and delivery processes are
integrated in the context of an overnight hotel stay.

The core product refers to the overnight rental of a bedroom. Its components are
service level (e.g. luxury versus economy), scheduling (how long the room is
available), nature of the process (in this case people processing), and the customer’s
role in consumption of the room. Supplementary services include things like
parking, room service, reservations, and a breakfast buffet. Delivery of both the core
and the supplementary services is provided electronically, via hotel employee, or by
the customer. Phone use and pay TV are automatically billed to the room. Room
service and check-in are provided by a hotel employee. Most breakfast buffets are
self-service, requiring the customer to take action.
(Moderate; p. 90)

44. Discuss how multi-brand strategies can succeed and what the strategies should be
based on in the hotel industry.

Many hotel chains offer groups of sub-brands or endorsed brands. For example,
Hilton Hotels Corporation and Starwood have 8-10 sub-brands, while Marriott
International has sixteen. To succeed, each sub-brand must offer a distinct value to
customers. For example, catering to the ultra wealth at one end of the spectrum with
one brand and also serving the economy class with another brand. Accommodations,
amenities, and service must be consistent with the level of customer sought. Target
considerations include, short-term versus extended stay, business versus pleasure,
and ability to pay matched with customer needs and desires.
(Challenging; p. 102)

45. Explain where Sun Microsystems falls on the spectrum of branding alternatives and
discuss what their strategy involves.

Sun Microsystems utilizes a sub-branded strategy. The company offers a

comprehensive hardware and software support program with four different levels of
support. These range from bronze to platinum. Different levels of support give
customers the flexibility to tradeoff price for increased service. For example, 24/7
service is costly, but potentially necessary for some high-powered business
customers.
(Challenging; p. 104)

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