QUESTION SET – SERVICES MARKETING

1. What are the main reasons for the growing share of the service sector in all major
economies of the world?
2. Describe the four broad “processing” categories of services, and provide examples for
each.
3. Why do the marketing, operations, HR management, and IT functions need to be
closely coordinated in service organizations?
4. What are the key elements in the framework for developing effective service
Marketing strategies?
5. Choose a service company you are familiar with, and show how each of the 7 Ps of
Services marketing applies to one of its service products.
6. Explain the three-stage model of service consumption with the help of a Table. Give
two examples from the Industry.
7. Why do consumer’s perceptions of risk play an important role in choosing between
alternative service offers? How can firms reduce consumer risk perceptions?
8. How are customers’ expectations formed? Explain the difference between desired
service and adequate service with reference to a service experience you have had
recently.
9. Describe the difference between high-contact and low-contact services, and explain
how the nature of a customer’s experience may differ between the two. Give one
example of each.
10. Describe the relationship between customer expectations and customer satisfaction.
Give two examples.
11. Review the five dimensions of service quality. What do they mean in the context of
(a) an industrial repair shop, (b) a retail bank, (c) a “Big 4” accounting firm?
12. Describe the different ways in which Services can be segmented. Provide examples
for each of these.
13. How are service levels of determinant attributes related to positioning of Services?
Give two examples.
14. Why should service firms focus their efforts? Describe the basic focus strategies, and
give examples of how these work.
15. Describe what is meant by positioning strategy and how do the market, customer,
internal, and competitive analyses relate to positioning strategy in relation to
Services?
16. Travel agencies are losing business to passengers booking their flights directly on
airline websites. Identify possible focus options open to travel agencies wishing to
develop new lines of business that would make up for the loss of airline ticket sales.
17. Explain the Flower of Service concept and identify each of its petals. What insights
does this concept provide for service marketers?
18. How is branding used in services marketing? What is the distinction between a
corporate brand such as Marriott and the names of its various inn and hotel chains?
19. Why do new services often fail? What factors are associated with successful
development of new services? Give two examples.
 20. Identify two examples of branding in financial services (e.g., specific types of Retail
bank accounts or insurance policies), and define their characteristics. How meaningful
are these brands likely to be to customers?
Alright, let's break this down super simple. Imagine two big players in the money game: Chase
Bank with its "Sapphire" checking account and Geico insurance with their "Gecko" mascot.
Chase Sapphire Account: This is like a VIP pass at a concert but for banking. You get fancy perks
like no ATM fees worldwide, higher interest rates on your savings, and even some travel bonuses. It's
like banking in first class.
Geico Insurance with the Gecko: Picture a cute little lizard telling you you can save 15% or more on
car insurance. That's Geico's mascot, making insurance feel less like a headache and more like a
smart, easy choice.
Why do these brands matter to folks? Because they make complicated stuff like banking and
insurance feel personal, easy, and kinda cool. Chase Sapphire screams "luxury" while Geico's Gecko
is all about simplicity and savings. People dig that because it makes their life easier and feels like
they're getting something special.

21. What is meant by “distributing services?” How can an experience or something

intangible be distributed? Give two examples.
Online Education Platforms (like Coursera or Udemy): These platforms distribute knowledge and
education through the internet. Instead of sitting in a physical classroom, students can learn anything,
anywhere, anytime, as long as they have internet access. The "product" (education) is delivered
through video lectures, readings, and forums. This allows for the distribution of educational services
on a global scale, transcending geographical boundaries.
Streaming Services (like Netflix or Spotify): These services distribute entertainment by streaming
content directly to your device. There's no physical product; instead, you get access to a vast library of
movies, shows, or music without owning a DVD or CD. The service is accessed via subscriptions,
allowing users to consume entertainment at their convenience, anytime, and virtually anywhere with
internet connectivity.
In both examples, the service delivery is facilitated through digital platforms, making the experience
or intangible good accessible to a wide audience without traditional physical distribution channels.

22. What are the different options for service delivery? For each of the options, what
factors do service firms need to take into account when using it?
In-Person Services: This traditional method involves direct, face-to-face interaction, like in
restaurants, hair salons, or healthcare.
Factors to Consider: Location is crucial; it needs to be convenient for the target clientele. The physical
environment and ambiance play significant roles in customer satisfaction. Staff training is also vital to
ensure high-quality personal interaction.
Self-Service: Customers perform the service themselves using the company’s facilities or equipment,
such as ATMs or online check-ins for flights.
Factors to Consider: The interface must be user-friendly to accommodate all customer segments.
There should be enough guidance available (like FAQs or help desks) to assist customers in using the
service independently. Ensuring technology is reliable and up-to-date is also critical.
Remote Delivery: Services are provided without face-to-face interaction, utilizing technology, like
telemedicine or online tutoring.
Factors to Consider: The technology platform's reliability and ease of use are paramount. Services
need to be adapted or designed to fit this mode of delivery effectively. Privacy and security, especially
for services dealing with sensitive information, are also critical considerations.
Automated Services: These are delivered through automated systems, such as vending machines or
online recommendation algorithms.
Factors to Consider: The technology must be maintained to ensure reliability and updated to keep the
service relevant. User experience design is crucial to make the service intuitive and satisfying.
Additionally, there should be a feedback mechanism to continuously improve the service based on
user interactions.

23. Why is franchising a popular way to expand distribution of an effective service? Give
two examples.
Franchising is like giving someone the recipe to your secret sauce but making sure they promise to
keep it tasting the same, no matter where they serve it. It's popular for spreading services far and wide
because it combines the strength of a proven business model with the local know-how and investment
of franchisees. Here’s why it rocks and a couple of examples to illustrate:
It's Less Risky: The franchisor (the original business) gets to expand without coughing up all the
cash and taking on all the risks themselves. They use the franchisee's (the local business owner)
money and muscle to grow. Plus, since the business model is already a hit, the franchisee feels
confident they’re betting on a winner.
Fast Growth: Imagine wanting to open 100 new locations. If you're doing it alone, that’s a mountain
of work and money. With franchising, each franchisee handles their own spot, speeding up the
expansion.
Examples:
McDonald’s: The golden arches are more than just a place to get burgers. They’re a prime example
of franchising done right. Each franchisee runs their McDonald’s by the book, ensuring your Big Mac
tastes the same whether you’re in Tokyo or Toronto.
Anytime Fitness: This 24/7 gym operates on a franchise model, allowing local owners to open up
their own gym under the Anytime Fitness brand. It’s a win-win: the brand grows worldwide, and
franchisees get to run their business with a recognized name, tapping into the company’s successful
playbook for attracting and keeping gym members.
 24. What factors do service companies need to understand to choose a distribution
strategy for going international that still allows it to control its IP and sources of value
creation? Give two examples.
When a service company wants to go global and spread its wings across international borders, picking
the right distribution strategy is like navigating through a maze. It's all about extending reach while
clutching tightly to the golden eggs: Intellectual Property (IP) and unique value creation methods.
Here’s what needs to be considered:
Understanding Local Laws and Regulations: Different countries have different rules around IP
protection, business operations, and even what services can be offered. Knowing these inside out
ensures a company can defend its IP and adapt its value proposition without stepping on legal
landmines.
Choosing the Right Partners: Whether it’s franchising, joint ventures, or licensing, picking partners
who respect the company's IP and can replicate the service quality and brand experience is key. This
partnership must be built on trust, with clear agreements to protect the company's secrets and maintain
standards.
Examples:
Starbucks: When they expand into new countries, they often adapt their menu to local tastes while
keeping the core Starbucks experience intact. They train local partners extensively to ensure the
coffee and service meet their global standard, protecting their brand and the unique value they create
in the coffee culture.
KPMG: This global network of professional firms providing Audit, Tax, and Advisory services,
carefully selects its member firms in various countries. These firms must adhere to strict quality
standards and share knowledge and expertise but are also deeply familiar with local business practices
and regulations. This strategy allows KPMG to maintain control over its IP (in this case, their
proprietary methodologies for auditing and consulting) and ensures the global brand's value
proposition is consistent, yet flexible enough to adapt to local market needs.
In sum, for service companies looking to go international, it’s not just about spreading their wings but
doing so in a way that protects their golden eggs: their IP and unique ways of creating value.
Understanding local nuances and choosing partners wisely are the twin keys to unlocking successful
global expansion.

25. Think of three services you buy or use either mostly or exclusively via the Internet.
What is the value proposition of this channel over alternative channels (e.g., phone,
mail, or branch network)?
Navigating the web to snag services has become second nature for many of us, thanks to its
convenience and efficiency. Here are three services I use mostly or exclusively online, along with the
value proposition of this digital highway over more traditional paths like phone, mail, or popping into
a local branch.
Online Banking: This is like having a bank in your pocket or under your pillow, minus the
discomfort. You can check balances, transfer money, pay bills, or even deposit checks with a few taps
on your phone or clicks on your computer. The value here is monumental: it’s 24/7 banking on your
schedule, no waiting in lines or working around bank hours.
Streaming Services (Netflix, Spotify, etc.): The crown jewels of entertainment. Why wait for a DVD
in the mail, or worse, endure endless commercials on TV, when you can binge-watch your favorite
series or listen to music uninterrupted online? The value proposition is clear: instant access to a vast
library of entertainment anytime, anywhere, tailored to your preferences.
E-commerce (Amazon, eBay): Imagine the world's biggest mall, open 24/7, without having to find
parking. That's e-commerce. You can buy anything from a book to a fridge, often with reviews to
guide your purchase. Plus, it's delivered to your doorstep. The value over traditional shopping or
ordering by phone/mail is the convenience, variety, and often better prices, all from the comfort of
your home.
In essence, the internet channel for these services offers unparalleled convenience, efficiency,
personalization, and access. It's about getting what you want, when you want it, without the physical
and temporal limitations of traditional channels.

26. How can the pricing tripod approach to service pricing be useful to come to a good
pricing point for a particular service? Give two examples.
The pricing tripod, or the three Cs of pricing—cost, customer, and competition—provides a
comprehensive framework for setting service prices. By balancing these three crucial factors,
businesses can determine a price point that covers their costs, appeals to customers, and remains
competitive in the market. Let's break it down and apply it to two examples:
1. Cloud Storage Services (e.g., Dropbox or Google Drive)
Cost: The service provider considers the cost of maintaining servers, ensuring data security, and
providing customer support. This forms the base price to ensure profitability.
Customer: They assess what customers value—storage space, security features, accessibility—and
their willingness to pay for additional benefits like more storage or enhanced security.
Competition: The provider looks at pricing strategies of competitors like iCloud or Microsoft
OneDrive. To remain competitive, they might offer more storage at a similar price or bundle services
for added value.
By balancing these aspects, a cloud storage service can set a price that covers costs, meets or exceeds
customer expectations for value, and aligns with or undercuts competitor pricing, thereby positioning
themselves effectively in the market.
2. Boutique Fitness Studios (e.g., Yoga or Pilates Studios)
Cost: Studios calculate the costs of instructors, facility upkeep, class equipment, and any additional
services provided. This establishes a minimum price to maintain operations.
Customer: They evaluate the target market's preferences—small class sizes, specific types of classes,
and location convenience—and their willingness to pay a premium for a personalized fitness
experience.
Competition: The studio considers the pricing of local gyms and other boutique studios. To
differentiate, they might focus on niche offerings, superior instructors, or a luxurious facility.
Balancing the tripod helps the studio find a price that justifies the premium service it offers, aligns
with customer expectations for exclusivity and personal attention, and remains competitive by
offering unique value that justifies higher prices compared to large, impersonal gyms.
 27. What is the role of nonmonetary costs in a business model, and how do they relate to
the consumer’s value perceptions? Give any two examples.
Nonmonetary costs play a crucial role in a business model as they encompass the non-financial
sacrifices or efforts that consumers undertake to obtain a product or service. These costs are integral
to shaping consumers' overall value perceptions, influencing their decision-making process.
Understanding and managing nonmonetary costs is key for businesses aiming to enhance customer
satisfaction and loyalty. Here are two examples illustrating the significance of nonmonetary costs in a
business model:
1. Time Costs in Fast-Food Chains:
Nonmonetary Costs: In the fast-food industry, customers often face time costs associated with
waiting in lines, placing orders, and waiting for their food to be prepared.
Role in Business Model: Fast-food chains strategically invest in processes like online ordering, self-
service kiosks, and drive-throughs to minimize time costs. Efficient service reduces customers' time
investments, positively impacting their overall value perception. Conversely, long wait times may
deter customers, negatively affecting the perceived value.
2. Learning Curve in Software Products:
Nonmonetary Costs: Software products often come with a learning curve, requiring users to invest
time and effort in understanding the features and functionalities.
Role in Business Model: Companies offering software solutions aim to streamline the user
onboarding process, providing intuitive interfaces, tutorials, and customer support. By minimizing the
learning curve, they reduce nonmonetary costs for users, enhancing the perceived value of their
product. Conversely, complex interfaces or inadequate support can increase nonmonetary costs,
leading to dissatisfaction.
Relation to Consumer’s Value Perceptions:
Positive Impact: When businesses effectively address and minimize nonmonetary costs, consumers
perceive greater value in the product or service. This positive correlation contributes to customer
satisfaction and loyalty.
Negative Impact: Ignoring or inadequately managing nonmonetary costs can lead to dissatisfaction,
reducing the perceived value. Consumers may seek alternatives that offer a better balance of benefits
and sacrifices.

28. Why are ethical concerns important issues when designing service pricing and
revenue management strategies? What are potential consumer responses to service
pricing or policies that are perceived as unfair?
Ethical concerns play a significant role in service pricing and revenue management strategies because
they influence customer perceptions, trust, and long-term relationships. Unethical pricing practices
can lead to negative consequences for a business, including reputational damage and legal
consequences. Here's why ethical considerations are crucial, along with potential consumer responses
to perceived unfair pricing or policies:
Importance of Ethical Concerns:
Trust and Reputation: Ethical pricing builds trust between the business and its customers. When
customers believe they are treated fairly, they are more likely to remain loyal and speak positively
about the brand. Unethical practices can quickly erode trust and tarnish a company's reputation.
Long-Term Relationships: Ethical pricing fosters long-term relationships with customers. When
consumers perceive fairness, they are more likely to engage in repeat business and become advocates
for the brand. Unethical pricing may result in short-term gains but often leads to customer
dissatisfaction and churn in the long run.
Legal Compliance: Ethical pricing ensures compliance with laws and regulations. Engaging in
deceptive or unfair pricing practices can result in legal consequences, fines, and damage to the
company's legal standing.
Potential Consumer Responses to Unfair Pricing or Policies:
Negative Word of Mouth: Consumers who feel they have been treated unfairly are likely to share
their negative experiences with friends, family, and online communities. Negative word of mouth can
spread quickly and harm a brand's image.
Reduced Loyalty and Repeat Business: Unfair pricing practices can lead to decreased customer
loyalty. Consumers may seek alternative providers who offer more transparent and ethical pricing,
reducing the likelihood of repeat business.
Boycotts and Public Backlash: In extreme cases, consumers may organize boycotts or public
campaigns against a company that is perceived to engage in unfair pricing. Social media platforms
provide a powerful tool for consumers to voice their concerns and mobilize others.
Legal Action: Consumers may resort to legal action if they believe they have been deceived or
unfairly treated. This can result in costly legal battles and damage to the company's reputation.

29. What are the six key decisions managers need to make when designing an effective
pricing schedule? Give two examples.
Designing an effective pricing schedule involves a series of strategic decisions that can significantly
impact a company's profitability and market competitiveness. Here are six key decisions that
managers need to make, along with two examples:
Pricing Objectives:
Decision: Managers must define the primary objectives of their pricing strategy, whether it's
maximizing profits, gaining market share, or achieving a certain return on investment.
Example: A luxury fashion brand might prioritize profit maximization, setting high prices to maintain
exclusivity and premium positioning. In contrast, a new entrant in the smartphone market may
prioritize market share and adopt a penetration pricing strategy to attract a larger customer base.
Costing Approach:
Decision: Managers must decide how to incorporate costs into pricing, whether through cost-plus
pricing, value-based pricing, or other approaches.
Example: A manufacturing company using cost-plus pricing adds a percentage markup to production
costs to determine the selling price of a product. Alternatively, a software company employing value-
based pricing assesses the perceived value of its software to customers and sets prices accordingly.
Price Segmentation:
Decision: Managers must determine whether to adopt a uniform pricing strategy or implement price
discrimination by segmenting the market based on factors such as customer demographics, location,
or purchasing behavior.
Example: Airlines often practice price segmentation by offering different ticket prices for economy,
business, and first-class seats. Similarly, software companies may use different pricing tiers for
individual users, small businesses, and enterprises.
Psychological Pricing:
Decision: Managers need to decide whether to use psychological pricing techniques, such as setting
prices just below round numbers or emphasizing discounts, to influence consumer perceptions.
Example: Retailers often price products at $9.99 instead of $10.00, leveraging the psychological
impact of perceiving the price as lower. Additionally, offering discounts like "buy one, get one free"
or "50% off" can influence customer behavior.
Promotional Pricing:
Decision: Managers must determine when and how to use promotional pricing strategies, such as
discounts, special offers, or limited-time promotions.
Example: During holiday sales events, retailers may offer significant discounts on selected items to
attract customers. Software companies might provide limited-time discounts or bundle additional
features to encourage new subscriptions.
Dynamic Pricing:
Decision: Managers need to decide whether to implement dynamic pricing, adjusting prices in real-
time based on factors like demand, competitor pricing, or time of day.
Example: Ride-sharing apps often use dynamic pricing during peak hours, increasing fares when
demand is high. Similarly, e-commerce platforms may adjust prices based on factors like inventory
levels, competitor pricing, or customer behavior.

30. From the customer perspective, what serves to define value in the following services:
(a) a hair salon, (b) a legal firm specializing in business and taxation law, and (c) a
Gym?
a) Hair Salon:
Customer Value in a Hair Salon:
Quality of Service: Customers value skilled and experienced hairstylists who can provide quality
haircuts, styling, and color treatments.
Customer Experience: A comfortable and welcoming atmosphere, friendly staff, and personalized
attention contribute to the overall experience.
Creativity and Trends: Staying updated with the latest hair trends and offering creative suggestions
aligns with customer expectations.
Example: A customer visiting a hair salon seeks not only a haircut but also an enjoyable experience.
They value the expertise of the stylist, the ambiance of the salon, and the feeling of being pampered,
contributing to an overall positive perception of value.
b) Legal Firm Specializing in Business and Taxation Law:
Customer Value in a Legal Firm:
Expertise and Knowledge: Customers seek legal advice and services from professionals with expertise
in business and taxation law to ensure accurate and reliable counsel.
Efficiency and Timeliness: Timely resolution of legal matters is crucial for businesses. Customers
value firms that can navigate complexities efficiently.
Communication and Transparency: Clear communication and transparency regarding legal processes,
fees, and potential outcomes contribute to customer satisfaction.
Example: A business owner seeking legal advice on taxation matters values a firm that not only
understands the complexities of tax law but also communicates effectively, providing clear guidance
and solutions in a timely manner.
c) Gym:
Customer Value in a Gym:
Quality of Facilities and Equipment: Customers value well-maintained facilities, modern equipment,
and a clean workout environment.
Variety of Services and Classes: Access to a variety of fitness classes, personalized training, and
diverse workout options cater to different preferences and fitness goals.
Community and Support: A sense of community, support from trainers, and a positive gym culture
contribute to the overall value for customers.
Example: A gym-goer seeks value beyond just access to fitness equipment. They appreciate a gym
that offers a range of classes, has knowledgeable trainers, and fosters a supportive community,
enhancing the overall fitness experience.

31. What are the 5 Ws along which the Integrated Service Communications Model is
structured? Give two examples
The Integrated Service Communications Model is structured along the five Ws, providing a
comprehensive framework for effective communication in the service industry. The five Ws—Who,
What, When, Where, and Why—serve as pillars to guide the development and execution of
communication strategies. Let's delve into each of these components with examples:
Who:
Definition: This answers the question of the target audience or recipients of the communication.
Example 1: A luxury spa may tailor its communication to affluent individuals seeking premium
wellness services. The "Who" in this case is the high-income demographic interested in luxury
experiences.
Example 2: An online tutoring platform might focus its communication on parents looking for
educational support for their children, addressing the specific needs and concerns of this target
audience.
What:
Definition: This pertains to the content or message that is being communicated.
Example 1: A restaurant may communicate a new menu launch, highlighting the innovative dishes,
ingredients, and culinary expertise. The "What" is the information about the new menu.
Example 2: A software company might communicate software updates, emphasizing new features,
improvements, and benefits for users. The "What" is the details about the software changes.
When:
Definition: This addresses the timing of communication, considering the most appropriate moments
for conveying information.
Example 1: An airline communicates flight delays or cancellations promptly to passengers to
minimize inconvenience, demonstrating a commitment to timely and relevant information sharing.
Example 2: An e-commerce platform may send promotional emails during festive seasons or holidays
to capitalize on increased consumer spending, aligning communication with opportune moments.
Where:
Definition: This focuses on the channels or platforms through which communication is delivered.
Example 1: A retail brand may use social media platforms to communicate promotional offers and
engage with customers, leveraging the broad reach and interactive nature of these channels.
Example 2: A bank might use email communication to update customers about changes in banking
policies or services, utilizing a direct and personalized channel for important information.
Why:
Definition: This delves into the purpose or objective behind the communication, providing context for
the message.
Example 1: A healthcare provider communicates preventive care tips to patients to empower them
with knowledge and foster a proactive approach to health. The "Why" is to promote wellness and
preventive measures.
Example 2: An online retail platform communicates the launch of a customer loyalty program to
enhance customer retention. The "Why" is to build stronger relationships and reward customer
loyalty.
 32. In what ways do the objectives of services communications differ substantially from
those of goods marketing? Describe four common educational and promotional
objectives in service settings, and provide a specific example for each of the
objectives you list.
The objectives of services communications differ substantially from those of goods marketing due to
the unique characteristics of services, such as intangibility, inseparability, variability, and
perishability. Services are experiential, and their marketing often focuses on building relationships
and trust. Here are four common educational and promotional objectives in service settings, along
with specific examples:
Building Trust and Credibility:
Objective: Establishing trust is crucial in services, where customers often invest in experiences and
relationships rather than tangible products. The objective is to communicate reliability and build
credibility.
Example: A financial advisory firm may launch a communication campaign emphasizing its team's
expertise, years of experience, and successful client stories to instill confidence in potential clients.
Educating Customers about the Service Process:
Objective: Many services involve customer participation, and understanding the service process is
vital. The objective is to educate customers on what to expect, reducing uncertainty and enhancing
their experience.
Example: A healthcare provider may use brochures, online content, or seminars to educate patients
about the process of a medical procedure, addressing concerns and providing clarity on the steps
involved.
Promoting Relationship-Building and Customer Loyalty:
Objective: Services often focus on long-term relationships and customer loyalty. The objective is to
communicate the value of ongoing relationships and the benefits of loyalty programs or memberships.
Example: A gym might launch a promotional campaign highlighting the community atmosphere,
personalized training plans, and exclusive member events to encourage customer loyalty and
retention.
Communicating Quality of Service:
Objective: Since services are intangible, communicating the quality of service is critical. The
objective is to assure customers of the high standards, professionalism, and excellence in service
delivery.
Example: An upscale restaurant may use marketing materials, online reviews, and testimonials to
convey the superior quality of its cuisine, ambiance, and attentive service to attract discerning
customers.
 33. What roles do personal selling, advertising, and public relations play in (a) attracting
new customers to visit a service outlet and (b) retaining existing customers? Give two
examples.
a) Attracting New Customers to Visit a Service Outlet:
Personal Selling:
Role: Personal selling involves direct interaction between a sales representative and potential
customers. In attracting new customers, personal selling plays a crucial role in presenting tailored
solutions, addressing specific customer needs, and building a rapport.
Example: In the real estate industry, a property agent engages in personal selling by showcasing
available properties to potential buyers. The agent can highlight unique features, answer questions,
and provide a personalized tour to attract new customers.
Advertising:
Role: Advertising is a mass communication tool that creates awareness and interest in the service. It
helps attract new customers by showcasing the unique value proposition, benefits, and offerings of the
service outlet.
Example: A newly opened fitness center may use advertising through social media, local newspapers,
or online platforms to promote its state-of-the-art facilities, diverse fitness classes, and membership
discounts, attracting individuals looking for a new gym.
Public Relations:
Role: Public relations efforts aim to shape a positive image of the service outlet in the eyes of the
public. This can involve media coverage, events, or community engagement to generate positive
word-of-mouth and attract new customers.
Example: A restaurant might organize a charity event or collaborate with a local food blogger for a
review. Positive coverage in the community or media can attract new customers by building
credibility and interest in the restaurant.

b) Retaining Existing Customers:

Personal Selling:
Role: Personal selling is not limited to acquiring new customers; it is equally crucial for retaining
existing ones. Sales representatives can provide personalized recommendations, offer loyalty
incentives, and maintain regular communication to reinforce the customer's commitment to the
service.
Example: In the telecommunications industry, a sales representative may contact existing customers
to introduce them to new plans, offer loyalty discounts, or address any concerns, fostering a long-term
relationship.
Advertising:
Role: Advertising contributes to customer retention by continuously reinforcing the brand and
reminding existing customers of the ongoing value and benefits of the service. It can highlight loyalty
programs, promotions, or exclusive offerings.
Example: A subscription-based streaming service may use advertising to communicate new content
releases, exclusive shows, and personalized recommendations to keep existing subscribers engaged
and less likely to consider alternatives.
Public Relations:
Role: Public relations efforts that showcase a service outlet's commitment to customer satisfaction,
community involvement, or ethical practices contribute to customer retention. Positive perceptions
generated through PR activities can strengthen customer loyalty.
Example: An eco-friendly hotel may engage in public relations activities, such as participating in
environmental initiatives or earning certifications for sustainable practices. These efforts enhance the
hotel's image, resonating positively with environmentally conscious customers and encouraging
repeat visits.

34. Why is WOM important for the marketing of services? How can a service firm that is
the quality leader in its industry induce and manage word-of-mouth? Give two
examples.
Word-of-Mouth (WOM) is particularly crucial for the marketing of services due to the intangible
nature of services and the significance of customer experiences. Here's why WOM is important:
Trust and Credibility:
Services often involve a high level of trust, as customers cannot physically inspect or test a service
before purchase. Positive WOM from friends, family, or online reviews builds credibility and trust,
influencing potential customers.
Personalization and Relatability:
Service experiences are personal and subjective. WOM allows individuals to share their unique
experiences, helping potential customers relate to real-life scenarios and making the service more
tangible.
Decision-Making Influence:
Consumers often rely on recommendations from peers or online reviews when making service-related
decisions. Positive WOM can significantly influence decision-making, leading to higher conversion
rates.
Cost-Effective Marketing:
WOM is a cost-effective marketing tool. Satisfied customers become advocates, promoting the
service without direct costs to the firm. This organic promotion is often more impactful than
traditional advertising.
Inducing and Managing Word-of-Mouth:
Exemplary Service Quality:
Example 1 - Luxury Hotel: A luxury hotel that consistently delivers exceptional service experiences
induces WOM by ensuring every guest encounter exceeds expectations. From personalized service to
attention to detail, the hotel creates positive stories that guests are likely to share with friends and on
online platforms.
Engagement and Interactivity:
Example 2 - Online Retail Platform: A leading online retail platform induces WOM by actively
engaging with customers through social media, encouraging them to share their experiences, reviews,
and photos. The platform may run campaigns, such as sharing user-generated content with specific
hashtags, creating a community around its brand.
Loyalty Programs and Incentives:
Example 3 - Airline Industry: A quality leader in the airline industry can manage WOM by
implementing a loyalty program that rewards customers for referrals or frequent usage. Offering
incentives like discounts, exclusive perks, or upgrades encourages customers to share positive
experiences with others.
Online Reviews and Testimonials:
Example 4 - Software Service Provider: A software service provider, recognized for its quality
leadership, can actively encourage satisfied customers to leave online reviews and testimonials.
Featuring these positive reviews on the company's website or promotional materials amplifies WOM.

35. Discuss the significance of search, experience, and credence attributes for the
communications strategy of a service provider. Assume the objective of the
communications strategy is to attract new customers.
The significance of search, experience, and credence attributes is profound when designing a
communications strategy for a service provider, especially when the objective is to attract new
customers. These attributes play a crucial role in shaping customer perceptions and influencing
decision-making in the service industry.
Search Attributes:
Significance in Communication Strategy: Search attributes are those that customers can evaluate
before purchase. In a communications strategy aimed at attracting new customers, highlighting and
effectively communicating search attributes is vital. This includes providing clear information about
tangible aspects that potential customers can assess easily.
Example: For a hotel service provider, search attributes would include room rates, location, facilities,
and services. The communications strategy should focus on presenting this information transparently
through various channels, such as the company website, online travel platforms, and marketing
materials.
Experience Attributes:
Significance in Communication Strategy: Experience attributes are evaluated during or after the
consumption of the service. Effective communication should set realistic expectations and emphasize
the unique and positive experiences customers can anticipate.
Example: In the context of a restaurant service provider, the experience attributes encompass factors
like ambiance, quality of service, and the taste of the food. The communications strategy should
utilize visual content, customer testimonials, and storytelling to convey the dining experience and
create anticipation among potential customers.
Credence Attributes:
Significance in Communication Strategy: Credence attributes are challenging for customers to
evaluate even after consumption. For these attributes, building trust through credible sources,
certifications, and testimonials becomes crucial in the communications strategy.
Example: In the healthcare industry, a service provider offering medical consultations may possess
credence attributes related to the effectiveness of treatments or medical advice. The communications
strategy should incorporate expert endorsements, patient testimonials, and relevant certifications to
establish credibility and alleviate potential concerns.
Overall Strategy:
Consistency Across Attributes: The communications strategy should ensure consistency in messaging
across search, experience, and credence attributes to provide a holistic view of the service.
Interactive Communication Channels: Leveraging interactive communication channels, such as social
media or live chat, can allow potential customers to seek information and clarify doubts related to all
attributes.
Customer Testimonials and Reviews: Integrating authentic customer testimonials and reviews into the
communications strategy adds credibility and allows potential customers to gain insights into the
experiences of others.

36. How does blueprinting help us to better understand the service process from the
perspective of the key actors (i.e., customers and the employees from different service
departments and functional areas) in a serviced process?
Blueprinting is a powerful tool in service management that helps to visualize and understand the
entire service process from the perspective of key actors, including customers and employees from
various service departments and functional areas. Here's how blueprinting contributes to a
comprehensive understanding:
Visual Representation of Service Process:
Customers' Perspective: Blueprinting provides a visual representation of the entire service process,
helping customers understand the sequence of steps and interactions they will encounter. This clarity
enhances customers' comprehension of the service and manages their expectations.
Employees' Perspective: For employees, especially those in customer-facing roles, blueprinting offers
a clear overview of their responsibilities within the service process. This visual representation aids in
training and ensures consistency in service delivery.
Identification of Frontstage and Backstage Activities:
Customers' Perspective: Blueprinting distinguishes between frontstage and backstage activities.
Frontstage activities are visible to customers, representing the aspects they directly experience, such
as interactions with employees or physical facilities. This helps customers understand the elements
contributing to their service experience.
Employees' Perspective: For employees involved in both frontstage and backstage activities,
blueprinting delineates their roles in service delivery. It provides a roadmap for employees to
understand when and how their actions impact the customer directly or are part of internal processes.
Clarity on Customer Actions and Employee Responses:
Customers' Perspective: Blueprinting outlines the steps customers need to take during the service
process. It provides clarity on their role, decisions, and interactions, empowering them to navigate the
service journey more effectively.
Employees' Perspective: For employees, blueprinting clearly indicates customer touchpoints and the
expected responses or actions required at each stage. This helps employees understand their
responsibilities in delivering a seamless service experience.
Efficient Cross-Functional Collaboration:
Customers' Perspective: Blueprinting showcases the collaboration between different service
departments, ensuring a smooth and integrated service experience for customers. This transparency
minimizes potential gaps or delays in service delivery.
Employees' Perspective: Employees from various functional areas gain insights into how their roles
intersect with those of colleagues in other departments. This facilitates better coordination,
communication, and problem-solving across functions, contributing to more efficient service delivery.
Continuous Improvement and Innovation:
Customers' Perspective: Blueprinting allows organizations to identify areas for improvement in the
service process, leading to enhanced customer satisfaction. It also creates opportunities for innovation
and the introduction of new service elements.
Employees' Perspective: For employees, blueprinting serves as a continuous improvement tool by
highlighting bottlenecks or areas prone to service failures. This encourages a culture of innovation and
adaptability among employees.

37. Why is it necessary to periodically redesign service processes, and what are the
typical symptoms of a service process that is not working well?
Periodically redesigning service processes is crucial for staying competitive, meeting evolving
customer expectations, and ensuring operational efficiency. As markets, technologies, and customer
preferences change, service processes must adapt to remain effective and deliver optimal experiences.
Here's why periodic redesign is necessary, along with typical symptoms of a service process that is
not working well:
Why Periodic Redesign is Necessary:
Adaptation to Changing Customer Needs:
Customer expectations and preferences evolve over time. Periodic redesign allows service providers
to align their processes with changing customer needs, ensuring that the service remains relevant and
valuable.
Technology Advancements:
Advances in technology offer new tools and channels that can enhance service delivery. Redesigning
processes enables the integration of emerging technologies, optimizing efficiency and improving the
overall customer experience.
Competitive Edge:
Periodic redesign allows service providers to stay ahead of the competition by adopting best practices,
optimizing workflows, and introducing innovations that differentiate their offerings in the market.
Efficiency and Cost-effectiveness:
Regular process reviews help identify inefficiencies and bottlenecks. Redesigning processes allows
organizations to streamline operations, reduce costs, and enhance overall efficiency.
Regulatory Compliance:
Changes in regulations and compliance requirements necessitate adjustments to service processes.
Regular redesign ensures that the service remains in compliance with industry standards and legal
requirements.
Typical Symptoms of a Service Process Not Working Well:
High Customer Complaints:
An increase in customer complaints, particularly related to service quality, delays, or
miscommunication, may indicate that the current processes are not meeting customer expectations.
Inconsistency in Service Delivery:
If there is inconsistency in delivering the service across different touchpoints or locations, it suggests
a lack of standardized processes. This can lead to varied customer experiences and reduced overall
satisfaction.
Long Wait Times:
Prolonged wait times for customers, whether in-store, on the phone, or online, can signal
inefficiencies in the service process. This often results in frustration and dissatisfaction among
customers.
Low Employee Morale:
Employee dissatisfaction, high turnover rates, or lack of engagement may indicate that the existing
service processes are burdensome or ineffective. A well-designed process considers the employee
experience and encourages efficiency.
Outdated Technology:
If the service relies on outdated technology, it may lead to operational inefficiencies and hinder the
ability to meet customer expectations. Difficulty in integrating new technologies is a sign that a
process redesign is necessary.
Decreased Customer Retention:
A decline in customer retention rates suggests that the service is not consistently meeting or exceeding
customer expectations. This may be an indication that the current processes need improvement.
Lack of Innovation:
A service process that lacks innovation and fails to incorporate new trends or technologies may
become stagnant. This can result in a loss of competitiveness in the market.
 38. Why does the customer’s role as a co-creator need to be designed into service
processes? Give two examples.
Designing the customer's role as a co-creator into service processes is essential to capitalize on the
unique characteristics of services, where customer participation and interaction are integral to value
creation. This co-creation approach recognizes the active involvement of customers in shaping their
service experiences. Here's why it's crucial, along with two examples:
Enhanced Personalization and Customization:
Importance: Service processes designed for customer co-creation allow for enhanced personalization
and customization. Recognizing that customers have unique needs and preferences, involving them in
the creation process ensures that the service is tailored to individual requirements.
Example 1 - Build-Your-Own Pizza Restaurant: In a build-your-own pizza restaurant, customers
actively participate in the service process by choosing their preferred crust, toppings, and sauces. This
level of customization not only meets diverse taste preferences but also engages customers in the
creative aspect of crafting their meal.
Example 2 - Online Design Platforms: Platforms that allow customers to design their own products,
such as customizable sneakers or personalized merchandise, embody co-creation. Customers actively
engage in the design process, selecting colors, patterns, and features, resulting in a unique and
personalized end product.
Improved Customer Satisfaction and Loyalty:
Importance: Co-creating service processes leads to higher levels of customer satisfaction and loyalty.
When customers actively participate in shaping their experiences, they develop a sense of ownership
and connection to the service, fostering a positive emotional bond.
Example 1 - Co-Creation in Banking Services: Some banks involve customers in co-creating financial
products or services. Through interactive workshops or online platforms, customers can express their
needs and preferences, influencing the design of new banking features or offerings. This collaborative
approach enhances customer satisfaction by providing solutions aligned with their financial goals.
Example 2 - Co-Creation in Travel Planning: Online travel platforms often involve customers in co-
creating their travel experiences. Users can customize their itineraries, select accommodations, and
plan activities based on personal preferences. This participatory approach not only caters to individual
preferences but also enhances the overall travel experience, fostering loyalty to the platform.

39. How can you test whether an SST (Self Service Technologies) has the potential to be
successful, and what can a firm do to increase its chances of customer adoption? Give
two examples.
Testing the potential success of Self-Service Technologies (SST) and ensuring customer adoption
involves careful evaluation of usability, functionality, and user experience. Here's how you can test
and increase the chances of successful customer adoption:

Testing the Potential Success of SST:

Usability Testing:
Objective: Evaluate how easily users can navigate and interact with the SST. Usability testing
assesses the clarity of instructions, the intuitiveness of the interface, and the overall user-friendliness.
Example: In testing an automated check-in kiosk at an airport, usability testing involves observing
how smoothly passengers can complete the check-in process, print boarding passes, and resolve any
issues without assistance.

Pilot Programs and Beta Testing:

Objective: Implement a pilot program or beta testing phase to gather feedback from a limited user
group before a full-scale launch. This allows the identification of potential issues, user preferences,
and areas for improvement.
Example: A banking institution introducing a mobile banking app might conduct a pilot program with
a select group of customers to collect feedback on app functionality, security features, and overall user
experience before releasing it to a broader audience.
Increasing Chances of Customer Adoption:

Clear Communication and Training:

Strategy: Provide clear communication about the benefits of the SST and offer training resources to
guide users through the adoption process. Addressing concerns and highlighting the convenience of
the technology can encourage customers to embrace it.
Example: A retail store introducing self-checkout terminals would conduct staff training to assist
customers with the new system. Additionally, clear signage and in-app tutorials can guide users on
how to use the self-checkout efficiently.

Incentives and Rewards:

Strategy: Offer incentives or rewards to encourage initial usage and continued adoption. This can
include discounts, loyalty points, or exclusive perks for customers who utilize the SST.
Example: A grocery store introducing an online shopping and self-pickup service might offer a
discount on the first order placed through the online platform. Ongoing rewards, such as loyalty
points for each online purchase, can further motivate customers to continue using the service.

Responsive Customer Support:

Strategy: Ensure robust customer support for users who may encounter difficulties or have questions
during the adoption process. Quick and effective resolution of issues enhances customer confidence in
using the SST.
Example: A telecommunications company launching an automated troubleshooting app can provide
live chat support within the app. This ensures users receive immediate assistance if they encounter
problems, minimizing frustration and promoting continued usage.

Feedback Mechanisms for Continuous Improvement:

Strategy: Implement mechanisms for users to provide feedback on their experiences. Actively use this
feedback to make continuous improvements to the SST, addressing pain points and enhancing
features.
Example: An online booking platform for hotel reservations can include a feedback form for users to
share their experience. This input can guide the platform in refining its interface, adding features, and
optimizing the overall booking process.
 40. Identify three situations in which you use self-service delivery. For each situation,
what is your motivation for using self-service delivery, rather than having service
personnel do it for you?
Online Banking Transactions:
Motivation for Self-Service: Many individuals prefer using self-service options for online banking
transactions due to convenience, speed, and 24/7 accessibility. Through mobile banking apps or
online platforms, users can perform various transactions such as transferring funds, paying bills, and
checking account balances without relying on service personnel.
Reasoning: Self-service in online banking allows users to have immediate control over their financial
activities. The motivation often stems from the desire for quick and efficient transactions, avoiding
the need to visit a physical bank branch during specific operating hours.

Automated Check-In at Airports:

Motivation for Self-Service: Travelers often opt for self-service kiosks at airports for check-in
procedures. The motivation lies in avoiding long queues and expediting the check-in process. Users
can select seats, print boarding passes, and manage their itineraries without the assistance of service
personnel.
Reasoning: Self-service check-in provides travelers with autonomy and flexibility. The convenience
of using kiosks allows passengers to personalize their travel experience, select preferred options, and
navigate the check-in process efficiently.

Online Shopping and Checkout:

Motivation for Self-Service: Many consumers prefer the self-service approach when shopping online.
The motivation includes the ability to browse a wide range of products, compare prices, and make
purchases from the comfort of their homes. Self-checkout options further streamline the process.
Reasoning: Self-service in online shopping offers convenience and control over the shopping
experience. Users can explore products at their own pace, make informed decisions based on reviews
and recommendations, and complete transactions without the need for assistance from store
personnel.