SHORT-ANSWER ESSAYS - Cengage EMEA



SHORT-ANSWER ESSAYS

Chapter 2: Fundamental Differences Between Goods and Services

1. Define the characteristics of intangibility, inseparability, heterogeneity, and perishability.

ANS:

• Intangibility means that services have no substance and therefore cannot be touched or evaluated like goods.

• Inseparability refers to the interaction and physical presence of the service provider and the consumer throughout the service experience.

• The heterogeneity of services pertains to the variability that is inherent in the service delivery process.

• Perishability refers to the service provider’s inability to store or inventory services.

2. Discuss the marketing problems associated with intangibility and the possible solutions to solve these problems.

ANS:

The marketing problems that arise include:

• it is difficult to easily display or communicate the properties of services to consumers

• prices are difficult to set

• services are not patentable, thus they are easily copied by competitors

• services cannot be stored for future use

Solutions suggested to minimize the problems associated with intangibility include:

• utilizing tangible clues to influence customer perceptions of service delivery

• developing promotional plans that emphasize personal sources of information

• developing the organization's image to reduce customer levels of perceived risk

3. Discuss the marketing problems associated with inseparability and the possible solutions to solve these problems.

ANS:

The marketing problems associated with inseparability are:

• the service provider's face-to-face interactions with the customer

• the customer's involvement in the service delivery process

• the impact of "other customers" that are sharing the service experience

• centralized mass production of services is difficult

Suggested solutions to minimize the impact of inseparability include:

• the careful selection and thorough training of public contact personnel

• manage customers to enhance their service experience

• the use of multi-site locations to overcome the difficulties associated with

• centralized mass production

4. Discuss the marketing problems associated with heterogeneity and the possible solutions to solve these problems.

ANS:

The primary marketing problem associated with heterogeneity is that:

• Standardization and quality control are difficult for the service firm to provide on a regular basis.

• Standardization may be achieved via automation--replacing human labor with machines.

• In contrast, many service firms are taking advantage of the variability that is inherent in service delivery by offering customized services.

• The tradeoffs associated with customer preferences with standardization and customization includes price, speed of delivery, and consistency of performance.

5. Discuss the marketing problems associated with perishability and the possible solutions to solve these problems.

ANS:

Due to the characteristic of perishability:

• it is not possible to inventory services

Strategies utilized to minimize the impact of perishability include:

• strategies to increase supply and/or alter demand

Strategies which increase the supply of service include:

• utilizing part-time employees

• sharing capacity with other service providers

• making preparations in advance with regards to future expansion

• utilizing third-parties

• increasing the amount of customer participation during the service process

Strategies to alter demand include:

• developing creative pricing strategies

• utilizing reservation systems

• developing complementary services

• developing nonpeak demand

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