Quiz Test 1 Study Guide
Quiz Test 1 Study Guide CONSCI 3910 - 0010
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CONSCI 3910 - 0010
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This 6 page Study Guide was uploaded by Ian Adams on Tuesday February 2, 2016. The Study Guide belongs to CONSCI 3910 - 0010 at Ohio State University taught by Jay Kandampully in Fall 2015. Since its upload, it has received 239 views. For similar materials see Consumer Service and Satisfaction in Behavioral Sciences at Ohio State University.
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Date Created: 02/02/16
CONSCI 3910 Jay Kandampully Quiz Test 1 Review Week 1: The Service Imperative INTRODUCTION This week we discussed how services dominate the world’s developed and established economies KEY POINTS The development of the service sector is key in developing strong economies Ernst Engel’s work on family income demonstrates that as an economy develops, services become increasingly significant An increase in demand for services causes change in all areas of life As countries become more developed, higher numbers of service providers emerge MAIN IDEAS Service Economy – the part of the economy that produces intangible goods o Customers pay to be provided with some sort of benefit o The percentage of the service sector as a part of a country’s GDP in larger, more developed countries is higher than in less developed countries o Technological advances are the leading cause of change within the service sector (e.g. in the manufacturing and agriculture industries) o Services add value to products Ernst Engel – German economist and statistician o Showed that an increase in family income has the following effects on spending: 1. The percentage of income spent on food decreases 2. The percentage of income spent on housing and household operations remains about the same 3. The percentage of income spent on other purchases, especially those in the service industry such as education, healthcare, entertainment, etc., increases rapidly As demand for services increases… o Social habits change (i.e. easier to get together with friends and family) o Working habits change (i.e. people can work from home) o Interacting habits change (i.e. less face to face contact, less use of “snail mail” and more email, texts, phone calls, etc.) o Communication habits change and communication becomes knowledgebased (i.e. more capability to communicate with people in other professions/with other skillsets) o Organizations become larger networks (i.e. functions are not carried out with a single person, rather they are carried out with the help of a wide variety of people with various skillsets from around the world) As countries become more developed… o Higher economic growth = Higher consumption of services o Higher customer demand for services = Higher competition among service providers o Higher number of service providers = Higher levels of similarity among service providers o Services are able to be copied by entrepreneurs o It is common for new competitors to copy successful service businesses and make them better Week 2: Intangibility and Inseparability of Services INTRODUCTION This week we discussed 2 of the 4 unique characteristics of services: intangibility and inseparability KEY POINTS Services are performed, and they are not seen, counted, tested, or returned Marketers for services focus on “tangibilizing” the intangible Services require simultaneous production and consumption MAIN IDEAS 1. Intangibility of Services a. Services are performed, not objects b. Services cannot be seen, felt, tested or touched c. Services cannot be counted, measured or inventoried d. Services cannot be tested or verified prior to sales e. Services cannot be returned or exchanged “Tangibilizing” the Intangible o This is the marketing strategy used to advertise services o Tangible objects are highlighted in ads for services o Example: A business class ad for an airline showcases a smiling customer surrounded by a glass of wine, a pillow, blanket and plate of food o Example: A spa ad shows a relaxed person in a fluffy robe with their eyes closed in a bed by the beach 2. Inseparability of Services a. Operations, Marketing and Human Resources are impossible to separate in a service business; they must work in harmony to perform a great service Service personnel need marketing and operational skills to be successful b. Production and consumption of a service cannot be separated since without customers, a service cannot be provided Customers expect immediate service Think about the simultaneous production and consumption during a football game, concert, airplane flight, etc. c. Services are first sold, and then services are produced and consumed simultaneously. This is opposite of goods as they are first produced, then sold, and then consumed Difficult to control quality of service outcome since two parties are involved (service personnel and customer) and external factors can come into play Services happen on the “front line,” unlike manufacturing of goods which occurs “back office” d. Customers are varied in how they respond to the same service Customer participates in the production of a service and hence affects the quality of production and consumption Think about a person who goes to a night club and does nothing except for stand around versus a person who goes and buys drinks and dances. The club provides the same service to them both, but they achieve different levels of satisfaction because of their different participation e. Services are multiple consumption events Think about a hotel. You experience many services throughout your stay, such as wifi, fresh towel exchanges, and food delivery Week 3: Heterogeneity and Perishability of Services INTRODUCTION This week we discussed the other 2 of the 4 unique characteristics of services: heterogeneity and perishability KEY POINTS Due to the person to person contact necessary for services, services have a high potential for variability To overcome heterogeneity, it is critical to keep employees engaged, to let them practice their work through experience, and to give them feedback Services do not last forever; they have a specific start and finish time MAIN IDEAS 1. Heterogeneity of Services Quality of service varies from one service organization to another Quality of service varies from one service performer to another Quality of service varies from the same performer from one occasion to another Most services are primarily delivered peopletopeople oServices are laborintensive oPotential for high variability in performance due to varied interactions between people oMany different employees may be in contact with an individual customer, causing an issue with inconsistency of behavior oAn employee’s performance can vary day in and day out oWhat company promised to deliver could be very different from what customer receives Strategies to tackle heterogeneity oMake sure employees are engaged in a job oAllow employees to have practice experiences using their job skills oGive feedback on employees’ performances 2. Perishability of Services Cannot inventory or store services oExample: When you visit a restaurant for a meal, that service is finished when you leave the building; the service does not continue Immediate access is required to the producer and consumer oServices are provided ondemand oTime of the service must match the time of supply and demand Quality of a service cannot be checked after production like in manufacturing Customers do not “own” a service product; Customers buy the “right” to a service When a customer does not consume an available service, the revenue cannot be recaptured oManagement must match service availability with demand oExample: During the middle of the day, a restaurant may have low traffic and few tables filled. In order to still make money, the restaurant may offer special promotions during these slow hours Week 4: Components of a Service Firm’s Offer INTRODUCTION These notes are from Tuesday of Week 4, the class before the “Quiz Test.” They cover the parts of a service firm’s offer as well as the service molecule. KEY POINTS Services are combinations of tangible products and intangible experiences The three parts of a service firm’s offer are activities, benefits, and interactions Service bundles are critical for customer personalization The service molecule consists of the core and peripheral offerings MAIN IDEAS ProductService Continuum of a Firm’s Offer A firm’s service falls on a continuum between product components (tangible) and service/experience components (intangible) Example: An overnight stay in a hotel requires services such as room cleaning. It also requires products, such as the physical beverages in the mini bar More opportunity in improving offering in service/experience component Three Parts of a Service Firm’s Offer Activities: Part of service they create. This is what firms sell more than anything else o Example: A ski resort offers skiing as the activity Benefits: What makes customers feel better o Example: A massage service provider makes their customers feel peaceful and relaxed Interactions: The connections people make with others at the service o Example: The laughter, joking, and dancing with others at a night club plays a huge part in the experienced service Service Bundles/Packages Packages allow firms to differentiate from one customer to another (to personalize services) Example: A country club will have a budget plan, moderate plan and deluxe plan to suit the needs and lifestyles of different members Service Molecule From a customer’s perspective, services are bundles of tangible and intangible aspects of a promised expectation for anything we buy Core Offering: The main reason someone buys a service; meets primary customer needs o Example: The core offering when buying a phone would be that it makes calls Peripheral Offering: The little things that add value to the core; can often be outsourced to other companies that specialize in the peripheral service o Example: A hotel pays a third party to run a restaurant in the hotel. Companies compete on the peripherals (online booking, valet service, etc.) Peripherals can turn into cores o Example: Apps on phones used to be peripherals, but now they are expected and commonplace Core offerings and peripheral offerings can be either tangible or intangible
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