Chapters 14-20 (Part 1) Flashcards
(20 cards)
Define services in a marketing context
• Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed
o Can help spread the diffusion of innovation, can help or hurt the firm
List and define the four core differences between services and goods
• Intangible: cannot be touched, tasted, or seen like a pure product can
o Challenging to convey the benefits of a service to customers
o Examples: doctor, dentist, lawyers
• Inseparable: service are produced and consumed at the same time
o Examples: haircut, theme park experience, hotel stay
• Variable/Variability in the service’s quality: offering different services/experiences based on the customer
o Examples: men’s and women’s haircuts, hotel for business or leisure
• Perishable: the service cannot be stored for use in the future
List the four service gaps that we discussed in class
- Knowledge Gap: the difference between customers’ expectations and the firm’s perception of those customer expectations
- Standards Gap: pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets
- Delivery Gap: the difference between the firm’s service standards and the actual service it provides to customers
- Communication Gap: the difference between the actual service provided to customers and the service that the firm’s promotion program promises
List the five building blocks of service quality
- Reliability: The ability to perform the service dependably and accurately
- Responsiveness: the willingness to help customers and provide prompt service
- Assurance: the knowledge of and courtesy by employees and their ability to convey trust and confidence
- Empathy: The caring, individualized attention provided to customers
- Tangibles: the appearance of physical facilities, equipment, personnel, and communication materials
What is the zone of tolerance as it relates to customer expectations
• An important marketing metric to evaluate how well firms perform on the five service quality dimensions is the zone of tolerance, which refers to the areas between customers’ expectations regarding their desired service and the minimum level of acceptance service- that is, the difference between what the customer really wants and what he or she will accept before going elsewhere
Define empowerment and provide two ways that an organization can support employees?
• Empowerment: allowing employees to make decisions about how service gets provided to customers
• Supporting employees:
o Emotional support: standing behind employee decisions
o Instrumental support: the systems and equipment to deliver the service properly
Define supply chain management
• Supply chain management: a set of techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is
o produced and distributed in the right quantities,
o to the right locations,
o and at the right time,
o and to minimize costs while satisfying the service levels that customers require
Define and provide an example of the following supply chain terms: retailers, wholesalers, manufacturers.
Retailers: sell products to end customers
Wholesalers: buy products from manufacturers and resell them to retailers
Manufacturers: ship to a wholesaler or retail store (or a retailer’s distribution center
What is the benefit of a distribution center for a retailer?
Distribution center: a facility for the receipt, storage, and redistribution of goods to company stores or customers
What is the difference between pull and push supply chains
Pull supply chain: orders for merchandise are generated at the store level on the basis of sales data captured by POS terminals
Push supply chain: merchandise is allocated to stores on the basis of forecasted demand
Pull pros: o less likely to be overstocked or out of stock, o merchandise is ordered as needed, o more responsive to customer demands, o more efficient overall
Pull cons:
o requires expensive information system,
o retailers may not be allowed to adjust inventory based on demand
o More applicable to merchandise that has a steady, predictable demand
Define just-in-time inventory systems. What is a supply shock?
Just-in-time (JIT) inventory systems: also known as quick response systems, are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems
o Reduction in lead time (the amount of time between order placement and order fulfillment)
o Allows retailers to hold less inventory
Supply shocks: sudden increase (or decrease) in demand by customers – may not have enough to meet sudden demand
Define and provide an example of vertical and horizontal channel conflicts
• Vertical channel conflict: when supply chain members are not in agreement (e.g., retailer, manufacturer)
o Manufacturer wants retailer to carry entire product line (not just a few items) and none of the competition’s products
Horizontal channel conflict: a disagreement among members at the same level of a marketing channels (e.g., competing retailers, competing manufacturers) o If Home Depot and Lowe’s start a price war over Stanley Tools’ products, everyone suffers
What is the ‘bullwhip effect’?
“Bullwhip effect”: the final customer places an order (whip) and order fluctuations build up upstream the supply chain.
o Oscillation, amplification, phase lag
o Forecast-driven supply chains (push)
List and define the three distribution strategies we discussed in class.
Intensive distribution strategy: place products in as many outlets as possible
Exclusive distribution strategy: only selected retailers in select regions can sell a brand
Selective distribution strategy: place products in a few specific retailers – in between intensive and exclusive
List and provide two examples of the three types of retailers we discussed in class.
Food Retailer: supermarket, supercenter, convenience, warehouse club
General Merchandise: full-line discount, specialty, department, drug, off-price, extreme value
Service: auto rental, health spa, vision center, bank
Define price in a marketing context
the overall sacrifice a consumer is willing to make to acquire a specific product or service
List, define, and provide an example of the four types of company objectives we discussed in class.
Profit orientation: firms focus on target profit pricing, maximizing profits, or target return pricing
o Target profit pricing: firms use price to stimulate a certain level of sales at a certain profit per unit
o Maximizing profits: gather data, develop model to capture all factors required to explain and predict sales and profits
o Target return pricing: employ pricing strategies designed to produce a specific return on their investment, usually a percentage of sales
Sales orientation: set prices believing that increasing sales will help the firm more than will increasing profits, concerned with overall market share
o Health club sets lower membership fee in order to attract more business, increase market share, gain sales through other services (e.g., spa, personal training, food offering)
o Apple’s iTunes: lower prices discourage competition entering the market, yet gain market share advantage
o Premium pricing: firms deliberately price products above the prices set for competing products to attract customers who only want the best – gain market share through high-quality offerings (barrier to entry: store reputation)
Competitor orientation: develop strategy by measuring themselves against their competition
o Competitive parity: set prices that are similar to those of major competitor
o Status quo pricing: change prices only to meet those of the competition
Customer orientation: focus on customer satisfaction, setting prices to match consumer expectations, make the purchase process easier for the consumer
o Can result in lower prices and increased value
What is a prestige pricing
Prestige products/services: consumers purchase for their status rather than their functionality
o Higher price is preferred (to a point)
Define price elasticity of demand. What is the difference between products that are elastic and products that are inelastic? What is an example of a product for each category?
Price elasticity of demand: measures how changes in a price affect the quantity of the product demanded
Elastic: market is price sensitive, small changes in price will generate large changes in quantity demanded (lower price = increased demand, higher price = decreased demand)
Inelastic: market is not price sensitive, price changes do not change quantity demanded
List and define the 3 factors that influence price elasticity of demand that we discussed in class
Income effect: as income increases, spending behavior changes (and vice versa); the change in quantity of a product demanded by consumers due to a change in their income
o Choice in automobile
o Choice in vacations, hotels, locations
Substitution effect: refers to consumers’ ability to substitute other products for the focal brand
o The greater the availability of substitute products, the higher the price elasticity of demand (i.e., customers will leave you)
Cross-price elasticity: the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B
