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Indicate whether the statement is true or false.
1. The first step toward success in the global marketplace for a nonprofit service firm is to determine the nature of its core
products.
a. True
b. False
2. Generally, the intensity of distribution should exceed the target market’s needs and preferences.
a. True
b. False
3. Each part of a firm’s service mix should make a different contribution to achieving the firm’s goals.
a. True
b. False
4. Social level relationship marketing is more effective than financial level of relationship marketing.
a. True
b. False
5. Patronage-oriented pricing tries to maximize the number of customers using a service.
a. True
b. False
6. A credence quality is a characteristic that can be easily assessed before purchase.
a. True
b. False
7. Patronage-oriented pricing seeks to match supply and demand by varying prices.
a. True
b. False
8. Marketers have more trouble promoting tangible goods than intangible services.
a. True
b. False
9. The first step in pricing a service is to define the unit of service consumption.
a. True
b. False
10. Nonprofit organization marketing is the effort by nonprofit organizations to bring about mutually satisfying exchanges
with target markets.
a. True
b. False
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11. Patronage-oriented pricing focuses on maximizing the surplus of income over costs.
a. True
b. False
12. Internal marketing is more important for goods manufacturers than service firms.
a. True
b. False
13. An online money transfer company that allows consumers to send money directly to bank accounts in several
countries around the world is an example of a service firm.
a. True
b. False
14. Service quality is easier to define and measure than the quality of tangible goods.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
15. In the context of service processes, _____ takes place when the service is directed at a customer.
a. information processing
b. possession processing
c. mental stimulus processing
d. people processing
16. Which of the following is an example of a promotion strategy that uses postpurchase communication?
a. An airline hiring an actor to act in a series of commercials endorsing the airline’s services
b. An insurance company using an umbrella as its logo to convey that its customers are well-protected
c. A chartered accountant firm offering a 20 percent discount to all customers who avail its services in January
d. A hotel sending an email survey to its guests asking them to rate the quality of service they received
17. Walter runs a wealth management firm that provides investment advice to its clients. The firm studies market
scenarios and advises its clients on the most profitable investment portfolios for the term of the customers’ choice. Walter
is providing _____ through the wealth management firm.
a. a service
b. a tangible product
c. shares
d. stocks
18. Which of the following scenarios best illustrates the component of responsiveness associated with service quality?
a. Francis, a tailor, has been consistently accurate with his measurements while stitching clothes for his customers.
b. Edwin, a customer service executive, never fails to reply to customer queries promptly.
c. Derek, a salesman at an apparel store, gains the trust of his customers through his excellent communication skills.
d. Calvin, a factory worker, is considered the most dependable employee during crisis situations such as machinery
breakdowns.
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19. Laelle Airlines, an international airlines company, offers a variety of services to its customers. Given this information,
which of the following is the core service provided by Laelle Airlines?
a. Providing plush seats with comfortable legroom for its passengers
b. Offering three-course meals for the passengers who travel in the airlines
c. Providing personalized toiletries, including wet towels and sleep masks, for all passengers
d. Offering souvenirs to all the passengers after their travel
20. _____ refers to the inability of services to be stored, warehoused, or inventoried.
a. Variability
b. Reliability
c. Heterogeneity
d. Perishability
21. Cliftonze Air, an airline company, sends online feedback forms to all passengers by e-mail after they fly in the
company’s airlines. In this scenario, which of the following promotion strategies does Cliftonze Air best illustrate?
a. Stressing tangible cues
b. Using personal information sources
c. Creating a strong organizational image
d. Engaging in postpurchase communication
22. Fumeley Kingdom, an amusement park, loses its revenue by staying open on working days and during off-season.
Electricity, water, staff remuneration, etc. cannot be disbanded even if the park gets no customers for a few days. In this
scenario, which of the following characteristics of services is the reason for Fumeley Kingdom’s loss of revenue?
a. Heterogeneity
b. Perishability
c. Tangibility
d. Variability
23. Invollet, a salon, gives discounts to the members of its loyalty program. The customers who possess Invollet’s
membership card are charged discounted rates for all its services. In this scenario, Invollet is at the _____ of relationship
marketing.
a. financial level
b. social level
c. customization level
d. structural level
24. To close the gap between what a company provides and what the customer is told it provides, the company must:
a. ensure that employees have the skills and the proper tools to perform their jobs.
b. create realistic customer expectations through honest, accurate communication.
c. encourage teamwork and train employees so that they know what the management expects.
d. stay attuned to customer wishes by researching customer needs and satisfaction.
25. Rent and Drive is a car rental company. It prices its cars based on operations-oriented pricing. In this case, Rent and
Drive:
a. varies the prices according to supply and demand of cars.
b. maximizes the surplus of income over its costs.
c. allows customers to negotiate price.
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d. varies prices for customers from different market segments.
26. Nonprofit organizations differ from profit organizations in that nonprofit organizations:
a. target the niche market segments that may be most profitable.
b. compete with, rather than complement, the efforts of other organizations in the market.
c. must often target those who are apathetic about or strongly opposed to receiving their services.
d. give priority to developing those market segments that are most likely to respond to particular offerings.
27. Which of the following statements is true of mass customization?
a. It focuses on customizing rather than standardizing products.
b. It cannot cater to the needs of different customer groups.
c. It uses technology to customize the products of a firm.
d. It does not respond to individual customers’ needs.
28. Antennaz Cinemas, a movie theater, offers a wide variety of services to its customers. Which of the following is most
likely to be the core service provided by Antennaz Cinemas?
a. Providing comfortable seats for people to sit and watch movies
b. Offering discount coupons for customers who regularly book movie tickets online
c. Offering a wide range of cocktails to its customers
d. Providing clean washrooms and waiting areas for customers
29. Formast Bank offers credit cards to its high-valued customers with a credit limit and billing cycle of the customers’
choice. This offer is applicable only for the existing high net worth individual customers of the bank who are eligible for
priority banking services. In this scenario, Formast Bank is at the _____ of relationship marketing.
a. financial level
b. social level
c. customization level
d. structural level
30. Zachary runs Plumton, a plumbing company that provides personnel to individual properties. The service personnel
that Plumton sends charge on an hourly basis. The company gets 20 percent of the amount charged and the service
personnel gets 80 percent. The services that Plumton provides is an example of _____.
a. information processing
b. mental stimulus processing
c. possession processing
d. people processing
31. Wildside Inc., a company providing various wildlife tours, gives equal importance to customers and employees. The
managers at Wildside Inc. ensure that the employees of the company are satisfied with their jobs. They believe that
employees should be kept happy as they are brand ambassadors of the company. This scenario is an example of _____.
a. external marketing
b. shopper marketing
c. nonprofit marketing
d. internal marketing
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32. Stone Restaurant, a five-star restaurant, changes its centerpiece such as candles, vases every day. The waiters also
creatively fold the napkins and place them on the tables at the end of each course. In this scenario, which of the following
promotion strategies is adopted by Stone Restaurant?
a. Using personal information sources
b. Stressing tangible cues
c. Engaging in postpurchase communication
d. Using celebrity endorsement
33. In the context of evaluating service quality, _____ refers to the ability to provide prompt service.
a. responsiveness
b. empathy
c. tangibility
d. assurance
34. A difference between goods and services is that goods:
a. have more search qualities.
b. exhibit more credence qualities.
c. can be assessed only after use.
d. are intangible performances.
35. Tina is an expert in gardening. She provides services like setting up new gardens, maintaining gardens, and
landscaping. In the context of service processes, the services provided by Tina come under the category of _____.
a. information processing
b. mental stimulus processing
c. possession processing
d. people processing
36. Which of the following strategies will help service organizations overcome perishability of services?
a. Increasing the credence qualities of services
b. Providing training for employees
c. Improving standardization of services
d. Finding ways to synchronize supply and demand
37. Which of the following is a characteristic that distinguishes the pricing decisions of nonprofit organizations from those
of profit organizations?
a. Consumers are charged a monetary price but instead must absorb monetary costs.
b. Their services are priced higher than the costs incurred.
c. Their services are paid for by people who are better off financially.
d. Indirect payment is not a common practice in nonprofit organizations.
38. Which of the following statements is true of nonprofit organizations?
a. They can measure their success and failure in strictly financial terms.
b. They seek to make a profit for redistribution to owners or shareholders.
c. They have a financial bottom line that simplifies decision-making processes for nonprofit managers.
d. They focus on generating enough funds to cover the organization’s expenses.
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39. A limitation of revenue-oriented pricing is that:
a. it does not focus on maximizing the surplus of income over costs.
b. it cannot be used by manufacturing companies.
c. determining costs can be difficult for many services.
d. the profit goals of the company is not taken into account.
40. In the context of evaluating service quality, _____ refers to the knowledge and courtesy of employees and their ability
to convey trust.
a. heterogeneity
b. responsiveness
c. assurance
d. tangibility
41. Randamt Fashion, an apparel store, owes its loyal customer base to its staff members who never fail to give
individualized attention to its customers. The staff is trained to understand the specific requirements of customers. Which
of the following components of service is best illustrated by the staff at Randamt Fashion?
a. Tangibility
b. Responsiveness
c. Perishability
d. Empathy
42. Dwightis Spa offers special packages to its customers who avail spa services during the off-season. Every customer
who chooses the premium spa package during this period gets to choose his or her spa room, color and intensity of
lighting in the room, the background music, and get towels with his or her name stitched. In this scenario, Dwightis Spa is
at the _____ of relationship marketing.
a. financial level
b. first level
c. customization level
d. second level
43. Which of the following is the most important factor influencing the distribution strategy of a time-dependent service
provider?
a. Scheduling
b. Tangible cues
c. Price bundling
d. Customization
44. Elsie has been purchasing her clothes from a particular store of her favorite brand for many years. As she is one of the
most loyal customers, the store manager personally offers to help her every time she visits the store. On her last visit, she
realized that the staff members have changed and she was not getting any personal attention. In this scenario, which of the
following characteristics of services is responsible for the lack of consistency and at Elsie’s favorite store?
a. Heterogeneity
b. Perishability
c. Intangibility
d. Inseparability
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45. During the end-of-season sale at Wallanze, an apparel store, the members of its customer loyalty program as well as
its employees get an additional discount of 5 percent over and above the sale discounts. All the employees of Wallanze are
given the same benefits that the members are entitled to because the company believes that the employees should be kept
happy as they are the brand ambassadors of the company. This scenario illustrates _____.
a. price fixing
b. guerilla marketing
c. diversification
d. internal marketing
46. A difference between people-processing services and possession-processing services is that people-processing
services:
a. use technology directed at a customer’s assets.
b. focus more on creating an attractive, comfortable physical environment.
c. require customers to enter the service factory.
d. focus more on training employees in employee–customer interaction.
47. Which of the following statements is true of a firm’s distribution strategy?
a. The intensity of distribution should exceed the target market’s needs and preferences.
b. Having too many outlets to distribute products may boost costs unnecessarily.
c. The location of a service does not influence the distribution strategy of a time-dependent service provider.
d. Since services are intangible, many service firms choose indirect distribution strategy.
48. A _____ is an announcement that promotes a program of a federal, state, or local government or of a nonprofit
organization.
a. public service advertisement
b. commercial advertisement
c. retail advertisement
d. surrogate advertisement
49. Unlike goods, services:
a. are produced in a centralized location and consumed in decentralized locations.
b. are tangible performances.
c. are stored, warehoused, and inventoried.
d. are more heterogeneous and less standardized and uniform.
50. Which of the following is a difference between profit organizations and nonprofit organizations?
a. Profit organizations focus on profit and sales maximization, while nonprofit organizations seek to redistribute
income.
b. Profit organizations use public service advertisements for promotion, while nonprofit organizations use
commercial advertisements for promotion.
c. Profit organizations market complex behaviors or ideas, while nonprofit organizations market tangible goods.
d. Profit organizations adopt undifferentiated segmentation strategies, while nonprofit organizations adopt
differentiated segmentation strategies.
51. Felix, a taxi driver, makes sure that his car always looks appealing. He gets the car serviced on time, changes the car
perfume before it gets over, leaves a magazine or two on the back seat for customers, and keeps the upholstery clean. In
this scenario, which of the following promotion strategies is adopted by Felix?
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a. Boundary spanning
b. Stressing tangible cues
c. End-cap marketing
d. Engaging in postpurchase communication
52. At the _____ of relationship marketing, the firm uses pricing incentives to encourage customers to continue doing
business with it.
a. financial level
b. customization level
c. structural level
d. social level
53. _____ is defined as the variability of inputs and outputs of services, which makes services less standardized and
uniform than goods.
a. Heterogeneity
b. Inseparability
c. Perishability
d. Intangibility
54. The North Star Hotel, a luxury hotel, encourages its employees to develop strong, personal relationships with guests. It
offers customized toiletries to its customers based on their preferences. It also has an entire floor dedicated to suites that
have air purification systems. These value-added services make The North Star Hotel unique as these services are not
available at other hotels. In this scenario, The North Star Hotel is at the _____ of relationship marketing.
a. financial level
b. social level
c. customization level
d. structural level
55. Chelsea runs a consultancy firm that provides stock market consulting for its clients. The firm advises its clients on
where to invest and how to earn maximum profits. Given this information, Chelsea provides _____ through the
consultancy firm.
a. service
b. value
c. brand
d. stock
56. At the _____ of relationship marketing, a firm uses financial and social bonds but offers value-added services that are
not readily available from other firms.
a. financial level
b. customization level
c. structural level
d. social level
57. According to the gap model of service quality, the gap between what customers want and what management thinks
customers want results from:
a. a lack of understanding or a misrepresentation of the customers’ needs, wants, or desires.
b. management’s inability to translate customers’ needs into delivery systems within the firm.
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c. the inability of management and employees to do what should be done.
d. misleading or deceptive advertising campaigns that promise more than what the firm can deliver.
58. Hannah likes to frequent Citrus, a fine dining restaurant, as she loves its beef lasagna and orders it every time she
visits the restaurant. However, during her recent visit, the lasagna she was served was undercooked and starkly different in
flavor compared with the ones she had previously eaten at the restaurant. When she informed the manager about it, she
learned that the food was cooked by a replacement chef as the usual chef was on leave. In this scenario, which of the
following characteristics of services is responsible for the lack of consistency and quality of the food at Citrus?
a. Heterogeneity
b. Perishability
c. Intangibility
d. Inseparability
59. According to the gap model of service quality, the gap between what management thinks customers want and the
quality specifications that management develops to provide the service results from:
a. the inability of management and employees to do what should be done.
b. a lack of understanding or a misrepresentation of the customers’ needs, wants, or desires.
c. misleading or deceptive advertising campaigns that promise more than what the firm can deliver.
d. the inability of management to translate customers’ needs into delivery systems within the firm.
60. A(n) _____ is a characteristic that consumers may have difficulty assessing even after purchase because they do not
have the necessary knowledge or experience.
a. search quality
b. experience quality
c. heterogeneous quality
d. credence quality
61. Vanessa went to a home appliances store to buy a microwave oven. As she shortlisted a particular model, she checked
the color of its display panel and door. In this scenario, Vanessa assessed the product’s _____.
a. intangible benefits
b. credence quality
c. search quality
d. experience quality
62. When Natalie visited Elsand, a beauty salon, she insisted that she wanted a senior hairstylist to give her a haircut and
color her hair. Which of the following characteristics of service is best illustrated in this scenario?
a. Search quality
b. Inseparability
c. Tangibility
d. Homogeneity
63. The number of customers who dine at Eat and Den, a restaurant, varies during weekdays and weekends. On days when
customer traffic is less, Eat and Den incurs losses because the food prepared on one day will not be fresh the next day. In
this scenario, which of the following characteristics of services is the reason for Eat and Den’s loss of revenue?
a. Heterogeneity
b. Perishability
c. Intangibility
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d. Variability
64. Which of the following statements is true of bundled pricing?
a. It is simpler for a firm to administer than individually pricing each element.
b. It is preferable when consumers are willing to pay extra for every part of the service.
c. It is a pricing strategy where customers pay only for the service elements they use.
d. It is a pricing strategy that does not apply for services.
65. Explain the factors that should be focused on when deciding on distribution strategies for service organizations.
66. Describe the issues relating to target markets that are unique to nonprofit service organizations.
67. Briefly explain what service firms must do to be successful in the global marketplace.
68. What are the three product-related distinctions between profit and nonprofit organizations?
69. What are the challenges faced by service providers while deciding on a pricing strategy?
70. Describe the four promotion strategies that marketers use to promote services.
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Answer Key
1. True
2. False
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