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Chapter 12: Services and Nonprofit Organization Marketing
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Page 1
1. Unlike a commercial advertiser, the sponsor of a public service advertisement pays for the time and space.
a.
True
b.
False
ANSWER:
False
2. A credence quality is a characteristic that can be easily assessed before purchase.
a.
True
b.
False
ANSWER:
False
3. Each part of a firm's service mix should make a different contribution to achieving its goals.
a.
True
b.
False
ANSWER:
True
4. Tele Tales, a radio and television broadcasting company, allots two hours of its combined air time to promoting
cautionary messages about tobacco and alcohol abuse. Tele Tales does not receive any sponsorship for running these
advertisements. In this context, Tele Tales is most likely engaging in a sales promotion activity.
a.
True
b.
False
ANSWER:
False
5. Patronage-oriented pricing tries to maximize the number of services used by a consumer.
a.
True
b.
False
ANSWER:
False
6. Nonprofit organizations have the freedom to choose their target audience that helps them control their economies of
scale and lower per-capita costs.
a.
True
b.
False
ANSWER:
False
7. Service quality is easier to define and measure than the quality of tangible goods.
a.
True
b.
False
ANSWER:
False
8. 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
ANSWER:
True
9. For services that are composed of multiple elements, the issue is whether pricing should be based on a "bundle" of
elements or whether each element should be priced separately.
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a.
True
b.
False
ANSWER:
True
10. Patronage-oriented pricing seeks to match supply and demand by varying prices.
a.
True
b.
False
ANSWER:
False
11. Marketers have more trouble promoting tangible goods than intangible services.
a.
True
b.
False
ANSWER:
False
12. Nonprofit organization marketing is the effort by nonprofit organizations to compete with private-sector organizations
by providing better customer services and gaining customer loyalty.
a.
True
b.
False
ANSWER:
False
13. Level 2 (social) relationship marketing is often more effective than level 1 (financial) relationship marketing.
a.
True
b.
False
ANSWER:
True
14. Tug Bark, a fast food chain from the United States, wants to open a branch in China. It plans to change its menu to
appeal to the Chinese palate. In this scenario, Tug Bark is engaged in implementing the gap model of service quality.
a.
True
b.
False
ANSWER:
False
15. Many nonprofit organizations are explicitly or implicitly prohibited from advertising, thus limiting their promotion
options.
a.
True
b.
False
ANSWER:
True
16. Patronage-oriented pricing focuses on maximizing the surplus of income over costs.
a.
True
b.
False
ANSWER:
False
17. Employees who like their jobs and are satisfied with the firm they work for are more likely to deliver superior service
to customers.
a.
True
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Chapter 12: Services and Nonprofit Organization Marketing
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b.
False
ANSWER:
True
18. Generally, the intensity of distribution should exceed the target market's needs and preferences.
a.
True
b.
False
ANSWER:
False
19. Internal marketing is more important for goods manufacturers than service firms.
a.
True
b.
False
ANSWER:
False
20. For a nonprofit service firm, the first step toward success in the global marketplace is determining the nature of its
core products.
a.
True
b.
False
ANSWER:
True
21. Wildside Inc., a company that organizes 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 the
employees should be kept happy as they are the brand ambassadors of the company. This scenario is an example of
_____.
a.
external marketing
b.
shopper marketing
c.
nonprofit marketing
d.
internal marketing
ANSWER:
d
22. Stone Restaurant, a five-star restaurant, changes its centerpiece such as candles and 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.
Creating a strong organizational image
ANSWER:
b
23. 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.
c.
the inability of management and employees to do what should be done.
d.
misleading or deceptive advertising campaigns promising more than the firm can deliver.
ANSWER:
a
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24. 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 a company are not taken into account.
ANSWER:
c
25. At the _____ of relationship marketing, a 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
ANSWER:
a
26. Tina is an expert gardener. 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
ANSWER:
c
27. Which of the following statements is true of internal marketing?
a.
Internal marketing is applicable only to the employees of goods manufacturers and not of service firms.
b.
The quality of a firm's employees is an important part of building long-term relationships with customers.
c.
Customers are treated as potential employees as they become the delivery vehicle of the purchased products.
d.
Different manufacturers exchange goods internally in an attempt to curb negative competitive spirit.
ANSWER:
b
28. A(n) _____ is a characteristic that can be assessed only after use.
a.
search quality
b.
credence quality
c.
experience quality
d.
intangible quality
ANSWER:
c
29. In the context of promotion strategies, which of the following is an example of engaging in postpurchase
communication?
a.
An airline hiring an actor to act in a series of commercials endorsing its 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 customers who avail its services in January
d.
A hotel sending an e-mail survey to its guests asking them to rate the quality of service that they received
ANSWER:
d
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30. Which of the following is the most important factor that influences the distribution strategy of a time-dependent
service provider?
a.
Scheduling
b.
Tangible cues
c.
Price bundling
d.
Customization
ANSWER:
a
31. Hannah likes to frequent Citrus, a fine dining restaurant, as she loves the beef lasagna there and orders it every time
she visits the restaurant. However, during her recent visit, the lasagna she was served was undercooked. 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
ANSWER:
a
32. In the context of service quality, which of the following statements is true of reliability?
a.
It involves being caring and paying individualized attention to customers.
b.
It involves providing prompt service to customers.
c.
It is performing the service right the first time.
d.
It refers to the knowledge and courtesy of employees.
ANSWER:
c
33. 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
ANSWER:
d
34. Which of the following strategies will help service organizations overcome perishability of services?
a.
Increasing the credence qualities of services
b.
Providing training to employees
c.
Improving the standard of services
d.
Finding ways to synchronize supply and demand
ANSWER:
d
35. Laelle Airlines, an international airlines company, has a service offering that includes a core service supported by
supplementary services. Given this information, which of the following is most likely to be the core service provided by
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Chapter 12: Services and Nonprofit Organization Marketing
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Laelle Airlines?
a.
Providing plush seats with comfortable legroom for its passengers
b.
Offering three-course meals for its passengers
c.
Providing personalized toiletries including wet towels and sleep masks for all passengers
d.
Offering souvenirs to all passengers after their travel
ANSWER:
a
36. The number of customers who dine at Eat and Den, a restaurant, varies on 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
d.
Variability
ANSWER:
b
37. Nonprofit organizations differ from profit organizations in that nonprofit organizations:
a.
target the niches that may be most profitable.
b.
compete with, rather than complement, the efforts of others.
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.
ANSWER:
c
38. 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
ANSWER:
d
39. 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 strategies.
ANSWER:
b
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
ANSWER:
c
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41. 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.
ANSWER:
d
42. Chelsea runs a stock market consultancy firm. 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.
branding
d.
profits
ANSWER:
a
43. _____ is defined as the inability of the production and consumption of a service to be detached.
a.
Intangibility
b.
Heterogeneity
c.
Inseparability
d.
Perishability
ANSWER:
c
44. _____ refers to the inability of services to be stored, warehoused, or inventoried.
a.
Variability
b.
Reliability
c.
Heterogeneity
d.
Perishability
ANSWER:
d
45. 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
ANSWER:
c
46. 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
ANSWER:
a
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47. _____ is a strategy that uses technology to deliver tailor-made services on a large scale.
a.
Place strategy
b.
Promotion strategy
c.
The service mix
d.
Mass customization
ANSWER:
d
48. Rent and Drive is a car rental company. It prices its rentals based on operations-oriented pricing. In this scenario, Rent
and Drive:
a.
varies the prices according to the supply and demand of cars.
b.
maximizes the surplus of income over its costs.
c.
allows customers to negotiate price.
d.
varies prices for customers from different market segments.
ANSWER:
a
49. Which of the following statements is true of the marketing strategies of nonprofit organizations?
a.
They can measure their success or failure in strictly financial terms.
b.
They seek to make a profit for redistribution to owners or shareholders.
c.
The presence of a financial "bottom line" makes it easy for nonprofit managers to make decisions.
d.
Their focus is often on generating enough funds to cover expenses.
ANSWER:
d
50. According to the gap model of service quality, the gap between the service that customers receive and the service they
want:
a.
can be positive or negative depending on the quality of service that was provided.
b.
can be closed by including misleading advertising campaigns promising more than the firm can deliver.
c.
is the result of management's ability to translate customers' needs into delivery systems within the firm.
d.
is the result of a lack of understanding or a misinterpretation of the customers' needs, wants, or desires.
ANSWER:
a
51. Which of the following is a difference between profit organizations and nonprofit organizations?
a.
Profit organizations focus on profit and sales maximization, whereas nonprofit organizations seek to
redistribute income.
b.
Profit organizations use public service advertisements for promotion, whereas nonprofit organizations use
commercial advertisements for promotion.
c.
Profit organizations market complex behaviors or ideas, whereas nonprofit organizations market tangible
goods.
d.
Profit organizations adopt undifferentiated segmentation strategies, whereas nonprofit organizations adopt
differentiated segmentation strategies.
ANSWER:
a
52. 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.
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Chapter 12: Services and Nonprofit Organization Marketing
c.
misleading or deceptive advertising campaigns promising more than the firm can deliver.
d.
the inability of management to translate customers' needs into delivery systems within the firm.
ANSWER:
d
53. Which of the following statements is true of a bundled price?
a.
It is simpler for a firm to administer than pricing each element separately.
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.
ANSWER:
a
54. A difference between people-processing services and possession-processing services is that possession-processing
services:
a.
use technology directed at a customer's assets.
b.
focus more on customers and not on their physical possessions.
c.
do not require customers to enter the service factory.
d.
focus more on training employees on employee–customer interactions.
ANSWER:
c
55. Which of the following statements is true of the global issues in services marketing?
a.
Competition in international services is decreasing rapidly.
b.
The international marketing of services is a major part of global business.
c.
The marketing mix elements should not take into account each country's cultural environment.
d.
The first step towards success in the global marketplace is designing the marketing mix elements.
ANSWER:
b
56. Describe the four promotion strategies that marketers use to promote services.
ANSWER:
Answers will vary. Consumers and business users have more trouble evaluating services than goods because
services are less tangible. In turn, marketers have more trouble promoting intangible services than tangible
goods. Here are four promotion strategies they can try:
• Stressing tangible cues:A tangible cue is a concrete symbol of the service offering. To make their
intangible services more tangible, hotels turn down the bedcovers and put mints on the pillows.
• Using personal information sources:A personal information source is someone consumers are
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Chapter 12: Services and Nonprofit Organization Marketing
Examples include legal, medical, accounting, and personal-care services. The most-used form of direct
distribution is the Internet. Most major airlines are now using online services to sell tickets directly to
consumers, resulting in lower distribution costs for the airlines. Other firms with standardized service
packages have developed indirect channels using independent intermediaries. For example, Banfield Pet
Hospital formed a strategic partnership with PetSmart to offer veterinary services at PetSmart
locations.Thelocationof a service most clearly reveals the relationship between its target market strategy and
distribution strategy. For time-dependent service providers such as airlines, physicians, and
dentists,schedulingis often a more important factor.
60. Briefly explain what service firms must do to be successful in the global marketplace.
ANSWER:
Answers will vary. The international marketing of services is a major part of global business, and the United
States has become the world's largest exporter of services. Competition in international services is increasing
rapidly, but many U.S. service industries have been able to enter the global marketplace because of their
competitive advantages. U.S. banks, for example, have advantages in customer service and collections
management.For both for-profit and nonprofit service firms, the first step toward success in the global
marketplace is determining the nature of the company's core products. Then, the marketing mix elements
(additional services, place, promotion, pricing, and distribution) should be designed to take into account each
country's cultural, technological, and political environment.
61. What are the three product-related distinctions between business and nonprofit organizations?
ANSWER:
Answers will vary. There are three product-related distinctions between business and nonprofit
organizations:
• Benefit complexity:Nonprofit organizations often market complex behaviors or ideas. Examples
include the need to exercise or eat right and the need to quit smoking. The benefits that a person
receives are complex, long term, and intangible, and therefore are more difficult to communicate to
consumers.
• Benefit strength:The benefit strength of many nonprofit offerings is quite weak or indirect. What are
the direct, personal benefits to you of driving fifty-five miles per hour or donating blood? In contrast,
most private-sector service organizations can offer customers direct, personal benefits in an
exchange relationship.
• Involvement:Many nonprofit organizations market products that elicit very low involvement
("Prevent forest fires") or very high involvement ("Stop smoking"). The typical range for private-
sector goods is much narrower. Traditional promotional tools may be inadequate to motivate
adoption of either low- or high-involvement products.
