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Indicate whether the statement is true or false.
1. Many businesses have found that it is more cost effective to focus only on attracting new customers than working hard
to keep the ones they already have.
a. True
b. False
2. Patronage-oriented pricing seeks to match supply and demand by varying prices.
a. True
b. False
3. It is usually ineffective to use marketing tools to transform services involving discrete transactions into membership
relationships.
a. True
b. False
4. Because services are intangible, many service firms have to use direct distribution or franchising.
a. True
b. False
5. University tuition is an example of below-cost pricing.
a. True
b. False
6. Internal marketing is more important for goods manufacturers than service firms.
a. True
b. False
7. Marketers have more trouble promoting tangible goods than intangible services.
a. True
b. False
8. Social relationship marketing is often more effective than financial relationship marketing.
a. True
b. False
9. The qualities of search, experience, and credence make it easier for marketers to communicate the benefits of an
intangible service than to communicate the benefits of tangible goods.
a. True
b. False
10. 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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11. Simultaneous production and consumption means that services normally cannot be produced in a centralized location
and consumed in decentralized locations.
a. True
b. False
12. Although the strategy of internal marketing applies to goods manufacturers as well as service firms, it is even more
critical in service firms.
a. True
b. False
13. Each part of a firm’s service marketing mix should make a different contribution to achieving its goals.
a. True
b. False
14. Patronage-oriented pricing focuses on maximizing the surplus of income over costs.
a. True
b. False
15. 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 implementing the gap model of service quality.
a. True
b. False
16. Nonprofit organizations have the freedom to choose their target audience, which helps them lower their per-capita
costs and take advantage of economies of scale.
a. True
b. False
17. Membership services naturally lend themselves to relationship marketing.
a. True
b. False
18. Alicia wants to buy a piece of furniture and would like to transport it using her personal vehicle. Therefore, she prefers
having delivery charges bundled with the price of the furniture.
a. True
b. False
19. Patronage-oriented pricing tries to maximize the number of services used by a consumer.
a. True
b. False
20. 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
21. 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
22. 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
23. Many nonprofit organizations are explicitly or implicitly prohibited from advertising, thus limiting their promotion
options.
a. True
b. False
24. A credence quality is a characteristic that can be easily assessed before purchase.
a. True
b. False
25. 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
26. 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
27. In the service industry, one drawback to using revenue-oriented pricing is that determining costs is difficult for many
services.
a. True
b. False
28. Generally, the intensity of distribution in a service-organization’s marketing mix should exceed the target market’s
needs and preferences.
a. True
b. False
29. Service quality is easier to define and measure than the quality of tangible goods.
a. True
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b. False
30. Unlike a commercial advertiser, the sponsor of a public service advertisement pays for the advertising time and space.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
31. When evaluating service quality, which statement 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.
32. Which of the following is a consequence of the heterogeneity of services?
a. No matter where, the customer knows exactly what is offered and what to expect.
b. Services are perceived as less standardized and uniform than goods.
c. Consistency and quality control of services can be easily achieved.
d. Standardization and training prove to be invariably futile or unreliable.
33. Starbucks uses different kinds of coffee, dairy and non-dairy alternatives, flavor shots, and temperature levels to create
a diverse array of options for customers. It uses a machine called a Clover, which allows baristas to customize brew times
down to the second, specify how much exposure the water has to the coffee grounds, and dial in a precise temperature.
Starbucks is well-geared toward ______.
a. customization
b. standardization
c. mass customization
d. mass standardization
34. Insurance claims are an example of ______.
a. below-cost pricing in the profit sector
b. below-cost pricing in the nonprofit sector
c. separation between payers and users in the profit sector
d. separation between payers and users in the nonprofit sector
35. 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 a negative competitive spirit.
36. Which of the following strategies will help service organizations overcome the perishability of services?
a. Increase the credence qualities of services.
b. Provide training to employees.
c. Improve the standard of services.
d. Find ways to synchronize supply and demand.
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37. 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 providing advertising campaigns that promise more than the firm can deliver.
c. results from 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.
38. Which strategy uses technology to deliver tailor-made services on a large scale?
a. Place strategy
b. Promotion strategy
c. The service mix
d. Mass customization
39. 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 _____
marketing.
a. external
b. niche
c. unsegmented
d. internal
40. A training institute offers a range of services to its students. Which of the following is most likely to be its core
service?
a. Beverages and a free lunch
b. Books and course material
c. Microphones and lecterns for lectures
d. An air-conditioned lecture hall
41. Tina is an expert gardener. She provides services like designing and planting 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
42. When considering the range of involvement that the target audience/customers have with a product, how do private-
sector service organizations (business) and nonprofit organizations generally compare?
a. The range is much narrower for nonprofit organizations.
b. The range is much narrower for business service organizations.
c. The range is more or less equal in the two cases.
d. The range is highly unpredictable in both cases.
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43. An upmarket dressmaking company deliberately keeps its number of outlets very low even after years of climbing
profits. There are no more than two in any major city of the United States. The policy may be justified in terms of the
company’s objective to ______.
a. cut costs
b. meet market’s needs
c. be exclusive
d. play it safe
44. By synchronizing supply and demand, a service provider can reduce the problem of ______.
a. intangibility
b. heterogeneity
c. inseparability
d. perishability
45. Which of the following relationship marketing levels is also referred to as customer intimacy?
a. Structural level
b. Social level
c. Financial level
d. Customization level
46. When considering strategies to promote intangible services, which of the following engages customers in postpurchase
communication?
a. An airline hires a well-known actor to endorse its services in a series of commercials.
b. An insurance company uses an umbrella as its logo to convey that its customers are well-protected.
c. A chartered accountant firm offers a 20 percent discount to customers who contract its services in January.
d. A hotel sends an e-mail survey to its guests asking them to rate the quality of service that they received.
47. Laelle Airlines, an international airline company offers a core service supported by supplementary services. Given this
information, which of the following is most likely to be the core service provided by 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
48. So far as promotion decisions are concerned, many nonprofit organizations are explicitly or implicitly prohibited from
advertising, thus limiting their promotion options. Are federal agencies included in this category?
a. No, federal agencies are exempt from this rule.
b. Yes, most federal agencies fall into this category.
c. Yes, only federal agencies fall into this category.
d. Yes, all federal agencies fall into this category.
49. 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.
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50. Health Works is a company that offers services related to health promotion and lifestyle. They not only send their
clients reminders for their general checkup but also make house visits for consultations, which are free if a Health Works
products or services are bought. They also conduct free workshops for their clients to network and join clusters with
similar profiles and regime. Their offerings would fall in the ______ level of relationship marketing.
a. social
b. customization
c. structural
d. financial
51. In the business of running movie theaters, it was proposed that the tickets be priced significantly higher than usual for
each of the opening weekends of the year’s summer blockbusters. This kind of pricing is ______.
a. patronage-oriented, not revenue-oriented
b. operations-oriented, not patronage-oriented
c. both revenue-oriented and patronage-oriented
d. both operations-oriented and patronage-oriented
52. Henry, a travel consultant, treats his customers with respect and helps them with the vast knowledge that has earned
him a good reputation. However, he is not as skilled in giving individual attention to customers or in anticipating and
understanding their priorities. Henry scores ______.
a. high on assurance but low on empathy
b. low on both assurance and empathy
c. high on both assurance and empathy
d. low on assurance but high on empathy
53. Which of the following statements is true in comparing for-profit service firms and nonprofit organizations?
a. While for-profit service firms market tangible products, nonprofit organizations market intangible products.
b. Both often require the customer to be present during the production process.
c. While for-profit service firms vary greatly from producer to producer, nonprofit organizations are uniform across
producers.
d. Both vary greatly from day to day, but with the same producer the day-to-day variations are eliminated.
54. Senior citizen and student discounts at movie theaters and restaurants are examples of pricing that is ______.
a. patronage-oriented, not operations-oriented
b. operations-oriented, not revenue-oriented
c. both revenue-oriented and patronage-oriented
d. both operations-oriented and patronage-oriented
55. 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.
56. A vehicle manufacturer makes base models using a large-scale production process. It also partners with small
companies that help customize its vehicles, thus offering a wide range of packages involving a variety of chassis colors,
upholstery designs, music systems, GPS devices, and passenger safety options. The company’s approach to its service
offering is an example of ______.
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a. mass customization
b. mass standardization
c. customization
d. standardization
57. Ambient Management, Inc. was experiencing a gap in the services it was providing. It closed the gap by ensuring that
its customer-facing staff had the skills, training, and proper tools to perform their jobs. When compared with the gap
model of service quality, the gap that the company addressed was between what ______.
a. customers wanted and what management thought customers wanted
b. the company provided and what the customers were told it provided
c. management thought customers wanted and the quality specifications it developed
d. the service quality specifications were and the service that was actually provided
58. Hannah likes to frequent Citrus, a fine dining restaurant, as she loves the beef lasagna there and orders it every time
she eats there. 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
59. Nonprofit organizations account for a little over ______ percent of the economic activity in the United States.
a. 5
b. 10
c. 20
d. 30
60. It could be said that, at least from a marketing perspective, it is harder to convey the advantages of adopting a plastic-
free lifestyle, than it is to sell the idea of having a microwave oven. This sentiment indicates that the benefit strength of
many nonprofit offerings is quite ______.
a. weak but direct
b. strong but indirect
c. strong and direct
d. weak or indirect
61. In many public assistance programs, about half the people who are eligible do not participate because they do not want
to devote the required time or effort or are just plain embarrassed to seek help. Such people are not willing to ______.
a. pay the nonfinancial price
b. separate payers from users
c. make an indirect payment
d. acknowledge the value of free services
62. Compared to goods, services tend to exhibit more ______ qualities.
a. experience and credence
b. experience and search
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c. search and credence
d. search and inseparability
63. Which of the following describes a for-profit rather than a nonprofit?
a. Prioritize market segments most likely to respond to their offerings.
b. Target those who are apathetic about receiving their services.
c. Complement, rather than compete with, the efforts of others.
d. Adopt undifferentiated strategies by default.
64. A search quality of a product or service is a characteristic that can be ______.
a. assessed only after using the purchase
b. hard to describe even after its use
c. easily assessed before purchase
d. experienced only on payment for the product or service
65. The inability of services to be stored, warehoused, or inventoried is termed ______.
a. variability
b. reliability
c. heterogeneity
d. perishability
66. 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 to services.
67. At what level or levels of relationship marketing does a firm use financial and social bonds but also offer value-added
services that are not readily available from other firms?
a. Neither at the customization level nor at the structural level
b. Only at the customization level
c. Only at the structural level
d. At both customization and structural levels
68. At the _____ level of relationship marketing, a firm uses pricing incentives to encourage customers to continue doing
business with it.
a. financial
b. customization
c. structural
d. social
69. Your insurance agent provides you with a service that includes ______.
a. both mental stimulus processing and information processing
b. neither mental stimulus processing nor information processing
c. mental stimulus processing, but not information processing
d. information processing, but not mental stimulus processing
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70. That consumers must be present during the production of services points to the ______ of services.
a. intangibility
b. heterogeneity
c. inseparability
d. perishability
71. Evaluating the quality of services before making a purchase is harder than evaluating the quality of goods because,
compared to goods, services tend to exhibit fewer ______ qualities.
a. experience
b. search
c. credence
d. intangible
72. 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.
73. Which statement describes a distribution strategy of a service organization?
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. Because services are intangible, many service firms choose indirect distribution strategies.
74. Which of the following characteristics of service is the least related to the display of human behavior, interpersonal
interaction, and knowledge?
a. Reliability
b. Assurance
c. Responsiveness
d. Tangibles
75. Which of the following statements correctly compares tangibles and intangibles?
a. Consumers and business users have more trouble evaluating services than goods and thus marketers have more
trouble promoting intangible services than tangible goods.
b. Consumers and business users have more trouble evaluating services than goods; however, marketers have less
trouble promoting intangible services than tangible goods.
c. Consumers and business users have less trouble evaluating services than goods; however, marketers have more
trouble promoting intangible services than tangible goods.
d. Consumers and business users have less trouble evaluating services than goods and thus marketers have less
trouble promoting intangible services than tangible goods.
76. 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. a service
b. concepts
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c. branding
d. profits
77. 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
78. Vintage Travel provides a wide range of travel-related services. Which of the following can create a lasting image of
their company in the minds of customers and potential users, even without them using Vintage Travel’s services?
a. Give special discounts only for bulk bookings.
b. Use well-known celebrities to endorse their services.
c. Give freebies to individuals who register on their website.
d. Use attractive logos, stationary, and office space.
79. 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 promising more than the firm can deliver.
d. the inability of management to translate customers’ needs into delivery systems within the firm.
80. 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
81. What kind of service processing does the airline industry address?
a. Information processing
b. Possession processing
c. Mental stimulus processing
d. People processing
82. 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.