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34 Cards in this Set

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What is yield management?
process of allocating the right type of capacity to the right kind of customer at the right price so at maximize revenue or yield
How do you calculate yield?
yield = actual revenue / potential revenue
How do you calculate actual revenue?
actual revenue = actual capacity used x average actual price
How do you calculate potential revenue?
total capacity x maximum price
What are the implications of yield management?
- pricing strategies to maximize yield
- concept of opportunity cost
- sophisticated statistical tool for forecasting demand and price elasticity needed
What is the physical service environment?
style of appearance of the physical surroundings and other experiental elements encountered by the customer at service-delivery sites
What are the elements of the physical service environment?
- servicescape
- other tangibles
What are the functions of the physical service environment?
- establishes distinctive image and unique positioning
- grabs ppl's attention
- creates moods/mindsets that facilitate service experience/encounter
- affects customers' service quality perception
What did Klimes find in his research into the Holiday Inn?
The revenue per actual room (RevPAR) decreased as number of defects in a hotel increased

stronger impacts were found in guest rooms, exterior of the building and the guest bathrooms
What are the ambient features?
characteristics of the environment pertaining to the 5 senses:
- music
- scent
- colour
- temperature
What are the benefits on music?
- induce positive affective sales
- activate related concepts
- influence's ppl's behaviour
- promotes right customer selection
- create certain mindsets
- decrease vandalism
The implications of scent?
- ppl prefer scented environements
- gamblers spend more
- ppl more willing to buy NIKE with floral
The implications of temperature?
the higher the prices, the lower the temperature
What are the customer responses to service failures?
- take some form of public action
- take some form of private action
- take no action
Name examples of public action for service failure complaints.
- complain to the firm
- complain to a third party
- take legal action
Name examples of private action when facing service failures.
Defect (switch providers)
negative word of mouth
Why do customers complain?
- obtain compensation from a monetary loss
- vent their anger
- help to improve their service
Why don't customers complain?
- probability of successful handling
- worthwhileness of complaints
What % of unhappy customers complain?
5 to 10%
How do you get consumer's to complain?
- convenience and easy access
- direct solicit of complaints
- incentives
- management by wandering about
- employee empowerment / reward
what do consumer's expect after complaining?
- distributive justice
(perceived fairness of outcome)

- procedural justice
(perceived fairness of company policies and practices)

- interactional justice
(behaviour of firm's employee in resolution of complaint)
What is service recovery?
process that:
- indentifies service failures
- effectively resolves customer problems
- classify their root causes
- yields data that can be integrated with other measure of performance to assess and improve the service system
Why is service recovery important?
- opportunity to resotre customer satisfaction and reinforce customer loyalty

- opportunity to communication firm's commitement to customers and strengthen the bond
What is another moment of truth?
opportunity to restore cust satisfaction and reinfore cust loyalty
What is the service recovery paradox?
those who experience a service failure that is satisfactorily resolved are more likely to make future purchases than customers without problems
What's wrong with relying on the service recovery paradox?
- invisiblity of unhappy customers
- cost of fixing mistakes
- weakened reliability
- customer defection after service recovery
- updated customer expectation for future performance
- reduced tolerance zone for the mistakes in the same category
what are the implication of service recovery?
- do it right the first itme
- welcome and encourage complaints
- act quickly
- provide adequate explanations
- treat customers fairly
- learn from recovery experiences
What are the types of word of mouth?
- positive
(cognitive, occurs when asked)

- negative
(emotional, occurs voluntarily soon after service failure)
What are the impacts of word of mouth on the recommender's behaviour?
- commitment and consistency (cialdini)

- strengthens beliefs and attitude
What is the theory of Moore and Fitzsimmon's on word of mouth?
writing a detailed review makes evalutations regress toward the center

positive become less positive, negative become less negative
What does negative word of mouth mean?
Comes from retaliatory feelings consumers feel toward a firm after an extremely negative experience
What are the patterns of behaviour after a negative experience?
- take legal action
- spread negative word of mouth
- switch brands
What is Bechwait and Morrin's theory about negative experience?
how does a consumer vengeance affect subsequent choice bahaviours?

tend to switch to number one rival, even with suboptimal choices
What are the benefits of the service guarantee?
- force firms to focus on what customers want
- set clear standards
- highlight cost of service failures
- require systems to get and act on customer feedback
- promote customers to complaint and let the firm know about their service experience
- accumulate information
- reduce perceived risk of purchase