Exam 3 Mark 4500

Front 1

5 Dimensions of Service Quality

Back 1

1. Empathy
2. Assurance
3. Tangibles
4. Reliability
5. Responsiveness

Front 2

5 Topics

Back 2

1. Promotions
2. Perceptions
3. Customer Satisfaction Measurement
4. Demand/Capacity Mgmt
5. Pricing

Front 3

PROMOTIONS

Back 3

PROMOTIONS

Front 4

3 Difficulties Effective Promotions Overcome

Back 4

1. No evoked set
2. Hard to understand services
3. Hard to evaluate

Front 5

6 Strategies for Effective Promotions

Back 5

1. Emphasize core service
2. Use interactive imagery
3. Make the service tangible
4. Document performance
5. Focus on 1 or 2 dimensions
6. Demonstrate use and consumption

Front 6

1. Emphasize the core service

Back 6

Helps in developing evoked set

Front 7

2. Use interactive imagery (brand/logo)

Back 7

-name/image conveys core service
-reinforces service category
-increases brand loyalty
-helps in developing evoked set

Front 8

3. Make service tangible

Back 8

-use specific language
-use relevant physical objects, logos
-should represent core/key benefit
-helps with evoked set and understanding
EXAMPLE: "Like a Good Neighbor, State Farm is there."

Front 9

4. Document Performance

Back 9

-cite objective, numerical performance standards
-highlight awards, certificates, training
-share consumer ratings
-helps in evaluation

Front 10

5. Focus on 1 or 2 key attributes

Back 10

-determine 1 or 2 key attributes that determine choice
-Focus on that in ads
EXAMPLE: Nationwide focuses on their vanishing deductible

Front 11

6. Demonstrate use and consumption

Back 11

-use customer testimonials
-use experience demonstrations
-helps in understanding

Front 12

3 tips for effective advertising

Back 12

1. Use an emotional appeal
2. Include tangible elements
3. Don't have to have extensive information

Front 13

Communicate during the service experience

Back 13

-use POS displays and process charts
-let the service contact person debrief the consumer
-helps in evaluation, particularly during the service

Front 14

Communications to employees

Back 14

-employees see communications aimed at customers
-supplemental with internal newsletters, brochures
-share "great service" examples and comments from customers

Front 15

PERCEPTIONS

Back 15

PERCEPTIONS

Front 16

Valence

Back 16

whether the outcome of the service is perceived as negative or positive, separate from the service experience itself
EXAMPLE: score of a football game

Front 17

Managing Valence

Back 17

-be aware of it
-track intentions rather than satisfaction
-control for it when comparing employees

Front 18

4 Ways to Manage Perceptions

Back 18

1. Price Appropriately
2. Educate consumers
3. Apply principles of perceptions management
4. Use guarantees

Front 19

1. Price Appropriately

Back 19

-price is a proxy for quality and impacts perceptions
-know the market/competition
-know your segments
-consider both in setting price (either too high or too low is bad)

Front 20

2. Educate consumers

Back 20

-continually advertise good performance ratings
-remind consumers of good performance
-confirm satisfaction at the end of the service experience

Front 21

3. Apply principles of perception management

Back 21

-finish strong
-get bad experiences out of the way early
-segment pleasure, combine pain
-build commitment through choice
-give people rituals and stick to them

Front 22

4. Use guarantees

Back 22

Explicit (written or contractual)
and
Implicit (unspoken or unwritten)

Front 23

2 Types of Explicit Guarantees

Back 23

1. Conditional (specific result)
2. Unconditional

Front 24

Conditional (specific result) guarantee

Back 24

-a well defined set of circumstances that triggers the guarantee
-specific remedies are stated

Front 25

Unconditional Guarantee

Back 25

-promises complete customer satisfaction
-more POWERFUL type

Front 26

Implicit Guarantees

Back 26

-unwritten, unspoken guarantee that exists between consumer and service provider
-based on mutual respect and trust
EXAMPLE: Ritz Carlton

Front 27

4 Characteristics of a "good" Guarantee

Back 27

1. Relevant to important dimension
2. Easy to understand
3. Easy to invoke
4. Easy to collect

Front 28

2 Reasons why guarantees work

Back 28

1. Effect on employees
-increases focus on customers
-increases focus on service standards
2. Effect on consumer
-projects stronger image of quality
-seen as reduction in risk

Front 29

5 Times when Guarantees are not considered a good idea

Back 29

1. Leader in product quality
2. Low quality provider
3. High level of uncontrollable variables
4. Probability of excessive cheating
5. If ethical issues exist

Front 30

CUSTOMER SATISFACTION MEASUREMENT

Back 30

CUSTOMER SATISFACTION MEASUREMENT

Front 31

5 Things that make CS measures good

Back 31

1. Statistically valid
2. Measure items of importance to customers
3. Are collected frequently
4. Include measures of intentions and loyalty
5. Lead to improvement

Front 32

NPS

Back 32

Net Promoter Score

Front 33

Key Question for NPS

Back 33

How likely is it that you would you recommend Company X to a friend or colleague?

Front 34

NPS computation

Back 34

%promoters - %detractors

Front 35

5 Point Checklist

Back 35

1. Do you know the 5 Key Moments of Truth?
2. Do employees/managers get feedback daily/weekly?
3. Do customers know the impacts of their comments?
4. Do you know % of detractors that are converted to promoters through service recovery?
5. What is the $ value of flipping a detractor?

Front 36

5 Common Methods

Back 36

1. Customer surveys
2. Trailer calls
3. Mystery shopper programs
4. SERVQUAL
5. Total market service quality surveys

Front 37

DEMAND/CAPACITY MANAGEMENT

Back 37

DEMAND/CAPACITY MANAGEMENT

Front 38

Importance of keeping capacity and demand balanced

Back 38

-demand for services often fluctuate
-most services are capacity constrained
-services can not be fully inventoried
-if supply is not consumed, revenue is lost

Front 39

Demand varies due to:

Back 39

-seasonality
-trend
-randomness
so must collect and analyze buying habits of customers

Front 40

Demand condition

Back 40

the ration of the demand to capacity at any point in time

Front 41

Possible Demand Conditions

Back 41

-Demand and Capacity are BALANCED
-Demand is GREATER THAN Capacity
-Demand is LESS THAN Capacity

Front 42

What to do if Demand and Capacity are balanced

Back 42

-Target condition
-Need to make sure that the capacity is being used by the most profitable customers (revenue management)

Front 43

Actions to INCREASE demand if demand is less than capacity

Back 43

-Smoothing-->shift demand from busy time to different time or create new demand
-decrease price during "off" times
-use promotions (ads) to encourage consumption
-provide non-price incentives

Front 44

Actions to DECREASE demand if demand is greater than capacity

Back 44

-price-->charge full price in busy times
-Communicate usage levels by sharing demand patterns with customers and suggesting alternative times/days
-take care of loyal customers first
-inventory demand by using a reservation system (inventorying customers)
-inventory demand by using a queuing system

Front 45

2 ways to create queues

Back 45

1. First come, first serve
2. Priority system
-urgency of service
-duration of service
-price
-importance of customer

Front 46

Customer perceptions of waiting

Back 46

-unoccupied time feels longer than occupied time
-segmented waits seem longer than combined waits
-uncertain wait times seem longer
-time beyond promised point seems longer
-unexplained waits seem longer than explained waits
-solo waits seem longer than group waits
-"unfair" waits seem longer than fair waits
-visible time saving activities reduce perceptions of wait time
-anxiety increases perceptions of wait time
-the more valuable the service, the higher the willingness to wait longer

Front 47

3 Ways to increase capacity

Back 47

1. Modify the service
2. Make better use of resources
3. Keep service inventory

Front 48

1. Modify the service

Back 48

-take out some of the steps
-make some of it self-service

Front 49

2. Make better use of resources

Back 49

DO FIRST
-cross train
-use peak time operating procedures (no training and no non-core activities)
-use theory of constraints

Front 50

5 Steps in the Theory of Constraints

Back 50

1. Identify the constraint
2. Exploit the constraint
3. Subordinate everything else to the constraint
4.Elevate the constraint -- the last resort
5. Identify a new constraint

Front 51

1. Identify the constraint

Back 51

-defined as the "bottleneck" --> what is holding things up
-lines prior to the bottleneck, no lines after the bottleneck

Front 52

2. Exploit the constraint

Back 52

-use the constraint to max capacity
-->used only for its core activity
-->never sits idle while waiting on someone, something else

Front 53

3. Subordinate everything else to the constraint

Back 53

-nothing is considered as important as the constraint
-other operations may be inefficient so that constraint is efficient
-all else "waits" so the constraint does not have to

Front 54

4. Elevate the constraint

Back 54

LAST RESORT
-Get more of the constraint
-add new equipment, employees (whatever the constraint is)

Front 55

5. Identify the new constraint

Back 55

start the process over

Front 56

PRICING

Back 56

PRICING

Front 57

Difficulty in pricing

Back 57

-high ratio of fixed to variable costs
-high element of "intellectual" labor
-high element of credence attributes
-high degree of perishability
-significant role of non-monetary factors

Front 58

Consumers view of cost

Back 58

-non-monetary elements
-time cost
-->opportunity cost of time it takes to obtain the service
-physical effot
-->need to travel to service location
-->self service activities
-mental/sensory
-->mental effort and or anguish involved in purchase
-->put up with unpleasant environment

Front 59

Bundling issues

Back 59

-works best when services are related
-if basic service is high priced, bundling is often expected

Front 60

Objective of Revenue Management

Back 60

Increase ARGE

Front 61

ARGE (stands for)

Back 61

Asset Revenue Generating Efficiency

Front 62

Computation for ARGE

Back 62

yield% x capacity utilization rate

Front 63

Yield % computation

Back 63

average price obtained from a unit of service / maximum potential price from the unit of capacity

Front 64

Capacity utilization rate

Back 64

units used / total units