Chapter 2: Fundamental Differences Between Goods and Services

Services are characterized by all of the following characteristics except for:
1. intangibility
2. homogeneity
3. perishability
4. inseparability
5. heterogeneity
Which of the following statements is false?
1. Services cannot be touched or seen in the same manner as goods.
2. Consumer judgments about services tend to be more subjective than
  objective.
3. Services are first produced, then sold, then consumed.
4. Services tend to vary from one transaction to the next.
5. Services cannot be inventoried.
Of the four unique service characteristics that distinguish goods from services,
the one that is the primary source of the other three characteristics is:
1. intangibility
2. inseparability
3. homogeneity
4. perishability
5. heterogeneity
Which of the following is not a marketing problem caused by intangibility?
1. Services lack the ability to be stored
2. Services lack patent protection
3. Services are difficult to price
4. Services are difficult to communicate to consumers
5. Consumers are involved in the service production process
Which of the following is a marketing problem caused by intangibility?
1. Services have no costs of goods sold.
2. The consumer is involved in the production process.
3. Other consumers are involved in the production process.
4. Service standardization and quality control are difficult to achieve.
5. Centralized mass production of services is difficult.
The primary cost of producing a service is
1. rent
2. overhead
3. cost of goods sold
4. labour
5. promotional expenses
Possible solutions that minimize the problems caused by intangibility include all
of the following except:
1. The use of tangible clues.
2. The effective management of consumers.
3. The creation of a strong organizational image.
4. The use of personal sources of information.
5. Prudential's "Piece of the Rock" promotional strategy.
The unique service characteristic that reflects the interconnection between the
service firm and its customer is called:
1. intangibility
2. inseparability
3. homogeneity
4. perishability
5. heterogeneity
Marketing problems caused by inseparability include all of the following
except for:
1. The service provides physical connection to the service.
2. The involvement of the customer in the production process.
3. Service standardization and quality control are difficult to achieve.
4. The involvement of other customers in the production process.
5. All of the above are marketing problems caused by inseparability.
The fact that services are sold and then produced and consumed simultaneously is attributed to:
1. intangibility
2. inseparability
3. homogeneity
4. perishability
5. heterogeneity
Which of the following statements pertain to inseparability is false?
1. As customer contact increases, the efficiency of the firm decreases.
2. Customers can affect the type of service desired.
3. Customers can affect the length of the service transaction.
4. Customers can affect the cycle of demand.
5. All the above statements are true.
The centralized mass production of services is difficult due to:
1. inseparability
2. intangibility
3. homogeneity
4. perishability
5. heterogeneity
Possible solutions that firms use to minimize the problems caused by inseparability include all of the following except:
1. The careful selection of service employees.
2. The management of service consumers.
3. The use of multisite locations to distribute services.
4. The training of public contact personnel.
5. Appealing to market segments with different demand patterns.
The primary solution to overcome the centralized mass production problems attributed to inseparability is:
1. The careful selection of service employees.
2. The management of service consumers.
3. The use of multisite locations to distribute services.
4. The training of public contact personnel.
5. Appealing to market segments with different demand patterns.
The service characteristic that reflects the variation in consistency from one service transaction to the next is:
1. inseparability
2. intangibility
3. homogeneity
4. perishability
5. heterogeneity
Which of the following statements pertaining to heterogeneity is false?
1. It is almost impossible for a service operation to achieve 100 percent
  perfect quality on an ongoing basis.
2. Standardization and quality control are difficult to achieve.
3. Customers always prefer customized services over standardized services.
4. Customized services are generally more expensive than standardized
  services.
5. It is easier to customize services than goods.
Which of the following is not an advantage of standardized services?
1. Less expensive
2. Meets the customer's exact needs
3. Delivered faster
4. More consistent
5. All the above are advantages of standardized services.
Solutions used to minimize the marketing problems attributed to heterogeneity include:
1. standardizing or customizing the service
2. using multisite locations
3. stressing tangible clues
4. appealing to different market segments with different demand patterns
5. using reservation systems
The unique service characteristic that deals specifically with the inability to inventory services is:
1. inseparability
2. intangibility
3. homogeneity
4. perishability
5. heterogeneity
Complications attributed to perishability include all of the following except:
1. Services which are not sold when they become available cease to exist.
2. The production and consumption of services cannot be separated by
  time and space.
3. Statistical sampling techniques are of little use in services.
4. Due to the lack of inventories, marketing and operations must work much closer together.
5. All of the above are complications associated with perishability.
Which of the following scenarios is likely to lead to the highest levels of customer dissatisfaction?
1. higher demand than maximum available supply
2. higher demand than optimal supply levels
3. lower demand than optimal supply levels
4. demand and supply at optimal levels
5. all of the above scenarios result in customer dissatisfaction
Which of the following strategies increases the supply of service available to consumers?
1. the use of creative pricing strategies
2. the use of reservation systems
3. capacity sharing
4. developing complementary services
5. developing nonpeak demand
Possible strategies for managing demand and minimizing the marketing problems associated with perishability include which of the following:
1. the use of creative pricing strategies
2. the use of reservation systems
3. developing complementary services
4. developing nonpeak demand
5. all of the above
The demand strategy in which service providers utilize their downtime by marketing to different segments with different demand patterns is associated with which of the following:
1. the use of creative pricing strategies
2. the use of reservation systems
3. capacity sharing
4. developing complementary services
5. developing nonpeak demand
A perishability-related strategy that increases the supply of service by forming a type of co-op among service providers that permits co-op members to expand their supply of services as a whole is referred to as:
1. co-op formation
2. capacity sharing
3. advance preparation for expansion
4. the utilization of third parties
5. creative management
Which of the following strategies increases the supply of service available to consumers?
1. increasing consumer participation
2. the use of creative pricing strategies
3. the use of reservation systems
4. developing complementary services
5. developing nonpeak demand
Which one of the following statements is true?
1. The use of third parties increases the supply of service.
2. Reservation systems can be used to alter the demand for services.
3. Customer participation in services may result in some loss of control by the service establishment.
4. The marketing department of service organizations must maintain a much
  closer relationship with the rest of the organization than what is typical in
  a goods business.
5. All the above are true.
The perishability-related strategy that may sometimes be associated with consumer feelings that the service firm may be attempting to distance itself from consumers is:
1. the use of reservation systems
2. training public contact personnel
3. the use of third-parties to conduct service transactions
4. increasing the amount of consumer participation
5. both a and d
Which one of the following strategies is used to alter consumer demand?
1. increasing consumer participation
2. utilizing third parties
3. utilizing creative pricing strategies
4. sharing capacity
5. preparing in advance for expansion
Which of the following would not be considered a tangible clue?
1. the quality of instruction in an educational setting
2. the appearance of employees
3. the appearance of the firm's physical facilities
4. the smile on an employee's face
5. the quality of paper stock use to produce a firm's brochures
Please match the appropriate unique service feature with the resulting marketing problem the feature causes.

Centralized mass production of services is difficult.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Standardization and quality control are difficult.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Cannot protect services through patents.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Prices are difficult to set.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Other customers are involved in the production process.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Please match the appropriate service feature with the marketing strategy suggested to compensate for the marketing difficulties associated with the feature.

Standardize the service.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Use tangible clues.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Emphasize the selection and training of public contact
personnel.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Effectively manage consumers.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability
Make adjustments between supply and demand to
achieve a balance between the two.
1. intangibility
2. inseparability
3. heterogeneity
4. perishability

Chapter 2: Fundamental Differences Between Goods and Services

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