Research 124

CHAPTER 8

PRODUCT AND SERVICES STRATEGY

MULTIPLE CHOICE QUESTIONS

1. Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need is called a(n): a. idea. b. demand. c. product. d. service.

Answer: (c) Difficulty: (2) Page: 278

2. Broadly defined, products include all of the following EXCEPT: a. money and payments. b. services. c. ideas. d. persons.

Answer: (a) Difficulty: (3) Page: 278

3. A ______________________ is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. a. service b. demand c. need d. physical object


4. All of the following are examples of services EXCEPT: a. banking. b. hotels and motels. c. tax preparation. d. computer software.

Answer: (d) Difficulty: (1) Page: 278

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5. Examples of pure tangible goods include all of the following EXCEPT: a. soap. b. tax preparation. c. toothpaste. d. salt.

Answer: (b) Difficulty: (1) Page: 278

6. Which of the following would be the best illustration of a pure service? a. a water pick for cleaning teeth b. a doctor’s exam c. a waiter taking your order in a restaurant d. flying on an airline


7. If a company has a hybrid offer, then its offer may be described as being one where there is: a. an equal amount of goods and services. b. a tangible good with accompanying services. c. a service with accompanying minor goods. d. a clone service package.


8. A(n) _____________ occurs when a company intentionally uses services as the stage, and goods as the props, to engage individual customers in a way that creates a memorable event. a. hybrid offer b. core service c. augmented or ancillary product d. experience

Answer: (d) Difficulty: (2) Page: 278, Marketing at Work 8-1

9. The most basic level of a product is called the: a. core product. b. central product. c. fundamental product. d. augmented product.


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10. All of the following are considered to be characteristics of the actual product category or feature EXCEPT: a. quality level. b. installation. c. brand name. d. design.

Answer: (b) Difficulty: (3) Page: 282, Figure 8-1

11. Actual products may have as many as five characteristics. All of the following could be considered to be among these characteristics EXCEPT: a. a quality level. b. features. c. warranty. d. a brand name.

Answer: (c) Difficulty: (3) Page: 282, Figure 8-1

12. The best illustration of an augmented product category or feature would be the: a. brand name. b. packaging. c. warranty. d. design.


13. Products purchased frequently, immediately, and with a minimum of comparison and buying effort are called: a. consumer products. b. convenience products. c. shopping products. d. specialty products.


14. Products that the consumer usually compares with others on price, suitability, quality, and style are typically called: a. convenience products. b. specialty products. c. shopping products. d. unsought products.


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15. A(n) _____________ is a product bought by the final consumer for personal consumption. a. consumer product b. industrial product c. psychological product d. stress-sensitive product


16. All of the following are characteristics of the convenience product EXCEPT: a. low price. b. mass promotion by the producer. c. exclusive distribution. d. frequent purchase, little planning, and little comparison.

Answer: (c) Difficulty: (2) Page: 282, Table 8-1

17. The best illustration of a shopping product listed below would be: a. a television. b. a magazine. c. fine crystal. d. life insurance.

Answer: (a) Difficulty: (3) Page: 282, Table 8-1

18. The best example of a specialty product listed below is that of a(n): a. luxury good, such as a Rolex watch. b. major appliance. c. Red Cross blood donation. d. laundry detergent.

Answer: (a) Difficulty: (2) Page: 282, 283, Table 8-1

19. Consumer goods with unique characteristics or brand identification often requiring a special purchase effort are called: a. custom products. b. specialty products. c. convenience products. d. shopping products.

Answer: (b) Difficulty: (1) Page: 282, 283

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20. Consumer goods that the consumer does not know about or does not normally think about buying are called: a. custom products. b. unsought products. c. specialty products. d. shopping products.


21. ____________________ are products bought by individuals and organizations for further processing or for use in conducting a business. a. Consumer products b. Services c. Industrial products d. Specialty products


22. The primary distinction between a consumer product and an industrial product is based on the ___________________. a. cost b. size c. description d. purpose for which the product is bought


23. Which of the following would not be one of the three major groups of industrial products and services? a. computer software for PCs b. materials and parts c. capital items d. supplies and services

Answer: (a) Difficulty: (1) Page: 283, 284

24. ____________ are industrial products that aid in the buyer’s production or operations, including installations and accessory equipment. a. Computer software goods b. Materials and parts c. Capital items d. Supplies and services


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25. ___________________ consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. a. Nonprofit marketing b. Services marketing c. Organizational marketing d. Cause-related marketing

Answer: (c) Difficulty: (2) Page: 284, 285

26. Which of the following would be the best illustration of corporate image advertising? a. A hospital listing its phone number in the Yellow Pages. b. A university sending a catalog to a prospective student. c. IBM using television to establish itself as the company to turn to for “e-Business solutions.” d. Nike employing Tiger Woods to promote golf balls.


27. When Michael Jordan and Tiger Woods use marketing to promote their careers and improve their impact and incomes, they are using: a. cause-related marketing. b. idea marketing. c. nonprofit marketing. d. person marketing.


28. New York State shouts “I Love New York!” This would be an example of which of the following forms of marketing? a. cause-related marketing b. idea marketing c. corporate image advertising d. place marketing


29. “Keep America Beautiful” and “Say No to Drugs” are forms of which type of marketing listed below? a. social marketing b. place marketing c. nonprofit marketing d. organizational marketing

Answer: (a) Difficulty: (1) Page: 285, 286

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30. ___________ is one of the marketer’s major positioning tools. a. Quantity b. Quality c. Cost d. Size


31. As explained in the text, product quality means conformance quality—consistency in delivering a target level of performance and: a. no recalls for at least one year. b. freedom from defects. c. standard engineering specifications. d. global standards, such as ISO 9000.


32. Beyond simply reducing product defects, the ultimate goal of total quality is to improve: a. distribution relationships. b. promotional methods. c. returns and allowances. d. customer satisfaction and value.


33. One way to add customer value is through distinctive product style and design. According to the text, all of the following companies have reputations for outstanding style and design EXCEPT: a. Jeep in SUVs. b. Black & Decker in cordless appliances. c. Steelcase in office furniture and systems. c. Bose in audio equipment.


34. According to the text, _________ simply describes the appearance of a product. a. style b. design c. feature d. brand


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35. Good __________ contribute(s) to a product’s usefulness as well as to its looks. a. style b. design c. brand enhancement d. features


36. If Steelcase office furniture company wanted to make office furniture that really met the needs of its consumers and provided value to the consumer that was not just “skin deep,” it would try to improve its products’ ________________. a. design b. style c. performance d. ambiance


37. A _______________ is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. a. product feature b. sponsorship c. brand d. logo


38. When a brand has achieved an impressive reputation for loyalty, performance, and quality, it can be said to have: a. brand endurance. b. brand equity. c. brand bonding. d. brand prestige.


39. All of the following are desirable qualities for a brand name EXCEPT: a. it should suggest something about the product’s benefits and qualities. b. it is best if it is a computer generated name (this gives it something that no one else has). c. it should be distinctive. d. it should be capable of registration and legal protection.

Answer: (b) Difficulty: (2) Page: 290, 291

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40. Once chosen, the brand name must be protected. Many firms try to build a brand name that will eventually become identified with the product category. However, success may threaten the company’s rights to the name. Some brand names lose their distinctiveness and become “generic” (any seller can use the name or term). All of the following brand names are now considered to be “generic” EXCEPT: (All of the brands have been put in lower case letters on purpose.) a. yo-yo. b. linoleum. c. shredded wheat. d. kleenex.


41. A manufacturer has four sponsorship options. A ________________ is a brand created and owned by a reseller of a product or service. a. licensed brand b. manufacturer’s brand c. private brand d. co-brand


42. A private brand is a brand created and owned by: a. a manufacturer of a product or service. b. a reseller of a product or service. c. an international cartel. d. a private family business.


43. Sears created the Craftsman brand name for tools. This would be an example of which of the following branding options? a. licensed brand b. manufacturer’s brand c. private brand d. co-brand


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44. If Bubble-Right makes 50% of all bubble gum sold in the United States, but sells it through middlemen who market the product under individual store brands, then Bubble-Right is utilizing which type of brand-sponsorship? a. licensed brand b. manufacturer’s brand c. private brand d. co-brand


45. Sam’s Grocery demands promotional payments from most of its food and beverage suppliers before it will guarantee them shelf space on premium aisles for new products. This practice has recently received much scrutiny from the Federal Trade Commission. The industry calls such promotional fees or payments: a. paybacks. b. promos. c. slotting fees. d. new product fees.


46. If Mark Mars pays Hershey Foods Corporation for the right to use its name on his line of T-shirts, then Mr. Mars is using which type of policy? a. licensing b. manufacturer’s branding c. private branding d. co-branding

Answer: (a) Difficulty: (2) Page: 292, 293, 295

47. ______________ is the practice of using the established brand names of two different companies on the same product. a. Licensed branding b. National branding c. Store branding d. Co-branding


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48. If Ford Motor Company and Eddie Bauer work together to design and sponsor a new sport utility vehicle, then the companies are using which of the following brand sponsorship options? a. licensed branding b. national branding c. store branding d. co-branding


49. All of the following would be possible advantages of co-branding EXCEPT: a. combined brands create broader consumer appeal. b. combined brands create greater brand equity. c. combined brands always offer economies of scale and reduced prices. d. combined brands allow a company to expand its existing brand into other categories.


50. Using a successful brand name to introduce additional items in a given product category under the same brand name (such as new flavors, forms, colors, added ingredients, or package sizes) is called: a. a line extension. b. a brand extension. c. multibranding. d. new brands.

Answer: (a) Difficulty: (1) Page: 296, Figure 8-4

51. A company might introduce ________________ as a low-cost, low-risk way to introduce new products in order to meet consumer desires for variety, to utilize excess capacity, or simply to command more shelf space from resellers. a. duobranding b. line extensions c. brand extensions d. new brands

Answer: (b) Difficulty: (2) Page: 296, Figure 8-4

52. _______________ is a strategy of using a successful brand name to launch a new or modified product in a new category. a. Duobranding b. Line extension c. Brand extension d. Multibranding

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53. If Honda uses its company name to cover such different products as its automobiles, lawn mowers, and motorcycles, it is practicing which of the following strategies? a. new brand strategy b. line extension strategy c. multibrand strategy d. brand extension strategy

Answer: (d) Difficulty: (2) Page: 297, Figure 8-4

54. Seiko watches cover many different buying motives, as well as desires for different features. For example, higher-priced Seiko Lasalles cover the upper end of the watch market, while Seiko’s Pulsar covers the lower end. The Lasalle and Pulsar would be called: a. bracket brands. b. Hi-Lo brands. c. flanker brands. d. end-zone brands.


55. When a company enters a new product category for which its current brand names are not appropriate, it will likely follow which of the following brand strategies? a. product extensions b. line extensions c. brand extensions d. new brands

Answer: (d) Difficulty: (2) Page: 297, 298, Figure 8-4

56. If a company is following a branding policy of weeding out weaker brands and only focusing their marketing dollars on brands that can achieve the number-one or -two market share positions in their category, then the company is probably pursuing a: a. megabrand strategy. b. metabrand strategy. c. minibrand strategy. d. brand elimination strategy.


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57. ________________ is the activities of designing and producing the container or wrapper for a product. a. Labeling b. Packaging c. Product support services d. Product line decisions


58. Traditionally, the primary function of the package was to: a. promote the product. b. introduce the product to a new market. c. contain and protect the product. d. describe the product and attract attention.


59. The first federal Act to control labels on packages (to ensure that no false, misleading, or deceptive labels or packages were allowed) was the: a. Robinson-Patman Act. b. Sherman Antitrust Act. c. Federal Trade Commission Act of 1914. d. Lanham Act.


60. A group of products that are closely related because they function in a similar manner is called a: a. product line. b. brand line. c. brand family. d. product position.


61. The number of items within the product line is identified as being the: a. product line width. b. product line strength. c. product line length. d. product line consistency.


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62. _______________ occurs when a company lengthens its product line beyond its current range. a. Product line strength b. Product line consistency c. Product line mobility d. Product line stretching


63. When a company lengthens its product line beyond its current range, it is engaged in: a. brand extension. b. product line stretching. c. product line reduction. d. product line filling.


64. Companies in the middle range of the market who wish to extend their product lines to both the upper and the lower end are considering: a. an upward stretch. b. a downward stretch. c. a stretch in both directions. d. a middle-end stretch.


65. ________________ is the set of all product lines and items that a particular seller offers for sale. a. Product line b. Product mix c. Product allotment d. Product choice


66. Product mix ________________ refers to the number of different product lines the company carries. a. width b. depth c. length d. consistency


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67. The total number of items that the company carries within its product lines refers to the ___________ of the product mix. a. width b. depth c. length d. consistency


68. The number of different versions of each product offered in the product line is called its: a. width. b. depth. c. length. d. consistency.


69. How closely related the various product lines are in end use, production requirements, distribution channels, or in some other way is called: a. width. b. depth. c. length. d. consistency.


70. The characteristic of service meaning that it cannot be seen, tasted, felt, heard, or smelled before being bought is called: a. intangibility. b. inseparability. c. variability. d. perishability.

Answer: (a) Difficulty: (2) Page: 306, Figure 8-5

71. The fact that services are sold, produced, and consumed at the same time refers to which of the following service characteristics? a. intangibility b. inseparability c. variability d. perishability

Answer: (b) Difficulty: (1) Page: 306, 307, Figure 8-5

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72. The quality of a service depends on who provides it, as well as when, where, and how it is provided. This is an example of which characteristic of services? a. intangibility b. inseparability c. variability d. perishability


73. The fact that a business traveler may have one very positive check-in experience at a hotel and then a very negative check-in experience with a different employee on a subsequent visit is evidence of service: a. intangibility. b. inseparability. c. variability. d. perishability.


74. The fact that services cannot be stored for later use or sale is evidence of their: a. intangibility. b. inseparability. c. variability. d. perishability.


75. Successful service companies focus their attention on both their customers and their employees. They understand ___________________, which links service firm profits with employee and customer satisfaction. a. internal marketing b. service-profit chains c. interactive marketing d. service differentiation


76. If a firm is practicing ____________________, the firm is training and effectively motivating its customer-contact employees and all of the supporting service people to work as a team to provide customer satisfaction. a. double-up marketing b. internal marketing c. interactive marketing d. service marketing


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77. __________________ means that service quality depends heavily on the quality of the buyer-seller interaction during service encounters. a. Double-up marketing b. Internal marketing c. Interactive marketing d. Service marketing


78. The solution to price competition is to develop a differentiated: a. product, price, and promotion. b. offer, delivery, and image. c. package and label. d. international Web site.


79. Companies should take steps not only to provide good service every time but also to recover from service mistakes when they do occur. The first step a manager should take to ensure service quality is to: a. empower front-line service employees. b. always take back merchandise if requested. c. offer a complaint hot line. d. refer customers to the service policy found at the bottom of most sales receipts.


TRUE/FALSE QUESTIONS

80. Products include more than just tangible goods.

Answer: (True) Difficulty: (1) Page: 278

81. A product can be a person, place, or an idea.


82. A good example of a pure tangible good would be air travel.

Answer: (False) Difficulty: (1) Page: 278

83. A company’s offer to the marketplace often includes both tangible goods and services—for example, when people patronize restaurants both for their food and their service. This would be an example of a hybrid offer.

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84. The product can be perceived as having three distinct levels. The first of these is called the actual product.

Answer: (False) Difficulty: (1) Page: 278, 279, Figure 8-1

85. The augmented product includes such variables as packaging, the brand name, and the quality level of the product.

Answer: (False) Difficulty: (2) Page: 282, Figure 8-1

86. A key component of the augmented product is the warranty.

Answer: (True) Difficulty: (2) Page: 282, Figure 8-1

87. The convenience product is a consumer product that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort.


88. A good illustration of a specialty product is a magazine or a newspaper.

Answer: (False) Difficulty: (2) Page: 282, 283, Table 8-1

89. If a marketer were attempting to sell life insurance, the type of consumer product category that it would most likely fall into would be an unsought product.

Answer: (True) Difficulty: (2) Page: 283, Table 8-1

90. Red Cross blood donations are considered to be specialty products and, therefore, have a specialty offer to the consumer.

Answer: (False) Difficulty: (2) Page: 282, 283, Table 8-1

91. The distinction between a consumer product and an industrial product is based on the purpose for which the product is bought.


92. Capital items are industrial products that aid in the buyer’s production or operations.


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93. The Ad Council’s “Say No to Drugs” is a good example of corporate image advertising.


94. Recently, marketers have shifted from TQM (total quality management) approaches to ROQ (return on quality) programs.


95. Unlike design, style is more than skin deep.


96. There is a move away from branding because of the high cost of maintaining branding reputation and image today.


97. A powerful brand (to be powerful and stay powerful) must have brand equity.

Answer: (True) Difficulty: (1) Page: 289, 290

98. A good brand name should suggest something about the product’s cost and price.

Answer: (False) Difficulty: (2) Page: 290, 291

99. Because of poor image and quality, store brands are no real threat to manufacturer’s brands as evidenced by recent sales reports.

Answer: (False) Difficulty: (2) Page: 291, 292

100. If Dannon Yogurt produces an economy-sized yogurt, this would be an example of a line extension.


101. The packaging concept states what the package should be or do for the product.


102. A product line is each individual product made by the company as it attempts to meet the needs of the marketplace.


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103. Product line stretching occurs when a company tries to milk all the promotional dollars possible out of the company’s promotional budget.


104. Product mix width refers to the number of different product lines the company carries.


105. Product line depth refers to how closely related the various product lines are to one another.


106. Service intangibility means that a service cannot be stored for later sale or use.


107. Service inseparability means that services cannot be separated from their providers.

Answer: (True) Difficulty: (1) Page: 306, 307

108. Because the customer is present as the service is produced, provider-customer interaction is a special feature of services marketing.


109. Internal marketing means that perceived service quality depends heavily on the quality of the buyer-seller interaction during the service encounter.


ESSAY QUESTIONS

110. Each year, Revlon sells more than $2.4 billion worth of cosmetics, toiletries, and fragrances to consumers around the world. Revlon knows that when it sells perfume, it sells much more than fragrant fluids. List and then briefly discuss what Revlon sells inaddition to a tangible product.

Answer:Fragrance marketers know that if there is “No smell; no sell,” however, the maker sells many things beyond the scent. In fact, it might be the last element developed. According to information presented in the text, Revlon carefully researchers women’s feelings about

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themselves and their relationships with others. It then develops and tests new perfume concepts that match women’s changing values, desires, and lifestyles. To summarize, Revlon takes the physical product, the product’s name, and even the package to market to women’s lifestyles, self-expression, and exclusivity. It does this by focusing on achievement, success, status, femininity, romance, passion, fantasy, memories, hopes, and dreams.

Difficulty: (1) Page: 275-277

111. Explain the meaning of the terms product and service. Compare the differences and similarities by explaining the product-service continuum.

Answer:A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas. A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. A company’s offer to the marketplace often includes both tangible goods and services. Each component can be a minor or a major part of the total offer. This continuum includes: (1) a pure tangible good, such as soap or toothpaste; (2) a tangible good with accompanying services, such as an automobile company offering a car plus its warranty and repair services; (3) a service with accompanying minor goods, such as an airline offering transportation service but serving meals while traveling; and (4) pure services where the offer is primarily a service, such as a doctor’s exam.

Difficulty: (2) Page: 278

112. Demonstrate the three levels of product and any accompanying features that might be present at each level.

Answer:Product planners need to think about products (and also services) on three levels. The most basic level is the core product, which addresses the question: What is the buyer really buying? This level is at the center of the marketing offer. Second, the product planner must build an actual product around the core product. Actual products may have as many as five characteristics: a quality level, features, design, a brand name, and packaging. These features are combined to deliver the core benefit. Lastly, the product planner must build an augmented product around the core and actual products by offering additional consumer services and benefits. The augmented product can include installation, delivery and credit, after-sale service, and a warranty.

Difficulty: (2) Page: 278, 279, 282, Figure 8-1

113. Demonstrate the differences and similarities between the four major types of consumer products.

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Answer:The four major types of consumer products include convenience, shopping, specialty, and unsought products. Convenience products are those consumer products that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort. They generally have a low price, widespread distribution, are found in convenient locations, are mass produced, and are exemplified by products such as toothpaste and magazines. Shopping products are consumer goods that the customer, in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price, and style. They are generally higher in price, found in selective distribution outlets, are supported by advertising and personal selling, and exemplified by major appliances and televisions. Specialty products are consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. They are generally high in price, found in exclusive outlets, carefully targeted by producers and resellers, and exemplified by luxury goods such as Rolex watches. Lastly, unsought goods are consumer products that the consumer either does not know about, or knows about but does not normally think of buying. They are generally supported by aggressive advertising and personal selling, and exemplified by life insurance. Price and distribution varies.

Difficulty: (2) Page: 282, 283, Table 8-1

114. List and briefly describe the three groups of industrial products and services cited in the text.

Answer:The three groups are:a). Materials and parts—includes raw materials and manufactured materials and parts. Raw materials consist of farm products and natural products. Manufactured materials and parts consist of component materials and component parts.b). Capital items—industrial products that aid in the buyer’s production or operations, including installations and accessory equipment.c). Supplies and services—operating supplies and repair and maintenance items.

Difficulty: (2) Page: 283, 284

115. What is social marketing? Give an example of a social marketing effort.

Answer:Social marketing is the design, implementation, and control of programs seeking to increase the acceptability of a social idea, cause, or practice among a target group. An example (several are listed in the text) would be the Advertising Council’s “Smokey the Bear” campaign.


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116. Discuss the differences between a product’s design and style.

Answer:Design is a larger concept than style. Style simply describes the appearance of a product. Styles can be eye-catching or yawn producing. Unlike style, design is more than skin deep. It goes to the very heart of a product. Good design contributes to a product’s usefulness as well as to its looks.


117. What characterizes a good brand name? List the desirable qualities a good brand name should have.

Answer:A good brand name should do the following:a). It should suggest something about the product’s benefits and qualities.b). It should be easy to pronounce, recognize, and remember.c). The brand name should be distinctive.d). It should be extendible.e). The name should translate easily into foreign languages.f). It should be capable of registration and legal protection.


118. Characterize and explain the four possible brand strategies discussed in the chapter.

Answer:A company has four choices when it comes to brand strategies. It can introduce line extensions, brand extensions, multibrands, or new brands. Line extension is a strategy of using a successful brand name to introduce additional items in a given product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes. A brand extension is using a successful brand name to launch a new or modified product in a new category. An example would be Honda Motor Company moving its name from automobiles to motorcycles, snowblowers, and lawn mowers. Multibranding offers a way to establish different features and appeal to different buying motives. It also allows a company to lock up more reseller shelf space. Forms can be flanker or fighter brands. In the new brand category, company may create a new brand name when it enters a new product category for which none of the company’s current brand names are appropriate.

Difficulty: (2) Page: 296-298, Figure 8-4

119. A company’s product mix has four important dimensions: width, length, depth, and consistency. Define or characterize each.

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Answer:a). Width refers to the number of different product lines the company carries.b). Length refers to the total number of items the company carries within its product lines.c). Depth refers the number of versions offered of each product in the line.d). Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way.


120. Identify and briefly discuss the four major service characteristics.

Answer:A company must consider four special service characteristics when designing marketing programs: intangibility, inseparability, variability, and perishability. These characteristics may be summarized as follows: (1) service intangibility—services cannot be seen, tasted, felt, heard, or smelled before they are bought (a good strategy would be to try and make the service more tangible), (2) service inseparability—services are produced and consumed at the same time and cannot be separated from their providers, whether the providers are people or machines (a strategy might be to try to increase the provider-customer interaction), (3) service variability—the service has the quality of varying greatly, depending on who provides it and when, where, and how it is provided (try to achieve consistency in the service offering), and (4) service perishability—services cannot be stored for later sale or use (service firms need to design better strategies for producing a better match between demand and supply).

Difficulty: (3) Page: 306, 307, Figure 8-5

121. Identify what a service-profit chain is and identify the critical five links of the chain.

Answer:A service-profit chain is the chain that links service firm profits with employee and customer satisfaction.The critical five links are:a). internal service qualityb). satisfied and productive service employeesc). greater service valued). satisfied and loyal customerse). healthy service profits and growth


122. Draw a distinction between internal marketing and interactive marketing.

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Answer:Internal marketing is marketing by a service firm to train and effectively motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction.

Interactive marketing is marketing by a service firm that recognizes that perceived service quality depends heavily on the quality of buyer-seller interaction.


APPLICATION QUESTION

123. A company must manage its product lines carefully. Jefferson Pool and Billiard Company (who has manufactured high-priced, high-quality pool and billiard tables to discriminating individuals for 50 years) recently decided to embark into a new business venture which they hoped would remedy their sagging sales. The company decided to begin to manufacture and market a line of durable but value-priced pool tables intended for private and arcade use. Using the correct terminology with respect to product line decisions, describe what Jefferson is attempting to do and give a judgment about whether you think the new product line might be a good fit. Be sure to explain your rationale and justify your conclusions.

Answer:The instructor might want to give additional instructions or embellish the example to fit individual course needs. However, if taken in the form presented above, the student should explain, and then choose from the following product line alteration options: a) Product line stretch(ing)—occurs when a company lengthens its product line beyond its current range. This stretch can occur through downward, upward, or both direction stretches. If the company initially began as an upper-end market company (as Jefferson did), they can later stretch their lines downward to plug a market hole that otherwise would attract a new competitor, to respond to a competitor’s attack on their upper end, or add at this level because low-end products seem to be having faster growth (this is probably what is happening in the Jefferson case). Or, if the company began in the low-end portion of the market (which Jefferson did not), the company might stretch their lines upward because it finds faster growth taking place in higher-end market. The company could also decide to stretch in both directions. b) The company could also pursue a line filling strategy (where the company would add more items within the present range of the line). There could be several reasons for adding a product line filling strategy—reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors. Since markets rather than products seem to be involved in this case, this alternative is not as sound as the downward stretch option.

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Students should see that the best alternative for the company would be to exercise a downward stretch. If the company is concerned that the stretch might cheapen their image and prestige, the move could be accomplished under another brand name. The company should also consider that, if they only been selling to individuals, selling to arcades might be a real challenge. Whatever they decide, the students should provide a rationale for their decision. The instructor might also allow for creativity (such as the student that recommends new product lines such as Air Hockey or Foosball).


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Research 124

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