ADM 2320 Lecture Notes - Lecture 12: Services Marketing, Micromarketing, Shortage

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amaranthfrog922

16 Mar 2016

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The markeing of services difers from product markeing because of four fundamental diferences unique to services: they are intangible, inseparable, variable, and perishable. A characterisic of a service; it cannot be touched, tasted, or seen like a pure product can. A service is also diicult to promote because it can"t be shown directly to potenial customers. A characterisic of a service; it is produced and consumed at the same ime that is, service and consumpion are inseparable. Another diference between services and products is that services are produced and consumed at the same ime. Because service producion can"t be separated from consumpion, astute service marketer provide opportuniies for their customers to get directly involved in the service. Consumers don"t have the opportunity to try the product or return the service. A characterisic of a service; its quality may vary because it is provided by humans.

Related Questions

FlashX company sells hi-end video games to consumers via the internet, each at a price of $75. It buys each game at a cost of $40, and it incurs another $5 per unit in distribution expenses. If FlashX incurs fixed overhead expenses per year of $2.1 million how many units does it need to sell in order to break even?

70,000

65,000

52,500

28,000

QUESTION 6

Why do retailers use the âmarkup on priceâ method of pricing, rather than the âmarkup on costâ method?

		Because it costs less to use the âmarkup on priceâ method.
		So that the âmarkupâ and âmarkdownâ percentages can easily be compared.
		Because it is more profitable to use the âmarkup on priceâ method.
		All of the above.

2 points

QUESTION 7

What can a service marketer do to manage the issue of âperishability?â

Charge higher prices during periods of peak demand, and reduce prices during periods of low demand.

Make sure that ambient conditions (physical surroundings) are pleasant.

Use better packaging to make sure the product does not spoil.

All of the above.

To say that service offerings are âinseparableâ means that:

		A service offering cannot be seen or touched.
		A service offering is âproducedâ or âdeliveredâ in the presence of the customer.
		The quality of a service offering can vary from customer to customer.
		All of the above are true.

2 points

QUESTION 10

Which of the following factors should be considered when setting the price of a new product?

		The price of substitute products.
		The anticipated length of the product life cycle.
		The degree of differentiation between the new product and existing products on the market.
		All of the above.

2 points

QUESTION 11

Which of the following statements regarding packaging is true?

		A package should provide protection to the consumer and to the product.
		A package should attract consumers' attention
		A good package should explain the features of the product, and how to use it.
		All of the above are true.

2 points

QUESTION 12

The "demand based" method for determining the selling price takes into consideration the fact that:

		Lower prices lead to higher sales volumes.
		Higher sales volumes lead to lower unit costs of production.
		Different levels of price (and cost) lead to different levels of profit.
		All of the above.

2 points

QUESTION 13

The concept of the âexperience curveâ is a recognition that:

		For new innovations, production costs typically increase as more and more units are produced.
		For innovations, production costs typically are not affected by production volume.
		For new innovations, production costs typically decline as more and more units are produced.
		Marketing managers who have more experience are typically more effective at their jobs.

2 points

QUESTION 14

Factors that affect the rate of adoption of new, innovative products include:

		The level of compatibility with existing technology.
		The extent to which people can observe others using the product.
		The level of functional, social, and/or monetary risk associated with the product.
		All of the above.

2 points

QUESTION 15

Which of the following statements regarding "convenience products" is true?

		Consumers typically will not accept substitute brands.
		Consumers typically are willing to put forth a high level of shopping effort.
		These products should be distributed through a wide variety of retail stores.
		All of the above are true.

2 points

QUESTION 16

Which of the following statements regarding a âfamily brandingâ strategy is true?

		A family branding strategy allows a firm to capitalize on its previous successes.
		A failure of one product within the family brand can harm sales of the other brands in the family.
		Family branding is advantageous in that it allows consumers to identify the manufacturer much easier, thus helping consumer to better judge the quality of the product.
		All of the above are true.

2 points

QUESTION 17

Which of the following factors argue for a penetration pricing strategy?

		The market potential is large, and is expected to increase over the years.
		It is highly likely that competitors will soon enter the market.
		Higher levels of sales volume are likely to bring lower production costs per unit.
		All of the above.

2 points

QUESTION 18

Which of the following statements regarding packaging is true?

		The quantity of product offered in a package can affect whether some consumers try the product.
		Different markets segments oftentimes desire different size/quantity packages.
		Different types of retail stores oftentimes prefer to carry different size/quantity packages.
		All of the above are true.

2 points

QUESTION 19

To say that a service offering is âintangibleâ means that:

		The service offering is âproducedâ or âdeliveredâ in the presence of the customer.
		The quality of the service offering can vary from customer to customer..
		The service offering cannot be seen or touched.
		All of the above are true

lilacyellowjacket558

After reading the case that is below, how can a foreign company entering China ensure that it tackles the most important little things that end up being huge barriers to success as we approach the year 2020 when China is expected to have significantly increased purchasing power among its middle class? Write your opinion, as a manager, on how to face cultural issues like those described in the case, when entering foreign markets.

The People's Republic of China opened up to foreign investments in the late 1970s. Since that time, numerous companies have tried to establish operations and sell their products to customers in China. Many more companies will try in the years to come China is expected to have some 190 million people in the middle- and upper-income categories by 2020. This is an increase from only about 17 million people in these income brackets as recently as in 2010. China's purchasing power for virtually all products and services has strong potential, and foreign companies will seek these market opportunities. What have we learned culturally that can help Western-based companies in China's marketplace?

Some background on China can serve as a starting point for a better understanding of the culture in China and what some well-known companies such as Best Buy and eBay have done to target the Chinese marketplace. The motivation for many foreign companies to enter China beyond those that have been there for a few decades for reasons of low-cost production was the triple growth of the Chinese economy that was seen from 2000 to 2010. China overtook Japan to become the second-largest economy in the world behind only the United States, and its large population makes for an enormous target market. Investment from foreign companies was the largest driver of China's growth in the decade from 2000 to 2010. However, many companies also increased their exports to China. The United States, for example, saw its companies increase exports to China by 542 percent from 2000 to 2011 (from about $16.2 billion to $103.9 billion), while total exports to the rest of the world increased by only 80 percent in the same time period.

Interestingly, while foreign investments grew, domestic consumption as a share of the Chinese economy declined from 46 percent in 2000 to 33 percent in 2010. This consumption declineâcoupled with slower growth globally and, ultimately, the worldwide economic downturn that started in 2008âraised questions about China's momentum. Right now, around 85 percent of mainstream Chinese consumers are living in the top 100 wealthiest cities. By the year 2020, these advanced and developing cities will have relatively few customers who are lower than the middle- and upper-income brackets by Chinese standards. The expectation is that these consumers will be able to afford a range of products and services, such as flat-screen televisions and overseas travel, making the Chinese customer much more of a target for a wide variety of consumption. This begs the question, can the unprecedented Chinese growth really continue, and would it come from increased consumption?

The resounding answer is yes according to research conducted by McKinsey & Company. McKinsey found that barring another major economic shock similar to what we saw in 2008, China's gross domestic product (GDP) will continue to grow, albeit not at the historic levels seen between 2000 and 2010 when it grew about 10.4 percent annually. The growth from 2010 to 2020 is expected to be about 7.9 percent per year, which is still far above the expected growth for the United States (2.8 percent annually), Japan (1.2 percent annually), and Germany (1.7 percent annually) the three countries among the top four worldwide economies along with China. And, the key is that consumption will now be the driving force behind the growth instead of foreign investment. The consumption forecast opens up opportunities for foreign companies to engage with Chinese consumers who are expected to have more purchasing power and discretionary spending. But culturally translating market success from one country or even a large number of countries to the Chinese marketplace is not necessarily as straightforward as it may seem. Often, a combination of naivety, arrogance, and cultural misunderstanding has led many well-known companies to fail in China. Lack of an understanding of issues such as local demands, buying habits, consumption values, and Chinese customers' personal beliefs led to struggles for companies that had been very successful elsewhere in the world. Let's take a brief look at Best Buy and eBay as two examples.

Best Buy, the mega-store mainly focused on consumer electronics, was founded in 1966 as an audio specialty store. Best Buy entered China in 2006 by acquiring a majority interest in China's fourth-largest appliance retailer, Jiangsu Five Star Appliance, for $180 million. But culture shock hit Best Buy, best described by Shaun Rein, the founder of China Market Research Group. He pointed to a few reasons for this culture shock and lack of success. First, the Chinese will not pay for Best Buy's overly expensive products unless they are a brand like Apple. Second, there is too much piracy in the Chinese market, and this reduces the demand for electronics products at competitive market prices. Third, like many Europeans, the Chinese do not want to shop at huge mega-stores. So, these three seemingly easy-to-understand cultural issues created difficulties for Best Buy. Solving these issues, Best Buy believed that it would have to develop and implement a different business model for the Chinese market than it has used, for example, in the United States. Now, how far should a company go outside its normal business model to adhere to the cultural values and beliefs of a new market? Strategically moving forward, Best Buy opted to close all of its Best Buy branded stores in China and focus on its wholly-owned local Jiangsu Five Star chain of stores. But will this new strategic business model be successful with the new makeup of customers in China expected by 2020?

eBay, the popular e-business site focused on consumer-to-consumer purchases, was founded in 1995. The company was one of the true success stories that lived through the dot-com bubble in the 1990s. It is now a multi-billion-dollar business with operations in more than 30 countries. But China's unique culture created problems for eBay in that market. Contrary to the widespread cultural issues that faced Best Buy, one company in particular (TaoBao) and one feature more specifically (built-in instant messaging) shaped a lot of the problems that eBay ran into in China. Some 200 million shoppers are using TaoBao to buy products, and the company accounts for almost 80 percent of online transaction value in China. Uniquely, TaoBao's built-in instant messaging system has been cited as the main reason for its edge over eBay in China. Basically, customers wanted to be able to identify a seller's online status and communicate with them directly and easily function not seamlessly incorporated into eBay's China system. Clearly, built-in instant text messaging is a solvable obstacle in doing business in China. It sounds easy now when we know about it, but may not always be the case when we take into account all the little things that are important in a market.

brownox314

Choose the right answer

Question 1

With respect to consumer behavior, one's attitudes, learning, and perceptions would be

		impersonal influences
		interpersonal influences
		personal influences
		insitutional influences

Question 2

In Maslow's hierarchy of needs,

		a physiological need must be met directly before social needs.
		esteem needs are the highest order of needs.
		self-actualization needs are the highest order
		safety needs and esteem are of the same importance.

Question 3

The most likely product to be purchased in an attempt to satisfy self-esteem needs would be

		"super class" tickets for your next air flight.
		a really fast computer.
		a home security system.
		yogurt and health food.

Question 4

Which of the following is not a characteristic that distinguishes organizational markets from consumer markets?

		Organizational markets are more geographically concentrated.
		More people exert influence on the organizational buying decision.
		The organizational market tends to have a greater number of buyers.
		Organizations often engage in multiple sourcing and vendor analysis.

Question 5

Consumers may attempt to reduce postpurchase anxiety in the consumer decision process by

		avoiding favorable information about the selected brand
		seeking reassurance from dissatisfied customers
		seeking information that favors the rejected brands
		ignoring unfavorable reports about the chosen brand

Question 6

The buying center concept explains how groups of people participate informally in business purchase decisions and

		methods to break through group perceptions.
		the role the group members play in buying decisions.
		how family units operate as buying centers.
		the process of performing vendor analysis.

Question 7

In the organizational buying process, a triggering event such as announcement of the availability of a new product whose use could improve the company's market performance is referred to as

		need or opportunity recognition
		identification of suppliers
		information search
		word-of-mouth exploration

Question 8

An undifferentiated marketing strategy

		serves the consumer better because the products offered are designed to meet the needs of a specific group of people
		benefits from the control and efficiency of short production runs
		ignores differences among consumer groups and focuses on the broad market
		is the most common strategy today and is used more now than in the past

Question 9

Goods purchased by the ultimate consumer for personal use are called

		personal products
		purchased products
		consumer products
		commercial products

Question 11

A particular purchasing agent might allow some salespeople to see the engineers responsible for developing product specifications but not allow others the same privilege. In the buying center, this purchasing agent is filling the role of

		a "hard" nose
		a gatekeeper
		an influencer
		a decider

Question 12

"Our prices are the lowest, we guarantee it" is an example of a positioning strategy based on the product's

		competitors
		price
		class
		application

Question 13

Segmenting the market based on exactly how an industrial purchaser will use products is referred to as

		customer-based segmentation
		benefits segmentation
		end-use application segmentation
		geographic segmentation

Question 14

The lumber your carpenter purchases to finish out your basement is classified as

		a home improvement product
		a raw material
		a business product
		a consumer good

Question 15

When consumer demand for personal computers affects computer manufacturers' demand for computer chips, this situation is known as

		volatile demand
		conjoined demand
		derived demand
		joint demand

Question 16

Which of the following is a personal factor in consumer bahavior?

		a cultural influence
		group membership
		friends' opinions
		a person's attitudes

Question 17

Cognitive dissonance would be most likely to occur after the purchase of

		sneakers
		groceries
		an automobile
		cosmetics

Question 18

Which of the following would be most likely to break through a person's perceptual screen?

		a newspaper ad featuring white type on a black background
		a black- and -white classified ad
		reducing the size of the ad
		using fewer colors in the ad

Question 19

The Fortune 500 list of America's largest firms based on sales revenues and number of employees provides a basis for

		market segmentation based upon customer type
		demographic segmentation based upon geographic location
		end-user segmentation of this market
		demographic segmentation based upon customer size

Question 20

Straight rebuy behavior by industrial purchasers will probably continue if the supplier provides

		poor service
		poor quality
		shipping delays
		satisfactory performance

Question 21

A controversial technique of subconscious communication, aimed at circumventing the perceptual screens, is called

		shadowed perception
		leger-de-main
		subliminal perception
		perception incognito

Question 22

Those products that are actually considered when making a consumer purchase decision are

		customer options
		customer selections
		the evoked set
		the product set

Question 23

The component of the business market that consists of individuals and firms that acquire goods and services to be used directly, or indirectly, in producing other goods and services is called:

		wholesaling and retailing
		the commercial market
		government
		an institution

Question 24

The institutional market does not include which of the following?

		hospitals
		museums
		motion pictures theatres
		universities

Question 25

Advertising for smoke alarms, air bags and life insurance typically uses which of Maslow's levels of needs to appeal to consumers?

		self-esteem needs
		safety and security needs
		physiological needs
		protection needs

Question 26

One type of buying center role is that of the

		influencer who supplies information for evaluation.
		authority figure who decides who, what, where, when, and how.
		disseminator who function is to get advertisements to prospects.
		specifier who needs on the specifications of products

Question 27

Manufacturing firms that convert to automated factory systems must purchase equipment that they have never bought before, such as robots and computers. This buying situation is called

		a straight rebuy
		a modified rebuy
		a contract purchase
		new-task buying

Question 29

A commonly used basis for segmenting consumer markets is

		product-related characteristics
		health-related matters
		information-related concepts
		performance-related criteria

1 points

Question 30

The business market is also known as the

		wholesale market
		corporate market
		organizational market
		distribution market

Question 31

Which of the following consumer problem-solving behaviors requires the least effort?

		extended problem solving
		limited problem solving
		impulsive buying
		routine response behavior

Question 32

The relationship between the demand for silk cloth and consumer demand for silk blouses and neckties is known as

		joint demand
		demand volatility
		derived demand
		consumer demand

Question 33

Examples of business market items that would usually be purchased as a straight rebuy are

		high quality raw materials
		heavy-duty machinery
		paper clips and pencils
		high-tech components

Question 34

The person who joins a local bowling league for the social interaction, even if he or she is a novice bowler, is probably trying to satisfy his or her

		esteem needs
		self-actualization needs
		physiological needs
		belongingness/social needs

Question 35

Campbell's "Soup for One" is an example of a product that is targeted to

		large families with high product usage of certain things but different preferences
		dual-income couples with no kids
		well-off older families
		non-traditional households such as nonfamily, single-person or single-parent situations

Question 36

Red Ryder Industries markets rodeo and horse riding supplies specifically to women. This is an example of

		market stratification
		market segmentation
		non-traditional marketing
		multi-gender marketing

Question 37

Purchases made by choosing a preferred brand or one of a limited group of acceptable brands are called

		extended problem solving
		routinized response behavior
		limited problem solving
		selective problem solving

Question 38

The slogan "the graying of America" describes the trend

		toward people retiring later in life
		of the word force to contain a disproportionate number of older Americans
		for gray hair to develop from years of high-stress urban work
		upward in the elderly population as Americans tend to live longer

Question 39

People or institutions must have sufficient purchasing power and the authority and willingness to buy to be considered a

		market
		buyer
		player
		segment

Question 40

Reference group influences would be most likely to be significant in the decision to buy

		a loaf of bread
		a Mercedes Benz
		a clock radio
		cellophane tape

Question 41

Internal search in the consumer decision process may include

		subscribing to consumer magazines to evaluate alternatives
		talking to family members
		reviewing past purchases
		surveying coworkers for buying options

Question 42

The process of dividing the total market into several smaller, homogeneous groups is called

		market penetration
		market segmentation
		market mixing
		market division

ADM 2320 Lecture Notes - Lecture 12: Services Marketing, Micromarketing, Shortage

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