Chap 1

1. (9) Customer Contact Model of Services - High Contact

2. (9) The Service Process Matrix

Degree of Interaction and Customization- High

Degree of Labor Intensity- High

(9)

Challenges for Managers: (high interaction/ high customization) • Fighting cost increases • Maintaining
quality • Reacting to consumer intervention in process • Managing flat hierarchy with loose
subordinate-superior relationships • Gaining employee loyalty

Challenges for Managers: (high labor intensity) • Hiring, training • Methods development • Employee
welfare • Scheduling workforces • Control of far-flung locations • Managing growth

Chap 2

(15)

The Strategic Planning Process for Services

Strategic Positioning • Sets “target market” • Five-forces or core competence • Decisions: Mission, high-
level goals, high-level objectives

Service Strategy • Sets “service concept,” “operating system,” and “service delivery system” •
Competitive priorities, order winners, and qualifiers • Decisions: Location, facility size, type and number,
capacity, inventory, etc.

Tactical Execution • Represents managing day-to-day service operations • Decisions: Supplier selection,
order size and timing, staffing levels, etc

Chap 3

1. A. Better products and services: Especially software and games which could be interactive when
on the Web. Maps that are not just references to streets, but can be queried for useful
information, like the closest gas station to your cur rent position.
B. More intelligent products and services: A key example of building more intel ligent services is
Amazon.com, which is able to link past purchase behavior with current book publishing to
automatically send emails to customers who are likely to purchase a particular item.

2. DIFFERENTIAL COST DRIVERS OF INTERNET AND TRADITIONAL FIRMS

Bricks Taxes Inventory and Personnel Logistics

Chap 4

SKIP

Chap 5

New Service Development- suggestion renew cards online, ship to customer

Chap 6

Many of their trends address different experiential issues: 1. Cocooning: Our desire to build ourselves
strong and cozy nests where we can retreat from the world and enjoy ourselves in safety and comfort.
The nesting trend is apparent in the boom in home stores such as Crate & Barrel or Pottery Barn; home
entertainment rooms and equipment; and home crafts such as cooking or building craft television
shows, magazines, and associated products. 2. Clanning: Our need to associate with likeminded
individuals and to identify ourselves with a particular group that shares our outlook and values. This
type of behavior is addressed by special interest chat rooms and Web sites, lifestyle publications, coffee
shops, niche hotels, and resorts. 3. Fantasy adventure: Our need to seek out riskfree fantasy and
adventure experiences as a break from the mundane daytoday activities. Examples of products and
services oriented toward this behavior include computer games, locationbased entertainment like
theme parks, television shows such as Survivor, and adventure travel. 4. Pleasure revenge: Another form
of escape comes in the form of sensual and pleasurable activities that provide a feeling of compensation
for all of life’s struggles. Typical examples of this trend are evident in the growth of massage therapy and
spas. 5. Small indulgences: The trend toward people rewarding themselves regularly with small
affordable luxuries such as ubiquitous Starbuck’s latte coffee drinks (sold at a premium over regular
coffee), dining out, and gourmet food items. 6. Anchoring: This term refers to the increasing tendency
for people to seek ful fillment in spiritual values and looking back to the past to recapture what was
comforting and reassuring then. Stores like Restoration Hardware with retro furnishings and accessories;
New Urbanism housing developments such as Seaside and Celebration, which draw inspiration from
historical Southern towns and traditional neighborhoods of the 1920s and 1930s; and themed
restaurants such as Johnny Rockets that replicate 1940s American diners com plete with jukeboxes,
handformed hamburgers, and malts. 7. Egonomics:This reaction to the standardization imposed by the
computer age manifests itself through various avenues of selfexpression and personal state ments.
Interactive Web and television activities, installation art and music gatherings such as the Burning Man
Event, paintyourown ceramics shops, and online publications create avenues for addressing this need.
Chap 7

Chap 8

TABLE 8.2: Risks and Benefits of Outsourcing Benefits Risks Access to expertise Contract Appropriateness
Pooling effect on variability Outsource firm (solvency, strikes) Lower costs Future pricing Higher quality
Information privacy Competitive advantage Firm specific risks Loss of firm knowledge Loss of career
paths Organizational identification Loss of customer empathy Loss of employee-firm identification

TABLE 8.3: Activities Often Offshored Professional judgment: medical diagnosis (e.g., radiology),
computer programming, product design, architecture, legal services, tax preparation, document editing,
securities research, consulting presentation preparation Communication oriented: call centers,
customer contact centers Back-office transaction processes: human resource department activity
(medical reimbursements, payroll, benefits), finance department activity (accounts receivable, accounts
payable), loan administration (initial mortgage application processing, payment processing, collateral
tracking, loan payoffs, collections), insurance (new account setup, policy issue, address/beneficiary
information change, claims processing: examination, capture, settlement, and correspondence), data
entry (credit card receipts, warranty cards, medical transcription, etc.)

Chap 9

Flow Chart

Chap 10

The expectation hierarchy

Ideal
Should Expectation

Will Expectation (High Expectations)

Minimally Acceptable

Will Expectation (Low Expectations)

Worst Possible

Determinants of Service Quality Reliability involves consistency of performance and dependability. It

means that the firm performs the service right the first time. It also means that the firm honors its
promises. Specifically, it involves: • accuracy in billings; • keeping records correctly; • performing the
service at the designated time. Responsiveness concerns the willingness or readiness of employees to
provide service. It involves timeliness of service: • mailing a transaction slip immediately; • calling the
customer back quickly; • giving prompt service (e.g., setting up appointments quickly). Competence
means possession of the required skills and knowledge to perform the service. It involves: • knowledge
and skill of the contact personnel; • knowledge and skill of operational support personnel; • research
capability of the organization, e.g., securities brokerage firm. Access involves approachability and ease
of contact. It means: • the service is easily accessible by telephone (lines are not busy and they don’t put
you on hold); • waiting time to receive service (e.g., at a bank) is not extensive; • convenient hours of
operation; • convenient location of service facility. Courtesy involves politeness, respect, consideration,
and friendliness of contact personnel (including receptionists, telephone operators, etc.) It includes: •
consideration for the consumer’s property (e.g., no muddy shoes on the carpet); • clean and neat
appearance of public contact personnel. Communication means keeping customers informed in
language they can understand and listening to them. It may mean that the company has to adjust its
language for different consumers—increasing the level of sophistication with a well-educated customer
and speaking simply and plainly with a novice. It involves: • explaining the service itself; • explaining
how much the service will cost; • explaining the trade-offs between service and cost; • assuring the
consumer that a problem will be handled. Credibility involves trustworthiness, believability, honesty. It
involves having the customer’s best interests at heart. Contributing to credibility are: • company name;
• company reputation; • personal characteristics of the contact personnel; • the degree of hard sell
involved in interactions with the customer. Security is the freedom from danger, risk, or doubt. It
involves: • physical safety (Will I get mugged at the automatic teller machine?); • financial security (Does
the company know where my stock certificate is?); • confidentiality (Are my dealings with the company
private?). Understanding/Knowing the Customer involves making the effort to understand the
customer’s needs. It involves: • learning the customer’s specific requirements; • providing individualized
attention; • recognizing the regular customer. Tangibles include the physical evidence of the service: •
physical facilities; • appearance of personnel; • tools or equipment used to provide the service; •
physical representations of the service, such as a plastic credit card or a bank statement; • other
customers in the service facility.

Chap 11
Bias Name Explanation Halo effect If a person is good at one thing, he or she must be good at another.
Studies have shown that attractive people are more likely to get promoted than ugly people. Availability
Because I have seen it, it must happen a lot. When surveyed, people generally respond incorrectly that
tornados kill more people than lightning because they see the devastated mobile home parks on the
news. Spurious awareness I think I know things that really are not so. The pasta example described in
the chapter. Anchoring People are very suggestible; they latch onto information early (anchor on a fact),
then fail to update when new information is available. Recency People tend to pay more attention to
what has happened recently, even if it is not representative of what usually happens. Selective
perception People tend to give credence to what confirms their beliefs and discount things that
contradict their beliefs. Memory/hindsight People remember things differently than they actually
happened. Everyone has a friend that says after a big upset, “I knew they would win!” Confirming
evidence When given information, people tend to see things that support their positions, while
discounting things that conflict with their positions

Chap 12

CAPACITY STRATEGIES

. Provide: Ensure sufficient capacity at all times

. Match: Change capacity as needed

. Influence: Alter demand patterns to fit firm capacity

. Control: Maximize capacity utilization

Supply Management

• Workshift scheduling.

• Increasing customer participation.

• Adjustable (surge) capacity.

• Sharing capacity.

Demand Management

• Partitioning demand.

• Price incentives and promotion of offpeak demand.

• Develop complementary services.

• Yield management.

• Overbooking
Chap 14

Rule 1: Waiting Lines Form Even When Total Workload Is Less Than Capacity

Rule 2: Waiting Lines Are Not Linearly Related to Capacity