MGMT 339 Exam 2 UPDATED
QUESTIONS AND CORRECT ANSWERS
K3: Define Service Failure - CORRECT ANSWER When service performance falls
below a customer's expectations in such a way that leads to customer dissatisfaction.
K3: Define Service Recovery - CORRECT ANSWER The actions taken by a firm in
response to service failure.
K3: What percentages are for the three types of responses for a bad service?
1. ?% complain to management or company headquarters
2. ?% complain to a frontline employee
3. ?% encounter a problem but do not complain - CORRECT ANSWER 1. 1%-5%
2. 45%
3. 50%
K3: What is the service recovery paradox? - CORRECT ANSWER Even if there's a
service failure, if the service recovery is successful, it's very likely the customers will be
satisfied and become even more loyal.
K3: What are three challenges to service recovery paradox? - CORRECT ANSWER 1.
Only a small percent of customers complain.
2. Service recovery must be EXCELLENT.
3. Service recovery can be expensive.
K3: When is service recovery more likely to occur? - CORRECT ANSWER 1. The
failure is not considered by the customer to be severe.
2. The customer has not experienced prior failures with the firm.
3. The customer perceives that the company had little control over the cause of the failure.
,K3: For tangible products, a guarantee is often done in the form of a _______? - CORRECT
ANSWER warranty
K3: Why is it so difficult for customers to return a service? - CORRECT
ANSWER Services aren't tangible.
K3: How can service companies guarantee good service? - CORRECT
ANSWER Slogan/message with a guarantee.
Ex. Starbucks - "Love your beverage or let us know. We'll make it right."
K3: What are the three important characteristics of an effective service guarantee? -
CORRECT ANSWER 1. Unconditional
2. Meaningful
3. Easy to understand and communicate
K3: Define unconditional service. - CORRECT ANSWER 1. The guarantee should
make its promise unconditionally - no strings attached.
K3: Define meaningful service - CORRECT ANSWER 2. The firm should guarantee
elements of the service that are important to the customer.
K3: Define easy to understand and communicate service. - CORRECT ANSWER 3.
Customers need to understand what to expect.
Employees need to understand what to do to satisfy customers.
K3: What are the benefits of service guarantees? - CORRECT ANSWER 1. forces the
company to focus on its customers.
2. sets clear standards for the organization.
3. reduces customers' sense of risk and builds confidence in the organization.
, 4. makes it easier for customers to address service failure.
K3: What are some reasons as to why a company may not want to offer a service guarantee? -
CORRECT ANSWER 1. Existing service quality is poor. Guarantee does not fit the
company's image. (e.g., taco trucks)
2. Too many uncontrollable external variables. (e.g., airlines)
3. Fears of cheating or abuse by customers. Costs of the guarantee outweigh the benefits.
4. Customers perceive little risk in the service. (low price)
5. Customers perceive little variability in service quality among competitors. (e.g., fast food
restaurants)
K3: Define servicescape - CORRECT ANSWER A concept that emphasizes the impact
of the physical environment in which a service process takes place.
K3: What are some exterior elements of the servicescape? - CORRECT
ANSWER Exterior elements: landscape, exterior design, signage, parking, surrounding
environment
K3: What are some interior elements of the servicescape? - CORRECT
ANSWER Interior elements: interior design and decor, equipment, signage, layout, air
quality, temperature and ambiance)
K3 P.2: Define Quality - CORRECT ANSWER The degree to which PERFORMANCE
of a product or service meets or exceeds customer EXPECTATIONS.
K3 P.2: What are the three costs of quality? - CORRECT ANSWER 1. Appraisal costs
2. Prevention costs
3. Failure Costs
K3 P.2: Define appraisal costs. - CORRECT ANSWER Costs incurred when the firm
assess the performance level of its processes.
QUESTIONS AND CORRECT ANSWERS
K3: Define Service Failure - CORRECT ANSWER When service performance falls
below a customer's expectations in such a way that leads to customer dissatisfaction.
K3: Define Service Recovery - CORRECT ANSWER The actions taken by a firm in
response to service failure.
K3: What percentages are for the three types of responses for a bad service?
1. ?% complain to management or company headquarters
2. ?% complain to a frontline employee
3. ?% encounter a problem but do not complain - CORRECT ANSWER 1. 1%-5%
2. 45%
3. 50%
K3: What is the service recovery paradox? - CORRECT ANSWER Even if there's a
service failure, if the service recovery is successful, it's very likely the customers will be
satisfied and become even more loyal.
K3: What are three challenges to service recovery paradox? - CORRECT ANSWER 1.
Only a small percent of customers complain.
2. Service recovery must be EXCELLENT.
3. Service recovery can be expensive.
K3: When is service recovery more likely to occur? - CORRECT ANSWER 1. The
failure is not considered by the customer to be severe.
2. The customer has not experienced prior failures with the firm.
3. The customer perceives that the company had little control over the cause of the failure.
,K3: For tangible products, a guarantee is often done in the form of a _______? - CORRECT
ANSWER warranty
K3: Why is it so difficult for customers to return a service? - CORRECT
ANSWER Services aren't tangible.
K3: How can service companies guarantee good service? - CORRECT
ANSWER Slogan/message with a guarantee.
Ex. Starbucks - "Love your beverage or let us know. We'll make it right."
K3: What are the three important characteristics of an effective service guarantee? -
CORRECT ANSWER 1. Unconditional
2. Meaningful
3. Easy to understand and communicate
K3: Define unconditional service. - CORRECT ANSWER 1. The guarantee should
make its promise unconditionally - no strings attached.
K3: Define meaningful service - CORRECT ANSWER 2. The firm should guarantee
elements of the service that are important to the customer.
K3: Define easy to understand and communicate service. - CORRECT ANSWER 3.
Customers need to understand what to expect.
Employees need to understand what to do to satisfy customers.
K3: What are the benefits of service guarantees? - CORRECT ANSWER 1. forces the
company to focus on its customers.
2. sets clear standards for the organization.
3. reduces customers' sense of risk and builds confidence in the organization.
, 4. makes it easier for customers to address service failure.
K3: What are some reasons as to why a company may not want to offer a service guarantee? -
CORRECT ANSWER 1. Existing service quality is poor. Guarantee does not fit the
company's image. (e.g., taco trucks)
2. Too many uncontrollable external variables. (e.g., airlines)
3. Fears of cheating or abuse by customers. Costs of the guarantee outweigh the benefits.
4. Customers perceive little risk in the service. (low price)
5. Customers perceive little variability in service quality among competitors. (e.g., fast food
restaurants)
K3: Define servicescape - CORRECT ANSWER A concept that emphasizes the impact
of the physical environment in which a service process takes place.
K3: What are some exterior elements of the servicescape? - CORRECT
ANSWER Exterior elements: landscape, exterior design, signage, parking, surrounding
environment
K3: What are some interior elements of the servicescape? - CORRECT
ANSWER Interior elements: interior design and decor, equipment, signage, layout, air
quality, temperature and ambiance)
K3 P.2: Define Quality - CORRECT ANSWER The degree to which PERFORMANCE
of a product or service meets or exceeds customer EXPECTATIONS.
K3 P.2: What are the three costs of quality? - CORRECT ANSWER 1. Appraisal costs
2. Prevention costs
3. Failure Costs
K3 P.2: Define appraisal costs. - CORRECT ANSWER Costs incurred when the firm
assess the performance level of its processes.
