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conjoint analysis: a research method for determining cyberspace: a virtual reality without physical exis-
the utility values that consumers attach to varying lev- tence, in which electronic transactions or communica-
els of a product’s attributes. tions occur.
consumption: purchase and use of a service or good.
control chart: a chart that graphs quantitative changes D
in service performance on a specific variable relative to
data mining: extracting useful information about indi-
a predefined standard.
viduals, trends, and segments from often massive
control model of management: an approach based on
amounts of customer data.
clearly defined roles, top-down control systems, a hier-
data warehouse: a comprehensive database containing
archical organizational structure, and the assumption
customer information and transaction data.
that management knows best.
database marketing: building, maintaining, and using
core competency: a capability that is a source of com-
customer databases and other databases for contacting,
petitive advantage.
selling, cross-selling, up-selling, and building customer
corporate culture: shared beliefs, norms, experiences,
relationships.
and stories that characterize an organization.
defection: a customer’s decision to transfer brand loy-
corporate design: consistent application of distinctive
alty from a current service provider to a competitor.
colours, symbols, and lettering to give a firm an easily
delivery channels: physical and electronic means by
recognizable identity.
which a service firm (sometimes assisted by intermedi-
cost leader: a firm that bases its pricing strategy on
aries) delivers one or more product elements to its cus-
achieving the lowest costs in its industry.
tomers.
cost-based pricing: relating the price to be charged for
demand curve: A curve that shows the number of units
a product to the costs associated with producing,
the market will buy at different prices.
delivering, and marketing it.
demand cycle: a period of time during which the level
credence attributes: product characteristics that cus-
of demand for a service will increase and decrease in a
tomers may not be able to evaluate even after purchase
somewhat predictable way before repeating itself.
and consumption.
demographic segmentation: dividing the market into
critical incident: a specific encounter between
groups based on demographic variables such as age,
customer and service provider in which the outcome
gender, family life cycle, family size, income, occupa-
has proved especially satisfying or dissatisfying for one
tion, education, religion, or ethnic group.
or both parties.
desired service: the “wished for” level of service quality
critical incident technique (CIT): a methodology for
that a customer believes can and should be delivered.
collecting, categorizing, and analyzing critical incidents
discounting: a strategy of reducing the price of an item
that have occurred between customers and service
below the normal level.
providers.
dynamic pricing: a technique, employed primarily by
CRM system: information technology (IT) systems and
e-tailers, to charge different customers different prices
infrastructure that support the implementation and
for the same products, based on information collected
delivery of a customer-relationship management
about their purchase history, preferences, and price
strategy.
sensitivity.
customer contact personnel: service employees who
interact directly with individual customers, either in
person or through mail and telecommunications. E
customer equity: total combined customer lifetime e-commerce: buying, selling, and other marketing
value (see definition) of the company’s entire customer processes supported by the Internet (see also e-tailing).
base. eight (8) Ps: eight strategic elements, each beginning
customer interface: all points at which customers with P, in the services marketing mix, representing the
interact with a service organization. key ingredients required to create viable strategies for
customer lifetime value (CLV): net present value of meeting customer needs profitably in a competitive
the stream of future contributions or profits expected marketplace.
over each customer’s purchases during his or her emotional labour: expressing socially appropriate (but
anticipated lifetime as a customer of a specific organi- sometimes false) emotions toward customers during
zation. service transactions.
customer relationship management (CRM): overall empowerment: authorizing employees to find solu-
process of building and maintaining profitable cus- tions to service problems and make appropriate deci-
tomer relationships by delivering superior customer sions about responding to customer concerns without
value and satisfaction. having to obtain a supervisor’s approval.
customer satisfaction: a short-term emotional reaction enablement: providing employees with the skills,
to a specific service performance. tools, and resources they need to use their own discre-
customer training: training programs offered by ser- tion confidently and effectively.
vice firms to teach customers about complex service enhancing supplementary services: supplementary
products. services that may add extra value for customers.
customization: tailoring service characteristics to meet e-tailing: retailing through the Internet instead of
each customer’s specific needs and preferences. through physical stores.
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involvement model of management: an approach understanding the process and even the nature of the
based on the assumption that employees are capable of outcome (see also physical intangibility).
self-direction and, if properly trained, motivated, and mental stimulus processing: intangible actions
informed, can make good decisions concerning service directed at people’s minds.
operations and delivery. mission statement: succinct description of what the
iTV: (interactive television) procedures that allow viewers organization does, its standards and values, whom it
to alter the viewing experience by controlling TV program serves, and what it intends to accomplish.
delivery (e.g., TiVo, video on demand) and/or content. molecular model: a framework that uses a chemical
analogy to describe the structure of service offerings.
moment of truth: a point in service delivery at which
J
customers interact with service employees or self-service
jaycustomer: a customer who acts in a thoughtless or equipment and the outcome may affect perceptions of
abusive way, causing problems for the firm, its employ- service quality.
ees, and other customers. mystery shopping: a research technique that employs
individuals posing as ordinary customers to obtain
L feedback on the service environment and
customer–employee interactions.
levels of customer contact: extent to which customers
interact physically with the service organization. N
low-contact services: services that require minimal or
no direct contact between customers and the service needs: subconscious, deeply felt desires that often con-
organization. cern long-term existence and identity issues.
loyalty: a customer’s commitment to continue patroniz- net value: the sum of all perceived benefits (gross
ing a specific firm over an extended period of time. value) minus the sum of all perceived outlays.
nonfinancial outlays: time expenditures, physical and
mental effort, and unwanted sensory experiences asso-
M ciated with searching for, buying, and using a service.
market focus: extent to which a firm serves few or nonmonetary costs: (see nonfinancial outlays).
many markets.
market segmentation: process of dividing a market O
into distinct groups within each of which all customers opportunity cost: potential value of income or other
share relevant characteristics that distinguish them benefits foregone as a result of choosing one course of
from customers in other segments, and respond in sim- action instead of other alternatives.
ilar ways to a given set of marketing efforts. optimum capacity: point beyond which a firm’s efforts
marketing communications mix: full set of communi- to serve additional customers will lead to a perceived
cation tools (both paid and unpaid) available to mar- decline in service quality.
keters, including advertising, sales promotion, events, organizational climate: employees’ shared perceptions
public relations and publicity, direct marketing, and of the practices, procedures, and types of behaviours
personal selling. that are rewarded and supported in a particular setting.
marketing implementation: process that turns mar- organizational culture: shared values, beliefs, and
keting plans into projects and ensures that such pro- work styles that are based on an understanding of
jects are executed in a way that accomplishes the plan’s what is important to the organization and why.
stated objectives. OTSU (“opportunity to screw up”): (see fail point).
marketing research: systematic design, collection, outputs: final outcome of the service delivery process
analysis, and reporting of customer and competitor as perceived and valued by customers.
data and findings relevant to a specific marketing situ-
ation facing an organization. P
marketplace: a location in physical space or cyberspace Pareto analysis: an analytical procedure to identify
(see definition) where suppliers and customers meet to what proportion of problem events is caused by each of
do business. several different factors.
mass customization: offering a service with some people: customers and employees who are involved in
individualized product elements to a large number of service production.
customers at a relatively low price. people processing: services that involve tangible
maximum capacity: upper limit to a firm’s ability to actions to people’s bodies.
meet customer demand at a particular time. perception: process by which individuals select, orga-
medium-contact services: services that involve only a nize, and interpret information to form a meaningful
limited amount of contact between customers and ele- picture of the world.
ments of the service organization. perceptual map: a visual illustration of how customers
membership relationship: a formalized relationship perceive competing services.
between the firm and a specified customer that may permission marketing: a marketing communication
offer special benefits to both parties. strategy that encourages customers to volunteer per-
mental intangibility: difficulty for customers in visual- mission to a company to communicate with them
izing an experience in advance of purchase and through specified channels so they may learn more
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about its products and continue to receive useful infor- product attributes: all features (both tangible and
mation or something else of value to them. intangible) of a good or service that can be evaluated
personal communications: direct communications by customers.
between marketers and individual customers that product elements: all components of the service per-
involve two-way dialogue (including face-to-face con- formance that create value for customers.
versations, phone calls, and email). productive capacity: amount of facilities, equipment,
personal selling: two-way communications between labour, infrastructure, and other assets available to a
service employees and customers designed to influence firm to create output for its customers.
the purchase process directly. productivity: how efficiently service inputs are trans-
physical effort: undesired consequences to a cus- formed into outputs that add value for customers.
tomer’s body resulting from involvement in the service promotion and education: all communication activi-
delivery process. ties and incentives designed to build customer prefer-
physical evidence: visual or other tangible clues that ence for a specific service or service provider.
provide evidence of service quality. psychographic segmentation: dividing a market into
physical intangibility: service elements that are not different groups based on personality characteristics,
accessible to examination by any of the five senses; social class, or lifestyle.
(more narrowly) elements that cannot be touched or pre- psychological burdens: undesired mental or emotional
served by customers. states experienced by customers as a result of the ser-
place and time: management decisions about when, vice delivery process.
where, and how to deliver services to customers. public relations: efforts to stimulate positive interest in
positioning: establishing a distinctive place in the a company and its products by sending out news
minds of customers relative to the attributes possessed releases, holding press conferences, staging special
by or absent from competing products. events, and sponsoring newsworthy activities put on
possession processing: tangible actions to goods and by third parties.
other physical possessions belonging to customers. purchase process: the stages a customer goes through
postprocess wait: a wait that occurs after service in choosing, consuming, and evaluating a service.
delivery has been completed.
post-encounter stage: final stage in the service pur- Q
chase process, in which customers evaluate the service
quality: the degree to which a service satisfies cus-
experienced, form their satisfaction/dissatisfaction
tomers by consistently meeting their needs, wants, and
judgment with the service outcome, and establish
expectations.
future intentions.
queue: a line of people, vehicles, other physical objects,
post-transaction survey: a technique to measure cus-
or intangible items waiting their turn to be served or
tomer satisfaction and perceptions of service quality
processed.
while a specific service experience is still fresh in the
queue configuration: the way in which a waiting line
customer’s mind.
is organized.
predicted service: level of service quality a customer
believes a firm will actually deliver.
preprocess wait: a wait before service delivery begins. R
prepurchase stage: first stage in the service purchase rate fences: techniques for separating customers so
process, in which customers identify alternatives, weigh that segments for whom the service offers high value
benefits and risks, and make a purchase decision. are unable to take advantage of lower-priced offers.
price and other user outlays: expenditures of money, reciprocal marketing: a marketing communication
time, and effort that customers incur in purchasing and tactic in which an online retailer allows paying cus-
consuming services. tomers to receive promotions for another online retailer
price bucket: an allocation of service capacity (e.g., and vice versa, at no upfront cost to either party.
seats) for sale at a particular price. re-engineering: analysis and redesign of business
price bundling: charging a base price for a core service processes to create dramatic performance improve-
plus additional fees for optional supplementary ments in such areas as cost, quality, speed, and cus-
elements. tomers’ service experiences.
price elasticity: extent to which a change in price relationship marketing: activities aimed at develop-
leads to a corresponding change in demand in the ing long-term, cost-effective links between an organi-
opposite direction. (Demand is described as price zation and its customers for the mutual benefit of
inelastic when changes in price have little or no effect both parties.
on demand.) reneging: a decision by a customer to leave a queue
price leader: a firm that takes the initiative on price before reaching its end because the wait is longer or
changes in its market area and is copied by others. more burdensome than originally anticipated.
process: a particular method of operations or series of repositioning: changing the position a firm holds in a
actions, typically involving steps that need to occur in a consumer’s mind relative to competing services.
defined sequence. retail displays: presentations in store windows and
product: the core output (either a service or a manufac- other locations of merchandise, service experiences,
tured good) produced by a firm. and benefits.
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retail gravity model: a mathematical approach to retail service failure: a perception by customers that one or
site selection that involves calculating the geographic more specific aspects of service delivery have not met
centre of gravity for the target population and then their expectations.
locating a facility to optimize customers’ ease of service focus: extent to which a firm offers few or
access. many services.
return on quality: financial return obtained from service guarantee: a promise that if service delivery
investing in service quality improvements. fails to meet predefined standards, the customer is
revenue management: a pricing and product-design entitled to one or more forms of compensation.
strategy based on charging different prices to different service marketing system: that part of the total
segments at different times to maximize the revenue service system in which the firm has any form of
that can be derived from a firm’s available capacity contact with its customers, from advertising to
during a specific time frame (also known as yield man- billing; it includes contacts made at the point of
agement). delivery.
role: a combination of social cues that guides behaviour service model: an integrative statement that specifies
in a specific setting or context. the nature of the service concept (what the firm offers,
role congruence: extent to which both customers and to whom, and through what processes), the service
employees act out their prescribed roles during a ser- blueprint (how the concept is delivered to target cus-
vice encounter. tomers), and the accompanying business model (how
revenues will be generated sufficient to cover costs and
ensure financial viability).
S service operations system: that part of the total
sales promotion: a short-term incentive offered to cus- service system in which inputs are processed and the
tomers and intermediaries to stimulate faster or larger elements of the service product are created.
purchase. service preview: a demonstration of how a service
satisfaction: a person’s feelings of pleasure or disap- works, to educate customers about the roles they are
pointment resulting from a consumption experience expected to perform in service delivery.
when comparing a product’s perceived performance service quality: customers’ long term, cognitive evalu-
or outcome in relation to his or her expectations. ations of a firm’s service delivery.
script: a learned sequence of behaviours obtained service quality information system: an ongoing ser-
through personal experience or communication with vice research process that provides timely, useful data
others. to managers about customer satisfaction, expectations,
search attributes: product characteristics that con- and perceptions of quality.
sumers can readily evaluate prior to purchase. service recovery: systematic efforts by a firm after a
segment: a group of current or prospective customers service failure to correct a problem and retain a cus-
who share common characteristics, needs, purchasing tomer’s goodwill.
behaviour, or consumption patterns. service sector: the portion of a nation’s economy rep-
sensory burdens: negative sensations experienced resented by services of all kinds, including those
through a customer’s five senses during the service offered by public and nonprofit organizations.
delivery process. service–profit chain: a strategic framework that links
service: an economic activity offered by one party to employee satisfaction to performance on service attrib-
another, typically without transfer of ownership, creat- utes to customer satisfaction, then to customer reten-
ing value from rental of, or access to, goods, labour, tion, and finally to profits.
professional skills, facilities, networks, or systems, services marketing mix (see eight (8) Ps).
singly or in combination. servicescape: the design of any physical location
service blueprint: (see blueprint, flowchart). where customers come to place orders and obtain ser-
service concept: what the firm offers, to whom, and vice delivery.
through what processes. SERVQUAL: a pair of standardized 22-item scales that
service delivery system: that part of the total service measure customers’ expectations and perceptions con-
system during which final “assembly” of the elements cerning five dimensions of service quality.
takes place and the product is delivered to the cus- standardization: reducing variation in service opera-
tomer; it includes the visible elements of the service tions and delivery.
operation. stickiness: a website’s ability to encourage repeat vis-
service encounter: a period of time during which cus- its and purchases by providing users with easy navi-
tomers interact directly with a service. gation, problem-free execution of tasks, and keeping
service encounter stage: the second stage in the ser- its audience engaged with interactive communi-
vice purchase process, in which the required service is cation presented in an appealing fashion.
delivered through interactions between customers and sustainable competitive advantage: a position in the
the service provider. marketplace that can’t be taken away or minimized by
service factory: a physical site where service opera- competitors in the short run.
tions take place.
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Z
V
zone of tolerance: the range within which customers
value chain: the series of departments within a firm or are willing to accept variations in service delivery.
external partners and subcontractors that carry out
value-creating activities to design, produce, market,
deliver, and support a product or service offering.
value exchange: transfer of the benefits and solutions
offered by a seller in return for financial and other
value offered by a purchaser.
Glossary 617