Product Service Level Management and Customer Service Standards Quiz
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Questions and Answers

What is customer value defined as?

  • The total cost of ownership
  • The difference between perceived benefits and total costs (correct)
  • The total costs incurred in making a purchase
  • The total benefits derived from a purchase
  • What are the two factors contributing to the growing importance of customer service as a competitive weapon?

  • Increase in product variety and decrease in customer expectations
  • Decrease in competition and increase in customer loyalty
  • Transition towards niche markets and increase in customer sophistication
  • Increase in customer expectations and transition towards commodity type markets (correct)
  • What is marketing defined as?

  • Promoting the product through advertisements
  • Management of the 'Four Ps' - product, price, promotion, and place (correct)
  • Maximizing customer satisfaction
  • Minimizing costs for the business
  • Why is 'total cost of ownership' used instead of 'price' in defining customer value?

    <p>To account for costs other than the purchase price involved in most transactions</p> Signup and view all the answers

    What is the formula to calculate customer lifetime value?

    <p>Average transaction value x yearly frequency of purchase x customer 'life expectancy'</p> Signup and view all the answers

    What is the focus of marketing efforts, according to the text?

    <p>Acquiring customers</p> Signup and view all the answers

    What is the challenge in designing supply chains mentioned in the text?

    <p>To design supply chains from the 'customer backwards'</p> Signup and view all the answers

    What is the key to Zara's success, as per the text?

    <p>'Fast Fashion' value proposition and quick response supply chain processes</p> Signup and view all the answers

    How is customer service described in the text?

    <p>Perceptual, and perceptions are the reality</p> Signup and view all the answers

    What is the purpose of service segmentation, based on the text?

    <p>Identifying key service components, establishing their relative importance to customers, and identifying customer clusters based on service preferences</p> Signup and view all the answers

    What is essential to understand the service needs and preferences of customers, according to the text?

    <p>Research</p> Signup and view all the answers

    How are ranking or rating scales used in the context of customer service components?

    <p>To establish the relative importance of customer service components</p> Signup and view all the answers

    What do customers often have to trade off when making purchasing decisions, according to the text?

    <p>Specific attributes</p> Signup and view all the answers

    What did Rolls-Royce develop to ensure performance guarantee for its customers?

    <p>'Power by the hour'</p> Signup and view all the answers

    What is the potential of existing customers, as mentioned in the text?

    <p>Higher profit and potential for growth</p> Signup and view all the answers

    What were traditional supply chains designed to optimize?

    <p>Internal operations of the supplying company</p> Signup and view all the answers

    What does the 'iceberg' effect of total costs of ownership reveal?

    <p>Hidden costs beneath the surface of the visible purchase price</p> Signup and view all the answers

    How is competitive advantage achieved in terms of customer value?

    <p>By delivering more customer value than competitors</p> Signup and view all the answers

    What are the elements through which logistics management uniquely influences customer value ratio?

    <p>Quality, service, cost, and time</p> Signup and view all the answers

    What has earned Caterpillar a world-class reputation?

    <p>Its focus on manufacturing, customer support, and logistics</p> Signup and view all the answers

    What are the essential elements provided by customer service for businesses?

    <p>Pre-transaction, transaction, and post-transaction elements</p> Signup and view all the answers

    What does the multivariate nature of customer service require?

    <p>A clearly identified policy tailored to specific markets</p> Signup and view all the answers

    What percentage of items do stock-outs occur on in supermarkets, leading to customer dissatisfaction and lost sales?

    <p>8%</p> Signup and view all the answers

    What do just-in-time strategies in industrial markets demand from suppliers?

    <p>Higher levels of response to meet demand</p> Signup and view all the answers

    What is essential for becoming a preferred supplier in any industry?

    <p>Superior customer service</p> Signup and view all the answers

    What enhances the impact of a strong consumer and customer franchise?

    <p>Efficiency of a supplier's logistics system</p> Signup and view all the answers

    What is the relationship between core product, customer service, and logistics?

    <p>Multiplicative, maximizing marketing effectiveness</p> Signup and view all the answers

    What do 'Servitisation' strategies focus on?

    <p>Converting a product into a service to add value</p> Signup and view all the answers

    Which quadrant of products should be regularly reviewed for potential deletion from the range?

    <p>Quadrant 3</p> Signup and view all the answers

    According to the 80/20 rule, what percentage of customer/product transactions contribute to 64% of total profit?

    <p>4%</p> Signup and view all the answers

    What should be the focus of customer service standards according to the text?

    <p>Complete match between customer expectations and what the supplier provides</p> Signup and view all the answers

    Which key areas are mentioned for setting customer service standards?

    <p>Order cycle time, stock availability, and delivery reliability</p> Signup and view all the answers

    What is the implication of the 80/20 rule for both products and customers?

    <p>Emphasizes the importance of key accounts and products</p> Signup and view all the answers

    Where should Quadrant 4 products be managed according to the text?

    <p>Centrally to reduce inventory investment</p> Signup and view all the answers

    What is the primary need for Quadrant 2 products according to the text?

    <p>High availability and should be held close to the customer</p> Signup and view all the answers

    What is the distribution of product service levels according to the text?

    <p>Can vary between businesses and markets</p> Signup and view all the answers

    What is necessary for defining customer-driven service standards according to the text?

    <p>Customer research and competitive benchmarking studies</p> Signup and view all the answers

    What rule applies to both products and customers, emphasizing the importance of key accounts and products?

    <p>The 80/20 rule</p> Signup and view all the answers

    What percentage of total profit do 4% of customer/product transactions contribute to according to the 80/20 rule?

    <p>64%</p> Signup and view all the answers

    What is the primary implication of the 80/20 rule for customer/product transactions?

    <p>Emphasizes the importance of key accounts and products</p> Signup and view all the answers

    Study Notes

    Managing Product Service Levels and Setting Customer Service Standards

    • The distribution of product service levels can vary between businesses and markets
    • A matrix in Figure 2.12 combines profit contribution and individual product demand
    • Quadrant 1 products require cost reductions due to low profit contribution and high demand
    • Quadrant 2 products need high availability and should be held close to the customer
    • Products in Quadrant 3 should be regularly reviewed for potential deletion from the range
    • Quadrant 4 products, although highly profitable, should be managed centrally to reduce inventory investment
    • The 80/20 rule applies to both products and customers, emphasizing the importance of key accounts and products
    • The 80/20 rule implies that 4% of customer/product transactions contribute to 64% of total profit
    • Customer service standards should aim for a complete match between customer expectations and what the supplier provides
    • Key areas for setting customer service standards include order cycle time, stock availability, and delivery reliability
    • Standards for technical support and order status information are also essential for effective customer service
    • Customer research and competitive benchmarking studies are necessary for defining customer-driven service standards

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    Test your knowledge on managing product service levels and setting customer service standards with this quiz. Explore topics such as the 80/20 rule, product demand matrix, customer expectations, and key areas for setting service standards.

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