com 240 Lecture Notes - Servqual, Marketing Mix, Customer Retention
Course Codecom 240
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standard markup pricing entails adding a fixed percentage to the cost of all items in a specific
product class. typically, this strategy is used when a store has such a large number of products
that estimating the demand for each product as a means of setting price is impossible.
cost-plus pricing involves summing the total unit cost of providing a product or service and
adding a specific amount to arrive at a price. cost-plus pricing generally assumes two forms:
cost-plus-percentage-of-cost-pricing involves adding a fixed percentage to the production or
construction costs. cost-plus-fixed-fee pricing means that a supplier is reimbursed for all costs
plus a fixed fee as profit that is independent of the final cost of the project.
experience curve pricing is based on the learning curve effect which holds that the unit cost of
many products and services decline by 10% to 30% each time a firm's experience at producing
and selling them doubles. since prices often follow costs with experience curve pricing, a rapid
decline in price is possible.
profit-oriented approaches attempt to balance both revenues and costs to set price. these might
either involve a target of a specific dollar volume of profit or express this target profit as a
percentage of sales or investment.
the four unique elements are sometimes referred to as the four i’s of services.
intangibility is a unique feature of services in that services cannot be held, touched, or seen before
purchase. a major marketing need for services is to make them tangible or show the benefits of
using the service.
inconsistency, the second "i", refers to the fact that service quality varies. services are provided by
people who have different capabilities and also vary in their job performance from day to day.
inconsistency can be reduced through standardization and training.
inseparability refers to the fact that the consumer does not (and cannot) separate the service from
the deliverer of the service.
inventory of services, the fourth "i", highlights the fact that inventory carrying costs are more
subjective and related to idle production capacity. idle production capacity is when the service
provider is available but there is no demand.
the service continuum
services vary in terms of their degree of tangibility and whether they are good or service dominant.
the range of services is referred to as the service continuum.
consumers evaluate a service by comparing their expectations with their actual experience. gap
analysis is used to identify differences between expectations and experience on five service quality
dimensions the instrument is called servqual.
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