Case Study 1 - The opportunity cost of waiting

Businesses have to make decisions that affect their daily operations and their long term prospects. Opportunity cost is defined as the best alternative that is forgone when making a decision. Due to limited resources and budgets (such as human resources, time and money) businesses are confronted with competing choices. Customers, however, do not like to wait for the delivery of their purchase, be it a good or service - that is, there is an opportunity cost to queues and waiting times.

Some examples of businesses addressing the opportunity cost for their customers include:

• Mirrors have long been used in places with lifts (elevators), such as in hotels and department stores. Customers do not necessarily notice the waiting time - and hence refrain from being annoyed at the business - as they stare at themselves in the mirror! The same reasoning applies when customers enter the lift - there are mirrors inside too for this reason.

• Music and entertainment is a major feature at many theme (leisure) parks. Disneyland operators try to sidetrack time-conscious customers by providing music, live entertainment and use of large movie screens to distract customers whilst they wait in line for thrill rides and other attractions. This all helps to provide a better overall experience for their customers.

• Whilst waiting at supermarket checkouts, you may notice the ‘bins’ next to the counter. These are a last minute attempt by the supermarkets to lure customers to buy miscellaneous items (hence the term ‘bins’) such as confectionery and batteries. The other purpose is, again, to distract people waiting in the queue.

• Airline companies often overbook the number of seats on a flight. This is because, statistically, flights are rarely booked at full capacity. However, as a result of the policy, airlines sometimes face the problem of overbooking and will need to ‘bump off’ customers, i.e. to offer them compensation for having to wait for the next available flight. Similarly, people who value time less conscientiously may purchase stand-by tickets which are cheaper but more inconvenient.

• Women’s clothes retailing is a massive industry. However, women are often accompanied by their husbands, boyfriends or partners who tend to have less patience in a shopping mall – look out for this next time you are out shopping! Marketers have noticed this fact and have responded. Many retail outlets now provide newspapers and male-orientated publications (such as motor vehicles or male fashion magazines) so that the girlfriend or wife can shop in peace! The retail outlets hope that this strategy will then allow the customers to spend much longer in their shops, thereby increasing the chance of more sales.

• 7-Eleven convenience stores, the Japanese-owned multinational company, charges higher prices than supermarkets for the same products.The surcharge is ‘justified’ as most of their stores are open 24-7, so customers pay for this convenience and the opportunity cost of having to pay higher wages to staff working unsociable hours.

 Case Study 2 - Apple's "Genius Bar"

Genius Bar at Apple Store in Istanbul, Turkey

Apple competes through the use of non-price competition methods, including the provision of unparalleled after-sales services in the industry. In particular, the company is well-known for its Genius Bar. This innovative concept provides customers with technical support stations located inside all of Apple's retail stores. As part of its extended marketing mix, the purpose of the Genius Bar is to support for customers purchasing Apple products by providing bespoke, concierge-style customer service and technical support . Ron Johnson, the former Senior Vice President for Retail at Apple, referred to the Genius Bar as the "heart and soul of our stores".

Genius Bar employees are specially trained and certified. Their role is to support customers with questions and problems about Apple's hardware and software. This service provides customers with the reassurance that they will always have technical support and troubleshooting support for their iPods, iPhones, Apple Watch, Apple TV, HomePod, Mac Books and array of other Apple products including application software.

 Case Study 3 - The IB Diploma results and appeals process

Each year, over 180,000 IB Diploma candidates receive their IB examination results. The IB operates a process called "Enquiry Upon Results" (or EUR for short) as a service for schools and students who believe that the grade awarded is incorrect, for whatever reason. The school's IB Coordinator can request an EUR based on the following categories:

• Category 1 re-mark: The re-mark of externally assessed material for an individual candidate.

• Category 2A: The return of externally assessed material by component for all candidates.

• Category 2B: The return of externally assessed material by subject/level for an individual candidate.

• Category 3 re-moderation: The re-moderation of marks for IA by subject/level.

EUR Category 1 (re-marks) - this service enables a particular candidate’s externally assessed components for a subject to remarked.

EUR Category 2A (return of scripts for all candidates) - this service enables schools to recall copies of externally assessed component materials for all candidates in the cohort, such as recalling every student's IB Business Management Extended Essay or their Paper 1 scripts.

EUR Category 2B (return of scripts for single candidate) - this service enables schools to recall externally assessed material by subject / level for an individual candidate.

EUR Category 3 (re-moderation of internal assessments) - This process enable schools to have the sample of internal assessments for a particular subject to be re-moderated. However, this can only be applied for by the DP Coordinator if the sample falls outside of the IB's tolerance level based on the school's internally assessed marks and the IB's moderated marks for the sample selected for external moderation.

Note: everything regarding the EUR process has to go through the school's IB Coordinator. The IB will not liaise with teachers or parents directly regarding issues related to EURs.

Key term

Process in the extended marketing mix (the 7 Ps) is about the way in which a service is provided or delivered to customers. It involves the operational aspects of a service provided to customers, such as the management of bookings, payments and queueing systems.