Which of the following is true for the modern company organization chart?
A) Frontline employees are less important than top management.
B) Customers are at the top of the pyramid.
C) Top management is at the top of the pyramid.
D) Customers are less important than middle management.
E) Frontline employees are at the top of the pyramid.
Page: 124
B
In the modern customer-oriented organizational chart, which of the following is considered to be at the top of the organizational pyramid?
A) sales
B) top management
C) front-line people
D) customers
E) middle management
Page: 124
D
In a modern customer-oriented organization chart, the ________ of an organization immediately follow the customer segment.
A) top management
B) marketing department
C) middle management
D) frontline people
E) lower management
Page: 124
D
________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
A) Perceived usefulness
B) Failure avoidance rate
C) Total customer benefit
D) Customer-perceived value
E) Competitors' market share rate
Page: 125
D
When a consumer considers a product or service, he or she will choose whichever product or service delivers the highest ________.
A) customer-perceived value
B) customer-perceived cost
C) customer profitability analysis
D) customer equity
E) customer lifetime value
Page: 125
A
________ is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering.
A) Total customer cost
B) Total customer benefit
C) Total benefits of ownership
D) Value proposition
E) Value delivery system
Page: 125
B
The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering is called the ________.
A) activity-based cost
B) customer profitability analysis
C) total customer cost
D) product life-cycle cost
E) direct product profitability
Page: 125
C
Which of the following is true for customer-perceived value?
A) It is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a product.
B) It is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering.
D) It is the net present value of the stream of future profits expected over the customer's lifetime purchases.
E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies.
Page: 125
B
Which of the following is the first step in customer value analysis?
A) Examine how customers in a specific segment rate the company's performance.
B) Assess the company's and competitors' performances on the different customer values against their rated importance.
C) Identify the major attributes and benefits that customers value.
D) Monitor customer values over time.
E) Assess the quantitative importance of the different attributes and benefits.
Page: 126
C
The final step of customer value analysis is to ________.
A) identify the major attributes and benefits that customers value
B) assess the company's and competitors' performances on the different customer values against their rated importance
C) examine how customers in a specific segment rate the company's performance
D) monitor customer values over time
E) assess the quantitative importance of the different attributes and benefits
Page: 126
D
Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT?
A) absorbing some risk by offering a warranty
B) improving the functional aspects of the products
C) augmenting the psychological benefits of the products
D) training service personnel to improve their skills
E) investing in brand building for the products
Page: 126
A
________ can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
A) Value proposition
B) Loyalty
C) Satisfaction
D) Respect
E) Customer value
Page: 127
B
TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of TBS Bikes is "speed". Surami is a five-gear bike and apart from speed, the company promises to include other features such as safety, good performance, and pollution control features. This describes the ________ of the bike.
A) total customer cost
B) customer-perceived value
C) value-delivery system
D) value proposition
E) total customer benefit
Page: 127
D
A company's ________ includes all the experiences the customer will have on the way to obtaining and using the offering.
A) value proposition
B) value delivery system
C) customer-value analysis
D) total customer benefit
E) total customer cost
Page: 127
B
Sammy's is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its marketing efforts on all the experiences the customers will have on the way to obtaining their food order and eating it. Hence, Sammy's is focusing its marketing efforts on its ________.
A) horizontal marketing system
B) cost versus benefit system
C) consumption system
D) marketing channel system
E) value delivery system
Page: 127
E
Total customer satisfaction is measured based on the relationship of ________.
A) expected value and total customer benefit
B) perceived performance and expectation
C) advertised outcomes and real outcomes
D) past experience and present experience
E) customer attitude and salesperson's attitude
Page: 128
B
Which of the following is true for customer satisfaction?
A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite situational influences.
B) Consumers often form more favorable perceptions of a product with a brand that is new.
C) The ultimate goal of a customer-centered firm is to create high customer satisfaction.
D) Only increased customer satisfaction can help a company increase its profits.
E) Greater customer satisfaction has also been linked to higher returns and lower risk in the stock market.
Page: 128
E
________ can track customer satisfaction directly, measure repurchase intention and also gauge a consumer's willingness to recommend the company and brand to others.
A) Periodic surveys
B) Mystery shoppers
C) Customer loss rates
D) Customer focus statements
E) Sales summary reports
Page: 129
A
Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field Grocery stores. Which of the following methods can it use for this?
A) group buyers
B) buyer brokers
C) mystery shoppers
D) personal shoppers
E) buying agents
Page: 129
C
Of customers who register a complaint, ________.
A) all will do business with the company again because they are unwilling to dedicate the effort required to find another vendor
B) none will do business with the company again
C) customers whose complaints are satisfactorily resolved are more likely to provide publicity than those who are dissatisfied
D) the speed of resolution has no impact on the likelihood of repeat business
E) some will do business with the company again if their complaint is resolved
Page: 131
E
Which of the following is the best method of recovering customer goodwill?
A) sending service people to conduct door-to-door surveys
B) contacting the complaining customer as quickly as possible
C) identifying prospective customers from the customer database
D) customizing products according to individual customer need
E) defining and measuring the customer retention rate
Page: 131
B
________ is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
A) Performance
B) Value
C) Quality
D) Customer retention
E) Customer loyalty
Page: 131
C
When two brands of the same basic product deliver their respective promised quality, they are delivering ________.
A) performance quality
B) conformance quality
C) unique quality
D) accuracy quality
E) customer support
Page: 131
B
Rade and Talion are competitors in the business of manufacturing wrist watches. While Rade promises to deliver design and quality to its customers, Talion promises to deliver durability and cost effectiveness. When both these companies deliver their respective promised qualities, they are delivering ________.
A) performance quality
B) customer support
C) unique quality
D) accuracy quality
E) conformance quality
Page: 131
E
The 80-20 rule reflects the idea that ________.
A) 20% of the company's profits are generated by the top 80% of customers
B) the top 20% of customers are highly satisfied and 80% of customers will recommend the company to a friend
C) 20% of customers are unprofitable, and 80% make up a company's profits
D) the top 20% of customers often generate 80% of the company's profits
E) any new product will be accepted by 20% of the customers immediately, but 80% of the customers will be up for grabs throughout the product's life cycle
Page: 132
D
A profitable customer ________.
A) yields a cost stream that exceeds by an acceptable amount his revenue stream
B) yields a revenue stream that exceeds the company's cost stream
C) yields a cost stream that exceeds the company's revenue stream
D) yields a revenue stream that exceeds by an acceptable amount his cost stream
E) yields a revenue stream that equals the company's cost stream
Page: 133
B
A ________ is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer.
A) prospector
B) profitable customer
C) market challenger
D) market nicher
E) pioneer customer
Page: 133
B
Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called ________.
A) input-output analysis
B) factor analysis
C) revenue-based costing
D) activity-based costing
E) future date costing
Page: 133
D
Which of the following is true for activity-based costing (ABC)?
A) ABC considers the real costs associated with each product.
B) With ABC, the company can estimate all costs coming from the customer, less revenue.
C) The tools of ABC can be used to conduct customer profitability analysis.
D) It identifies the costs of products and services based on the revenue they generate.
E) ABC allocates indirect costs in proportion to direct costs.
Page: 133
C
________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
A) Activity-based costing
B) Customer lifetime value
C) Customer value analysis
D) Customer-perceived value
E) Customer profitability analysis
Page: 134
B
The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
Page: 135
B
________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty.
A) Customer relationship management
B) Customer lifetime value
C) Customer profitability analysis
D) Customer satisfaction analysis
E) Customer-value delivery
Page: 135
A
A customer ________ is any occasion on which a customer encounters the brand and product—from actual experience to personal or mass communications to casual observation.
A) touch point
B) point of order
C) point of difference
D) pivot point
E) point of parity
Page: 135
A
A customer touch point for Abacus Airlines would be an item such as ________.
A) ease of access to the airport
B) a mechanic's ability to service the airplanes
C) the reservations desk
D) the value of air travel versus surface transportation
E) competency of a travel agent
Page: 135
C
Rachel and Josh are on vacation in Hawaii. When they arrived at the hotel, they were offered chilled juice. Their check-in formalities were handled by the staff. When they entered their room, they saw that chocolates had been placed on the pillows and a flower arrangement on the table. The hotel's actions are an example of ________.
A) customer lifetime value
B) customer perceived value
C) customer value analysis
D) customer profitability analysis
E) a customer touch point
Page: 135
E
Customer relationship management enables companies to provide excellent real-time customer service through the effective use of ________.
A) reports from mystery shoppers
B) survey data from customers who have defected
C) market research
D) individual account information
E) demographic trend data
Page: 135
D
________ is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns.
A) Relationship marketing
B) Permission marketing
C) Database marketing
D) Internet marketing
E) Horizontal marketing
Page: 136
B
________ is the practice of sending messages only when consumers express a willingness to become more involved with the brand.
A) Relationship marketing
B) Permission marketing
C) Cause marketing
D) Defensive marketing
E) Horizontal marketing
Page: 136-137
B
Which of the following is a step in one-to-one marketing that can be adapted for CRM marketing?
A) Identify the lifetime value of lost customers.
B) Define and measure the retention rate of customers.
C) Offer the lowest price for a particular product.
D) Distinguish the causes of customer attrition.
E) Customize products, services, and messages to each customer.
Page: 137
E
Another term for high customer ________ is customer churn.
A) retention
B) defection
C) value
D) perception
E) belief
Page: 139
B
Which of the following can a company do to reduce defection?
A) Attract new customers to try out the company's products.
B) Increase customer lifetime value by increasing the non-monetary costs of products.
C) Enhance the growth potential of existing customers through cross-selling and upselling.
D) Distinguish the causes of customer attrition and identify those that can be managed better.
E) Make low-profit customers more profitable or terminate the relationship.
Page: 140
D
Jack has shopped at VeggiesNmore. He was happy with the experience and thought that this could be an alternative to GreenFoods. However, he is also keen to try out other stores in the neighborhood. He is in the ________ stage of the marketing funnel as far as shopping at VeggiesNmore is concerned.
A) aware
B) open to trial
C) most often used
D) nonrejecter
E) regular user
Page: 140
D
Amy is in the "aware" stage of the marketing funnel when she says ________.
A) she can try shopping at VeggiesNmore while simultaneously exploring other stores in the neighborhood
B) she was informed about VeggiesNmore by her colleague at work
C) she regularly shops from VeggiesNmore
D) she shops from VeggiesNmore as far as the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore
Page: 140
B
Satisfied customers constitute the company's ________.
A) customer relationship capital
B) customer churn
C) target audience
D) high-value customers
E) customer touch points
Page: 140
A
Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and books for children. This expansion of dealership sales offerings is an attempt to increase the value of the customer base by ________.
A) reducing the rate of customer defection
B) increasing the longevity of the customer relationship
C) enhancing the growth potential of each customer through cross-selling
D) making low-profit customers more profitable
E) terminating low-profit customers
Page: 141
C
LifeTime Insurance screens its customers and tries to get unprofitable customers to buy services from competitors. This is an example of ________.
A) trying to increase the retention rate for low-profit customers
B) terminating the relationship with low-profit customers
C) enhancing the growth potential of each customer through up-selling
D) increasing the longevity of the customer relationship
E) reducing the rate of customer defection
Page: 141
B
Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to ________.
A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers
Page: 141
B
Which of the following is an example of focusing disproportionate effort on high-profit customers?
A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
Page: 141
B
Which of the following is an example of enhancing the growth potential of each customer through cross-selling?
A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets and other accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
Page: 141
A
Which of the following is a policy a store can adopt to make low-profit customers more profitable?
A) 2Wheels sends birthday greetings to its best customers and gives them discounts on merchandise.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
Page: 141
C
Companies provide rewards to customers who buy often and in substantial amounts. These reward schemes are referred to as ________.
A) benefit programs
B) frequency programs
C) satisfaction programs
D) profitability programs
E) quality programs
Page: 142
B
Which of the following gains the most benefit from introducing a frequency program?
A) the first company to introduce a frequency program in an industry
B) the fast follower, the second to introduce a program in an industry
C) the industry sales leader
D) the niche player in the industry
E) the low-cost leader in the industry
Page: 142
A
Club membership programs that are open to everyone who purchases a product or service ________.
A) are more powerful long-term loyalty builders than limited-membership clubs.
B) will not help a company attract customers from competitors
C) prevent those with only a fleeting interest in a company's products from joining
D) are useful for building a database of customers but are not very good as long-term loyalty builders
E) are useless unless there are fees and membership conditions
Page: 142
D
Southwest Airlines offers a Rapid Rewards program that allows customers to count flights they have taken toward free future flights. This is an example of a(n) ________.
A) cross-selling program
B) value delivery system
C) club membership program
D) activity-based costing program
E) up-selling program
Page: 142
C
Some customers inevitably become inactive or drop out. The challenge for marketers is to reactivate them through ________ strategies.
A) win-back
B) retention
C) defection
D) sell-out
E) recuperation
Page: 143
A
A ________ is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy
Page: 143
A
The process of building, maintaining, and using customer databases and other databases for the purpose of contacting, transacting, and building customer relationships is called ________.
A) data warehousing
B) data mining
C) database marketing
D) participatory marketing
E) permission marketing
Page: 143
C
A ________ is simply a set of names, addresses, and telephone numbers.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy
Page: 143
B
Using the information in his company's ________ lets a telemarketer respond to customer inquiries more effectively because he or she can see a total picture of the customer relationship.
A) data warehouse
B) call back list
C) call rejection list
D) bibliographic database
E) customer-value hierarchy
Page: 144
A
Through ________, marketing statisticians can extract useful information about individuals, trends, and segments from the mass of data.
A) data governance
B) data modeling
C) data mining
D) data maintenance
E) data marketing
Page: 144
C
2Wheels conducts exhaustive customer surveys to discover customer preferences and attitudes towards the brand. Sally uses cluster analysis to classify the data and help the company determine the trends in the information. Sally is using the technique of ________.
A) data management
B) data marketing
C) data governance
D) data accumulation
E) data mining
Page: 144
E
Susan Lefferts' company advertises widely. Ms. Lefferts uses business reply cards attached to her company's magazine ads to build her company's database. In which of the following ways would Ms. Lefferts most likely use the database?
A) to deepen customer loyalty
B) to reactivate customer purchases
C) to avoid serious customer mistakes
D) to determine if up-selling is appropriate
E) to identify prospects
Page: 144
E
Phil Langston has just ordered a number of expensive executive gifts that he will be sending as an appreciation token to a select few customers from his client database. In which of the following ways is Mr. Langston most likely using his database?
A) to identify prospects
B) to decide which customers should receive a new sales offer
C) to deepen customer loyalty
D) to avoid serious customer mistakes
E) to beat the competition to a sale
Page: 144
C
The skillful use of ________ has made catalog house Fingerhut one of the nation's largest direct-mail marketers.
A) everyday low prices
B) expanded home delivery options
C) database marketing
D) under-the-line promotions
E) retailer alliances
Page: 144
C
Which of the following is true for customer relationship marketing?
A) Competitors can often hack into CRM systems.
B) Building and maintaining a customer database requires a large investment.
C) It is very difficult to find and train database employees.
D) Long-term results of such systems are still unproven.
E) Focusing too much on databases separates a company from its customers.
Page: 145
B
Which of the following is not conducive to database marketing?
A) Rushbury Theater relies on the generosity of donors to keep functioning.
B) Kenilworthy retails luxury handbags and leather accessories to a select clientele.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim's sells its range of snacks in stores throughout the country.
E) PetZone offers obedience classes, a doggie daycare and other services for pets in the Manhattan area.
Page: 145
D
In which of the following cases is building a database worthwhile for the company?
A) Clare's creates personalized sculptures for special occasions.
B) Sales of Clarity soap have fallen over the past few months in all regions.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim's sells its range of snacks in stores throughout the country.
E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the U.S.
Page: 145
C
In which of the following cases is building a database worthwhile for the company?
A) where the product is a once-in-a-lifetime purchase
B) where customers show little loyalty to a brand
C) where the company has a long relationship with its customers
D) where the unit sale is very small
E) where the cost of gathering the information is high
Page: 145-146
C
Which of the following is most likely to use database marketing?
A) an airline
B) a candy bar manufacturer
C) a fast-food chain
D) a toothpaste manufacturer
E) a hair stylist
Page: 145
A
Which of the following statements demonstrates behavioral loyalty towards a brand?
A) 2Wheels has very customer-friendly return policies for its products.
B) I always buy 2Wheels products when I'm looking for bike accessories.
C) Most of my friends agree that 2Wheels is the best place for durable biking gear.
D) 2Wheels has the friendliest customer service people I've ever met.
E) I think that 2Wheels products are the highest-quality products in their price range.
Page: 146
B
Managers who believe the customer is the company's only true "profit center" consider the traditional organization chart to be obsolete.
Page: 124
true
The modern customer-oriented organization chart places top management at the top of the pyramid.
Page: 124
false
Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
Page: 125
true
Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using, and disposing of the given market offering.
Page: 125
false
Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an annual basis.
Page: 125
false
A seller who is at a disadvantage has two alternatives: decrease total customer benefit or increase total customer cost.
Page: 126
false
The value proposition is stated in the price of a product and readily recognized by the average consumer.
Page: 127
false
The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.
Page: 127
true
The value proposition is also known as the core positioning of the offering.
Page: 127
false
Loyalty is a person's feelings of pleasure or disappointment that result from comparing a product's perceived performance to expectations.
Page: 128
false
Customer satisfaction is the only way by which a firm can increase its profitability.
Page: 128
false
Consumers' expectations result exclusively from past buying experiences.
Page: 128
false
The best thing a company can do in the face of company mistakes is to discourage the customer from complaining.
Page: 131
false
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
Page: 131
true
Conformance quality and performance quality are identical in the marketing sense.
Page: 131
false
Two products with very different performance qualities can have the same conformance quality if both products deliver their respective promised quality.
Page: 131
true
A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing the customer.
Page: 133
true
A customer's profitability is judged on the basis of the lifetime stream of revenue and cost, not the profit from a particular transaction.
Page: 133
true
Unprofitable customers who defect to a competitor should be encouraged to do so.
Page: 133
true
Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing.
Page: 133
true
Activity-based costing tries to identify the real costs associated with serving each customer.
Page: 133
true
Activity-based costing does not consider indirect, variable and overhead costs.
Page: 133
false
Customer lifetime value describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
Page: 134
true
The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as possible.
Page: 135
false
A customer touch point is the time when the customer makes a purchase.
Page: 135
false
Permission marketing presumes that consumers know what they want.
Page: 137
true
All companies should practice one-to-one marketing.
Page: 137
false
Customer churn is how rapidly a store can move customers through its checkout facility or process.
Page: 139
false
For a magazine, subscription renewal rate is a good measure of retention.
Page: 139
true
A company should try to retain the customer only as long as the cost to discourage defection is lower than the lost profit.
Page: 140
true
Profit rate tends to decrease over the life of the retained customer due to increased purchases,
referrals, price premiums, and increased operating costs to service.
Page: 140
false
The marketing funnel identifies the profitability of consumers at each stage in the decision process.
Page: 140
false
Focusing disproportionate effort on high-profit customers will lead to lower customer profitability for those customers.
Page: 141
false
Frequency programs are designed to reward customers who buy frequently and in substantial amounts.
Page: 142
true
Clubs that are open to everyone who purchases a product or service are good for building a customer database.
Page: 142
true
It's often easier to reattract ex-customers than to find new ones because the company knows their names and histories.
Page: 143
true
A customer database is simply a listing of a customer's name, address, and phone number for credit reference.
Page: 143
false
Cluster analysis is a statistical technique that can be employed in data mining.
Page: 144
true
Building a customer database is not recommended when the product is a once-in-a-lifetime purchase.
Page: 145
true
Loyal customers are the best ambassadors for a brand.
Page: 146
false