Deck 4: The Customer Experience and Value Creation

Question 1

Three key sources of customer-perceived performance include perceived product performance,perceived service quality,and perceived company or brand reputation.

Answer 1

True

Question 2

A product-based business can use its order cycle to create important sources of customer value that the business's consumer-focused competitors will never see.

Answer 2

False

Question 3

Studying the experience of lead users provides insights for improving a product by adding new features or modifying it in other ways.

Answer 3

True

Question 4

The "day-in-the-life-of-a-customer" approach may be described as "stapling yourself to an order."

Question 5

A product that will eliminate or significantly reduce the usage costs that customers presently
incur offers a substantial economic value.

Question 6

Which of the following is true regarding lead users?

A)They are customers who are unwilling to purchase products that do not provide a complete customer solution.
B)They are users who wait to see whether the product or service will deliver meaningful benefits.
C)They are skilled users who extend the boundaries of a product's application to achieve a more desired customer solution.
D)They are skeptical customers who are unwilling to purchase a product unless they are assured of meaningful benefits associated with using the product.
E)They are the last customers to adopt a new product or service.

Question 7

We can create a set of preference curves by examining how customers make trade-offs when choosing among various combinations of price and benefits,using conjoint analysis.

Question 8

Empathic design uses statistical surveys to collect quantitative information about customer needs.

Question 9

Which of the following terms refers to highly knowledgeable and skilled users who often extend the boundaries of a product's application to achieve a more desired customer solution?

A)mainstream users
B)captive users
C)lead users
D)spinners
E)laggards

Question 10

Companies seeking discontinuous innovations need more than incremental product improvements that come from lead user analysis.

Question 11

Reverse innovation begins by identifying new product benefits.

Question 12

The formula for calculating the customer value index is: Brand Image+Warranty+Price +Callbacks.

Question 13

Moreno Motors Inc.identifies that bikers are usually the first users of their newly launched products.The firm sends consultants to biker rallies to discover how bikers who use Moreno motorcycles modify them to extend their usage,as well as the desired benefits.Recent visits revealed that bikers were seeking items,such as bolt-on chrome products,horsepower performance enhancers,and improved braking systems in Moreno motorcycles.In this example,Moreno Motors Inc.is studying which of the following groups of customers?

A)lead users
B)mainstream customers
C)laggards
D)captive customers
E)spinners

Question 14

Lead users are users who purchase a product only after it has been used by the majority of mainstream users.

Question 15

NaturalBeauty Inc.is a firm that manufactures a range of herbal cosmetic products under the brand name NaturalBeauty.To improve its odds of developing successful disruptive innovations,the firm listens to its lead customers and identifies product benefits that are not met by the existing cosmetic products in the market.After careful analysis,the firm chooses the most lucrative opportunity and uses an "invent to order" process to develop a new product.In this example,NatureFresh Inc.is using which of the following methods?

A)reverse innovation
B)diversification
C)vertical integration
D)horizontal integration
E)market penetration

Question 16

The main difference between crowdsourcing and mass collaboration is the level of multidirectional interaction.

Question 17

The perceived customer value is the sum of the relative performance and the relative cost of purchase.

Question 18

Which of the following is a form of the emphatic design?

A)creating a database of customers' demographic details
B)filming customer product use
C)conducting an online survey of customers' preferences
D)using social media to interact with customers
E)creating a database of customers' buying habits

Question 19

A product's life-cycle cost is the sum of the purchase price and the costs of acquiring,using,owning,maintaining,and disposing of the product.

Question 20

For products that project a "brand personality," there is an opportunity to create customer value through the delivery of emotional benefits.

Question 21

Which of the following is a part of the second stage of reverse innovation?

A)probing for new insights
B)verifying the size of the opportunities
C)determining new product benefits that address unmet customer needs
D)building a value proposition around the competitive advantages of the product
E)"inventing to order" with continuous customer involvement and feedback

Question 22

Market-based businesses differ from product-focused businesses in that market-based businesses ________.

A)focus on products and services
B)are providers of solutions
C)have a narrow view of customers' underlying problems
D)lack a strong customer focus
E)lack knowledge of customer usage

Question 23

Logic teach Inc. ,a software manufacturing firm,specializes in inventory management and billing software for supermarkets and hotels.The product has a price of $500,acquisition cost of $100,installation cost of $300,and usage and maintenance cost of $300.What is the life-cycle cost of Logic Tech's inventory management software?

A)$1,200
B)$300
C)$600
D)$1,000
E)$500

Question 24

Which of the following is a potential problem that a customer can face at the order entry stage of the customer order cycle?

A)The order is in process but the customer is not aware of order status.
B)The product is delivered late or damaged.
C)The wrong product is delivered.
D)The order is priced incorrectly.
E)The product's user manual is inadequate.

Question 25

Customers in which of the following subsets of consumers take product usage beyond its intended capability,and act as co-inventors?

A)captive customers
B)prosumers
C)mainstream customers
D)spinners
E)laggards

Question 26

The process of taking a closer look at the customer ordering process from the customer's viewpoint,with the objective of uncovering any potential problems or sources of frustration in the purchasing process is called ________.

A)lead user analysis
B)the Kano method
C)conjoint analysis
D)acquisition analysis
E)"staple yourself to an order"

Question 27

A recent Consumer Reports study analyzed toasters and found that the average performance rating for all toasters tested was 70 with an average price of $33.Coffers is a brand of toaster that sells for $32 and received an overall performance rating of 84.What is Coffers's relative performance against other toasters tested?

A)4
B)38
C)83.5
D)98.5
E)120

Question 28

The relative performance metric can be created by ________.

A)dividing the performance rating of a product by the average performance rating of all products in the market
B)dividing the overall rating of a product's performance by the rating of the top-performing brand
C)dividing the overall rating of a product's performance by its price
D)dividing the overall rating of a product's performance by the average price for products in that product category
E)dividing the overall rating of a product's performance by the cost of manufacturing the product

Question 29

McCann Chemicals is a multinational pharmaceutical company with headquarters in New York.The firm invites all the research scientists at McCann Chemicals,as well as clinicians and academicians to work on open-source projects funded by the firm.McCann Chemicals has a special web site that is used to create an open-ended group of prosumers,professionals,specialists,and employees,who can share information and help each other.In this example,McCann Chemicals is using which of the following methods?

A)reverse innovation
B)emphatic method
C)vertical integration
D)mass collaboration
E)horizontal integration

Question 30

Consumers can purchase inkjet printers for as little as $30.However,the price of replacement ink cartridges can be as much or more than the purchase price of the printer.This is part of the ________ of an inkjet printer.

A)disposal costs
B)acquisition costs
C)usage costs
D)repair costs
E)ownership costs

Question 31

Which of the following refers to using collective intelligence to solve specific problems or solicit ideas-often as part of a competition or for a reward?

A)onboarding
B)crowdsourcing
C)benchmarking
D)mass collaboration
E)outsourcing

Question 32

Which of the following statements is true about prosumers?

A)They are employees who test a product before it is released in the market.
B)They are employees who interact with customers to gather information about product preferences.
C)The are the first users of a new product.
D)They are advanced users who do not always represent the needs of an overall target market.
E)They are consumers who purchase a product only when there are some discounts.

Question 33

The fair price for the Merrill Microwaves,manufactured by Merrill Inc. ,is considerably higher than its actual price of $140.Merrill Microwaves have a relative performance rating of 125.According to this data,Merrill Microwaves provides ________.

A)lower-quality products at higher prices
B)superior-quality products at higher prices
C)products with very high life-cycle cost
D)relatively lower value to the customers when compared to an average relative performance rating
E)a very good value for customers,but it may be underpricing the product

Question 34

Amtech Inc. ,an American firm that manufactures inkjet cartridges,also provides inkjet refill services at all its stores.The firm manufactures and sells "do it yourself" kits that allows customers to do their own inkjet refills.Amtech Inc.lowers the total cost of the product by solving its customers' problem of throwing away empty cartridges,and also enables customers to save money.In this example, Amtech Inc.reduces which of the following costs for their customers?

A)resale costs
B)acquisition costs
C)repair costs
D)insurance costs
E)disposal costs

Question 35

Which of the following is used to determine a product's life-cycle cost?

A)disposal cost
B)direct materials cost
C)direct labor cost
D)cost of satisfaction
E)distribution cost

Question 36

Which of the following statements is true about reverse innovation?

A)It involves learning what customers want but cannot get from existing products.
B)It refers to a new product that fails to address customers' needs.
C)It refers to gradual product improvements that come from technological developments.
D)It starts by encouraging intrapreneurs.
E)It refers to innovative ideas generated by employees within an organization.

Question 37

Stephen bought a new Chevrolet Suburban vehicle by putting $10,000 down and arranging to make monthly payments of $599 for six years.These payments represent the ________ of the vehicle for Stephen.

A)acquisition costs
B)repair costs
C)maintenance costs
D)ownership costs
E)disposal costs

Question 38

During the ________ stage of reverse innovation,a firm must communicate and deliver a value proposition that is built around the unique customer benefits of the product.

A)developing
B)listening
C)choosing
D)launching
E)identifying

Question 39

Suppose the benchmark competitive product has a price of $300,costs $200 to install,and averages $500 in usage and maintenance costs.Your product is priced at $400,costs $100 to install,and averages $400 in usage and maintenance costs.In this situation,the economic value of your product over the benchmark competitive product is ________.

A)-$200
B)-$100
C)$0
D)$100
E)$200

Question 40

Crowdsourcing differs from mass collaboration in that crowdsourcing initiatives ________.

A)use collaborative web sites and wikis
B)yield results very slowly
C)facilitate an information-sharing environment
D)have a specific purpose or problem to solve
E)are open-source projects

Question 41

Customers can create a set of preference curve,by examining how customers make trade-offs when choosing among various combinations of price and benefits,using ________.

A)conjoint analysis
B)regression analysis
C)an empathic design
D)a focus group
E)the relative performance index

Question 42

If four-wheel drive capability is weighed at 40 on relative importance,and your truck scores 8 out of 10,while the three competitors score 7,6,and 6,respectively,your truck has a relative advantage score of ________.

A)4
B)12
C)27
D)40
E)80

Question 43

A recent Consumer Reports study analyzed consumer ovens and found that the average performance rating for all ovens tested was 70 with an average price of $110.QuickBake oven,a consumer oven,has a relative performance of 130 based on a weighted average of product performance,service quality,and brand reputation.It has a relative cost of purchase of 90.What is the perceived customer value of QuickBake oven?

A)60
B)77.7
C)40
D)130
E)120

Question 44

Aster Technologies Inc. ,a firm that sells inventory management software,has labor savings of 20% (0.33),a product warranty of five years (0.42),a competitive price (1.0),and no customer callbacks (0.83).Calculate its customer value index (CVI).

A)-0.26
B)0.26
C)0.92
D)1.08
E)2.58

Question 45

Your consumer printer has the following relative advantages for the four purchase components of the product.What is your relative cost of purchase index?

A)6.5
B)126
C)74
D)13.5
E)54

Question 46

Calculate the perceived customer value if the relative performance of the product is 100 and its relative cost of purchase is 75.

A)25
B)75
C)100
D)125
E)175

Question 47

The uptime of database servers is weighed at 80 on relative importance,and your database server scored 7 out of 10.Your four competitors score 5,6,8,and 3.What is the relative advantage score of your database server with regards to uptime?

A)60
B)560
C)7
D)80
E)40

Question 48

MINI-CASE
The table given below shows four aspects of product performance that customers seek in commercial scanners.The product performance ratings are shown for PrintWorth Inc. ,an American firm that manufactures commercial scanners,and three of its competitors.

Mini-Case Question.What is the overall relative advantage score of PrintWorth Inc.for image quality?

A)0
B)-40
C)26.66
D)13.34
E)6

Question 49

Perceived customer value is determined by ________.

A)subtracting relative cost of purchase from relative performance
B)adding performance to enhancement value
C)dividing product performance by average performance
D)dividing product performance by the number of customers
E)comparing the price-performance matrix entries

Question 50

If a company's product has an overall perceived performance score of 125,it means that ________.

A)the product has a product performance advantage of 125%
B)the company is showing a 25% increase in sales in the annual report
C)the relative cost of purchase index for the product is equal to 125
D)the business is 25 percent ahead of its competition
E)the company is showing a 25% increase in profits in the annual report

Question 51

List and briefly discuss the fours steps in developing new customer solutions with the help of a product's lead users.

Question 52

Star Treadmill,manufactured by KM Group of Manufacturers,costs $700.The product has relative cost of purchase of 90,and a perceived customer value of 40.What is the relative performance of Star Treadmill?

A)130
B)50
C)77.7
D)40
E)2.25

Question 53

Which of the following is calculated using the formula: Labor Savings +Warranty+ Price +Callbacks?

A)overall performance factor
B)overall performance index
C)perceived customer value
D)customer value index
E)life-cycle cost

Question 54

MINI-CASE
The table given below shows four aspects of product performance that customers seek in commercial scanners.The product performance ratings are shown for PrintWorth Inc. ,an American firm that manufactures commercial scanners,and three of its competitors.

Mini-Case Question.What is the relative product performance index for PrintWorth Inc.?

A)100
B)130
C)25
D)48
E)62.9

Question 55

Maher and Russell Inc.is a firm that manufactures home alarm systems Maher and Russell Inc.has an overall perceived performance score of 85.This indicates that Maher and Russell home alarm systems ________.

A)have a relative advantage of 85% due to the brand reputation
B)have a relative market share of 15%
C)have a relative cost of purchase index of 85
D)are 15 percent behind the competition
E)are 85% above the average relative performance

Question 56

MINI-CASE
The table given below shows four aspects of product performance that customers seek in commercial scanners.The product performance ratings are shown for PrintWorth Inc. ,an American firm that manufactures commercial scanners,and three of its competitors.

Mini-Case Question.What is the overall relative advantage score of PrintWorth Inc.for machine uptime?

A)13.34
B)7
C)140
D)20
E)10

Question 57

A recent Consumer Reports study analyzed flat-screen TVs and found that the average performance rating for all TVs tested was 80 with an average price of $340.Clarence flat-screen TV has a perceived customer value of 30,and relative performance of 112.What is the relative cost of purchase for a Clarence flat-screen TV?

A)11.34
B)340
C)33.6
D)82
E)120

Question 58

Name and discuss the six sources of economic benefit and value creation.

Question 59

The purchase price of commercial food grinders has a relative importance of 30.Your food grinder has a purchase price rating of 6,and three of your competitors have a rating of 4,3,and 5.What is your relative advantage with regards to the purchase price of your product?

A)30
B)180
C)20
D)60
E)6

Question 60

Which of the following addresses emotional benefits tied to the customer's personal psychological needs?

A)cost of purchase
B)maintenance cost
C)product availability
D)brand personality
E)disposal cost