Deck 5: Creating Long term Loyalty Relationships

Question 1

If marketers raise customer expectations too high, the buyer is likely to be disappointed. However, if the company sets expectations too low, it

A) must offer a fixed price.
B) will raise the value proposition.
C) will lower total customer cost.
D) will create customer loyalty.
E) won't attract enough buyers.

Answer 1

E

Question 2

When a consumer considers a product or service, he or she will choose whichever product or service delivers the highest customer perceived value. A retailer such as Zellers can improve it offerings in three ways. If Zellers improves products, personnel, and image benefits, it will

A) reduce total customer cost.
B) reduce product cost.
C) increase total customer benefit.
D) increase long-term loyalty.
E) reduce psychic costs.

Answer 2

C

Question 3

Enterprise Office Depot is a marketer that has moved from the traditional to a modern customer-oriented organization chart. In that case, we would expect to find the ________ of Enterprise, second in importance.

A) middle management
B) service department
C) top management
D) front-line people
E) marketing department

Answer 3

D

Question 4

If a company increases customer satisfaction by lowering its price or increasing its services, the result may be

A) a loyalty program.
B) lower profits.
C) unsatisfying experiences.
D) decreased lifetime value.
E) customer defection.

Question 5

________ are adept at building customer relationships, not just products.

A) Sales-centred companies
B) Customer-centred companies
C) Production-centred companies
D) Profit-centred companies
E) Promotion-centred companies

Question 6

Total customer benefit is the perceived monetary value of the bundle of economic, functional, and ________ benefits customers expect from a given market offering.

A) fabricated
B) advertised
C) psychological
D) intangible
E) realized

Question 7

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.

Question 8

The opening vignette on Sobeys Inc. indicates that successful marketers are the ones that

A) understand the sales concept.
B) manage their customer base.
C) divorce themselves from a production mentality.
D) understand promotional strategy.
E) diversify their product line.

Question 9

One large construction company has paid $19,000 for a Caterpillar tractor, yet when the company calculates the bundle of economic, functional, and psychological benefits of the tractor, they arrive at a figure much higher. The construction company's assessment is seen as the

A) total customer satisfaction.
B) value proposition.
C) total customer cost.
D) customer perceived benefit.
E) total customer benefit.

Question 10

If Volvo were to focus its marketing efforts on all the experiences the customer will have on the way to obtaining and using their offerings, it would be focusing its marketing efforts on the customer's

A) psychological system.
B) demand.
C) cost versus benefit system.
D) value-delivery system.
E) perception system.

Question 11

RBC wants to understand what value propositions make sense to which customers. When the bank discovered that it sometimes makes sense to tell a customer her or she is not using the right service, even if that services generates less revenue in the short term, it was acting on a

A) return on quality.
B) customer lifetime value.
C) leverageable advantage.
D) competitive advantage.
E) customer profitability analysis.

Question 12

The final step of customer value analysis is to _______

A) monitor customer values over time.
B) identify the major attributes and benefits that customers value.
C) assess the company's and competitors' performances on the different customer values against their rated importance.
D) examine how customers in a specific segment rate the company's performance.
E) assess the quantitative importance of the different attributes and benefits.

Question 13

Derrick Lagodzki has just taken possession of new Toyota Yaris. Whether Derrick is satisfied after purchase will depend on the Yaris's performance in relation to

A) Toyota's expectations.
B) his expectations.
C) Toyota's delivery.
D) his reactions.
E) both Derrick's and Toyota's demands.

Question 14

The perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychic costs is called the

A) total customer cost.
B) organizational expense ratio.
C) shopper's fatigue.
D) comparison shopping to comparison buying ratio.
E) analysis paralysis.

Question 15

The ________ consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.

A) value proposition
B) mission statement
C) corporate pledge
D) corporate perceived value
E) customer promise

Question 16

In the modern customer-oriented organizational chart, which of the following is considered to be at the top of the organizational pyramid?

A) Sales are at the top of the organizational pyramid.
B) Customers are at the top of the organizational pyramid.
C) Middle management is at the top of the organizational pyramid.
D) The president is at the top of the organizational pyramid.
E) Front-line people are at the top of the organizational pyramid.

Question 17

Buyers do not always make logical or rational decisions. They might purchase the most expensive and least quality item for example. Which of the following would be another good example of this behaviour?

A) The buyer might be underage.
B) The buyer might be under pressure to resist sales messages.
C) The buyer is not seen by the seller as being very intelligent.
D) The buyer might be under orders to buy at the lowest price.
E) The buyer refuses to listen to or read any advertising.

Question 18

________ 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) Report rating
B) Competitors market share rate
C) Perceived usefulness
D) Customer perceived value
E) Failure avoidance rate

Question 19

In applying a customer's perceived value to a decision, a seller who is at a customer perceived value disadvantage has two alternatives: to increase total customer benefit or

A) offer an extended warranty.
B) lose the sale to the competitor.
C) advertise more frequently.
D) decrease total customer cost.
E) increase a cash-back bonus.

Question 20

Which of the following is the first step in customer value analysis?

A) Identify the major attributes and benefits that customers value.
B) Examine how customers in a specific segment rate the company's performance.
C) Assess the company's and competitors' performances on the different customer values against their rated importance.
D) Monitor customer values over time.
E) Assess the quantitative importance of the different attributes and benefits.

Question 21

A ________ 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 that customer.

A) semi-profitable
B) target
C) profitable
D) niche
E) unprofitable

Question 22

After conducting customer profitability analysis (CPA), Sunquest Vacations would likely decide to curtail any resources and activities directed at ________ customers, those seen as the most unprofitable and undesirable.

A) losing
B) loyal
C) satisfied
D) profitable
E) mixed-bag

Question 23

A survey performed by Canadian Business magazine found that the biggest gap between best and worst customer satisfaction levels occurred in the

A) fashion industry.
B) computer systems industry.
C) automobile industry.
D) financial services industry.
E) airline industry.

Question 24

________ 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) Customer loyalty
C) Quality
D) Value
E) Customer retention

Question 25

Which of the following is the best example of what is called a leverageable advantage?

A) TD Canada Trust ranking number one in customer satisfaction
B) Microsoft's use of its operating system to supply networking applications
C) Dell avoiding selling its products in retail stores
D) UPS targeting mid-size shippers
E) Apple winning design awards and producing unique commercials

Question 26

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) demographic trend data
E) individual account information

Question 27

________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty.

A) Customer lifetime value
B) Customer profitability analysis
C) Customer relationship management
D) Customer satisfaction analysis
E) Customer-value delivery

Question 28

________ is an organization-wide approach to continuously improving the quality of all the organization's processes, products, and services.

A) Profit-centred management
B) Strategic management
C) Customer-retention management
D) Total quality management
E) Total customer control management

Question 29

According to research done by American Express, the best customers outspend those that are considered to be the best customers by significant margins. Holt Renfrew, an upscale retailer, would likely find their best customers outspend other customers by a ratio of

A) 5 to 1.
B) 13 to 1.
C) 12 to 1.
D) 16 to 1.
E) 4 to 1.

Question 30

The 20-80-30 rules reflects the idea that

A) the top 20 percent of customers are highly satisfied, 80 percent of customers will recommend the company to a friend, and 30 percent are unsatisfied.
B) 20 percent of customers are unprofitable, 80 percent of customers make up 30 percent of a company's profits.
C) any new product offering will be accepted by 20 percent of the customers immediately, this figure will eventually rise to 30 percent, however, 80 percent of the customers will be up for grabs throughout the product life cycle for the product.
D) the top 20 percent of customers generate 80 percent of the company's profits, half of which are lost serving the bottom 30 percent of unprofitable customers.
E) 20 percent of the company's profits are generated by 80 percent of customers, and 30 percent of customers are satisfied.

Question 31

The drive in world markets to produce superior goods has led some countries to recognize or award prizes. What is the name of Japan's prize for developing quality products?

A) the Deming Prize
B) Malcolm Baldridge National Quality Award
C) the John F. Welch Jr. Prize
D) the K.C. Irving Quality Award
E) the J.D. Power Award

Question 32

Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called

A) Activity-Based Costing (ABC).
B) input-output analysis.
C) factor analysis.
D) Revenue-Based Costing (RBC.)
E) Future Date Costing (FDC).

Question 33

Most companies have learned that the ________ are the most profitable because of service expectations and their willingness to pay almost full price for the products they purchase.

A) large-size customers
B) target market customers
C) midsize customers
D) small-size customers
E) niche customers

Question 34

________ can track customer satisfaction directly and ask additional questions to measure repurchase intention and the respondent's likelihood or willingness to recommend the company and brand to others.

A) Mystery shoppers
B) Customer loss rates
C) Customer focus statements
D) Periodic surveys
E) Sales summary reports

Question 35

If Loblaws hired staff to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products, they would be engaging in which satisfaction measurement strategy?

A) covert operatives
B) mystery shoppers
C) intelligence agents
D) market mavens
E) opinion leaders

Question 36

________ 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) Satisfaction
C) Respect
D) Customer value
E) Loyalty

Question 37

________ is the practice of marketing to consumers only after gaining their expressed permission.

A) Relationship marketing
B) Cause marketing
C) Permission marketing
D) Defensive marketing
E) Horizontal marketing

Question 38

The best survey method to measure customer satisfaction directly is

A) to administer periodic surveys.
B) to compute the customer loss rate.
C) to employ a mystery shopper.
D) the mailed questionnaire.
E) to survey former customers.

Question 39

One key to customer retention is ________. It would be wise for a company to measure this factor frequently.

A) to have an ethics officer
B) to have customers on the board of directors
C) customer satisfaction
D) deep discounts for intermediaries
E) heavy promotion

Question 40

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) some will do business with the company again if their complaint is resolved
E) the speed of resolution has no impact on the likelihood of repeat business

Question 41

Which of the following strategies among Peppers and Rogers's four-step framework for one-to-one marketing involves formulating customized offerings communicated in a personalized way.

A) interacting with individual customers to learn their needs
B) differentiating customers in terms of their needs and value to the company
C) focus disproportionate effort on high-value customers
D) customizing products, services, and messages to each customer
E) identify your prospects and customers

Question 42

Online retailers such as Zazzle and CafePress allow users to upload images and create their own clothing and posters or buy merchandise created by other users. This would be an example of which of the following?

A) mass customization
B) mass marketing
C) environmental marketing
D) niche marketing
E) individualization

Question 43

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) enhance the growth potential for each customer through cross-selling
C) increase the longevity of the customer relationship
D) make low-profit customers more profitable
E) focus disproportionate effort on high-value customers

Question 44

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

Question 45

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.

Question 46

Satisfied customers constitute the company's ________.

A) customer churn
B) target audience
C) high-value customers
D) customer touch points
E) customer relationship capital

Question 47

The aim of customer relationship management (CRM) is to produce high customer

A) equity.
B) profitability.
C) value.
D) loyalty.
E) satisfaction.

Question 48

________ is the total of the discounted lifetime values of all of a firm's customers.

A) Customer relationship management
B) Relational equity
C) Value equity
D) Customer lifetime value
E) Customer equity

Question 49

With respect to the CRM Imperative, "you get it" when

A) you eliminate all your strong competitors.
B) you have learned how to outsource.
C) you have identified your most valuable customers.
D) you develop a Web presence.
E) you have selected the most beneficial promotion channels.

Question 50

The CRM (customer relationship management) imperative is characterized by five steps or factors. It begins with acquiring the right customer which can involve

A) identifying HR systems to boost employee loyalty.
B) spotting what products or services to offer.
C) learning how to win customers back.
D) researching the best way to delivery your products.
E) calculating your share of their wallet.

Question 51

Another term for high customer ________ is customer churn.

A) defection
B) perception
C) retention
D) value
E) belief

Question 52

Which of the following is a characteristic of one-to-one marketing rather than mass marketing?

A) mass promotion
B) share of market
C) two-way messages
D) standard product
E) customer attraction

Question 53

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

Question 54

Whole Foods Market trains their employees to be knowledgeable and friendly in order to

A) increase the longevity of the customer relationship.
B) reduce the rate of customer defection.
C) make low-profit customers more profitable or terminating them.
D) enhance the growth potential of each customer through up-selling.
E) focus disproportionate effort on high-value customers.

Question 55

Any occasion on which a customer encounters the brand and product, such as a hotel chain's reservation system, business services, and restaurants, is considered a customer

A) touch point.
B) reward system.
C) relationship.
D) sensitivity.
E) customization.

Question 56

The average dissatisfied customer gripes to ________ people.

A) 13
B) 5
C) 9
D) 11
E) 20

Question 57

In ________ marketing, the salesperson contacts the customer from time to time with suggestions about improved product uses or new products.

A) accountable marketing
B) reactive marketing
C) partnership marketing
D) proactive marketing
E) basic marketing

Question 58

The Shoppers Optimum card allows users to accumulate points to apply toward free goods at Shoppers Drug Mart, This is a very successful and recognized

A) frequency program.
B) customer defection.
C) CRM technology.
D) mass customization.
E) retailer partnership.

Question 59

The ability of a company to meet each customer's requirements to prepare on a mass basis individually designed products, services, programs, and communications, is referred to as

A) individualization.
B) proactive customer service.
C) competitive advantage.
D) mass customization.
E) target market customization.

Question 60

3M makes it easy for dialog to occur with its customers. 3M claims that over two-thirds of its product improvement ideas come from listening to

A) entrepreneurial product ideas.
B) customer reactions to competitive products.
C) customer complaints.
D) media feedback.
E) customer suggestions.

Question 61

A Lexus rides smoother, goes faster, and lasts longer. Yet both a Lexus and a Hyundai deliver the same ______ if all the units deliver their respective promised quality.

A) safety quality
B) unique quality
C) conformance quality
D) customer support
E) performance quality

Question 62

An organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for such marketing purposes as lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships is called

A) customer segments.
B) relationship markets.
C) target market segments.
D) a customer database.
E) a customer mail list.

Question 63

Susan Belcourt's company advertises widely. In each magazine ad, a business reply card is attached. Ms. Belcourt uses these cards to build her company's database. In which of the following ways would Ms. Belcourt most likely be using the newly constructed database?

A) to avoid serious customer mistakes
B) to determine if up-selling is appropriate
C) to reactivate customer purchases
D) to deepen customer loyalty
E) to identify prospects

Question 64

Through ________, marketing statisticians can extract useful information about individuals, trends, and segments from the mass of data.

A) data accumulation
B) target market information supplied by the government
C) data marketing
D) data management
E) datamining

Question 65

Frequency marketing is an acknowledgment of the fact that 20 percent of a company's customers might account for ________ percent of its business.

A) 90
B) 70
C) 50
D) 80
E) 40

Question 66

James Everett is a telemarketer. He can use his company's ________ to respond to customer inquiries more effectively because of his ability to see a total picture of the customer relationship.

A) Better Business Bureau contacts
B) call back list
C) corporate database
D) data warehouse
E) call rejection list

Question 67

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 the company has a long relationship with its customers
C) where customers show little loyalty to a brand
D) where the unit sale is very small
E) where the cost of gathering the information is high

Question 68

When companies provide rewards to customers who buy frequently and in substantial amounts, this is referred to as

A) quality programs.
B) loyalty programs.
C) benefit programs.
D) satisfaction programs.
E) frequency programs.

Question 69

Which of the four key principles of Canada's Personal Information Protection and Electronic Documents Act ensures that firms only collect and use information appropriate to the transaction being undertaken?

A) limitations
B) accuracy
C) consumer knowledge and consent
D) privacy
E) right to access

Question 70

A ________ is simply a set of names, addresses, and telephone numbers.

A) customer database
B) customer mailing list
C) call-waiting list
D) demographic list
E) psychographic list

Question 71

A ________ would contain such items as past volumes, prices, profits, buyer team names, status of current contacts, and an assessment of competitive strengths and weaknesses.

A) business database
B) contact list
C) general corporate database
D) customer mailing list
E) customer database

Question 72

In general, companies can use their databases in five ways. Which way involves remembering customer preferences and sending appropriate gifts, coupons, and reading material?

A) to decide which customers should receive a particular offer
B) to deepen customer loyalty
C) to reactivate customer purchases
D) to identify prospects
E) to avoid serious customer mistakes

Question 73

Nina Saab 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 Ms. Saab most likely using his database?

A) to beat the competition to a sale
B) to avoid serious customer mistakes
C) to deepen customer loyalty
D) to identify prospects
E) to decide which customers should receive a new sales offer

Question 74

________ involves the use of sophisticated statistical and mathematical techniques such as cluster analysis, automatic interaction detection, predictive modeling, and neural networking.

A) Data management
B) Data accumulation
C) Datamining
D) Target market analysis
E) Data marketing

Question 75

Which of the following is considered to be one of the five problems that can deter a firm from using CRM (customer relationship marketing)?

A) It is very difficult to find and train database employees.
B) Building and maintaining a customer database requires a large investment.
C) Focusing too much on databases separates a company from its customers.
D) Long-term results of such systems are still unproven.
E) Competitors can often hack into CRM systems.

Question 76

Which of the following represents the type of information typically found in a customer database?

A) past volumes, prices, and profits
B) buyer team member names
C) preferred media
D) competitive strengths and weaknesses
E) status of current contracts

Question 77

________ is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns.

A) Relationship marketing
B) Database marketing
C) Permission marketing
D) Internet marketing
E) Horizontal marketing

Question 78

Royal Caribbean uses its database to offer spur-of-the-moment cruise packages to fill all the berths on its ships. It focuses on retired people and single people because they are more able to make quick commitments. This is an example of opportunities presented by

A) advertising.
B) frequency programs.
C) reactive marketing.
D) mail catalogs.
E) datamining.

Question 79

CRM tends to be used less often by ________, although some have built databases for certain brands.

A) companies whose customers have highly differentiated needs
B) consumer packaged-goods companies
C) service providers
D) companies that do a lot of cross-selling
E) business marketers

Question 80

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) database marketing.
B) datamining.
C) data warehousing.
D) custom marketing.
E) electronic marketing.