general business data bank

Question
Chapter 5:

Creating Customer Value, Satisfaction, and Loyalty

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GENERAL CONCEPT QUESTIONS
Multiple Choice
1. ________ are adept at building customer relationships, not just products; they are skilled in market engineering, not just product engineering.

a. Profit-centered companies

b. Customer-centered companies

c. Production-centered companies

d. Sales-centered companies

e. Promotion-centered companies

2. The opening vignette on Ritz-Carlton shows that successful marketers are the ones that fully ________.

a. understand promotional strategy

b. diversify their product line

c. divorce themselves from a production mentality

d. satisfy their customers profitably

e. understand the sales concept

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

Sales
The president
Front-line people
Customers
Middle management
4. ________ 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. Report rating

d. Customer-perceived value

e. Competitors’ market share rate

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

a. psychological

b. intangible

c. realized

d. fabricated

e. advertised

6. The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering is called the ________.

a. organizational expense ratio

b. shopper’s fatigue

c. total customer cost

d. analysis paralysis

e. comparison shopping to comparison buying ratio

7. In applying a customer’s perceived value to a decision, a seller who is at a disadvantage with respect to customer-perceived value has two alternatives: to increase total customer benefit or ________.

a. increase a cash-back bonus

b. decrease total customer cost

c. lose the sale to the competitor

d. advertise more frequently

e. offer an extended warranty

8. 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 against a specific major competitor on an individual attribute or benefit basis

d. monitor customer values over time

e. assess the quantitative importance of the different attributes and benefits

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

a. customer promise

b. mission statement

c. corporate pledge

d. corporate-perceived value

e. value proposition

A company’s ________ includes all the experiences the customer will have on the way to obtaining and using the offering.

f. value proposition

g. value delivery system

h. customer-value analysis

i. total customer benefit

j. total customer cost

10. Total customer satisfaction is measured based on the relationship of ________.

a. anticipated and real performance

b. perceived performance and expectation

c. advertised outcomes and real outcomes

d. past experience and present experience

e. customer attitude and salesperson’s attitude

11. The ultimate goal of the customer-centered firm is ________.

a. high customer satisfaction

b. high profits

c. low costs

d. maximum stakeholder satisfaction

e. none of the above

12. Buyers form their expectations from all of the following EXCEPT ________.

a. past buying experience

b. friends and associates advice

c. marketers’ information

d. competitors’ information

e. governmental newsletters

13. A customer’s decision to be loyal or to defect is the sum of many small encounters with the company. In order for all these small encounters to add up to customer loyalty, many companies, such as Joie de Vivre Hospitality, strive to create ________.

a. a reward program

b. a comprehensive customer database

c. a branded customer experience

d. strong word-of-mouth promotions

e. a top-notch advertising campaign

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

a. heavy promotion

b. deep discounts for intermediaries

c. to have an ethics officer

d. customer satisfaction

e. to have customers on the board of directors

15. ________ can track customer satisfaction directly and also gauge consumers’ willingness to recommend the company and brand to others.

a. Periodic surveys

b. Mystery shoppers

c. Customer loss rates

d. Customer focus statements

e. All of the above

16. Studies of customer dissatisfaction show that customers are dissatisfied with their purchases about 25% of the time, but only about ________ complain.

a. 1%

b. 5%

c. 10%

d. 15%

e. 20%

17. Of customers who register a complaint, ________.

a. the majority 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 spread more word of mouth than those who continue to be dissatisfied

d. the speed of resolution has no impact on the likelihood of repeat business

e. between approximately half and three-quarters will do business with the company again if their complaint is resolved

18. ________ 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

19. Total quality is the key to value creation and customer satisfaction. A marketing manager has several roles to play in a quality-centered company, including ________.

a. participating in cross-functional team building

b. correctly identifying customers’ needs and requirements

c. ensuring costs are adequately controlled during order fulfillment

d. setting expectations both internally and externally

e. working closely with the sales team to create a dynamic sales message

20. The 20–80 rule reflects the idea that ________.

a. the top 20% of customers often generate 80% of the company’s profits

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. 20% of the company’s profits are generated by the top 80% of customers

e. any new product offering 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

21. Most companies have learned that the ________ are often the most profitable because of service expectations and their willingness to pay almost full price.

a. large-size customers

b. midsize customers

c. small-size customers

d. niche customer

e. target market customers

22. A(n) ________ 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. profitable

b. semiprofitable

c. unprofitable

d. niche

e. target

23. 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 (RBC)

d. activity-based costing (ABC)

e. future date costing (FDC)

________ describes the net present value of the stream of future profits expected over the customer’s lifetime purchases.

f. Activity-based costing

g. Customer profitability analysis

h. Customer value analysis

i. Customer-perceived value

j. Customer lifetime value

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

a. value

b. loyalty

c. profitability

d. satisfaction

e. equity

25. A customer touch point in the airline industry would include an item such as ________.

a. reservations

b. mechanics’ ability to service the airplanes

c. ease of access to the airport

d. the value of air travel versus surface transportation

e. competency of a travel agent

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 into overall consumption trends

d. individual account information

e. demographic trend data

27. All of the following would be among the Peppers and Rogers’s four-step framework for one-to-one marketing that can be adapted to CRM marketing EXCEPT ________.

a. customizing products, services, and messages to each customer

b. interacting with individual customers to learn their needs

c. always offering the lowest price

d. differentiating customers in terms of their needs and value to the company

e. identifying your prospects and customers

28. Winning companies improve the value of their customer base by excelling at each of the following strategies EXCEPT ________.

a. retaining all customers regardless of profitability

b. reducing the rate of customer defection

c. increasing the longevity of the customer relationship

d. making low-profit customers more profitable or terminating them

e. focusing disproportionate efforts on high-value customers

29. Harley-Davidson sells more than motorcycles and accessories. Its dealerships also sell branded clothing and licensed goods. 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

30. Although actual costs vary from business to business depending on the complexity of the sales process, the most expensive customer acquisition method based on cost per solicitation is ________.

a. personal selling

b. direct mail

c. telemarketing

d. banner advertisements

e. e-mail

31. Another term for high customer ________ is customer churn.

a. retention

b. defection

c. value

d. perception

e. belief

32. People with the motivation, ability, and opportunity to make a purchase are known as ________.

a. potentials

b. advocates

c. members

d. prospects

e. partners

33. Customers who enthusiastically recommend the company and its products and services to others are known as ________.

a. potentials

b. advocates

c. members

d. prospects

e. partners

34. Satisfied customers constitute the company’s ________.

a. customer relationship capital

b. customer churn

c. prospects

d. high-value customers

e. customer touch points

35. Acquiring new customers can cost ________ times more than satisfying and retaining current customers.

a. two

b. three

c. five

d. seven

e. 10

36. All of the following are methods to form strong customer bonds EXCEPT ________.

a. creating superior products, services, and experiences for the target market

b. making it easy for customers to reach the appropriate company personnel and express their needs, perceptions, and complaints

c. organizing and making accessible a database of information on individual customer needs, preferences, contacts, purchase frequency, and satisfaction

d. running award programs recognizing outstanding employees

e. concentrating the planning and management of the customer satisfaction and retention process within the marketing department

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

a. benefit programs

b. frequency programs

c. satisfaction programs

d. loyalty programs

e. quality programs

Typically, ________ gains the most benefit from introducing a frequency program.

f. the first company to introduce a frequency program in an industry

g. the fast follower, who is second to introduce a frequency program in an industry,

h. the industry sales leader

i. the niche player in the industry

j. the low-cost leader in the industry

38. All of the following are CRM imperatives EXCEPT ________.

a. acquiring the right customer

b. crafting the right value proposition

c. instituting the best processes

d. motivating employees

e. learning to make profits through marginal customers

39. CRM technology can help motivate employees by ________.

a. analyzing customer revenue and cost data to identify current and future high-value customers

b. better targeting the company’s direct marketing efforts

c. tracking customer-service satisfaction levels

d. aligning employee incentives and metrics

e. developing new pricing models

40. According to Stanford’s business guru Jeffery Pfeffer, “the best companies build cultures in which frontline people ________.”

a. can refer serious problems to senior management

b. have strictly limited freedom to deviate from standard operating procedures

c. are also consumers of the company’s products

d. are empowered to do what’s needed to take care of the customer

e. live in the communities they serve

41. 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. a customer database

b. a customer mail list

c. target market segments

d. customer segments

e. relationship marketsa

42. 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. datamining

c. database marketing

d. custom marketing

e. electronic marketing

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

a. customer database

b. customer mailing list

c. call-waiting list

d. psychographic list

e. demographic list

44. A customer database should contain all of the following EXCEPT ________.

a. a customer’s past purchases

b. demographics

c. psychographics

d. mediagraphics

e. an assessment of competitive strengths and weaknesses

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

a. customer mailing list

b. contact list

c. customer database

d. business database

e. general corporate database

46. Savvy companies are capturing information every time a customer comes into contact with any of its departments. As a marketing manager all of the following would be available customer touch points for your consideration EXCEPT ________.

a. a customer purchase

b. an online query

c. a mail-in rebate card

d. an ad run on a national television network

e. a customer-requested service call

47. Using 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. corporate database

e. Better Business Bureau contacts

48. 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. datamining

d. data management

e. data marketing

49. ________ 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 marketing

c. Target market analysis

d. Data accumulation

e. Datamining

50. In general, companies can use their databases in all of the following ways EXCEPT ________.

a. to predict competitive strategies and plans

b. to identify prospects

c. to decide which customers should receive a particular offer

d. to deepen customer loyalty

e. to avoid serious customer mistakes

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