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Chapter 10 Developing and Maintaining Long-Term Customer Relationships
MULTIPLE CHOICE
1. In times past, developing and implementing the “right” marketing strategy was all about __________.
In today’s economy, however, that emphasis has shifted to developing strategies that attract and retain
customers over the long term.
a.
aggressive selling in order to maximize sales volume
b.
creating a large number of transactions in order to maximize the firm’s market share
c.
conducting extensive research to discover customer needs
d.
making the highest quality product
e.
making products of moderate quality that could be sold at the lowest possible price
2. __________ is defined as a business philosophy aimed at defining and increasing customer value in
ways that motivate customers to remain loyal.
a.
Lifetime value management
d.
Customer relationship management
b.
Customer orientation
e.
Retention management
c.
Market orientation
3. With respect to competitive advantages, many see __________ as the most important asset that an
organization can possess, as it stems from the value generated by the trust, commitment, cooperation,
and interdependence among relationship partners.
a.
partnership capital
d.
relational collaboration
b.
integrity
e.
professionalism
c.
relationship capital
4. The PTL Corporation provides long-distance telephone services to consumer and business markets.
The company recently initiated a marketing strategy designed to promote customer knowledge and
educate customers about the company and its products. The strategy is also designed to prospect for
new customers. At what stage of the customer relationship development process does PTL find itself?
a.
repeat purchase
d.
advocacy
b.
community
e.
client
c.
awareness
5. Larger financial institutions now offer a wide range of services under one roof, from banking to stock
trading. These institutions have moved away from increasing their market share to instead focus on
increasing their:
a.
share of market.
d.
relational share.
b.
share of relationships.
e.
lifetime customer value.
c.
share of customer.
6. Which of the following statements is FALSE regarding the use of the 80/20 rule in managing
customer relationships?
a.
Advances in technology and data collection techniques allow firms to profile customers in
real time.
b.
Twenty percent of customers provide 80 percent of business profits.
c.
Some customers are too expensive to keep given the low level of profits that they
generate.
d.
The 80 percent of customers in the bottom tier should be fired so the firm can focus on its
top customers.
e.
The firm’s top customers are the most obvious candidates for retention strategies.
7. When a firm begins to charge high fees for additional services to non-profitable customers, it has
determined that the __________ of those customers is too low to warrant added efforts at maintaining
a relationship with them.
a.
client value
d.
market share
b.
lifetime value
e.
80/20 value
c.
relational value
8. Which of the following relationship strategies is most likely to be used by a health club as it tries to
create social bonds with its clientele?
a.
membership programs
d.
customer reminder notifications
b.
coupons
e.
family discount programs
c.
personalized training
9. What is the primary disadvantage associated with using financial incentives as a means of developing
customer relationships?
a.
They take a long time to work.
b.
Customers may resist the use of financial incentives.
c.
They can be expensive to use.
d.
They can promote continual brand switching.
e.
All of the above.
10. __________ refers to the degree of superiority of a firm’s goods or services. It is a relative term
because it can only be judged in comparison to competing products or when compared to an internal
standard of excellence.
a.
Value
d.
Satisfaction
b.
Durability
e.
Sustainability
c.
Quality
11. In service offerings, the core product is typically composed of three interrelated dimensions. What are
these dimensions?
a.
people, technology, and facilities
b.
people, processes, and physical evidence
c.
processes, employees, and facilities
d.
customers, employees, and processes
e.
reputation, operations, and quality
12. With respect to the different components of the total product offering, supplemental products play the
important role of:
a.
meeting basic customer needs.
b.
delivering the main core benefits of the product offering.
c.
adding symbolic benefits to the product offering.
d.
delivering the minimum level of quality demanded by customers.
e.
differentiating the product offering from competing products.
13. Which of the following statements about value is FALSE?
a.
Value includes the concept of quality, but it is broader in scope.
b.
Value takes into account every marketing program element.
c.
Value, unlike quality, means the same thing to all customers.
d.
Value is critical to maintaining long-term customer relationships.
e.
Value allows for the necessary balance among the five types of utility.
14. There are two types of monetary costs involved in the purchase of any product: transactional costs and
life-cycle costs. Which of the following best exemplifies a life-cycle cost in the purchase of an
automobile?
a.
the actual purchase price
d.
registration fees
b.
state or local taxes
e.
title fees
c.
anticipated repair expenses
15. In the purchase of a product, time, effort, risk, and opportunity costs are all examples of:
a.
nonmonetary costs.
d.
experiential costs.
b.
soft costs.
e.
monetary costs.
c.
intangible costs.
16. Assume a customer planning to purchase a Wii U gaming console made this statement: “Given the
expense and all the hype about the new Wii U, it ought to be the best gaming console ever made.”
What type of expectation does this customer have about the Wii U?
a.
an ideal expectation
d.
a minimum tolerable expectation
b.
a normative expectation
e.
a highly involved expectation
c.
an experience-based expectation
17. In which of the following situations would a customer become more tolerable of weak or poor product
performance?
a.
When the customer is in a hurry.
b.
When the customer’s personal needs are high.
c.
When the purchase situation is highly involving.
d.
When the customer has fewer product alternatives.
e.
When the purchase is for a special occasion.
18. With respect to customer expectations, which of the following best describes the zone of tolerance?
a.
It explains situations where customer expectations will be higher than normal.
b.
It represents the degree to which customers recognize and are willing to accept variability
in performance.
c.
It explains situations where customer satisfaction will be exceptionally low.
d.
It explains why customers tolerate weak performance when performance is beyond the
control of the firm.
e.
It explains situations where customers will hold lower than normal expectations.
19. Meghan recently took her parents to a gourmet restaurant for their 25th wedding anniversary. The
evening was exceptional, with everyone receiving the utmost in terms of quality and value. However,
when reflecting on the experience the next day, Meghan decided that she was not fully satisfied. Why
might this happen?
a.
Because satisfaction has nothing to do with quality or value.
b.
Because satisfaction occurs over time, whereas perceptions about quality and value occur
immediately.
c.
Because dissatisfaction is based on an entirely different set of factors than satisfaction.
d.
Because satisfaction can be based on factors that have nothing to do with quality or value.
e.
It cannot happen. By definition, customers who receive the best quality and value will be
satisfied.
20. Which of the following IS NOT good advice with respect to leveraging customer satisfaction from a
strategic point of view?
a.
Understand what can go wrong in fulfilling customers’ needs.
b.
Offer a satisfaction guarantee.
c.
Flesh out all uncontrollable issues and attempt to prevent them.
d.
Make it easy for customers to complain.
e.
Make customer satisfaction measurement an ongoing priority.
ESSAY
1. Explain the overall objective of customer relationship management and the stages that customers are
pulled through in the process. For each stage, identify the marketing goals during the stage as well as
examples of strategies that may be used.
ANS:
Examples: Good product quality and value-based pricing, good service before, during, and
after the sale, frequent reminders and incentives
2. Acquire more of each individual customer’s business
3. Personalize products to meet evolving customer needs and wants
Examples: Frequent customer cards, frequent-flier programs, broad product offering
2. Create opportunities for customers to interact with each other in a sense of
community
Examples: Membership programs, affinity programs, ongoing personal communication
2. Become such a part of the customer’s life that he or she is not willing to end the
3. Think of customers as partners
2. Discuss the strategies that can be used to enhance and maintain customer relationships. Identify the
key advantages and disadvantages of each strategy, as well as examples of the marketing tactics that
my be used.
3. Discuss the role of value in developing long-term customer relationships. In your discussion, explain
the value formula and its component parts. How can the value formula help marketers design strategies
to optimize customer value?
4. Discuss the relationship between customer expectations and customer satisfaction. What might cause
expectations to be higher or lower? How is the zone of tolerance a useful diagnostic tool in terms of
developing strategies aimed at improving customer satisfaction?
5. In terms of managing customer expectations, what are the three possible outcomes that may occur
when expectations are compared to actual product performance? What should marketers do to manage
expectations effectively, especially when customers’ expectations are unrealistic? Should a firm
attempt to delight its customers by constantly exceeding their highest expectations?
