Retailing Management, 10e (Levy)
Chapter 10 Customer Relationship Management
1) Customer loyalty can be enhanced by creating an appealing brand image.
2) Customer loyalty is limited to ensuring satisfaction by offering a wide assortment of products.
3) A data warehouse normally contains information on customer preferences.
4) Cookies are not equipped to track customer interactions on social networking sites.
5) The customer lifetime value (CLV) is the expected contribution from the customer to the
retailer’s profits over his or her entire relationship with the retailer.
6) A specific type of data analysis that focuses on the composition of the bundle of merchandise
purchased by a consumer during a single shopping trip is called a market basket analysis.
7) Frequent-shopper programs are expensive to implement and manage.
8) Effective frequent-shopper programs are transparent.
9) Customers in the platinum segment place more value on the price of a product.
10) Developing retail programs for small groups or individual customers is referred to as 1-to-1
retailing.
11) ________ indicates that customers are committed to purchasing merchandise and services
from the retailer regardless of competing retailers’ enticements.
A) Customer commitment
B) Customer loyalty
C) Customer satisfaction
D) Customer attitudes
E) Customer interest
12) What is the primary objective of CRM process?
A) To develop a base of loyal customers who patronize the retailer frequently
B) To satisfy customers by providing discounts and special offers
C) To increase the foot-traffic into retail stores
D) To offer the best prices possible to their target customer
E) To attract customers away from competitors
13) Customer loyalty means
A) customers are committed to purchasing from the retailer and will seldom shop at competing
stores.
B) customers have a high frequency of purchasing merchandise from the retailer.
C) customers have most recently shopped and purchased from the retailer.
D) customers make the highest amount of their purchases at one retailer and will be loyal to that
retailer.
E) customers have positive emotions about a retailer and will be loyal to that retailer.
14) A business philosophy and set of strategies, programs, and systems that focuses upon
identifying and building loyalty with a retailer’s most valued customers is called
A) customer loyalty management.
B) strategic relationship management.
C) most valued customer management.
D) strategic consumer management.
E) customer relationship management.
15) The objective of the CRM process is to
A) analyze market trends.
B) expand services.
C) develop loyalty and repeat-purchase behavior.
D) extend hours of operations.
E) monitor customer transactions.
16) ________ refers to the percentage of the customers’ purchases made from the retailer.
A) 80-20 rule
B) Share of wallet
C) Customer lifetime value
D) Profit sharing
E) 1-to-1 retailing
17) Which of the following statements is true of customer loyalty?
A) It refers to customers making repeat visits to a retailer and being satisfied with their
experiences.
B) It occurs when customers purchase merchandise and services from a retailer because of its
convenient location.
C) It is an emotional connection between a retailer and a customer.
D) It is the state of accumulated transactions that customers build through repeat purchases
responding to various promotions.
E) It is the sole result of superior customer service.
18) Retailers will use all of the following to retain and increase share of wallet from their best
customers except:
A) Frequent-shopper programs
B) Special customer services
C) Personalization
D) Promotions
E) Lower prices
19) Which of the following statements does not describe the customer relationship management
process that retailers implement?
A) The process begins with the collection and analysis of data about a retailer’s customers and the
identification of its best customers.
B) CRM is an iterative process that turns customer data into customer loyalty and repeat-purchase
behavior.
C) Retailers concentrate on providing more value to their best customers using targeted
promotions.
D) Loyal customers share a personal bond with retailers.
E) All of these statements describe customer relationship management.
20) What is the final step in the CRM process?
A) Analyzing data
B) Developing CRM programs
C) Constructing a data warehouse
D) Identifying the target customers
E) Implementing programs
21) The first step in the CRM process is
A) analyzing data.
B) creating a data warehouse.
C) developing CRM programs.
D) implementing programs.
E) rewarding loyal customers.
22) A(n) ________ forms the foundation for all CRM activities.
A) frequent-shopper program
B) loyalty program
C) 1-to-1 retailing program
D) RFM analysis
E) data warehouse
23) Which of the following information does not form a part of the data warehouse for a retailer?
A) Details of customer visits to the retailer’s site
B) A complete history of the customer’s transactions
C) Customer preferences such as brands and fabrics
D) Demographic data for segmentation purposes
E) Details of competitor patronization
24) Why is constructing a data warehouse more difficult for in-store transactions than it is for
online shopping?
A) Customer returns to the store confound the data.
B) Store purchases can be made with cash or third-party credit cards.
C) Availability of store assortments is not always similar to website assortments.
D) Store customers are not interested in sharing personal information.
E) Since customers are more likely to buy gifts for others in stores than online, it defeats the
purpose of understanding the end-user.
25) Which of the following is an inherent limitation associated with asking the customer for
identifying information for building a data warehouse?
A) Some customers may feel that the sales associate is violating their privacy.
B) Some identifying information is illegal to use for marketing purposes.
C) If the information provided is inaccurate, the retailer may be held liable.
D) Customer consent is mandatory in the U.S. for using personal information.
E) Customers may give more information than what the sales associate can record.
26) When Mary purchased some caulk for her windows at Home Depot, the cashier asked for her
telephone number at the point-of-sale. What was the retailer doing by asking this question?
A) The retailer was determining her level of trust in the store.
B) The retailer was identifying her preference.
C) The retailer was collecting data for the store’s database.
D) The retailer was curious as to how many people from that area code shopped the store.
E) The retailer was confirming forecasts for buyers.
27) At La Rue Fashions, there is a certain customer who makes large purchases every Friday and
returns everything two weeks later. In response, the manager recently created a policy and
published it. It included specifics of the store’s terms regarding returned merchandise stating that
all tags must be intact; the clothing must not have been worn; and it must be returned within seven
days to receive credit. Which of the following best describes the retailer’s actions?
A) Add-on selling
B) Getting the lead out
C) Data mining
D) RFM analysis
E) Cutting off services
28) Wilbur uses a Books-A-Million customer card, Kash-N-Karry customer card, Jerry’s Cleaners
customer card, and Sandwich Shop customer card when he shops at any of these retailers. Each
time he uses them, he gets rewarded with reduced cost, free merchandise, or a credit. These cards
form a part of
A) assortment planning programs.
B) retail analytic programs.
C) frequent-shopper programs.
D) privacy and CRM programs.
E) market basket analysis.
29) Which of the following statements is not true of frequent-shopper programs?
A) Frequent-shopper programs are programs that identify and provide rewards to customers who
patronize a retailer.
B) Frequent-shopper programs are also commonly called loyalty programs.
C) Frequent-shopper cards are issued on the basis of market basket analysis.
D) Frequent-shopper programs include a private-label credit card offered by a retailer.
E) Frequent-shopper programs can provide customer information automatically to the retailer
when customers have their program card scanned at the time of transaction.
30) When customers join the Daily Needs Reward Zone, they receive one point on every purchase
they make at Daily Needs stores and DailyNeeds.com. Reward Zone points are converted to
reward certificates which can be redeemed for merchandise at Daily Needs stores or on
DailyNeeds.com. Reward Zone Members also receive exclusive offers throughout the year and a
“special reward” for their birthday. This strategy by Daily Needs is an example of
A) a tiered reward system.
B) personalization.
C) a customer loyalty program.
D) an exclusive value share program.
E) market basket analysis.
31) ________ identify and provide rewards to customers who patronize a retailer.
A) Retail brand communities
B) Cookies
C) Loyalty programs
D) Customer surveys
E) Store advocates
32) Airlines and credit cards that offer points for each dollar spent are utilizing ________ for
effective customer relationship management.
A) a loyalty program
B) cookies
C) share of wallet
D) market baskets
E) communities
33) Which of the following describes an approach that is used to deal with unprofitable customers?
A) Retailers charging a restocking fee for returned merchandise
B) Retailers offering frequent buyer cards
C) Supermarkets giving away free samples of a new product
D) Retailers having special events outside of regular store hours
E) Retailers allowing certain merchandise to be viewed only by qualified customers
34) Although having information about individual customers helps retailers provide better services
to consumers, consumers are concerned about
A) price promotions.
B) loyalty.
C) descriptive information.
D) privacy.
E) data mining.
35) Which of the following principles forming the basis of a new legislation on consumer privacy
encourages retailers to treat consumer privacy as their default setting?
A) Simplified consumer choice
B) Data mining
C) Privacy by design
D) Greater transparency
E) Opt-in agreements
36) Which of the following is a reason for consumers to have privacy concerns regarding cookies?
A) Customers cannot realize the amount of information being collected without their knowledge.
B) The passwords used to access websites reveal a large amount of personal information without a
customer’s knowledge.
C) The cookies block the ability to log on to certain sites.
D) Governmental agencies may use cookies to collect extra taxes.
E) The cookies may corrupt the consumers’ personal software files.
37) Electronic retailers can collect transaction data for their data warehouse, but they can also
collect information by placing cookies on a visitor’s hard drive. Cookies are
A) viruses.
B) frequent-shopper rewards.
C) text files that identify pirated software.
D) files that identify visitors when they return to a website.
E) text files used exclusively to determine demographic information.
38) When Lana went to Bookdreams.com to look for books on health and wellness, she saw a
personalized greeting and book recommendations. The greeting and books recommendations were
based on her previous visits to the site. Which of the following best describes how
Bookdreams.com knew that Lana has accessed their site?
A) Bookdreams.com used retail analytics to create a personalized offer.
B) The site used the 80-20 scheme to analyze her buying behavior.
C) The site used market basket analysis to predict her buying patterns.
D) Another retailer sold her private information to Bookdreams.com.
E) Bookdreams.com placed cookies on her computer to identify her.
39) When consumers explicitly agree to share personal information, the agreement is referred to as
A) participatory knowledge.
B) opt in.
C) the 80-20 rule.
D) a disclosure agreement.
E) opt out.
40) When consumers explicitly tell the retailer not to use their personal information, they must
A) choosing/consenting.
B) opt in.
C) opt out.
D) declining public domain statutes.
E) notifying consumer information services.
41) If a U.S. retailer wants to conform to the European policies concerning how customer
information is collected, which type of policy should it adopt?
A) Opt in
B) Opt out
C) Opt private
D) Opt EC
E) 80-20 rule
42) Which of the following statements correctly describes the practices regarding customer
privacy in the U.S.?
A) In the U.S., Americans rely upon federal government to protect consumer privacy.
B) Current legislation in the U.S. for consumer privacy forces strict protection of consumer
privacy in retailing.
C) The U.S. has more stringent consumer privacy laws than the European Union.
D) In the U.S., the opt-out policy is applied when consumers’ personal information is collected and
used.
E) In the U.S., personal information is generally viewed as being in the public domain, and
retailers can use it in any way they desire.