59) Using the information in 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) bibliographic database
E) customer-value hierarchy
60) Through ________, marketing statisticians can extract useful information about individuals,
trends, and segments from the mass of data.
A) data governance
B) data modeling
C) data mining
D) data maintenance
E) data marketing
61) 2Wheels conducts exhaustive customer surveys to discover customer preferences and
attitudes towards the brand. Sally uses cluster analysis to classify the data and help the company
determine the trends in the information. Sally is using the technique of ________.
A) data management
B) data marketing
C) data governance
D) data accumulation
E) data mining
62) Susan Lefferts’ company advertises widely. Ms. Lefferts uses business reply cards attached
to her company’s magazine ads to build her company’s database. In which of the following ways
would Ms. Lefferts most likely use the database?
A) to deepen customer loyalty
B) to reactivate customer purchases
C) to avoid serious customer mistakes
D) to determine if up-selling is appropriate
E) to identify prospects
63) Phil Langston 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 Mr. Langston most likely using his database?
A) to identify prospects
B) to decide which customers should receive a new sales offer
C) to deepen customer loyalty
D) to avoid serious customer mistakes
E) to beat the competition to a sale
64) The skillful use of ________ has made catalog house Fingerhut one of the nation’s largest
direct-mail marketers.
A) everyday low prices
B) expanded home delivery options
C) database marketing
D) under-the-line promotions
E) retailer alliances
65) Which of the following is true for customer relationship marketing?
A) Competitors can often hack into CRM systems.
B) Building and maintaining a customer database requires a large investment.
C) It is very difficult to find and train database employees.
D) Long-term results of such systems are still unproven.
E) Focusing too much on databases separates a company from its customers.
66) Which of the following is not conducive to database marketing?
A) Rushbury Theater relies on the generosity of donors to keep functioning.
B) Kenilworthy retails luxury handbags and leather accessories to a select clientele.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim’s sells its range of snacks in stores throughout the country.
E) PetZone offers obedience classes, a doggie daycare and other services for pets in the
Manhattan area.
67) In which of the following cases is building a database worthwhile for the company?
A) Clare’s creates personalized sculptures for special occasions.
B) Sales of Clarity soap have fallen over the past few months in all regions.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim’s sells its range of snacks in stores throughout the country.
E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the U.S.
68) 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 customers show little loyalty to a brand
C) where the company has a long relationship with its customers
D) where the unit sale is very small
E) where the cost of gathering the information is high
69) Which of the following is most likely to use database marketing?
A) an airline
B) a candy bar manufacturer
C) a fast-food chain
D) a toothpaste manufacturer
E) a hair stylist
70) Which of the following statements demonstrates behavioral loyalty towards a brand?
A) 2Wheels has very customer-friendly return policies for its products.
B) I always buy 2Wheels products when I’m looking for bike accessories.
C) Most of my friends agree that 2Wheels is the best place for durable biking gear.
D) 2Wheels has the friendliest customer service people I’ve ever met.
E) I think that 2Wheels products are the highest-quality products in their price range.
71) Managers who believe the customer is the company’s only true “profit center” consider the
traditional organization chart to be obsolete.
72) The modern customer-oriented organization chart places top management at the top of the
pyramid.
73) Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
74) Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using,
and disposing of the given market offering.
75) Customer-perceived value is the perceived monetary value of all the purchases a customer
makes on an annual basis.
76) A seller who is at a disadvantage has two alternatives: decrease total customer benefit or
increase total customer cost.
77) The value proposition is stated in the price of a product and readily recognized by the
average consumer.
78) The value delivery system includes all the experiences the customer will have on the way to
obtaining and using the offering.
79) The value proposition is also known as the core positioning of the offering.
80) Loyalty is a person’s feelings of pleasure or disappointment that result from comparing a
product’s perceived performance to expectations.
81) Customer satisfaction is the only way by which a firm can increase its profitability.
82) Consumers’ expectations result exclusively from past buying experiences.
83) The best thing a company can do in the face of company mistakes is to discourage the
customer from complaining.
84) Quality is the totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs.
85) Conformance quality and performance quality are identical in the marketing sense.
86) Two products with very different performance qualities can have the same conformance
quality if both products deliver their respective promised quality.
87) A profitable 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 the customer.
88) A customer’s profitability is judged on the basis of the lifetime stream of revenue and cost,
not the profit from a particular transaction.
89) Unprofitable customers who defect to a competitor should be encouraged to do so.
90) Customer profitability analysis is best conducted with the tools of an accounting technique
called activity-based costing.
91) Activity-based costing tries to identify the real costs associated with serving each customer.
92) Activity-based costing does not consider indirect, variable and overhead costs.
93) Customer lifetime value describes the net present value of the stream of future profits
expected over the customer’s lifetime purchases.
94) The aim of customer relationship management is to keep the costs of meeting and tracking
consumers as low as possible.
95) A customer touch point is the time when the customer makes a purchase.
96) Permission marketing presumes that consumers know what they want.
97) All companies should practice one-to-one marketing.
98) Customer churn is how rapidly a store can move customers through its checkout facility or
process.
99) For a magazine, subscription renewal rate is a good measure of retention.
100) A company should try to retain the customer only as long as the cost to discourage
defection is lower than the lost profit.
101) Profit rate tends to decrease over the life of the retained customer due to increased
purchases,
referrals, price premiums, and increased operating costs to service.
102) The marketing funnel identifies the profitability of consumers at each stage in the decision
process.
103) Focusing disproportionate effort on high-profit customers will lead to lower customer
profitability for those customers.
104) Frequency programs are designed to reward customers who buy frequently and in
substantial amounts.
105) Clubs that are open to everyone who purchases a product or service are good for building a
customer database.
106) It’s often easier to reattract ex-customers than to find new ones because the company knows
their names and histories.
107) A customer database is simply a listing of a customer’s name, address, and phone number
for credit reference.
108) Cluster analysis is a statistical technique that can be employed in data mining.
109) Building a customer database is not recommended when the product is a once-in-a-lifetime
purchase.
110) Loyal customers are the best ambassadors for a brand.
111) Compare and contrast the typical traditional organization chart for an organization against
the modern customer-oriented organization chart.
112) Explain customer-perceived value.
113) What are the steps in a customer value analysis?
114) Explain total customer satisfaction.
115) What are the measurement techniques for monitoring satisfaction?
116) Identify ways in which companies facing customer complaints can recover customer
goodwill.
117) What technique is used for customer profitability analysis?
118) Explain permission marketing.
119) Today, companies are increasingly concerned about customer defection. There are three
main steps a company can take to reduce the defection rate. Characterize those three steps.
120) A key driver of shareholder value is the aggregate value of the customer base. Identify the
five strategies employed by winning companies to improve the value of their customer base.
121) What are the five problems that can prevent a company from using CRM effectively?
122) LZT is a cell phone manufacturer that designs its phones based on customer input. Once a
new model is launched, the company monitors customer feedback and uses negative reviews to
improve the next model. LZT also handles customer queries at length, and customer service is
considered to be the most important function in the company. Is LZT more likely to use a
traditional or modern company organization?
123) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-
based Keiko Inc. and U.S.-based Global Tech. Though Keiko’s products are priced lower than
Global’s, the non-monetary costs of doing business with Keiko may lead LZT to choose Global
Tech. What can Keiko do to obtain LZT’s order?
124) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-
based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for
LZT?
125) Create a value proposition for cell phone manufacturer LZT.
126) Shoe retail chain Berry’s has noticed an increase in complaints about customer service at its
stores and is beginning to lose customers to competitors. The company needs to identify the
problems and rectify them. Give two methods Berry’s can use to discover the problem.
127) Give an example of two products that have different performance quality but are of equal
conformance quality.
128) Berry’s is a chain of shoe stores. The company recently reviewed its customer relations
strategy and suggested that the brand communication be consistent across all customer touch
points. What are the various touchpoints for Berry’s?
129) Give an example of how a hotel can generate customer loyalty at a “customer touch point”.
130) Berry’s is a chain of shoe stores. The marketing team suggested that the company use
permission marketing instead of interruption marketing. How can this benefit the company?
131) Uncle Jim’s is a brand of ready-to-eat snacks that is widely distributed in supermarkets and
stores across the country. Should Uncle Jim’s opt for one-to-one marketing? Give reasons for
your answer.
132) Bicycle store 2Wheels wants to maximize sales from each customer. The marketing team
suggests that 2Wheels uses cross-selling techniques. How can the company implement this
technique?
133) Bicycle store 2Wheels notices that it has a high proportion of low-profit customers, but
doesn’t want to terminate the customer relationship. What can 2Wheels do to make these
customers more profitable?
134) To increase customer loyalty, 2Wheels wants to start a club for its dedicated customers, but
wants to make sure that only members who are ready to participate in activities join the club.
What can it do to ensure this?
135) The management of Keiko has learned that the company risks losing a long-time customer,
LZT, to a competitor. How can Keiko make it more difficult for LZT to switch to another
customer?
136) Sara is the marketing manager of a small HR consultancy firm. She is in the process of
implementing the use of a database to assist her company in its marketing efforts. List five ways
in which she might be able to use the database for marketing efforts.
137) CJ’s is a clothes retailer that grew from a single store into a chain over a few years. The key
service characteristic during CJ’s early years was a personalized customer relationship, and the
company continues to collect information about its customers and maintain a database. Recently,
however, CJ’s has been losing customers to competitors as the expansion has made it difficult to
personalize services. How can CJ’s use its customer database to reactivate customer purchases?
138) Uncle Jim’s is a brand of ready-to-eat snacks that is widely distributed in supermarkets and
stores across the country. The marketing team has recently suggested that the company adopt
database marketing so that it can better target its customers. Should Uncle Jim’s create a
database? Give reasons for your answer.
139) Sara is the marketing manager of a small HR consultancy firm. She is in the process of
building a database to assist her company in its marketing efforts. Give five problems that can
make the database less effective.
140) Using an example, contrast behavioral loyalty and attitudinal loyalty to a product.