A Framework for Marketing Management, 5e (Kotler)
Chapter 4 Creating Long-term Loyalty Relationships
1) 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.
2) In the modern customer-oriented organizational chart, which of the following is considered to
be at the top of the organizational pyramid?
A) sales
B) top management
C) front-line people
D) customers
E) middle management
3) ________ 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) Total customer benefit
D) Customer-perceived value
E) Competitors’ market share rate
4) When a consumer considers a product or service, he or she will choose whichever product or
service delivers the highest ________.
A) customer-perceived value
B) customer-perceived cost
C) customer profitability analysis
D) customer equity
E) customer lifetime value
5) ________ is the perceived monetary value of the bundle of economic, functional, and
psychological benefits customers expect from a given market offering.
A) Total customer cost
B) Total customer benefit
C) Total benefits of ownership
D) Value proposition
E) Value delivery system
6) The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of
the given market offering is called the ________.
A) activity-based cost
B) customer profitability analysis
C) total customer cost
D) product life-cycle cost
E) direct product profitability
7) Which of the following is true for customer-perceived value?
A) It is the perceived monetary value of the bundle of economic, functional, and psychological
benefits customers expect from a product.
B) It is the difference between the prospective customer’s evaluation of all the benefits and all the
costs of an offering and the perceived alternatives.
C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using,
and disposing of the given market offering.
D) It is the net present value of the stream of future profits expected over the customer’s lifetime
purchases.
E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a
brand if they use phased decision strategies.
8) 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?
A) absorbing some risk by offering a warranty
B) improving the functional aspects of the products
C) augmenting the psychological benefits of the products
D) training service personnel to improve their skills
E) investing in brand building for the products
9) ________ 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) Loyalty
C) Satisfaction
D) Respect
E) Customer value
10) TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of
TBS Bikes is “speed.” Surami is a five-gear bike and apart from speed, the company promises to
include other features such as safety, good performance, and pollution control features. This
describes the ________ of the bike.
A) total customer cost
B) customer-perceived value
C) value-delivery system
D) value proposition
E) total customer benefit
11) A company’s ________ includes all the experiences the customer will have on the way to
obtaining and using the offering.
A) value proposition
B) value delivery system
C) customer-value analysis
D) total customer benefit
E) total customer cost
12) Sammy’s is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its
marketing efforts on all the experiences the customers will have on the way to obtaining their
food order and eating it. Hence, Sammy’s is focusing its marketing efforts on its ________.
A) horizontal marketing system
B) cost versus benefit system
C) consumption system
D) marketing channel system
E) value delivery system
13) Total customer satisfaction is measured based on the relationship of ________.
A) expected value and total customer benefit
B) perceived performance and expectation
C) advertised outcomes and real outcomes
D) past experience and present experience
E) customer attitude and salesperson’s attitude
14) Which of the following is true for customer satisfaction?
A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite
situational influences.
B) Consumers often form more favorable perceptions of a product with a brand that is new.
C) The ultimate goal of a customer-centered firm is to create high customer satisfaction.
D) Only increased customer satisfaction can help a company increase its profits.
E) Greater customer satisfaction has also been linked to higher returns and lower risk in the stock
market.
15) ________ 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
16) When two brands of the same basic product deliver their respective promised quality, they
are delivering ________.
A) performance quality
B) conformance quality
C) unique quality
D) accuracy quality
E) customer support
17) Rade and Talion are competitors in the business of manufacturing wrist watches. While Rade
promises to deliver design and quality to its customers, Talion promises to deliver durability and
cost effectiveness. When both of these companies deliver their respective promised qualities,
they are delivering ________.
A) performance quality
B) customer support
C) unique quality
D) accuracy quality
E) conformance quality
18) The 80-20 rule reflects the idea that ________.
A) 20% of the company’s profits are generated by the top 80% of customers
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) the top 20% of customers often generate 80% of the company’s profits
E) any new product 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
19) A profitable customer ________.
A) yields a cost stream that exceeds by an acceptable amount his revenue stream
B) yields a revenue stream that exceeds the company’s cost stream
C) yields a cost stream that exceeds the company’s revenue stream
D) yields a revenue stream that exceeds by an acceptable amount his cost stream
E) yields a revenue stream that equals the company’s cost stream
20) A ________ 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) prospector
B) profitable customer
C) market challenger
D) market nicher
E) pioneer customer
21) 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
D) activity-based costing
E) future date costing
22) Which of the following is true for activity-based costing (ABC)?
A) ABC considers the real costs associated with each product.
B) With ABC, the company can estimate all costs coming from the customer, less revenue.
C) The tools of ABC can be used to conduct customer profitability analysis.
D) It identifies the costs of products and services based on the revenue they generate.
E) ABC allocates indirect costs in proportion to direct costs.
23) ________ describes the net present value of the stream of future profits expected over the
customer’s lifetime purchases.
A) Activity-based costing
B) Customer lifetime value
C) Customer value analysis
D) Customer-perceived value
E) Customer profitability analysis
24) The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
25) ________ is the process of carefully managing detailed information about individual
customers and all customer “touch points” to maximize loyalty.
A) Customer relationship management
B) Customer lifetime value
C) Customer profitability analysis
D) Customer satisfaction analysis
E) Customer-value delivery
26) A customer ________ is any occasion on which a customer encounters the brand and
product—from actual experience to personal or mass communications to casual observation.
A) touch point
B) point of order
C) point of difference
D) pivot point
E) point of parity
27) A customer touch point for Abacus Airlines would be an item such as ________.
A) ease of access to the airport
B) a mechanic’s ability to service the airplanes
C) the reservations desk
D) the value of air travel versus surface transportation
E) competency of a travel agent
28) Rachel and Josh are on vacation in Hawaii. When they arrived at the hotel, they were offered
chilled juice. Their check-in formalities were handled by the staff. When they entered their room,
they saw that chocolates had been placed on the pillows and a flower arrangement on the table.
The hotel’s actions are an example of ________.
A) customer lifetime value
B) customer perceived value
C) customer value analysis
D) customer profitability analysis
E) a customer touch point
29) Another term for high customer ________ is customer churn.
A) retention
B) defection
C) value
D) perception
E) belief
30) 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) individual account informtion
E) demographic trend data
31) 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.
32) Jack has shopped at VeggiesNmore. He was happy with the experience and thought that this
could be an alternative to GreenFoods. However, he is also keen to try out other stores in the
neighborhood. He is in the ________ stage of the marketing funnel as far as shopping at
VeggiesNmore is concerned.
A) aware
B) open to trial
C) most often used
D) nonrejecter
E) regular user
33) Amy is in the “aware” stage of the marketing funnel when she says ________.
A) she can try shopping at VeggiesNmore while simultaneously exploring other stores in the
neighborhood
B) she was informed about VeggiesNmore by her colleague at work
C) she regularly shops from VeggiesNmore
D) she shops from VeggiesNmore as far as the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore
34) Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and
books for children. 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