35) LifeTime Insurance screens its customers and tries to get unprofitable customers to buy
services from competitors. This is an example of ________.
A) trying to increase the retention rate for low-profit customers
B) terminating the relationship with low-profit customers
C) enhancing the growth potential of each customer through up-selling
D) increasing the longevity of the customer relationship
E) reducing the rate of customer defection
36) Many banks and phone companies now charge fees for once-free services to ensure
minimum customer revenue levels. This helps the banks to ________.
A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers
37) Which of the following is an example of focusing disproportionate effort on high-profit
customers?
A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other
accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside
the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price
by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
38) Which of the following is an example of enhancing the growth potential of each customer
through cross-selling?
A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets and other
accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside
the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price
by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
39) Companies provide rewards to customers who buy often and in substantial amounts. These
reward schemes are referred to as ________.
A) benefit programs
B) frequency programs
C) satisfaction programs
D) profitability programs
E) quality programs
40) Which of the following gains the most benefit from introducing a frequency program?
A) the first company to introduce a frequency program in an industry
B) the fast follower, the second to introduce a program in an industry
C) the industry sales leader
D) the niche player in the industry
E) the low-cost leader in the industry
41) Club membership programs that are open to everyone who purchases a product or service
________.
A) are more powerful long-term loyalty builders than limited-membership clubs.
B) will not help a company attract customers from competitors
C) prevent those with only a fleeting interest in a company’s products from joining
D) are useful for building a database of customers but are not very good as long-term loyalty
builders
E) are useless unless there are fees and membership conditions
42) Southwest Airlines offers a Rapid Rewards program that allows customers to count flights
they have taken toward free future flights. This is an example of a(n) ________.
A) cross-selling program
B) value delivery system
C) club membership program
D) activity-based costing program
E) up-selling program
43) A ________ is an organized collection of comprehensive information about individual
customers or prospects that is current, accessible, and actionable for lead generation, lead
qualification, sale of a product or service, or maintenance of customer relationships.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy
44) 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) data mining
C) database marketing
D) participatory marketing
E) permission marketing
45) 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
46) 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
47) 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
48) 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
49) 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
50) 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.
51) 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.
52) In which of the following cases is building a database worthwhile for the company?
A) where the product is a one-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
53) 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
54) 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.
55) Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
56) Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using,
and disposing of the given market offering.
57) Customer-perceived value is the perceived monetary value of all the purchases a customer
makes on an annual basis.
58) The value proposition is stated in the price of a product and readily recognized by the
average consumer.
59) The value delivery system includes all the experiences the customer will have on the way to
obtaining and using the offering.
60) The value proposition is also known as the core positioning of the offering.
61) Loyalty is a person’s feelings of pleasure or disappointment that result from comparing a
product’s perceived performance to expectations.
62) Customer satisfaction is the only way by which a firm can increase its profitability.
63) Consumers’ expectations result exclusively from past buying experiences.
64) Conformance quality and performance quality are identical in the marketing sense.
65) Two products with very different performance qualities can have the same conformance
quality if both products deliver their respective promised quality.
66) 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.
67) A customer’s profitability is judged on the basis of the lifetime stream of revenue and cost,
not the profit from a particular transaction.
68) Unprofitable customers who defect to a competitor should be encouraged to do so.
69) Activity-based costing tries to identify the real costs associated with serving each customer.
70) Activity-based costing does not consider indirect, variable and overhead costs.
71) Customer lifetime value describes the net present value of the stream of future profits
expected over the customer’s lifetime purchases.
72) The aim of customer relationship management is to keep the costs of meeting and tracking
consumers as low as possible.
73) A customer touch point is the time when the customer makes a purchase.
74) Customer churn is how rapidly a store can move customers through its checkout facility or
process.
75) Explain customer-perceived value.
76) 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?
77) Create a value proposition for cell phone manufacturer LZT.
78) Give an example of two products that have different performance quality but are of equal
conformance quality.
79) Give an example of how a hotel can generate customer loyalty at a “customer touch point.”