70) 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.
These are examples of customer ________.
A) lifetime value
B) perceived value
C) value analysis
D) profitability analysis
E) touch points
71) Which of the following is NOT a way to make online brand communities more effective?
A) set appointed times for topic discussion
B) keep the focus on the topic
C) make it easy for users to express themselves
D) launch contests
E) set limits on length of responses
72) Another term for high customer ________ is customer churn.
A) retention
B) defection
C) value
D) perception
E) belief
73) 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.
The Marketing Funnel (Scenario)
Amy and Jack were loyal customers of GreenFoods, a local grocery store. However, after a
couple of incidents where they had to return products that were stale and out of date, the couple
decided to try out VeggiesNmore, a chain store that recently opened in town. Both Amy and Jack
must move through each stage in the marketing funnel before becoming loyal customers.
74) 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 eager 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
75) 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 at VeggiesNmore
D) she shops at VeggiesNmore because the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore
76) Satisfied customers constitute the company’s ________.
A) customer relationship capital
B) customer churn
C) target audience
D) high-value customers
E) customer touch points
77) 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
78) 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
79) Many banks and phone companies now charge fees for once-free services to ensure
minimum customer revenue levels. This helps 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
80) 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.
81) 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.
82) Which of the following is a policy a store can adopt to make low-profit customers more
profitable?
A) 2Wheels sends birthday greetings to its best customers and gives them discounts on
merchandise.
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.
83) Companies provide rewards to customers who buy often and in substantial amounts. These
reward schemes are referred to as ________ programs.
A) benefit
B) frequency
C) satisfaction
D) profitability
E) quality
84) 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
85) 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
86) 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
87) The subscription manager at Cosmopolitan magazine keeps track of the subscription renewal
rate, which is a good measure of customer lifetime value.
88) When the brand manager for John Deere sets up advertising, sales promotions, events, and
public relations to communicate about the value embodied in its products, she is participating in
the “communicating value” management function.
89) All companies should practice one-to-one marketing.
90) Customer churn is how rapidly a store can move customers through its checkout facility or
process.
91) For a magazine, subscription renewal rate is a good measure of retention.
92) A company should try to retain a customer only as long as the cost to discourage defection is
lower than the lost profit.
93) 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.
94) The marketing funnel identifies the profitability of consumers at each stage in the decision
process.
95) Focusing disproportionate effort on high-profit customers will lead to lower customer
profitability for those customers.
96) Frequency programs are designed to reward customers who buy often and in substantial
amounts.
97) Clubs that are open to everyone who purchases a product or service are good for building a
customer database.
98) It’s often easier to re-attract ex-customers than to find new ones because the company knows
their names and histories.
99) Today, companies are increasingly concerned about customer defection. There are three
main steps a company can take to reduce the defection rate. Describe those three steps.
100) A key driver of shareholder value is the aggregate value of the customer base. Identify the
five strategies employed by successful companies to improve the value of their customer base.
101) 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?
102) 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?
103) To increase customer loyalty, 2Wheels wants to start a club for its dedicated customers, but
wants to make sure that only members who want to participate in activities join the club. What
can it do to ensure this?
104) The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
105) ________ 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
106) 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 information
E) demographic trend data
107) ________ marketing is based on the premise that marketers can no longer use “interruption
marketing” via mass media campaigns.
A) Relationship
B) Permission
C) Database
D) Internet
E) Horizontal
108) ________ marketing is the practice of sending messages only when consumers express a
willingness to become more involved with the brand.
A) Relationship
B) Permission
C) Cause
D) Defensive
E) Horizontal
109) Some customers inevitably become inactive or drop out. The challenge for marketers is to
reactivate them through ________ strategies.
A) win-back
B) retention
C) defection
D) sell-out
E) recuperation
110) 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
111) ________ describes the company’s optimization of the value of its customer base.
A) Customer relationship management
B) Behavioral targeting
C) Customer value management
D) Terminal marketing
E) Personalized marketing
112) ________ focuses on the analysis of individual data on prospects and customers to develop
marketing strategies to acquire and retain customers and drive customer behavior.
A) Permission marketing
B) Customer value management
C) Behavioral targeting
D) Customer relationship management
E) Terminal marketing
113) BMW is ________ the customer experience when it offers 500 side-mirror combinations,
1,300 front bumper combinations, and 9,000 center-console combinations and provides new
buyers a video link to watch their car being “born” while waiting for delivery.
A) identifying
B) synthesizing
C) integrating
D) acknowledging
E) personalizing
114) To exploit the power of social media, marketers need to create tangible value for
consumers, which can come from all of the following EXCEPT ________.
A) discounts
B) coupons
C) information
D) solicitations
E) special offers
115) After being frustrated by the lack of detailed, reliable, and up-to-date information available
to help him decide where to go on a Mexican holiday, Stephen Kaufer founded ________ in
2001.
A) TripAdvisor
B) Wanderfly
C) EveryTrail
D) Starwood
E) Expedia
116) ________ helps companies manage and monitor online reviews using a process called
device fingerprinting.
A) Gawker
B) Bazaarvoice
C) Metacritic
D) Angie’s List
E) Technorati
117) A Forrester study of 10,000 consumers of Amazon.com’s electronics and home and garden
products found that ________ percent found negative reviews helpful.
A) 20
B) 30
C) 40
D) 50
E) 60
118) Sites such as Bizrate.com, Shopping.com, and PriceGrabber.com, and Epinions.com and
Yelp.com, which let customers share information about their product and service experiences
with others, reflect an increase in customer ________.
A) ambiguity
B) empowerment
C) privacy
D) diplomacy
E) empathy
119) Which of the following is NOT a touch point for a hotel?
A) reservations
B) frequent-stay programs
C) room service
D) laundry service
E) All of the above are touch points.
120) ________ marketing is about making sure the brand and its marketing are as personally
relevant as possible to as many customers as possible — a challenge, given that no two
customers are identical.
A) Personalizing
B) Permission
C) Identification
D) Database
E) Integrated
121) Which of the following was NOT part of the British Airways “Know Me” program?
A) centralization of information about frequent fliers into a single database
B) identification of each customer’s seating location and previous flight, meal, and complaint
history
C) infiltration of coach class by mystery shoppers
D) generation of 4,500 daily messages to recognize passengers
E) distribution of 2,000 iPads to crew members and ground staff to aid information
dissemination and stimulate passenger recognition
122) Activists used ________ to populate the Internet with unflattering information about Nike.
A) banner ads
B) YouTube videos
C) goodwill
D) search engine optimization
E) brand studies
123) The aim of customer relationship management is to keep the costs of meeting and tracking
consumers as low as possible.
124) A customer touch point is when the customer makes a purchase.
125) Permission marketing presumes that consumers know what they want.
126) A marketer who wants to position his line of cameras as the “Cadillac” of all cameras is
focused on connecting with customers.
127) A marketer who is using a reliable marketing information system to monitor the marketing
environment so s/he can assess market potential and demand is focused on capturing marketing
insights.
128) Loyal customers are the best ambassadors for a brand.
129) Customers who load up with personalized options in their BMWs — generating more
profitability for BMW and its dealers — are less loyal.
130) The Coca-Cola Freestyle dispensing machine, which can dispense 125 sparkling and still
drinks that consumers can mix via a touchscreen allowing consumers to create a beverage to suit
their particular taste, is an example of permission marketing.
131) Villy Custom Bicycles come in a variety of mix and match colors and styles so consumers
can design their own. This is an example of personalizing the product.
132) The overall rate of ad blocking on Web browsers is 22 percent.
133) Identify ways in which companies facing customer complaints can recover customer
goodwill.
134) Explain permission marketing.
135) 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 touch points for Berry’s?
136) Give an example of how a hotel can generate customer loyalty at a “customer touch point.”
137) 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?
138) 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?
139) Identify the pros and cons of using behavioral targeting for marketing.
140) Are complaints a good indicator of customer satisfaction? Why or why not?
141) According to IBM, what do firms need to do to exploit the power of social media?
142) Provide an example of a big company that fought back against an unjustified complaint.