Marketing Management, 14e (Kotler/Keller)
Chapter 5 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) In a modern customer-oriented organization chart, the ________ of an organization
immediately follow the customer segment.
A) top management
B) marketing department
C) middle management
D) frontline people
E) lower management
4) ________ 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
5) 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
6) ________ 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
7) 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
8) 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.
9) Which of the following is the first step in customer value analysis?
A) Examine how customers in a specific segment rate the company’s performance.
B) Assess the company’s and competitors’ performances on the different customer values against
their rated importance.
C) Identify the major attributes and benefits that customers value.
D) Monitor customer values over time.
E) Assess the quantitative importance of the different attributes and benefits.
10) The final step of customer value analysis is to ________.
A) identify the major attributes and benefits that customers value
B) assess the company’s and competitors’ performances on the different customer values against
their rated importance
C) examine how customers in a specific segment rate the company’s performance
D) monitor customer values over time
E) assess the quantitative importance of the different attributes and benefits
11) 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
12) ________ 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
13) 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
14) 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
15) 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
16) 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
17) 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.
18) ________ can track customer satisfaction directly, measure repurchase intention and also
gauge a consumer’s willingness to recommend the company and brand to others.
A) Periodic surveys
B) Mystery shoppers
C) Customer loss rates
D) Customer focus statements
E) Sales summary reports
19) Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field
Grocery stores. Which of the following methods can it use for this?
A) group buyers
B) buyer brokers
C) mystery shoppers
D) personal shoppers
E) buying agents
20) Of customers who register a complaint, ________.
A) all will do business with the company again because they are unwilling to dedicate the effort
required to find another vendor
B) none will do business with the company again
C) customers whose complaints are satisfactorily resolved are more likely to provide publicity
than those who are dissatisfied
D) the speed of resolution has no impact on the likelihood of repeat business
E) some will do business with the company again if their complaint is resolved
21) Which of the following is the best method of recovering customer goodwill?
A) sending service people to conduct door-to-door surveys
B) contacting the complaining customer as quickly as possible
C) identifying prospective customers from the customer database
D) customizing products according to individual customer need
E) defining and measuring the customer retention rate
22) ________ 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
23) 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
24) 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 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
25) 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
26) 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
27) 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
28) 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
29) 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.
30) ________ 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
31) The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
32) ________ 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
33) 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
34) 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
35) 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
36) 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
37) ________ is based on the premise that marketers can no longer use “interruption marketing”
via mass media campaigns.
A) Relationship marketing
B) Permission marketing
C) Database marketing
D) Internet marketing
E) Horizontal marketing
38) ________ is the practice of sending messages only when consumers express a willingness to
become more involved with the brand.
A) Relationship marketing
B) Permission marketing
C) Cause marketing
D) Defensive marketing
E) Horizontal marketing
39) Which of the following is a step in one-to-one marketing that can be adapted for CRM
marketing?
A) Identify the lifetime value of lost customers.
B) Define and measure the retention rate of customers.
C) Offer the lowest price for a particular product.
D) Distinguish the causes of customer attrition.
E) Customize products, services, and messages to each customer.
40) Another term for high customer ________ is customer churn.
A) retention
B) defection
C) value
D) perception
E) belief
41) 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.
42) 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
43) 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
44) Satisfied customers constitute the company’s ________.
A) customer relationship capital
B) customer churn
C) target audience
D) high-value customers
E) customer touch points
45) 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
46) 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
47) 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
48) 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.
49) 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.
50) 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.
51) 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
52) 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
53) 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
54) 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
55) 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
56) 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
57) 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
58) A ________ is simply a set of names, addresses, and telephone numbers.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy