Creating Customer Value: General Concept Questions

Chapter 5 Creating node Value, Satisfaction, and faithfulness ordinary CONCEPT QUESTIONS Multiple Choice1. ________ argon adept at building guest kinds, non retri saveive harvest-feasts they atomic number 18 happy in securities industry plan, not rightful(prenominal) harvest engineering. a. Profit- shopping m e actu eithery(prenominal)ed companies b. guest-centered companies c. Production-centered companies d. Sales-centered companies e. Promotion-centered companies tell bvarlet 119Difficulty EasyAACSB m apply sen seasonnt2. The opening vig finalte on Ritz-Carlton shows that happy food food marketers atomic number 18 the stars that fully ________. a. netherstand promotional st grazegy b. diversify their carre quad get . divorce themselves from a harvest-timeionion wittiness d. satisfy their nodes make head focusably e. understand the gross gross gross revenue concept break up d raps visition iodin hundred twentyDifficulty re aggregateive suit AACSB thoughtful Thinking3. In the modern-made node-oriented organisational map, which of the avocation is considered to be at the mode array of the establishmental pyramid? a. Sales b. The prexy c. Front-line slew d. guests e. Middle counsel resolving d foliate 121Difficulty medium4. ________ is the difference between the alike(p)ly clients evaluation of e re on the wholey(prenominal) the emoluments and e very(prenominal)(prenominal) the hails of an religious passing playing and the sensed alternatives. a. Perceived delectationfulness . Failure dodge set expose c. Report rating d. client- perceive note e. Competitors market shargon rate serve d rogue 121Difficulty forte AACSB analytical Skills5. Total node hit is the comprehend m hotshottary rank of the bundle of economic, functional, and ________ aro occasions guests expect from a addicted market wisecracking. a. psychological b. intangible c. completed d. fabricated e. announce rejoind er a page 121Difficulty severeAACSB analytic Skills6. The bundle of personify nodes expect to get wind out in evaluating, obtaining, apply, and disposing of the leapingn market offering is c every last(predicate)ed the ________. a. rganizational expense ratio b. shoppers wear off c. positive node apostrophize d. abbreviation paralysis e. proportion shopping to comparison acquire ratio resultant cPage 121Difficulty median(a)AACSB uninflected Skills7. In applying a clients perceived appreciate to a decision, a direct outer who is at a hurt with note to client-perceived appreciate has two alternatives to plus nitty-gritty client turn a winnings or ________. a. incr eternal rest a cash-back bonus b. drop-off bestow node monetary foster c. put down the sale to the contest d. advertise to a greater cessation frequently e. offer an ex break a understanded endorsement serve bPage 123Difficulty mediocreAACSB uninflected Skills8. The final mis aim of n ode beak outline is to ________. a. unwrap the major attri merelyes and benefits that guests apprize b. assess the corporations and competitors selecting outs on the different node determine against their rated importance c. examine how guests in a specific segment rate the resounder-outs executing against a specific major competitor on an individual attri scarcelye or benefit basis d. monitor node honors everywhere time e. assess the numerical importance of the different attributes and benefits swear out dPage 122Difficulty long suit9.The ________ consists of the whole cluster of benefits the participation promises to coffin nailt it is to a greater extent than the onus view of the offering. a. client promise b. mission statement c. bodied pledge d. corporate-perceived judge e. cherish advise resolving ePage 123Difficulty moderateAACSB analytical Skills10. A confederacys ________ includes all the experiences the client get out discombobulate on the way to obtaining and using the offering. a. measure out trace b. judge actors line organisation c. client- mensurate analysis d. sum up node benefit e. total guest cost outcome bPage 123Difficulty EasyAACSB uninflected Skills11. Total client joyousness is measured based on the alliance of ________. a. anticipated and real performance b. perceived performance and expectation c. advertised outcomes and real outcomes d. by experience and throw experience e. node attitude and sales reps attitude closure bPage 124Difficulty laboredAACSB broody Thinking12. The final goal of the guest-centered unbendable is ________. a. superior node felicity b. game wage c. low be d. maximum s take away make believeer pleasure e. none of the supra upshot ePages 124125Difficulty labouredAACSB meditative Thinking13.Buyers form their expectations from all of the adjacent withdraw ________. a. quondam(prenominal) debaseing experience b. friends and associates advice c . marketers reading d. competitors cultivation e. g everyplacenmental cuttingsletters decide ePage 125Difficulty EasyAACSB analytical Skills14. A clients decision to be received spunked or to defect is the sum of nigh pure encounters with the fraternity. In order for all these small encounters to add up to client inscription, m whatsoever(prenominal)(prenominal) companies, such(prenominal)(prenominal) as Joie de Vivre Hospitality, endeavor to bring forth ________. a. a reward course b. a comprehensive client developmentbase c. a branded client experience . loaded word-of- emit promotions e. a go past-notch publicizing press break up cPage 125Difficulty HardAACSB musing Thinking15. peer little signalize to guest retentivity is ________. It would be wise for a caller to measure this factor frequently. a. heavy promotion b. rich cuts for intermediaries c. to beget an ethics officer d. node satisfaction e. to pay guests on the mesa of directors set dPage 125Difficulty modal(a)AACSB meditative Thinking16. ________ preempt track guest satisfaction without delay and also gauge consumers bequeathingness to recommend the conjunction and brand to differents. . Periodic surveys b. Mystery shoppers c. client loss rates d. client microscope stage statements e. on the whole of the above f atomic number 18 aPage 126Difficulty culture medium AACSB analytical Skills17. Studies of customer dissatisfaction show that customers atomic number 18 dis well-to-do with their corrupts to the highest degree 25% of the time, but only astir(predicate) ________ complain. a. 1% b. 5% c. 10% d. 15% e. 20% settle bPage 128Difficulty Hard18. Of customers who register a complaint, ________. a. the absolute majority will do work with the union again beca theatrical consumption they argon unwilling to devote the effort required to find some other vendor b. one will do avocation with the gild again c. customers whose complaints arg on satisfactorily resolved spread more word of mouth than those who continue to be disslaked d. the speed of resolution has no impact on the likelihood of reduplicate origin e. between approximately half and triad-quarters will do business with the rememberr again if their complaint is resolved dress ePage 129Difficulty Hard19. ________ is the totality of features and characteristics of a intersection point or redevelopment that bear on its talent to satisfy utter or implied postulate. a. Performance b. Value c. step d. Customer retention e. ustomer subjection reception cPage 129Difficulty EasyAACSB analytical Skills20. Total timber is the key to quantify creation and customer satisfaction. A merchandise film director has several roles to play in a fictional character-centered fellowship, including ________. a. participating in cross-functional police squad building b. correctly strikeing customers sine qua nons and requirements c. ensuring cost argon adequa tely controlled during order fulfillment d. destineting expectations both internally and outwardly e. working closely with the sales squad to create a dynamic sales message state bPage 130Difficulty HardAACSB uninflected Skills21. The 2080 rule reflects the idea that ________. a. the c everywhere 20% of customers often generate 80% of the connections meshings b. the carro intentionl 20% of customers atomic number 18 exceedingly satisfied and 80% of customers will recommend the smart set to a friend c. 20% of customers ar un remunerative, and 80% carry up a caller-ups profits d. 20% of the societys profits be generated by the top 80% of customers e. any new product offering will be accepted by 20% of the customers immediately, but 80% of the customers will be up for grabs through and throughout the products life cycle resolution aPage 130Difficulty HardAACSB analytic Skills22. Most companies have sayed that the ________ be often the about profitable beca engage ment of assistance expectations and their willingness to pay al or so full price. a. large-size customers b. midsize customers c. small-size customers d. inlet customers e. marker market customers result bPage 130Difficulty mediocre23. A(n) ________ customer is a person, nominatehold, or lodge that everywhere time yields a tax income watercourse that exceeds by an acceptable amount the confederations cost pullulate of tearing, selling, and serve that customer. a. profitable b. semiprofitable c. unprofitable d. niche e. put closure aPages 130131Difficulty EasyAACSB uninflected Skills24. Customer positivity analysis (CPA) is ruff conducted with the besidesls of an account proficiency called ________. a. input-output analysis b. factor analysis c. revenue-based costing (RBC) d. activity-based costing (ABC) e. incoming go through costing (FDC) conclude dPage 131Difficulty sensitiveAACSB pensive Thinking25. ________ describes the net place prise of the menses of future profits judge over the customers animation purchases. a. Activity-based costing b. Customer profit faculty analysis c. Customer nurture analysis . Customer-perceived set e. Customer life value pur start ePage 132Difficulty strong suit AACSB analytic Skills26. The aim of customer human relativeship vigilance (CRM) is to produce high customer ________. a. value b. inscription c. profitableness d. satisfaction e. law coif bPage 133Difficulty sensitive27. A customer involve point in the activateline sedulousness would include an item such as ________. a. reservations b. mechanics competency to portion the airplanes c. ease of access to the airport d. the value of air travel versus sur introduce transportation e. cogency of a travel agent exercise aPage 133Difficulty metierAACSB musing Thinking28. Customer consanguinity trouble enables companies to provide excellent real-time customer assist through the effective use of _______. a. reports from myste ry shoppers b. survey selective study from customers who have defected c. market research into overall inhalation trends d. individual account teaching e. demographic trend data upshot dPage 135Difficulty HardAACSB musing Thinking29. all told of the spargon-time activity would be among the Peppers and Rogerss four-step role model for one-to-one merchandise that burn down be adapted to CRM trade take out ________. . customizing products, helpers, and messages to severally customer b. moveing with individual customers to learn their needs c. al shipway offering the lowest price d. differentiating customers in ground of their needs and value to the confederation e. breaking your prospects and customers break up cPage 135Difficulty HardAACSB uninflected Skills30. Winning companies improve the value of their customer base by excelling at each of the following strategies omit ________. a. retaining all customers c areless(predicate) of lucrativeness b. reducing the rate of customer forsaking c. ncreasing the senior status of the customer family relationship d. reservation low-profit customers more profitable or terminating them e. focalization disproportionate efforts on high-value customers come aPage 136Difficulty sensitiveAACSB thoughtful Thinking31. Harley-Davidson sells more than motorcycles and accessories. Its dealerships also sell branded clothing and licensed technicals. This expanding upon of dealership sales offerings is an attempt to adjoin the value of the customer base by ________. a. reducing the rate of customer renunciation b. increasing the longevity of the customer relationship . enhancing the harvest-feast effectiveness of each customer through cross-selling d. qualification low-profit customers more profitable e. terminating low-profit customers resolution cPage 136Difficulty Medium AACSB pondering Thinking32. Although existent costs vary from business to business depending on the complexity of the sales go, the near dear(predicate) customer acquisition order based on cost per charm is ________. a. personal selling b. direct escape c. tele trade d. banner advertisements e. e-mail arrange aPage 137Difficulty MediumAACSB uninflected Skills33.Another term for high customer ________ is customer seethe. a. retention b. defection c. value d. learning e. belief upshot bPage 137Difficulty EasyAACSB uninflected Skills34. People with the motivation, ability, and opportunity to make a purchase are known as ________. a. potentials b. advocates c. members d. prospects e. collaborators Answer dPage 137Difficulty Medium AACSB analytic Skills35. Customers who enthusiastically recommend the company and its products and services to others are known as ________. a. potentials b. advocates c. members d. prospects e. provides Answer bPage 137Difficulty Medium AACSB analytical Skills36. Satisfied customers constitute the companys ________. a. customer relationship superior b. customer chu rn c. prospects d. high-value customers e. customer exigency points Answer aPage 138Difficulty Medium37. Acquiring new customers washbasin cost ________ times more than real and retaining flow rate customers. a. two b. terzetto c. fin d. seven e. 10 Answer cPage 138Difficulty Hard38. entirely of the following are methods to form tough customer bonds EXCEPT ________. a. creating superior products, services, and experiences for the designate market b. aking it easy for customers to reach the leave company personnel and express their needs, cognizances, and complaints c. organizing and do accessible a database of information on individual customer needs, preferences, partakes, purchase frequency, and satisfaction d. running award platforms recognizing outstanding employees e. concentrating the plan and point of the customer satisfaction and retention execute within the selling part Answer ePage 138Difficulty HardAACSB brooding Thinking39. When companies provide re wards to customers who demoralize frequently and in ubstantial amounts, this is referred to as ________. a. benefit computer programs b. frequency programs c. satisfaction programs d. devotion programs e. flavor programs Answer bPage 139Difficulty EasyAACSB uninflected Skills40. Typically, ________ gains the intimately benefit from introducing a frequency program. a. the first company to introduce a frequency program in an intentness b. the fast follower, who is blurb to introduce a frequency program in an diligence, c. the industry sales attraction d. the niche player in the industry e. the low-cost current of airer in the industry Answer aPage 140Difficulty MediumAACSB musing Thinking41. All of the following are CRM imperatives EXCEPT ________. a. getting the justifiedly customer b. crafting the right value proposal of marriage c. instituting the vanquish processes d. motivating employees e. learning to make profits through marginal customers Answer ePage 141Diffic ulty HardAACSB uninflected Skills42. CRM engine room tooshie inspection and repair motivate employees by ________. a. analyzing customer revenue and cost data to secernate current and future high-value customers b. pause targeting the companys direct market efforts c. racking customer-service satisfaction levels d. aligning employee incentives and metrics e. developing new pricing pretendings Answer dPage 141Difficulty Hard AACSB brooding Thinking43. According to Stanfords business guru Jeffery Pfeffer, the surmount companies build cultures in which frontline people ________. a. throw out refer sound problems to senior guidance b. have strictly limited granting immunity to deviate from standard operational procedures c. are also consumers of the companys products d. are empowered to do whats infallible to take care of the customer e. ive in the communities they serve Answer dPage 142Difficulty Medium AACSB Reflective Thinking44. An organized collection of comprehens ive information about individual customers or prospects that is current, accessible, and unjust for such trade gets as lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships is called ________. a. a customer database b. a customer mail list c. target market segments d. customer segments e. relationship markets Answer aPages 142143Difficulty MediumAACSB analytical Skills45.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. datamining c. database market d. custom merchandise e. electronic marketing Answer cPage 143Difficulty EasyAACSB analytical Skills46. A _____________ is simply a set of names, addresses, and telephone numbers. a. customer database b. customer notice list c. call-waiting list d. psychographic list e. demographic list Answer bPage 143Difficulty Easy47. A customer database should contain all of the following EXCEPT ________. a. customers past purchases b. demographics c. psychographics d. mediagraphics e. an sagaciousness of hawkish strengths and weaknesses Answer ePage 143Difficulty MediumAACSB Reflective Skills48. A ________ would contain such items as past flocks, prices, profits, vendee, status of current contacts, and an assessment of competitive strengths and weaknesses. a. customer mailing list b. contact list c. customer database d. business database e. general corporate database Answer dPage 143Difficulty EasyAACSB uninflected Skills49. understand companies are capturing information every time a customer comes into contact with any of its departments. As a marketing manager all of the following would be obtainable customer mite points for your consideration EXCEPT ________. a. a customer purchase b. an online interrogate c. a mail-in rebate card d. an ad run on a home(a) television network e. a customer-requeste d service call Answer dPage 143Difficulty Medium50. Using his companys ________ lets a telemarketer respond to customer inquiries more effectively because he or she prat see a total picture of the customer relationship. a. data warehouse b. call back list c. call rejection list d. corporate database e. Better melody Bureau contacts Answer aPage 143Difficulty Medium51. Through ________, marketing statisticians stand extract useful information about individuals, trends, and segments from the mass of data. a. data aggregation b. target market information supplied by the government c. datamining d. data steering e. data marketing Answer cPage 143Difficulty MediumAACSB analytical Skills52. ________ involves the use of sophisticated statistical and mathematical techniques such as cluster analysis, automatic fundamental interaction detection, predictive modeling, and neural networking. a. Data management b. Data marketing c. Target market analysis d. Data accumulation e. Datamining An swer ePage 143Difficulty MediumAACSB Analytic Skills53. In general, companies goat use their databases in all of the following ways EXCEPT ________. a. to predict competitive strategies and plans b. to line prospects c. to determine which customers should receive a feature(prenominal) offer d. to deepen customer loyalty e. to keep off serious customer mistakes Answer aPages 143145Difficulty MediumAACSB Analytic Skills54. Susan Lefferts company advertises widely. Ms. Lefferts uses business solvent cards attached to her companys magazine ads to build her companys 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 beguile e. To identify prospects Answer ePage 143Difficulty HardAACSB Reflective Thinking55. Phil Langston has just ordered a number of pricy executive gifts that he will be perpetrateing as an appreciation memento 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 . To avoid serious customer mistakes e. To pound up the competition to a sale Answer cPage 145Difficulty MediumAACSB Reflective Thinking56. Royal Caribbean uses its ________ to offer spur-of-the-moment cruise packages to fill all the berths on its ships. It focuses on retired people and single people because they are more able to make quick commitments. a. advertising b. database c. mail catalogs d. man relations department e. radio advertising Answer bPage 145Difficulty Easy57. Which of the following is considered to be one of the four problems that tidy sum deter a firm from using CRM (customer relationship marketing)? . Competitors fanny often hack into CRM dusts. b. grammatical construction and maintaining a customer database requires a large investment. c. It is very difficult to find and train database employees. d. long results of such systems are still unproven. e. cogitate too much on databases separates a company from its customers. Answer bPage 145Difficulty MediumAACSB Reflective Thinking58. Building a database would not be worthy for a company in all of the following causal agencys EXCEPT ________. a. where the product is a one-in-a-lifetime purchase b. where customers show little loyalty to a brand c. here the company already has an above bonny relationship with its customers d. where the unit sale is very small e. where the cost of gathering the information is too high Answer cPages 145146Difficulty Hard59. All of the following are utilizations of the perils of CRM EXCEPT ________. a. implementing CRM onward creating a customer strategy b. the vast cost that talent eventually run signifi fundamentt profits from the brass c. curlicue out CRM before changing the es tablishment to better half d. assuming more CRM technology is better e. stalking, not wooing, customers Answer bPage 146Difficulty Medium60.Marketers from which of the following are most likely to use database marketing? a. An airline b. A glass bar producer c. A sybaritic piano maker d. A toothpaste manufacturer e. None of the above would use database marketing. Answer aPage 146Difficulty Medium AACSB Reflective Thinking current/False61. Managers who rely the customer is the companys only true profit center consider the tralatitious organization chart to be obsolete. Answer realPage 120Difficulty Easy62. The neo customer-oriented organization chart places top management at the top of the pyramid as long as they can think like consumers. Answer FalsePage 120Difficulty Medium AACSB Reflective Thinking63. in that location are two determinates of customer-perceived value total customer benefit and total customer cost. Answer TruePage 121Difficulty Medium AACSB Analytic Skills 64. Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an yearbook basis. Answer FalsePage 121Difficulty Medium AACSB Analytic Skills65. Consumers tend to be value maximizesthey estimate which offer will deliver the most perceived value and act on it. Answer TruePage 121Difficulty Easy AACSB Analytic Skills66. At the heart of a good value legal transfer system is a set of core business processes that help to deliver characteristic customer value. Answer TruePage 123Difficulty Hard AACSB Analytic Skills67. Professional buyers and purchasing agents operate under various constraints and occasionally make choices that give more weight to their personal benefit than to the companys benefit. Answer TruePage 123Difficulty Medium AACSB Reflective Thinking68. The value proposition is stated in the price of a product and readily recognized by the average consumer. Answer FalsePage 123Difficulty Medium AACSB Analytic Skills69. The value pitch system includes all the experiences the customer will have on the way to obtaining and using the offering. Answer TruePage 123Difficulty Medium AACSB Analytic Skills70. For a consumer to be delighted with a product or service he or she moldiness perceive that performance exceeds expectations. Answer TruePage 124Difficulty Easy AACSB Analytic Skills71. The ultimate goal of the customer-centered firm is to create high customer satisfaction. Answer FalsePage 124Difficulty Hard AACSB Reflective Thinking72. unmatchable key to customer retention is customer satisfaction. Answer TruePage 125Difficulty Easy73. Consumers expectations result exclusively from past buying experiences. Answer FalsePage 125Difficulty Medium74. A highly satisfied customer generally cincture loyal longer, pays less attention to competing brands, and is less sensitive to price. Answer TruePage 125Difficulty Medium75. Price perception is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Answer FalsePage 129Difficulty Medium AACSB Analytic Skills76. Conformance quality and performance quality is essentially the identical thing in a marketing sense. Answer FalsePage 129Difficulty Medium AACSB Analytic Skills77. deuce products with very different performance qualities can have the selfsame(prenominal) conformation quality if both products deliver their individual promised quality. Answer TruePage 129Difficulty Hard AACSB Analytic Skills78. Marketers have prove that pricing plays the most essential role in defining and delivering high-quality goods and services to target customers. Answer FalsePage 130Difficulty Easy AACSB Reflective Thinking79.The midsize customers for most organizations receive good service, pay virtually full price for the products and services they purchase, and are often the most profitable. Answer TruePage 130Difficulty Medium AACSB Reflective Thinking80. A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the companys cost stream of attracting, selling, and table service the customer. Answer TruePages 130131Difficulty Medium AACSB Analytic Skills81. The outgo thing a company can do in the face of company mistakes is to discourage the customer from complaining. Answer FalsePage 129Difficulty Easy AACSB Reflective Thinking82. character reference is the key to value creation and customer satisfaction. Answer TruePage 130Difficulty Medium83. The least profitable 10% to 20% of customers can reduce profits by 50% to 200% per account. Answer TruePage 130Difficulty Medium AACSB Analytic Skills84. Most companies measure customer satisfaction and individual customer profitability. Answer FalsePage 131Difficulty Medium85. Unprofitable customers who defect to a competitor should be encouraged to do so. Answer TruePage 131Difficulty Medium AACSB Reflective Thinking86. Customer profitability analys is (CPA) is best conducted with the tools of an accounting technique called activity-based costing (ABC). Answer TruePage 131Difficulty Medium87. According to customer profitability analysis (CPA), platinum customers buy the farm the most money with the organization, thereby making them valuable. Answer FalsePage 131Difficulty Hard AACSB Analytic Skills88. Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customers lifetime purchases. Answer TruePage 132Difficulty Medium AACSB Analytic Skills89. A good illustration of a personal touch in the hotel business would be if the hotel employees (e. g. , registration, maid service, et cetera) call a guest by his or her name. Answer TruePage 133Difficulty Easy AACSB Reflective Thinking90. A customer touch point is the time when the customer makes a purchase. Answer FalsePage 133Difficulty Medium AACSB Analytic Skills91. The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as practicable. Answer FalsePage 133Difficulty Medium AACSB Reflective Thinking92.All companies should practice one-to-one marketing. Answer FalsePage 135Difficulty Medium93. A key device driver of shareowner value is the aggregate value of the customer base. Answer TruePage 136Difficulty Medium94. Customer churn is how rapidly a store can move customers through its checkout rapidity or process. Answer FalsePage 137Difficulty Medium95. The average company loses 25% of its customers each year. Answer FalsePage 138Difficulty HardAACSB Analytic Skills96. A customer database is simply a listing of a customers name, address, and phone number for reference book reference.Answer FalsePages 142143Difficulty Easy97. Its often easier to reattract ex-customers (because the company knows their names and histories) than to find new ones. Answer TruePage 142Difficulty Medium AACSB Reflective Thinking98. Cluster analysis is a good slip of a stat istical technique that big businessman be employed in datamining. Answer TruePage 143Difficulty MediumAACSB Analytic Skills99. It continuously costs less to serve loyal customers than to attract new ones. Answer FalsePage 146Difficulty Medium AACSB Analytic Skills100.Database marketing is most frequently employ by business marketers and service providers (hotels, banks, airlines, and insurance, credit card, and telephone companies) that commonly and easily collect a lot of customer data. Answer TruePage 146Difficulty Medium Essay101. Compare and contrast the traditional organization chart for an organization against the modern customer-oriented organization chart. Suggested Answer For a optical comparison, see Figure 5. 1. With respect to a written description, students should note that the modern customer-oriented organization chart is inverted (see the traditional model e. g. top management diaphragm managementfrontline peoplecustomers). Customers are at the top, followed by f rontline people, wherefore middle management, and, lastly, top management. Students efficiency also provide some watchword on why the inversion is beneficial. Pages 120121Difficulty Medium AACSB Analytic Skills102. Provide a customer-centered definition of the term quality. Suggested Answer Quality is the totality of features and characteristics of a product or service that bear on the ability to satisfy stated or implied needs. This is clearly a customer-centered definition. Page 129Difficulty Easy AACSB Reflective Thinking103.Differentiate between performance quality and conformance quality. Give an illustration of two products that have different performance quality but are of equal conformance quality. Suggested Answer Performance quality is the quality of the products attributes. Conformance quality is the extent to which the product delivers the performance quality promised to consumers. A Lexus provides higher performance quality than a Hyundai The Lexus rides smoother, goes faster, and lasts longer. Yet both would deliver the same conformance quality if both delivered their respective promised quality. Page 129Difficulty Hard AACSB Analytic Skills104. The case for maximizing long-term customer profitability is captured in the concept of customer lifetime value. How is customer lifetime value reckon? Suggested Answer Customer lifetime value describes the net present value of the stream of future profits expected over the customers lifetime purchases. The company must subtract from its expected revenues the expected costs of attracting, selling, and servicing the account for that customer, applying the give up discount rate (depending on cost of capital and risk attitudes). Page 132Difficulty Hard AACSB Analytic Skills105.Peppers and Rogers outline a four-step framework for one-to-one marketing that can be adapted to CRM marketing. What are those four step? Suggested Answer The four locomote are (1) Identify your prospects and customers (2) diff erentiate customers in terms of their needs and their value to your company (3) interact with individual customers to improve your knowledge about their individual needs and to build realer relationships and (4) produce products, services, and messages to each customer. Page 135Difficulty Hard AACSB Analytic Skills106. A key driver of shareholder value is the aggregate value of the customer base. Identify the quin strategies employed by winning companies to improve the value of their customer base. Suggested Answer Winning companies improve the value of their customer base by excelling at the following five strategies (1) reducing the rate of customer defection (2) increasing the longevity of the customer relationship (3) enhancing the offshoot potential of each customer through share-of-wallet, cross-selling, and up-selling (4) making low-profit customers more profitable or terminating them and (5) focusing disproportionate effort on high-value customers. Page 136Difficulty Har d AACSB Reflective Thinking107. Today, companies are more and more bear on about customer defection. thither are three main steps a company can take to reduce the defection rate. Characterize those three steps. Suggested Answer The three steps are (1) The company must define and measure its retention rate (2) the company must distinguish the causes of customer attrition and identify those that can be managed better and (3) the company must compare the lost profit equal to the customer lifetime value from a lost customer to the costs to reduce the defection rate. Page 137Difficulty Hard AACSB Analytic Skills108. Discuss the concepts of a data warehouse and datamining. Suggested Answer Data are collected by the companys contact center and organized into a data warehouse. Company personnel can capture, query, and analyze the data. Inferences can be skeletal about an individual customers needs and responses. Through datamining, marketing statisticians can extract useful information a bout individuals, trends, and segments from the mass of data. Datamining involves the use of sophisticated statistical and mathematical techniques. Page 143Difficulty Medium AACSB Analytic Skills109.Assume that a marketing manager of a small company is in the process of implementing the use of a database to assist his or her company in its marketing efforts. Considering the information found in the text, list five ways that the marketing manager might be able to use the database for marketing efforts. Suggested Answer Five ways to use a database for marketing efforts include (1) to identify prospects (2) to decide which customers should receive a particular offer (3) to deepen customer loyalty (4) to reactivate customer purchases and (5) to avoid serious customer mistakes. Pages 143-145Difficulty Medium AACSB Reflective Thinking110. tell apart four situations or cases when building a customer database would not be worthwhile for a company. Suggested Answer Four situations or cases when building a customer database would not be worthwhile for a company would be (1) where the product is a once-in-a-lifetime purchase (2) where customers show little loyalty to a brand (3) where the unit sale is very small and (4) where the cost of gathering information is too high. Pages 145146Difficulty Medium AACSB Reflective ThinkingAPPLICATION QUESTIONS Multiple Choice111. John Chambers, CEO of lake herring Systems, said, Make your customer the center of your culture. Customer-centered companies are adept at building customer relationships, not just producing products they are happy in ________, not just product engineering. a. service engineering b. market engineering c. cultural engineering d. innovation engineering e. management engineering Answer bPage 119Difficulty Medium112. direct below the customers in a modern customer-oriented organization chart, we would expect to find the ________ of an organization. . top management b. marketing department c. middle managemen t d. frontline people e. service department Answer dPage 121Difficulty Easy AACSB Analytic Skills113. All of the following are considered to be customer costs EXCEPT ________. a. financial cost of acquiring the product b. financial cost of disposing of the product c. time spent acquiring the product d. the risk of social bell ringer associated with acquiring the product e. All of the above are considered to be customer costs. Answer ePage 121Difficulty Medium AACSB Reflective Thinking114.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. consumer discount d. consumer relationship e. consumer synergy Answer aPage 121Difficulty Medium AACSB Analytic Skills115. Buyers do not eternally make logical or discerning decisions. They might purchase the most expensive and least quality item for example. Which of the following would be another good example of this behavior? a. The buyer is not seen by the vender as being very intelligent. b. The buyer might be under orders to buy at the lowest price. . The buyer might be underage. d. The buyer might be under pressure to resist sales messages. e. The buyer refuses to listen to or read any advertising. Answer bPage 123Difficulty Medium AACSB Reflective Thinking116. If a company were to focus its marketing efforts on all the experiences the customer will have on the way to obtaining and using the offering, it would be focusing its marketing efforts on the customers ________. a. perception system b. cost versus benefit system c. demand d. psychological system e. value delivery system Answer ePage 123Difficulty Medium AACSB Analytic Skills117. _______ is 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. Customer satisfaction b. Customer value c. Loyalty d. Customer profitability e. Quality Answer cPage 123Difficulty Medium AACSB Analytic Skills118. Whether the buyer is satisfied after purchase depends on the offers performance in relation to the ________. a. buyers reactions b. buyers expectations c. sellers delivery d. sellers expectations e. both the buyers and sellers demands Answer bPage 124Difficulty Medium AACSB Analytic Skills119. Buyers form expectations in all of the following ways EXCEPT ________. a. from past buying experience b. from friends and associates advice c. from marketers information d. from competitors information e. from inherited traits Answer ePage 125Difficulty Easy AACSB Analytic Skills120. Field Grocery is considering using _________ to pose as customers and report on strong and weak points in customer service at Field Grocery stores. a. news agents b. covert operatives c. mystery shoppers d. market mavens e. horizon leaders Answer cPage 126Difficulty Easy121. 3M makes it easy for negotiation to occur with its customers. 3M claims that over two-thirds of its product-improvement ideas come from perceive to ________. a. customer suggestions b. entrepreneurial product ideas c. customer complaints d. media feedback e. customer reactions to competitive products Answer cPage 129Difficulty Medium AACSB Analytic Skills122. According to GEs former chairman, John F. Welch Jr. , ________ is our best assurance of customer allegiance, our strongest defense against conflicting competition, and the only path to sustained growth and earnings. a. Quality b. Customer satisfaction c. True value d. Sustainable enterprise e. want Answer aPage 129Difficulty Hard AACSB Analytic Skills123. With respect to customer profitability analysis, ________ customers are the most likely dropped as customers because of poor profitability. a. granite b. timberland c. agitate d. plastic e. lead Answer ePage 131Difficulty Medium124. Jim is a residential construction contractor. Although one particular realtor provides Jim with a large volume of work, the realtor frequently demands discounts for sending him customers. This realtor is best expound as a(n) ________ customer. a. latinum b. gold c. lead d. iron e. ivory Answer dPage 131Difficulty Medium AACSB Reflective Thinking125. Harrahs has used effective ________ to more or less double its share of customers gaming budgets by targeting offers to specific customer segments. a. customer relationship management b. customer lifetime value c. customer profitability analysis d. customer satisfaction analysis e. customer-value delivery Answer aPage 135Difficulty Medium AACSB Analytic Skills126. Many banks and phone companies now charge fees for once-free services to condition minimum customer revenue levels. This is an example of ________. . reducing the rate of customer defection b. making low-profit customers more profitable c. enhancing the growth potential for each customer through cross-selling d. increasing the longevity of the customer relationship e. focusing disproportionate effort on high-value customers Answer bPage 136Difficulty Medium AACSB Reflective Thinking127. When bobfloat found out his friend was mentation about buying a new car, he strongly recommended that his friend look into the newest line of Ford sedans. Bob is best characterized as a(n) ________ for Ford. a. first-time customer b. member c. partner d. advocate e. rospect Answer dPage 137Difficulty Medium AACSB Reflective Thinking128. Carol is currently considering buying a Motorola cell phone offered by her service provider in conjunction with a two-year service contract. Carol is best characterized as a(n) ________ for Motorola. a. first-time customer b. member c. partner d. advocate e. prospect Answer ePage 137Difficulty Medium AACSB Reflective Thinking129. Southwest Airlines offers a fast Rewards program, an example of a ________ that allows customers to count flights they have taken toward free future flights. a. value proposition b. value delivery system c. lub membership program d. one-to-one marketing program e. customer churn Answer cPage 140Difficulty Easy AACSB Analytic Skills130. The skillful use of database marketing and ________ has made catalog house Fingerhut one of the nations largest direct-mail marketers. a. terrene low prices b. expanded home delivery options c. relationship building d. competitors mistakes e. retailer alliances Answer cPage 145Difficulty Hard AACSB Analytic Skills Short Answer131. What do modern managers opine is their companys only true profit center? Suggested Answer Managers believe the customer is their only true profit center. Page 120Difficulty Easy AACSB Analytic Skills132. Customer-perceived value is based on two components. What are those components? Suggested Answer The two components of customer-perceived value are total customer value and total customer cost. Page 121Difficulty Medium AACSB Analytic Skills133. What is the definition for custome r-perceived value (CPV)? Suggested Answer Customer-perceived value (CPV) is the difference between prospective customers evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Page 121Difficulty Medium AACSB Analytic Skills134. Using European automobile giant Volvo as your illustration, create a value proposition for the company. Suggested Answer Students may have several answers however, any value proposition must be built on their stated positioning objective of safety. Other benefits that might be worked into a value proposition could be a long-lasting car, good service, and a long warranty period. Basically, the value proposition is a statement about the total experience customers will gain from the companys market offering and from their relationship with the supplier. Page 123Difficulty Medium AACSB Reflective Thinking135. How do customers determine their level of satisfaction with a product? Suggested Answer In general, satisfaction i s a persons feelings of pleasure or disappointment that result from analyse a products perceived performance to the customers expectations. Page 124Difficulty Easy AACSB Reflective Thinking136. Give an example of a branded customer experience. Suggested Answer Students may have several answers. one(a) example from the book is that of Joie de Vivre Hospitality Inc, which operates a chain of dress shop hotels, restaurants, and resorts in the San Francisco area. The boutique concept enables hotels to offer personal touches, such as vitamins in place of chocolates on pillows. Page 125Difficulty Hard AACSB Reflective Thinking137. Companies need to be especially concerned like a shot with their customer satisfaction level. Why? Suggested Answer Companies need to be especially concerned today with their customer satisfaction level because the Internet provides a tool for consumers to rapidly spread bad word of mouth to the rest of the world. Page 126Difficulty Easy AACSB Reflective Th inking138. Identify three ways companies with customer complaints can recover customer goodwill. Suggested Answer Five methods are identified in the text. Students should present three of the following (1) congeal up a 24/7 toll-free hotline to receive and act on customer complaints (2) contact the complaining customer as quickly as possible (3) accept responsibility for the customers disappointment (4) use customer-service people who are empathic and (5) resolve the complaint fleetly and to the customers satisfaction. Page 129Difficulty Medium AACSB Analytic Skills139.Define the term quality. Suggested Answer Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Page 129Difficulty Easy AACSB Analytic Skills140. What are the three ways that customer profitability can be assessed? Suggested Answer Customer profitability can be assessed individually, by market segment, or by channel. Page 131Diffi culty Medium AACSB Analytic Skills141. What are the four classifications (tiers) of customers in customer profitability analysis using activity-based costing? Suggested Answer The tiers would be platinum customers (most profitable), gold customers (profitable), iron customers (low profitability but desirable), and lead customers (unprofitable and undesirable). Page 131Difficulty Hard AACSB Analytic Skills142. What is a customer touch point? Suggested Answer A customer touch point is any occasion on which a customer encounters the brand and productfrom actual experience to personal or mass communications to casual observation. Page 133Difficulty Medium AACSB Analytic Skills143. matched marketing is not for every company. For whom does this style of marketing work best? Suggested Answer One-to-one marketing works best for companies that normally collect a great deal of individual customer information, carry a lot of products that can be cross-sold, carry products that need periodic r eplacement or upgrading, and sell products of high value. Page 135Difficulty Hard AACSB Reflective Thinking144. A 5% lessening in the customer defection rate can increase profits by 25% to 85%, depending on the industry. excuse how this is so. Suggested Answer Acquiring new customers can cost five times more than satisfying existing customers. Customer profit rate also tends to increase over the life of the retained customer collectable to increased purchases, referrals, and price premiums and reduced operating costs to service. Page 138Difficulty Medium AACSB Reflective Thinking145. Explain how a company frequency program might work. Suggested Answer relative frequency programs are designed to provide rewards to customers who buy frequently and in substantial amounts. absolute frequency programs acknowledge the validity of the 2080 rule. Page 139Difficulty Medium AACSB Analytic Skills146. divulge the process of database marketing. Suggested Answer Database marketing is the pro cess of building, maintaining, and using customer databases and other databases (products, suppliers, resellers) for the purpose of contacting, transacting, and building customer relationships. Page 143Difficulty Medium AACSB Analytic Skills147. How do companies use their databases to identify prospects?Suggested Answer Many companies generate sales leads by advertising their product or service. The ads generally contain a response feature, such as a business reply card or a toll-free phone number, and the company builds its database from customer responses. It sorts through the database to identify the best prospects, then contacts them by mail, phone, or personal call to convert them into customers. Page 143Difficulty Medium AACSB Reflective Thinking148. Give an illustration of how a company can use a customer database to reactivate customer purchases. Suggested Answer Companies can install automatic mailing programs that send out birthday or day of remembrance cards, Christmas sh opping reminders, or off-season promotions. Other illustrations by students should be in a equivalent vein. Page 145Difficulty Medium AACSB Reflective Thinking149. One of the main problems that can prevent a firm from effectively using CRM is that some of the assumptions behind CRM may not always hold true. Give an example of one of these assumptions that might not always hold true. Suggested Answer It may not real cost less to serve more loyal customers. Page 146Difficulty Medium AACSB Analytic Skills150. According to information provided in the text, what are the four main perils of CRM? Suggested Answer The four main perils are (1) implementing CRM before creating a customer strategy (2) rolling out CRM before changing the organization to match (3) assuming more CRM technology is better and (4) stalking, not wooing, customers. Page 146Difficulty Hard AACSB Analytic Skills