103. Differentiate between performance quality and conformance quality. Give an example of two products that have different performance quality but are of equal conformance quality.

104. The case for maximizing long-term customer profitability is captured in the concept of customer lifetime value. How is customer lifetime value calculated?

).

105. Peppers and Rogers outline a four-step framework for one-to-one marketing that can be adapted to CRM marketing. What are those four steps?

106. A key driver of shareholder value is the aggregate value of the customer base. Identify the five strategies employed by winning companies to improve the value of their customer base.

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107. Today, companies are increasingly concerned about customer defection. There are three main steps a company can take to reduce the defection rate. Characterize those three steps.

108. Discuss the concepts of a data warehouse and datamining.

109. 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.

110. Describe four situations or cases when building a customer database would not be worthwhile for a company.

 

APPLICATION QUESTIONS

Multiple Choice

111. John Chambers, CEO of Cisco 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 skilled in ________, not just product engineering.

a. service engineering

b. market engineering

c. cultural engineering

d. innovation engineering

e. management engineering

112. Immediately below the customers in a modern customer-oriented organization chart, we would expect to find the ________ of an organization.

a. top management

b. marketing department

c. middle management

d. frontline people

e. service department

113. 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 stigma associated with acquiring the product

e. All of the above are considered to be customer costs.

114. 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

 

115. Buyers do not always make logical or rational 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 seller as being very intelligent.

b. The buyer might be under orders to buy at the lowest price.

c. 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.

116. 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 customer’s ________.

a. perception system

b. cost versus benefit system

c. demand

d. psychological system

e. value delivery system

117. ________ 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

118. Whether the buyer is satisfied after purchase depends on the offer’s performance in relation to the ________.

a. buyer’s reactions

b. buyer’s expectations

c. seller’s delivery

d. seller’s expectations

e. both the buyer’s and seller’s demands

119. 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

 

120. Field Grocery is considering using _________ to pose as customers and report on strong and weak points in customer service at Field Grocery stores.

a. intelligence agents

b. covert operatives

c. mystery shoppers

d. market mavens

e. opinion leaders

121. 3M makes it easy for dialog to occur with its customers. 3M claims that over two-thirds of its product-improvement ideas come from listening to ________.

a. customer suggestions

b. entrepreneurial product ideas

c. customer complaints

d. media feedback

e. customer reactions to competitive products

122. According to GE’s former chairman, John F. Welch Jr., “________ is our best assurance of customer allegiance, our strongest defense against foreign competition, and the only path to sustained growth and earnings.”

a. Quality

b. Customer satisfaction

c. True value

d. Sustainable enterprise

e. Motivation

123. With respect to customer profitability analysis, ________ customers are the most likely dropped as customers because of poor profitability.

a. granite

b. wood

c. iron

d. plastic

e. lead

124. 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 described as a(n) ________ customer.

a. platinum

b. gold

c. lead

d. iron

e. ivory

125. Harrah’s has used effective ________ to almost 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

126. Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This is an example of ________.

a. 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

127. When Bob found out his friend was thinking 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. prospect

 

128. 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

129. Southwest Airlines offers a Rapid 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. club membership program

d. one-to-one marketing program

e. customer churn

130. The skillful use of database marketing and ________ has made catalog house Fingerhut one of the nation’s largest direct-mail marketers.

a. everyday low prices

b. expanded home delivery options

c. relationship building

d. competitor’s mistakes

e. retailer alliances

Short Answer

131. What do modern managers believe is their company’s only true “profit center”?

132. Customer-perceived value is based on two components. What are those components?

 

133. What is the definition for customer-perceived value (CPV)?

134. Using European automobile giant Volvo as your illustration, create a value proposition for the company.

135. How do customers determine their level of satisfaction with a product?

.

136. Give an example of a “branded customer experience.”

137. Companies need to be especially concerned today with their customer satisfaction level. Why?

138. Identify three ways companies with customer complaints can recover customer goodwill.

139. Define the termquality.

.

140. What are the three ways that customer profitability can be assessed?

141. What are the four classifications (tiers) of customers in customer profitability analysis using activity-based costing?

142. What is a customer touch point?

143. One-to-one marketing is not for every company. For whom does this style of marketing work best?

144. A 5% reduction in the customer defection rate can increase profits by 25% to 85%, depending on the industry. Explain how this is so.

145. Explain how a company frequency program might work.

146. Describe the process of database marketing.

.

147. How do companies use their databases to identify prospects?

 

148. Give an illustration of how a company can use a customer database to reactivate customer purchases.

149. 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.

150. According to information provided in the text, what are the four main perils of CRM?