1. Susan Lefferts’ company advertises widely. Ms. Lefferts uses business reply cards attached to her company’s magazine ads to build her company’s database. In which of the following ways would Ms. Lefferts most likely use the database?

 

Phil Langston has just ordered a number of expensive executive gifts that he will be sending as an appreciation token to a select few customers from his client database. In which of the following ways is Mr. Langston most likely using his database?

a. To identify prospects

b. To decide which customers should receive a new sales offer

c. To deepen customer loyalty

d. To avoid serious customer mistakes

e. To beat the competition to a sale

2. 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. public relations department

e. radio advertising

3. Which of the following is considered to be one of the four problems that can deter a firm from using CRM (customer relationship marketing)?

a. Competitors can often hack into CRM systems.

b. Building and maintaining a customer database requires a large investment.

c. It is very difficult to find and train database employees.

d. Long-term results of such systems are still unproven.

e. Focusing too much on databases separates a company from its customers.

4. Building a database would not be worthwhile for a company in all of the following cases EXCEPT ________.

a. where the product is a one-in-a-lifetime purchase

b. where customers show little loyalty to a brand

c. where the company already has an above average relationship with its customers

d. where the unit sale is very small

e. where the cost of gathering the information is too high

5. All of the following are examples of the perils of CRM EXCEPT ________.

a. implementing CRM before creating a customer strategy

b. the enormous cost that might eventually drain significant profits from the organization

c. rolling out CRM before changing the organization to match

d. assuming more CRM technology is better

e. stalking, not wooing, customers
Marketers from which of the following are most likely to use database marketing?

f. An airline

g. A candy bar manufacturer

h. A grand piano maker

i. A toothpaste manufacturer

j. None of the above would use database marketing.

True/False

6. Managers who believe the customer is the company’s only true “profit center” consider the traditional organization chart to be obsolete.

7. The modern customer-oriented organization chart places top management at the top of the pyramid as long as they can think like consumers.

8. There are two determinates of customer-perceived value: total customer benefit and total customer cost.

9. Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an annual basis.

10. Consumers tend to be value maximizes—they estimate which offer will deliver the most perceived value and act on it.

11. At the heart of a good value delivery system is a set of core business processes that help to deliver distinctive customer value.

12. Professional buyers and purchasing agents operate under various constraints and occasionally make choices that give more weight to their personal benefit than to the company’s benefit.

13. The value proposition is stated in the price of a product and readily recognized by the average consumer.

14. The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.

15. P
For a consumer to be delighted with a product or service he or she must perceive that performance exceeds expectations.

16. The ultimate goal of the customer-centered firm is to create high customer satisfaction.

17. One key to customer retention is customer satisfaction.

18. Consumers’ expectations result exclusively from past buying experiences.

19. A highly satisfied customer generally stays loyal longer, pays less attention to competing brands, and is less sensitive to price.

20. 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.

21. Conformance quality and performance quality is essentially the same thing in a marketing sense.

22. Two products with very different performance qualities can have the same conformance quality if both products deliver their respective promised quality.

23. Marketers have found that pricing plays the most essential role in defining and delivering high-quality goods and services to target customers.

24. The midsize customers for most organizations receive good service, pay nearly full price for the products and services they purchase, and are often the most profitable.

25. A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling, and servicing the customer.

26. The best thing a company can do in the face of company mistakes is to discourage the customer from complaining.
Quality is the key to value creation and customer satisfaction.

27. The least profitable 10% to 20% of customers can reduce profits by 50% to 200% per account.

28. Most companies measure customer satisfaction and individual customer profitability.

29. Unprofitable customers who defect to a competitor should be encouraged to do so.

30. Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called activity-based costing (ABC).

31. According to customer profitability analysis (CPA), platinum customers spend the most money with the organization, thereby making them valuable.

32. Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customer’s lifetime purchases.

33. 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.

34. A customer touch point is the time when the customer makes a purchase.

35. The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as possible.

36. All companies should practice one-to-one marketing.

37. A key driver of shareholder value is the aggregate value of the customer base.

38. Customer churn is how rapidly a store can move customers through its checkout facility or process.

39. The average company loses 25% of its customers each year.

40. A customer database is simply a listing of a customer’s name, address, and phone number for credit reference.

41. It’s often easier to reattract ex-customers (because the company knows their names and histories) than to find new ones.

Answer: True

42. Cluster analysis is a good example of a statistical technique that might be employed in datamining.

43. It always costs less to serve loyal customers than to attract new ones.

44. Database marketing is most frequently used by business marketers and service providers (hotels, banks, airlines, and insurance, credit card, and telephone companies) that normally and easily collect a lot of customer data.

Essay

45. Compare and contrast the traditional organization chart for an organization against the modern customer-oriented organization chart.

46. Provide a customer-centered definition of the term quality.