Deck 3: Customer Relationship Management Strategies for Business Markets

Question 1

The whale curve of cumulative probability demonstrates that the most profitable 20 percent of customers generate between 150 and 300 percent of total profits.

Answer 1

True

Question 2

Buyers seek a close relationship for strategic purchases and employ a more distant arms-length approach in procuring non- strategic items.

Answer 2

True

Question 3

The contribution of a firm's customer-relating capability to the firm's position of advantage depends on the degree to which the market offers an attractive opportunity.

Answer 3

True

Question 4

Customized, high-technology products-like semiconductor test equipment-fit the transactional exchange category.

Question 5

All customers hold similar amounts of growth potential.

Question 6

Having a relationship orientation is critical to developing a customer-relating capability.

Question 7

For collaborative customers, the salesperson not only works with the purchasing staff, but also with a wide array of managers throughout the organization.

Question 8

While loyal customers are likely to be satisfied, all satisfied customers will not remain loyal.

Question 9

Operational linkages and information-sharing mechanisms are common features of collaborative relationships.

Question 10

Relationship commitment exists when one party has confidence in a partner's reliability and integrity.

Question 11

Firing a customer may be appropriate if the customer is not profitable, not new, and shows little or no opportunity for learning.

Question 12

Transactional exchange centers on the timely delivery of basic products for highly competitive market prices.

Question 13

The cost of serving a long-standing customer is often more than the cost of acquiring a new customer.

Question 14

Buying firms prefer a transactional relationship when there are few alternatives and the complexity of purchase is high.

Question 15

Buyer-seller relationships that arise for important purchases are the ones that are more likely to involve operational linkages and high levels of information exchange.

Question 16

Total cost of ownership illuminates exactly what activities are associated with serving a particular customer and how these activities are linked to revenues and the consumption of resources.

Question 17

Collaborative exchange features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits.

Question 18

When supply needs are complex, the buying firm is less likely to opt for a close relationship with a supplier.

Question 19

Buying firms prefer a more collaborative relationship when the supply market is dynamic.

Question 20

Relationship commitment involves a partner's belief than an ongoing relationship is so important that it deserves maximum efforts to maintain it.

Question 21

_____ reflect(s) the degree to which the systems, procedures, and routines of the buying and selling firms have been connected to facilitate operations.

A)Relationship connectors
B)Information exchange
C)Cooperative norms
D)Operational linkages
E)Legal bonds

Question 22

Business marketing relationships vary in terms of their closeness or degree of collaboration. Transactions that are almost, if not entirely, void of a close, collaborative relationship:

A)do not involve the exchange of money.
B)involve long-term, contractual commitments.
C)are one-time exchanges of value between two parties with no prior or subsequent interaction.
D)intend to move each partner toward the attainment of some long-term strategic goal.
E)none of the answer choices

Question 23

​Menu-based pricing involves B2B pricing in the hospitality industry.

Question 24

​Operational connections can be useful in collaborative exchange.

Question 25

Rather than adopting the approach of "one design fits all," the astute marketer matches the strategy to the product and market conditions that surround a particular relationship. Which of the following statements is(are) true?

A)It is unwise for marketers to make specialized investments in transactional relationships.
B)For transactional customers, the salesperson should center primary attention on the purchasing staff.
C)Transactional customers display less loyalty to a particular supplier and can easily switch part or all of their purchases from one vendor to another.
D)all of the answer choices

Question 26

Transactional exchange features very close:

A)information linkages.
B)social linkages.
C)operational linkages.
D)none of the answer choices.

Question 27

Buying firms prefer a more collaborative relationship when:

A)the purchase is deemed strategically important to the buying organization.
B)the market is dynamic.
C)there are few alternatives.
D)all of the answer choices

Question 28

For transactional customers, the business marketer should:

A)see that operational linkages are designed into the relationship to keep product and service offerings aligned with customer needs.
B)directly assist the customer with planning and strategy issues.
C)focus primary attention on the purchasing staff.
D)all of the answer choices

Question 29

Which of the following statements about collaborative relationships is(are) true?

A)Customers prefer a collaborative relationship when there is a competitive supply environment featuring many alternatives.
B)Collaborative relationships are less likely to involve operational linkages between the buying and selling firms.
C)Buyers prefer collaborative relationships when the purchase decision is not complex.
D)none of the answer choices

Question 30

For collaborative customers, the business marketer should:

A)invest resources to build operational linkages and information-sharing mechanisms for the relationship.
B)directly assist customers with planning and strategy development.
C)work with a wide array of managers on strategy and coordination issues.
D)all of the answer choices

Question 31

On-going transactions in the business market where the customer and the supplier focus only on the timely exchange of standard products at competitive prices could be described as:

A)transactional exchange.
B)a partnership.
C)collaborative exchange.
D)a strategic alliance.
E)a joint venture.

Question 32

Which of the following statements about transactional relationships is(are) true?

A)Customers emphasize a transactional orientation when the purchase is viewed as less important to the organization.
B)Customers prefer a transactional relationship when the market is dynamic (for example, rapidly-changing technology).
C)Transactional relationships are more likely to involve operational linkages.
D)all of the answer choices

Question 33

Collaborative relationships:

A)are emphasized by buying firms when the purchase is deemed important to the organization.
B)are emphasized by buyers when the complexity is high.
C)are more likely to involve operational linkages.
D)all of the answer choices

Question 34

In regards to relationship management, s​ocial programs can be useful.

Question 35

Which of the following statements about buyer-seller relationships is(are) true?

A)Customers prefer a transactional orientation when there are few alternative offerings from suppliers.
B)Customers emphasize a collaborative orientation when the purchase decision is not complex.
C)Collaborative relationships are more likely to involve operational linkages and high levels of information exchange.
D)All of the answer choices

Question 36

There is a gravitational pull that moves buyers toward the transactional side of the exchange spectrum because:

A)competitors are continually working to attract the best customers away.
B)customer requirements and expectations keep changing.
C)customers can freely explore new options in real time on the Internet.
D)all of the answer choices

Question 37

​Transaction exchange refers to foreign exchange payments involving international transactions.

Question 38

Buying firms prefer a transactional relationship when:

A)the complexity of the purchase is high.
B)there is a competitive supply market featuring many alternatives.
C)the supply market is stable.
D)all of the answer choices
E)both there is a competitive supply market featuring many alternatives and the supply market is stable

Question 39

Transactional relationships:

A)are characterized by high levels of information exchange.
B)are emphasized by buyers when the purchase is viewed as less important to the organization's objectives.
C)are more likely to involve operational linkages.
D)all of the answer choices
E)both are characterized by high levels of information exchange and are more likely to involve operational linkages

Question 40

In regards to factors that influence the profitability of individual customers, an alternative approach involves process improvements.​

Question 41

_____ illuminates exactly what activities are associated with serving a particular customer and how these activities are linked to revenues and the consumption of resources.

A)Customer profitability
B)Activity-based costing
C)Total cost of ownership
D)Margin analysis

Question 42

Using the continuum of working relationships, the industry bandwidth refers to:

A)the range of relationship strategies (from transactional to collaborative) that are pursued by competing firms.
B)the number of competitors in the particular industry.
C)always-a-share customers.
D)the lost-for-good customer.
E)the number of organizations in a straight rebuy situation.

Question 43

When organizational buyers consider changes from one selling firm to another, what are the two main categories of switching costs they consider?

A)Trust and relationship commitment
B)Transactional and collaborative relationships
C)Investments and risk of exposure
D)Operational linkages and relationship connectors.

Question 44

The open exchange of information is a characteristic of ____ relationships.

A)close
B)distant
C)transactional
D)all of the answer choices
E)both distant and transactional

Question 45

_____ occur in between the two extremes on the relationship continuum, where the focus of the selling firm shifts from attracting customers to keeping customers.

A)Transactional exchanges
B)Value-added exchanges
C)Competitive exchanges
D)Collaborative exchanges

Question 46

Value can be defined as the _____ benefits received by a customer firm in exchange for the price paid for a product offering.

A)economic
B)technical
C)social
D)all of the answer choices

Question 47

A(n) _____ represents the products, services, ideas, and solutions that a business marketer offers to advance the performance goals of the customer organization.

A)industry bandwidth
B)value proposition
C)marketing plan
D)customer relationship management program

Question 48

Which of the following are goals of customer relationship management (CRM)?

A)A continuing dialogue with customers.
B)Personalized treatment of the most valuable customers.
C)Achieving customer retention.
D)All of the answer choices.

Question 49

Business marketers track customer loyalty and retention because:

A)the cost of new customers is often far less than long-standing customers.
B)all satisfied customers will remain loyal.
C)the firm can identify opportunities for expanding the relationship.
D)the cost of serving established customers usually increases.

Question 50

_____ features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits.

A)Transactional exchange
B)Value-added exchange
C)Competitive exchange
D)Collaborative exchange

Question 51

From the customer's perspective, relationship quality centers on:

A)the sensitivity of the salesperson in understanding how business conditions affect the industry within which the buying firm operates.
B)the ability of the salesperson to understand the selection criteria of each member of the buying center.
C)trust in the salesperson.
D)satisfaction with the salesperson.
E)both trust in the salesperson and satisfaction with the salesperson

Question 52

Which of the following performance attributes has research recently shown influences customer satisfaction of business buyers?

A)Responsiveness of the supplier in meeting the firm's needs.
B)Product quality.
C)Delivery reliability.
D)All of the answer choices.

Question 53

Which of the following are reasons for business marketers to employ relationship marketing activities?

A)Loyal customers are far more profitable than price sensitive customers.
B)Having strong relationships with customers can be hard for competitors to understand or duplicate.
C)Both loyal customers are far more profitable than price sensitive customers and having strong relationships with customers can be hard for competitors to understand or duplicate are true.
D)None of the answer choices.

Question 54

_____ exists when one party has confidence in a partner's reliability and integrity.

A)Trust
B)Solidarity
C)Relationship commitment
D)A strategic alliance
E)Interfirm cooperation

Question 55

The procedure for designing effective customer relation programs includes

A)obtaining the right customers.
B)crafting the right value propositions.
C)motivating employees.
D)All of the answer choices.

Question 56

The belief by a partner that an ongoing relationship is not so important that it deserves maximum effort to maintain it is referred to as:

A)trust.
B)solidarity.
C)relationship commitment.
D)a strategic alliance.
E)none of the answer choices.

Question 57

When a business marketer demonstrates special skills in managing relationships with key customers or by developing innovative strategies with alliance partners, they are trying to create:

A)a collaborative advantage.
B)an equal advantage.
C)an arm's length transaction.
D)a transactional exchange.
E)None of the answer choices.

Question 58

_____ centers on all activities directed toward establishing, developing, and maintaining successful exchanges with customers and other constituents.

A)Relationship marketing
B)Transactional exchange
C)A strategic alliance
D)Buying centers

Question 59

_____ involves a partner's belief that an ongoing relationship is so important that it deserves maximum efforts to maintain it.

A)Trust
B)Relationship commitment
C)Relationship marketing
D)A strategic alliance

Question 60

When business marketers are assessing which of their current customers represent the best opportunities for growth, which of the following factors should be considered?

A)The cost-to-serve the customer.
B)Projected profit margins.
C)The current share of the wallet the firm has attained.
D)All of the answer choices.

Question 61

The most profitable customers are those that have a high____________________and a low____________________.

Question 62

Please identify the three main components of a strong customer-relating capability and how each component helps develop a strong customer-relating capability. How does customer-relating capability lead to a relationship advantage?

Question 63

To optimize the purchasing strategy, buying firms across industries are beginning to segment the supply base: buyers seek a close relationship for strategic purchases and employ a more distant arm's-length approach in procuring non-strategic items. Describe the resulting implications for firms that are evaluating potential customers to target with relationship marketing strategies.

Question 64

Gartner Group, a research firm for information technology users, reports that 55 percent of all customer relationship management software projects fail to produce results. Worse yet, one in every five companies report that their CRM initiatives not only had failed to deliver profitable growth but also had damaged long-standing customer relationships. Experts suggest that these problems tend to occur when executives mistake CRM technology for a customer strategy. First, define customer relationship management (the cross-functional process) and describe how CRM technology (the software) allows a firm to provide customized treatment of key customers. Second, describe the central components of a customer relationship management strategy and the way in which CRM technology can support each strategy component.

Question 65

Xerox serves a diverse set of customers in the business market.
·
Customer group A demands a wide variety of services in addition to a perfectly functioning copier. These customers value the relationship with Xerox and are willing to pay a premium for product and service quality.
·
Customer group B wants a quality copier but, most of all, they want a rock bottom price and choose suppliers on that basis.
·
Customer group C demands a quality product and extensive service support but wants all of this for a "rock bottom" price. These customers will freely switch from one supplier to the next. As competition intensifies for Xerox, more customers are moving into this group each month.
First, describe how Xerox might develop a portfolio of relationship strategies to meet the needs of such diverse customer groups. Second, some customers in each group are more costly to serve than others. How should such cost differences be reflected in the particular relationship strategies that Xerox follows? Third, what strategies can Xerox follow to increase the switching costs of customers in Group B or Group C?

Question 66

Rather than adopting the approach of "one design fits all," the astute marketer matches the strategy to the product and market conditions that surround a particular account. Describe the product and market conditions that support a collaborative relationship? a transactional relationship?

Question 67

____________________ consist of unwritten and largely nonverbalized sets of congruent expectations and assumptions held by the parties to the alliance about each other's prerogatives and obligations.

Question 68

In a collaborative exchange, the supply market dynamism would best be described as:

Question 69

Value is best defined as the economic, technical, service and social benefits received by a customer firm in exchange for the:

Question 70

A cross-functional process for achieving a continuing dialogue with customers, with personalized treatment of the most valuable customers and ensuring customer retention and the effectiveness of marketing initiatives is known as:

Question 71

As software manufacturers and consulting organizations diffuse best practices, and the relevant CRM software becomes widely available and economical to use, all competitors will be equally equipped. However, when compared to rivals, some firms will be rewarded by customers with higher rates of customer loyalty and lower rates of defection while others will continue to stumble. In the end, to excel at customer relationship management, a firm requires a customer-relating capability. Describe the central elements of a customer-relating capability and how it can provide a firm with a strong advantage over competitors.

Question 72

When the focus of the selling firm shifts from attracting customers to keeping customers, these exchanges are best described as:

Question 73

Once a firm implements an Activity-Based Costing approach, and plots cumulative profitability against customers, a striking pattern emerges that is known as:

Question 74

Some customers place a high value on supporting services (for example, technical advice and training) and are willing to pay a premium price for this support. Other customers do not value service support and are extremely price sensitive in making product selection decisions. Describe how a business marketer might profitably serve each of these customer segments.

Question 75

Large firms tend to make up the majority of the most profitable customers AND of the least profitable customers. What are some of the characteristics that define both high-cost-to-serve and low-cost-to-serve customers? What can business marketers do to manage high and low cost-to-serve customers?

Question 76

____ is composed of at least two dimensions: (1) trust in the product and (2) satisfaction with the customer.

A)role definition
B)relational adaptiveness
C)relationship quality
D)role congruity
E)none of the answer choices