Deck 9: Understanding the Customercompany Profit Chain: Satisfaction, Loyalty, Retention, and Profits

Question 1

The University of Michigan measures service quality each year by interviewing 8,000 consumers about 100 companies and 20 government agencies.

Answer 1

False

Question 2

Many consumers are committed to a brand because it represents the lifestyle that they want to be associated with.

Answer 2

True

Question 3

Many people in the U.S. wear John Deere hats because of the high values John Deere represents as part of the American scene.

Answer 3

True

Question 4

Behavioral loyalty means strong feelings toward a brand.

Question 5

Inertial loyalists are uninvolved and continue to select a brand because it is not worth the effort to switch.

Question 6

The relationship between satisfaction and loyalty is symmetrical and linear.

Question 7

A company's most loyal customers may also be its competitors' most loyal customers.

Question 8

As one would expect, most heavy users are not multi-brand loyal.

Question 9

One hundred percent loyal buyers tend to be light buyers of the product or service.

Question 10

The most visible form of customer relationship management is probably the loyalty/rewards/frequency program.

Question 11

The main reason companies introduce loyalty programs is to attract more customers.

Question 12

Many feel that loyalty programs don't, in fact, increase customer loyalty toward the company that sponsors the program.

Question 13

Spurious or inertial loyalty looks at which brands a customer purchases but does not consider a person's attitudes toward the brands?

Question 14

Situation specific loyalty recognizes that a person may forgo purchasing a brand that they like or prefer?

Question 15

Most customers who are dissatisfied complain directly to the company-they complain loudly.

Question 16

Customer satisfaction is not a very good measure predicting future purchase behavior.

Question 17

The large number of on-par competitive offerings is a type of intervening variable that can exist between satisfaction and the creation of loyalty toward a company and its customers.

Question 18

More than seventy-five percent of all Americans participate in at least one loyalty program.

Question 19

Multi-channel users are more profitable than single channel users.

Question 20

Each year, the University of Michigan conducts a survey of customers that examines customer perceptions of hundreds of companies in a variety of industries. Which measures are felt to be so important to American businesses that this survey is done?

A)GNP
B)economic indicators
C)service quality and customer satisfaction
D)foreign vs. domestic product quality
E)index of counterfeit products

Question 21

The two types of satisfaction measures are

A)transaction specific and cumulative.
B)short vs. long term.
C)holistic vs. experiential.
D)trust vs. commitment based.
E)inductive vs. deductive.

Question 22

What type of loyalty is exemplified by someone who has a brand name tattooed on their body?

A)behavioral loyalty
B)affect loyalty
C)situation specific loyalty
D)latent loyalty
E)conative loyalty

Question 23

What type of loyalty is exhibited by someone who seldom, if ever, questions the correctness of his brand selection?

A)deliberative loyalty
B)inertial loyalty
C)emotive loyalty
D)cerebral loyalty
E)habitual loyalty

Question 24

For high-profit/high-loyalty customers, companies should use what type of marketing strategy?

A)CRP
B)OUTFOX
C)X-RAY WALLET
D)FAT
E)butterfly

Question 25

The average U.S. household belongs to how many loyalty programs?

A)3
B)8
C)10
D)14
E)21

Question 26

Which is most true about loyalty programs?

A)They are basically offensive in nature; i.e., they attract new customers.
B)Over 85% of members are active in the loyalty programs they belong to.
C)They are basically defensive in nature; i.e., they won't attract many new customers but rather prevent current ones from defecting.
D)Restaurants are the number one sector for loyalty program members.
E)Most loyalty programs are profitable.

Question 27

Charging differing amounts for different levels of servicing is called

A)differential servicing.
B)discriminatory servicing.
C)tiered servicing.
D)staged servicing.
E)none of the above

Question 28

A steep skew customer base means that

A)most cannot afford the service.
B)most can afford the service.
C)there is a highly profitable segment within the customer base.
D)most customers are not highly profitable.
E)B and D

Question 29

Which type of loyalty looks at the brand(s) purchased but does not consider a person's attitudes toward the brand(s)?

A)spurious loyalty
B)true loyalty
C)latent loyalty
D)inertial loyalty
E)A and D

Question 30

Which type of loyalty does NOT simply look at what is purchased but also looks at a person's liking and preference toward the brand?

A)situation specific loyalty
B)affect loyalty
C)latent loyalty
D)spurious loyalty
E)repeat purchase loyalty

Question 31

Which type of loyalty recognizes that a person may forgo purchasing a brand that they like or prefer?

A)inertial loyalty
B)spurious loyalty
C)situation specific loyalty
D)behavioral loyalty
E)repeat purchase loyalty

Question 32

Spurious loyalty is the same as

A)inertial loyalty.
B)situation specific loyalty.
C)latent loyalty.
D)divided loyalty.
E)affect loyalty.

Question 33

Novelty seeking behavior may interrupt

A)divided loyalty.
B)latent loyalty.
C)situation specific loyalty.
D)affect loyalty.
E)none of the above

Question 34

What type of loyalty characterizes a consumer who feels very positive toward a brand but, for a variety of reasons, does not buy it?

A)situation specific loyalty
B)latent loyalty
C)inertial loyalty
D)spurious loyalty
E)no loyalty

Question 35

Consumers may buy a brand because of its benefits. Which of the following is not a typical brand benefit?

A)an internal feeling that the right thing was done
B)an emotional relationship with the brand
C)a brand's functional benefits, such as its features
D)a feeling of group acceptance
E)all are brand benefits

Question 36

Which is not true of customer complaints?

A)Most customers who are dissatisfied complain directly to the company.
B)Complaining customers, if satisfied, may become even more loyal.
C)Complaints should be viewed as opportunities by a company.
D)It is better to have complainers voice their opinions than not voice their opinions.
E)all of the above are true

Question 37

Satisfaction is

A)the most important reaction a company can gain from consumers.
B)the strongest of all sentiments.
C)not a very good measure predicting future purchase behavior.
D)achieved in only 40% of all transactions.
E)both A and B are true

Question 38

The strongest of all relationships is a(n)

A)acquaintance relationship.
B)friendly relationship.
C)partner relationship.
D)relationship based on satisfaction.
E)situation-specific relationship.

Question 39

Which of the following is not an intervening variable that can exist between satisfaction and the creation of loyalty toward a company and its customers?

A)large number of on-par competitive offerings
B)novelty seeking
C)new offerings
D)no personal attachment to the brand
E)equilibrium evaluation

Question 40

Loyalty is probably most difficult to establish for

A)specialty goods.
B)shopping goods.
C)comparative goods.
D)convenience goods.
E)inelastic goods.

Question 41

Long term customers are felt to be more profitable for all but which of the following reasons?

A)they buy more
B)they buy more expensive items
C)they become less price sensitive
D)the price-quality relationship loses its impact
E)they spread good opinions leading to friends' purchases

Question 42

Long term customers are felt to be more profitable for which of the following reasons?

A)they become less price sensitive
B)they lose their vigilance toward price
C)they experience purchase efficiencies and value the convenience
D)they cost less to service
E)all of the above

Question 43

Loyalty programs

A)are more common overseas than in the U.S.
B)now account for up to 20% of companies' new customers.
C)are a $25 billion dollar industry in the U.S. alone.
D)enable companies to collect data and enter into dialogues with their customers.
E)all of the above

Question 44

Which of the following concerning loyalty programs is NOT true?

A)More than half of all American adults participate in at least one loyalty program.
B)Loyalty programs are usually used as a defensive measure to prevent customer defection.
C)Loyalty programs can serve as the nexus for marketing alliances between companies who otherwise may be competitors.
D)Loyalty programs are sometimes called "frequency," "points," or "rewards" programs.
E)all of the above are true

Question 45

Multi-channel strategies

A)must integrate manufacturers, wholesalers, and retailers.
B)are best exemplified by vertically aligned networks (VANs)
C)can be the basis of establishing a value added partnership (VAP)
D)always have a channel captain.
E)all of the above are false

Question 46

Many studies have shown that

A)high value customers select the one convenient channel best for them.
B)the channel captain is very often the one with the most developed website.
C)multi-channel users can be 25-50% more profitable than single channel users.
D)women tend to be more multi-channel oriented than men.
E)all of the above are true

Question 47

Companies prefer

A)to use the minimum number of channels necessary to satisfy their customers.
B)to serve their high value customers directly.
C)to serve their marginal customers over the Internet.
D)to provide "clicks" and avoid "bricks" whenever possible.
E)none of the above

Question 48

Stages in the customer-business life cycle include all EXCEPT which of the following?

A)rationalization
B)development
C)retention
D)winback
E)all are stages in the customer-business life cycle