Deck 11: Database and Direct Response Marketing

Question 1

Successful database marketing requires a quality data warehouse.

Answer 1

True

Question 2

Most database programs take advantage of cookies produced by a computer to register and store Web site visits and to personalize the site with a greeting when the person returns.

Answer 2

True

Question 3

Information about current customers,former customers,and prospects is contained within a firm's operational database.

Answer 3

False

Question 4

Purchase and Web site visit histories are sufficient to build a quality database.

Question 5

Mailing addresses of individuals in a database should be updated at least once every two years and more often if they are used for frequent contacts.

Question 6

While database marketing can be used for selling products,the primary benefit of database marketing is the enhancement of customer loyalty.

Question 7

While it is important for a database to record every transaction with a customer,recording of interactions that do not relate to a purchase are not necessary.

Question 8

The secrets to developing loyalty include recognition,rewards,and responsibility.

Question 9

Retaining current customers is more expensive than gaining new customers.

Question 10

The marketing database contains the transactions individuals have with a firm and follows accounting rules.

Question 11

Two common forms of database coding are lifetime value analysis and data mining.

Question 12

Sales of Levi Strauss jeans declined when younger customers began to view the brand as not being hip.

Question 13

The marketing team at Levi-Strauss responded to the decline in sales by developing a strong database marketing program.

Question 14

The data warehouse holds all of the customer data.

Question 15

Database marketing involves collecting customer data for the purpose of developing direct marketing programs.

Question 16

The Internet and e-mail provide excellent,cost-effective channels of communication to build long-term relationships with customers.

Question 17

Geocoding allows for combining demographic information,geographic information,and lifestyle data.

Question 18

Geocoding is adding geographic codes to customer records.

Question 19

Successful database marketing emphasizes two things: identifying customers and building relationships.

Question 20

Levi Strauss' three primary brands are Levi's,Dockers,and Live Strauss Signature.

Question 21

Through data mining a company can build a profile of its best customers,which can then be used to identify prospective new customers or upgrade current customers to a higher level of purchasing.

Question 22

When reviewing RFM codes,Alex who is coded 534 would be more valuable than Ian who is coded 232.

Question 23

To code data using RFM analysis,the first step is to sort the data by the date of the last purchase and then code the most recent purchase with a 1 and the most distant purchase with a 5.

Question 24

In a RFM analysis,the M stands for marketing.

Question 25

Data mining normally involves building profiles of consumer groups and preparing models that predict future purchase behaviors.

Question 26

In a RFM analysis,the F stands for frequency,which is a record of when customers makes purchases,including the dates.

Question 27

A retailer can use data mining to determine when to mark merchandise down and how much to mark it down.

Question 28

Data mining and data coding of a firm's database can help a firm develop more personalized marketing communications and marketing programs.

Question 29

In using RFM codes,companies know that the worst predictor of future purchases is the M,or monetary.

Question 30

Typically,loyal customers make more purchases and also increase the amounts they spend on each visit.

Question 31

In a RFM analysis,the F stands for frequency.

Question 32

In a RFM analysis,the R stands for recency.

Question 33

Lifetime value is a figure that represents revenues and profits received from a customer throughout the lifetime of a relationship.

Question 34

In a RFM analysis,the M represents the monetary value of the last purchase.

Question 35

To code data using RFM analysis,the frequency is coded from 1 to 5 with 5 representing the customers who have made the highest number of purchases within a specific time period and 1 representing the customers who have made the least number of purchases.

Question 36

In calculating the lifetime value,the cost of acquiring a customer is determined by dividing the total marketing and advertising costs by the firm's total number of customers.

Question 37

When calculating the lifetime value for a market segment,it should be calculated over a 3-year period.

Question 38

Lifetime value can be calculated in two ways.Most marketing experts believe the most accurate method is calculating the lifetime value of a single customer.

Question 39

In using RFM codes,companies know that recency is the best predictor of future purchases.

Question 40

In a RFM analysis,the R stands for recency,which is the date of the last purchase.

Question 41

Ariana has just moved to a new apartment.A few days after moving she received a letter from Bed,Bath,and Beyond with a coupon for merchandise she may need in her new apartment.This is an example of the database marketing technique known as trawling.

Question 42

The most common database-driven marketing programs are permission marketing,frequency programs,and customer relationship management efforts.

Question 43

The key technology for database-driven customer communications is the cell phone.

Question 44

A permission marketing program means promotions are only sent to customers that ask for them.

Question 45

Faith received an e-mail from Volkswagen exactly one year after she purchased her Volkswagen.The company thanked her for her purchase and encouraged her to access the company's Web site.This is an example of the database marketing technique of trawling.

Question 46

When a customer makes a purchase over the Internet,the only communication that is important is sending them a thank you and acknowledgment of the order.

Question 47

Record and book clubs that send out monthly mailings of books and records to purchase are using a permissions marketing program.

Question 48

A company's marketing team segments customers into 6 groups based on their lifetime value calculations.The highest value segment,President's Gold,should be targeted with rewards for purchases to encourage them to continue making purchases.

Question 49

A company's marketing team segments customers into 6 groups based on their lifetime value calculations.The second highest value segment,President's Silver,should be targeted with rewards to move them to the highest segment.

Question 50

In developing data-driven communications with customers through Web visits,identification codes allow a visitor to register with the site through an ID name or number and a password.

Question 51

The primary reason for building a database,coding the information,and data mining is to use the output to build programs that will boost sales revenues.

Question 52

In permission marketing,permission is normally obtained from individuals in exchange for an incentive.

Question 53

In developing data-driven communications with customers,maintaining customer profile information is important because the information helps the marketing team create personalized communications.

Question 54

Personalized communications with customers through database information builds relationships and leads to both repeat purchases and customer loyalty.

Question 55

Trawling is the process of coding data files with lifetime values and RFM codes.

Question 56

When customers make contact with a company,the customer's profile,history,and other information contained in the database should be available to the company contact person as he or she deals with the customer.

Question 57

Customer contact personnel with a company should not use RFM codes or lifetime values of individual customers to affect the way they deal with a customer since every customer should be treated equally.

Question 58

A database marketing program provides the tools to personalize messages and keep records of the types of communications that work and those that do not work.

Question 59

An important key to success in permission marketing programs is to make sure participants have actually agreed to participate and not been tricked into participating or signed up without their knowledge.

Question 60

By segmenting customers into lifetime value segments,a company's marketing department can personalize a different marketing program for each customer within the segments.

Question 61

Moderate users of a good or service are most likely to be enticed by a frequency program.

Question 62

CRM is built on two primary metrics: lifetime value of customers and RFM analysis.

Question 63

The number one reason individuals join an e-mail permission marketing programs is a chance to win prizes or cash in sweepstakes or contests.

Question 64

A frequency program is an incentive program designed to encourage customers to make repeat purchases.

Question 65

The first principle in developing a loyalty or frequency program is to design the program to enhance the value of what the product offers to customers.

Question 66

The greater the value of the reward in a frequency program,the more effort individuals will expend in the program to obtain the reward.

Question 67

The basic idea behind customer relationship management (CRM)is that companies can use databases to customize products and communications to customers that would result in higher sales and profits.

Question 68

The majority of customers enrolled in an e-mail permissions marketing program stop reading the permission e-mails because they are shoddy or irrelevant.

Question 69

For long-term success in permission marketing programs,customers should feel empowered,which means they have the power to choose the incentive they want to join the permission program.

Question 70

To maintain positive attitudes toward permission marketing programs,the rewards must be offered continually and not just at the beginning of the program.

Question 71

A program designed to build long term loyalty and bonds with customers through the use of a personal touch facilitated by technology is a customer relationship management (CRM)program.

Question 72

The higher an individual's income,the less likely it becomes that he or she will join a frequency or loyalty program.

Question 73

Share of a customer is a term that means the potential value that could be added to a given customer's value based on his or her percentage of purchases of a product with a particular vendor .

Question 74

RFM analysis is a useful tool for monitoring frequency programs.

Question 75

Companies develop frequency programs to encourage customer loyalty and to match or preempt the competition.

Question 76

When customers in a permission marketing program are given rewards during the program as well as at the beginning,it creates a feeling of reciprocity.

Question 77

To optimize permission marketing,firms must feature empowerment and reciprocity.

Question 78

The number one reason individuals remain loyal to a permission marketing program once they have joined is a chance to win prizes in a contest or sweepstakes.

Question 79

The lifetime value of a customer is based on the idea that customers generate revenues over their lifetimes with a company that are greater than a single transaction.

Question 80

With a frequency program,consumers are more likely to put forth greater effort to obtain luxury goods as opposed to necessity items.