Deck 4: Creating Long-Term Loyalty Relationships

Question 1

The Net Promoter Score is calculated by subtracting ________ from ________.

A) promoters; detractors
B) detractors; promoters
C) detractors; passively satisfied customers
D) passively satisfied customers; detractors
E) passively satisfied customers; promoters

Answer 1

B

Question 2

TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of TBS Bikes is "speed." Surami is a five-gear bike, and apart from speed, the company promises to include other features such as safety, good performance, and pollution control features. This describes the ________ of the bike.

A) total customer cost
B) customer-perceived value
C) value-delivery system
D) value proposition
E) total customer benefit

Answer 2

D

Question 3

________ is the difference between the prospective customer's evaluation of all benefits and all costs of an offering and the perceived alternatives.

A) Perceived usefulness
B) Failure avoidance rate
C) Total customer benefit
D) Customer-perceived value
E) Competitors' market share rate

Answer 3

D

Question 4

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

Question 5

Which of the following is the best method of recovering customer goodwill?

A) sending service people to conduct door-to-door surveys
B) contacting the complaining customer as quickly as possible
C) identifying prospective customers from the customer database
D) customizing products according to individual customer need
E) defining and measuring the customer retention rate

Question 6

________ can be 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) Value proposition
B) Loyalty
C) Satisfaction
D) Respect
E) Customer value

Question 7

A company's ________ includes all the experiences the customer will have on the way to obtaining and using the offering.

A) value proposition
B) value delivery system
C) customer-value analysis
D) total customer benefit
E) total customer cost

Question 8

Loyalty is a person's feelings of pleasure or disappointment that result from comparing a product's perceived performance to expectations.

Question 9

Total customer satisfaction is measured based on the relationship of ________.

A) expected value and total customer benefit
B) perceived performance and expectation
C) advertised outcomes and real outcomes
D) past experience and present experience
E) customer attitude and salesperson's attitude

Question 10

Rade and Talion are competitors in the business of manufacturing wrist watches. While Rade promises to deliver design and quality to its customers, Talion promises to deliver durability and cost effectiveness. When both these companies deliver their respective promised qualities, they are delivering ________.

A) performance quality
B) customer support
C) unique quality
D) accuracy quality
E) conformance quality

Question 11

Which of the following is True for customer-perceived value?

A) It is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a product.
B) It is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering.
D) It is the net present value of the stream of future profits expected over the customer's lifetime purchases.
E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies.

Question 12

Which of the following is a way for companies to increase customer-perceived value?

A) increase the psychological investment associated with buying
B) increase the buyer's time and energy investment
C) increase total customer benefit by improving economic and functional benefits
D) decrease total customer benefit by replacing psychological benefits of the product
E) decrease the difference between total customer benefit and total customer cost

Question 13

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

Question 14

The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of a market offering is called the ________.

A) activity-based cost
B) customer profitability analysis
C) total customer cost
D) product life-cycle cost
E) direct product profitability

Question 15

Of customers who register a complaint, ________.

A) all will do business with the company again because they are unwilling to dedicate the effort required to find another vendor
B) none will do business with the company again
C) customers whose complaints are satisfactorily resolved are more likely to provide publicity than those who are dissatisfied
D) the speed of resolution has no impact on the likelihood of repeat business
E) some will do business with the company again if their complaint is resolved

Question 16

One of the ways a company like Caterpillar could increase the customer-perceived value of an offer, relative to a competitor like Komatsu, is to increase the total customer benefit by improving psychological benefits of its product, services, people, and/or image.

Question 17

________ is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering.

A) Total customer cost
B) Total customer benefit
C) Total benefits of ownership
D) Value proposition
E) Value delivery system

Question 18

Sammy's is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its marketing efforts on all the experiences the customers will have on the way to obtaining their food order and eating it. Hence, Sammy's is focusing its marketing efforts on its ________ system.

A) horizontal marketing
B) cost versus benefit
C) consumption
D) marketing channel
E) value delivery

Question 19

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

Question 20

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) customer profitability analysis
D) customer equity
E) customer lifetime value

Question 21

Consumers' expectations result exclusively from past buying experiences.

Question 22

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

Question 23

Explain customer-perceived value.

Question 24

The 80-20 rule reflects the idea that ________.

A) 20 percent of the company's profits are generated by the top 80 percent of customers
B) the top 20 percent of customers are highly satisfied and 80 percent of customers will recommend the company to a friend
C) 20 percent of customers are unprofitable, and 80 percent make up a company's profits
D) the top 20 percent of customers often generate 80 percent of the company's profits
E) any new product will be accepted by 20 percent of the customers immediately, but 80 percent of the customers will be up for grabs throughout the product's life cycle

Question 25

Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT?

Question 26

Which of the following is True for activity-based costing (ABC)?

A) ABC considers the real costs associated with each product.
B) With ABC, the company can estimate all costs coming from the customer, less revenue.
C) The tools of ABC can be used to conduct customer profitability analysis.
D) It identifies the costs of products and services based on the revenue they generate.
E) ABC allocates indirect costs in proportion to direct costs.

Question 27

Explain total customer satisfaction.

Question 28

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

Question 29

Identify ways in which companies facing customer complaints can recover customer goodwill.

Question 30

Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. Though Keiko's products are priced lower than Global's, the non-monetary costs of doing business with Keiko may lead LZT to choose Global Tech. What can Keiko do to obtain LZT's order?

Question 31

A customer's profitability is judged on the basis of the lifetime stream of revenue and cost, not the profit from a particular transaction.

Question 32

A profitable customer yields a ________.

A) cost stream that exceeds by an acceptable amount his revenue stream
B) revenue stream that exceeds the company's cost stream
C) cost stream that exceeds the company's revenue stream
D) revenue stream that exceeds by an acceptable amount his cost stream
E) revenue stream that equals the company's cost stream

Question 33

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.

Question 34

________ lines up customers along columns and products along rows to show the profitability of selling a product to a customer.

A) Mystery shopping
B) Activity-based costing
C) Customer profitability analysis
D) Customer lifetime value
E) American Customer Satisfaction Index

Question 35

Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Question 36

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

Question 37

Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing.

Question 38

A ________ 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 that customer.

A) prospector
B) profitable customer
C) market challenger
D) market nicher
E) pioneer customer

Question 39

________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.

A) Activity-based costing
B) Customer lifetime value
C) Customer value analysis
D) Customer-perceived value
E) Customer profitability analysis

Question 40

Customer profitability analysis is best conducted with the tools of an accounting technique called ________.

A) input-output analysis
B) factor analysis
C) revenue-based costing
D) activity-based costing
E) future date costing

Question 41

Which of the following can a company do to reduce defection?

A) Attract new customers to try out the company's products.
B) Increase customer lifetime value by increasing the non-monetary costs of products.
C) Enhance the growth potential of existing customers through cross-selling and up-selling.
D) Distinguish the causes of customer attrition and identify those that can be managed better.
E) Make low-profit customers more profitable or terminate the relationship.

Question 42

________ marketing is the practice of sending messages only when consumers express a willingness to become more involved with the brand.

A) Relationship
B) Permission
C) Cause
D) Defensive
E) Horizontal

Question 43

Rachel and Josh are on vacation in Hawaii. When they arrived at the hotel, they were offered chilled juice. Their check-in formalities were handled by the staff. When they entered their room, they saw that chocolates had been placed on the pillows and a flower arrangement on the table. These are examples of customer ________.

A) lifetime value
B) perceived value
C) value analysis
D) profitability analysis
E) touch points

Question 44

Another term for high customer ________ is customer churn.

A) retention
B) defection
C) value
D) perception
E) belief

Question 45

A customer ________ is any occasion on which a customer encounters the brand and product from actual experience to personal or mass communications to casual observation.

A) touch point
B) point of order
C) point of difference
D) pivot point
E) point of parity

Question 46

The Marketing Funnel (Scenario)
Amy and Jack were loyal customers of GreenFoods, a local grocery store. However, after a couple of incidents where they had to return products that were stale and out of date, the couple decided to try out VeggiesNmore, a chain store that recently opened in town. Both Amy and Jack must move through each stage in the marketing funnel before becoming loyal customers.
Amy is in the "aware" stage of the marketing funnel when she says ________.

A) she can try shopping at VeggiesNmore while simultaneously exploring other stores in the neighborhood
B) she was informed about VeggiesNmore by her colleague at work
C) she regularly shops from VeggiesNmore
D) she shops from VeggiesNmore as far as the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore

Question 47

Some customers inevitably become inactive or drop out. The challenge for marketers is to reactivate them through ________ strategies.

A) win-back
B) retention
C) defection
D) sell-out
E) recuperation

Question 48

The aim of customer relationship management is to produce high customer ________.

A) integrity
B) loyalty
C) innovation
D) liability
E) equity

Question 49

________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty.

A) Customer relationship management
B) Customer lifetime value
C) Customer profitability analysis
D) Customer satisfaction analysis
E) Customer-value delivery

Question 50

Club membership programs that are open to everyone who purchases a product or service ________.

A) are more powerful long-term loyalty builders than limited-membership clubs
B) will not help a company attract customers from competitors
C) prevent those with only a fleeting interest in a company's products from joining
D) are useful for building a database of customers but are not very good as long-term loyalty builders
E) are useless unless there are fees and membership conditions

Question 51

The Marketing Funnel (Scenario)
Amy and Jack were loyal customers of GreenFoods, a local grocery store. However, after a couple of incidents where they had to return products that were stale and out of date, the couple decided to try out VeggiesNmore, a chain store that recently opened in town. Both Amy and Jack must move through each stage in the marketing funnel before becoming loyal customers.
Jack has shopped at VeggiesNmore. He was happy with the experience and thought that this could be an alternative to GreenFoods. However, he is also eager to try out other stores in the neighborhood. He is in the ________ stage of the marketing funnel as far as shopping at VeggiesNmore is concerned.

A) aware
B) open to trial
C) most often used
D) nonrejecter
E) regular user

Question 52

What technique is used for customer profitability analysis?

Question 53

Cable TV operators and cellular carriers suffer from high levels of ________, or customer defections.

A) customer retention
B) customer churn
C) detraction
D) share-of-wallet
E) customer complaints

Question 54

Customer lifetime value describes the net present value of the stream of future profits expected over the customer's lifetime purchases.

Question 55

BMW is ________ the customer experience when it offers 500 side-mirror combinations, 1,300 front bumper combinations, and 9,000 center-console combinations and provides new buyers a video link to watch their car being "born" while waiting for delivery.

A) identifying
B) synthesizing
C) integrating
D) acknowledging
E) personalizing

Question 56

Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps banks to ________.

A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers

Question 57

To exploit the power of social media, marketers need to create tangible value for consumers, which can come from all of the following EXCEPT ________.

A) discounts
B) coupons
C) information
D) solicitations
E) special offers

Question 58

Which of the following is a policy a store can adopt to make low-profit customers more profitable?

A) 2Wheels sends birthday greetings to its best customers and gives them discounts on merchandise.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.

Question 59

Companies provide rewards to customers who buy often and in substantial amounts. These reward schemes are referred to as ________ programs.

A) benefit
B) frequency
C) satisfaction
D) profitability
E) quality

Question 60

A customer touch point for Abacus Airlines would be an item such as ________.

A) ease of access to the airport
B) a mechanic's ability to service the airplanes
C) the reservations desk
D) the value of air travel versus surface transportation
E) competency of a travel agent

Question 61

The subscription manager at Cosmopolitan magazine keeps track of the subscription renewal rate, which is a good measure of customer lifetime value.

Question 62

Berry's is a chain of shoe stores. The marketing team suggested that the company use permission marketing. How can this benefit the company?

Question 63

Berry's is a chain of shoe stores. The company recently reviewed its customer relations strategy and suggested that the brand communication be consistent across all customer touch points. What are the various touch points for Berry's?

Question 64

The management of Keiko has learned that the company risks losing a long-time customer, LZT, to a competitor. What basic measures can Keiko take to build loyalty with LZT?

Question 65

Bicycle store 2Wheels wants to attract and retain customers to maximize customer profitability. What are the basic tactics it can use to manage customers that vary in loyalty, profitability, risk, and other factors?

Question 66

Bicycle store 2Wheels notices that it has a high proportion of low-profit customers, but the store doesn't want to terminate the customer relationship. What can 2Wheels do to make these customers more profitable?

Question 67

Villy Custom Bicycles come in a variety of mix and match colors and styles so consumers can design their own. This is an example of personalizing the product.

Question 68

Are complaints a good indicator of customer satisfaction? Why or why not?

Question 69

To increase customer loyalty, 2Wheels wants to start a club for its dedicated customers, but wants to make sure that only members who are want to participate in activities join the club. What can it do to ensure this?

Question 70

________ marketing is about making sure the brand and its marketing are as personally relevant as possible to as many customers as possible-a challenge, given that no two customers are identical.

A) Personalizing
B) Permission
C) Identification
D) Database
E) Integrated

Question 71

Clubs that are open to everyone who purchases a product or service are good for building a customer database.

Question 72

Give an example of how a hotel can generate customer loyalty at a "customer touch point".

Question 73

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

Question 74

A key driver of shareholder value is the aggregate value of the customer base. Identify the five strategies employed by successful companies to improve the value of their customer base by attracting and retaining customers.

Question 75

A company should try to retain a customer only as long as the cost to discourage defection is lower than the lost profit.

Question 76

Explain permission marketing.

Question 77

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

Question 78

Permission marketing presumes that consumers know what they want.

Question 79

According to IBM, what do firms need to do to exploit the power of social media?

Question 80

The marketing funnel identifies the profitability of consumers at each stage in the decision process.