Deck 6: Building Customer Relationships

Question 1

At the partnership stage of the customer relationship,the firm is most concerned with:

A) Creating a competitive advantage
B) Customer satisfaction
C) The enhancement of its relationship with the customer
D) Creating service loyalty
E) Customer retention

Answer 1

C

Question 2

The three types of benefits to organizations of maintaining and developing a loyal customer base are:

A) Economic benefits; customer behavior benefits; human resource management benefits
B) Economic benefits; confidence benefits; social benefits
C) Customer behavior benefits; human resource management benefits; social benefits
D) Special treatment benefits; economic benefits; customer behavior benefits
E) Confidence benefits; social benefits; customer behavior benefits

Answer 2

A

Question 3

Following the acquaintance relationship in the evolution of customer relationships is the customers as _____ stage.

A) Allies
B) Associates
C) Friends
D) Partners
E) Supporters

Answer 3

C

Question 4

How would a day care center operator benefit from the implementation of relationship marketing with the parents of three preschool children?

A) The children would benefit from socialization skills
B) The parents wouldn't have to go looking for a new facility to keep their children
C) The parents would ask for a reduced monthly rate
D) The parents would get to socialize with the other parents of children at their center
E) The parents would spread the word about their happiness with the services provided by the day care center

Question 5

_____ marketing focuses on keeping and improving current customers,rather than concentrating on acquiring new customers.

A) Transaction
B) Expansion
C) Relationship
D) Strategic
E) Benefit

Question 6

According to the _______,while advertising,sales and promotions pour profits into your company,there will always be some customer defection,which has the potential to grow larger.

A) Bucket theory of marketing
B) Iceberg principle of relationships
C) 80/20 principle
D) Service paradigm shift
E) Echo principle of marketing

Question 7

How would you describe the sustainability of competitive advantage in the acquaintance stage of the customer relationship evolution?

A) Non-existent because the company's primary goal is to induce trial
B) Generally low with some variation on how the competition creates unique value
C) High even though it depends on how unique the service offering is
D) Medium because customers are heterogeneous
E) Generally low because of the expense associated with mass customization

Question 8

The key to success in the _____ stage of the customer relationship is the firm's ability to use customer knowledge and information systems to deliver highly personalized and customized offerings.

A) Friendship
B) Ally
C) Colleague
D) Comrade
E) Partnership

Question 9

Beyond the specific inherent benefits of receiving service value,customers also benefit in other ways from long-term associations with firms.The three types of relational benefits for customers are:

A) Confidence benefits; economic benefits; behavior benefits
B) Management benefits; confidence benefits; economic benefits
C) Confidence benefits; social benefits; special treatment benefits
D) Confidence benefits; special treatment benefits; economic benefits
E) Social benefits; management benefits; behavior benefits

Question 10

A primary goal of firms at the friendship stage of the relationship is:

A) Customer retention
B) The creation of a unique product
C) Creating a competitive advantage through their marketing mix
D) Gaining a familiarity of how the customer creates its service offerings
E) The enhancement of customer relationships

Question 11

Elmer Jennings is a government auditor and works for the Bracken and Leach firm.He is the one who checks to see that city and county governments have complied with accounting principles.As an auditor,Jennings sometimes will spend six weeks in one office while he checks its accounting records.The closeness of the relationship that Jennings builds with the government employees he works with was realized by Bracken and Leach when Jennings left the firm,went to work for another one and took his clients with him.This is an example of how _____ benefits can be both helpful and harmful.

A) Confidence
B) Reliability
C) Social
D) Transactional
E) Economic

Question 12

In acquaintance relationships,firms generally focus on:

A) Creating service offering awareness
B) Inducing product trial and adoption
C) Gaining specific knowledge of customer's needs
D) Providing value comparable to the competition
E) Creating clear and easily comprehended communications

Question 13

In some long-term customer-firm relationships,a service provider may become part of a customer's __________ ,such as when a hairdresser serves as a personal confidant,or a proprietor of a local retail store is known a central figure in the neighborhood network.

A) Esteem benefits
B) Self-actualization
C) Social support system
D) Utility transfer
E) Assurance group

Question 14

According to the text,the relationships between businesses and their customers have the ability to evolve.In the first step of this evolution process,customers are identified as:

A) Acquaintances
B) Prospects
C) Strangers
D) Friends
E) Allies

Question 15

Kayla has been having her haircut by Duncan,a hairstylist at Studio 21 Salon,for five years.She has continued to use the same hairstylist even though the price of a haircut at Studio 21 Salon is $10 higher than at competing hair salons.Duncan stays up to date on the latest hairstyles and hair care products and Kayla always leaves the salon with a haircut she loves.Kayla realizes _____ benefits from her relationship with Duncan.

A) Reliability
B) Confidence
C) Transactional
D) Self-actualization
E) Transformational

Question 16

WedSafe is the name of a company that provides wedding insurance.For example,in the event that a wedding is called off,the couple can insure themselves against loss of their nonrefundable deposits.If WedSafe's primary marketing effort is to make engaged couples aware of its services,the company is in which stage of the customer relationship evolution?

A) Acquaintances
B) Leads
C) Strangers
D) Allies
E) Friends

Question 17

The primary goal of businesses that are in the first stage of their relationship with a customer is to:

A) Create financial bonds
B) Develop a long-lasting relational time horizon
C) Qualify the prospect as a customer
D) Initiate communications in order to attract them
E) Engage in problem solving sales

Question 18

The transition from the _____ stage to the _____ stage of the customer relationship requires the development of trust.

A) Customers as acquaintances; customers as friends
B) Customers as strangers; Customers as acquaintances
C) Customers as partners; customers as acquaintances
D) Customers as acquaintances; customers as strangers
E) Customers as friends; customers as strangers

Question 19

WedSafe is the name of one of several companies that provide wedding insurance.For example,in the event that a wedding is called off,the couple can insure themselves against loss of their nonrefundable deposits.If WedSafe's primary marketing effort is satisfying its customers,the company is in which stage of the customer relationship evolution?

A) Prospects
B) Leads
C) Friends
D) Associate
E) Acquaintances

Question 20

Which of the following is one of the ways an organization benefits from maintaining and developing a loyal customer base?

A) Employee retention
B) Customers' increasing expectations of more personalized service
C) A reactive market-growth strategy
D) The ability to engage in guerilla marketing
E) Competitor entrenchment

Question 21

Every Thursday afternoon for almost twenty years,Jasmine and Tanya have gotten a manicure at the same location.The manicure salon has changed ownership three times and has had two different names during that same period,but Jasmine and Tanya still find it a convenient place to meet and share news about friends and relatives.Jasmine and Tanya's relationship with the manicure salon exemplifies how a service provider uses _____ to support its customer retention strategy.

A) Economic bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Security bonds

Question 22

Since service companies have found that customers differ in their relationship value and that it may be neither practical nor profitable to meet or exceed all customers' expectations,they have divided their target markets according to:

A) Current and/or future profitability
B) Behavior
C) Usage
D) Volume
E) User characteristics

Question 23

Step-by-Step day care center offers parents several other services not normally offered by day care centers.A caterer is present every morning when the children are dropped off to take orders for supper.When the parents pick up their children in the evening,their supper is ready for them to take home,too.A hair stylist comes to the center once a week and cuts the hair of any child whose parents request this service.A photographer comes to the center every three months to take updated pictures of children whose parents don't have the time to take their children to the photography studio.In this way,Step-by-Step is using _____ to support its customer retention strategy.

A) Financial bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Security bonds

Question 24

A company that uses a four-tier scheme to segment is customers by profitability:

A) Is using usage segmentation
B) Identifies customers who need different sorts of attention
C) Can increase profitability by increasing sales to lower-level customers
D) Cannot use relationship marketing effectively
E) Is accurately described by all of the above

Question 25

Rather than treating all of its customers the same,FedEx categorized its customers internally as "the good,the bad,and the ugly" based on their ___________.

A) Loyalty
B) Profitability
C) Attitude
D) Volume
E) User characteristics

Question 26

According to the text,the relationship value of a customer is not influenced by:

A) The average revenues generated per relevant time period over the lifetime
B) Sales of additional products and services over time
C) Referrals generated by the customer over time
D) The length of the average customer "lifetime"
E) The communication strategy

Question 27

_____ arise(s)when the customer is required to pay a penalty to switch providers.

A) Fixed costs
B) Legal inertia
C) Financial inertia
D) Contractual costs
E) Opportunity costs

Question 28

Every time Tom and Betty stay at a Marriott Hotel,they earn points that can be used at a later date for free rooms,meals,and other hotel amenities.Marriott is using _____ to implement its retention strategy.

A) Financial bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Security bonds

Question 29

Miller & Sons Funeral Home has handled all of the funeral needs for the Atwater family since 1957.The family believes that Miller & Sons offers them good value for their dollar and the Miller sons and the Atwater boys played on the same high school football team.Miller & Sons Funeral Home is using _____ to implement its customer retention strategy.

A) Economic bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Security bonds

Question 30

Retention strategies based on social bonds:

A) Build long-term relationships through social and interpersonal as well as financial bonds
B) Use a strategy of mass customization
C) Are concerned about maintaining customer intimacy
D) Are the most difficult of the retention strategies to initiate
E) Create high opportunity costs

Question 31

In many instances,customers develop loyalty to an organization in part because of costs involved in changing to and purchasing from a different firm.These costs are called:

A) Financial inertia
B) Opportunity costs
C) Switching costs
D) Fixed costs
E) Retained costs

Question 32

The _____ of a customer is a concept that looks at customers from the perspective of their lifetime revenue or profit contributions to a company.

A) Relationship value
B) Attractiveness index
C) Profit performance quotient
D) Calculated risk
E) Loyalty factor

Question 33

Retention strategies built around financial bonds:

A) Provide long-term profit increases
B) Use price as the primary marketing mix element
C) Are difficult to initiate
D) Provide long-term competitive advantage
E) Have a high degree of service customization

Question 34

Participants in the Coffee Café's loyalty program get a free large cup of coffee after every 10^th cup of coffee purchased.After purchasing 100 cups of coffee from the Coffee Café,loyalty program participants receive a $10 gift certificate good for food and beverage items or merchandise.Coffee Café uses _____ to encourage its customers to remain loyal.

A) Financial bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Security bonds

Question 35

Salespeople for college texts call on college instructors to sell them on using a particular text for their classes.Improvements in efficiency have led some publishers to stop making sales calls altogether on smaller colleges.It is a much better use of the sales force's time to call on schools with large classes and big adoption rates.From the customer's point of view,this application of the profitability tier:

A) Could cause resentment
B) Will not cause any problems
C) Simply increases the importance of word-of-mouth communication
D) Is not profitable
E) Creates across-the-board customer enhancement

Question 36

The term customer intimacy is most closely related to the establishment of _____ bonds.

A) Financial
B) Social
C) Customization
D) Structural
E) Security

Question 37

Molly and Tom are getting married.Last month they hired a caterer for the wedding reception.This month they attended a wedding for which their chosen caterer had provided food,dishes,and flowers.Neither thought the food was good and Molly worried that the dishes looked cheap.However,they feel they cannot change caterers at this date due to the large deposit required by the catering company when it took the job.Molly and Tom do not want to pay:

A) Extraneous expenses
B) Opportunity costs
C) Switching costs
D) Fixed costs
E) Retained costs

Question 38

The development of strong customer relationships is strongly influenced by:

A) Legal barriers to loyalty programs
B) The composition of the buying center
C) Barriers the customer faces in leaving a relationship
D) Differences in organizational cultures
E) All of the above

Question 39

Every month the pest exterminator does a monthly spraying at Jean Poole's house.Every month Jean gripes that she is being ripped off by the exterminating company and that she's going to find a new one.But she never does change service providers due to:

A) The iteration principle
B) Customer inertia
C) Service standardization
D) Switching costs
E) Process reciprocity

Question 40

Moonlight Catering has increased the deposit it requires before agreeing to cater an event to $300.This amount is nonrefundable and must be paid when Moonlight Catering is hired for the job.This increase in deposit will help Moonlight Catering achieve its goal of:

A) Customer enhancement
B) Prospecting
C) Increasing its value-added service
D) Customer satisfaction
E) Customer retention

Question 41

When customers and firms reach the friend level of their customer relationship,firms generally focus on providing value comparable to the competition.

Question 42

The ability to segment customers narrowly based on profitability implications may raise questions of privacy for customers.

Question 43

Well-implemented retention strategies will have long-term success even if there is no solid base of service quality and customer satisfaction to build on.

Question 44

Pandora is an Internet-based music discovery service that helps its customers find and enjoy music that they like.A customer can create up to 100 unique "stations" by identifying favorite songs or artists and then Pandora's expert systems analyzes what they like and provides suggestions based on this analysis.Pandora is using ____________ to develop and maintain customer relationships.

A) Customization bonds
B) Social bonds
C) Niche marketing
D) Focused marketing
E) Structural bonds

Question 45

_________ are created by providing services to the client that are designed right into the service delivery system.

A) Financial bonds
B) Customization bonds
C) Individualization bonds
D) Structural
E) Social bonds

Question 46

With relationship marketing,customers receive the specific inherent benefits of receiving service value and nothing more.

Question 47

Aramark is a food service company that supplies meals to more than 200,000 hospital patients daily.To improve its service,it created a database that tracks patient preferences individually by hospitals,regionally,and nationally.The accumulated database is used to provide better menus.Aramark's kitchen staff deliver the food and are referred to as hosts.All hosts have a minimum of 40 hours of training to teach them how to be courteous,efficient,and quick.These trained hosts deliver customized meals from carts preloaded according to room number.According to patient surveys,Aramark has boosted patient satisfaction by almost 10 percent by providing customized meals.Aramark is using _____ in its customer retention strategy.

A) Financial bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Heterogeneity

Question 48

Regency Dry Cleaners operates in a medium-sized community.Its customers all live within a 20-mile radius of the cleaners.Regency provides its regular customers with several alternative pickup and delivery schedules rather than a single weekly pickup and delivery.Regency's driver will pickup clothes in the morning and deliver them back clean in the afternoon if that is what a customer needs.Regency has found the increase in its total number of customers because of this service more than pays its additional operation expenses.Regency has built its customer retention strategy around:

A) Customization bonds
B) Social bonds
C) Niche marketing
D) Focused marketing
E) Structural bonds

Question 49

New Bedford College has a two-year masters degree program designed for special education teachers.Thirty-five students enter the program each fall.The education department requires that the 35 students take the same classes.Classes are made available in sequence.If Beth wanted to take only one special education class to get her a teaching certificate in learning disabilities (LD),she would be unable to because she would not be able to participate in any carry-over projects from previous classes (This is a common teaching tool for the New Bedford education department faculty.).New Bedford College will avoid setting up a relationship with Beth because:

A) She is in the wrong segment
B) She and others like her are compatible
C) Her needs are homogeneous with many others
D) She would be a difficult customer
E) She would not be profitable in the short-run

Question 50

Which of the following is NOT a reason why a service firm may avoid a customer relationship with a particular customer?

A) Customer is in the wrong segment
B) Customer is not divisible
C) Customer is not always right
D) Customer is not profitable in the long run
E) Customer is difficult

Question 51

There is no way to calculate the relationship value of a customer.

Question 52

Sometimes firms have service encounters that fail because of ___________,who intentionally or unintentionally act in a way that is disruptive,rude,or aggressive.

A) Profitable customers
B) Dysfunctional customers
C) Friends
D) Strangers
E) Heterogeneous customers

Question 53

The primary goal of relationship marketing is to build and maintain a base of profitable and committed customers through attraction,retention,and customer enhancement.

Question 54

Relationship marketing essentially represents a paradigm shift within marketing - away from an acquisitions/transaction focus toward a retention/relationship focus.

Question 55

United Jersey Bank offers customers,who have a combined balance of $3000 or more in a United Jersey Checking Account and Preferred Money Market Account,a service called United Jersey Preferred Banking.This service is designed to make banking more convenient and profitable for customers.United Jersey Preferred Banking eliminates monthly maintenance fees,provides unlimited free transactions at ATMs,preferred rates on personal loans,higher interest rates on savings with higher balances,and a consolidated monthly statement.United Jersey Bank does not offer United Jersey Preferred banking to customers with a combined balance of less than $3000 in a United Jersey Checking Account and Preferred Money Market Account since these customers are:

A) In the wrong segment
B) Not divisible
C) Not profitable in the long run
D) Known as difficult customers
E) None of the above

Question 56

With relationship marketing,customers can develop social relationships with their service providers,which makes it less likely that they will switch to a competitor.

Question 57

Customer retention strategies based on customization bonds:

A) Do not exist in business-to-business marketing
B) Create tying contracts,refusals to deal,exclusive dealing,and areas of gray marketing
C) Are not concerned with the pricing element of the marketing mix
D) May include the customer intimacy approach
E) Support transactional marketing as well as relationship marketing

Question 58

Often,_____ are created by providing customized services to the client that are technology based and make the customer more productive.

A) Financial bonds
B) Social bonds
C) Customization bonds
D) Structural bonds
E) Heterogeneity

Question 59

For the organization,relationship marketing increases customer purchases,lowers costs,and creates free word-of-mouth advertising.

Question 60

The four-tiered system for measuring customer profitability uses usage segmentation.

Question 61

Once a company has entered into a relationship with a customer,that relationship should never end.

Question 62

Which retention strategy relies primarily on financial incentives?

Question 63

Describe the types of social bonds that can bind customers to the firm.

Question 64

Why are Level 4 retention strategies the most difficult to imitate?

Question 65

What are some influences on the lifetime or relationship value of a customer?

Question 66

What is the primary goal of relationship marketing?

Question 67

A theater that was once very popular is having decreased attendance at its movies even though its owner is providing his audience with the kind of movies they have enjoyed in the past.He is thinking about offering a program where customers earn free snacks with the purchase of a set number of tickets.Why might it be inappropriate for a movie theater to implement a financial rewards loyalty program?

Question 68

Jade Taylor has run an advertising agency long enough to understand that the customer is not always right.He is interested in identifying his profitable customers.Define the four customer profitability tiers that might help Jade to analyze his customer base?

Question 69

What are the three types of benefits customers enjoy through relationship marketing?

Question 70

Discuss the challenges that companies face when ending customer relationships.

Question 71

Level 1 retention strategies are very useful in creating a long-term competitive advantage.

Question 72

What are the two types of switching barriers that oftentimes prevent dissatisfied customers from switching providers?

Question 73

To be successful,a service provider must accept the fact that the customer is always right.

Question 74

What are four customer goals for organizations that engage in relationship marketing?

Question 75

List the four stages in the evolution of customer relationships.

Question 76

Gracie gets her haircut at a salon almost twenty miles from her house because the price is low and because Gracie went to school with the woman who owns the salon.What kind of retention strategy is being used in this example?

Question 77

What are the three types of benefits firms enjoy through relationship marketing?

Question 78

Social bonds alone may not tie the customer permanently to the firm,but they are much more difficult to imitate than financial incentives.

Question 79

Bundling and cross-selling are ways to implement a Level 1 retention strategy.

Question 80

What are three types of customer relationships that may not be beneficial to the firm?