Question 1

Vanguard's success is measured by which of the following?
A) Low redemption rates
B) High redemption rates
C) Low customer turnover
D) High customer turnover
E) Portfolio stability

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Question 2

Describe the "Iron" customer segment discussed by Zeithaml, Rust, and Lemon.

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Question 3

ING Direct could be called the fast-food model of consumer banking because it is about as no-frills as it gets.

Accepted Answer

ING Direct operates online and has minimal physical branches, offering simple and streamlined banking products with low fees and high interest rates. This can be compared to the fast-food industry's emphasis on speed, convenience, and simplicity.

Question 4

Which of the following is an example of a service that involves discrete transactions within a membership context?
A) Repair under warranty
B) Insurance
C) Radio station
D) Car rental
E) Pay phone

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Question 5

Which of the following is NOT an aspect of ING Direct's no-frills strategy?
A) High interest rates
B) Offers only a handful of basic products
C) Lures low-maintenance customers
D) Firing customers who don't fit the profile
E) Increased contact with the bank

Accepted Answer

ING Direct's no-frills strategy focuses on simplicity and efficiency, offering high interest rates, a limited product range, and targeting low-maintenance customers. It does not emphasize increased contact with the bank; rather, it aims to minimize operational costs and complexities.

Question 6

Describe how Vanguard Group keeps its costs down to attract the right type of customer.

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Question 7

Part of British Airways' strategy is that customers can earn BA points and air miles on other airlines.

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This statement is true. British Airways is a part of the oneworld airline alliance, which allows customers to earn and redeem points/miles across multiple member airlines. Additionally, British Airways has partnerships with other airlines outside of the alliance where customers can also earn points/miles.

Question 8

Define total relationship marketing.

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Question 9

Why do firms benefit from a price premium with loyal customers?

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Question 10

Explain what a "structural bond" means.

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Question 11

Vanguard Group is very careful about acquiring the right type of customer.

Accepted Answer

Vanguard Group is known for its focus on long-term, low-cost investments and is selective in the types of customers it attracts. The company targets individuals who are looking to invest for the long-term and are willing to hold diversified portfolios. Vanguard does not cater to day traders or those seeking quick profits through speculative investments.

Question 12

Which of the following is an example of a service that involves continuous delivery without a formal relationship?
A) Police protection
B) Movie theater
C) Restaurant
D) Banking
E) Insurance

Accepted Answer

Police protection provides a continuous delivery of service without a formal relationship with the individuals who benefit from it. People living in a certain area receive police protection regardless of whether they have a formal relationship with the police department or not.

Question 13

Customer satisfaction (based on the ACSI) is highly related to the stock price of individual firms.

Accepted Answer

Research has shown that there is a positive correlation between customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), and stock price. Companies with higher customer satisfaction tend to have higher stock prices, while those with lower customer satisfaction tend to have lower stock prices.

Question 14

Describe the wheel of loyalty.

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Question 15

Which of the following is NOT an example of common CRM applications?
A) Data collection
B) Data analysis
C) Market reinvestment
D) Sales force automation
E) Call center automation

Accepted Answer

Data collection, data analysis, sales force automation, and call center automation are all common CRM applications. Market reinvestment is not typically considered a CRM application.

Question 16

What are the two questions that need to be asked when analyzing the nature of a current relationship?

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Question 17

Give an example of a firm discussed in the chapter that successfully built a strategy on serving customer segments that were neglected by established players that didn't perceive them as sufficiently "valuable."

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Question 18

Define loyalty in a service context.

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Question 19

DHL's less powerful accounts generate significantly lower profitability than their major accounts.

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Question 20

Discuss the framework of the five key processes involved in a CRM strategy.

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Quiz 12: Managing Relationships and Building Loyalty

Vanguard's success is measured by which of the following?