Question 1

Transaction-based marketing depends on the development of social ties between buyers and sellers.

Accepted Answer

Transaction-based marketing focuses on single, short-term sales rather than building long-term relationships with customers.

Question 2

It costs millions in advertising to lure new customers to cosmetic counters. A cosmetics company CEO recognized that women prefer to be loyal to their cosmetic brands and, in doing so, would need products that take a woman through her lifetime, changing as her skin changes. By following this philosophy, the company began practicing one of the main tenets of relationship marketing.

Accepted Answer

This approach focuses on long-term customer engagement and loyalty, which are core principles of relationship marketing, rather than just making a one-time sale.

Question 3

The human resources director at Lowe Locks, Inc. has decided to restructure the evaluation process. She recommends that a percentage of feedback come from input provided by suppliers and distributors of their products. This restructuring process indicates that the focus of Lowe Locks is on transaction-based marketing.

Accepted Answer

The restructuring process indicates a focus on relationship-based marketing, as it involves gathering feedback from suppliers and distributors, which are key stakeholders in the business relationship.

Question 4

Which statement best describes long-term customers?
A) They are less valuable to a company than short-term customers.
B) They are more difficult to deal with than short-term customers.
C) They are expensive investments because the upkeep is costly.
D) They are more valuable assets than new ones.

Accepted Answer

Long-term customers are considered more valuable assets than new ones because they tend to buy more over time, are cheaper to sell to since they already know the product or service, and can provide valuable referrals to other potential customers. This increases their lifetime value to the company.

Question 5

The ultimate transaction-based relationship is between a customer and a vending machine.

Accepted Answer

In a transaction-based relationship, the interaction is purely transactional without any personal connection or ongoing relationship. A vending machine interaction epitomizes this as it involves a simple exchange of money for goods with no personal interaction or relationship development.

Question 6

Internal marketing involves selling products to employees of the firm at a discount.

Accepted Answer

Internal marketing is the process of promoting and communicating an organization's mission, values, and goals to its employees to increase their engagement, motivation, and commitment to the company. It does not involve selling products to employees at a discount.

Question 7

In relationship marketing, the focus is on enticing a buyer to make an immediate purchase based on factors such as low price, convenience, or packaging.

Accepted Answer

Relationship marketing focuses on building long-term relationships with customers, rather than just making an immediate sale. It involves establishing trust, communication, and personalized experiences to keep customers coming back and becoming loyal to a brand.

Question 8

The factor that moves most companies from relationship marketing to transaction-based marketing is the realization that getting new customers is more profitable than serving old ones.

Accepted Answer

Most companies move from transaction-based marketing to relationship marketing because they realize that retaining existing customers is often more profitable and cost-effective than acquiring new ones. Relationship marketing focuses on long-term customer engagement and loyalty, which can lead to repeat business and referrals, ultimately being more beneficial for the company.

Question 9

Internal marketing is equally as important as external marketing because studies show that 40 percent of all consumer product sales come from employees and their extended families.

Accepted Answer

Internal marketing is crucial for building employee engagement, loyalty, and advocacy, but the claim that 40 percent of all consumer product sales come from employees and their extended families is not a widely recognized statistic in marketing literature. Internal marketing primarily focuses on motivating employees and ensuring they are aligned with the company's goals, rather than directly driving a significant portion of consumer sales.

Question 10

Since the Industrial Revolution, most manufacturers have focused on making products and then promoting them to customers in hopes of selling enough to cover costs and earn a profit.

Accepted Answer

This approach is known as the traditional manufacturing and sales model, where the focus is on product creation followed by marketing and sales efforts to ensure profitability.

Question 11

Transaction based marketing emphasizes retaining customers over making a sale.

Accepted Answer

Transaction based marketing focuses on making immediate sales rather than building long-term relationships with customers.

Question 12

Transaction-based marketing recognizes and builds on the concept that providing added value to customer transactions through superior customer service improves customer retention and referrals.

Accepted Answer

Transaction-based marketing focuses on single, short-term transactions rather than building long-term relationships with customers. It does not emphasize added value through superior customer service for improving customer retention and referrals; relationship marketing does.

Question 13

Relationship marketing views the buyer-seller relationship as equal partners, thus motivating customers to enter into a long-term cycle of repeat purchases, customer satisfaction, and profitability.

Accepted Answer

Relationship marketing focuses on building long-term relationships with customers, emphasizing customer satisfaction, loyalty, and repeat business, rather than just making individual sales. This approach considers both the buyer and seller as equal partners in a mutually beneficial relationship, aiming to create a cycle of continuous business and profitability.

Question 14

One basic element of relationship marketing involves putting customers at the centre of a company's efforts. Companies are then required to gather information about customers, analyze the data, and monitor customer satisfaction.

Accepted Answer

Relationship marketing focuses on long-term customer engagement and loyalty, which involves understanding customer needs and preferences through data collection and analysis to ensure their satisfaction and foster a positive, ongoing relationship.

Question 15

How does a cooperative relationship formed between businesses compare to a joint venture?
A) It typically involves forming a new business unit.
B) It may involve partners taking ownership positions.
C) It is usually less formal than a joint venture.
D) It would not be typified by a joint, new-product development team.

Accepted Answer

Cooperative relationships between businesses are generally less formal than joint ventures. In a joint venture, companies often create a new entity and share in its ownership and governance, which involves more formal agreements and structures. Cooperative relationships can involve various forms of collaboration without creating a new entity or formal partnership structure.

Question 16

The sale of a product to a customer via a vending machine is typical of a transaction-based relationship.

Accepted Answer

A vending machine is a self-service machine that allows customers to purchase products without any interaction with a salesperson. The transaction is solely based on the customer's decision to buy the product and the machine's ability to accept payment and dispense the item. Therefore, it is a transaction-based relationship.

Question 17

What do lifetime-value-of-a-customer and payback calculations recognize?
A) that customers will always be there, regardless of the industry or product
B) that customer complaints have little relevance to how people actually behave
C) that long-term customers are usually more valuable than new ones
D) that customer satisfaction is not the determinant of how loyal the customer will be

Accepted Answer

Lifetime-value-of-a-customer and payback calculations recognize that long-term customers are usually more valuable than new ones because they tend to buy more over time, can cost less to serve, and may generate additional business through referrals.

Question 18

What is one of the most important measures for evaluating customer relationship programs?
A) weekly cost of program administration
B) average amount of each transaction the program generates
C) lifetime value of a customer
D) yearly income the program provides

Accepted Answer

The lifetime value of a customer is a crucial measure for evaluating customer relationship programs because it assesses the total worth of a customer to a business over the entirety of their relationship, providing a comprehensive view of the customer's value beyond single transactions or short-term income.

Question 19

The gift shop at Vancouver International Airport services tourists from countries all over the world. Although sales personnel are courteous, the relationship with customers is primarily transaction based.

Accepted Answer

The nature of a gift shop, especially in an international airport setting like Vancouver International Airport, is to cater to tourists from various countries, focusing on quick, transactional exchanges rather than building long-term customer relationships.

Question 20

Creating long-term relationships with customers leads to improved products and better sales, but it comes at a high price for the company and, ultimately, the consumer.

Accepted Answer

Building long-term relationships with customers can actually lead to cost savings for the company through customer retention, reduced marketing expenses, and valuable feedback for product improvement, which can also benefit consumers through better products and services.

Quiz 17: Relationship Marketing and Customer Relationship Management CRM