Question 1

________ is the financial value of a customer throughout the lifetime of the customer relationship.

Accepted Answer

Customer equity refers to the financial value of a customer throughout the lifetime of their relationship with a company, taking into account factors such as purchase history, customer loyalty, and potential for future business. Share of customer refers to the portion of a customer's purchasing that a company has captured, while the customer perceptual map is a visual representation of how customers perceive different brands and products in a market. CRM (customer relationship management) refers to the strategies and technologies used by companies to manage their interactions with customers. The 80/20 rule, also known as the Pareto principle, suggests that 80% of a company's revenue comes from 20% of its customers.

Question 2

A retailer that wanted to target prospective grooms between the ages of 21 and 40 who are within six months of their marriage is using ________ segmentation to define its target market.

Accepted Answer

Demographic segmentation is based on factors such as age, gender, income, education, and marital status. In this case, the retailer is targeting a specific age range (21-40) and marital status (within six months of marriage), which are both demographic factors.

Question 3

CRM firms focus on increasing their ________, not share of market.

Accepted Answer

CRM firms focus on increasing their share of customers, by acquiring new customers, retaining existing ones, and increasing customer loyalty. They want to increase their customer base and the value of each customer relationship rather than simply gaining a larger share of the overall market.

Question 4

Some people want healthy cereal that will help them lose weight or possibly prevent certain kinds of cancer.Some want presweetened cereal.Some want fruits and nuts in their cereal.Some people want whole-wheat cereal while others want rice cereal.There are some who like hot cereal and others who like to eat their cereal right out of the box.The diversity of consumers for cereal is an example of ________.

Accepted Answer

The diversity of consumers for cereal is an example of market fragmentation, which refers to the existence of diverse consumer needs and preferences in a market. The different preferences for cereal demonstrate that there is no single type of cereal that will satisfy all consumers, and companies must offer a variety of options to meet the needs of different segments within the market. Market aggregation, market similitude, economic aggregation, and disintermediation are not applicable in this context.

Question 5

Which of the following statements about the lifetime value of a customer is true?

Accepted Answer

CRM (Customer Relationship Management) helps companies identify their customers' lifetime value by analyzing data such as purchase history and customer behavior. This information can be used to personalize marketing efforts and create targeted promotions, ultimately increasing the lifetime value of the customer. Option B is incorrect because not all customers have the same lifetime value; some may make purchases more frequently or spend more money. Option C is incorrect because calculating lifetime value involves complex calculations and data analysis. Option D is incorrect because a company can strive to increase both customer share (the percentage of the market they have) and lifetime value simultaneously. Option E is incorrect because while the brand may influence the perceived value of a customer, it is not the sole factor in determining their lifetime value.

Question 6

Which of the following is true of perceptual maps?

Accepted Answer

Perceptual maps are created based on consumer research and provide a visual representation of how consumers perceive different products or brands in the market. They are not limited to the new product development process and can be used to identify consumer preferences in terms of various attributes such as price, quality, and features. While they are not the only method for predicting product success, they can be a useful tool for understanding consumer behavior and making strategic marketing decisions. Additionally, perceptual maps can be used in both business-to-consumer and business-to-business marketing contexts.

Question 7

Many marketing experts advocate ________ programs that allow a company to talk to individual customers and adjust elements of the marketing mix to satisfy the specific needs of each customer.

Accepted Answer

Customer relationship management (CRM) programs allow companies to gather data about individual customers and use that information to tailor marketing efforts to meet the specific needs and preferences of each customer. This helps increase customer satisfaction, loyalty, and retention. Psychographic segmentation can be a component of CRM, but it does not necessarily involve adjusting elements of the marketing mix for individual customers. Transactional management, B2B marketing, and C2C marketing do not relate specifically to tailored marketing efforts for individual customers.

Question 8

Demographic variables are so frequently used in market segmentation because they ________.

Accepted Answer

Demographic variables are easy to measure in comparison to many other methods of market segmentation, making them a popular choice for marketers.

Question 9

A company's first step in customer relationship management should be to ________.

Accepted Answer

The first step in customer relationship management should be to identify customers and get to know them in as much detail as possible. This allows the company to tailor its approach to each customer, build rapport and trust, and ultimately provide better service and support. Ranking customers in terms of sales volume or identifying transactions that will be abandoned may have some value, but these efforts will be much more effective when combined with a deep understanding of individual customers. Similarly, customizing aspects of the product to meet individual needs may be important, but this can only be done effectively when the company knows its customers well. Identifying customers that cost the company money may also be valuable, but this is more relevant to cost management or pricing decisions than to customer relationship management.

Question 10

When many men in the baby boomer segment started getting gray hair, they were reluctant to use hair dyes made for women even though they were just as eager as women to fight the aging process.To address this reluctance, hair care product manufacturers introduced hair dying systems for men to use on their head and their facial hair.The hair care product manufacturers used ________ segmentation to define their target markets.

Accepted Answer

The description mentions the target market as "many men in the baby boomer segment" who are experiencing gray hair. This segment is defined by their age and gender, which fall under the category of demographic segmentation.

Question 11

Which of the following statements about customer relationship management (CRM) programs is true?

Accepted Answer

CRM programs are designed to collect information from various points of contact with the customer, known as customer touchpoints. This information can be used to better understand the customer and provide personalized experiences. Other options are incorrect as mass communication channels are not the only factor in the success of CRM, internet technology can actually aid the implementation of CRM programs, not all companies need to engage in CRM for every customer interaction, and CRM programs can benefit both consumer and business-to-business marketers.

Question 12

In developing a new shoe, Reebok targeted the youth market.It used ________ segmentation to define its target market.

Accepted Answer

Demographic segmentation divides the market based on variables such as age, gender, income, education, and occupation. Reebok targeted the youth market, which falls under the age demographic variable.

Question 13

An increasing number of companies are considering their relationships with customers as financial assets.Such firms measure success by calculating the value of their ________.

Accepted Answer

Customer equity is the value of all current and future relationships with a company's customers. Therefore, firms that measure success by calculating the value of their customer relationships are focusing on their customer equity. A) CRM refers to customer relationship management, which is a strategy used to manage interactions with customers. VALS 2 is a system used for categorizing consumers based on their values, attitudes, and lifestyle. Brand personality refers to the human characteristics associated with a brand. Positioning refers to the way a company differentiates its product or brand in the mind of the consumer. None of these choices directly relate to measuring the value of customer relationships as financial assets.

Question 14

In one-to-one marketing, after a marketer has identified customers and knows them in as much detail as possible, the next step is for the marketer to ________.

Accepted Answer

The answer of In one-to-one marketing, after a marketer has...

Question 15

To determine ________, firms compare the investments they make in acquiring and retaining customers to the financial return on those investments.

Accepted Answer

Determining customer equity involves analyzing the financial value of customer relationships, which includes the investments made in acquiring and retaining customers and comparing them to the financial returns on those investments. Segmentation, share of customer, brand personality, and positioning are all related to marketing strategies but do not directly involve a financial analysis of customer investments and returns.

Question 16

Which of the following is NOT a focus of customer relationship management?

Accepted Answer

Undifferentiated targeting is not a focus of customer relationship management. Customer prioritization, share of customer, lifetime value of the customer, and customer equity are all important aspects of CRM.

Question 17

Companies that successfully practice customer relationship management measure success by ________.

Accepted Answer

Companies that successfully practice customer relationship management measure success by Share of Customer and Lifetime Value of the Customer. Share of Customer is the portion of a customer's purchasing that a company gets in their product categories, while Lifetime Value of the Customer is the total amount that a customer will spend on a company's products over their lifetime. These measures indicate how well a company is retaining and growing its customer base.

Question 18

The owner of a pet grooming salon wants to calculate customer equity.Which of the following would be a step the owner of this pet grooming salon should complete?

Accepted Answer

Customer equity is the total amount of money a customer will spend at a business over their lifetime. To calculate it, the owner needs to compare the investments made by the salon owner in acquiring the customer to the total amount of purchases made by the customer. This will give the owner an idea of the value this customer will bring to the salon in the future.

Question 19

The ________ is the potential profit generated by a single customer's purchase of a firm's products over the customer's lifetime.

Accepted Answer

The term for potential profit generated by a single customer's purchases over their lifetime is commonly referred to as the "lifetime value of a customer."

Question 20

CRM stands for ________.

Accepted Answer

CRM stands for Customer Relationship Management, which is a strategy used by companies to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving customer retention and satisfaction.

Quiz 6: Sharpen the Focus: Target Marketing Strategies and Customer Relationship