Marketing Management 15th Edition Kotler Test Bank 1

Marketing Management 15th Edition
Kotler Test Bank
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Marketing Management, 15e (Kotler)

Chapter 5 Creating Long-Term Loyalty Relationships
1) Which of the following is true for the modern company organization chart?
A) Frontline employees are less important than top management.
B) Customers are at the top of the pyramid.
C) Top management is at the top of the pyramid.
D) Customers are less important than middle management.
E) Frontline employees are at the top of the pyramid.
Answer: B
Diff: 1
LO: 5.1: What are customer value, satisfaction, and loyalty, and how can companies deliver
them?
AACSB: Reflective thinking
2) In the modern customer-oriented organizational chart, which of the following is considered to

be at the top of the organizational pyramid?
A) sales
B) top management
C) front-line people
D) customers
E) middle management
Answer: D
Diff: 2
them?
3) In a modern customer-oriented organization chart, the ________ of an organization
1
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immediately follow the customer segment.
A) top management
B) marketing department
C) middle management
D) frontline people
E) lower management
Answer: D
Diff: 1
them?
AACSB: Analytical thinking
2
4) ________ 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: D
Diff: 1
them?
5) 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
Answer: A
Diff: 2
them?
6) ________ 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
Answer: B
Diff: 2
them?
3
7) 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
Answer: C
Diff: 2
them?
8) 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.
Answer: B
Diff: 2
them?
9) Which of the following is the first step in customer value analysis?

A) Examine how customers in a specific segment rate the company's performance.
B) Assess the company's and competitors' performances on the different customer values against
their rated importance.
C) Identify the major attributes and benefits that customers value.
D) Monitor customer values over time.
E) Assess the quantitative importance of the different attributes and benefits.
Answer: C
Diff: 2
them?
4
10) The final step of customer value analysis is to ________.
A) identify the major attributes and benefits that customers value
B) assess the company's and competitors' performances on the different customer values against
their rated importance
C) examine how customers in a specific segment rate the company's performance
D) monitor customer values over time
E) assess the quantitative importance of the different attributes and benefits
Answer: D
Diff: 2
them?
11) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-
based Keiko Inc. and US-based Global Tech. How can Keiko reduce the total customer cost for
LZT?
A) by absorbing some risk by offering a warranty
B) by improving the functional aspects of the products
C) by augmenting the psychological benefits of the products
D) by training service personnel to improve their skills
E) by investing in brand building for the products
Answer: A
Diff: 3
them?
AACSB: Analytical thinking; Application of knowledge
12) ________ 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
Answer: B
Diff: 1
them?
5
13) 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: D
Diff: 2
them?
14) 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
Answer: B
Diff: 2
them?
15) 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
Answer: E
Diff: 2
them?
6
16) 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
Answer: B
Diff: 1
them?
17) Which of the following is true for customer satisfaction?

A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite
situational influences.
B) Consumers often form more favorable perceptions of a product with a brand that is new.
C) The ultimate goal of a customer-centered firm is to create high customer satisfaction.
D) Only increased customer satisfaction can help a company increase its profits.
E) Greater customer satisfaction has also been linked to higher returns and lower risk in the stock
market.
Answer: E
Diff: 2
them?
18) ________ can track customer satisfaction directly, measure repurchase intention and also
gauge a consumer's willingness to recommend the company and brand to others.
A) Periodic surveys
B) Mystery shoppers
C) Customer loss rates
D) Customer focus statements
E) Sales summary reports
Answer: A
Diff: 2
them?
7
19) Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field
Grocery stores. Which of the following methods can it use for this?
A) group buyers
B) buyer brokers
C) mystery shoppers
D) personal shoppers
E) buying agents
Answer: C
Diff: 2
them?
AACSB: Application of knowledge
20) 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
Answer: E
Diff: 2
them?
21) 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
Answer: B
Diff: 2
them?
8
22) ________ is the totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs.
A) Performance
B) Value
C) Quality
D) Customer retention
E) Customer loyalty
Answer: C
Diff: 1
them?
23) When two brands of the same basic product deliver their respective promised quality, they
are delivering ________.
A) performance quality
B) conformance quality
C) unique quality
D) accuracy quality
E) customer support
Answer: B
Diff: 2
them?
24) Rade and Talion are competitors in the business of manufacturing wristwatches. 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
Answer: E
Diff: 3
them?
9
25) Justin conducts a survey on behalf of his firm, Komatsu. In the survey, he asks prospects to
rate Caterpillar and Komatsu branded tractors on their performance on attributes that are
important to the customer. In which step in the customer value analysis is Justin engaged?
A) Examine how customers in a specific segment rate the company's performance against a
specific major competitor on an individual attribute or benefit basis.
B) Assess the quantitative importance of the different attributes and benefits.
C) Identify the major attributes and benefits customers value.
D) Monitor customer values over time.
E) Assess the company's and competitors' performances on the different customer values against
Answer: E
Diff: 2
them?
26) 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: B
Diff: 2
them?
27) Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
Answer: TRUE
Diff: 1
them?
28) 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.
Answer: TRUE
Diff: 2
them?
10
29) Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using,
and disposing of the given market offering.
Answer: FALSE
Diff: 1
them?
30) Customer-perceived value is the perceived monetary value of all the purchases a customer
makes on an annual basis.
Answer: FALSE
Diff: 1
them?
31) A seller who is at a disadvantage has two alternatives: decrease total customer benefit or
increase total customer cost.
Answer: FALSE
Diff: 1
them?
32) The value proposition is stated in the price of a product and readily recognized by the
average consumer.
Answer: FALSE
Diff: 1
them?
33) The value delivery system includes all the experiences the customer will have on the way to
obtaining and using the offering.
Answer: TRUE
Diff: 1
them?
34) The value proposition is also known as the core positioning of the offering.
Answer: FALSE
Diff: 1
them?
11
35) Loyalty is a person's feelings of pleasure or disappointment that result from comparing a
product's perceived performance to expectations.
Answer: FALSE
Diff: 1
them?
36) Customer satisfaction is the only way by which a firm can increase its profitability.
Answer: FALSE
Diff: 1
them?
37) Consumers' expectations result exclusively from past buying experiences.

Answer: FALSE
Diff: 1
them?
38) The best thing a company can do in the face of company mistakes is to discourage the
customer from complaining.
Answer: FALSE
Diff: 1
them?
39) Quality is the totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs.
Answer: TRUE
Diff: 1
them?
40) Conformance quality and performance quality are identical in the marketing sense.
Answer: FALSE
Diff: 1
them?
12
41) Two products with very different performance qualities can have the same conformance
quality if both products deliver their respective promised quality.
Answer: TRUE
Diff: 1
them?
42) Compare and contrast the typical traditional organization chart for an organization against
the modern customer-oriented organization chart.
Answer: The traditional organization chart is a pyramid with the president at the top,
management in the middle, and frontline people and customers at the bottom. In this case, the top
management is the most important part of an organization. Managers who believe the customer
is the company's only true "profit center" consider the traditional organization chart obsolete.
In the modern customer-oriented organization chart, customers are at the top, followed by
frontline people, then middle management, and, lastly, top management.
Diff: 1
them?
43) Explain customer-perceived value.

Answer: Customer-perceived value (CPV) is the difference between the prospective customer's
evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total
customer benefit is the perceived monetary value of the bundle of economic, functional, and
psychological benefits customers expect from a given market offering because of the product,
service, people, and image. Total customer cost is the perceived bundle of costs customers
expect to incur in evaluating, obtaining, using, and disposing of the given market offering,
including monetary, time, energy, and psychological costs.
Customer-perceived value is thus based on the difference between benefits the customer gets and
costs he or she assumes for different choices. The marketer can increase the value of the
customer offering by raising economic, functional, or emotional benefits and/or reducing one or
more costs.
Diff: 1
them?
13
44) What are the steps in a customer value analysis?
Answer: Managers conduct a customer value analysis to reveal the company's strengths and
weaknesses relative to those of various competitors. The steps in this analysis are:
1. Identify the major attributes and benefits that customers value.
2. Assess the quantitative importance of the different attributes and benefits.
3. Assess the company's and competitors' performances on the different customer values against
4. Examine how customers in a specific segment rate the company's performance against a
specific major competitor on an individual attribute or benefit basis.
5. Monitor customer values over time.
Diff: 2
them?
45) Explain total customer satisfaction.

Answer: In general, satisfaction is a person's feelings of pleasure or disappointment that result
from comparing a product's perceived performance (or outcome) to expectations. If the
performance falls short of expectations, the customer is dissatisfied. If it matches expectations,
the customer is satisfied. If it exceeds expectations, the customer is highly satisfied or delighted.
Customer assessments of product performance depends on many factors, especially the type of
loyalty relationship the customer has with the brand. Consumers often form more favorable
perceptions of a product with a brand they already feel positive about.
Diff: 1
them?
46) What are the measurement techniques for monitoring satisfaction?

Answer: Many companies are systematically measuring how well they treat customers,
identifying the factors shaping satisfaction, and changing operations and marketing as a result.
• Periodic surveys: These can track customer satisfaction directly and ask additional questions
to measure repurchase intention and the respondent's likelihood or willingness to recommend the
company and brand to others.
• Customer loss rate: Companies need to monitor their competitors' performance too. They can
monitor their customer loss rate and contact those who have stopped buying or who have
switched to another supplier to find out why.
• Mystery shoppers: Companies can hire mystery shoppers to pose as potential buyers and
report on strong and weak points experienced in buying the company's and competitors'
products. Managers themselves can enter company and competitor sales situations where they
are unknown and experience firsthand the treatment they receive, or they can phone their own
company with questions and complaints to see how employees handle the calls.
Diff: 1
them?
14
based Keiko Inc. and US-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?
Answer: Student answers will vary. Keiko can increase total customer benefit by improving
economic, functional, and psychological benefits of its product, services, people, and image. It
can reduce LZT's non-monetary costs by reducing the time, energy, and psychological
investment. It can also further reduce its product's monetary cost.
Diff: 2
them?
based Keiko Inc. and US-based Global Tech. How can Keiko reduce the total customer cost for
LZT?
Answer: Keiko can reduce the price or cost of ownership and maintenance, simplify the ordering
and delivery process, or absorb some buyer risk by offering a warranty.
Diff: 2
them?
49) Create a value proposition for cell phone manufacturer LZT.

Answer: Student answers will vary. LZT's value proposition could include good quality, reliable
battery life, excellent design, and style.
Diff: 2
them?
50) Shoe retail chain Berry's has noticed an increase in complaints about customer service at its
stores and is beginning to lose customers to competitors. The company needs to identify the
problems and rectify them. Give two methods Berry's can use to discover the problem.
Answer: Periodic surveys can track customer satisfaction directly and ask additional questions
about the quality of customer service. Berry's can hire mystery shoppers to pose as potential
buyers and report on strong and weak points experienced in buying the company's and
competitors' products.
Diff: 2
them?
15
51) Give an example of two products that have different performance quality but are of equal
conformance quality.
Answer: Student answers will vary. Performance quality is the quality of the product's attributes.
Conformance quality is the extent to which the product delivers the performance quality
promised to consumers. A Sony Ericsson mobile cell phone provides higher performance quality
than a Nokia. The Sony Ericsson mobile has more features and lasts longer than a Nokia mobile
cell phone. Yet both would deliver the same conformance quality if both delivered their
respective promised quality.
Diff: 2
them?
52) ________ 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 (ABC)
C) Customer profitability analysis (CPA)
D) Customer lifetime value (CLV)
E) American Customer Satisfaction Index (ACSI)
Answer: C
Diff: 3
LO: 5.2: What is the lifetime value of customers, and how can marketers maximize it?
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
Answer: B
Diff: 2
16
54) 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
Answer: D
Diff: 2
55) 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
Answer: B
Diff: 2
56) 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
Answer: B
Diff: 2
17
57) Customer profitability analysis (CPA) 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
Answer: D
Diff: 2
58) 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.
Answer: C
Diff: 2
59) ________ 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
Answer: B
Diff: 1
60) 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.
Answer: TRUE
Diff: 1
18
61) A customer's profitability is judged on the basis of the lifetime stream of revenue and cost,
not the profit from a particular transaction.
Answer: TRUE
Diff: 1
62) Unprofitable customers who defect to a competitor should be encouraged to do so.

Answer: TRUE
Diff: 1
63) Customer profitability analysis is best conducted with the tools of an accounting technique
called activity-based costing.
Answer: TRUE
Diff: 1
64) Activity-based costing tries to identify the real costs associated with serving each customer.
Answer: TRUE
Diff: 1
65) Activity-based costing does not consider indirect, variable, and overhead costs.
Answer: FALSE
Diff: 1
66) Customer lifetime value describes the net present value of the stream of future profits
expected over the customer's lifetime purchases.
Answer: TRUE
Diff: 1
19
67) What technique is used for customer profitability analysis?
Answer: Customer profitability analysis (CPA) is best conducted with the tools of an accounting
technique called activity-based costing (ABC). ABC accounting tries to identify the real costs
associated with serving each customer — the costs of products and services based on the
resources they consume. The company estimates all revenue coming from the customer, less all
costs.
With ABC, the costs should include the cost not only of making and distributing the products
and services, but also of taking phone calls from the customer, traveling to visit the customer,
paying for entertainment and gifts — all the company's resources that go into serving that
customer. ABC also allocates indirect costs like clerical costs, office expenses, supplies, and so
on, to the activities that use them, rather than in some proportion to direct costs. Both variable
and overhead costs are tagged back to each customer.
Diff: 1
68) 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
Answer: A
Diff: 2
LO: 5.3: How can companies attract and retain the right customers and cultivate strong customer
relationships and communities?
69) 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
Answer: C
Diff: 2
20
70) 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
Answer: E
Diff: 2
71) Which of the following is NOT a way to make online brand communities more effective?
A) set appointed times for topic discussion
B) keep the focus on the topic
C) make it easy for users to express themselves
D) launch contests
E) set limits on length of responses
Answer: E
Diff: 3
72) Another term for high customer ________ is customer churn.

A) retention
B) defection
C) value
D) perception
E) belief
Answer: B
Diff: 1
21
73) 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 upselling.
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.
Answer: D
Diff: 2
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.
74) 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
Answer: D
Diff: 3
75) 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 at VeggiesNmore
D) she shops at VeggiesNmore because the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore
Answer: B
Diff: 2
22
76) Satisfied customers constitute the company's ________.
A) customer relationship capital
B) customer churn
C) target audience
D) high-value customers
E) customer touch points
Answer: A
Diff: 2
77) Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and
books for children. This expansion of dealership sales offerings is an attempt to increase the
value of the customer base by ________.
A) reducing the rate of customer defection
B) increasing the longevity of the customer relationship
C) enhancing the growth potential of each customer through cross-selling
D) making low-profit customers more profitable
E) terminating low-profit customers
Answer: C
Diff: 2
78) LifeTime Insurance screens its customers and tries to get unprofitable customers to buy
services from competitors. This is an example of ________.
A) trying to increase the retention rate for low-profit customers
B) terminating the relationship with low-profit customers
C) enhancing the growth potential of each customer through up-selling
D) increasing the longevity of the customer relationship
E) reducing the rate of customer defection
Answer: B
Diff: 3
23
79) 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
Answer: B
Diff: 2
80) Which of the following is an example of focusing disproportionate effort on high-profit

customers?
A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other
accessories.
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.
Answer: B
Diff: 3
81) Which of the following is an example of enhancing the growth potential of each customer
through cross-selling?
A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets and other
accessories.
the city.
Answer: A
Diff: 2
24
82) 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.
the city.
Answer: C
Diff: 3
83) 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
Answer: B
Diff: 2
84) Which of the following gains the most benefit from introducing a frequency program?
A) the first company to introduce a frequency program in an industry
B) the fast follower, the second to introduce a program in an industry
C) the industry sales leader
D) the niche player in the industry
E) the low-cost leader in the industry
Answer: A
Diff: 2
25
85) 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
Answer: D
Diff: 2
86) Southwest Airlines offers a Rapid Rewards program that allows customers to count flights
they have taken toward free future flights. This is an example of a(n) ________.
A) cross-selling program
B) value delivery system
C) club membership program
D) activity-based costing program
E) up-selling program
Answer: C
Diff: 2
87) The subscription manager at Cosmopolitan magazine keeps track of the subscription renewal
rate, which is a good measure of customer lifetime value.
Answer: FALSE
Diff: 3
88) When the brand manager for John Deere sets up advertising, sales promotions, events, and
public relations to communicate about the value embodied in its products, she is participating in
the "communicating value" management function.
Answer: TRUE
Diff: 2
26
89) All companies should practice one-to-one marketing.
Answer: FALSE
Diff: 1
90) Customer churn is how rapidly a store can move customers through its checkout facility or
process.
Answer: FALSE
Diff: 1
91) For a magazine, subscription renewal rate is a good measure of retention.

Answer: TRUE
Diff: 1
92) A company should try to retain a customer only as long as the cost to discourage defection is
lower than the lost profit.
Answer: TRUE
Diff: 1
93) Profit rate tends to decrease over the life of the retained customer due to increased purchases,
referrals, price premiums, and increased operating costs to service.
Answer: FALSE
Diff: 1
94) The marketing funnel identifies the profitability of consumers at each stage in the decision
process.
Answer: FALSE
Diff: 1
95) Focusing disproportionate effort on high-profit customers will lead to lower customer
profitability for those customers.
Answer: FALSE
Diff: 1
27
96) Frequency programs are designed to reward customers who buy often and in substantial
amounts.
Answer: TRUE
Diff: 1
97) Clubs that are open to everyone who purchases a product or service are good for building a
customer database.
Answer: TRUE
Diff: 1
98) It's often easier to re-attract ex-customers than to find new ones because the company knows
their names and histories.
Answer: TRUE
Diff: 1
99) Today, companies are increasingly concerned about customer defection. There are three
main steps a company can take to reduce the defection rate. Describe those three steps.
Answer: The three steps that a company can take to reduce defection are:
1. The company must define and measure its retention rate.
2. The company must distinguish the causes of customer attrition and identify those that can be
managed better.
3. The company must compare the lost profit equal to the customer lifetime value from a lost
customer to the costs to reduce the defection rate.
Diff: 1
28
100) 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.
Answer: Winning companies improve the value of their customer base by excelling at the
following five strategies:
1. Reducing the rate of customer defection
2. Increasing the longevity of the customer relationship
3. Enhancing the growth potential of each customer through "share-of-wallet," cross-selling,
and up-selling
4. Making low-profit customers more profitable or terminating them
5. Focusing disproportionate effort on high-value customers
Diff: 1
101) Bicycle store 2Wheels wants to maximize sales from each customer. The marketing team
suggests that 2Wheels uses cross-selling techniques. How can the company implement this
technique?
Answer: 2Wheels can use cross-selling techniques by stocking products related to bicycles, such
as cycling gear, bottles, lamps, and other accessories.
Diff: 1
102) Bicycle store 2Wheels notices that it has a high proportion of low-profit customers, but
doesn't want to terminate the customer relationship. What can 2Wheels do to make these
customers more profitable?
Answer: 2Wheels can encourage unprofitable customers to buy more or in larger quantities,
forgo certain features or services, or pay higher amounts or fees. It can also use cross-selling or
up-selling techniques.
Diff: 2
103) To increase customer loyalty, 2Wheels wants to start a club for its dedicated customers, but
wants to make sure that only members who want to participate in activities join the club. What
can it do to ensure this?
Answer: Student answers will vary. 2Wheels can institute membership fees and membership
conditions to ensure that only members with a lasting interest join the club.
Diff: 2
29
104) The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
Answer: B
Diff: 2
LO: 5.4: How do customers' new capabilities affect the way companies conduct their marketing?
105) ________ 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
Answer: A
Diff: 1
106) Customer relationship management enables companies to provide excellent real-time

customer service through the effective use of ________.
A) reports from mystery shoppers
B) survey data from customers who have defected
C) market research
D) individual account information
E) demographic trend data
Answer: D
Diff: 2
107) ________ marketing is based on the premise that marketers can no longer use "interruption
marketing" via mass media campaigns.
A) Relationship
B) Permission
C) Database
D) Internet
E) Horizontal
Answer: B
Diff: 2
30
108) ________ 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
Answer: B
Diff: 1
109) 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
Answer: A
Diff: 2
110) A ________ is an organized collection of comprehensive information about individual

customers or prospects that is current, accessible, and actionable for lead generation, lead
qualification, sale of a product or service, or maintenance of customer relationships.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy
Answer: A
Diff: 1
111) ________ describes the company's optimization of the value of its customer base.
A) Customer relationship management
B) Behavioral targeting
C) Customer value management
D) Terminal marketing
E) Personalized marketing
Answer: C
Diff: 2
31
112) ________ focuses on the analysis of individual data on prospects and customers to develop
marketing strategies to acquire and retain customers and drive customer behavior.
A) Permission marketing
B) Customer value management
C) Behavioral targeting
D) Customer relationship management
E) Terminal marketing
Answer: B
Diff: 3
113) 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
Answer: E
Diff: 2
114) 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
Answer: D
Diff: 2
32
115) After being frustrated by the lack of detailed, reliable, and up-to-date information available
to help him decide where to go on a Mexican holiday, Stephen Kaufer founded ________ in
2001.
A) TripAdvisor
B) Wanderfly
C) EveryTrail
D) Starwood
E) Expedia
Answer: A
Diff: 2
116) ________ helps companies manage and monitor online reviews using a process called
device fingerprinting.
A) Gawker
B) Bazaarvoice
C) Metacritic
D) Angie's List
E) Technorati
Answer: B
Diff: 3
117) A Forrester study of 10,000 consumers of Amazon.com's electronics and home and garden
products found that ________ percent found negative reviews helpful.
A) 20
B) 30
C) 40
D) 50
E) 60
Answer: D
Diff: 2
33
118) Sites such as Bizrate.com, Shopping.com, and PriceGrabber.com, and Epinions.com and
Yelp.com, which let customers share information about their product and service experiences
with others, reflect an increase in customer ________.
A) ambiguity
B) empowerment
C) privacy
D) diplomacy
E) empathy
Answer: B
Diff: 1
119) Which of the following is NOT a touch point for a hotel?

A) reservations
B) frequent-stay programs
C) room service
D) laundry service
E) All of the above are touch points.
Answer: E
Diff: 2
120) ________ 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
Answer: A
Diff: 2
34
121) Which of the following was NOT part of the British Airways "Know Me" program?
A) centralization of information about frequent fliers into a single database
B) identification of each customer's seating location and previous flight, meal, and complaint
history
C) infiltration of coach class by mystery shoppers
D) generation of 4,500 daily messages to recognize passengers
E) distribution of 2,000 iPads to crew members and ground staff to aid information
dissemination and stimulate passenger recognition
Answer: C
Diff: 3
122) Activists used ________ to populate the Internet with unflattering information about Nike.
A) banner ads
B) YouTube videos
C) goodwill
D) search engine optimization
E) brand studies
Answer: D
Diff: 3
123) The aim of customer relationship management is to keep the costs of meeting and tracking
consumers as low as possible.
Answer: FALSE
Diff: 1
124) A customer touch point is when the customer makes a purchase.

Answer: FALSE
Diff: 1
125) Permission marketing presumes that consumers know what they want.
Answer: TRUE
Diff: 1
35
126) A marketer who wants to position his line of cameras as the "Cadillac" of all cameras is
focused on connecting with customers.
Answer: FALSE
Diff: 3
127) A marketer who is using a reliable marketing information system to monitor the marketing
environment so s/he can assess market potential and demand is focused on capturing marketing
insights.
Answer: TRUE
Diff: 2
AACSB: Information technology
128) Loyal customers are the best ambassadors for a brand.

Answer: FALSE
Diff: 1
129) Customers who load up with personalized options in their BMWs — generating more
profitability for BMW and its dealers — are less loyal.
Answer: FALSE
Diff: 3
130) The Coca-Cola Freestyle dispensing machine, which can dispense 125 sparkling and still
drinks that consumers can mix via a touchscreen allowing consumers to create a beverage to suit
their particular taste, is an example of permission marketing.
Answer: FALSE
Diff: 2
131) 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.
Answer: TRUE
Diff: 2
36
132) The overall rate of ad blocking on Web browsers is 22 percent.
Answer: FALSE
Diff: 3
133) Identify ways in which companies facing customer complaints can recover customer
goodwill.
Answer: Given the potential downside of having an unhappy customer, it is critical that
marketers deal with negative experiences properly. Beyond that, the following procedures can
help to recover customer goodwill.
1. Set up a 24/7 toll-free "hotline" to receive and act on customer complaints.
2. Contact the complaining customer as quickly as possible.
3. Accept responsibility for the customer's disappointment
4. Use customer-service people who are empathic.
5. Resolve the complaint swiftly and to the customer's satisfaction.
Diff: 2
134) Explain permission marketing.

Answer: Permission marketing is the practice of marketing to consumers only after gaining their
expressed permission and is based on the premise that marketers can no longer use "interruption
marketing" via mass media campaigns. Marketers can develop stronger consumer relationships
by respecting consumers' wishes and sending messages only when they express a willingness to
become more involved with the brand. However, permission marketing, like other
personalization approaches, presumes consumers know what they want.
Diff: 1
135) 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?
Answer: Student answers will vary. Berry's touch points can include the stores' sales staff, point-
of-purchase advertising, the company Web site, the packaging of the products, the company's
advertising, and promotional messages.
Diff: 2
136) Give an example of how a hotel can generate customer loyalty at a "customer touch point."
Answer: Student answers will vary. An example of a customer touch point would be when a
hotel offers its guests something to drink upon arrival before they check in, or when the staff
places chocolates on pillows and face towels twisted into the shape of animals on beds.
Diff: 2
37
137) Berry's is a chain of shoe stores. The marketing team suggested that the company use
permission marketing instead of interruption marketing. How can this benefit the company?
Answer: Student answers will vary. Using permission marketing, the practice of marketing to
consumers only after gaining their expressed permission, Berry's can develop stronger consumer
relationships by respecting consumers' wishes and sending messages only when they express a
willingness to become more involved with the brand.
Diff: 2
138) The management of Keiko has learned that the company risks losing a long-time customer,
LZT, to a competitor. How can Keiko make it more difficult for LZT to switch to another
customer?
Answer: Student answers will vary. Keiko can supply LZT with special equipment or computer
links that help them manage orders, payroll, and inventory. Customers are less inclined to switch
to another supplier when it means high capital costs, high search costs, or the loss of loyal-
customer discounts.
Diff: 2
139) Identify the pros and cons of using behavioral targeting for marketing.
Answer: Behavioral targeting allows firms to match its ads to prospects based on the online
behavior or target customers. Firms use cookies and codes to match their identities with their
Web-browsing activities, and users' names and e-mail addresses, along with other personal
details, are passed on to third-party companies. Advertising clients can target customers based on
behavior, making ads more relevant to consumers. Firms gain higher click-through rates. More
ad revenue is generated to support content development. However, consumers have concerns and
feel that self-regulation is inadequate. Consumers would like to know what information is being
collected and shared.
Diff: 3
140) Are complaints a good indicator of customer satisfaction? Why or why not?
Answer: No. Studies show that while customers are dissatisfied with their purchases about 25
percent of the time, only about 5 percent complain. The other 95 percent either feel complaining
is not worth the effort or don't know how or to whom to complain. They just stop buying.
Diff: 3
38
141) According to IBM, what do firms need to do to exploit the power of social media?
Answer: To successfully exploit the potential of social media, companies need to design
experiences that deliver tangible value in return for customers' time, attention, endorsement, and
data. According to these IBM analysts, that "tangible value" includes discounts, coupons, and
information to facilitate purchase. They also note that many businesses overlook social media's
most potent capabilities for capturing customer insights, monitoring the brand, conducting
research, and soliciting new-product ideas.
Diff: 3
142) Provide an example of a big company that fought back against an unjustified complaint.
Answer: Student responses will vary. When Taco Bell began to attract negative buzz online after
rumors and a consumer lawsuit alleged that its taco mixture consisted of more filler than meat, it
leaped into action with full-page newspaper ads headlined, "Thank you for suing us." There and
in Facebook postings and a YouTube video, the company pointed out that its taco mixture was
88 percent beef, with ingredients such as water, oats, spices, and cocoa powder added only for
flavor, texture, and moisture. To help spread the word, Taco Bell marketers bought the key
words "taco," "bell," and "lawsuit" so that its official responses appeared as the first link on
Yahoo!, Google, and Bing searches.
Diff: 2
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Marketing Management, 15e (Kotler)

2) In the modern customer-oriented organizational chart, which of the following is considered to

3) In a modern customer-oriented organization chart, the ________ of an organization

8) Which of the following is true for customer-perceived value?

9) Which of the following is the first step in customer value analysis?

17) Which of the following is true for customer satisfaction?

20) Of customers who register a complaint, ________.

37) Consumers' expectations result exclusively from past buying experiences.

43) Explain customer-perceived value.

45) Explain total customer satisfaction.

46) What are the measurement techniques for monitoring satisfaction?

49) Create a value proposition for cell phone manufacturer LZT.

55) A profitable customer yields a ________.

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

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

72) Another term for high customer ________ is customer churn.

The Marketing Funnel (Scenario)

80) Which of the following is an example of focusing disproportionate effort on high-profit

91) For a magazine, subscription renewal rate is a good measure of retention.

106) Customer relationship management enables companies to provide excellent real-time

110) A ________ is an organized collection of comprehensive information about individual

119) Which of the following is NOT a touch point for a hotel?

124) A customer touch point is when the customer makes a purchase.

128) Loyal customers are the best ambassadors for a brand.

134) Explain permission marketing.

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