Mkt 3340
Decades ago, developing and implementing the "right" marketing strategy was all about _______. In today's economy, however that emphasis has shifted to developing strategies that attract and retain customers over the long term.
Conducting extensive research to discover customer needs
Firms CANNOT create:
Consumer segments
Which of the following is not required to achieve a customer-centric culture?
Cost
Former Trader Joe's president Doug Rauch says that the company abandoned the word consumer for the word customer. Why did he do it?
Customer is more individual than consumer
Which method for building experiential value is most likely to have the most variability for consumers based service organizations such as hotels and restaurants?
Customer service
By coupling small production runs with frequent "retirements" Ty Inc. fanned desire for its stuffed toy Beanie Babies. Stephen Brown describes this as holding back supply and delaying customers' gratification in order to avoid excess inventory and to make buyers feel luck, which is referred to as:
Exclusivity
Rockwell Collins is a manf. of avionics and comms systems for corporate aircraft. In response to the general slowdown in the business aviation industry, Rockwell announced cutbacks for all items it makes for small and midsize jets. Based on this information, which of the following segmentation variables is Rockwell most likely to utilize:
Firmographic
In sparsely populated geographic regions, companies may have a virtual monopoly because of the lack of alternatives available to customers. In these situations, some companies may charge high prices that are not supported by the value provided to customers. This strategy may also increase the likelihood that customers will switch providers if alternatives are available. These customers may be referred to as:
Vulnerable customers
The process of collecting and using detailed information about individual customers during points of contact between a buyer and seller are referred to as:
customer relationship management
Companies can employ various strategies to acquire customers. When Under Armour Inc. introduce sportswear for women in the early 2000s, it acquired new customers who did not buy its sports clothing designed for men. This is a successful attempt to acquire customers by:
increasing market size
PRIZM is a commonly used segmentation system that groups consumers into:
life stage groups and social group
Assume that a company has segmented its customers based on customer lifetime value (CLV) and customer referral value (CRV). From a strategic perspective, a customer with a high CRV but a low CLV should be:
targeted for customer development strategies to increase wallet share
A segmentation process begins by grouping
needs and preferences
The failure of Volkswagen's brand Phaeton in the US is due in large part to the:
not considered luxury in US
A customer's lifetime value is static. Companies cannot change or influence a customer's lifetime value
false
A whale curve is a graphical representation of company profits displayed by plotting cumulative profits against the cumulative percentage of customer:
true
Because customers are the primary source of profit for a company, customer lifetime value (CLV) is a good proxy for company value:
true
Both customer lifetime value and customer equity are metrics applicable to the individual customer; combined, they provide information for understanding firm value
true
Churn rates vary by company, industry, and country because culture and competitions within an industry affects norms:
true
Frito Lay's use of a demand landscape is an example of what type of model:
resonance focus mode
Which of the following statements about value is FALSE:
value means the same thing to all customers
There are many potential segmentations variables, but these variables can be grouped into three basic categories. The categories include all of the following EXCEPT:
when do customers buy
Reichheld believes that a follow up question should be added to a question about how a customer rates a product in order to determine which of the following:
why the customer give the product this rating
The innovation funnel is a model that explains how ideas are turned into new products, but it does not explain whom of the innovations that have been successful over the past few decades. The actions that are not included in the innovation funnel are:
Redefine value and raising expectations
JetBlue's Even More Space initiative allowed passengers to buy seats with more legroom for a slightly higher price. The initiative increased JetBlue's profit martin. Which costumer development strategy does this exemplify?
Redefining the business
Companies who focus on maintaining a continuous stream of products or services in established categories in order to satisfy customers' unmet needs are innovating using market driving strategies:
TRUE
Cutting costs is NOT the most effective way to increase customer perceived value:
TRUE
Burger King, White Castle, and several other chains known for beef patties are targeting young urban professionals who increasingly seed vegetarian foods. These restaurants now offer plant passed burgers and other meat substitutes. In this example, segmentation and targeting are primarily influencing the organizations ______ strategy.
product
Customer perceived value (CPV) can be represented by the following equation: Value = benefit -cost where different benefits add up to total customer benefits, and different costs add up to total customer cost. The total customer benefit included the following: The definition of customer benefits include
product, services, personal and image benefits
Dunkin Donuts is expanding several different countries. Its stores offer curry doughnuts in India, dulce de leche doughnuts in Peru, and cherry brandy doughnuts in Germany. This is an example of segmentation based on:
Geography
Specialty retailers like Restoration Hardware, LL Bean, and Anthropologie make heavy use of direct mail catalogs. Such catalog marketers typically segment their markets based on three factors, each of which describes the nature of different customers' past purchase and correlates well with future purchase. Abbreviated as RFM the factors are:
Recency, frequency and monetary value
Which of the following is NOT a benefit of segmentation for organization:
Segmentation makes marketing more convenient
Frito-Lay created a demand landscape in order to (1) map its products to consumer behavior (e.g. activities, projects, tasks, and to-dos driven by goals, needs, urges, sensations, and desires in the social cultural context) and (2) position its brands in the way people operate every day:
TRUE
The goal of customer management is to grow the business profitability by acquiring, retaining and developing the right customer.
TRUE
What a product represents to customers and how it builds or maintains their self-image or personal identity is often more important than the product's actual attributes an capabilities in predicting whether or not a product succeeds in the marketplace:
TRUE
while most companies hire front line employees based on their skills and aptitude, some business scholars argue that front-line employees should be hired for attitude instead of aptitude.
TRUE
The GotLife Company build a successful business by offering high end golf clubs designed to meet the specific needs of experienced players for functionality and durability. The company then shifted its focus to cheaper "value" clubs, sold through discount outlets to novices, experienced golfers, or would be golfers concerned about price. The "value" strategy failed. Which of the following targeting approaches did GotLife probably pursue and why was it unsuccessful?
Targeting all segments
In 2019, Epson's Ecotank ET-270 all in one printer retailed for $199.99. by comparison, several of epson's other all in one printers retailed for $149.99 or less. However, marketing for the ecotank printers provided test results that showed those who switched to ecotank could save 80% by using low cost ink replacement bottles rather than higher priced ink replacement cartridges. Which type of customer value was Epson emphasizing in its marketing for ecotank printers?
Economic value
A paper products company is concerned with distributors reliance on price discounts. Although price discounts successfully increase sales during the price discount promotions, sales decrease between those price promotions, A systematic reliance on discounts to drive sales is MOST likely to risk which of the following in the long term?
Ability to capture value from customers
Customer relationship management (CRM) is the process of collecting detailed information about individual customers are all touch points:
FALSE
Research suggests that the investment required to change customers from satisfied to completely satisfied to completely satisfied will not provide an attractive financial return and is probably not a wise investment of resources:
FALSE
Javier is comparing two specialized office computers: X and Y. the purchase price for computer X is $3000 with a $200 startup fee and a $500 service fee. Computer Y has no startup fee and $300 service fee. Computer Y's economic value to the customer is $400.
False
An online subscription service has calculated lifetime (CLV0 for 100,000 users. Which of the following is a strategic or managerial decision in which CLV could be useful to the company?
All of the answers are correct Determining which users to target based upon estimated profitability Determining its limits to user acquisition costs Determining investments into customer retention programs Determining which users to target for customer development
Statistical techniques like regression analysis cannot be used routinely to infer a consumer's response to marketing actions. This is because the data series available to firms are often too long and large for individual-level analysis
False
The use if firmographics to segment business markets is equivalent to the use of psychographics to segment consumer markets:
False
Understanding why customers buy a product can help firms do all of the following EXCEPT:
Form segments based on consumer lifestyles
A branch manager of a rental company set a goal to increase customer satisfaction ratings. To achieve this goal, she authorized the sales associate to provide customers with additional price discounts. Although customer satisfaction ratings increased, the brand manager later discovered that 20% of the rental contracts with the highest customer satisfaction were also unprofitable. This group of highly satisfied but unprofitable customers represents the company's:
Free riders
California Closets is a maker of closet organizers and custom storage solutions. Its products are designed for people who live in small places. Assuming the company plans to segments it's market based on a single variable, which of the following is most appropriate.
Geography (urban versus suburban)
Juan and Javier are two of the most effective salespeople at XYZ corp. In terms of average revenue per customer. Juan tends to increase revenue per customer through upselling, while Javier is more likely to increase revenue per customer through cross selling. Although both approaches are effective with existing customer, cross selling is more likely than upselling to:
Improve customer retention rate
For a segmentation to be useful, it must meet several criteria. Which of the following is NOT among these criteria?
Profitable
In choosing a basis for segmentation, marketers may ask "who, what and why" questions about their customers. "what variables focus primarily on customer:
Purchase Behavior
Companies like Dell, Home Depot, and Palm created groundbreaking products and concepts using market driving strategies Which of the following statements is not an actin common to these companies and their market driving strategies:
RIGHT ANSWER= THEY ALL HAVE MINOR INCREMENTAL IMPROVEMENTS TO BE SATISFIED
Which of the following is NOT one of the three crucial actions that a company may take when using customer centricity and innovation to fuel market driven strategies:
Rely heavily on traditional new-product markets
In which context of presenting benefits to customers, marketers should us a(n) _______ model, which involves demonstrating a deep understanding of customers' needs and differentiating or highlighting offerings on the few elements that matter most to target customers.
Resonance focus
A firm should consider three key factors when choosing a target segment, including not only the external factors of competition and segment characteristics but also the firms internal:
Resources and competencies
Customer ___ is the percentage of customers who stay with a company in a given period, while customer ___ is the percentage of customers who leave a company within a given period of time.
Retention rate / churn rate
H.J Heinz Company has estimated the average CLV are equally attractive for customers in two of its broad business to business segments: restaurants and hospitals. Heinz believes that its restaurant customers are generally loyal to Heinz brands, while hospitals often purchase competing bras such as Huts. From the perspective of customer development, which of the following is an important piece of information missing from the estimated of CLV:
Share of wallet
Coordination as a set of activities that organizations may engage in to achieve a customer-centric culture includes:
Sharing info accross all functional units
The group of customers who receive high value from customer experience and who provide high value to the company are referred to as:
Star Customers
For noncontractual buying situations, it is difficult for companies to determine retention rates because they may not know if the customer has defected or if the customer has simply not made a purchase during the time period.
TRUE
The goal of cluster analysis is to group customers and determine the number of groups, or clusters so that the:
distance between two customers in a cluster is minimized
Tiffany & co is an American luxury jeweler headquartered New York City in the late 1980s. Tiff and Co ventured into the fragrance business by adding luxury perfumes to its products mix although perfumes are distinctly different than jewelry, both product categories appeal to the same target market. Which of the directives for customer centric branding strategies does this most closely represent:
plan brand extensions based on customer needs, not component similarities
During which step in the STP marketing process is a value proposition defined and an action plan developed:
positioning
Assume that Kroger is attempting to increase its average retention rate from 75% to 80%. By how many would this increase the expected customer lifetime?
12 months
An independent marketing research firm sells syndicated marketing research services to a variety of customers. An average corporate customer generates $6,000 in annual profits per year. The firm is considering investing in additional services to improve retention rates from 60% to 70%. Assuming a discount rate of 10%, the margin multiple is 1.20 for a 60% retention rate and 1.75 for a 70% retention rate. If the retention rate was improved from 60% to 70%, which of the following is the estimated difference in the customer value (CLV) of an average corporate customer?
3300
As part of a strategy to improve customer satisfaction and loyalty. A sales manager has asked key account salespeople to decrease the annual customer churn rate from 50% to 40% during the next fiscal year. Decreasing the customer churn rate to 40% will increase the average expected customer lifetime by.
6 months
According to the customer equity model, which of the following is not a factor in calculating customer equity?
??Part of equity are :Relationship equity,Customer equity, brand equity, value equity.RIGHT ANSWER = ALL ANSWERS ARE TRUE
Customer value has two sides: capturing value through customer ____ and delivering value through customer___.
Profitability / experience
Assume Marriott Internationals surveyed its customers and asked "Using a 0-10 scale, how likely is it that you would recommend a Marriott hotel to a friend or colleague? The results found that 9% of those surveyed were detractors (0-6), 62% were passives (7-8), and 29% were promoters (9-10). What is Marriott's net promoter score (NPS)?
20
A commercial cleaning company spends an average of $500 per year, per customer, in supplies, wages, and account maintenance. An average customer generates $1,000 in revenue per year. Assuming a discount rate of 12% and an annual retention rate of 80%, which of the following is the best estimate for the lifetime value of an average customer using the simplified customer lifetime value (CLV) evaluation?
$1,250
Assume that a customer is comparing the total cost of ownership of two cars for a five-year period. The purchase price for Car A is $25000 with an annual maintenance cost of $2000 per year. The purchase price for Car B is $28,000 with annual maintenance cost of $1000 per year. Both cars have the same gas mileage and have a similar resale value. The dealers cost of Car A is $20,000 and the dealer's cost of Car B is $24,000. What is the difference in the total cost of ownership to the customer?
$2,000
Assume that a company calculates customer lifetime value (CLV) using a margin multiple. Assume the margin multiple is 2.5 and corresponds to an 80% retention rate (r). Assume the estimate average monthly revenue of a customer is $125, and the estimated average monthly cost of a customer is $40. What is the CLV of the estimated average customer?
$2,550
Which of the following statements about business-to-business (B2B) are FALSE as it relates to developing a customer centric strategy:
B2B customers are cost conscious, so measuring satisfaction is not possible
Which of the following statements about CLV is True?
CLV must be calculated for each customer individually
In 2015, Marriott hotels offered guest complimentary GoPro HERO4 cameras to use while vacationing at any one of Marriott's 17 Caribbean and Latin American resorts and hotels. Developing relationships with external partners to increase the value of an experience for customers is part of a set of activities referred to as __________.
Coordination
Which of the following concepts refers to the total customer lifetime value (CLV) across all existing and future customers and serves as a good proxy for the overall firm value?
Customer equity
Which of the following does the marketing process of segmentation, targeting, and positioning (STP) Not Address?
Differences in customer preferences
Gerber's Good Start line of formulas for infants and toddlers has high defection rates after a couple of years. Which of the following best characterizes the most likely reason for defection among Gerber's Good Start most loyal customers?
Lifestyle switchers
In 2014, P&G announced that it would sell approximately half its brands in order to revive sales growth and save costs. At the time P&G top 80 brands accounted for $84.1 billion in sales (95% of total profit) while their other 100 brands it owned only accounted for $2.4 billion in sales. Which of the directives for customer centric branding strategies does this most closely represent:
Make brands as narrow as possible
Subscription-based services such as Netflix offer free, limited time trials to new customers. Some services may extend the free trial period to customers who opt to unsubscribe to the service. The example is BEST associated with which broad strategy designed to acquire customers.
Offer discounts and incentives
Which of the following represents the most significant risk to companies using a mass marketing approach:
They may lose customers to niche marketers
A toothpaste manufacturer believes its most likely customers are parents of young children who value a brand with a kid friendly taste and texture. The company's segmentation is probably based on:
a combination of demographics and benefits sought.
Among the segmentation variables related to purchase behavior is consumers' share of wallet. This term refers to
money that a consumer spends with one firm, as a share of all the money that the consumer spends in the category
You are the VP of marketing for a reginal chain of fine dining restaurants. You have created policies to ensure that every fulltime employee has the training and skills to deliver the highest quality customer experiences. For example, every server is authorized to surprise customers with one-bite appetizers as part of the company's customer delight program. The company refers to these policies as employee empowerment. This is an example that best matches which of the four sets of activities for creating a customer centric culture.
capability
When determining the customer lifetime value (CLV) for a targeted group of customers, the most important factor that the management of a company to consider is which:
clv is not static.
A company that develops artificial flavorings for candy manufacturers uses research to refine its market offerings. Its studies require participants to make repeated comparisons between pairs of products, in each pair, the products offering on the key attributes of flavorings strength and price. The research approach of this firm is:
conjoint analysis
Amazon's recommendations for potential customers who are considering a purchase includes related items using the phrase "customers who bought this item also bought..." For example, Amazon would likely recommend a Kindle case when a customer was looking at a Kindle. Which customer development strategy does this exemplify:
cross-selling
Segmentation and targeting influence a company's resource allocation, potentially affecting strategic decisions in all of the following areas EXCEPT:
mission formulation
Acquiring customers who do not appear attractive based on a customer lifetime value (CLV) calculations should always be avoided:
false
CLV is the present value of all future streams of revenue an individual customer generates over the life of his or her business with the firm.
false
Competitor focused organizations have high ratings in customer service.
false
To compete successfully in business to business (B2B) markets, a company must do all of the following except:
focus heavily on products and technology
Mass customization is most appropriate:
for technology products where the cost of new versions is extremely low
Conjoint analysis is an approach used to achieve preference-based segmentation by
forcing consumers to make trade-offs between pairs of products with different attributes.
Alisa just purchased a beautiful designer bag with the brand name prominently displayed. She admits that she paid way too much for the bag. According to the customer perceived value (CPV) equation, Alisa may derive what type of benefit from this purchase:
image benefit
According to the Customer Profitability/Customer Experience matrix, free riders have high customer experience yet low profitability. Which of the following is a tactic that is not likely to increase the profitability of free riders:
increase customer delight
Which is not a key action that can help organization retain customers?
increase the customer churn rate
When a firm begins to charge high fees for additional services to unprofitable customers, it has determined the _______ of those customers is too low to warrant the added efforts to maintain a relationship with them:
lifetime value
A firm preparing to introduce a new deodorant has leaned that more competitors are offering products formulated for women than men. This finding most likely emerged during the _______ step of the firm's STP process.
targetivity
One way that customer centricity fits into an organization is through the knowledge management system. The knowledge management system can best be described as understanding:
the customer
