Chapter 10 LS

For retailers, the 80-20 rule is a condition in which _____.

80 percent of the sales or profits come from 20 percent of the customers

Select from the following the two objectives of using frequent-shopper programs.

Build a data warehouse that links customer data to their transactions, Encourage repeat purchase behavior and loyalty

Identify the true statement about frequent-shopper programs.

Frequent-shopper programs are not particularly useful for building long-term customer loyalty.

Who among the following can be categorized in the iron segment of the customer pyramid?

Keith patronizes multiple stores, compares product prices, and purchases the product with the lowest price.

Identify the true statement about customer loyalty.

Loyal customers have a bond with the retailer based on an emotional connection.

Which of the following is TRUE regarding tiered reward programs.

The higher the tier, the better the reward.

Identify the difference between government regulations on customer privacy in the United States and the European Union.

Unlike retailers in the United States, retailers in the European Union must get consumers to agree to share their personal information.

Converting iron and gold customers into platinum customers can be referred to as customer _____.

alchemy

Customers in the gold segment _____.

are more profitable to a retailer than customers in the iron segment

Customers in the platinum segment _____.

are the most profitable and loyal customers of a retailer

Frequent-shopper programs _____.

are very expensive to establish and cannot be easily corrected

By participating in a retail community, customers _____.

become more reluctant to leave the family of other people patronizing the retailer

A retail _______ ________ is a group of customers who are bound together by their loyalty to a retailer and the activities the retailer sponsors and undertakes.

brand community

Customers in the lead segment _____.

can make a negative contribution to a retailer's income

Creating tiered awards and linking charitable actions to loyalty programs _______.

can make the loyalty program more effective

According to the EU directive on consumer privacy, a business operating in the EU _____.

can use consumer information only for a specified purpose

A _____ contains all the information a firm has collected about its customers and is part of the data warehouse.

customer database

In the customer pyramid, the platinum segment is followed by the __ segment

gold

Buying better security measures and adopting a "privacy by design" approach are two ways of ______.

increasing customer confidence regarding privacy issues

Customers belonging to the segment have a customer lifetime value lower than the customer life value of customers belonging to the gold segment and purchase modest amount of merchandise from a retailer.

iron

The _____ segment is composed of the customers who buy a modest amount of merchandise from a particular retailer, but their spending levels, loyalty, and profitability are not substantial enough for special treatment.

iron

1-to-1 retailing _____.

is used by retailers to develop retail programs for small groups or individual customers

Frequent-shopper or ____ programs identify and provide rewards to customers who regularly patronize a retailer

loyalty

A customer relationship management program is also called a ______. (Select all that apply)

loyalty program, frequent shopper program

Frequent-shopper programs are also called

loyalty programs

What do retailers typically use to forecast their CLV?

past behavior of customers

Customers belonging to the ______ segment in the customer pyramid buy a lot of the merchandise sold by a retailer and often place more value on customer service than on price

platinum

The _____ segment is composed of the customers with the top 25 percent customer lifetime values who are the most profitable and loyal customers of a retailer.

platinum

Identify the true statement about the EU directive on consumer privacy.

A business can collect consumer information only if it has clearly defined the purpose, such as completing a transaction.

Identify the true statement about identifying customers.

A retailer cannot identify customers who make purchases using third-party credit cards.

Identify the true statement about add-on selling.

A retailer's customer database reveals opportunities for add-on selling.

Identify the true statement about the government regulations on customer privacy in the United States.

American customers must explicitly tell retailers not to use or share their personal information for other purposes.

Which part of a customer database includes a record of the interactions that the customer has had with the retailer, inquiries made through in-store kiosks, and information about contacts initiated by the retailer, such as catalogs and e-mails sent to the customer?

Customer contacts

_____ is the expected contribution from a customer to a retailer's profits over their entire relationship with the retailer.

Customer lifetime value

_____ means that customers are committed to purchasing merchandise and services from the retailer and will resist the activities of competitors attempting to attract their patronage.

Customer loyalty

Which of the following is the information in a customer database that contains details about what the customer likes, such as favorite colors, brands, fabrics, and flavors, as well as apparel sizes?

Customer preferences

Which of the following is a difference between the platinum segment and the gold segment in the customer pyramid?

Customers in the gold segment have lower customer lifetime values than customers in the platinum segment.

Which of the following is a difference between the gold segment and the iron segment in the customer pyramid?

Customers in the iron segment purchase fewer amounts of merchandise compared to customers in the gold segment.

Which of the following is a key requirement of an effective tiered loyalty program?

Customers perceive the tier levels to be attainable.

Which of the following is the information in a customer database that contains the demographic and psychographic data describing the customer that can be used in developing market segments?

Descriptive information

Who among the following customers can be categorized in the gold segment of the customer pyramid?

Eric visits a particular sports store often, but his buying decisions are mainly influenced by the price of merchandise.

In which of the following scenarios will a retailer find it most difficult to collect customer information?

Hanna, a university student, purchases a pair of jeans at a store using a third-party credit card.

Select from the following the two objectives for analyzing a customer database.

Identify the retailer's best customers, Improve decisions made by retail managers

Which of the following statements is true about a retailer's customer databases?

It is the foundation for subsequent CRM activities.

A retailer that wants to increase consumer confidence regarding privacy issues may choose to adopt a "privacy by design" approach. What does this approach entail?

It requires input from various departments such as marketing, legal, HR and IT before making decisions that might affect consumer privacy.

Identify the customer belonging to the iron segment from the following.

Jamie is price sensitive and buys a limited number of dresses from a particular apparel store.

Identify the reason why most large retail chains use customer relationship management processes to efficiently develop relationships similar to those that many small local retailers have with customers.

Large retail chains do not have the intimate knowledge about the customers who enter their stores.

Who among the following can be categorized in the platinum segment of the customer pyramid?

Nina frequently purchases apparel from a particular retailer and does not like shopping at any other store.

Identify the customer belonging to the platinum segment from the following.

Roxanne prefers buying electronics of a specific brand due to its excellent customer service.

Which of the following is a feature of customers in the iron segment of a customer pyramid?

Their spending levels, loyalty, and profitability are not substantial enough for special treatment.

Identify a feature of customers in the platinum segment of a customer pyramid.

They are not overtly concerned about prices and often place more value on customer service.

Identify a feature of customers in the gold segment of a customer pyramid.

They are not very loyal to a retailer and frequently patronize some of the retailer's competitors.

Identify a feature of customers in the lead segment of a customer pyramid.

They demand a lot of attention but do not purchase any products from a retailer.

What are customers most concerned about when retailers collect detailed, personal information about them?

They feel that the data collected may not be secure.

Which of the following is the information in a customer database that contains a complete history of the purchases made by the customer, including the purchase date, the stock-keeping units purchased, the price paid, the amount of profit, and whether the merchandise was purchased in response to a special promotion or marketing activity?

Transactions

Select from the following all of the ways retailers can make frequent-shopper programs more effective.

Treat frequent shoppers as VIPs, Make the program transparent and simple, Create tiered rewards

True or false: A retailer can identify customers easily if they use the same credit card while shopping at the retailer's store and website.

True

True or false: For most retailers, a relatively small number of customers account for the majority of their profits.

True

True or false: The cost of processing two or three returned items is often much greater than the profits coming from the one item that the customer kept.

True

True or false: Using a global satellite tracking system, the RFID reader in the store can collect information about where the customer has been in the store.

True

Offering and selling more products and services to existing customers to increase the retailer's share of wallet with these customers is a practice known as _____- ______selling.

add on

Determining who the retailer's best customers are and improving decisions made by retail managers are the objectives of _______.

analyzing customer databases

Privacy concerns are heightened for customers shopping online because of the extensive amount of information that can be collected without their knowledge through the use of ______.

cookies

Small files stored on a customer's computer that identify customers when they return to a website are called

cookies

A business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer's most valued customers is called _____ ______management.

customer relationship

From a customer's perspective, one of the main concerns associated with the collection of customer data is the _____.

distribution of data by a retailer to third-party businesses

Building a data warehouse that links customer data to their transactions and encouraging repeat purchase behavior and loyalty are the objectives of _______.

frequent-shopper programs

In terms of the customer pyramid, the process of no longer selling to unprofitable customers—with negative customer lifetime values—can be referred to as "_____."

getting the lead out

Joanna often buys a significant amount of merchandise from a particular retailer. However, she is not very loyal to the retailer and occasionally patronizes the retailer's competitor. Moreover, price plays a greater role in her decision making than customer service. Joanna belongs to the _____ segment in the customer pyramid.

gold

The _____ segment is composed of customers who buy a significant amount of merchandise from a retailer, but are not very loyal to the retailer and patronize some of the retailer's competitors. (Remember to type only one word in the blank.)

gold

Customers in the iron segment _____.

have limited income and are price sensitive

Customers belonging to the _______ segment demand a lot of attention but do not purchase any products from a retailer.

lead

The _____ segment is composed of customers with the lowest customer lifetime values who make a negative contribution to a retail firm's income.

lead

An effective tactic for increasing the effectiveness of frequent-shopper programs is to _____.

link the rewards to charitable causes

It is most difficult for a retailer to identify a customer who _____.

makes cash payments for in-store transactions

In a _____ _____ analysis, the data mining tools determine which products appear in the market basket that a customer purchases during a single shopping trip.

market basket

To perform a _____, a computer program counts the number of times two products get purchased at the same time.

market basket analysis

Frequent-shopper programs should _____.

offer choices to customers in order to be more effective

The most effective frequent-shopper program _____.

offers choices

Customers in the platinum segment _____.

often place more value on customer service than customers in the gold segment

Customers in the gold segment _____.

often place more value on price than customer service

A(n) _________ reader in a store can acquire a customer's personal information from small devices carried by customers and tags on the merchandise they want to purchase.

rfid

Customer alchemy is ______.

the process of increasing the sales made to good customers

Frequent-shopper programs might be more effective if _____.

the reward program is linked to charitable causes

Frequent-shopper programs might be more effective if _____.

they offer unique rewards to those who shop the most

An effective tactic for increasing the effectiveness of frequent-shopper programs is to _____.

treat customers who spend a lot as VIPs