Exam chapter_4_ 11 January 2021, questions and answers PDF

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A Framework for Marketing Management, 6e (Kotler) Chapter 4 Creating Long-Term Loyalty Relationships 1) ________ 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 2) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 3) ________ 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking

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4) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 5) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 6) Which of the following is a way for companies to increase customer-perceived value? A) increase the psychological investment associated with buying B) increase the buyer's time and energy investment C) increase total customer benefit by improving economic and functional benefits D) decrease total customer benefit by replacing psychological benefits of the product E) decrease the difference between total customer benefit and total customer cost Answer: C Diff: 3 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking

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7) ________ 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 8) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking; Application of knowledge 9) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking

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10) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking; Application of knowledge 11) 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: 2 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 12) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking

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13) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 14) Rade and Talion are competitors in the business of manufacturing wrist watches. 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking; Application of knowledge 15) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 16) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Application of knowledge

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17) Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an annual basis. Answer: FALSE Diff: 1 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 18) The value proposition is stated in the price of a product and readily recognized by the average consumer. Answer: FALSE Diff: 1 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 19) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 20) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Reflective thinking 21) Consumers' expectations result exclusively from past buying experiences. Answer: FALSE Diff: 1 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? 22) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 23) Two products with very different performance qualities can have the same conformance quality if both products deliver their respective promised quality. Answer: TRUE Diff: 2 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 6 .

24) 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: 2 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? 25) 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: 2 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? 26) 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 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking

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27) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japanbased Keiko Inc. and U.S.-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 nonmonetary costs by reducing the time, energy, and psychological investment. It can also further reduce its product's monetary cost. Diff: 3 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 28) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japanbased Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT? Answer: Answers will vary but can address any monetary, time, energy, and psychological costs. For example, 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: 3 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 29) 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: 3 LO: 4.1: How can companies deliver customer value, satisfaction, and loyalty? AACSB: Analytical thinking 30) ________ 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 C) Customer profitability analysis D) Customer lifetime value E) American Customer Satisfaction Index Answer: C Diff: 3 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking

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31) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Analytical thinking 32) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking 33) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Analytical thinking

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34) Customer profitability analysis 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking 35) 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: 3 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking 36) ________ 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Analytical thinking 37) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Analytical thinking

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38) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking 39) Unprofitable customers who defect to a competitor should be encouraged to do so. Answer: TRUE Diff: 1 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Reflective thinking 40) Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing. Answer: TRUE Diff: 1 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? 41) 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 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? AACSB: Analytical thinking 42) What technique is used for customer profitability analysis? Answer: Customer profitability analysis 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. Diff: 1 LO: 4.2: What is the lifetime value of customers, and how can marketers maximize it? 43) 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 LO: 4.3: How can companies attract and retain the right customers and cultivate strong customer relationships and communities? AACSB: Reflective thinking 11 .

44) The aim of customer relationship management is to produce high customer ________. A) integrity B) loyalty C) innovation D) liability E) equity Answer:...