Chapter 06 - Building Customer Relationships

Chapter 06
Building Customer Relationships
Multiple Choice Questions
1. (p. 147) _____ marketing focuses on keeping and improving current customers, rather than
concentrating on acquiring new customers.
A. Transaction
B. Expansion
C. Relationship
D. Strategic
E. Benefit

Difficulty: Moderate

2. (p. 147) According to the _______, while advertising, sales and promotions pour profits into
your company, there will always be some customer defection, which has the potential to grow
larger.
A. Bucket theory of marketing
B. Iceberg principle of relationships
C. 80/20 principle
D. Service paradigm shift
E. Echo principle of marketing

Difficulty: Moderate

3. (p. 148) According to the text, the relationships between businesses and their customers have
the ability to evolve. In the first step of this evolution process, customers are identified as:
A. Acquaintances
B. Prospects
C. Strangers
D. Friends
E. Allies

Difficulty: Easy

6-1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 06 - Building Customer Relationships

4. (p. 148) The primary goal of businesses that are in the first stage of their relationship with a
customer is to:
A. Create financial bonds
B. Develop a long-lasting relational time horizon
C. Qualify the prospect as a customer
D. Initiate communications in order to attract them
E. Engage in problem solving sales

Difficulty: Moderate

5. (p. 148) WedSafe is the name of a company that provides wedding insurance. For example, in
the event that a wedding is called off, the couple can insure themselves against loss of their
nonrefundable deposits. If WedSafe’s primary marketing effort is to make engaged couples
aware of its services, the company is in which stage of the customer relationship evolution?
A. Acquaintances
B. Leads
C. Strangers
D. Allies
E. Friends

Difficulty: Challenging

6. (p. 148) WedSafe is the name of one of several companies that provide wedding insurance.
For example, in the event that a wedding is called off, the couple can insure themselves
against loss of their nonrefundable deposits. If WedSafe’s primary marketing effort is
satisfying its customers, the company is in which stage of the customer relationship
evolution?
A. Prospects
B. Leads
C. Friends
D. Associate
E. Acquaintances

Difficulty: Moderate

6-2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

(p. A. Creating service offering awareness B. High even though it depends on how unique the service offering is D. Gaining specific knowledge of customer's needs D. Friends D. 149) How would you describe the sustainability of competitive advantage in the acquaintance stage of the customer relationship evolution? A. in whole or part. (p. (p. Allies B. This document may not be copied. Inducing product trial and adoption C. Creating clear and easily comprehended communications Difficulty: Moderate 8. duplicated. . Supporters Difficulty: Easy 6-3 © 2013 by McGraw-Hill Education.Building Customer Relationships 7. Generally low because of the expense associated with mass customization Difficulty: Moderate 9. Partners E. Providing value comparable to the competition E. forwarded. Not authorized for sale or distribution in any manner. This is proprietary material solely for authorized instructor use. Non-existent because the company's primary goal is to induce trial B.Chapter 06 . scanned. distributed. 148) Following the acquaintance relationship in the evolution of customer relationships is the customers as _____ stage. 148) In acquaintance relationships. Associates C. Medium because customer are heterogeneous E. firms generally focus on: A. Generally low with some variation on how the competition creates unique value C. or posted on a website.

152) The key to success in the _____ stage of the customer relationship is the firm's ability to use customer knowledge and information systems to deliver highly personalized and customized offerings. A. customers as friends B. (p. This document may not be copied. Customers as acquaintances.Chapter 06 . Gaining a familiarity of how the customer creates its service offerings E. customers as strangers E. forwarded. Customers as strangers. customers as acquaintances D. . in whole or part. A. Partnership Difficulty: Easy 6-4 © 2013 by McGraw-Hill Education.Building Customer Relationships 10. Customer retention B. Ally C. duplicated. (p. 148) The transition from the _____ stage to the _____ stage of the customer relationship requires the development of trust. scanned. Friendship B. distributed. The enhancement of customer relationships Difficulty: Moderate 12. Customers as acquaintances C. Customers as friends. Customers as acquaintances. Not authorized for sale or distribution in any manner. Customers as partners. customers as strangers Difficulty: Moderate 11. Creating a competitive advantage through their marketing mix D. 149) A primary goal of firms at the friendship stage of the relationship is: A. or posted on a website. (p. The creation of a unique product C. This is proprietary material solely for authorized instructor use. Colleague D. Comrade E.

Chapter 06 . Transactional D. a service provider may become part of a customer’s __________ . forwarded. This document may not be copied. in whole or part. for five years. scanned. A. Customer retention Difficulty: Moderate 14. distributed. She has continued to use the same hairstylist even though the price of a haircut at Studio 21 Salon is $10 higher than at competing hair salons. 152) At the partnership stage of the customer relationship. Reliability B. The enhancement of its relationship with the customer D. (p. . Esteem benefits B. or posted on a website. (p. This is proprietary material solely for authorized instructor use. such as when a hairdresser serves as a personal confidant. Utility transfer E. Self-actualization E. Duncan stays up to date on the latest hairstyles and hair care products and Kayla always leaves the salon with a haircut she loves. 155) Kayla has been having her haircut by Duncan. Kayla realizes _____ benefits from her relationship with Duncan. 153) In some long-term customer-firm relationships. a hairstylist at Studio 21 Salon. Self-actualization C. the firm is most concerned with: A. Not authorized for sale or distribution in any manner. Creating service loyalty E.Building Customer Relationships 13. or a proprietor of a local retail store is known a central figure in the neighborhood network. Transformational Difficulty: Moderate 6-5 © 2013 by McGraw-Hill Education. Confidence C. A. Creating a competitive advantage B. duplicated. Customer satisfaction C. Social support system D. (p. Assurance group Difficulty: Moderate 15.

economic benefits E. This is proprietary material solely for authorized instructor use. special treatment benefits. Economic benefits. The three types of relational benefits for customers are: A. Confidence benefits. customer behavior benefits. confidence benefits. customers also benefit in other ways from long-term associations with firms. economic benefits. went to work for another one and took his clients with him. customer behavior benefits Difficulty: Challenging 6-6 © 2013 by McGraw-Hill Education. in whole or part. Not authorized for sale or distribution in any manner. scanned. Management benefits. behavior benefits Difficulty: Challenging 18. The closeness of the relationship that Jennings builds with the government employees he works with was realized by Bracken and Leach when Jennings left the firm. Special treatment benefits. confidence benefits. human resource management benefits.Building Customer Relationships 16. special treatment benefits D. social benefits. Confidence benefits. or posted on a website. (p. Economic benefits. human resource management benefits B. duplicated. This document may not be copied. As an auditor. Jennings sometimes will spend six weeks in one office while he checks its accounting records. economic benefits C. (p. forwarded. Social D. economic benefits. distributed. This is an example of how _____ benefits can be both helpful and harmful. behavior benefits B. Confidence B. 154) Elmer Jennings is a government auditor and works for the Bracken and Leach firm. customer behavior benefits E. social benefits. Reliability C. Confidence benefits. social benefits C. Social benefits.Chapter 06 . Transactional E. social benefits D. (p. Economic Difficulty: Moderate 17. 153-154) Beyond the specific inherent benefits of receiving service value. Confidence benefits. management benefits. . He is the one who checks to see that city and county governments have complied with accounting principles. Customer behavior benefits. A. 154-156) The three types of benefits to organizations of maintaining and developing a loyal customer base are: A.

(p.Chapter 06 . Relationship value B. The ability to engage in guerilla marketing E. The parents would get to socialize with the other parents of children at their center E. in whole or part. Employee retention B. A. The parents wouldn't have to go looking for a new facility to keep their children C. (p. or posted on a website. Loyalty factor Difficulty: Moderate 6-7 © 2013 by McGraw-Hill Education. (p. duplicated. The parents would spread the word about their happiness with the services provided by the day care center Difficulty: Moderate 21. The parents would ask for a reduced monthly rate D. . 156) Which of the following is one of the ways an organization benefits from maintaining and developing a loyal customer base? A. 155) How would a day care center operator benefit from the implementation of relationship marketing with the parents of three preschool children? A. 156) The _____ of a customer is a concept that looks at customers from the perspective of their lifetime revenue or profit contributions to a company. This is proprietary material solely for authorized instructor use. Customers' increasing expectations of more personalized service C. Not authorized for sale or distribution in any manner. A reactive market-growth strategy D. scanned. Attractiveness index C. The children would benefit from socialization skills B.Building Customer Relationships 19. forwarded. Profit performance quotient D. Competitor entrenchment Difficulty: Moderate 20. Calculated risk E. distributed. This document may not be copied.

they have divided their target markets according to: A. Profitability C. distributed. or posted on a website. Sales of additional products and services over time C. A. Referrals generated by the customer over time D.Building Customer Relationships 22. scanned. The average revenues generated per relevant time period over the lifetime B. User characteristics Difficulty: Moderate 6-8 © 2013 by McGraw-Hill Education. The length of the average customer "lifetime" E. 156) According to the text. duplicated. Loyalty B. and the ugly” based on their ___________. Volume E. forwarded. (p. the relationship value of a customer is not influenced by: A. Current and/or future profitability B. Not authorized for sale or distribution in any manner. the bad.Chapter 06 . The communication strategy Difficulty: Challenging 23. This document may not be copied. Volume E. User characteristics Difficulty: Moderate 24. Behavior C. 158) Rather than treating all of its customers the same. FedEx categorized its customers internally as “the good. (p. This is proprietary material solely for authorized instructor use. in whole or part. Usage D. . 157-158) Since service companies have found that customers differ in their relationship value and that it may be neither practical nor profitable to meet or exceed all customers’ expectations. Attitude D. (p.

159) A company that uses a four-tier scheme to segment is customers by profitability: A. Differences in organizational cultures E. (p. duplicated. Simply increases the importance of word-of-mouth communication D. forwarded. scanned. It is a much better use of the sales force's time to call on schools with large classes and big adoption rates. (p. This is proprietary material solely for authorized instructor use. distributed. This document may not be copied.Building Customer Relationships 25. Is accurately described by all of the above Difficulty: Moderate 26. 1159-160) Salespeople for college texts call on college instructors to sell them on using a particular text for their classes. Is using usage segmentation B. in whole or part. or posted on a website. Not authorized for sale or distribution in any manner. Identifies customers who need different sorts of attention C. Legal barriers to loyalty programs B.Chapter 06 . (p. Will not cause any problems C. . Creates across-the-board customer enhancement Difficulty: Challenging 27. From the customer's point of view. The composition of the buying center C. Cannot use relationship marketing effectively E. Could cause resentment B. Improvements in efficiency have led some publishers to stop making sales calls altogether on smaller colleges. 160) The development of strong customer relationships is strongly influenced by: A. Is not profitable E. this application of the profitability tier: A. Can increase profitability by increasing sales to lower-level customers D. Barriers the customer faces in leaving a relationship D. All of the above Difficulty: Moderate 6-9 © 2013 by McGraw-Hill Education.

But she never does change service providers due to: A. Service standardization D. Contractual costs E. This document may not be copied. Financial inertia D. distributed. customers develop loyalty to an organization in part because of costs involved in changing to and purchasing from a different firm.Building Customer Relationships 28. forwarded. (p. duplicated. These costs are called: A. This is proprietary material solely for authorized instructor use. . Fixed costs B. Opportunity costs C. Process reciprocity Difficulty: Moderate 29. Switching costs D. A. or posted on a website. The iteration principle B. scanned. Financial inertia B. Fixed costs E. Not authorized for sale or distribution in any manner. Legal inertia C. (p. 162) _____ arise(s) when the customer is required to pay a penalty to switch providers. Retained costs Difficulty: Moderate 30.Chapter 06 . Opportunity costs Difficulty: Easy 6-10 © 2013 by McGraw-Hill Education. Switching costs E. Every month Jean gripes that she is being ripped off by the exterminating company and that she's going to find a new one. (p. 161) Every month the pest exterminator does a monthly spraying at Jean Poole's house. in whole or part. 162) In many instances. Customer inertia C.

duplicated.Chapter 06 . This is proprietary material solely for authorized instructor use. forwarded. This month they attended a wedding for which their chosen caterer had provided food. in whole or part. Retained costs Difficulty: Moderate 32. Molly and Tom do not want to pay: A. Not authorized for sale or distribution in any manner. Increasing its value-added service D. Neither thought the food was good and Molly worried that the dishes looked cheap. Opportunity costs C. Provide long-term competitive advantage E. Have a high degree of service customization Difficulty: Moderate 6-11 © 2013 by McGraw-Hill Education. This document may not be copied. Customer enhancement B. Fixed costs E. This amount is nonrefundable and must be paid when Moonlight Catering is hired for the job. (p. Extraneous expenses B. Customer retention Difficulty: Moderate 33. or posted on a website. 162-163) Retention strategies built around financial bonds: A. (p. 162) Molly and Tom are getting married. .Building Customer Relationships 31. Customer satisfaction E. Prospecting C. Switching costs D. dishes and flowers. Are difficult to initiate D. they feel they cannot change caterers at this date due to the large deposit required by the catering company when it took the job. distributed. Last month they hired a caterer for the wedding reception. scanned. Use price as the primary marketing mix element C. However. 162) Moonlight Catering has increased the deposit it requires before agreeing to cater an event to $300. Provide long-term profit increases B. (p. This increase in deposit will help Moonlight Catering achieve its goal of: A.

This is proprietary material solely for authorized instructor use. 162-163) Participants in the Coffee Café’s loyalty program get a free large cup of coffee after every 10th cup of coffee purchased. Coffee Café’s uses _____ to encourage its customers to remain loyal A. Are concerned about maintaining customer intimacy D.Chapter 06 .Building Customer Relationships 34. A. (p. (p. distributed. 163) Retention strategies based on social bonds: A. Marriott is using _____ to implement its retention strategy. scanned. 162-163) Every time Tom and Betty stay at a Marriott Hotel. . Structural bonds E. After purchasing 100 cups of coffee from the Coffee Café. Not authorized for sale or distribution in any manner. Are the most difficult of the retention strategies to initiate E. (p. duplicated. Social bonds C. forwarded. in whole or part. This document may not be copied. Security bonds Difficulty: Moderate 36. Customization bonds D. Create high opportunity costs Difficulty: Moderate 6-12 © 2013 by McGraw-Hill Education. loyalty program participants receive a $10 gift certificate good for food and beverage items or merchandise. Security bonds Difficulty: Challenging 35. Social bonds C. Financial bonds B. Build long-term relationships through social and interpersonal as well as financial bonds B. Financial bonds B. they earn points that can be used at a later date for free rooms. Structural bonds E. Use a strategy of mass customization C. or posted on a website. Customization bonds D. meals and other hotel amenities.

Not authorized for sale or distribution in any manner. The manicure salon has changed ownership three times and has had two different names during that same period. but Jasmine and Tanya still find it a convenient place to meet and share news about friends and relatives.Chapter 06 . A. duplicated. or posted on a website. 163-164) Miller & Sons Funeral Home has handled all of the funeral needs for the Atwater family since 1957. Social bonds C. (p. (p. Economic bonds B. This document may not be copied. forwarded. scanned. in whole or part. Jasmine and Tanya’s relationship with the manicure salon exemplifies how a service provider uses _____ to support its customer retention strategy.Building Customer Relationships 37. . 163-164) Every Thursday afternoon for almost twenty years. Structural bonds E. Customization bonds D. Jasmine and Tanya have gotten a manicure at the same location. Security bonds Difficulty: Moderate 6-13 © 2013 by McGraw-Hill Education. Economic bonds B. This is proprietary material solely for authorized instructor use. Structural bonds E. Security bonds Difficulty: Moderate 38. Social bonds C. Customization bonds D. A. The family believes that Miller & Sons offers them good value for their dollar and the Miller sons and the Atwater boys played on the same high school football team. distributed. Miller & Sons Funeral Home is using _____ to implement its customer retention strategy.

Structural E. Financial B. Financial bonds B. This is proprietary material solely for authorized instructor use.Building Customer Relationships 39. duplicated. A hair stylist comes to the center once a week and cuts the hair of any child whose parents request this service. A photographer comes to the center every three months to take updated pictures of children whose parents don't have the time to take their children to the photography studio. distributed. Social C. A. .Chapter 06 . Not authorized for sale or distribution in any manner. When the parents pick up their children in the evening. in whole or part. Customization bonds D. (p. or posted on a website. (p. their supper is ready for them to take home. A caterer is present every morning when the children are dropped off to take orders for supper. A. This document may not be copied. 165-165) Step-by-Step day care center offers parents several other services not normally offered by day by day care centers. 165) The term customer intimacy is most closely related to the establishment of _____ bonds. Security Difficulty: Easy 6-14 © 2013 by McGraw-Hill Education. too. scanned. Security bonds Difficulty: Challenging 40. Step-by-Step is using _____ to support its customer retention strategy. Social bonds C. In this way. forwarded. Structural bonds E. Customization D.

This is proprietary material solely for authorized instructor use. (p. Its customers all live within a 20-mile radius of the cleaners. Regency provides its regular customers with several alternative pickup and delivery schedules rather than a single weekly pickup and delivery.Building Customer Relationships 41. Focused marketing E. 165) _________ are created by providing services to the client that are designed right into the service delivery system. Individualization bonds D. Niche marketing D. Structural E. Structural bonds Difficulty: Challenging 43. forwarded. distributed. Structural bonds Difficulty: Challenging 42. Not authorized for sale or distribution in any manner. Focused marketing E. Customization bonds C. Regency’s driver will pickup clothes in the morning and deliver them back clean in the afternoon if that is what a customer needs.Chapter 06 . A. Customization bonds B. (p. scanned. Niche marketing D. Regency has built its customer retention strategy around: A. Financial bonds B. (p. 165) Pandora is an Internet-based music discovery service that helps its customers find and enjoy music that they like. This document may not be copied. Social bonds C. . or posted on a website. A customer can create up to 100 unique “stations” by identifying favorite songs or artists and then Pandora’s expert systems analyzes what they like and provides suggestions based on this analysis. in whole or part. duplicated. A. Pandora is using ____________ to develop and maintain customer relationships. Customization bonds B. Social bonds Difficulty: Easy 6-15 © 2013 by McGraw-Hill Education. Regency has found the increase in its total number of customers because of this service more than pays its additional operation expenses. Social bonds C. 164-165) Regency Dry Cleaners operates in a medium-sized community.

Do not exist in business-to-business marketing B. According to patient surveys. These trained hosts deliver customized meals from carts preloaded according to room number. Financial bonds B. regionally and nationally. in whole or part. distributed. 165) Customer retention strategies based on customization bonds: A. (p. All hosts have a minimum of 40 hours of training to teach them how to be courteous. Customization bonds D. This document may not be copied.Chapter 06 . or posted on a website. This is proprietary material solely for authorized instructor use. efficient and quick. 164-165) Aramark is a food service company that supplies meals to more than 200. scanned.000 hospital patients daily. Support transactional marketing as well as relationship marketing Difficulty: Challenging 45. _____ are created by providing customized services to the client that are technology based and make the customer more productive. The accumulated database is used to provide better menus. May include the customer intimacy approach E. Customization bonds D. it created a database that tracks patient preferences individually by hospitals. exclusive dealing and areas of gray marketing C. Heterogeneity Difficulty: Moderate 6-16 © 2013 by McGraw-Hill Education. refusals to deal. Structural bonds E. Create tying contracts. Aramark is using _____ in its customer retention strategy. Social bonds C. Structural bonds E. Social bonds C. (p. 165) Often. duplicated. To improve its service. (p. Not authorized for sale or distribution in any manner. Aramark's kitchen staff deliver the food and are referred to as hosts. A. A. forwarded. . Are not concerned with the pricing element of the marketing mix D. Aramark has boosted patient satisfaction by almost 10 percent by providing customized meals. Financial bonds B.Building Customer Relationships 44. Heterogeneity Difficulty: Moderate 46.

forwarded. provides unlimited free transactions at ATMs. United Jersey Preferred Banking eliminates monthly maintenance fees. If Beth wanted to take only one special education class to get her a teaching certificate in learning disabilities (LD). Her needs are homogeneous with many others D. None of the above 6-17 © 2013 by McGraw-Hill Education. United Jersey Bank does not offer United Jersey Preferred banking to customers with a combined balance of less than $3000 in a United Jersey Checking Account and Preferred Money Market Account since these customers are: A. scanned. who have a combined balance of $3000 or more in a United Jersey Checking Account and Preferred Money Market Account. duplicated. (p. Thirty-five students enter the program each fall. higher interest rates on savings with higher balances and a consolidated monthly statement. a service called United Jersey Preferred Banking. This service is designed to make banking more convenient and profitable for customers. In the wrong segment B. 166-169) Which of the following is NOT a reason why a service firm may avoid a customer relationship with a particular customer? A. She and others like her are compatible C. she would be unable to because she would not be able to participate in any carry-over projects from previous classes (This is a common teaching tool for the New Bedford education department faculty. She would not be profitable in the short-run Difficulty: Moderate 49. Customer is not divisible C. Customer is in the wrong segment B. Classes are made available in sequence. . Customer is difficult Difficulty: Easy 48. or posted on a website.Chapter 06 .). 167) New Bedford College has a two-year masters degree program designed for special education teachers. in whole or part. (p. This document may not be copied. The education department requires that the 35 students take the same classes. She is in the wrong segment B. 168) United Jersey Bank offers customers. Not authorized for sale or distribution in any manner. preferred rates on personal loans. Not divisible C. New Bedford College will avoid setting up a relationship with Beth because: A. Known as difficult customers E. Customer is not profitable in the long run E.Building Customer Relationships 47. She would be a difficult customer E. Customer is not always right D. Not profitable in the long run D. distributed. (p. This is proprietary material solely for authorized instructor use.

or aggressive. Dysfunctional customers C. 148) When customers and firms reach the friend level of their customer relationship. This is proprietary material solely for authorized instructor use. Friends D. Heterogeneous customers Difficulty: Easy True / False Questions 51. or posted on a website. firms generally focus on providing value comparable to the competition. 147) Relationship marketing essentially represents a paradigm shift within marketingaway from an acquisitions/transaction focus toward a retention/relationship focus.Building Customer Relationships Difficulty: Moderate 50. rude. scanned. distributed. who intentionally or unintentionally act in a way that is disruptive. (p. (p. in whole or part. (p. 169) Sometimes firms have service encounters that fail because of ___________. Profitable customers B. . Strangers E. FALSE Difficulty: Moderate 6-18 © 2013 by McGraw-Hill Education. A. This document may not be copied.Chapter 06 . duplicated. TRUE Difficulty: Moderate 52. forwarded. Not authorized for sale or distribution in any manner.

or posted on a website. (p. 153) With relationship marketing. customers can develop social relationships with their service providers. 156) There is no way to calculate the relationship value of a customer. distributed. FALSE Difficulty: Moderate 55. 152) The primary goal of relationship marketing is to build and maintain a base of profitable and committed customers through attraction. customers receive the specific inherent benefits of receiving service value and nothing more. FALSE Difficulty: Moderate 6-19 © 2013 by McGraw-Hill Education. TRUE Difficulty: Moderate 57. (p. in whole or part.Chapter 06 . forwarded. 153) With relationship marketing.Building Customer Relationships 53. This document may not be copied. (p. Not authorized for sale or distribution in any manner. relationship marketing increases customer purchases. This is proprietary material solely for authorized instructor use. which makes it less likely that they will switch to a competitor. (p. . lowers costs and creates free word-of-mouth advertising. (p. TRUE Difficulty: Easy 54. scanned. duplicated. 154-155) For the organization. retention and customer enhancement. TRUE Difficulty: Moderate 56.

(p. or posted on a website. This is proprietary material solely for authorized instructor use. distributed. 159) The ability to segment customers narrowly based on profitability implications may raise questions of privacy for customers.Building Customer Relationships 58. duplicated. TRUE Difficulty: Moderate 60.Chapter 06 . forwarded. (p. FALSE Difficulty: Moderate 59. FALSE Difficulty: Moderate 61. . 160) Well-implemented retention strategies will have long-term success even if there is no solid base of service quality and customer satisfaction to build on. Not authorized for sale or distribution in any manner. FALSE Difficulty: Easy 6-20 © 2013 by McGraw-Hill Education. (p. scanned. 158) The four-tiered system for measuring customer profitability uses usage segmentation. a service provider must accept the fact that the customer is always right. 166) To be successful. 163) Level 1 retention strategies are very useful in creating a long-term competitive advantage. FALSE Difficulty: Moderate 62. (p. in whole or part. This document may not be copied. (p.

152) What is the primary goal of relationship marketing? To build and maintain a base of committed customers who are profitable for the organization. (p.Building Customer Relationships 63. . (p. This is proprietary material solely for authorized instructor use. that relationship should never end. TRUE Difficulty: Easy 64. 163) Bundling and cross-selling are ways to implement a Level 1 retention strategy. Difficulty: Easy 6-21 © 2013 by McGraw-Hill Education.Chapter 06 . but they are much more difficult to imitate than financial incentives. (p. This document may not be copied. scanned. 164) Social bonds alone may not tie the customer permanently to the firm. forwarded. 169) Once a company has entered into a relationship with a customer. TRUE Difficulty: Easy 65. FALSE Difficulty: Easy Short Answer Questions 66. Not authorized for sale or distribution in any manner. duplicated. or posted on a website. in whole or part. distributed. (p.

Difficulty: Easy 6-22 © 2013 by McGraw-Hill Education. social benefits and special treatment benefits. retaining customers and enhancing customers. or posted on a website. satisfying customers. This is proprietary material solely for authorized instructor use.Chapter 06 . duplicated. 153-154) What are the three types of benefits customers enjoy through relationship marketing? Confidence benefits. (p. forwarded. distributed. Difficulty: Easy 70. Not authorized for sale or distribution in any manner. 152) What are four customer goals for organizations that engage in relationship marketing? Acquiring customers.Building Customer Relationships 67. in whole or part. (p. Difficulty: Easy 69. This document may not be copied. scanned. friend and partner. 149) List the four stages in the evolution of customer relationships. (p. . Difficulty: Easy 68. (p. Stranger. 154-156) What are the three of benefits firms enjoy through relationship marketing? Economic benefits. customer behavior benefits and human resource management benefits. acquaintance.

(p. referrals generated by the customer over time. forwarded. Difficulty: Moderate 6-23 © 2013 by McGraw-Hill Education. 163) Gracie gets her haircut at a salon almost twenty miles from her house because the price is low and because Gracie went to school with the woman who owns the salon. What kind of retention strategy is being used in this example? Level 2-social bonds. duplicated. Difficulty: Moderate 72. This document may not be copied. 161-162) What are the two types of switching barriers that oftentimes prevent dissatisfied customers from switching providers? Switching costs and customer inertia. 162) Which retention strategy relies primarily on financial incentives? Level 1-financial bonds. (p. or posted on a website. sales of additional products and services over time. costs associated with serving the customer. Difficulty: Easy 73. 156) What are some influences on the lifetime or relationship value of a customer? Length of an average customer lifetime. in whole or part. (p. average revenues generated per relevant time period over the lifetime. scanned.Chapter 06 . Not authorized for sale or distribution in any manner. This is proprietary material solely for authorized instructor use. Difficulty: Difficulty 74.Building Customer Relationships 71. . distributed. (p.

gold. (p. less profitable than platinum because customers look for price discounts. If this does not happen. (p. Sometimes raising prices or charging for services that previously had been given away for free can move unprofitable customers out of the company. 158-159) Jade Taylor has run an advertising agency long enough to understand that the customer is not always right. Not authorized for sale or distribution in any manner. (p. a essential customers who provide the volume needed to utilize the firm's capacity but not profitable enough for special treatment and lead. employee or service provider to customer in a business-to-business (B2B) relationship. Difficulty: Moderate 76. 167-169) What are three types of customer relationships may not be beneficial to the firm? Level 4—wrong segment. customers who are costing the firm money. or posted on a website.Building Customer Relationships 75. the relationship may be salvaged by negotiating expectations or finding more efficient ways to serve the client.Chapter 06 . Employee (or service provider) to consumer (B2C). 172) Discuss the challenges that companies face when ending customer relationships. among customers (C2C). distributed. Define the four customer profitability tiers that might help Jade to analyze his customer base? The four customer profitability tiers forming the customer pyramid of profitability are platinum. Difficulty: Moderate 78. both parties may need to find an agreeable way to end the relationship. in whole or part. This document may not be copied. not profitable in the long term. scanned. the most profitable customers and heavy users. Helping a client find a new provider who can better meet its needs is another way to gracefully exit a nonproductive relationship. (p. He is interested in identifying his profitable customers. Difficulty: Moderate 77. 163) Describe the types of social bonds that can bind customers to the firm. difficult customers. duplicated. . iron. forwarded. Difficulty: Moderate 6-24 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. If the customer has become too demanding. Firing customers should be done in a way that avoids negative publicity or negative word of mouth.

This document may not be copied. this strategy will not be successful long-term unless it builds customers' perception of increased value received from the service. or posted on a website. Finally. 162-163) A theater that was once very popular is having decreased attendance at its movies even though its owner is providing his audience with the kind of movies they have enjoyed in the past.Chapter 06 . . duplicated. these programs are easily imitated. Second. forwarded. Thus. He is thinking about offering a program where customers earn free snacks with the purchase of a set number of tickets. Why might it be inappropriate for a movie theater to implement a financial rewards loyalty program? First. scanned. Not authorized for sale or distribution in any manner.Building Customer Relationships 79. (p. any increased usage or loyalty from customers may be short-lived. This is proprietary material solely for authorized instructor use. distributed. Difficulty: Moderate 6-25 © 2013 by McGraw-Hill Education. in whole or part. this strategy is not likely to be successful unless it is structured so that it can truly lead to increased or repeat usage rather than serving as a means to attract new customers and potentially cause endless switching among competitors.

165) Why are Level 4 retention strategies the most difficult to imitate? Level 4 retention strategies involve structural as well as financial. Structural bonds are created by providing services to the client that are frequently designed right into the service delivery system for that client.80. Difficulty: Moderate . Often. structural bonds are created by providing customized services to the client that are technology based and make the customer more productive. social and customization bonds between the customer and the firm. (p.