Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following is true for the modern company organization chart?
A) Frontline employees are less important than top management.
B) Customers are at the top of the pyramid.
C) Top management is at the top of the pyramid.
D) Customers are less important than middle management.
E) Frontline employees are at the top of the pyramid.
Answer: B

2) In the modern customer-oriented organizational chart, which of the following is considered to be at the top
of the organizational pyramid?
A) sales
B) top management
C) front-line people
D) customers
E) middle management
Answer: D

3) In a modern customer-oriented organization chart, the ________ of an organization immediately follow the
customer segment.
A) top management
B) marketing department
C) middle management
D) frontline people
E) lower management
Answer: D

4) ________ is the difference between the prospective customer's evaluation of all the benefits and all the 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

5) When a consumer considers a product or service, he or she will choose whichever product or service delivers
the highest ________.
A) customer-perceived value
B) customer-perceived cost
C) customer profitability analysis
D) customer equity
E) customer lifetime value
Answer: A

6) ________ is the perceived monetary value of the bundle of economic, functional, and psychological benefits
customers expect from a given market offering.
A) Total customer cost
B) Total customer benefit
 C) Total benefits of ownership
D) Value proposition
E) Value delivery system
Answer: B

7) The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given
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

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

A) It is the perceived monetary value of the bundle of economic, functional, and psychological benefits
customers expect from a product.
B) It is the difference between the prospective customer's evaluation of all the benefits and all the costs of
an offering and the perceived alternatives.
C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and
disposing of the given market offering.
D) It is the net present value of the stream of future profits expected over the customer's lifetime
purchases.
E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a brand if
they use phased decision strategies.
Answer: B

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

A) Examine how customers in a specific segment rate the company's performance.
B) Assess the company's and competitors' performances on the different customer values against their
rated importance.
C) Identify the major attributes and benefits that customers value.
D) Monitor customer values over time.
E) Assess the quantitative importance of the different attributes and benefits.
Answer: C

12) ________ can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service
in the future despite situational influences and marketing efforts having the potential to cause switching
behavior.
A) Value proposition
B) Loyalty
C) Satisfaction
D) Respect
E) Customer value
Answer: B

13) TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of TBS Bikes is
"speed". Surami is a five-gear bike and apart from speed, the company promises to include other features
such as safety, good performance, and pollution control features. This describes the ________ of the bike.
A) total customer cost
B) customer-perceived value
C) value-delivery system
 D) value proposition
E) total customer benefit
Answer: D

14) A company's ________ includes all the experiences the customer will have on the way to obtaining and using
the offering.
A) value proposition
B) value delivery system
C) customer-value analysis
D) total customer benefit
E) total customer cost
Answer: B

15) Sammy's is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its marketing efforts on
all the experiences the customers will have on the way to obtaining their food order and eating it. Hence,
Sammy's is focusing its marketing efforts on its ________.
A) horizontal marketing system
B) cost versus benefit system
C) consumption system
D) marketing channel system
E) value delivery system
Answer: E

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

A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite
situational influences.
B) Consumers often form more favorable perceptions of a product with a brand that is new.
C) The ultimate goal of a customer-centered firm is to create high customer satisfaction.
D) Only increased customer satisfaction can help a company increase its profits.
E) Greater customer satisfaction has also been linked to higher returns and lower risk in the stock market.
Answer: E

18) ________ can track customer satisfaction directly, measure repurchase intention and also gauge a consumer's
willingness to recommend the company and brand to others.
A) Periodic surveys
B) Mystery shoppers
C) Customer loss rates
D) Customer focus statements
E) Sales summary reports
Answer: A

19) Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field Grocery stores.
Which of the following methods can it use for this?
A) group buyers
B) buyer brokers
C) mystery shoppers
D) personal shoppers
E) buying agents
Answer: C

22) ________ is the totality of features and characteristics of a product or service that bear on its ability to satisfy
stated or implied needs.
 A) Performance
B) Value
C) Quality
D) Customer retention
E) Customer loyalty
Answer: C

25) The 80-20 rule reflects the idea that ________.

A) 20% of the company's profits are generated by the top 80% of customers
B) the top 20% of customers are highly satisfied and 80% of customers will recommend the company to a
friend
C) 20% of customers are unprofitable, and 80% make up a company's profits
D) the top 20% of customers often generate 80% of the company's profits
E) any new product will be accepted by 20% of the customers immediately, but 80% of the customers will
be up for grabs throughout the product's life cycle
Answer: D

26) A profitable customer ________.

A) yields a cost stream that exceeds by an acceptable amount his revenue stream
B) yields a revenue stream that exceeds the company's cost stream
C) yields a cost stream that exceeds the company's revenue stream
D) yields a revenue stream that exceeds by an acceptable amount his cost stream
E) yields a revenue stream that equals the company's cost stream
Answer: B

27) 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

28) Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called
________.
A) input-output analysis
B) factor analysis
C) revenue-based costing
D) activity-based costing
E) future date costing
Answer: D

29) 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
 30) ________ 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

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

32) ________ is the process of carefully managing detailed information about individual customers and all
customer "touch points" to maximize loyalty.
A) Customer relationship management
B) Customer lifetime value
C) Customer profitability analysis
D) Customer satisfaction analysis
E) Customer-value delivery
Answer: A

46) LifeTime Insurance screens its customers and tries to get unprofitable customers to buy services from
competitors. This is an example of ________.
A) trying to increase the retention rate for low-profit customers
B) terminating the relationship with low-profit customers
C) enhancing the growth potential of each customer through up-selling
D) increasing the longevity of the customer relationship
E) reducing the rate of customer defection
Answer: B

53) Club membership programs that are open to everyone who purchases a product or service ________.
A) are more powerful long-term loyalty builders than limited-membership clubs.
B) will not help a company attract customers from competitors
C) prevent those with only a fleeting interest in a company's products from joining
D) are useful for building a database of customers but are not very good as long-term loyalty builders
E) are useless unless there are fees and membership conditions
Answer: D

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
71) Managers who believe the customer is the company's only true "profit center" consider the traditional
organization chart to be obsolete.
Answer: True False

72) The modern customer-oriented organization chart places top management at the top of the pyramid.
Answer: True False
73) Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
Answer: True False

74) Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using, and disposing of
the given market offering.
Answer: True False

75) Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an
annual basis.
Answer: True False

76) A seller who is at a disadvantage has two alternatives: decrease total customer benefit or increase total
customer cost.
Answer: True False

77) The value proposition is stated in the price of a product and readily recognized by the average consumer.
Answer: True False

78) The value delivery system includes all the experiences the customer will have on the way to obtaining and
using the offering.
Answer: True False

79) The value proposition is also known as the core positioning of the offering.
Answer: True False

80) Loyalty is a person's feelings of pleasure or disappointment that result from comparing a product's perceived
performance to expectations.
Answer: True False

81) Customer satisfaction is the only way by which a firm can increase its profitability.
Answer: True False

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

Answer: True False

83) The best thing a company can do in the face of company mistakes is to discourage the customer from
complaining.
Answer: True False

85) Conformance quality and performance quality are identical in the marketing sense.
Answer: True False

86) Two products with very different performance qualities can have the same conformance quality if both
products deliver their respective promised quality.
Answer: True False

87) 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 False
 88) 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 False

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

Answer: True False

90) Customer profitability analysis is best conducted with the tools of an accounting technique called activity-
based costing.
Answer: True False

91) Activity-based costing tries to identify the real costs associated with serving each customer.
Answer: True False

92) Activity-based costing does not consider indirect, variable and overhead costs.
Answer: True False

94) The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low
as possible.
Answer: True False

71) TRUE

72) FALSE

73) TRUE

74) FALSE

75) FALSE

76) FALSE

77) FALSE

78) TRUE

79) FALSE

80) FALSE

81) FALSE

82) FALSE

83) FALSE

85) FALSE

86) TRUE
87) TRUE

88) TRUE

89) TRUE

90) TRUE

91) TRUE

92) FALSE

94) FALSE