Chapter 4

Question 1

What is the cornerstone of holistic marketing?

Answer 1

Strong customer relationship

Question 2

What is Customer-Perceived Value (CPV)?

Answer 2

The difference between the customer’s evaluation of benefits and costs of an offering and its alternative

Question 3

Define loyalty

Answer 3

A deeply held commitment to rebuy a preferred product or service in the future despite situational factors

Question 4

Define satisfaction

Answer 4

Feelings of pleasure or disappointment that result from comparing a product’s performance to its expectations

Question 5

What kind of customers yield the most profit?

Answer 5

Midsize customers (no discounts, medium transaction costs)

Question 6

Define a profitable customer

Answer 6

Customer that over time yields more revenue exceeding the company’s costs for serving that customer

Question 7

Define Customer Lifetime Value (CLV)

Answer 7

The net present value of stream of future profits expected over a customers lifetime

Question 8

What is a Customer Relationship Management (CRM)?

Answer 8

The process of carefully managing detailed information of a customer, and all its touch points to maximize loyalty

Question 9

What is the marketing funnel?

Answer 9

It identifies the percentage of potential target market at each stage in the decision process, from merely aware to highly loyal.

Question 10

What 3 types of marketing activities do companies use to improve loyalty?

Answer 10

• Interaction with customers
• Loyalty programs (reward frequent customers with discounts)
• Creating institutional ties (the company may supply large customers with special equipment that help them manage orders)

Question 11

What 5 results do come from companies using their databases?

Answer 11

• Identification of the best prospects
• Match specific orders to specific customers
• Deepen customer loyalty by remembering preferences
• Reactivate customer purchasing through reminders etc
• Avoid serious mistakes like mispricing the same product

Question 12

What are the 5 main problems that prevents a firm from using databases for CRM?

Answer 12

• Some situations are not conducive to database management
• Large investment in hardware and software
• Getting everyone in the firm to be customer oriented
• Some customers do not want their data collected
• The assumptions of CRM are not always true