Creating Customer Value and Engagement Part III

66) ________ refers to the portion of the customer's purchase that a company gets in its product categories. A) Value proposition B) Share of customer C) Brand equity D) Customer lifetime value E) Customer equity Answer: B 67) ________ is the total combined customer lifetime values of all the company's current and potential customers. A) Share of customer B) Value proposition C) Customer equity D) Market share E) Customer-perceived value Answer: C 68) The ultimate aim of customer relationship management is to ________. A) produce high customer equity B) divide markets into distinct segments C) evaluate customer lifetime value D) turn "strangers" into "butterflies" E) evaluate current sales share Answer: A 69) In which of the following customer relationship groups do organizations generally avoid investing? A) barnacles B) strangers C) butterflies D) true believers E) true friends Answer: B 70) A consumer who is potentially profitable but not loyal to a firm's offerings is referred to as a ________. A) true friend B) butterfly C) stranger D) barnacle E) true believer Answer: B 71) ________ are customers who show low potential profitability and little projected loyalty. A) True friends B) Barnacles C) Strangers D) True believers E) Butterflies Answer: C 72) A customer who is both loyal and profitable is referred to as a ________. A) barnacle B) stranger C) true believer D) laggard E) butterfly Answer: C 73) Amazon Prime strives to convert casual shoppers into loyal customers. An Amazon Prime customer can be classified as a ________. A) barnacle B) true believer C) stranger D) laggard E) butterfly Answer: B 74) Efforts to convert ________ into loyal customers are rarely successful. A) barnacles B) strangers C) true believers D) laggards E) butterflies Answer: E 75) Customers who are classified as true believers ________. A) are attracted to a company's competitor's deals and offers B) have needs and wants that do not fit a company's offerings C) are not very profitable for a company D) tell others about their good experiences with a company E) are projected to be less loyal to any brand Answer: D 76) Carla, a team leader in charge of customer relationship management, is planning strategies to improve the profitability of her firm's least profitable but loyal customers. She is also examining methods for "firing" customers in this group who cannot be made profitable. To which of the following customer relationship groups do these customers belong? A) butterflies B) true friends C) strangers D) barnacles E) innovators Answer: D 77) Various government agencies have launched campaigns to encourage energy conservation and concern for the environment as well as discourage smoking, illegal drug use, and obesity. This illustrates ________ marketing. A) ambush B) social C) for-profit D) consumer-generated E) multi-level Answer: B 78) Which of the following transforms marketing strategies into real values for consumers? A) share of customer B) customer equity C) the four Ps of marketing D) a firm's value proposition E) customer satisfaction surveys Answer: C 79) Customer relationship management focuses on retaining existing customers but not on acquiring new customers. Answer: FALSE 80) Companies like Coca-Cola and Facebook deliver customer satisfaction by spreading happiness and connecting individuals through shared experiences. Answer: TRUE 81) Customer-perceived value is defined as a customer's evaluation of the perceived difference between all the benefits and all the costs of a market offering relative to those of competing offers. Answer: TRUE 82) The more loyal a firm's profitable customers, the lower its customer equity. Answer: FALSE 83) In markets with few customers and high margins, sellers should try to develop basic relationships rather than full partnerships. Answer: FALSE 84) The Internet of Things (IoT) is a global environment where everything and everyone is digitally connected to everything and everyone else. Answer: TRUE 85) Through consumer-generated marketing, consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. Answer: TRUE 86) Success at delivering customer value rests on how well a company's entire supply chain performs against competitors' supply chains. Answer: TRUE 87) Customer equity is a measure of the past value of a company's customer base. Answer: FALSE 88) In the final step of a marketing process, a company reaps the rewards of its strong customer relationships by capturing value from customers. Answer: TRUE 89) Define customer-perceived value. Answer: Customer-perceived value is defined as the customer's evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. Importantly, customers often do not judge values and costs accurately or objectively. They act on perceived value. A customer buys from the firm that offers the highest customer-perceived value. 90) The aim of customer relationship management is to create not just customer satisfaction, but customer delight as well. Explain. Answer: Customer satisfaction cannot be taken for granted. Since brand loyalty is dependent upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current customers. Firms create customer delight by promising only what they can deliver and then delivering more than what they promise. They also create emotional relationships with key customers. Delighted customers make repeated purchases and become customers for life. More importantly, they also essentially become an unpaid sales force for the firm as "customer evangelists" who tell other potential customers about their positive experiences with a product. 91) Explain, with examples, the different types of relationships that a company can build with its customers. Answer: At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. For example, Proctor & Gamble's Tide does not phone or call on all of its consumers to get to know them personally. Instead, it creates relationships through brand-building advertising, public relations, and social media presence. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, P&G sales representatives work closely with Walmart, Kroger, and other large retailers that sell Tide. In between these two extremes, other levels of customer relationships are appropriate. Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to develop stronger bonds with customers. For example, many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programs, hotels give room upgrades to their frequent guests, and supermarkets give patronage discounts to "very important customers." Other companies sponsor club marketing programs that offer members special benefits and create member communities. 92) Compare and contrast customer-managed relationships and consumer-generated marketing. Answer: Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. Thus, the marketing world is now embracing not only customer relationship management, but also customer-managed relationships. Greater consumer control means that companies can no longer rely on marketing by intrusion. Instead, marketers must practice marketing by attraction – creating market offerings and messages that involve consumers rather than interrupt them. Hence, most marketers now augment their mass-media marketing efforts with a rich mix of direct marketing approaches that promote brand-consumer interaction. For example, many brands are creating dialogues with consumers via their own or existing online social networks. A growing part of the new customer dialogue is consumer-generated marketing, by which consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, and other digital forums. Increasingly, companies are also inviting consumers to play a more active role in shaping products and brand messages. One drawback of this process is that harnessing consumer-generated content can be time-consuming and expensive. 93) Define customer equity, and explain why it is important to a company. Answer: Customer equity is the sum of the lifetime values of all the current and potential customers of a company. Customer equity is dependent upon customer loyalty from a firm's profitable customers. Because customer equity is a reflection of a company's future, companies must manage it carefully, viewing customers as assets that need to be maximized. It is important that companies not only acquire customers but also keep and grow them. When companies create profitable customers, they earn a greater share of their purchases, and capture their customer lifetime value. 94) Describe and compare the four types of customers classified by their potential profitability to an organization. Identify how an organization should manage each type of customer. Answer: The four types of customers are strangers, butterflies, true friends, and barnacles. 1. "Strangers" have low potential profitability and loyalty. A company's offerings do not fit well with a stranger's wants and demands. Companies should not invest in building a relationship with this type of customers. 2. Another type of customer in which a company should not invest is the "barnacle." Barnacles are highly loyal but not very profitable because there is a limited fit between their needs and the company's offerings. The company might be able to improve barnacles' profitability by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be "fired." 3. Like strangers, "butterflies" are not loyal. However, they are potentially profitable because there is a good fit between the company's offerings and their needs. Like real butterflies, this type of customer will come and go without becoming a permanent, loyal consumer of a company's products. Companies should create satisfying and profitable transactions with them, and then cease investing in them until the next time around. 4. The final type of customers is "true friends." They are both profitable and loyal. There is a strong fit between their needs and the company's offerings, so the company should make continuous relationship investments in an effort to go beyond satisfying and to delight these customers. A company should try to delight true friends so that they will tell others about their good experiences with the company. 95) ________ marketing is perhaps the fastest-growing marketing platform. A) Online B) Social media C) Mobile D) Website E) Blog Answer: C 96) ________ involves machines that think and learn in a way that looks and feels human but with a lot more analytical capacity. A) Not-for-profit marketing B) Globalization C) Artificial intelligence D) Social responsibility E) Sustainable marketing Answer: C 97) Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, email, blogs, and other digital platforms to engage consumers. Answer: TRUE 98) Today, almost every company, large or small, is touched in some way by global competition. Answer: TRUE 99) Discuss the opportunities and challenges that new communication technologies have created for marketers. Answer: Through the Internet and related technologies, people can now interact in direct and surprisingly personal ways with large groups of others, from neighbors within a local community to people across the world. With communication technologies such as e-mail, blogs, websites, online communities, online social networks, and Twitter, today's marketers incorporate interactive approaches that help build targeted, two-way customer relationships. Marketers can create deeper consumer involvement and a sense of community surrounding a brand, making a brand a meaningful part of consumers' conversations and lives. However, while new communication tools create relationship-building opportunities for marketers, they also create challenges. They give consumers a greater voice, and therefore greater power and control in the marketplace. Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. 100) Explain how the Internet has transformed the way in which we do business today. Answer: The Internet links individuals and businesses of all types to each other. The Internet allows firms access to exciting new market spaces. The consumer love affair with digital and mobile technology makes it fertile ground for marketers trying to engage customers. Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, e-mail, blogs, and other digital platforms that engage consumers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and other digital devices. At the most basic level, marketers set up company and brand websites that provide information and promote the company's products. Many of these sites also serve as online brand communities, where customers can congregate and exchange brand-related interests and information. The social media provide exciting opportunities to extend customer engagement and get people talking about a brand. Most U.S. companies now use social media as part of their marketing mixes. Mobile marketing is perhaps the fastest-growing digital marketing platform. Smartphones are ever-present, always on, finely targeted, and highly personal. This makes them ideal for engaging customers anytime, anywhere as they move through the buying process. For example, Starbucks customers can use their mobile devices for everything from finding the nearest Starbucks and learning about new products to placing and paying for orders.