Chap 1 marketing: Creating and Capturing Customer Value Essay

MID-TERM EXAM REVIEW
Chapter 1 Marketing: Creating and Capturing Customer Value

PART 1 - Chap 1 marketing: Creating and Capturing Customer Value Essay introduction. MULTIPLE CHOICE QUESTIONS

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1) According to management guru Peter Drucker, “The aim of marketing is to ________.” A) create customer value
B) identify customer demands
C) make selling unnecessary
D) set realistic customer expectations
E) sell products

2)What do companies call a set of benefits that they promise to consumers to satisfy their needs? A) market offering
B) value proposition
C) demand satisfaction
D) need proposition
E) evoked set

3) When marketers set low expectations for a market offering, the biggest risk they run is________. A) disappointing loyal customers
B) decreasing customer satisfaction
C) failing to attract enough customers
D) failing to understand their customers’ needs
E) incorrectly identifying a target market

4) All of the following are accurate descriptions of modern marketing, EXCEPT which one? A) Marketing is the creation of value for customers.
B) Marketing is managing profitable customer relationships.
C) Selling and advertising are synonymous with marketing.
D) Marketing involves satisfying customers’ needs.
E) Marketing is used by for-profit and not-for-profit organizations.

5) ________ is defined as a social and managerial process by which individuals and organizations obtain what they need and want through value
creation and exchange. A) Selling
B) Advertising
C) Bartering
D) Marketing
E) Negotiating

6) Which of the following refers to sellers being preoccupied with their own products and losing sight of underlying consumer needs? A) selling myopia
B) marketing management
C) value proposition
D) marketing myopia
E) the product concept.

7) Consumer research, product development, communication, distribution, pricing, and service are all core ________ activities. A) exchange
B) marketing
C) management
D) production
E) customer relationship management.

8) Which customer question is answered by a company’s value proposition? A) “Why should I buy your brand rather than a competitor’s?” B) “How does your brand benefit me and society?”
C) “What are the costs and benefits of your brand?”
D) “What kind of experience will I have with products and services associated with this brand?” E) “What are the benefits of being a loyal consumer of your brand?”

9) Selecting which segments of a population of customers to serve is called ________. A) market segmentation
B) positioning
C) customization
D) target marketing
E) managing the marketing effort

10) Which of the following marketing management orientations focuses primarily on improving efficiencies along the supply chain? A) production concept
B) product concept
C) selling concept
D) marketing concept
E) social marketing concept

11) Which concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do? A) product

B) production
C) selling
D) marketing
E) equity

12) The ________ concept is aligned with the philosophy of continuous product improvement and the belief that customers will choose products that offer the most in quality, performance, and innovative features. A) product

B) production
C) customer
D) marketing
E) promotion

13) According to the production concept, consumers will favor products that are ________ and ________. A) satisfying; quality focused
B) advertised; affordable
C) in high demand; hard to find
D) segmented; convenient
E) available; affordable
14) Customer-driven marketing usually works well when ________ and when customers ________. A) a clear need exists; are difficult to identify
B) customers know what they want; are loyal to the brand
C) a firm can deliver the goods desired; are thoroughly researched D) a clear need exists; know what they want
E) a need exists; don’t know what they want.

15) When customers don’t know what they want or don’t even know what’s possible, the most effective strategy is ________ marketing. A) customer-driven
B) customer-driving
C) societal
D) production
E) product

16) According to the simple five-step model of the marketing process, a company needs to ________ before designing a customer-driven marketing strategy. A) determine how to deliver superior value
B) build profitable relationships with customers
C) use customer relationship management to create full partnerships with key customers D) understand the marketplace and customer needs and wants
E) construct key components of a marketing program

17) Which concept holds that firms must strive to deliver value to customers in a way that maintains or improves the consumer’s and society’s well-being? A) marketing
B) selling
C) product
D) societal marketing
E) equity

18) The three areas of consideration that should be balanced in the societal marketing concept are consumer wants, society’s interests, and ________. A) human welfare
B) want satisfaction
C) company profits
D) short-run wants
E) long-term needs

19) The set of marketing tools a firm uses to implement its marketing strategy is called the ________. A) promotion mix
B) product mix
C) marketing mix
D) TQM
E) marketing effort

20) Of the following, which is the most important concept of modern marketing? A) customer relationship management
B) societal marketing
C) consumer-generated marketing
D) properly trained salespeople
E) low prices

21) Building, keeping, and growing profitable relationships by delivering customer value and satisfaction is called ________. A) customer lifetime value
B) customer perceived value
C) customer relationship management
D) database marketing
E) societal marketing

22) Customer-perceived value is determined by a customer’s ________ of the benefits and costs of a market offering relative to those of competing offers. A) personal assessment
B) rational expectations
C) accurate assessment
D) objective evaluation
E) emotional understanding

23) It is most accurate to say that customers buy from stores and firms that offer which of the following? A) the highest value for the dollar
B) the highest customer-perceived value
C) the highest level of customer satisfaction
D) the most attractive company image
E) the most concern for society’s interests

24) ________ is defined as the customer’s evaluation of the differences between all the benefits and all the costs of a marketing offer relative to those of competing offers. A) Customer equity
B) Customer satisfaction
C) Customer evangelism
D) Customer-perceived value
E) Marketing myopia

25) Which of the following is the term for customers who make repeat purchases and tell others about their positive experiences with a product or service? A) satisfied customers
B) customer evangelists
C) butterflies
D) full partners
E) social customers

26) A room upgrade offered by a hotel to a guest who often stays in the hotel is an example of a ________. A) frequency marketing program
B) basic customer relationship
C) club marketing program
D) partner relationship management technique
E) structural benefit

27) Using customer profitability analysis to weed out unprofitable customers and target winning ones for pampering is referred to as ________. A) customer relationship management
B) positioning
C) database marketing
D) selective relationship management
E) marketing myopia

28) Which of the following has NOT contributed to the deeper, more
interactive nature of today’s customer relationships? A) e-mail
B) Web sites
C) online social networks
D) traditional advertising
E) video sharing

29) Which of the following best explains why consumers have greater power and control in today’s marketplace? A) The production concept and competition have lowered prices. B) Implementation of the product concept has resulted in continually improving products. C) Customer-driven marketing creates products and services that meet customers’ future needs. D) More companies are implementing social marketing and weighing long-term costs and benefits. E) Through new communication technologies, customers have more access to information and more methods of sharing their opinions with other customers.

30) In today’s world, marketing should be done by ________ employees in an organization. A) only marketing
B) only marketing, sales, and customer-support
C) only sales and technology
D) only management and marketing
E) all

31) Through ________, many companies today are strengthening their connections to all partners, from providers of raw materials to components to final products that are delivered to final buyers. A) supply chain management

B) direct marketing
C) partnership relationship marketing
D) customized marketing
E) equity marketing

32) The final step in the marketing process is ________.
A) capturing value from customers
B) creating customer loyalty
C) creating customer lifetime value
D) understanding the marketplace
E) designing a customer-driven marketing strategy

33) Beyond simply retaining good customers, marketers want to constantly increase their “share of customer.” What does this mean in marketing terms? A) Marketers want to increase their market share.

B) Marketers want to increase the share they get of the customer’s purchasing in their product categories. C) Marketers want to increase the profit margin with this target market. D) Marketers want to continuously increase their customers’ levels of satisfaction. E) Marketers want to turn satisfied customers into delighted customers.

34) ________ is one of the best ways to increase share of customer. A) Targeting new customers
B) Using bait and switch
C) Cross-selling
D) Relationship selling
E) Partnership marketing

35) The ultimate aim of customer relationship management is to produce ________. A) customer equity
B) market share
C) sales volume
D) a reliable database
E) higher profit margins

36) Which of the following is currently the fastest-growing form of marketing? A) consumer-generated marketing
B) online marketing
C) mass media marketing
D) social marketing
E) word-of-mouth marketing

37) Today almost every company, small and large, is affected in some way by which of the following? A) the societal marketing concept
B) not-for-profit marketing
C) global competition
D) customer-generated marketing
E) caring capitalism

38) Which of the following is the total combined customer lifetime values of all a company’s current and potential customers? A) share of customer
B) customer lifetime value
C) customer equity
D) profitability
E) share of market

39) Which of the following is an example of consumer-generated marketing? A) Toyota’s presence in online communities
B) Nike’s Nike Plus running Web site
C) MasterCard’s use of “Priceless” commercials shot by customers D) Neiman Marcus’s InCircle Rewards program for its best customers E) The Lexus Covenant aimed at creating customer delight

40) Suzie Chan strengthens her company’s connections by treating suppliers of raw materials, vendors, and distributors as partners in delivering customer value. What type of management is she practicing? A) outside partnering

B) inside partnering
C) marketing
D) supply chain
E) customer development

41) ________ are human needs as shaped by individual personality and culture. A) Needs
B) Wants
C) Demands
D) Values
E) Exchanges

42) When backed by buying power, wants become ________.
A) social needs
B) demands
C) physical needs
D) self-esteem needs
E) exchanges

43) ________ is one of the best ways to increase share of customer. A) Targeting new customers
B) Using bait and switch
C) Cross-selling
D) Relationship selling
E) Partnership marketing

44) According to the opening scenario, the Tide marketing team is MOST concerned about which of the following? A) maintaining its brand share
B) fostering customers’ emotional connections with their product C) advertising their product’s benefits
D) comparing the effectiveness of their product to other brands E) incorporating consumer-generated marketing in the marketing mix

45) Greater consumer control means that companies must rely more on marketing by ________ than by ________. A) interruption; involvement
B) interaction; intrusion
C) socialization; information
D) producing; selling
E) inspiration; competition

46) Stew Leonard, the owner of a highly successful regional supermarket chain, reacts adversely to losing a single customer sale. He feels that this amounts to losing the entire stream of future purchases that a customer is likely to make if he or she remains in the area. Stew Leonard’s concern is an illustration of which of the following? A) share of customer

B) market share
C) profitability
D) customer lifetime value
E) market share maintenance
47) Which of the following is an example of consumer-generated marketing? A) Toyota’s presence in online communities
B) Nike’s Nike Plus running Web site
C) MasterCard’s use of “Priceless” commercials shot by customers D) Neiman Marcus’s InCircle Rewards program for its best customers E) The Lexus Covenant aimed at creating customer delight

48) When an airline goes after a “share of travel” from its customers, it is attempting to increase ________. A) customer lifetime value
B) share of customer
C) total customer spending
D) customer satisfaction
E) customer ownership

49) Amazon.com leverages relationships with its 35 million customers by offering them music, videos, gifts, toys, consumer electronics, and office products, among other items. Based on previous purchase history, the company recommends related CDs, books, videos, or other products that might interest a customer. This most directly helps Amazon.com capture a greater ________. A) customer lifetime value

B) share of customer
C) profit margin
D) share of market
E) customer equity

50) Governmental agencies are becoming more involved in marketing as the years pass. When a local government advertises keeping the area’s streams and water supply cleaner, it is involved in ________. A) green marketing

B) social marketing campaigns
C) demarketing
D) environmental marketing
E) partnership marketing.

Part 2. Dicussion
1) In a short essay, explain how and why marketers go beyond selling a product or service to create brand experiences. 2) In a short essay, discuss the challenges and advantages that new communication technologies have created for marketers. 3) Briefly explain the societal marketing concept. Give an example of an organization that has effectively used the societal marketing concept. 4) Explain why the aim of customer relationship management is to create not just customer satisfaction, but also customer delight. 5) Define customer equity and explain how a company can increase it.

KEYS

Part 1. Multiple choice

Page ref.
1
C
5
2
A
6
3
C
7
4
C
2 and 4
5
D
5
6
D
6
7
B
7
8
A
9
9
D
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10
A
9
11
D
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12
A
10
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E
9
14
D
11
15
B
11
16
D
5
17
D
11
18
C
11
19
C
12
20
A
13
21
C
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22
A
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23
B
13
24
D
13
25
B
13

Page ref.
26
A
16
27
D
17
28
D
18
29
E
18
30
E
19
31
A
21
32
A
21
33
B
22
34
C
22
35
A
23
36
B
26
37
C
26
38
C
23
39
C
20
40
D
21
41
B
6
42
B
6
43
C
22
44
B
2
45
B
18
46
D
22
47
C
20
48
B
22
49
B
23
50
B
29

Part 2. Discussion
1) In a short essay, explain how and why marketers go beyond selling a product or service to create brand experiences. Answer: Sellers are most effective when they focus more on the benefits and experiences produced by their products and services than on the specific products and services themselves. Smart marketers focus on creating a brand experience, incorporating several products and services for their customers. By doing so, marketers hope to increase customer satisfaction, creating a body of customers who will repeatedly purchase their market offerings and recommend those offerings to friends. (Page ref. 7) 2) In a short essay, discuss the challenges and advantages 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, Web sites, online communities, and online social networks, 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. This benefits companies when views of its products are positive, but can be damaging when customers share stories of negative experiences with a company’s products. (page ref. 18)

3) Briefly explain the societal marketing concept. Give an example of an organization that has effectively used the societal marketing concept. Answer: According to this concept, firms will succeed if they take underlying consumer needs and society’s well being into account over the long term. A pure marketing concept can damage consumers’ long-run welfare by focusing exclusively on satisfying consumers’ short-run wants. Over a long period of time, this too-narrow focus can be damaging to the company. In setting their marketing strategies, marketers today need to balance company profits, consumer wants, and society’s interests. Johnson & Johnson is an example of a company that has successfully implemented the societal marketing concept. The organization stresses honesty, integrity, and putting people before profits, an ethic that helped Johnson & Johnson quickly address and recover from the poisonous tampering of Tylenol capsules in 1982.(page ref.11)

4) Explain why the aim of customer relationship management is to create not just customer satisfaction, but also customer delight. Answer: Customer satisfaction cannot be taken for granted. Because 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 promised. 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 the product.(page ref.13)

5) Define customer equity and explain how a company can increase it. Answer: Customer equity is the sum of the lifetime values of all a company’s current and potential customers. 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. To increase customer equity, companies should work to delight their customers and establish full relationships with their most profitable customers. (page ref.23)

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