Test Bank

CHAPTER 1

Customer Relationship Management

______________________________

True-False
1.

Just as Henkel, many corporations are increasingly adopting supplier relationship management (SRM) as a
means to forge their competitive advantage the ability to understand individual customer needs, therefore to
manage their marketing efforts more efficiently.
(F)

2.

The markets are becoming more fragmented, making differentiation more difficult, and competition more
intense. These changes are driving companies to be product-centric, and shifting their marketing functions from
customer-based to product-based.
(F)

3.

While most firms recognize the benefits of adopting customer relationship management (CRM) practices, not all
firms have been successful in their CRM implementations. We believe having the right approach to CRM
planning is critical to a firms success.
(T)

4.

An important part of CRM is identifying the different types of customers and then developing specific strategies
for interacting with each customer. Examples of such strategies are developing better relationship with loyal
customers, not profitable customers.
(F)

5.

Customer lifetime value refers to the net economic value of a customer to a firm over his or her entire lifetime
(three years in most cases but it can depend on the length of the average purchase cycle of customers) with the
company.
(T)

6.

Companies are now beginning to design and implement CRM initiatives from a CLV perspective so that it
becomes easier for them to measure the impact of the CRM activities.
(T)

7.

The ultimate goal of CRM is to satisfy all customers regardless of firms profitability.

8.

Information on prospects, active and inactive customers are useful to marketers and should be included in
customer databases.
(T)

9.

Secondary data collection is usually conducted in-house in the forms of experiments or survey methods such as
questionnaires, interviews or observations.
(F)

10.

Although primary data collection is a costly and time-consuming process, it is sometimes necessary for managers
to obtain primary data if the required data cannot be obtained elsewhere or if the reliability of those data cannot
be determined even when they can be obtained from other sources.
(T)

11.

With the widespread use of internet and the growth of PDAs and smart-phones, CRM applications are now
offered in many forms, traditional ERP system, mobile or web-based online portal.
(T)

12.

Customer-level metrics break brand-level metrics down to individual customer, such as market share, customer
equity, sales growth, etc.
(F)

13.

Statistical models provide the necessary function of creating the linkage between performance metrics and the
possible drivers/levers.
(T)

14.

Because of advancements in data collection and database technologies, identifying the correct approach to
employ for generating metrics is not relevant to the success or failure of a CRM campaign.
(F)

(F)

Multiple Choice
1.

What is essentially the financial value of the customer relationship to the firm?
a. stock value
b. customer value
c. relationship value
d. supply chain management value

(b)

2.

To which of the following CANNOT be attributed most of the CRM initiatives?

a. customer acquisition
b. customer retention
c. customer survey
d. customer win-back

(c)

3.

Which of the following is NOT an example of Transaction-related information?

a. How much was spent in the transaction?
b. What type of product was purchased?
c. How frequent is this type of product purchased by the customer?
d. none of the above

(d)

4.

Which of the following is NOT psychographic information?

a. inquiries and referrals
b. values and preferences
c. interests and activities
d. none of the above

(a)

5.

Which of the following is NOT primary data source?

a. sales results
b. distributor reports & feedback
c. customer feedback
d. none of the above

(d)

6.

Which one of the following is NOT secondary external data source?

a. published data sources
b. firms accounting department
c. standardized sources of marketing data sources
d. Internet

(b)

7.

8.

______ help companies track and assess their performance and more importantly,
evaluate the returns on their CRM initiatives.
a. databases
b. metrics
c. technologies
d. none of the above
______ is the total lifetime value of all customers of the focal firm
a. customer equity
b. RFM value
c. customer lifetime value
d. none of the above

(b)

(a)