Difficulty: Easy
120) Customer-managed relationships are marketing relationships that are controlled by customers; therefore, they are of no significance to marketers.
Answer: FALSE
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Moderate
121) Large-scale marketing approaches that foster two-way customer relationships are made possible by new communication technologies.
Answer: TRUE
AACSB: Information technology
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Moderate
122) In consumer-generated marketing, marketers play a bigger role in shaping consumers' brand experiences and those of others.
Answer: FALSE
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Moderate
123) To increase its "share of customer," a firm concentrates on retaining as many customers as possible over its lifetime.
Answer: FALSE
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Easy
124) A company can create customer delight by meeting customer expectations through offering good products that do what is promised.
Answer: FALSE
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Moderate
125) Many companies now use customer profitability analysis to identify and weed out unprofitable customers.
Answer: TRUE
AACSB: Information technology
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Challenging
126) Explain what marketers can expect from individuals in the customer relationship group classified as "butterflies."
Answer: "Butterflies" are profitable but not loyal. Marketers should enjoy this type of customer "for the moment" because they soon flutter off. Marketers should create profitable and satisfying transactions with "butterflies," then cease investing in them until the next time around. Marketers can expect transactions with butterflies when conditions are optimal, but they should not expect butterflies to become loyal customers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Difficulty: Moderate
127) Describe and compare the four types of customers classified by their potential profitability to an organization. Explain how an organization should manage each type of customer.
Answer: The four types of customers are strangers, butterflies, true friends, and barnacles. "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 customer. 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." 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 use promotional blitzes to attract these customers, create satisfying and profitable transactions with them, and then cease investing in them until the next time around. 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 convert true friends into customer evangelists who tell others about their good experiences with the company.