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Services Marketing 6th Edition By Valerie Zeithaml – Test Bank

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Services Marketing 6th Edition By Valerie Zeithaml – Test Bank

Chapter 06

Building Customer Relationships

Multiple Choice Questions

1.

_____ marketing focuses on keeping and improving current customers, rather than concentrating on acquiring new customers.

A.

Transaction

B.

Expansion

C.

Relationship

D.

Strategic

E.

Benefit

2.

According to the _______, while advertising, sales and promotions pour profits into your company, there will always be some customer defection, which has the potential to grow larger.

A.

Bucket theory of marketing

B.

Iceberg principle of relationships

C.

80/20 principle

D.

Service paradigm shift

E.

Echo principle of marketing

3.

According to the text, the relationships between businesses and their customers have the ability to evolve. In the first step of this evolution process, customers are identified as:

A.

Acquaintances

B.

Prospects

C.

Strangers

D.

Friends

E.

Allies

4.

The primary goal of businesses that are in the first stage of their relationship with a customer is to:

A.

Create financial bonds

B.

Develop a long-lasting relational time horizon

C.

Qualify the prospect as a customer

D.

Initiate communications in order to attract them

E.

Engage in problem solving sales

5.

WedSafe is the name of a company that provides wedding insurance. For example, in the event that a wedding is called off, the couple can insure themselves against loss of their nonrefundable deposits. If WedSafe’s primary marketing effort is to make engaged couples aware of its services, the company is in which stage of the customer relationship evolution?

A.

Acquaintances

B.

Leads

C.

Strangers

D.

Allies

E.

Friends

6.

WedSafe is the name of one of several companies that provide wedding insurance. For example, in the event that a wedding is called off, the couple can insure themselves against loss of their nonrefundable deposits. If WedSafe’s primary marketing effort is satisfying its customers, the company is in which stage of the customer relationship evolution?

A.

Prospects

B.

Leads

C.

Friends

D.

Associate

E.

Acquaintances

7.

In acquaintance relationships, firms generally focus on:

A.

Creating service offering awareness

B.

Inducing product trial and adoption

C.

Gaining specific knowledge of customer’s needs

D.

Providing value comparable to the competition

E.

Creating clear and easily comprehended communications

8.

How would you describe the sustainability of competitive advantage in the acquaintance stage of the customer relationship evolution?

A.

Non-existent because the company’s primary goal is to induce trial

B.

Generally low with some variation on how the competition creates unique value

C.

High even though it depends on how unique the service offering is

D.

Medium because customers are heterogeneous

E.

Generally low because of the expense associated with mass customization

9.

Following the acquaintance relationship in the evolution of customer relationships is the customers as _____ stage.

A.

Allies

B.

Associates

C.

Friends

D.

Partners

E.

Supporters

10.

The transition from the _____ stage to the _____ stage of the customer relationship requires the development of trust.

A.

Customers as acquaintances; customers as friends

B.

Customers as strangers; Customers as acquaintances

C.

Customers as partners; customers as acquaintances

D.

Customers as acquaintances; customers as strangers

E.

Customers as friends; customers as strangers

11.

A primary goal of firms at the friendship stage of the relationship is:

A.

Customer retention

B.

The creation of a unique product

C.

Creating a competitive advantage through their marketing mix

D.

Gaining a familiarity of how the customer creates its service offerings

E.

The enhancement of customer relationships

12.

The key to success in the _____ stage of the customer relationship is the firm’s ability to use customer knowledge and information systems to deliver highly personalized and customized offerings.

A.

Friendship

B.

Ally

C.

Colleague

D.

Comrade

E.

Partnership

13.

At the partnership stage of the customer relationship, the firm is most concerned with:

A.

Creating a competitive advantage

B.

Customer satisfaction

C.

The enhancement of its relationship with the customer

D.

Creating service loyalty

E.

Customer retention

14.

In some long-term customer-firm relationships, a service provider may become part of a customer’s __________ , such as when a hairdresser serves as a personal confidant, or a proprietor of a local retail store is known a central figure in the neighborhood network.

A.

Esteem benefits

B.

Self-actualization

C.

Social support system

D.

Utility transfer

E.

Assurance group

15.

Kayla has been having her haircut by Duncan, a hairstylist at Studio 21 Salon, for five years. She has continued to use the same hairstylist even though the price of a haircut at Studio 21 Salon is $10 higher than at competing hair salons. Duncan stays up to date on the latest hairstyles and hair care products and Kayla always leaves the salon with a haircut she loves. Kayla realizes _____ benefits from her relationship with Duncan.

A.

Reliability

B.

Confidence

C.

Transactional

D.

Self-actualization

E.

Transformational

16.

Elmer Jennings is a government auditor and works for the Bracken and Leach firm. He is the one who checks to see that city and county governments have complied with accounting principles. As an auditor, Jennings sometimes will spend six weeks in one office while he checks its accounting records. The closeness of the relationship that Jennings builds with the government employees he works with was realized by Bracken and Leach when Jennings left the firm, went to work for another one and took his clients with him. This is an example of how _____ benefits can be both helpful and harmful.

A.

Confidence

B.

Reliability

C.

Social

D.

Transactional

E.

Economic

17.

Beyond the specific inherent benefits of receiving service value, customers also benefit in other ways from long-term associations with firms. The three types of relational benefits for customers are:

A.

Confidence benefits; economic benefits; behavior benefits

B.

Management benefits; confidence benefits; economic benefits

C.

Confidence benefits; social benefits; special treatment benefits

D.

Confidence benefits; special treatment benefits; economic benefits

E.

Social benefits; management benefits; behavior benefits

18.

The three types of benefits to organizations of maintaining and developing a loyal customer base are:

A.

Economic benefits; customer behavior benefits; human resource management benefits

B.

Economic benefits; confidence benefits; social benefits

C.

Customer behavior benefits; human resource management benefits; social benefits

D.

Special treatment benefits; economic benefits; customer behavior benefits

E.

Confidence benefits; social benefits; customer behavior benefits

19.

Which of the following is one of the ways an organization benefits from maintaining and developing a loyal customer base?

A.

Employee retention

B.

Customers’ increasing expectations of more personalized service

C.

A reactive market-growth strategy

D.

The ability to engage in guerilla marketing

E.

Competitor entrenchment

20.

How would a day care center operator benefit from the implementation of relationship marketing with the parents of three preschool children?

A.

The children would benefit from socialization skills

B.

The parents wouldn’t have to go looking for a new facility to keep their children

C.

The parents would ask for a reduced monthly rate

D.

The parents would get to socialize with the other parents of children at their center

E.

The parents would spread the word about their happiness with the services provided by the day care center

21.

The _____ of a customer is a concept that looks at customers from the perspective of their lifetime revenue or profit contributions to a company.

A.

Relationship value

B.

Attractiveness index

C.

Profit performance quotient

D.

Calculated risk

E.

Loyalty factor

22.

According to the text, the relationship value of a customer is not influenced by:

A.

The average revenues generated per relevant time period over the lifetime

B.

Sales of additional products and services over time

C.

Referrals generated by the customer over time

D.

The length of the average customer “lifetime”

E.

The communication strategy

23.

Since service companies have found that customers differ in their relationship value and that it may be neither practical nor profitable to meet or exceed all customers’ expectations, they have divided their target markets according to:

A.

Current and/or future profitability

B.

Behavior

C.

Usage

D.

Volume

E.

User characteristics

24.

Rather than treating all of its customers the same, FedEx categorized its customers internally as “the good, the bad, and the ugly” based on their ___________.

A.

Loyalty

B.

Profitability

C.

Attitude

D.

Volume

E.

User characteristics

25.

A company that uses a four-tier scheme to segment is customers by profitability:

A.

Is using usage segmentation

B.

Identifies customers who need different sorts of attention

C.

Can increase profitability by increasing sales to lower-level customers

D.

Cannot use relationship marketing effectively

E.

Is accurately described by all of the above

26.

Salespeople for college texts call on college instructors to sell them on using a particular text for their classes. Improvements in efficiency have led some publishers to stop making sales calls altogether on smaller colleges. It is a much better use of the sales force’s time to call on schools with large classes and big adoption rates. From the customer’s point of view, this application of the profitability tier:

A.

Could cause resentment

B.

Will not cause any problems

C.

Simply increases the importance of word-of-mouth communication

D.

Is not profitable

E.

Creates across-the-board customer enhancement

27.

The development of strong customer relationships is strongly influenced by:

A.

Legal barriers to loyalty programs

B.

The composition of the buying center

C.

Barriers the customer faces in leaving a relationship

D.

Differences in organizational cultures

E.

All of the above

28.

Every month the pest exterminator does a monthly spraying at Jean Poole’s house. Every month Jean gripes that she is being ripped off by the exterminating company and that she’s going to find a new one. But she never does change service providers due to:

A.

The iteration principle

B.

Customer inertia

C.

Service standardization

D.

Switching costs

E.

Process reciprocity

29.

In many instances, customers develop loyalty to an organization in part because of costs involved in changing to and purchasing from a different firm. These costs are called:

A.

Financial inertia

B.

Opportunity costs

C.

Switching costs

D.

Fixed costs

E.

Retained costs

30.

_____ arise(s) when the customer is required to pay a penalty to switch providers.

A.

Fixed costs

B.

Legal inertia

C.

Financial inertia

D.

Contractual costs

E.

Opportunity costs

31.

Molly and Tom are getting married. Last month they hired a caterer for the wedding reception. This month they attended a wedding for which their chosen caterer had provided food, dishes, and flowers. Neither thought the food was good and Molly worried that the dishes looked cheap. However, they feel they cannot change caterers at this date due to the large deposit required by the catering company when it took the job. Molly and Tom do not want to pay:

A.

Extraneous expenses

B.

Opportunity costs

C.

Switching costs

D.

Fixed costs

E.

Retained costs

32.

Moonlight Catering has increased the deposit it requires before agreeing to cater an event to $300. This amount is nonrefundable and must be paid when Moonlight Catering is hired for the job. This increase in deposit will help Moonlight Catering achieve its goal of:

A.

Customer enhancement

B.

Prospecting

C.

Increasing its value-added service

D.

Customer satisfaction

E.

Customer retention

33.

Retention strategies built around financial bonds:

A.

Provide long-term profit increases

B.

Use price as the primary marketing mix element

C.

Are difficult to initiate

D.

Provide long-term competitive advantage

E.

Have a high degree of service customization

34.

Every time Tom and Betty stay at a Marriott Hotel, they earn points that can be used at a later date for free rooms, meals, and other hotel amenities. Marriott is using _____ to implement its retention strategy.

A.

Financial bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Security bonds

35.

Participants in the Coffee Café’s loyalty program get a free large cup of coffee after every 10th cup of coffee purchased. After purchasing 100 cups of coffee from the Coffee Café, loyalty program participants receive a $10 gift certificate good for food and beverage items or merchandise. Coffee Café uses _____ to encourage its customers to remain loyal.

A.

Financial bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Security bonds

36.

Retention strategies based on social bonds:

A.

Build long-term relationships through social and interpersonal as well as financial bonds

B.

Use a strategy of mass customization

C.

Are concerned about maintaining customer intimacy

D.

Are the most difficult of the retention strategies to initiate

E.

Create high opportunity costs

37.

Miller & Sons Funeral Home has handled all of the funeral needs for the Atwater family since 1957. The family believes that Miller & Sons offers them good value for their dollar and the Miller sons and the Atwater boys played on the same high school football team. Miller & Sons Funeral Home is using _____ to implement its customer retention strategy.

A.

Economic bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Security bonds

38.

Every Thursday afternoon for almost twenty years, Jasmine and Tanya have gotten a manicure at the same location. The manicure salon has changed ownership three times and has had two different names during that same period, but Jasmine and Tanya still find it a convenient place to meet and share news about friends and relatives. Jasmine and Tanya’s relationship with the manicure salon exemplifies how a service provider uses _____ to support its customer retention strategy.

A.

Economic bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Security bonds

39.

Step-by-Step day care center offers parents several other services not normally offered by day care centers. A caterer is present every morning when the children are dropped off to take orders for supper. When the parents pick up their children in the evening, their supper is ready for them to take home, too. A hair stylist comes to the center once a week and cuts the hair of any child whose parents request this service. A photographer comes to the center every three months to take updated pictures of children whose parents don’t have the time to take their children to the photography studio. In this way, Step-by-Step is using _____ to support its customer retention strategy.

A.

Financial bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Security bonds

40.

The term customer intimacy is most closely related to the establishment of _____ bonds.

A.

Financial

B.

Social

C.

Customization

D.

Structural

E.

Security

41.

Regency Dry Cleaners operates in a medium-sized community. Its customers all live within a 20-mile radius of the cleaners. Regency provides its regular customers with several alternative pickup and delivery schedules rather than a single weekly pickup and delivery. Regency’s driver will pickup clothes in the morning and deliver them back clean in the afternoon if that is what a customer needs. Regency has found the increase in its total number of customers because of this service more than pays its additional operation expenses. Regency has built its customer retention strategy around:

A.

Customization bonds

B.

Social bonds

C.

Niche marketing

D.

Focused marketing

E.

Structural bonds

42.

Pandora is an Internet-based music discovery service that helps its customers find and enjoy music that they like. A customer can create up to 100 unique “stations” by identifying favorite songs or artists and then Pandora’s expert systems analyzes what they like and provides suggestions based on this analysis. Pandora is using ____________ to develop and maintain customer relationships.

A.

Customization bonds

B.

Social bonds

C.

Niche marketing

D.

Focused marketing

E.

Structural bonds

43.

_________ are created by providing services to the client that are designed right into the service delivery system.

A.

Financial bonds

B.

Customization bonds

C.

Individualization bonds

D.

Structural

E.

Social bonds

44.

Customer retention strategies based on customization bonds:

A.

Do not exist in business-to-business marketing

B.

Create tying contracts, refusals to deal, exclusive dealing, and areas of gray marketing

C.

Are not concerned with the pricing element of the marketing mix

D.

May include the customer intimacy approach

E.

Support transactional marketing as well as relationship marketing

45.

Aramark is a food service company that supplies meals to more than 200,000 hospital patients daily. To improve its service, it created a database that tracks patient preferences individually by hospitals, regionally, and nationally. The accumulated database is used to provide better menus. Aramark’s kitchen staff deliver the food and are referred to as hosts. All hosts have a minimum of 40 hours of training to teach them how to be courteous, efficient, and quick. These trained hosts deliver customized meals from carts preloaded according to room number. According to patient surveys, Aramark has boosted patient satisfaction by almost 10 percent by providing customized meals. Aramark is using _____ in its customer retention strategy.

A.

Financial bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Heterogeneity

46.

Often, _____ are created by providing customized services to the client that are technology based and make the customer more productive.

A.

Financial bonds

B.

Social bonds

C.

Customization bonds

D.

Structural bonds

E.

Heterogeneity

47.

Which of the following is NOT a reason why a service firm may avoid a customer relationship with a particular customer?

A.

Customer is in the wrong segment

B.

Customer is not divisible

C.

Customer is not always right

D.

Customer is not profitable in the long run

E.

Customer is difficult

48.

New Bedford College has a two-year masters degree program designed for special education teachers. Thirty-five students enter the program each fall. The education department requires that the 35 students take the same classes. Classes are made available in sequence. If Beth wanted to take only one special education class to get her a teaching certificate in learning disabilities (LD), she would be unable to because she would not be able to participate in any carry-over projects from previous classes (This is a common teaching tool for the New Bedford education department faculty.). New Bedford College will avoid setting up a relationship with Beth because:

A.

She is in the wrong segment

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