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Chapter 8—Customer Relationship Management (CRM)
MULTIPLE CHOICE
1. What is the term for a company-wide business strategy designed to optimize profitability,
revenue, and customer satisfaction by focusing on highly defined and precise customer
segments?
a. organizational optimization
b. consumer relationship marketing
c. total quality management
d. customer relationship management
ANS: D PTS: 1 REF: 125 OBJ: 8-1
TOP: AACSB Reflective Thinking| TB&E Model Customer| TB&E Model Strategy
BLM: Remember
2. As a strategy to optimize profitability, revenue, and customer satisfaction, what would the
Toronto Blue Jays implement to focus on its fan base and provide them with additional
benefits?
ANS: D
CRM is a company-wide business strategy designed to optimize profitability, revenue, and
customer satisfaction by focusing on highly defined and precise customer segments.
PTS: 1 REF: 125 OBJ: 8-1

BLM: Higher Order
3. ThomasCook.com, an online travel retailer in the United Kingdom, is able to offer a more
effective customer experience and support its revenue goals using a certain type of software to
manage service interactions across phone, e-mail, and Web channels. The deployment has
resulted in a change in the type of customer calls received by ThomasCook.com service
agents. Because customers are able to find answers to general queries online, agents at the
contact centre are now focused on helping customers with their actual bookings. Which of the
following categories would the software fall under?
a. corporate relationship marketing
b. total quality management
c. customer relationship management
d. call response marketing
ANS: C
PTS: 1 REF: 125 OBJ: 8-1

BLM: Higher Order
Copyright © 2013 Nelson Education Ltd. 8-1

Chapter 8 – Customer Relationship Management (CRM)
4. Convergys Corporation is a provider of outsourced customer care, human resources, and

billing services. The company handles about 1.7 million interactions per day in its 68 contact
centres worldwide. Its new software allows anyone talking to a customer to view the
customer’s order and billing information on his or her computer. Thus, problems can be
resolved in real time, increasing responsiveness and first call resolution while reducing call
processing time by up to 40 percent. This new software would be classified as part of which
of the following?
b. call response marketing
ANS: D
PTS: 1 REF: 125-126 OBJ: 8-1

BLM: Higher Order
5. Customer relationship management

a. is often described as a closed-loop system.
b. involves only personnel in marketing and management departments.
c. organizes the company around functional departments.
d. is only a theory and has not been proven successful in any practical way.
ANS: A
PTS: 1 REF: 125-126 OBJ: 8-1

BLM: Higher Order
6. To initiate the CRM cycle, what must a company first do?

a. create marketing objectives.
b. establish customer relationships with the organization.
c. determine the level of interaction customers have with the organization.
d. acquire and capture customer data for product categories.
ANS: B PTS: 1 REF: 126 OBJ: 8-1
BLM: Remember

7. What can the difference between traditional marketing and customer relationship marketing
be compared to?
a. the difference between night and day
b. the difference between mice and elephants
c. the difference between shooting a rifle and a shotgun
d. the difference between circles and squares
ANS: C PTS: 1 REF: 125-126 OBJ: 8-1
TOP: AACSB Reflective Thinking| TB&E Model Strategy BLM: Higher Order
8. Which of the following statements best describes the CRM cycle?

a. The letters CRM are an acronym for consumer relationship marketing.
b. The CRM cycle does not affect employees outside the marketing and management
functional areas.
c. The CRM cycle is continuous and circular with no predefined start or end point.
d. The CRM cycle takes a simplistic perspective on customers.
ANS: C
CRM stands for customer relationship management.
PTS: 1 REF: 126 OBJ: 8-1

BLM: Higher Order
9. What does a company have if it customizes its product offerings based on data generated
through interaction between the customer and the company?
a. a supply-based focus
b. a sales orientation
c. a supply-based focus
d. a customer-centric focus
ANS: D
A customer-centric focus is represented by adherence to the marketing concept.
PTS: 1 REF: 127 OBJ: 8-2

TOP: AACSB Reflective Thinking| TB&E Model Customer BLM: Remember
10. Foremost Manufacturing makes lighting reflectors and other fabricated metal products.
Foremost Manufacturing recognizes that being “good enough” just isn’t good enough. With
this in mind, Foremost has embarked on a program to transform itself into a manufacturing
enterprise with an unwavering focus on customer service. What has Foremost adopted?
a. a demand-based focus
b. a sales focus
c. a supply-based focus
d. a customer-centric focus
ANS: D
PTS: 1 REF: 127 OBJ: 8-2
TOP: AACSB Reflective Thinking| TB&E Model Customer BLM: Higher Order

11. During 2005–2006, Best Buy instituted a new focus in all of its stores, which will now
customize their product offerings for the five key customer segments it has identified: Which
type of focus is Best Buy using?
a. demand based
b. sales-centric
c. supply based
d. customer-centric
ANS: D
PTS: 1 REF: 127 OBJ: 8-2

12. What internal management philosophy is customer-centric similar to?

a. utilitarianism
b. the equity theory
c. the marketing concept
d. consumerism
ANS: C PTS: 1 REF: 127-128 OBJ: 8-2
13. The way to people’s hearts may be through their stomachs, but Kraft Foods has decided not to
rely exclusively on that maxim to secure the long-term loyalty of its customers. It is also
making new product developments through data generated from interaction between Kraft and
its customers. Kraft Foods can best be described as which of the following?
a. is sales oriented.
b. has a standardization focus.
c. is ethnocentric.
d. has a customer-centric focus.
ANS: D
PTS: 1 REF: 127 OBJ: 8-2

TOP: AACSB Reflective Thinking| TB&E Model Customer| TB&E Model Product
BLM: Higher Order
14. In a CRM environment, which of the following is defined as the informal process of
collecting customer information through customer contacts and feedback on product
performance?
a. attitude adjustment
b. organizational perception
c. stimulus/response research
d. learning
ANS: D PTS: 1 REF: 127-128 OBJ: 8-2

15. Which of the following is the process by which learned information from customers is
centralized and shared in order to enhance the relationship between customers and the
organization?
a. knowledge management
b. learning
c. database mining
d. information marketing
ANS: A PTS: 1 REF: 128 OBJ: 8-2
16. Synavant is a pharmaceutical company in Toronto, Ontario. Its director of business

development told a group of investors, “There is a single database repository in this company
from which everybody can access data about a customer or potential customers.” What is
Synavant most likely using?
a. learned research
b. stimulus/response marketing
c. knowledge management
d. sales-oriented marketing
ANS: C
Knowledge management is the process by which learned information from customers is
organization.
PTS: 1 REF: 128 OBJ: 8-2

TOP: AACSB Technology| TB&E Model Customer| TB&E Model Online/Computer
BLM: Higher Order
17. Which of the following refers to the latitude organizations bestow on their representatives to
negotiate mutually satisfying commitments with customers?
a. consumer learning
b. customerization
c. empowerment
d. interaction
ANS: C PTS: 1 REF: 128 OBJ: 8-2

18. The guest at a Marriott hotel stepped in a mud puddle on his way into the hotel. His shoes
were drenched, and he had planned to wear them to an important sales presentation in an hour.
The hotel concierge saw the guest’s unhappy face and asked if he could help. After learning of
the problem, the concierge called a nearby shoe store and had a new pair sent over. Why was
the concierge able to handle the situation in a matter that created customer satisfaction?
a. Marriott has a sales orientation.
b. Marriott uses knowledge management.
c. Marriott limits customer interactions.
d. Marriott empowers its employees.
ANS: D
Empowerment refers to the latitude organizations bestow on their representatives to negotiate
mutually satisfying commitments with customers.
PTS: 1 REF: 128 OBJ: 8-2

19. What is the term for the point at which a customer and a company representative exchange
information and develop learning relationships?
a. social contact
b. interaction
c. empowering moment
d. equilibrium point
Les Ailes de la Mode is a Quebec retail store that promotes the highest quality customer
service.
20. Refer to Les Ailes de la Mode. It does this by maintaining the importance of the point at
which customer and store personnel exchange information and develop learning relationships.
What is this point called?
a. knowledge analysis
b. equilibrium point
c. empowerment moment
d. interaction
ANS: D
An interaction is the point at which a customer and a company representative exchange
information and develop learning relationships.
PTS: 1 REF: 128 OBJ: 8-2


21. Refer to Les Ailes de la Mode. The store has established itself not only as a top retailer in the
province, but also as a credit card and point program company, cataloguer, and even
publisher. Through gathering customer information for its credit cards and point program,
catalogue orders, and subscriptions to its publications, what has Les Ailes de la Mode created?
a. several different focus areas
b. several different touch points
c. several different distribution channels
d. several different sources of distribution information
ANS: B
Touch points are all areas of the business where customers have contact with the company and
data may be gathered and used to guide and direct the decision making within that business
unit.
PTS: 1 REF: 129 OBJ: 8-3

22. Refer to Les Ailes de la Mode. The store offers its customers Les Ailes MasterCard. The card
is connected to a points program that offers one point for every $20 of purchases on the card
and triple that on purchases made at Les Ailes. It also incorporates an electronic chip, through
which a $10 coupon is awarded to each member every month via the electronic gift card (on
purchases of $10 or more every month). Card members also receive free subscriptions to the
retailer’s Les Ailes magazine. What is CRM being used for?
a. to retain loyalty
b. in mass marketing
c. to create transactional relationships
d. to develop a compiled list
ANS: A
One of the advantages of CRM is the ability to personalize the message.
PTS: 1 REF: 135 OBJ: 8-7

BLM: Higher Order

23. In Nokia stores, “Experience Areas” feature phones connected to photo printers, speakers,
notebook computers, and Bluetooth headsets to demonstrate the interactivity and full range of
features available on the cell phones. These “Experience Areas” allow customers to interact
with the technology and provide information to Nokia. What are the “Experience Areas”
examples of?
a. touch points
b. focus areas
c. information search areas
d. experimental points
ANS: A
In a CRM system, touch points are all areas of the business where customers have contact
with the company and data may be gathered and used to guide and direct the decision making
within that business unit.
PTS: 1 REF: 129 OBJ: 8-3

24. The Toronto Blue Jays, a Major League Baseball team, used customer satisfaction surveys of
season ticket holders to determine why the number of season ticket holders was declining.
What was this survey an example of?
a. a touch point
b. a focus area
c. a data search
d. an interaction
ANS: A
Touch points are all areas of the business where customers have contact with the company and
data may be gathered and used to guide and direct the decision making within that business
unit.
PTS: 1 REF: 129 OBJ: 8-3

25. In a CRM system, which term describes all areas of the business where customers have
contact with the company, and data may be gathered and used to guide the decision making
within that business unit?
a. touch points
b. focus areas
c. information search periods
d. observational data
ANS: A PTS: 1 REF: 129-130 OBJ: 8-3
TOP: AACSB Reflective Thinking| TB&E Model Strategy BLM: Remember

26. The executive vice president of Hudson’s Bay Company in Canada (a major retail chain) said
in an interview, “We have to be able to offer customers what they want when they want it. We
need better insight into their spending—we have gaps in knowledge of how customers spend.”
Which type of interactions would provide the retail chain the best opportunity for learning
about its customers?
a. point of sale
b. relationship based
c. retail-centric
d. sales oriented
ANS: A
Only alternative (a) is the name of one of the types of interactions discussed in your text.
PTS: 1 REF: 129-130 OBJ: 8-3

BLM: Higher Order
Hudson’s Bay Company in Canada operates The Bay, Zellers, Home Outfitters, and hbc.com.
At each of its stores and its website, it gives HBC Rewards that enable members to earn
points, which can be redeemed in the HBC Rewards catalogue for various items, including
travel, leisure and entertainment items, Air Miles reward miles, or Bay and Zellers gift
certificates. To use the system, customers have to provide their HBC card number.
27. Refer to Hudson’s Bay Company. This reward program enables Hudson’s Bay to engage in
which type of interactions with its customers?
a. point of sale and Web-based
b. transaction-based and Web-based
c. transaction-based and retail-centric
d. point of sale and retail-centric
ANS: A
Because Hudson’s Bay does business at its stores and at its website, it engages in both
point-of-sale and Web-based interactions.
PTS: 1 REF: 129-130 OBJ: 8-3

TOP: AACSB Technology| AACSB Reflective Thinking| TB&E Model Online/Computer| TB&E
Model Customer BLM: Higher Order
28. Refer to Hudson’s Bay Company. Which of the following provides the most likely reason that
Hudson’s Bay Company implemented this reward program?
a. to acquire more information about its customers
b. to make sure the 80/20 principle is not influencing its activities
c. to retain loyal customers
d. to increase the importance of customer service
ANS: C
The HBC Rewards program is a loyalty program.
PTS: 1 REF: 135 OBJ: 8-7
BLM: Higher Order

29. Which type of interactions occur when customers buy products in a store?
a. point of sale
b. relationship based
c. cost based
d. retail-centric
ANS: A PTS: 1 REF: 129-130 OBJ: 8-3
30. How does the traditional approach for acquiring data from customers occur?
a. through encoding devices
b. through media
c. through feedback mechanisms
d. through channel interactions
ANS: D PTS: 1 REF: 130-131 OBJ: 8-4
31. How should an organization view every transaction?

a. as simply a financial exchange
b. as deleterious to customer relationship management
c. as the opportunity to collect vast amounts of data about the customer
d. as the creation of customer-organization multiplicity
ANS: C PTS: 1 REF: 130-131 OBJ: 8-4
32. According to your textbook, which of the following is a guideline for a successful CRM
system?
a. Customer information is not retained past the initial contact with the customer.
b. Intuition and experience must define the products provided by the organization.
c. The product takes centre stage in the organization.
d. Customer information is kept in a centralized repository.
ANS: D
Customer information is retained past the initial contact with the customer. Customer data
should be accumulated over the customer’s entire life span with the organization. Customers
must define the products provided by the organization. The customer takes centre stage in the
organization.
PTS: 1 REF: 131 OBJ: 8-5

BLM: Higher Order

33. When viewed as an interaction between the organization and the customer, a transaction can
produce all of the following customer data EXCEPT which of the following?
a. information about the customer’s relationship with other customers.
b. past purchase history.
c. information about the customer’s relationship with the organization.
d. average amount spent on purchases.
ANS: A PTS: 1 REF: 130-131 OBJ: 8-4
34. What is the term for a central repository for data from various functional areas of the
organization that can be shared by all of the organization’s departments?
a. an information mine
b. a knowledge distribution centre
c. an information intermediary
d. a data warehouse
TOP: AACSB Technology| TB&E Model Online/Computer BLM: Remember
35. Hong Kong’s TravelSky Technology Limited, a provider of information technology solutions
for China’s air travel and tourism industries wants to capture the huge amounts of new
information required to provide the information needed by its users. What can it create to do
this?
a. an information mine
b. a knowledge distribution centre
c. an information storage unit
d. a data warehouse
ANS: D
A data warehouse is a central repository for data from various functional areas of the
organization. These data can be shared by all of the organization’s departments.
PTS: 1 REF: 131 OBJ: 8-5

TOP: AACSB Technology| TB&E Model Online/Computer BLM: Higher Order

36. “Lots of organizations have customer data, but not in a way that’s useful,” said a speaker at
the Canadian Marketing Association’s national convention. “Retailers have all kinds of data in
different places—they don’t have a single view of the customer.” The speaker is saying that
retailers do NOT use which of the following?
a. information distribution centres
b. data warehouses
c. information extraction mines
d. data intermediaries
ANS: B
A data warehouse is a central repository for data from various functional areas of the
organization. These data can be shared by all of the organization’s departments.
PTS: 1 REF: 131 OBJ: 8-5

BLM: Higher Order
37. What is the core of the data warehouse?

a. transaction channels of communication
b. point-of-sale interactions
c. the database
d. a compiled list
38. Which of the following statements best describes customer data?

a. Customer data should be accumulated over the customer’s entire life span with the
organization.
b. Once customer data are gathered, the information is owned by the organization,
which can use this information any way it seems fit.
c. Customer data are unaffected by the internal process of empowerment.
d. Customer data from point-of-sale touch points are not needed if information is
centralized.
ANS: A
One of the important issues concerning the gathering of customer data is the privacy issue.
Empowerment leads directly to customer satisfaction. Empowerment produces more customer
data.
PTS: 1 REF: 130-131 OBJ: 8-4

TOP: AACSB Reflective Thinking| TB&E Model Customer| TB&E Model Online/Computer
BLM: Higher Order

39. In a speech, David Poirier, chief information officer of Hudson’s Bay Company, a Canadian
retailer, said, “We [Hudson’s Bay Company] had all kinds of data in different places. We
didn’t have a single view of the customer until we focused on finding one method to manage
relationships with our customers.” What would Hudson’s Bay use to profile customer
segments for better CRM marketing efforts?
a. a data mart
b. a customer information system
c. a data warehouse
d. a data mining system
ANS: C
A data warehouse is essentially a very large, corporate-wide database, culled from a number
of legacy systems, such as order fulfillment, distribution, and sales, already in place within the
organization.
PTS: 1 REF: 131 OBJ: 8-5

BLM: Higher Order
40. What is essentially a very large, corporate-wide database, culled from a number of separate
systems, such as billing, accounting, order fulfillment, distribution, customer service, and
marketing and sales, already in place within an organization?
a. a customer information system
b. a data warehouse
c. a decision support system
d. a data cluster
Refer to Recreational Equipment, Inc. (REI) is a large retailer that specializes in outdoor gear
like tents, mountain climbing equipment, mountain bikes and outdoor clothing. They have
stores all across North America and are always looking for new locations to open more stores.
Recreational Equipment, Inc. (REI) collects a vast amount of data through its website, direct
mailings, and retail stores.
41. To be useful, where could all of these data be centralized?

a. in a data mart
b. in a decision matrix
c. in a data warehouse
d. in a data cluster
ANS: C
A data warehouse is essentially a very large, corporate-wide database, culled from a number
of separate systems, such as billing, accounting, order fulfillment, distribution, customer
service, and marketing and sales, already in place within an organization.
PTS: 1 REF: 131 OBJ: 8-5


42. Refer to Recreational Equipment, Inc. (REI). When REI considers new store locations, it
examines order data to find places with high concentrations of customers buying online and
through the company’s catalogues. What is REI using to identify potential store locations?
a. database enhancement
b. data mining
c. data shading
d. customer prediction
ANS: B
Data mining is used to find hidden patterns and relationships in the customer data stored in the
data warehouse.
PTS: 1 REF: 132 OBJ: 8-6

43. Lesley Owens has limited money to invest in a mailing to people who might be interested in
subscribing to a new magazine about making scrapbooks. She wants to send the mailing to
those prospects with the highest probability of becoming subscribers. What should she use?
a. a compiled list
b. a data mine
c. a response list
d. a data cluster
ANS: C
A response list includes the names and addresses of individuals who have responded to an
offer in the past.
PTS: 1 REF: 131 OBJ: 8-5

44. The Old Ridley College Foundation raised $80,000 at its “A Taste of Pelee Island,” a gala
dinner where all proceeds went to support scholarship funds and educational programs at
SUNY College at Old Ridley. Attendees were people who had contributed to the scholarship
program previously. How would they have been reached?
a. through a compiled list
b. through a response list
c. through a management database
d. through a data warehouse database
ANS: B
offer in the past.
PTS: 1 REF: 131 OBJ: 8-5


45. Taquan recently purchased a GE microwave oven using a $50 rebate offer. He filled out the
rebate certificate and sent it to an address provided by GE. The rebate certificate contained
Taquan’s full name, his phone number, his address, and some purchase information. Taquan
has most likely become part of which of GE’s lists?
a. compiled
b. response
c. electronic cash
d. Internet research
ANS: B
A response list includes the names and addresses of individuals who have responded to a
similar offer in the past.
PTS: 1 REF: 131 OBJ: 8-5

46. Which type of list generally includes names and addresses gleaned from directories or
membership rosters?
a. predictive
b. compiled
c. response
d. actionable
47. Leah wants to develop a mailing list of people who have participated in bicycle rides for
charities. She has offered to purchase a list of last year’s Ride for Life, which was held to
raise funds for cancer research. Which type of list is Leah building?
a. actionable
b. response
c. compiled
d. predictive
ANS: C
A compiled list is one that generally includes names and addresses gleaned from directories or
membership rosters.
PTS: 1 REF: 131 OBJ: 8-5


48. What is the term for the addition of information to customer or prospect records for the
purpose of better describing or better determining the responsiveness of customers or
prospects?
a. information formatting
b. database enhancement
c. data mining
d. predictive modelling
TOP: AACSB Technology|| TB&E Model Online/Computer BLM: Remember
49. Walmart captures point-of-sale transactions from over 2,800 stores in six countries and
continuously transmits these data to its massive data warehouse. Walmart allows more than
3,500 suppliers to access data on their products and perform data analyses. These suppliers
use the data to identify customer buying patterns at the store level. They use this information
to manage local store inventory and identify new merchandising opportunities. What are both
Walmart and its suppliers engaging in?
a. information formatting
b. database enhancement
c. data mining
d. data shading
ANS: C
Data mining is data analysis that is used to find hidden patterns and relationships in the
customer data stored in data warehouses.
PTS: 1 REF: 132-133 OBJ: 8-6

50. Which of the following statements best describes a CRM system?

a. A critical component of a CRM system is the use of the appropriate technology to
store and integrate customer data.
b. A CRM system operates on the theory that all customers are equally important.
c. Due to privacy laws, a CRM system disseminates customer information only to
those who are actually in day-to-day contact with customers.
d. A company using a CRM system must view its customers as bits of data.
ANS: A
The CRM system allows companies to make use of the 80/20 rule. Customers should be
viewed comprehensively.
PTS: 1 REF: 125-127 OBJ: 8-1

BLM: Higher Order

51. What is the term for the process of finding hidden patterns and relationships in the customer
data stored in the data warehouse?
a. customer information management
b. data feedback
c. information retrieval
d. data mining
ANS: D PTS: 1 REF: 132-134 OBJ: 8-6
52. What could a catalogue retailer use to determine that customers who change residences are
three times more likely than customers who have not moved to buy tables, fax machines, and
decorative products but no more likely to buy jewellery or footwear?
a. data mining
b. information search
c. evoked sets
d. an information environment
ANS: A
Data mining is a process that identifies significant customer patterns.
PTS: 1 REF: 132-133 OBJ: 8-6

BLM: Higher Order
53. What would an online retailer use to discover that customers who purchase flannel sheets also
have a high probability of purchasing all-natural Christmas wreaths if the opportunity is made
available?
a. knowledge interpretation
b. systems management
c. data mining
d. information extraction
ANS: C
Data mining is a process that identifies significant customer patterns.
PTS: 1 REF: 132-133 OBJ: 8-6

BLM: Higher Order

54. What could a catalogue retailer use to determine that customers who change residences are
three times as likely as customers who have not moved to buy tables, fax machines, and
decorative products but no more likely to buy jewellery or footwear?
a. a data analysis approach that identifies patterns of characteristics that relate to
particular customers or customer groups
b. customer-initiated information systems
c. trend analysis and hypothesis testing to reveal trends in consumer behaviour
d. automatic extrapolation to predict past behaviour
ANS: A
Past behaviour is not predictable—it is a known. Notice that the answer to this question is a
description of data mining.
PTS: 1 REF: 132-133 OBJ: 8-6

BLM: Higher Order
55. Ford Canada has turned to the Internet to help it stand apart from its competitors in the
automotive industry. One Internet ad shows a Ford truck driving out of a forest with its engine
roaring and mud splattering on the screen. The wipers come on to reveal the Ford “Built
Tough” logo, which then recedes to the side of the screen. The ad directs people to a site
(www.ford.ca/builtfordtough) where they can sign up to receive direct mail from Ford. Ford
Canada will combine this database with a database of new F-series truck owners to look for
significant patterns and trends. Which of the following best describes what Ford Canada will
be using?
a. an information search system
b. knowledge trending
c. data graphing
d. data mining
ANS: D
Data mining is used to identify significant patterns and trends.
PTS: 1 REF: 132-133 OBJ: 8-6

TOP: AACSB Technology| TB&E Model Online/Computer| TB&E Model Promotion
BLM: Higher Order

56. L.L. Bean, Inc. has been reducing the number of catalogues it sends out while increasing its
sales and profits. L.L. Bean now identifies customers who have purchased recently and often
and have spent considerable money. Such customers are most likely to purchase again. What
is L.L. Bean using to identify these customers?
a. predictive data
b. trend data
c. correlation analysis
d. recency-frequency-monetary analysis
ANS: D
RFM analysis identifies customers likely to purchase again because they have bought recently
or frequently or spent a lot.
PTS: 1 REF: 133-134 OBJ: 8-6

TOP: AACSB Technology| TB&E Model Customer BLM: Higher Order
57. Which of the following techniques used to analyze marketing databases considers whether a
customer has made a purchase recently as well as how often that customer makes a purchase?
a. recency-frequency-monetary analysis
b. predictive modelling
c. data mining
d. lifetime value analysis
ANS: A PTS: 1 REF: 133-134 OBJ: 8-6
TOP: AACSB Technology| TB&E Model Customer BLM: Remember
58. Marketing to repeat customers is more profitable than marketing to first-time buyers is a basic
assumption of which of the following?
a. customer segmentation
c. data manipulation
ANS: D
Lifetime value analysis is a data manipulation technique that projects the future value of the
customer over a period of years using the assumption that marketing to repeat customers is
more profitable than marketing to first-time buyers.
PTS: 1 REF: 134 OBJ: 8-6


59. Future Shop uses CRM to track visitors to its website. This tracking allows the retailer to
confidently project the value of its repeat customers through its application of which of the
following?
a. customer segmentation.
b. customer valuation
c. data manipulation
ANS: D
Lifetime value analysis is a data manipulation technique that projects the future value of the
customer over a period of years using the assumption that marketing to repeat customers is
more profitable than marketing to first-time buyers.
PTS: 1 REF: 134 OBJ: 8-6

BLM: Higher Order
60. Which of the following uses a past set of occurrences to predict the likelihood that some other
occurrence, such as a response or purchase, will take place in the future?
a. customer manipulation
c. data mining
TOP: AACSB Technology| TB&E Model Strategy BLM: Remember
61. The cable industry needs to identify current and future traffic patterns so it can manage the
growth of cable systems. Because of high costs, it is undesirable to buy bandwidth before it is
needed. It is also time consuming to upgrade a cable system. Furthermore, consumers hate to
wait for capacity increases. Therefore, what does the industry use to determine when and
where new systems should be implemented?
a. lifetime analysis
b. cross-selling
c. speed of data communications
ANS: D
Through predictive modelling, marketers try to determine the odds that system upgrades will
be needed in the future.
PTS: 1 REF: 134 OBJ: 8-6

BLM: Higher Order

62. BMW automobiles has launched an online effort to market its new styles. It hopes to use its
database capabilities to capture valuable data on car buyers. BMW plans on
cross-referencing new owners with the database generated from this online campaign to see
how many names are duplicated. BMW will use these data to forecast which campaigns have
the greatest probability of success. Which of the following methods will BMW most likely
use to analyze these data?
a. lifetime value analysis
b. future value assessment modelling
c. recency-frequency-monetary analysis
ANS: D
Predictive modelling is a data manipulation technique in which marketers try to determine,
based on some past set of occurrences, the odds that some other occurrence, such as a
purchase, will take place.
PTS: 1 REF: 134 OBJ: 8-6

BLM: Higher Order
63. What is the technique used to suggest that a customer who wanted to buy a $28 shirt would
also be a likely prospect for a cigar humidor?
a. predictive modelling
b. customer segmentation
c. market aggregation
d. data interpolation
ANS: A
Predictive modelling is a data manipulation technique in which marketers try to determine,
based on some past set of occurrences, the odds that some other occurrence, such as a
purchase, will take place.
PTS: 1 REF: 134 OBJ: 8-6

64. Looking to build up its postpurchase relationships, General Motors recently launched a
service whereby GM vehicle owners can sign up to get e-mail service reminders, access
information about GM vehicles, and receive special promotions. What is General Motors
using to enhance its customer relationships?
a. modelling
b. scoring
c. campaign management
d. data mining
ANS: C
It has established a campaign to sell its services to car buyers.
PTS: 1 REF: 135 OBJ: 8-7

BLM: Higher Order

65. Which of the following involves developing product offerings customized for the appropriate
customer segment and then pricing and communicating these offerings for the purpose of
enhancing customer relationships?
a. predictive modelling
b. campaign management
c. data mining
d. consumerism
To target outdoor enthusiasts, Subaru added an outdoor life section to its website that is
organized by area of interest. The site will serve as a platform for co-marketing and
promotional programs.
66. Refer to Subaru. This offering of customized products to a customer segment for the purpose
of enhancing the auto manufacturer’s customer relationships is an example of which of the
following?
a. campaign management
b. customer aggregation
c. transaction segmentation
d. data mining
ANS: A
Developing customized offerings for the appropriate customer segment is a common tactic in
campaign management.
PTS: 1 REF: 135 OBJ: 8-7

BLM: Higher Order
67. Refer to Subaru. Which of the following provides the most likely reason that Subaru has
added this section to its site?
a. to design a more effective customer outreach program
b. to increase the effectiveness of its channels of distribution
c. to increase the importance of customer service
d. to design more targeted marketing communications
ANS: D
By designing different sites for different segments, it is targeting customers.
PTS: 1 REF: 136 OBJ: 8-7

BLM: Higher Order

68. The Marriot-Hilton hotel chains award points for every dollar spent in one of their hotels.
Customers who earn a high number of points are given special privileges that may include
upgraded hotel rooms or several free nights. What is the purpose of leveraging this customer
information?
a. to retain loyal customers
b. to reinforce competitive promotional decisions
c. to cross-sell other products and services
d. to induce product trial by new customers
ANS: A
Loyalty programs reward loyal customers for making multiple purchases with the objective of
building long-term relationships.
PTS: 1 REF: 135 OBJ: 8-7

BLM: Higher Order
69. In a show of fan appreciation, the San Diego Chargers gave 5,000 Chargers season ticket
holders a customized digital gift card in the form of a CD to redeem at the Chargers’ online
team store during the upcoming season. The card is a mini CD that fits into a computer’s
CD-ROM drive. Fans will access the card’s offerings by using a provided password that takes
them to the Chargers’ website where they can apply for a 10 percent discount for purchases
made on the site. The card also features a brief collection of video highlights as well as links
to different areas of the Chargers’ website. What is the NFL team’s goal?
a. to cross-sell
b. to reinforce purchase decisions
c. to retain loyal customers
d. to create team awareness
ANS: C
Because the cards were given to existing customers (season ticket holders), they should retain
loyal fans.
PTS: 1 REF: 135 OBJ: 8-7

BLM: Higher Order

70. When Vania went to the phone to place a catalogue order for a humidor for her father, she was
pleased when the operator suggested that she might also be interested in a subscription to a
magazine targeted to cigar lovers. The operator was using a method commonly used to
leverage customer information. What is it called?
a. cross-selling
b. trading up
c. modelling
d. a database channel
ANS: A
Cross-selling uses past customer buying information to ask for additional sales.
PTS: 1 REF: 136 OBJ: 8-7

71. According to the CEO of Allied Office Products, “We’re a head-count business: I know that if
you have a 60-person office, you should buy $290 worth of basic office supplies—paper,
pens, staples—from us with each order, but if that’s all we get, we stagnate. For us to grow,
we have to convince the customer, who already likes our products and service, to buy more
than just basic supplies; we have to increase the order by 10, 20, or 29 times.” Allied’s
salespeople are trained to push the company’s less traditional, higher-margin lines such as
coffee and refreshments, printing and forms management, and office furniture. What are
Allied’s salespeople engaging in?
a. cross-selling
b. trading up
c. buyer empowerment
d. bundling
ANS: A
Cross-selling uses past customer buying information to ask for additional sales.
PTS: 1 REF: 136 OBJ: 8-7

BLM: Higher Order
72. Volvo has a concept car website that caters to car enthusiasts who might want to see concept
cars evolve into real-life products. A Forum section allows people who really care about the
cars they drive to submit opinions and questions, enabling Volvo to gauge consumer reaction
to new ideas. What is CRM giving Volvo the opportunity to do?
a. enhance its database
b. retain loyal customers
c. design targeted marketing communications
d. reinforce customer purchase decisions
ANS: C
It allows Volvo to target car enthusiasts—to tailor a message for this group.
PTS: 1 REF: 136 OBJ: 8-7

BLM: Higher Order

73. After Ruth and Mike had paid in advance for their week’s stay at a Quebec inn, Ruth felt that
they might have chosen poorly and that they were committing themselves to stay at a place
they might hate. Then Ruth got a letter from the inn’s owner stating that she was looking
forward to their visit and asking what they most enjoyed for breakfast. How did the hospitality
of the letter deal with Ruth’s cognitive dissonance?
a. by cross-selling
b. by disintermediation
c. by implementing a penetration strategy
d. by reinforcing her purchase decision
ANS: D
A database offers marketers an excellent opportunity to reach out to customers to reinforce the
purchase decision.
PTS: 1 REF: 136-137 OBJ: 8-7

BLM: Higher Order
74. A new manufacturer of craft items used in home decorating could promote its stencil designs
to subscribers to The Artistic Stenciller, the official magazine of the Stencil Artisans League.
In this way, the manufacturer could leverage customer information to do which of the
following?
a. cross-sell
b. induce product trial
c. reduce cognitive dissonance
d. reinforce purchase decisions
ANS: B
Notice the question specifies this is a new manufacturer.
PTS: 1 REF: 137 OBJ: 8-7

BLM: Higher Order

75. A catalogue retailer that sells fleece-lined outerwear knows its target market includes people
who work outdoors year-round as well as people who engage in winter sports. The catalogue
retailer could mail personalized catalogues to prospects who are subscribers to a journal for
people actively involved in the lumber industry. In this way, the catalogue retailer could
leverage customer information to do which of the following?
a. cross-sell
b. reinforce purchase decisions
c. retain loyal customers
d. induce product trial
ANS: D
Since a marketing database already has a profile of its best customers, then it can easily find
new customers who are similar to its most profitable segment.
PTS: 1 REF: 137 OBJ: 8-7

BLM: Higher Order
76. What is a marketing channel?

a. the link between the retailer and the consumer
b. the method used to facilitate all communications
c. the structure that moves products from producer to ultimate consumer
d. the direct link to the ultimate consumer from the manufacturer
ANS: C PTS: 1 REF: 137-138 OBJ: 8-7
TOP: AACSB Reflective Thinking| TB&E Model Distribution BLM: Remember
77. Why does CRM concern many consumers?

a. not all customers have access to CRM marketing
b. the potential for invasion of privacy
c. the aggressive nature of marketers that use CRM
d. the expense to consumers
ANS: B
Consumers have concerns because of the potential for invasion of privacy.
PTS: 1 REF: 138-139 OBJ: 8-7


78. When Ford Motor Company launched an online effort to market its F-Series trucks, it created
a database. According to the textbook, what is one potential problem with the use of this
database?
a. that customers may perceive it as an invasion of privacy
b. that the database may be used to generate unrepresentative focus groups
c. that media alternatives may be eliminated from promotional campaigns
d. the lack of adequate personal information on customers
ANS: A
Consumers have concerns because of the potential for invasion of privacy.
PTS: 1 REF: 138-139 OBJ: 8-7

In 1981, the producers of Butterball Turkey opened the Butterball Turkey Talk-Line. Created
to assist struggling cooks preparing the holiday bird, the Butterball Turkey Talk-Line was
initially staffed with six home economists who responded to 11,000 phone calls in its first
year. The Butterball Turkey Talk-Line is now known as “the granddaddy of all help lines.”
Today the staff of 45 home economists and nutritionists responds to over 100,000 questions
between October and December. In keeping with its history of technological advances,
Butterball launched butterball.com in 1985, one of the first consumer websites, complete with
turkey preparation tips and favourite recipes from the Butterball kitchens. Butterball Turkey’s
commitment to providing premium products and renowned customer service has prevailed as
a long-standing tradition to call on, not only at the holidays, but also all year long. Butterball
has maintained a prominent position on people’s holiday tables, a position it is likely to hold
for many years to come.
79. Refer to Butterball Turkey. Butterball’s pledge to providing premium products and renowned
customer service indicates a commitment to which of the following?
a. customer relations mapping
c. client relationship management

80. Refer to Butterball Turkey. As more struggling cooks needed the information provided by the
Butterball Turkey Talk-Line, Butterball added more employees. When many consumers
expressed an inability to tell when the turkey was done, Butterball developed a pop-up signal
that made it easy to tell when the turkey was cooked to perfection. When customers wanted
more low-fat meat products, Butterball produced turkey luncheon meats and sausage.
Butterball would be classified as which of the following?
a. customer-centric
b. sales oriented
c. production oriented
d. ethnocentric
ANS: A PTS: 1 REF: 127-128 OBJ: 8-2
BLM: Higher Order
81. Refer to Butterball Turkey. What would Butterball use to centralize and share the vast amount
of customer information that its staff gathered through its years of interaction with customers?
a. cognitive learning
b. knowledge management
c. the marketing concept
d. customer empowerment
ANS: B
Knowledge management is the process used by companies. Employees, not customers, are
empowered.
PTS: 1 REF: 128 OBJ: 8-2

BLM: Higher Order
82. Refer to Butterball Turkey. By having the customers and company representatives exchange
information, and by developing learning relationships between the company and its
customers, what was Butterball establishing?
a. interactions
b. a stable organizational culture
c. motivation for obsolescence
d. a flat span of management
ANS: A PTS: 1 REF: 128 OBJ: 8-2
TOP: AACSB Communication| TB&E Model Customer BLM: Higher Order
83. Refer to Butterball Turkey. What are Butterball’s touch points?

a. its ads in lifestyle magazines
b. its emotional-appeal commercials
c. its help line and website
d. its new product innovations
TOP: AACSB Reflective Thinking| TB&E Model Customer| TB&E Model Online/
BLM: Higher Order

As flextime, consulting, telecommuting, and downsizing make it more difficult for people to
donate blood at the workplace, Canadian Blood Services has launched a CRM marketing
campaign in Toronto to boost awareness and repeat donations. Early in the campaign, it went
to its listings of previous donors and pulled out those with birthdays in February, March, and
April. These donors were sent a birthday card with the greeting, “On the anniversary of your
life, would you consider saving another’s life?”
84. Refer to Blood Services. What does the organization’s decision to use CRM marketing mean?
a. It will use the CRM process as a strategy.
b. It will focus on highly defined and precise customer groups.
c. It will revert to a market aggregation strategy.
d. It will create competitive functional areas.
ANS: A
Focusing on highly defined and precise customer groups is how CRM accomplishes its
objectives.
PTS: 1 REF: 125-127 OBJ: 8-1

85. Refer to Blood Services. What is the card sent by the organization an example of?
a. a touch point
b. a predictive campaign
c. a point-of-sale interaction
d. a service message
ANS: A
Touch points are all possible areas of a business where customers communicate with the
business.
PTS: 1 REF: 129 OBJ: 8-3

86. Refer to Blood Services. Where is the information about past donors stored?
a. in the organization’s integration systems
b. in the organization’s information repository
c. in the organization’s data mine
d. in the organization’s database
ANS: D
A database is a collection of data, especially one that can be accessed and manipulated by
computer data.
PTS: 1 REF: 131 OBJ: 8-5

BLM: Higher Order

87. Refer to Blood Services. Which type of list did the organization develop for donors to receive
birthday cards?
a. compiled
b. response
c. feedback
d. proactive
ANS: B
A response list is derived from donors (customers) who have indicated interest in the service
(given blood previously).
PTS: 1 REF: 131 OBJ: 8-5

88. Refer to Blood Services. What technique did the organization use to analyze its donor
information?
a. data identifying
b. niche marketing
c. predictive modelling
d. customer segmentation
ANS: D
Customer segmentation is the process of breaking large groups of customers into smaller,
more homogeneous groups.
PTS: 1 REF: 133 OBJ: 8-6

89. Refer to Blood Services. Why did the organization use CRM marketing?
a. to cross-sell other products
b. to design targeted marketing communications
c. to increase effectiveness of its distribution strategy
d. to define customer service
ANS: B
The birthday cards (a type of communication) were intended as reminders and thank-you
cards.
PTS: 1 REF: 136 OBJ: 8-7

TOP: AACSB Communication| TB&E Model Customer BLM: Higher Order

TRUE/FALSE
1. Customer relationship management describes organizations that organize around customer

segments.
ANS: T PTS: 1 REF: 125-127 OBJ: 8-1

2. Technology plays a major role in any CRM system.
ANS: T PTS: 1 REF: 125-127 OBJ: 8-1

3. Data mining is an analytical process that compiles actionable data about the purchase habits of
a firm’s current and potential customers.
ANS: T PTS: 1 REF: 125-127 OBJ: 8-1

BLM: Remember
4. Learning in a CRM environment is normally a process of collecting customer information

through customers’ feedback on products.
ANS: T PTS: 1 REF: 127-129 OBJ: 8-2

BLM: Remember
5. Through the application of knowledge management, the Sears clothing catalogue retailer
would have learned that a substantial number of its customers would like Sears to offer a line
of maternity wear.
ANS: T PTS: 1 REF: 127-129 OBJ: 8-2

6. For a catalogue retailer, the contact between the customer and the company’s order taker
would be an example of a touch point.
ANS: T PTS: 1 REF: 129-130 OBJ: 8-3

7. When Amazon.com asks visitors to its site to create wish lists and then invites them to send
the lists to people who may be planning to buy them a present soon, it is relying on
Web-based interactions to help it learn about its customers.
ANS: T PTS: 1 REF: 129-130 OBJ: 8-3

Model Customer BLM: Higher Order

8. Point-of-sale interactions are used both in marketing and in merchandising activities.
ANS: T PTS: 1 REF: 129-130 OBJ: 8-3

9. Channel interactions are the relationships a manufacturer has with its distributors.
ANS: F
Channel interactions are between customers and marketers and include store visits,
conversations with salespeople, and wireless communication.
PTS: 1 REF: 130-131 OBJ: 8-4

TOP: AACSB Communication| TB&E Model Customer BLM: Remember
10. Transactions can provide all types of information about the customer’s past purchases.
ANS: T PTS: 1 REF: 130-131 OBJ: 8-4

11. The process of centralizing data in a CRM system is sometimes referred to as the interpolation
of external and internal touch points.
ANS: F
The process of centralizing data in a CRM system is called data warehousing.
PTS: 1 REF: 131-132 OBJ: 8-5

BLM: Remember
12. For a CRM system to be effective, customer information must be stored in a data matrix.
ANS: F
The information must be stored in a data warehouse, a central repository for data from various
functional areas of the organization.
PTS: 1 REF: 131-132 OBJ: 8-5

BLM: Higher Order
13. Response lists are especially important in database creation because past behaviour is a strong
predictor of future behaviour.
ANS: T
offer of some kind.
PTS: 1 REF: 129 OBJ: 8-5

TOP: AACSB Reflective Thinking| TB&E Model Customer| TB&E Model Online/Computer
BLM: Remember

14. Data enhancement is the addition of information to customer or prospect records for the
purpose of better describing or better determining the responsiveness of those customers or
prospects.
ANS: T PTS: 1 REF: 132-134 OBJ: 8-5

15. Multinational companies often face difficult problems when pulling together internal data
about their customers.
ANS: T
The problems include differences in language, computer systems, and data-collection
methods.
PTS: 1 REF: 132-134 OBJ: 8-5

TOP: AACSB International Perspective| TB&E Model Customer
BLM: Higher Order
16. Data mining analyzes significant relationships simultaneously among several customer
dimensions within vast data warehouses.
ANS: T PTS: 1 REF: 132-134 OBJ: 8-6

TOP: AACSB Technology| AACSB Analytic| TB&E Model Customer| TB&E Model Customer|
TB&E Model Online/Computer BLM: Remember
17. Volvo has a website that caters to car enthusiasts who might want to see concept cars evolve
into real-life products. Volvo would likely have used data mining to locate people who were
car enthusiasts and innovators.
ANS: T PTS: 1 REF: 132-134 OBJ: 8-6

BLM: Higher Order
18. As a predictive tool, data mining has limited utility.
ANS: F
Data mining has great utility as a predictive tool.
PTS: 1 REF: 132-134 OBJ: 8-6

TOP: AACSB Technology| TB&E Model Strategy BLM: Higher Order
19. RFM analysis is used to delete unnecessary or duplicated data.
ANS: F
RFM analysis identifies customers most likely to purchase again.
PTS: 1 REF: 132-134 OBJ: 8-6

TOP: AACSB Reflective Thinking| TB&E Model Strategy BLM: Remember

20. Lifetime value analysis is helpful only when it is used on current customers.
ANS: F
LTV facilitates targeting new customers who look as though they will be profitable
customers.
PTS: 1 REF: 132-134 OBJ: 8-6

21. European-based companies are much more likely to have adopted campaign management and
other CRM techniques than North American–based organizations.
ANS: F
European companies have been slow to embrace campaign management and CRM
techniques, in part because of strict privacy laws.
PTS: 1 REF: 134-139 OBJ: 8-7

TOP: AACSB International Perspective| TB&E Model Customer| TB&E Model Promotion
BLM: Higher Order
ESSAY
1. Comment on the following statement: “A CRM cycle is a rather simplistic customer service
strategy.” How should the cycle be described?
ANS:
On the surface, CRM may seem like simplistic customer service, but customer service is only
a small part of a totally integrated holistic approach to building customer relationships. The
CRM cycle is described as a closed-loop system that has no predefined start or end. It is
initiated with the identification of customer relationships. Next, a company needs to
understand the interactions with its current customers. Using this knowledge, the company
captures customer information based on the interactions, uses technology to store this
customer information, and analyzes the data for profitable/unprofitable segments. Once this is
done, the information should be disseminated throughout the organization.
PTS: 1 REF: 125-127 OBJ: 8-1

TOP: AACSB Analytic| TB&E Model Strategy BLM: Higher Order
2. Describe the actions of a company that is referred to as having a customer-centric focus.
ANS:
Companies that implement a CRM system adhere to a customer-centric focus.
Customer-centric is an internal management philosophy similar to the marketing concept.
Under this philosophy, the company customizes its product offerings based on data generated
through interactions between the customer and the company.
PTS: 1 REF: 127 OBJ: 8-2
TOP: AACSB Analytic| TB&E Model Customer| TB&E Model Strategy
BLM: Remember

3. How can a company measure its success at implementing CRM techniques? How does
empowerment influence CRM marketing?
ANS:
The success of CRM can be directly measured by the effectiveness of the interaction between
the customer and the organization. The more latitude (empowerment) a company gives its
representatives, the more likely the interaction will conclude in a way that satisfies the
customers.
PTS: 1 REF: 128 OBJ: 8-2

BLM: Higher Order
4. What is knowledge management? What type of companies use knowledge management?
ANS:
Knowledge management is the process by which learned information from customers is
organization. Companies that have a CRM system need to use knowledge management.
PTS: 1 REF: 128 OBJ: 8-2

TOP: AACSB Analytic| TB&E Model Strategy BLM: Remember
5. Explain the importance of interactions in a customer relationship management system. Most

colleges and universities have some form of CRM system. Describe an interaction that occurs
at your institution.
ANS:
An interaction is a touch point at which a customer and a company representative exchange
information and develop learning relationships. There are several examples; probably, the best
occurs when the student goes through the admission process. The applying student provides
information for the registrar’s office, and the registrar’s office provides information to the
student about classes, living arrangements, food plans, etc.
PTS: 1 REF: 128 OBJ: 8-2

BLM: Higher Order
6. What is a touch point? Give two examples of touch points.
ANS:
Touch points are all possible areas of a business where customers communicate with that
business. Touch points include sales, requests for information, complaints, warranty
applications, and credit applications. Students may develop other equally correct answers.
PTS: 1 REF: 129 OBJ: 8-3

TOP: AACSB Analytic| TB&E Model Strategy BLM: Higher Order

7. What is a data warehouse? How does it differ from a database?
ANS:
Both are collections of data. Traditionally, collected data were stored in separate databases
throughout an organization. A data warehouse is a central repository for data from all of the
functional areas of the organization. The information can be shared by all with the use of a
data warehouse.
PTS: 1 REF: 131 OBJ: 8-5

Model Customer BLM: Remember
8. Distinguish between a compiled list and a response list.
ANS:
A response list includes the names and addresses of individuals at home or in the workplace
who have responded to an offer of some kind either by mail, e-mail, telephone,
direct-response television, product rebates, contests, sweepstakes, billing inserts, etc.
Response lists tend to be especially valuable because past behaviour is a strong predictor of
future behaviour.
A compiled list is developed by gathering names and addresses from directories and
membership rosters, usually enhanced with information from public records, such as census
data, auto registrations, birth announcements, business start-ups, bankruptcies, etc. It is a
method used to build and expand a customer database.
PTS: 1 REF: 131 OBJ: 8-5

TOP: AACSB Analytic| TB&E Model Strategy BLM: Remember
9. An organization wants to identify its best customers. What data-mining techniques can it use
if all of its customer information is stored in a database?
ANS:
1. customer segmentation
2. recency-frequency-monetary analysis
3. lifetime value analysis
4. predictive modelling
PTS: 1 REF: 133 OBJ: 8-6

TOP: AACSB Analytic| TB&E Model Customer BLM: Remember

10. Briefly describe how and why an organization uses data mining. What are some commonly
used types of data analysis?
ANS:
Data mining is used to find hidden patterns and relationships in customer data stored in a data
warehouse. Data-mining tools analyze significant relationships simultaneously among several
customer dimensions. Commonly used types of data analysis include customer segmentation,
recency-frequency-monetary analysis, lifetime value analysis, and predictive modelling.
PTS: 1 REF: 132-134 OBJ: 8-6

TOP: AACSB Technology| TB&E Model Customer BLM: Remember
11. Briefly describe six common CRM marketing database applications.
ANS:
 Campaign management: This involves developing customized products for the
appropriate customer segment, pricing these products attractively, and communicating these
offers in a manner that enhances customer relationships
 Retain loyal customers: Loyalty programs reward loyal consumers for making
multiple purchases.
 Cross-sell other products: A database allows marketers to match product profiles and
consumer profiles to cross-sell customers other products that match their demographic,
lifestyle, or behavioural characteristics.
 Design targeted marketing communications: Using transaction and purchase data in
addition to personal or demographic information allows marketers to tailor a message.
 Reinforce consumer purchase decisions: A database offers marketers an opportunity to
reach out to customers to reinforce their purchase decisions.
 Induce product trial by new customers: Using the profile of its best customers,
marketers can find new customers that are similar to its most profitable segment.
 Increase the effectiveness of distribution channel marketing: Marketing databases
enable manufacturers to advise retailers how to better meet customer needs and make it
possible to serve customers using direct channels instead of the traditional indirect channels.
 Improve customer service: Many companies are using CRM marketing techniques to
determine how best to tailor products to customers’ needs.
PTS: 1 REF: 134-139 OBJ: 8-7

BLM: Higher Order

12. You have decided your business should adopt a CRM marketing approach. You have invested
in computer software that captures customer data such as name, address, age, education, and
lifestyle characteristics. Now you find many customers are reluctant to provide you with such
information. What are the general consumer concerns regarding this issue, and how could you
address these concerns?
ANS:
CRM strategies concern many because of the potential for invasion of privacy. The sheer
volume of information that is aggregated in databases makes this information vulnerable to
unauthorized access and use.
Many consumers are concerned because they know that many companies actively sell huge
amounts of personal information to list compilers. Further, there is widespread
misunderstanding among consumers about existing privacy laws and regulations. Frustrated
by their lack of control, consumers want more opportunities to determine how their personal
information will be used. They are also distressed by spam and by the amount of information
collected about them online.
Given these concerns, it is critical that marketers remember that their relationships with
customers are built on trust. Unless companies can win that trust, they will be unable to offer
the benefits that CRM can provide.
PTS: 1 REF: 134-139 OBJ: 8-7

BLM: Higher Order

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4. Convergys Corporation is a provider of outsourced customer care, human resources, and

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5. Customer relationship management

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6. To initiate the CRM cycle, what must a company first do?

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8. Which of the following statements best describes the CRM cycle?

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12. What internal management philosophy is customer-centric similar to?

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16. Synavant is a pharmaceutical company in Toronto, Ontario. Its director of business

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PTS: 1 REF: 129-130 OBJ: 8-3

PTS: 1 REF: 129-130 OBJ: 8-3

Copyright © 2013 Nelson Education Ltd. 8-9

31. How should an organization view every transaction?

PTS: 1 REF: 131 OBJ: 8-5

Copyright © 2013 Nelson Education Ltd. 8-10

PTS: 1 REF: 131 OBJ: 8-5

Copyright © 2013 Nelson Education Ltd. 8-11

PTS: 1 REF: 131 OBJ: 8-5

37. What is the core of the data warehouse?

38. Which of the following statements best describes customer data?

PTS: 1 REF: 130-131 OBJ: 8-4

Copyright © 2013 Nelson Education Ltd. 8-12

PTS: 1 REF: 131 OBJ: 8-5

41. To be useful, where could all of these data be centralized?

PTS: 1 REF: 131 OBJ: 8-5

Copyright © 2013 Nelson Education Ltd. 8-13

PTS: 1 REF: 132 OBJ: 8-6

PTS: 1 REF: 131 OBJ: 8-5

PTS: 1 REF: 131 OBJ: 8-5

Copyright © 2013 Nelson Education Ltd. 8-14

PTS: 1 REF: 131 OBJ: 8-5

PTS: 1 REF: 131 OBJ: 8-5

Copyright © 2013 Nelson Education Ltd. 8-15

PTS: 1 REF: 132-133 OBJ: 8-6

50. Which of the following statements best describes a CRM system?

PTS: 1 REF: 125-127 OBJ: 8-1

Copyright © 2013 Nelson Education Ltd. 8-16

PTS: 1 REF: 132-133 OBJ: 8-6