chapter 4

Question 1

customer-perceived value (CPV)

Answer 1

the difference between the prospective customer’s evaluation of all the costs and benefits of an offering and the perceived alternatives.

Question 2

total customer benefit

Answer 2

the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering because of the product, service, people, and image.

Question 3

total customer cost

Answer 3

the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychological costs.

Question 4

loyalty

Answer 4

a deeply held commitment to rebuy or re-patronise a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behaviour.

Question 5

value proposition

Answer 5

the whole cluster of benefits the company promises to deliver. it is more than the core positioning of the offer.

Question 6

value delivery system

Answer 6

includes all the experiences the customer will have on the way to obtaining and using the offering.

Question 7

satisfaction

Answer 7

a person’s feelings of pleasure or disappointment that result from comparing a product or service’s performance to expectations. it is key to customer retention. the company must try to deliver a high level subject to also delivering acceptable levels to other stakeholders, given its total resources.

Question 8

quality

Answer 8

the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Question 9

conformance quality

Answer 9

delivering promised quality.

Question 10

performance quality

Answer 10

good characteristics.

Question 11

the 80-20 rule

Answer 11

80 or more of the company’s profits come from the top 20 percent of its customers.

Question 12

profitable customer

Answer 12

a person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer.

Question 13

customer profitability analysis (CPA)

Answer 13

best conducted with the tools of an accounting technique called activity-based costing (ABC) and tries to identify the real costs associated with serving each customer, that is, the costs of products and services based on the resources they consume.

Question 14

customer lifetime value (CLV)

Answer 14

the net present value of the stream of future profits expected over the customers’ lifetime purchases. for example, CLV provides a formal quantitative framework for planning customer investment and helps marketers adopt a long-term perspective.

Question 15

customer relationship management (CRM)

Answer 15

the process of carefully managing detailed information about individual customers and all customers’ ‘touch points’ to maximise loyalty.

Question 16

customer value management (CVM)

Answer 16

describes the company’s optimisation of the value of its customer base.

Question 17

customer touch point

Answer 17

any occasion in which a customer encounters the brand and product, from actual experience to personal or mass communications to casual observation.

Question 18

personalising marketing

Answer 18

about making sure the brand and its marketing are as personally relevant as possible to as many customers as possible - a challenge, given that no two customers are identical.

Question 19

permission marketing

Answer 19

the practice of marketing to consumers only after gaining their expressed permission.

Question 20

customer churn/defection

Answer 20

losing customers who switch three times a year to find the best deal.

Question 21

marketing funnel

Answer 21

identifies the percentage of the potential target market at each stage in the decision process, from merely aware to highly loyal.

Question 22

conversion rates

Answer 22

the percentage of customers at one stage who move to the next.

Question 23

customer relationship capital

Answer 23

satisfied customers.

Question 24

customer base

Answer 24

the number and value of customers who will do business with the new firm when it is sold.

Question 25

frequency programs (FPs)

Answer 25

designed to reward customers who buy frequently and in substantial amounts.

Question 26

club membership programs

Answer 26

attract and keep those customers responsible for the largest portion of business.

Question 27

brand community

Answer 27

a specialised community of consumers and employees whose identification and activities focus on the brand. a strong brand community results in a more loyal, committed customer base. characteristics: 1. sense of connection to the brand/company/product/community members 2. shared rituals/stories/traditions that help convey meaning 3. shared responsibility to the community and individual members.