Market-Based Management, 6e (Best)
Chapter 1 Customer Focus, Customer Performance, and Profit Impact
1) The major benefit of a strong customer focus is long-run survival.
Answer: TRUE
Page Ref: 6
Difficulty: Easy
2) A business with a short-term perspective lacks a strong consumer focus.
Answer: TRUE
Page Ref: 6
Difficulty: Easy
3) Minimal customer focus results in a reduction in the cost of marketing and sales.
Answer: FALSE
Page Ref: 7
Difficulty: Easy
4) Asset turnover in an organization is an example of internal company metrics.
Answer: TRUE
Page Ref: 11
Difficulty: Medium
5) Measures of market performance, such as sales and market share, are backward-
,looking measures of success or failure.
Answer: TRUE
Page Ref: 14
Difficulty: Medium
6) A market-based management business gives its dissatisfied customers as much
attention as its "very satisfied" customers.
Answer: TRUE
Page Ref: 17
Difficulty: Easy
7) The marketing cost of retaining customers is much higher than the cost of replacing
them.
Answer: FALSE
Page Ref: 20
AACSB: Analytic Skills
Difficulty: Medium
8) A market-based management system views customers as lifetime partners.
Answer: TRUE
Page Ref: 21
Difficulty: Easy
,9) A business that has a 75 percent customer retention rate has an an average customer
life of 6 years.
Answer: FALSE
Page Ref: 22
AACSB: Analytic Skills
Difficulty: Medium
10) The life expectancy of a customer decreases exponentially as a business moves to
higher levels of customer retention.
Answer: FALSE
Page Ref: 22
AACSB: Analytic Skills
Difficulty: Medium
11) The higher the rate of customer retention, the longer the average customer life
expectancy and the greater the customer lifetime value.
Answer: TRUE
Page Ref: 24
Difficulty: Easy
12) The customer loyalty index (CLI) is a function of total sales, customer lifetime value,
and shareholder dividend.
Answer: FALSE
Page Ref: 25
AACSB: Analytic Skills
Difficulty: Medium
, 13) A repeat customer buys a lot from many companies and does not have a strong
preference for one over the other.
Answer: TRUE
Page Ref: 27
Difficulty: Easy
14) Captive customers are a drain on a business's profits because the cost of acquiring
them can never be recovered.
Answer: FALSE
Page Ref: 29
AACSB: Analytic Skills
Difficulty: Medium
15) Unrestrained customer acquisition can result in a negative rather than positive impact
on profits due to the cost of customer acquisition with little offsetting income.
Answer: TRUE
Page Ref: 31
Difficulty: Easy
Chapter 1 Customer Focus, Customer Performance, and Profit Impact
1) The major benefit of a strong customer focus is long-run survival.
Answer: TRUE
Page Ref: 6
Difficulty: Easy
2) A business with a short-term perspective lacks a strong consumer focus.
Answer: TRUE
Page Ref: 6
Difficulty: Easy
3) Minimal customer focus results in a reduction in the cost of marketing and sales.
Answer: FALSE
Page Ref: 7
Difficulty: Easy
4) Asset turnover in an organization is an example of internal company metrics.
Answer: TRUE
Page Ref: 11
Difficulty: Medium
5) Measures of market performance, such as sales and market share, are backward-
,looking measures of success or failure.
Answer: TRUE
Page Ref: 14
Difficulty: Medium
6) A market-based management business gives its dissatisfied customers as much
attention as its "very satisfied" customers.
Answer: TRUE
Page Ref: 17
Difficulty: Easy
7) The marketing cost of retaining customers is much higher than the cost of replacing
them.
Answer: FALSE
Page Ref: 20
AACSB: Analytic Skills
Difficulty: Medium
8) A market-based management system views customers as lifetime partners.
Answer: TRUE
Page Ref: 21
Difficulty: Easy
,9) A business that has a 75 percent customer retention rate has an an average customer
life of 6 years.
Answer: FALSE
Page Ref: 22
AACSB: Analytic Skills
Difficulty: Medium
10) The life expectancy of a customer decreases exponentially as a business moves to
higher levels of customer retention.
Answer: FALSE
Page Ref: 22
AACSB: Analytic Skills
Difficulty: Medium
11) The higher the rate of customer retention, the longer the average customer life
expectancy and the greater the customer lifetime value.
Answer: TRUE
Page Ref: 24
Difficulty: Easy
12) The customer loyalty index (CLI) is a function of total sales, customer lifetime value,
and shareholder dividend.
Answer: FALSE
Page Ref: 25
AACSB: Analytic Skills
Difficulty: Medium
, 13) A repeat customer buys a lot from many companies and does not have a strong
preference for one over the other.
Answer: TRUE
Page Ref: 27
Difficulty: Easy
14) Captive customers are a drain on a business's profits because the cost of acquiring
them can never be recovered.
Answer: FALSE
Page Ref: 29
AACSB: Analytic Skills
Difficulty: Medium
15) Unrestrained customer acquisition can result in a negative rather than positive impact
on profits due to the cost of customer acquisition with little offsetting income.
Answer: TRUE
Page Ref: 31
Difficulty: Easy
