Deck 11: Database and Direct Response Marketing and Personal Selling

Question 1

Lifetime value is a figure that represents revenues and profits received from a customer throughout the lifetime of a relationship.

Answer 1

False

Question 2

The marketing database contains the transactions individuals have with a firm and follows accounting rules.

Answer 2

False

Question 3

Geocoding allows for combining demographic information, geographic information, and lifestyle data.

Answer 3

True

Question 4

While it is important for a database to record every transaction with a customer, recording of interactions that do not relate to a purchase are not necessary.

Question 5

Paula Ramirez noted that word-of-mouth communications were a key element of the sales and marketing program for the 1400 Words Company.

Question 6

Retaining current customers is more expensive than gaining new customers.

Question 7

In calculating the lifetime value, the cost of acquiring a customer is determined by dividing the total marketing and advertising costs by the firm's total number of customers.

Question 8

Successful database marketing emphasizes two things: identifying customers and building relationships.

Question 9

Lifetime value can be calculated in two ways. Most marketing experts believe the most accurate method is calculating the lifetime value of a single customer.

Question 10

While database marketing can be used for selling products, the primary benefit of database marketing can be the enhancement of customer loyalty.

Question 11

The Internet and e-mail provide excellent, cost-effective channels of communication to build long-term relationships with customers.

Question 12

Successful database marketing requires a quality data warehouse.

Question 13

A data warehouse contains information including customer e-mail addresses, purchase and communication histories, and personal preference profiles.

Question 14

The data warehouse holds all of the customer data.

Question 15

Customers today value a low price over personalized marketing efforts.

Question 16

Mailing addresses of individuals in a database should be updated at least once every two years and more often if they are used for frequent contacts.

Question 17

Information about current customers, former customers, and prospects is contained within a firm's operational database.

Question 18

Purchase and website visit histories are sufficient to build a quality database.

Question 19

The key figures in calculating the lifetime value of a consumer or set of consumers are revenues, costs, and retention rates.

Question 20

Geocoding is adding geographic codes to customer records.

Question 21

Customer service representatives can use an individual's lifetime value to determine how he/she should interact with the customer.

Question 22

When customers make contact with a company, the customer's profile, history, and other information contained in the database should be available to the company contact person as he or she deals with the customer.

Question 23

Customer contact personnel with a company should not allow the lifetime values of individual customers to affect the way they deal with a customer since every customer should be treated equally.

Question 24

A database marketing program provides the tools to personalize messages and keep records of the types of communications that work and those that do not work.

Question 25

Data mining normally involves building profiles of consumer groups and preparing models that predict future purchase behaviors.

Question 26

In developing data-driven communications with customers, maintaining customer profile information is important because the information helps the marketing team create personalized communications.

Question 27

When a customer makes a purchase over the Internet, the only communication that is important is sending them a thank you and acknowledgment of the order.

Question 28

The primary reason for building a database, coding the information, and data mining is to use the output to build programs that will boost sales revenues.

Question 29

The most common database-driven marketing programs are permission marketing, frequency programs, and customer relationship management efforts.

Question 30

Through data mining a company can build a profile of its best customers, which can then be used to identify prospective new customers or upgrade current customers to a higher level of purchasing.

Question 31

A retailer can use data mining to determine when to mark merchandise down and how much to mark it down.

Question 32

Personalized communications with customers through database information builds relationships and leads to both repeat purchases and customer loyalty.

Question 33

Data mining and data coding of a firm's database can help a firm develop more personalized marketing communications and marketing programs.

Question 34

Faith received an e-mail from Volkswagen exactly one year after she purchased her Volkswagen. The company thanked her for her purchase and encouraged her to access the company's website, which is an example of trawling.

Question 35

Trawling is the process of coding data files with lifetime values and customer cluster codes.

Question 36

Ariana moved to a new apartment. She soon received a letter from Bed, Bath, and Beyond containing a coupon for merchandise she may need in her new apartment, which is an example of trawling.

Question 37

A sporting goods store could use customer clustering to group customers based on the type of sporting goods they purchased, such as fishing supplies, hunting supplies, and so forth.

Question 38

A permission marketing program means promotions are only sent to customers that ask for them.

Question 39

In developing data-driven communications with customers through Web visits, identification codes allow a visitor to register with the site through an ID name or number and a password.

Question 40

Coding of customer data can produce information that can be used to group customers into clusters based on a wide variety of criteria.

Question 41

In permission marketing, permission is normally obtained from individuals in exchange for an incentive.

Question 42

To maintain positive attitudes toward permission marketing programs, rewards must be offered continually and not just at the beginning of the program.

Question 43

A frequency program provides incentives that are designed to encourage customers to make repeat purchases.

Question 44

A program designed to build long term loyalty and bonds with customers through the use of a personal touch facilitated by technology is a customer relationship management (CRM) program.

Question 45

An important key to success in permission marketing programs is to make sure participants have actually agreed to participate and not been tricked into participating or signed up without their knowledge.

Question 46

Moderate users of a good or service are most likely to be enticed by a frequency program.

Question 47

With a frequency program, consumers are more likely to put forth greater effort to obtain luxury goods as opposed to necessity items.

Question 48

When analyzing the reasons for the failures of CRM programs, the overarching theme was that the CRM programs were focused on sales rather than enhancing relationships with customers.

Question 49

The greater the value of the reward in a frequency program, the more effort individuals will expend in the program to obtain the reward.

Question 50

The lifetime value of a customer is based on the idea that the amount of money customers spend with a firm increases over time.

Question 51

To optimize permission marketing, firms must feature empowerment and reciprocity.

Question 52

The basic idea behind customer relationship management (CRM) is that companies can use databases to customize products and communications to customers that would result in higher sales and profits.

Question 53

Companies develop frequency programs to encourage customer loyalty and to match or preempt the competition.

Question 54

The number one reason individuals remain loyal to a permission marketing program after they have joined is a chance to win prizes in a contest or sweepstakes.

Question 55

A key principle in developing a loyalty or frequency program is to design the program to enhance the value of what the product offers to customers.

Question 56

Share of a customer measures a customer's potential value.

Question 57

For long-term success in permission marketing programs, customers should feel empowered, which means they have the power to choose the incentive they want to join the permission program.

Question 58

In providing rewards for a frequency program, a variable ratio reward schedule is superior to regularly scheduled rewards.

Question 59

When customers in a permission marketing program receive rewards during the program as well as at the beginning, it creates a feeling of reciprocity.

Question 60

CRM is built on two primary metrics: lifetime value of customers and data mining.

Question 61

The most common form of direct marketing is e-mail.

Question 62

Direct sales are not an attractive method for selling products to consumers.

Question 63

Outbound direct response telemarketing is most successful when it is tied into a database and either customers or prospects are contacted.

Question 64

Of the different types of mailing lists that can be purchased, the lowest cost list is a response list.

Question 65

Successful cataloging requires an enhanced database that allows for targeting of recipients.

Question 66

Through search engine optimization, brands can place direct response ads before consumers who are searching the Internet to either purchase a product or to obtain additional information.

Question 67

If a company is using its own data list generated by its database, it is important to parse the list to separate active customers from inactive customers so different mailers can be sent to each group.

Question 68

Catalogs are an essential selling tool for many business-to-business marketing programs.

Question 69

The primary advantage of direct mail is that mail can be easily targeted to specific consumer groups and to specific individuals.

Question 70

Many consumers believe online shopping has replaced catalogs, but research reveals that receiving a catalog is often the first step in the buying cycle for consumers.

Question 71

Digital direct-to-press is used only in business-to-business marketing due to its costs.

Question 72

Catalogs offer the advantages of being long lasting, low-pressure, and can be viewed at a person's leisure.

Question 73

Direct response marketing or direct marketing is vending products to customers without the use of other channel members.

Question 74

In purchasing a mailing list, a response list consists of customers who have purchased the product before and have responded to direct mail offers for the product being advertised.

Question 75

According to the Direct Marketing Association, about 60 percent of direct marketing expenditures are spent on retaining current customers.

Question 76

In terms of responding to a direct mail offer, a PURL offers the advantage of preloading all of the individual's personal data to the website.

Question 77

Direct mail is a primary tool for promoting Internet websites and online sales.

Question 78

In purchasing a mailing list, a "hot list" is individuals that have responded to a direct mail offer within the last 30 days.

Question 79

The Internet has not been a successful medium for direct response advertising.

Question 80

The most common approach to direct mail campaigns is to purchase a list of names.