Question 1

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

Accepted Answer

Database marketing can certainly be used for selling products, but its primary benefit lies in enhancing customer loyalty. By utilizing customer data and insights, businesses can create personalized and targeted marketing campaigns that resonate with individual customers, leading to stronger relationships and repeat business.

Question 2

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

Accepted Answer

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Question 3

The internet and email provide excellent, cost-effective channels of communication to build long-term relationships with customers.

Accepted Answer

The internet and email are excellent and cost-effective channels of communication that facilitate building long-term relationships with customers.

Question 4

Data mining can be used for each of the following purposes except:
A)develop profiles of a firm's best customers.
B)develop profiles of customers who tend to purchase competing brands.
C)identify current customers who fit the profile of a firm's best customers.
D)identify current customers who would be good prospects for cross-selling other products.

Accepted Answer

Data mining is primarily used for identifying patterns and relationships within data to predict outcomes, make decisions, and improve processes. It is not typically used to develop profiles of customers who tend to purchase competing brands, as this would require access to competitors' customer data, which is not usually available.

Question 5

A marketing database follows accounting rules.

Accepted Answer

A marketing database is not a financial database, so it does not follow accounting rules. Its purpose is to store and organize information about customers and their behavior for marketing purposes, not for financial reporting.

Question 6

Each of the following is an example of data mining except:
A)American Eagle studying how consumers respond to price markdowns.
B)Goody's analyzing baskets of merchandise purchased by individual consumers.
C)Target identifying the other retail stores customers use for particular products.
D)First Horizon Bank expanding its wealth management business by studying profiles of its best customers.

Accepted Answer

Data mining involves analyzing large sets of data to discover patterns, trends, and relationships that can inform decision-making. While options A, B, and D describe activities that involve analyzing customer data to understand behavior or preferences, option C describes a competitive analysis activity, which, although it may involve data analysis, is not focused on discovering patterns within the company's own data but rather on understanding the competitive landscape.

Question 7

Geocoding is adding geographic codes to customer records.

Accepted Answer

Geocoding is the process of adding geographic codes, such as latitude and longitude, to customer records or any other location-based data.

Question 8

Most marketing experts believe the most accurate method to calculate lifetime value is to calculate the lifetime value of a single customer rather than a market segment.

Accepted Answer

Calculating the lifetime value of a market segment allows for a more comprehensive and strategic understanding of customer value over time, accommodating variations within a broader group, which is often more practical and insightful for marketing strategies.

Question 9

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.

Accepted Answer

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Question 10

Successful database marketing requires a quality data warehouse.

Accepted Answer

A quality data warehouse is essential for effective database marketing as it provides a centralized repository of accurate and reliable data that can be used for analysis and targeted marketing campaigns. Without a quality data warehouse, marketers may struggle to obtain the insights and customer segmentation needed to run successful campaigns.

Question 11

Repeat customers purchase more frequently and spend more money than do new customers.

Accepted Answer

Repeat customers have already established a level of trust and satisfaction with a business, making them more likely to make additional purchases and spend more money. This is often referred to as the "loyalty effect" in marketing.

Question 12

Retaining current customers is more expensive than gaining new customers.

Accepted Answer

Retaining current customers is generally less expensive than acquiring new customers, as the latter often involves significant marketing and sales efforts.

Question 13

Geocoding allows for combining demographic information, geographic information, and purchase history data.

Accepted Answer

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Question 14

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

Accepted Answer

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Question 15

A data warehouse contains customer information such as customer email addresses, purchase and communication histories, and personal preference profiles.

Accepted Answer

A data warehouse is a central repository of data that is used for reporting and analysis. It typically contains data from various sources and is structured to support querying and analysis. In the case of a customer data warehouse, it would contain information such as email addresses, purchase and communication histories, and personal preference profiles to support marketing and customer service efforts.

Question 16

The data warehouse holds all customer data.

Accepted Answer

The data warehouse is a central repository that holds an organization's data from different sources, including customer data. Therefore, it can be said that the data warehouse holds all customer data.

Question 17

Data mining is:
A)collecting addresses and zip codes of customers.
B)reviewing past purchases of a product by customers.
C)building profiles of customer segments and preparing models that predict their future purchase behavior.
D)selecting cities for data analysis.

Accepted Answer

Data mining involves analyzing large datasets to discover patterns and build predictive models, which is described in option C. It's more than just collecting or reviewing data; it's about extracting valuable insights and making predictions.

Question 18

Successful database marketing emphasizes two things: identifying customers and producing sales.

Accepted Answer

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Question 19

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

Accepted Answer

Building a quality database requires more than just purchase and website visit histories; it also needs comprehensive data including customer preferences, demographics, engagement history, and more to create a holistic view of the customer.

Question 20

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

Accepted Answer

While recording interactions unrelated to a purchase may not be essential for transactional purposes, they can provide valuable information for customer service, marketing, and other business operations. Therefore, it is recommended to record all customer interactions in a database, not just those related to purchases.

Quiz 11: Database and Direct Response Marketing and Personal Selling