At Zappos, the Web retailer that began with selling shoes and now has expanded its selections

to include clothing and accessories, the customer is at the center of everything. Employees are
trained to deliver WOW through service. The company has dedicated itself to delighting its
customers and keeping them coming back for more. These delighted customers also spread
plenty of positive buzz about the company to their friends, who often become Zappos
customers themselves. Zappos has relied almost exclusively on repeat customers and word of
mouth instead of paid advertising. As the company grows, however, management is
considering investing a larger share of its resources in a mass marketing campaign in
magazines and newspapers.
1.

Which of the following, if true, would best support the argument that Zappos
should move toward a mass marketing campaign?
a.
Zappos competitors in Web retailing tend to adopt mass marketing campaigns.
b.
Zappos customers who buy shoes are more loyal to Zappos than Zappos
customers who buy accessories.
c.
Zappos market research reveals that most customers who use the Internet
routinely prefer to buy a wide range of products from just a few retailers.
d.
Zappos customer service representatives receive more training and have access to
more documentation than representatives of other companies.
e.
Zappos training procedures will allow it to maintain its performance in customer
service even if it acquires a large number of new customers.

User Responses:
Feedback:

E
Should Zappos adopt a mass marketing campaign? So far
theyre doing well with customer service, but maintaining that
might be harder if they got a lot of new customers. If Choice 5 is
true, then getting new customers wont jeopardize customer
service, and so Choice 5 supports the argument.
Choice 1 is about what the competitors do, which doesnt tell
Zappos what to do.
Choice 2 distinguishes shoes from accessories but tells us
nothing about mass marketing.
Choice 3 weakens the argument by suggesting that most
people would prefer not to shop at specialty sites.
Choice 4 explains why the customer service is so good, but that
doesnt tell us whether this advantage would persist in a mass
marketing world.

2.

Which of the following, if true, would undermine the argument that Zappos
should move toward a mass marketing campaign?
a.
Zappos market research reveals that price is the most important factor for most
customers who routinely buy shoes, clothing, and accessories.
b.
Awareness of Zappos brand is low among customers who routinely buy shoes,
clothing, and accessories.
c.
The number of people who use the Internet to purchase clothing items is expected
to grow substantially in the next three years.
d.
Zappos initial marketing budgets were too small to allow it to purchase
advertisements in popular newspapers and magazines.
e.
Recently, most newspapers and magazines have lowered their advertisement rates
due to reduced circulation.

User Responses:
Feedback:

A
Now we need to figure out what would weaken the argument.
All we really know about Zappos is that they have strong
customer service. But if most customers are focused on price,
then Zappos advantage in customer service would be less
significant for those customers. So if Choice 1 is true, then
going after the mass market makes less sense. As for the
others:
Choice 2 strengthens the argument by suggesting that Zappos
would gain brand awareness from mass marketing.
Choice 3 strengthens the argument by suggesting that more of
the general population could be Zappos customers.
Choice 4 identifies the reasons for Zappos initial decisions,
which are irrelevant. The issue is what the company should do
now.
Choice 5 makes mass marketing sound cheaper, which would
strengthen the argument. But then again, if circulation is lower,
then the rates should be cheaper. So Choice 5 does nothing to
the argument.

Stephanie Ungar is part of the marketing department at Spa World, a mid-sized chain of full
service day spas located throughout the Midwest. Stephanie spends much of her time each
day learning about her companys customers, from analyzing customers comments and
ratings on Spa World surveys to interacting with customers at one of the companys many
spas. Informed by her research, Stephanie has created several suggestions for customer
packages that meet the desires of the companys most loyal customers as well as packages
aimed at attracting and keeping customers who only occasionally come to Spa World.
Stephanie is preparing to present these suggestions to management.

3.

Which of the following actions would be the best example of customer-driving

marketing?
a.
creating a valued customer program that rewards loyal customers by giving those
customers special discounts on massages and skin treatments
b.
promoting a new technology that makes skin more resistant to sun damage
c.
making the hours of operation of all Spa World locations the same
d.
rewarding employees who have a long history of providing excellent customer
service excellence
e.
expanding Spa Worlds customer referral program to reward employees who
encourage their friends to visit Spa World

User Responses:
Feedback:

4.

B
Customer-driving marketing involves leading customers where
they want to go before they themselves know where they want
to go. All of the choices could be attractive to customers and
based on customer need, and so they all could be customerdriven. But the new technology that makes skin more resistant
to sun damage is the only one that is customer-driving, because
it is the only one that involves consumer wants that dont
currently exist. It is very unlikely that customers are aware of a
desire for a technology that hasnt been invented yet.

Stephanie is concerned about identifying underlying needs instead of simply

focusing on existing demands. All of the following questions, if asked during
her research, would help Stephanie EXCEPT:
a.
To what extent are potential visitors to Spa World motivated by concerns about
health as opposed to improving their appearance?
b.
Would Spa World customers be interested in similar services and products delivered
at their homes?
c.
When customers visit Spa world, are they more interested in solving their everyday
problems or are they more interested in forgetting about those problems?
d.
Would Spa World be more focused on identifying underlying customer needs if it
had originated as a division of a larger organization?
e.
Would Spa World customers value health and beauty advice even if following that
advice did not lead to a purchase of a currently existing Spa World product or
service?

User Responses:
Feedback:

D
a.All of the wrong choices here involve questions that would
help Spa World break out of its current definition of its products
and services. The exception is Choice 4, which would help Spa
World understand why it acts as it does but would not help Spa
World become more customer-focused.

5.

Management at Spa World is having trouble understanding the concept of

meeting underlying customer needs instead of simply selling the products
they make. Doing this effectively requires marketers to think about
possibilities that are outside of the customers current experiences. To
illustrate the idea, Stephanie explains that years ago the earliest camera
manufacturers typically failed to predict that camera customers would ________.
a.
balance quality and price before making purchasing decisions
b.
be interested in recording sound as well as images
c.
trust recommendations from friends more than advertisements
d.
prefer to try out new products before they buy them
e.
seek volume discounts when making large orders

User Responses:
Feedback:

C
The correct answer is the one that describes a possibility that
was outside of the experience of the earliest camera customers.
Those customers would have known about balancing quality
and price (Choice 1), trusting recommendations more than ads
(Choice 3), trying out products (Choice 4), and seeking volume
discounts (Choice 5). But the camera customer experience at
the time would not have included recording sound as well as
images. That would have been new. So while failing to predict
any of these would be a bad thing, failing to predict the desire
to record sound is the only choice that illustrates an inability to
think about possibilities outside of customers current
experiences.

6.

In her proposal to management, Stephanie suggests creating a variety of new

services that will help Spa World satisfy unrecognized needs. Spa Worlds
investors are skeptical. Some have pointed out that Spa World customers have
never purchased these services in the past and that they have never asked for
them, either. Which of the following is the best reply Stephanie could offer to
this objection?
a.
When a new product or service is introduced into the market, other companies often
find ways to improve on that product or service.
b.
With proper attention to cost control, Spa Worlds expenditures on these services
could be only a small portion of Spa Worlds overall budget.
c.
Effective market research can identify customers underlying needs and measure
their interest in new products and services that meet those needs.
d.
The costs of servicing some customers can be so high that a business can be more
profitable by ending the relationship with those customers.
e.
Organizations that offer new products and services often need to spend resources
explaining features and benefits to customers who are unfamiliar with those
products and services.

User Responses:
Feedback:

C
What would be the best reply to the objection that customers
have never bought or even asked for the new services? As
Choice 3 points out, effective market research can help Spa
World figure out what new products and services would interest
its customers. So Choice 3 is an effective retort.
Choice 1 weakens Stephanies case by suggesting that the first
company to produce something will produce a worse version
than later companies will produce.
Choice 2 suggests that the new services wont cost so much,
but thats not a reason to produce them. The investors dont
claim that the new services are too expensive. Rather, the
investors arent convinced that customers want the new
services in the first place.
Choice 4 is true, but is irrelevant here. Cutting off unprofitable
customers tells us nothing about Stephanies ideas or the
objection.
Choice 5 suggests that the new products will be more
expensive, which doesnt help Stephanies case.

New technologies have made it possible for automakers to produce cars that are more fuel
efficient and safer. These new car models, if adopted by a large portion of drivers, will greatly
reduce the environmental damage caused by automobiles and can reduce reliance on
nonrenewable fuel. However, the new car models are different from the large, heavy models
that domestic consumers have become accustomed to. The management team at a domestic
automaker is now faced with transitioning to a customer-driving marketing concept.

7.

One member of the management team is a supporter of the product concept.

Which of the following is a disadvantage of this approach?
a.
It fails to recognize that a companys current product can be improved.
b.
It does not strike a proper balance between performance and quality.
c.
It focuses on the needs of current and potential customers over the needs of sellers.
d.
It assumes that making high-quality innovative products guarantees success.
e.
It discounts the possibility that given enough time, competitors can match the
product quality levels of even the most efficient organization.

User Responses:
Feedback:

8.

D
The product concept holds that consumers will favor products
that offer the most in quality, performance, and features. This is
part of the issue, but it neglects other aspects of business.
Choice 4 points out this flaw.
Choices 1, 2, and 5 concern product features and quality, but
thats not the problem here. The problem is that having a good
product isnt enough.
Choice 3 claims that the product concept focuses on customers
over the needs of sellers, which isnt clearly a flaw and in any
case isnt a problem here.

Which of the following, if true, would best support the decision to produce the
new car models?
a.
Historically, the automaker has not had much success selling autos in foreign
markets.
b.
Auto customers believe that heavier cars are safer to drive.
c.
Auto customers prefer products that are friendlier to the environment when those
products provide the same features and benefits that less-friendly products provide.
d.
Future increases in the price of fuel are likely to make customers more interested in
fuel efficiency.
e.
Members of the management team have expressed interest in purchasing the new
models for their own use.

User Responses:
Feedback:

D
The new models are more fuel-efficient but are different from
the ones that customers expect. However, if Choice 4 were true
and fuel became more expensive, customers would be more
likely to ignore the differences in order to save money.
Choice 1 would be a reason to change something, but we dont
know why the automaker hasnt had success and we dont know
what the reaction to the new models might be.
Choice 2 would be a reason to go with models that are less fuelefficient.
Choice 3 could only undermine the argument by suggesting
that customers look for the same things whether products are
environmentally-friendly or not.
Choice 5 is about what the managers would buy themselves,
which isnt the point here. They need to be concerned about the
broad market, not themselves.

9.

One member of the management team is evaluating the new car models by
considering market share only. However, considering a companys customer
equity can result in a better estimate of the companys value than market
share alone because ________.
a.
market share is more focused on revenue than profitability
b.
market share does not reflect the research and development costs that companies
incur in order to bring their product to market
c.
customer equity takes into account future changes in the environment
d.
customer equity takes into account the difference between customer-perceived
value and customer satisfaction
e.
customer equity is easier to calculate

User Responses:
Feedback:

10.

C
Customer equity is the total combined lifetime value of all of
the companys customers. But market share considers the
present only. So, as Choice 3 points out, future changes in the
environment will be reflected in customer equity but not market
share. This is important, because companies expect to compete
in the future as well as the present.
Choices 1 and 2 criticize market share for not considering
expenses, but that does not distinguish market share from
customer equity.
Choice 4 doesnt describe customer equity, which is not a
measure of perceived value or satisfaction.
Choice 5 has it backwards. Customer equity is harder to
calculate, since it requires speculation about the future.

For the decision to produce the new models to be consistent with the societal
marketing concept, all of the following would need to be true EXCEPT which
one?
a.
The cars must deliver value to customers.
b.
The cars must meet the needs of the businesses that produce them.
c.
The cars must have less of an impact on the environment than any other car
models.
d.
The cars must preserve or enhance the ability of future generations to meet their
needs.
e.
The cars must take into account the long-run welfare of consumers.

User Responses:
Feedback:

C
The societal marketing concept holds that marketing strategy
should deliver value to customers in a way that maintains or
improves both the consumers and societys well-being. It favors
sustainable activities and long-run welfare. So all of the
conditions mentioned would be required except the requirement
that the models have less of an impact than any other car
models. That goes too far. The societal marketing concept
would consider the environmental impact of a model but not
demand the adoption of the one with the least impact.