ITPEC FE Morning April 2022 Question 68

Which of the following is the purpose of CRM?

a)Acquisition of customer loyalty and maximization of customer lifetime valueb)Ascertainment of the sales information for each product at the time of salesc)Determination of the order quantity and order timing of material requirred for manufacturingd)Reduction in loss of sales opportunities due to inventory shortage

Explanation

Winning customer loyalty and maximising customer lifetime value — the purpose of CRM.

CRM (customer relationship management) gathers each customer's purchase history, contacts and enquiries in one place so that every department can treat the customer as an individual. Good long-term relationships keep customers coming back, which raises lifetime value: the total profit a customer brings over the whole relationship.

Answer (a)

Why not others:

•(b) — capturing sales information per product at the moment of sale is the purpose of a POS system
•(c) — deciding the order quantity and timing of materials needed for manufacturing is the purpose of MRP
•(d) — reducing sales lost to stockouts is the aim of inventory control and SCM, which match supply to demand

Key rule: CRM is about the long-term relationship with each customer; POS captures sales, MRP plans materials, SCM balances supply and inventory.

Business Strategy Management · AI-written, may contain errors

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