ITPEC IP April 2023 Question 84

A good relationship with the customer is the source of profit — the question asks for the idea underlying CRM.

CRM (customer relationship management) collects the information from every contact with a customer — sales, support, marketing — and uses it to understand needs, raise satisfaction and keep customers over the long term. Profit comes from retention and customer lifetime value rather than from a single sale, since keeping an existing customer usually costs less than winning a new one.

Answer (b)

Why not others:

• •(a) — profit from choosing an area with little competition and entering it before competitors is first-mover advantage, a market-entry strategy
• •(c) — a shorter product life cycle is a market condition that pressures companies, not a source of profit, and CRM is not about it
• •(d) — profit from a large share of a specific market is the market-share or niche strategy, not customer relationships

Key rule: CRM treats long-term customer relationships as the asset that earns profit; entry timing and market share belong to competitive strategy.

Business Strategy Management · AI-written, may contain errors