A Company That Uses a Four-Tier Scheme to Segment Its

question 16

Multiple Choice

A company that uses a four-tier scheme to segment its customers by profitability:

• A) Is using usage segmentation
• B) Identifies customers who need different sorts of attention
• C) Can increase profitability by increasing sales to lower-level customers
• D) Cannot use relationship marketing effectively
• E) Is accurately described by all of the above

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Definitions:

Strip Bond

A type of bond where the principal and regular coupon payments have been separated and are sold individually as zero-coupon bonds.

Interest

The cost of borrowing money, typically expressed as a percentage of the borrowed amount, paid by the borrower to the lender.

Effective Rate

The actual interest rate of an investment or loan when the compounding frequency is accounted for, giving a true reflection of the cost or yield.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.