Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Krasana Coffee is a new high-end coffee restaurant in Slovakia that sells 1kg bags of beans through independent coffee shops. The bags of roasted beans

Krasana Coffee is a new high-end coffee restaurant in Slovakia that sells 1kg bags of beans through independent coffee shops. The bags of roasted beans retail for €16 and Krasana receives €8.12 per bag, which costs €3.50 per bag to produce and deliver. In their first year of business, they sold 20,700 bags primarily in the capital of Bratislava and spent €53,000 on local advertising and promotions. Krasana has one employee focused on marketing and sales whose salary and expenses are €40,000 per year. Based on feedback from the channel and the salesperson, Krasana estimates that the average customer purchased one bag of their coffee every other month. In January, they began to sell the bags directly through their website using a subscription model of one bag per month for the same retail price but delivered to the end customer's door by post at a cost of €5 per bag, including delivery. They supported this effort by spending €32,000 on SEO and Instagram ads. They also continued their traditional advertising and promotional spending in support of the independent coffee shop channel. After three months, they had signed up 1,600 subscribers through their website and still sold 3,600 bags through independent coffee shops. 


If Krasana estimates that each customer will continue to purchase the bags for 2 1/2 years, what is the best estimate of customer CLV?

Step by Step Solution

3.46 Rating (159 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the Customer Lifetime Value CLV you can follow these steps 1 Calculate the contribution ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting and Reporting a Global Perspective

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

4th edition

978-1408066621, 1408066629, 1408076861, 978-1408076866

More Books

Students also viewed these Marketing questions

Question

Which target markets are Google appealing to?

Answered: 1 week ago

Question

3. Give short, clear directions before, not during, transitions.

Answered: 1 week ago

Question

What is Accounting?

Answered: 1 week ago

Question

Define organisation chart

Answered: 1 week ago

Question

What are the advantages of planning ?

Answered: 1 week ago

Question

Explain the factors that determine the degree of decentralisation

Answered: 1 week ago

Question

What Is acidity?

Answered: 1 week ago

Question

What is a make-or-buy decision?

Answered: 1 week ago