Question: Andrew is a regular customer at Ottos brew pub in Chicago. He usually goes there once a week and has 2 pints (assume a price

Andrew is a regular customer at Ottos brew pub in Chicago. He usually goes there once a week and has 2 pints (assume a price per pint of $5 and a gross margin for Ottos of 80%). Assume that Andrew will be in Chicago for five years (use 4 weeks per month and 48 weeks per year).

a. Using month as the discount period and a monthly discount factor of 1%, what is Andrews CLV to Ottos? Note: To find the sum of the first Sn terms of a geometric sequence use the formula = 1 (1 ) 1 , where r is the common ratio. You can also use Excel to find the answer, it is totally up to you.

b. Repeat the calculations under various scenarios that Andrew may not remain a loyal Ottos customer. Specifically, assume monthly retention rates of .99, .95, and .90. Whats the likelihood that Andrew will still be a customer after one year under these scenarios? How does CLV change?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Andrew is a regular customer at Max's brew pub in Tempe. He usually goes there once a week and has 2 pints ( assume a price per pint of $ 5 and a gross margin for Max's of 8 0 % ) . Assume that...

Mike is a regular customer at Bobs brew pub in Tempe. He usually goes there once a week and has 2 pints (assume a price per pint of $5 and a gross margin for Bobs of 80%). Assume that Mike will be in...

Questions As an international marketing consultant, you are asked to give an independent assessment of Guin - ness's opportunities in the world beer market. You are specifically asked the following...

Blackrocks:Craft Brewing - From Hobby To Business:Applying Strategic Management To The Small Firm Brian Gnauck, Northern Michigan University, USA Claudia Hart, Northern Michigan University, USA Larry...

Blackrocks: Craft Brewing - From Hobby To Business: Applying Strategic Management To The Small Firm Brian Gnauck, Northern Michigan University, USA Claudia Hart, Northern Michigan University, USA...

i need question uploaded in last picture READING 5.1 The Greed Cycle: How Corporate America Went out of Control JOHN CASSIDY through accounting skulduggery that exag. In this essay, John Cassidy,...

Managerial Decision Making Six Decision Stages in Chapter 5 I. Identify and Diagnose the Problem Consider the following questions when identifying and diagnosing the problem: Is there a difference...

Hi, Please help me with responding to the discussion questions below because I'm having a hard time answering them myself. I have been up all night, and I'm unable to figure them out. I uploaded a...

#3. (20 points) Three long current carrying wires were placed as shown in the figure. The directions of the currents are as seen in the figure and their magnitudes 13 = 20 A. are I, = 8 A, I, = 20 A...

Kerry is a senior auditor and a member of the team auditing a long-standing client, the listed public company Darcy Industries Ltd. Kerry's wife's uncle died recently and his estate is being...

q , is used to eliminate opportunities for risk - free profits. speculating spread hedging arbitrage

1 5 . Delete row 2 1 since the worksheet is now complete. Your workbook should look like the Final Figures on the following pages. The values in cells and 1 9 of the Profit Projections worksheet have...

5. Analyze the group dynamics from five of your favorite television shows. See if you can identify the various social and antigroup role types in each of the groups.

Decision Making in Groups Leadership in Meetings

Have you ever been in a leadership role among a group of friends? Have you ever been subordinate to a friend in a group situation? Did any conflict arise, and if so, how did you resolve it?