Lisa is a sales manager at a clothing retail store. She has hired you, a recent...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lisa is a sales manager at a clothing retail store. She has hired you, a recent graduate with a marketing degree with an emphasis on marketing information systems. She wants you to analyze big data that the company has gathered on its customers to come up with Ideal Customer Profiles so that the firm can make marketing investment decisions to attract such customers. Lisa explains that an ideal customer profile is a description of the demographics, psychographics, and behavior of the customers who are most likely to purchase their firm's product. In order to identify the Ideal Customers, you must determine the Customer Acquisition Costs. Lifetime Value, Payback Periods, and Customer Retention. You are familiar with these concepts because you learned about them in your marketing classes. John Lund end images LLC 1. You know that the Customer Acquisition Cost is the cost associated with convincing a customer to buy a good or service. It includes the product, research, marketing, and accessibility costs. You also know that it equals the marketing expenses per month divided by the number of new customers per month. You have determined that two certain groups of customers are the largest groups of buyers. You want to know which group will be more profitable to target in terms of marketing. You check the company's big data and find that the marketing expense per month for targeting the first group is $30,000, while the second group requires $60,000. You estimate that this marketing campaign will be able to attract 1,000 new customers for demographic group 1 and 1,500 for demographic group 2. C Customer Acquisition Cost 1 2 A Marketing Expenses for Targeting Customers B Number of Customers Prev 1 of 1 Next > What is the Customer Acquisition Cost for each customer in demographic group 1? O $40 O $50 O $30 O $60 What is the Customer Acquisition Cost for group 2? O $40 O $100 O $80 O $60 2. You are now ready to calculate the Customer Lifetime Value, which Lisa wants calculated as a forecast of the net profit related to the whole purchase future associated with a customer. It equals the monthly sales to a certain customer, multiplied by the gross profit percentage, multiplied by the number of lifetime months a customer is expected to purchase from a certain store. Using company data. you have determined that the gross profit percentage is 25 percent. or 0.25. The monthly sales to an average customer would be $150 for the first group and $210 for the second group. B 1 2 Monthly Sales to a Customer O $11,000 Ⓒ$9,000 O $10,000 $12,000 Over a 240-month period, what is the Customer Lifetime Value for the first group? Gross Profit Percentage O$18,600 Ⓒ$16,600 C D Number of Lifetime Months Customer Lifetime Value Over the same period, what is the Customer Lifetime Value for the second group? O $14,600 O$12.600 Prev 1 of 1 Next > 3. After tabulating the first two results, you begin to analyze the third component of ideal customers: the Payback Period. This is the duration of time needed for an Investment to retrieve its initial expense in terms of profits or savings. It is calculated by dividing the Customer Acquisition Cost by the product of the monthly sales to a certain customer, multiplied by the gross profit percentage. C D Payback Period A 1 Customer Acquisition Cost 2 What is the Payback Period for the first group? 1.2 months 1 month O1.4 months 0.8 months B Monthly Sales to a Customer What is the Payback Perlod for the second group? O 0.76 months 0.96 months 11 months 1.2 months Gross Profit Percentage < Prev 1 of 1 Next >> 4. Which demographic group will consist of the Ideal Customers that the store should invest in? Ogroup 2 O group 1 5. After identifying the ideal group of customers, you want to determine the rate of keeping these customers loyal to your store. So, you decide to analyze the Customer Retention Rate, the rate of loyal customers within a business. This rate will help you to both tabulate the firm's customer retention metrics and measure results over time. Using company data, you find that at the beginning of last year, your store had 5,000 customers, and by the end of that year, it had gained 600 customers. In the same year, the company lost 300 customers due to the opening of a new store by a competitor in the vicinity. You used the following formula to calculate the Customer Retention Rate. ((Number of customers at the end of the year Number of new customers acquired during the same year)/(Number of customers at the beginning of the year)) x 100 A B 1 # of Customers at the End #of New Customers of the Year Acquired 2 O search # of Customers at the Beginning of the Year What did you find? (Please note that you need to calculate the number of customers at the end of the year on your own.) 11 Prev D Customer Retention Rate 1 of 1 Next > Lisa is a sales manager at a clothing retail store. She has hired you, a recent graduate with a marketing degree with an emphasis on marketing information systems. She wants you to analyze big data that the company has gathered on its customers to come up with Ideal Customer Profiles so that the firm can make marketing investment decisions to attract such customers. Lisa explains that an ideal customer profile is a description of the demographics, psychographics, and behavior of the customers who are most likely to purchase their firm's product. In order to identify the Ideal Customers, you must determine the Customer Acquisition Costs. Lifetime Value, Payback Periods, and Customer Retention. You are familiar with these concepts because you learned about them in your marketing classes. John Lund end images LLC 1. You know that the Customer Acquisition Cost is the cost associated with convincing a customer to buy a good or service. It includes the product, research, marketing, and accessibility costs. You also know that it equals the marketing expenses per month divided by the number of new customers per month. You have determined that two certain groups of customers are the largest groups of buyers. You want to know which group will be more profitable to target in terms of marketing. You check the company's big data and find that the marketing expense per month for targeting the first group is $30,000, while the second group requires $60,000. You estimate that this marketing campaign will be able to attract 1,000 new customers for demographic group 1 and 1,500 for demographic group 2. C Customer Acquisition Cost 1 2 A Marketing Expenses for Targeting Customers B Number of Customers Prev 1 of 1 Next > What is the Customer Acquisition Cost for each customer in demographic group 1? O $40 O $50 O $30 O $60 What is the Customer Acquisition Cost for group 2? O $40 O $100 O $80 O $60 2. You are now ready to calculate the Customer Lifetime Value, which Lisa wants calculated as a forecast of the net profit related to the whole purchase future associated with a customer. It equals the monthly sales to a certain customer, multiplied by the gross profit percentage, multiplied by the number of lifetime months a customer is expected to purchase from a certain store. Using company data. you have determined that the gross profit percentage is 25 percent. or 0.25. The monthly sales to an average customer would be $150 for the first group and $210 for the second group. B 1 2 Monthly Sales to a Customer O $11,000 Ⓒ$9,000 O $10,000 $12,000 Over a 240-month period, what is the Customer Lifetime Value for the first group? Gross Profit Percentage O$18,600 Ⓒ$16,600 C D Number of Lifetime Months Customer Lifetime Value Over the same period, what is the Customer Lifetime Value for the second group? O $14,600 O$12.600 Prev 1 of 1 Next > 3. After tabulating the first two results, you begin to analyze the third component of ideal customers: the Payback Period. This is the duration of time needed for an Investment to retrieve its initial expense in terms of profits or savings. It is calculated by dividing the Customer Acquisition Cost by the product of the monthly sales to a certain customer, multiplied by the gross profit percentage. C D Payback Period A 1 Customer Acquisition Cost 2 What is the Payback Period for the first group? 1.2 months 1 month O1.4 months 0.8 months B Monthly Sales to a Customer What is the Payback Perlod for the second group? O 0.76 months 0.96 months 11 months 1.2 months Gross Profit Percentage < Prev 1 of 1 Next >> 4. Which demographic group will consist of the Ideal Customers that the store should invest in? Ogroup 2 O group 1 5. After identifying the ideal group of customers, you want to determine the rate of keeping these customers loyal to your store. So, you decide to analyze the Customer Retention Rate, the rate of loyal customers within a business. This rate will help you to both tabulate the firm's customer retention metrics and measure results over time. Using company data, you find that at the beginning of last year, your store had 5,000 customers, and by the end of that year, it had gained 600 customers. In the same year, the company lost 300 customers due to the opening of a new store by a competitor in the vicinity. You used the following formula to calculate the Customer Retention Rate. ((Number of customers at the end of the year Number of new customers acquired during the same year)/(Number of customers at the beginning of the year)) x 100 A B 1 # of Customers at the End #of New Customers of the Year Acquired 2 O search # of Customers at the Beginning of the Year What did you find? (Please note that you need to calculate the number of customers at the end of the year on your own.) 11 Prev D Customer Retention Rate 1 of 1 Next >
Expert Answer:
Answer rating: 100% (QA)
A Marketing Expenses for Targeting Customers For demographic group 1 30000 For demographic group 2 6... View the full answer
Related Book For
Operations Management Creating Value Along the Supply Chain
ISBN: 978-1118301173
1st Canadian Edition
Authors: Roberta S. Russell, Bernard W. Taylor, Ignacio Castillo, Navneet Vidyarthi
Posted Date:
Students also viewed these finance questions
-
sunnyside is being audited by swan and co. externl auditors. the lead partner onthe engagement is interested in utilizing audit data analytics (ADA) as a substantive test of details, andis discussing...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Hi there , I need help. for my work i need a relevant and well written introduction as well as conclusion to the following below. My work is complete i just need a introduction and conclusion please...
-
This histogram shows the times, in minutes, required for 25 rats in an animal behavior experiment to successfully navigate a maze. Which of the following best describes the shape of the histogram? A....
-
The network shown is a current-to-voltage converter or transresistance amplifier. Find VO/is for this network. 1s
-
On 27 September 2019, management of Bannor (Pty) Ltd, a registered VAT vendor, decided to sell the existing delivery vehicle for R300 000 (excluding VAT) and replace it with a new one. The original...
-
A political analyst would like to survey a sample of the registered voters in a county. The county has 47 election districts. How could the analyst use random numbers to obtain a cluster sample?
-
Revenue allocation, bundled products Heavenly Resorts operates a five-star hotel with a world- recognized championship golf course. Heavenly has a decentralized management structure, with three...
-
What are the design considerations for absorption columns in large-scale industrial applications? Discuss the effects of tray design, packing materials, and column geometry on absorption efficiency...
-
You, CPA, work as an associate with Campbell and Associates LLP, a financial and business advisory firm. The board of directors of Pembroke Pulp and Paper Inc. (PPPI) has engaged your firm once again...
-
what is the term for a behavior that serves the same functional outcome as the challenging behavior?
-
In Philippines, What is fiscal formulation about and what is it for?
-
Mr. George is thinking about getting a $20,000 second mortgage on his house to help him finance an afterhours software project so he can make some extra money outside of work. He is looking at a...
-
"A great part of the economic system is Psychological"- explain the statement.
-
While surveying a cave, a spelunker follows a passage 180 m straight west, then 230 m in a direction 45.0 east of south, and then 270 m at 30.0 east of north. After a fourth unmeasured displacement,...
-
Gungunum Star has total assets of $308,000, a total asset turnover rate of 1.0, a debt-equity ratio of 0.29, and a return on equity of 11.15 percent. What is the firm's net income?
-
Illustration 11 Aravind Co. Ltd. was registered with an authorised capital of 5,00,000 divided into 50,000 shares of 10 each. The company offered 30,000 shares to the public which were payable as...
-
How can NAFTA be beneficial to suppliers of Walmart?
-
Explain what the numerical value of the slope of the linear regression equation in Problem 12-30 means. Problem 12-30 Week Temperature (C) (Litres Sold) 1 24 95 2 19 90 3 28 125 4 32 150 5 25 85 6....
-
Look for layout software packages on the Internet. What do systems like Vis Factory do? Can you find any of the layout approaches discussed in the text?
-
Herriott Hotels, Inc. wants to develop a new beach front resort along the coast of Nova Scotia. A number of sites are available, and the hotel chain has narrowed the choice to five locations. They...
-
Basic Chemicals Ltd produces a highly flammable chemical product. The company experienced a flood on 1 April 2025 that destroyed its entire work in process inventory but did not affect the raw...
-
Cold Appliances Pty Ltd makes refrigerators and is trying to determine the cost of its ending work in process. The accountant has put together the following data for the year ended 30 June 2025. Each...
-
An apparatus for measuring thermal conductivity employs an electrical heater sandwiched between two identical samples of diameter \(25 \mathrm{~mm}\) and length \(60 \mathrm{~mm}\), which are pressed...
Study smarter with the SolutionInn App