Question: Please provide formulas ( an excel with formulas preferably ) and the answers with explanation. Thank you 1 . A subscription hair service, WigzMax, is
Please provide formulas an excel with formulas preferably and the answers with explanation. Thank you
A subscription hair service, WigzMax, is planning to launch a new line of wigs. They intend to hire a celebrity hair stylist to make the new line of four new models: Halle, Nia, Janet, and Toni. WigzMax will spend $ to hire the designer, and $ on marketing. The prices and variable costs of the models are: PHalle $ VCHalle $; PNia $ VCNia $; PJanet $ VCJanet $; and PToni $ VCToni $ They expect to sell the models in the ratio ::: respectively. The total customer base of WigzMax is customers.
a Calculate the breakeven quantity for each model.
b Assume that customers who buy certain models dont switch to different wigs, but the probability of staying with WigzMax from year to year has been and Assuming a discount rate of annually, calculate the CLV for customers in each wig segment. Use the total contribution for each wig from part a as the annual margin in each case, and remember to subtract the AC
c If WigzMax has $ to spend on increasing the retention rate in the segment with the highest CLV what would the retention rate need to increase to in order to justify spending that amount on retention. Hint: Number of customers would be the sales mix fraction times the total customer base. Change M by subtracting $number of customers in that segment. Rearrange the CLV formula in terms of r gives the following
d Suppose that instead of spending on retention, WigzMax would like to increase the number of customers from its highest CLV segment. It is considering an ad buy for the $ which will be viewed by potential customers in that segment. What percent of the targeted customers would need to join in order for the acquisition spending to be worthwhile? Add a sentence to explain what your answer means.
e Again, just looking at the highest CLV segment, suppose that instead of spending the whole $ on the ad buy, WigzMax decided to spend $ on that, and set aside up to $ towards coupons. Of course, not everyone will redeem the coupon, but they expect to recruit at least of those customers with an offer of a $ coupon, or at least if they offer a $ coupon. Assuming that spending the $ on advertising would have brought in customers:
i Calculate the new CLV for each option :
$ on ads
$ on ads and a $ coupon
$ on ads and a $ coupon
Hint: AC from ads and coupons should be separated. Although $ was budgeted, you are paying only for the number redeemed. In other words, AC for the ones with coupons will be Ad spendingnumber of customers who switched coupon. AC is the only change in each case
ii Calculate the total segment value for those new customers for each option from part iHint: CLV number of new customers
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
