Promotion A is a 25 percent discount promotion, and promotion B is a free gift offering that costs the store $1.5 for each gift conditional on purchases.

Assume the following:

 the store has 60 percent infrequent shoppers and 40 percent frequent shoppers; 

infrequent shoppers on average spend $20 when purchase, while frequent shoppers on average spend $30 when purchase; 

the store profit margin is 40 percent on average.

If the store wants to maximize its profit in the next month, would you recommend it to use promotion A, B, or not to promote at all? Explain why

Answer rating: 100% (QA)

To recommend the best promotion for maximizing profitwe need to calculate the incremental profit pro... View the full answer