1. TidyPet is a pet grooming service operating in the Western states of USA. It has three packages for sale: Bubble, Scrubbadub, and the Works. The marketing team expects that customers will buy them in sales mix ratio of 4:7:2. The package prices are $45, $65, $99 per treatment, respectively. The variable costs for the packages are $15, $25, and $35, respectively. They anticipate that the ad campaign they need to run will cost around $500,000 across three states. a. How many treatments of each type do they need to sell in order to breakeven? [3] b. Assume that they were able to get a total of 28,950 households with the marketing budget mentioned above, and they can achieve retention rates in the three segments of 85%, 67%, and 72%, respectively. Using a discount rate of 6% annually, please calculate the CLV for each segment. (Hint: M = total contribution for each segment from part a. AC = FC/total number of customers) (Note: Just use the same AC for each segment) [6] c. Suppose that next year they have an additional $400,000 in their marketing budget that they can spend across the three segments, what would each retention rate target be for each segment if the entire $400,000 is spent on that segment? (Hint: Rearrange the formula in terms of r, and calculate the new M. To find the size of each segment, use the sales mix, e.g. Bubble would be 4/13 of the total number of customers.) [3] New M = Old M - RS d. If they instead spend that $400,000 on advertising to 5,000 households in their highest CLV segment, how many new customers would they need to acquire to breakeven? (Hint: Use the CLV from part b). [2] e. They expect that after the first year they will be able to increase margins from their original batch of customers (part b) year to year by 4%, 6%, 2%, respectively. Please recalculate the CLV for each segment. Assume that the AC is a sunk cost (they have already broken even on that original batch). In other words, calculate it without AC. [6]