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.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]