2. JD, a paint wholesaler, is considering selling paint to professional painters. Six hundred (600) professional painters in the area spend a total of $23 million per year on paint. Average gross margin for JD is 35%, and it currently has $4.2 million of sales in this segment. The current retention rate of each painter is 80%, and the revenue per painter is stable over time.

a. The marketing director proposes spending $1,000,000 for a one-time direct marketing campaign to painters. How many painters would JD need to acquire to make this investment pay off in the long term (assume an infinite horizon)?

b. The marketing director also wants to find out the maximum amount of money JD should spend to increase the retention rate of the current professional customers from 80% to 90%.