Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A subscription food box service, GoldBelly, is planning to launch a new line of boxes. Each month the subscriber will receive ( or be able
A subscription food box service, GoldBelly, is planning to launch a new line of boxes. Each month the subscriber will receive or be able to send a particular type of food item from the best restaurants around the USA. The four boxes they are going to add are cookie, icecream, pie, and cake. It will cost the company about $ to coordinate the boxes, and $ in marketing.
The prices and variable costs of the models are: Pcookie $ VCcookie $; Picecream $ VCicecream $; Ppie $ VCpie $; and Pcake $ VCcake $ They expect to sell the models in the ratio ::: respectively. The total customer base of GoldBelly is customers.
Calculate the breakeven quantity for each model.
Assume that customers usually by one plan or the other and the probability of staying with GoldBelly from month to month has been and respectively. Assuming a discount rate of calculate the CLV for customers in each subscription. Hint: Use the total contribution for each subscription from part a as the margin in each case, and remember to subtract the AC
If GoldBelly 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. Find the new M by subtracting $number of customers in that segment. Rearranging the CLV formula in terms of r gives the following
New rCLVACdNew MCLVAC
Suppose that instead of spending on retention, GoldBelly 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.
Breakeven Acquisition RateAcquisition SpendingCLV
Again, just looking at the highest CLV segment, suppose that instead of spending the whole $ on the ad buy, GoldBelly decided to spend a portion on ads, and some towards coupons. Of course, not everyone will redeem the coupon, but they expect to gain 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:
Calculate the new CLV for each option :
$ on ads
$ on ads and a $ coupon
$ on ads and a $ coupon
Hint: AC for the ones with coupons will be Ad spendingnumber of customers who switched coupon. AC is the only change in each case
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
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started