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After completing your business administration studies, you start your business shop-for-less. Your start up's focus is on creating and distributing a shopping coupon newsletter. You

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After completing your business administration studies, you start your business "shop-for-less". Your start up's focus is on creating and distributing a shopping coupon newsletter. You publish it monthly and each newsletter includes (targeted for a female and a male customer group) 20 coupons with discounts for each of the two customer groups. For that purpose, "shop-for-less" has contacted 20 companies that agreed to offer one coupon for each newsletter and each customer group. For appearing in the newsletter, each company pays "shop-for-less" 0.10$ per newsletter for the female customer group and 0.20$ for the male customer group. You distribute the newsletter through an annual subscription of 50$ that the customers have to pay at the beginning of the year. The customers can cancel the contract at the end of each year. The acquisition costs for "shop-for-less" are 44$ for female customers and 68$ for male customers. The costs for "shop-for-less" for preparing the coupons, marketing costs and distribution per customer and newsletter are 1.20$. In the first year after starting the busines.5., "shop-for-less" has acquired 5,000 female and 2,500 male customers. A consultant estimates a yearly retention rate of 70% for female customers and 80% for male customers. The yearly discount rate is 10%. a) How high is the customer lifetime value (before and after acquisition cost) for the female and male customer group? Please describe all steps of your calculation and use yearly values. b) According to customer equity (i.e., customer lifetime value times number of customers), which customer group is more profitable? Draft the steps and results. c) Would the results in b) change if the customer retention rate changed and only 20% of the female customers and 10% of the male customers called their contract off in the first year? Explain your approach

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