Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing

Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing promotions and thinks that CLV analysis will help her decide the best course of action. An average specialty coffee drink sells for $3.64 and has a margin of 66%. One promotion is providing loyalty cards to her regular customers that would give them one free specialty coffee drink after 10 regular purchases. Alicia estimates that this will increase the frequency of their purchases by 15%. Currently, her customers average buying 2 specialty drinks per week.
The second promotion is targeted at new customers. She would offer a free specialty drink to incoming college freshmen by providing a coupon with their orientation packages. Because of her location near the college, she expects that 570 students will come to Cool Beans for a free trial. Of those, she anticipates that 17% will become regular customers who will purchase at least one specialty drink each week. The cost of printing and distributing the coupons is $92.
What would be the annual cost of the loyalty program?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding And Managing Public Organizations

Authors: Hal G. Rainey

4th Edition

047040292X, 978-0470402924

Students also viewed these General Management questions

Question

2. Explain grades or test results.

Answered: 1 week ago

Question

Identify five strategies to prevent workplace bullying.

Answered: 1 week ago