From the customer database: there were 1,000 customers this year, 600 first time buyers, 50 core customers (customers who purchase at least once a year and have had a transaction relationship with the company for more than two years), and the rest being early repeat buyers. You also calculated some useful statistics from data as below:

Question 1. - Show CLV tables for each part of the question.

a) What is the CLV of a new customer? What is the CLV of a core customer?

b) To turn around the business, the firm owner plans to permanently cut prices by an average of 10%. She predicts that the price cut will help increase the number of customer acquisitions by 200 each year. Is this a good strategy?

c) Alternatively, the owner can run occasional price promotions targeting existing customers. The owner predicts that, counting the promotions as a marketing investment, the direct marketing cost for each customer will permanently increase to $250 each year, but it will also increase the retention rate for both new and core customers by 5%. Is this a good strategy?

New customers (less than or equal to 2 years) $500.00 Core customers (more than 2 years) $1,500.00 Average spending Average number of purchases Direct marketing cost Average gross margin Average retention rate Annual discount rate Acquisition Cost 1.5 $50.00 45% 25% 10% $1,000 4 $50.00 60% 60% 10% $0 Answer the following questions: New customers (less than or equal to 2 years) $500.00 Core customers (more than 2 years) $1,500.00 Average spending Average number of purchases Direct marketing cost Average gross margin Average retention rate Annual discount rate Acquisition Cost 1.5 $50.00 45% 25% 10% $1,000 4 $50.00 60% 60% 10% $0 Answer the following questions