If we know that the average revenue of a particular manufacturing product is $75, frequency of repurchase is six times per year, contribution margin is 10%, and average customer defection rate is 25%:

(a) What is the average value of a loyal customer (VLC) in a target market segment?

(b) Analyse how the value of a loyal customer (VLC) will change if the average customer defection rate varies between 15% and 40% (in increments of 5%) and the frequency of repurchase varies between 3, 4, 5, 6, 7, 8 and 9 times per year. Plot the graph or use Excel table to illustrate the impact of these assumptions on the VLC.

(c) Explain in your own words the impact of average customer defection rate and frequency of repurchase. What have you learned from this VLC?

Question 2 Choose either a goods-manufacturing or service-providing company to answer the following considerations when producing goods or providing services.

(a) Describe the nature of business of the company you have selected. What are the basic elements to consider when this company is designing its products or services? You can do some self-research about the company and make reasonable assumptions when answering the question.

(b) Discuss the tasks that you should take into consideration in the 6-steps for the design of goods and/or services for this company.