MYWay Communications Table 1: Segment Evaluation Segment 1: Basic (TV Only) Year 1 Year 2 Year 3 Descriptive Statistics from MyWay Communications Customer Database Segment 1: Segment 2: Basic (TV Only) Premium (TV + Internet) Number of Annual Number of Annual Customers Fees Paid Customers Fees Paid Year 1 85,000 $ 480 115,000 $ 900 Year 2 76,500 $ 540 103,500 $ 960 Year 3 L 65,025 $ 600 82,800 $ 1,020 Segments Number of Customers Average Expenditure Premium (TV+internet) Basic (TV Only) Total Revenues Variable Costs Contribution Margin Segment Size Segment Size (% of Total) Lifetime Value (Year 3) Additional Facts Acquisition Costs Annual Cost of Marketing Campaign Cotal Number of Customers Acquired from Campaign Acquisition Costs per Customer (Assumed to be same for both segments) $ 30,000,000 200,000 Total Acquisition Costs Retention Spending Costs Operating Profit Discount Rate Segment LTV % of Total NPV Profit Index (% of NPV Profit/% Size) Retention Spending on Current Customers in Year 2 to Year 5 Phone Call to Upgrade to Bigger DVR, Pay Channels or HBO ) Jumber of Phone Calls per Year Cost per Outbound Call otal Annual Retention Costs per Customer NPV (Net Profit/Discount Rate) Cumulative NPV Profit Average Customer LTV $2.50 Question 1: For each segment, which year do they break even and become profitable? Year 1 Year 2 Year 3 Zariable Costs as % of Revenues Basic (TV Only) Premium (TV + Internet) 55% 25% Segment 2: Premium (TV+Internet) Number of Customers Average Expenditure (Discount Rate) 20% Revenues Variable Costs Contribution Margin Total Acquisition Costs Retention Spending Costs Operating Profit Discount Rate NPV (Net Profit/Discount Rate) Cumulative NPV Profit Average Customer LTV Question 2: For each segment what is the retention rate in Year 3 (% customers retained from Year 2)? I Question 3: Considering the relative size of each segment, complete Table 1: 'Segment Evaluation' table. Which segment is more valuable? Support your point of view with evidence. MYWay Communications Table 1: Segment Evaluation Segment 1: Basic (TV Only) Year 1 Year 2 Year 3 Descriptive Statistics from MyWay Communications Customer Database Segment 1: Segment 2: Basic (TV Only) Premium (TV + Internet) Number of Annual Number of Annual Customers Fees Paid Customers Fees Paid Year 1 85,000 $ 480 115,000 $ 900 Year 2 76,500 $ 540 103,500 $ 960 Year 3 L 65,025 $ 600 82,800 $ 1,020 Segments Number of Customers Average Expenditure Premium (TV+internet) Basic (TV Only) Total Revenues Variable Costs Contribution Margin Segment Size Segment Size (% of Total) Lifetime Value (Year 3) Additional Facts Acquisition Costs Annual Cost of Marketing Campaign Cotal Number of Customers Acquired from Campaign Acquisition Costs per Customer (Assumed to be same for both segments) $ 30,000,000 200,000 Total Acquisition Costs Retention Spending Costs Operating Profit Discount Rate Segment LTV % of Total NPV Profit Index (% of NPV Profit/% Size) Retention Spending on Current Customers in Year 2 to Year 5 Phone Call to Upgrade to Bigger DVR, Pay Channels or HBO ) Jumber of Phone Calls per Year Cost per Outbound Call otal Annual Retention Costs per Customer NPV (Net Profit/Discount Rate) Cumulative NPV Profit Average Customer LTV $2.50 Question 1: For each segment, which year do they break even and become profitable? Year 1 Year 2 Year 3 Zariable Costs as % of Revenues Basic (TV Only) Premium (TV + Internet) 55% 25% Segment 2: Premium (TV+Internet) Number of Customers Average Expenditure (Discount Rate) 20% Revenues Variable Costs Contribution Margin Total Acquisition Costs Retention Spending Costs Operating Profit Discount Rate NPV (Net Profit/Discount Rate) Cumulative NPV Profit Average Customer LTV Question 2: For each segment what is the retention rate in Year 3 (% customers retained from Year 2)? I Question 3: Considering the relative size of each segment, complete Table 1: 'Segment Evaluation' table. Which segment is more valuable? Support your point of view with evidence