How much would the product cost be

Assignment Help Business Management

Reference no: EM133877823

Problem

This problem is based on the Berkeley Home Improvement (BHI) example we discussed in class. BHI is trying to figure out whether it should offer free home delivery to all SaverCard customers with purchases above $150. At an industry convention, a hardware chain claimed that the introduction of free home delivery reduced the churn rate (the annual churn rate decreases from 30% to 25%). It also claimed that to get qualified for free home delivery, customers spent more on some order. On average, customers qualified for free home delivery with probability 90% and in that case, their annual spending increased by $60, and when they did not, their annual spending remained the same as before (i.e., $200). The average cost of home delivery is $30 per order. Given this information, answer the following questions.

A. If BHI introduces the new program, how much would the average annual revenue be?

B. If BHI starts the new program, how much would the product cost be? (Recall that product costs are currently 60% of revenue.)

C. Given $30 cost per delivery and 90% chance of being qualified for free home delivery per year, how much would the (expected) marketing cost be? (Recall that marketing costs are currently $25 per year. Here no need to account for the retention rate, only account for the probability of being qualified for free home delivery) Get the instant assignment help.

D. With these calculations in place, calculate the average CLV (You can use the table we used in class by modifying the numbers.)

Reference no: EM133877823

Questions Cloud

Examine how psychological factors influence decision making : How psychological factors influence decision making by explaining a person's attitude toward visiting Disney World in terms of the tri-component attitude model.

Discuss why overstated advertisements are not desirable : Discuss why overstated advertisements are not desirable for potential customers or the organization. What lasting damage might they stimulate?

Functions of escape-attention and automatic reinforcement : Discuss the functions of escape, attention and automatic reinforcement. Another condition that could be considered is access to a tangible.

What other services might caleb benefit from : What other services might Caleb benefit from? What potential barriers do you believe may interfere with Caleb's progress in treatment?

How much would the product cost be : If BHI introduces the new program, how much would the average annual revenue be? If BHI starts the new program, how much would the product cost be?

Which benefit represents the most significant advantage : According to the course materials, which benefit represents the most significant advantage of using open-source software in an enterprise setting?

What specific performance advantage does mariadb demonstrate : Based on the course materials, what specific performance advantage does MariaDB demonstrate in benchmark studies?

What was the primary motivation for creating mariadb : According to the course materials, what was the primary motivation for creating MariaDB as a fork of MySQL?

What was the primary historical event that led to creation : According to the course materials, what was the primary historical event that led to the creation of MariaDB?

User Account

All Pages