need help with the first section vglsoirLoyalty i. Time Works, Inc. incurs $400

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need help with the first section

vglsoirLoyalty i. Time Works, Inc. incurs $400 in variable costs and $60 in marketing expenses for cach $800 in sales revenue generated by a retained customer. If there are 150,000 retained customers, what is Time Woks, Inc.'s net marketing contribution from these customers? 2 What is the average life expectancy of a customer for a company with 75% customer retention 3. What is the customer retention for a company given an avcr 4. An increase from 80% to 90 % in customer retention would have what effect on the average age customer life expectancy of four years? customer life? hat is the present value of $1.00 received after 2 years if the business has a discount rate of 10 percent? stimate the net present value of the customer cash flow with an 80% customer retention rte and a 10% discount rate if the initial cost to acquire this customer is $50, and the business reccives $30 in revenues in the first year, $40 in the second, $45 in the third, $50 in the fourth, $55 in the fifth, and $50 in the sixth. Marketing Performance and Marketing Profitability 7. What is the net marketing contribution for a product line that generates $20 million in sales revenues with cost of goods sold equal to $12 million, marketing and sales expenses equal to $2 million, and other operating expenses equal to $2 million? Overton Enterprises sells widgets to a marketplace where total demand is 12 million. Overton's market share is 12 selling price per widget is $40 and the variable costs per widget are $25. Overton spends $7 million on marketing expenses. is Overton Enterprises' net marketing contribution? percent the What 8 Overton Enterprises sells widgets to a marketplace where total demand is 12 million. Overton's market share is 12 ½ percent, the selling price per widget is $40 and the variable costs per widget are $25. Overton spends $7 million o n marketing expenses and has S2 million in other operating expenses. What is Overton Enterprises profit (before tax)? on Enterprises sells widgets into a marketplace where total demand is 12 million. Overton's market share is 12 percent r widget is $40 and the variable costs per widget are $25. Overton spends $7 million on marketing expenses. If the net marketing contr butionbe? Overton lowered its price by 10%, causing a boost in market share to 15%, what would 11. What is the marketing returm on sales (Marketing ROS) for a product line that generates s20 milion goods sold equal to $12 million, marketing and sales expenses equal to $2 million, and other operating expenses equal t n in sales revenues with 12. What is the marketing return on investment (Marketing RO) for a product line that generates $800 millio I sales expenses equal to $150 million and other operating expenses equal to

Explanation / Answer

Ans 1) Gross profit = sales - variable expense

= $800 - $400

= $400

net marketing contribution per customer = $400 - $60

= $340

net marketing contribution form all customer = $340 * 150000 = $51,000,000

Ans 2) Avereage life expentacy = 1/( 1 - customer retention)

= 1/(1 - .75) = 4 years

Ans 3) Customer retention = 1 - 1/Avereage life expentacy

= 1 - 1/4 = 75%

Ans 4) Average life expectancy at 80% = 1/(1 - .8) = 5 years

Average life expectancy at 90% = 1/(1 - .9) = 10 years

It doubles the average life expectancy.

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