I need help with Q\'s 2 and 3 - Thanks! Question 2 The customer acquisition stra

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I need help with Q's 2 and 3 - Thanks!

Question 2 The customer acquisition strategy with customer acquisition cost of $15. The strategy basically is to offer $15 discount to the new customers. This discount is only for the first year, and the fee is going to jump to the regular fee for the following years. Assume that this strategy does not have any effect on retention rate and contribution margin for each customer. Is this strategy worth pursuing? In other words, does this strategy generate more value for the company? g manager at the Magazine Company suggests a new Not yet answered Points out of 1 Flag question Select one: a. Yes O b. No Question 3 Briefly, explain the reason for your answer to the previous question Not yet answered Points out of 1 Flag question

Explanation / Answer

2. yes, it generates some additional revenue and more value to the firm.

3. now we need to think about the cost of magazine, and the profit for each one. if the profit is really higher than the discount value, then the total profit of the firm will definitely goes up. even the added new customers may not continue to subscribe in later years, but this strategy helps to acquire more and more new customers.

the people who really loves to read the particular magazine, will definitely stay with the producer only. if the readers do not find anything interested or new, then it is waste of efforts. Untill the readers find interest towards the magazine, these many discounts, offers, etc may not help much the producer.

but as of now, the taken decision impats the sales, the number of subscribers will definitely hike. the retention rate may be less, but the new customers will definitely added undoubtedly.

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