A catalog retailer is preparing to release a new catalog. They initially tested the response to the catalog in a subset of their customers. In the initial test, they reached out to 25,000 customers and sent them a copy of the catalog, which costs $0.75. 2,150 customers made a purchase, spending an average of $55. The retailer's margin is 60% (i.e., variable costs of goods sold are 40%). a. What was the gross profit in dollars of this test mailing? b. What was the gross profit as a percent of gross sales? c. What was the return on marketing expenditures (gross profit as a function of marketing costs)? d. What was the breakeven for this campaign? The marketer now engages in RFM analysis. They identify that RFM cell 452 had a response rate of 3.80%. What is the breakeven index for that group? e.

A catalog retailer is preparing to release a new catalog. They initially tested the response to the catalog in a subset of their customers. In the initial test, they reached out to 25,000 customers and sent them a copy of the catalog, which costs $0.75. 2,150 customers made a purchase, spending an average of $55. The retailer's margin is 60% (i.e., variable costs of goods sold are 40%). a. What was the gross profit in dollars of this test mailing? b. What was the gross profit as a percent of gross sales? c. What was the return on marketing expenditures (gross profit as a function of marketing costs)? d. What was the breakeven for this campaign? The marketer now engages in RFM analysis. They identify that RFM cell 452 had a response rate of 3.80%. What is the breakeven index for that group? e.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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