Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, Planet Euroand Frothies. Alicia, the owner, is considering two different marketing promotions and thinks thatCLV analysis will help her decide the best course of action. An average specialty coffee drink sellsfor $3.14 and has a margin of 79%. One promotion is providing loyalty cards to her regularcustomers that would give them one free specialty coffee drink after 10 regular purchases. Aliciaestimates that this will increase the frequency of their purchases by 16%. Currently, her customersaverage buying 2 specialty drinks per week.The second promotion is targeted at new customers. She would offer a free specialty drink toincoming college freshmen by providing a coupon with their orientation packages. Because of herlocation near the college, she expects that 330 students will come to Cool Beans for a free trial ofthose, she anticipates that 14% will become regular customers who will purchase at least onespecialty drink each week. The cost of printing and distributing the coupons is $140.What is the CLV of a customer over the time horizon of one year prior to introduction of theloyalty program?

Given, Specialty coffee drink price = $3.14 Profit margin = 79% Cost of coupon= $10 Customer's…

Answered: Cool Beans is a locally owned…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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