Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every two years and its customer defection rate is 25%. Gary's fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. An aggressive marketing campaign is planned that Al estimates will increase the store's share of customers by 8,000. What is the market value increase? a. $2,800,000 b. $400,000 c. $1,200,000 d. $800,000
Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every two years and its customer defection rate is 25%. Gary's fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. An aggressive marketing campaign is planned that Al estimates will increase the store's share of customers by 8,000. What is the market value increase? a. $2,800,000 b. $400,000 c. $1,200,000 d. $800,000
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every two years and its customer defection rate is 25%. Gary's fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. An aggressive marketing campaign is planned that Al estimates will increase the store's share of customers by 8,000. What is the market value increase?
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