You are First electronic bank (FEB) and you provides a store credit card...
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You are First electronic bank FEB and you provides a store credit card to Frys electronics. After years, of Frys customers million have a Frys credit card but growth has slowed, and youre considering a marketing budget of $M to gain more Frys customer Marketing departments data shows you can gain a customer per $ spent in marketing Each customer makes about transactions per year Currently, the cost of transaction for Frys at per customer is $ Approximation of net profit margin per transaction at Your experience curve with Frys is an curve Is $M worth the investment? Its a ONETIME expense Hint: calculate cost saving per transaction with experience curve Compare the total profit before and after gaining more customers Note that profit margin changes after gaining more customers because
You are First electronic bank FEB and you provides a
store credit card to Frys electronics.
After years, of Frys customers million
have a Frys credit card but growth has slowed, and
youre considering a marketing budget of $M to
gain more Frys customer
Marketing departments data shows you can gain
a customer per $ spent in marketing
Each customer makes about transactions per
year
Currently, the cost of transaction for Frys at
per customer is $
Approximation of net profit margin per
transaction at
Your experience curve with Frys is an curve
Is $M worth the investment? Its a ONETIME
expense
Hint:
calculate cost saving per transaction with
experience curve
Compare the total profit before and after gaining
more customers Note that profit margin
changes after gaining more customers because
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