Describe the formula for cannibalization losses and calculate the cannibalization loss with the relevant steps for the American Apparel example mentioned on page 6 of the case, with the Face value of $50; Merchant share of voucher revenue $15; Cannibalization Rate of 70%; Redemption rate of 75% and 60% of prior customers.
American Apparel example American Apparel ran a popular deal in which it offered $50 worth of clothing for $25, selling 133,000 vouchers. Afterwards, a company insider listed several positive effects. First, customers spent an average of $20 above the voucher's face value when cashing in the deal.' The promotion also attracted many new customers: "The killer was email address acquisition.... We converted approximately 25% of in store redemptions into signing up for our email list... which is on track to generate an additional five to six figures in online revenue." Finally, American Apparel negotiated a contract that gave Groupon "much much less than half" of the voucher revenue.23
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QUESTION TWO
B. Based on the estimates of the number of people in each age group in the American society, calculate the voting percentage in each segment as well as voting share of each segment. Explain the difference in interest of voting percentage and share for different segments with respect to Pepsi Refresh Project. What are the managerial implications?
QUESTION THREE
B. Netflix charges $9.95 per month. Variable costs are about $1.00 per account per month. With maintenance and service cost of $6 per year for a customer, their attrition is only 0.5% per month. At a monthly discount rate of 1%, what is the CLV of a customer?
QUESTION FOUR
B. The following table shows consumer response for three brands of interest across relevant attributes.
The responses are based on the following scale:
Neither Likely
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QUESTION ONE American Apparel example QUESTION TWO QUESTION THREE QUESTION FOUR Preference Model Below