Marketing

Marketing

Question 1

Clientele big accounts

Medium clients

Contacted prospects

20 prospects

250 prospects

Conversion cost

30 %

10 %

Acquisition cost

1000 Euros

275 Euros

Gross margin

Year 0 : 8%

Year 1:10%

Year 2:11 %

Year 3:11%

Year 0:10 %

Year 1:12 %

Year 2:15%

Year 3:18 %

Evolution of the turnover /client et by year (hypotheses)

Year 0 :14500 Euros

Year 1:15000 Euros

Year 2: 16000 Euros

Year 3: 18000 Euros

Year 0 :1500 Euros

Year 1: 1800 Euros

Year 2: 1900Euros

Year 3: 2000Euros

Marketing cost and post-sale per client(hypotheses)

Year 0 : 350 Euros

Year 1:300 Euros

Year 2: 200 Euros

Year 3:200 Euros

Year 0 : 150 Euros

Year 1:100 Euros

Year 2: 100 Euros

Year 3: 50 Euros

Actualization rate

10 %

Annual contribution

Contribution = realized gross margin - marketing cost

Calculate the Lifetime Value

In the domain of marketing a life time value of a customer which is denoted by (CLV) this customer life time value evaluation is termed as analyzing the future profit i.e. net profit earned by the customer. The concept defines the future relation of net profit and with the customer. This model of value creation varies levels from level with proper accuracy and estimated value. The value creation model includes and analyzed on a special statistical model. There are two types of clients with us:

Big Clients

Medium Clients

Clientele big accounts

Medium clients

Contacted prospects

20 prospects

250 prospects

Conversion cost

30 %

10 %

Acquisition cost

1000 Euros

275 Euros

Gross margin

Year 0 : 8%

Year 1:10%

Year 2:11 %

Year 3:11%

Year 0:10 %

Year 1:12 %

Year 2:15%

Year 3:18 %

If we analyze the table it states that for having the big accounts we need to have extra cost to convert them in to clients. That the table suggests that 30% is required to convert the customers into net profit, on the other hand only 10% is required to convert a medium base client. The acquisition cost is of big clients are 1000 Euros whereas, the acquisition cost of the medium base clients are only 275 Euros.

Evolution of the turnover /client et by year (hypotheses)

Year 0 :14500 Euros

Year 1:15000 Euros

Year 2: 16000 Euros

Year 3: 18000 Euros

Year 0 :1500 Euros

Year 1: 1800 Euros

Year 2: 1900Euros

Year 3: 2000Euros

Gross margin

Year 0 : 8%

Year 1:10%

Year 2:11 %

Year 3:11%

Year 0:10 %

Year 1:12 %

Year 2:15%

Year 3:18 %

In life time value creation of a customer we just need to focus on the net profit. If we analyze the situation of net profit we would find out the fact that, the margin in year 1 for the big account clients is lower than the medium account holders. But in the year 3, 11% is given ...