Time Value of Money and Elite Ballplayer

Topics: Time value of money, Customer service, Net present value Pages: 2 (474 words) Published: October 6, 2014
IS3222 – IT and Customer Relationship Management
Academic Year 2014/2015 Semester 1
Case Assignment 3
Read the Harvard Business School case for Maru Batting Center, # KEL688. The optional technical note, Using Customer Relationship Management to Analyze the Lifetime Value of a Customer #KEL695, can also help walk through the exercises. The data in Excel format is available for download in the course package, #KEL691. Answer the questions below based on only information presented in the case and your understanding of the case.

You may answer the questions in either essay or bullet points form. Be concise and substantiate your answers with logical arguments and flow of thoughts. Question 1
What is the customer acquisition cost for Maru Batting Center (MBC) for the following customers?
a) A Little Leaguer
b) A Summer Slugger
c) An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine
d) An Elite Ballplayer if MBC purchases the List and invites all target customers to the gala event
e) An Entertainment Seeker
Question 2
Without discounting cash flows to take into account the time value of money, how soon will MBC break even on the following customers?
a) A Little Leaguer
b) A Summer Slugger
c) An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine
d) An Elite Ballplayer if MBC purchases the List and invites all target customers to the gala event
e) An Entertainment Seeker
Question 3
Taking into account the time value of money and assuming that 100 percent of a customer segment will have experienced attrition once the net present value of annual profits per customer falls below ¥100, what is the lifetime value to MBC of the following customers?

a) A Little Leaguer
b) A Summer Slugger
c) An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine

d) An Elite Ballplayer if MBC purchases the List and invites all target customers to the gala event
e) An Entertainment...
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