Reference no: EM131517521

An important, often overlooked part of marketing is the evaluation of existing marketing programs. Evaluation allows marketers to understand if their initiatives are working, and to illuminate potential areas for improvement going forward. In this assignment, you will examine this. Assume that you have opened Arthur’s Place, a quick serve pizza restaurant. In order to attract attention to the new business, after one month in business, you decide to commence a coupon program. You pay to have coupons included in the local town’s Valpak coupon mailer. The cost per coupon is 29 cents. You pay to have the coupon mailed to 7500 households in the local community.

After one month, you assess the effectiveness of the coupon campaign. Your accountant tells you that 176 coupons have been redeemed, and the average customer bill for the 137 transactions is $25.63. The company cost each of these transactions was $11.65.

-Calculate the customer acquisition cost.

-Was the coupon campaign a success or a failure? Why or why not?

-What sort of additional information would help you determine whether or not the coupon campaign was a success or not?

-Now calculate the customer acquisition cost payback. Assume that these 176 customers come to the pizza place once a month. Does this payback period seem reasonable? Why or why not?

Assume that you have forecasted that the average customer will eat at the pizza place monthly for seven years. What is the customer lifetime value (CLV)?

Would it be harder or easier to evaluate a campaign like this if it had been advertising instead of coupons? Justify your answer by explaining what would be different.