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Using the 62,500 subjects in the pool, E-World marketing specialist summarized different RFM groups’ hit-rate (so called buying rating/response rate) for the new product DIVO (Sheet HitRate), which is sold for $72. To direct-market the product to each consumer, the marketing cost is $5 per person. Product gross margin is 50%. a) Please sort the data and list the 10 RFM groups with the highest hit rate b) If the firm decides to market to every of the 62,500 customers, what is the gross profit/loss c) Using the hit-rate information, please make the recommendation and list the profitable RFM groups. d) If the firm chose to only market to these profitable groups, what is the gross profit/loss e) Comment on the effectiveness of RFM.
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