Maru Batting Center Memo Page 1 Analy

Maru Batting Center Solution

1) The customer acquisition cost:

Customer
Customer acquisition cost
A
A Little Leaguer
¥10,000
B
A Summer Slugger
¥10,000
C
Elite Ballplayers (Print Ad)
¥60,000
D
Elite Ballplayers (Party)
¥50,000
E
Entertainment Seekers
¥2,000

2) The break even for each customer segment without discounting cash flows

Customer
Break even
A
A Little Leaguer
Between 2 and 3 years
B
A Summer Slugger
Between 2 and 3 years
C
Elite Ballplayers (Print Ad)
Between 3 and 4 years
D
Elite Ballplayers (Party)
Between 2 and 3 years
E
Entertainment Seekers
Under 2 years

3) The lifetime value (LTV) :

Customer
LTV
A
A Little Leaguer
5709
B
A Summer Slugger
2197
C
Elite Ballplayers (Print Ad)
16320
D
Elite Ballplayers (Party)
27,320
E
Entertainment Seekers
338
i
Should MBC throw gala event?
MBC should throw the gala event seeing as this will produce the highest profits from the most profitable customer segment and they will be able to recoup the cost of throwing the event quickly.

4) The most attractive customer segment to MBC is the Elite Ballplayer (Party) segment. This segment provides the highest amount of profits, and the highest LTV when compared to all of the other segments.

5) MBC should pursue the Chiyoda ward sponsorship. In this case MBC will break even quicker and produce a high customer LTV when compared to the current little league sponsorship with the Minato ward.

6) Yes. MBC should owner Maru’s brother’s suggestion. It is beneficial to MBC if they were to run a ¥500 promotion for the Elite Ballplayers with a discount from year 2 onward. Even though it will take slightly longer to break even when compared to the same scenario without the discount, the substantial increase in customer LTV (from 27,320 to 43890(approx.)) due to the increase in retention rate make it a very attractive promotion to institute.

7) MBC should not pursue the promotion. With the promotion, the customer acquisition cost will be ¥77,586. With this value MBC