## Choi Han-kyul is the owner of the Coffee Prince, he is considering to launch a new coffee line using beans imported from Vietnam.

### marketing

##### Description

QUIZ 1

There is only 01 sections: Section A. Please fulfill the requirements.

SECTION A: Open Questions – 5 questions x 20 points – Total: 100 points

QUESTION 1

Choi Han-kyul is the owner of the Coffee Prince, he is considering to launch a new coffee line using beans imported from Vietnam. The new coffee line is very similar to the store’s most popular “Americano”, which used Brazilian beans. Due to the country of origin, the new coffee line is generally cheaper to make but it would cost a bit more to marketing. The following table shows the cost break-down.

 Fixed Cost Variable Cost Price Americano \$3.50 \$1.50 \$9.90 New Coffee Line \$1.50 \$2.00 \$6.90

Analysis suggests that the unit cannibalization rate of the new coffee line will be 90% in its initial year, and drop 10% annually in sequence.

If Choi Han-kyul expects to sell 100 cups of the New Coffee Line per month (compare to 300 cups of the Americano), should the Coffee Prince proceed with the introduction?

QUESTION 2

Calculate the Return on Marketing Cost between the Americano and the New Coffee Line in Question 1.

=>  Americano  = \$9.9- (\$3.5+\$1.5) /( \$ 3.5+ \$1.5) =

QUESTION 3

What is the Brand Equity of the Americano and the New Coffee Line in Question 1.

QUESTION 4

The Coffee Prince ran a survey on its loyal customers and found out the results:

 Customer Group Member Silver VIP Gold VIP Platinum VIP VVIP Avg Expenditure per visit 9.90 8.50 8.00 15.00 12.00 Avg Purchase Cycle per week 1 3 5 5 7

Could you calculate the Customer Lifetime Value for the Coffee Prince?

*Given that, the average customer lifespan is 20 years for Coffee Shop in Korea. The customer retention rate in this case is 75%. Profit margin is 49.5%. Rate of discount is 10%.

QUETION 5

Go Eun-cha, the marketing manager of the Coffee Prince, approaches Choi Han-kyul with a proposal. She wants to spend \$60,000 on an advertisement reaching 15,000 new prospects. She expects the advertisement to convince 25% of the prospects to take advantage of a special discount to enjoy an Americano for only \$5.90, is the advertisement economically attractive?