A Goal of Calculating the Lifetime Value of a Customer

question 123

Multiple Choice

A goal of calculating the lifetime value of a customer is to .

• A)figure the estimated total profit generated by a customer over his or her lifetime
• B)reduce share of customer
• C)reduce total communications costs
• D)develop appropriate responses in transactional marketing situations
• E)increase market share

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Definitions:

Total Utility

The total satisfaction or benefit a consumer receives from consuming a specific quantity of goods or services.

Income Effect

The change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Diminishing Marginal Utility

The principle that as a person consumes more of a good, the satisfaction (utility) gained from each additional unit decreases.