A Company Uses Lifetime Value to Segment Their Customers into Five

question 174

Multiple Choice

A company uses lifetime value to segment their customers into five different segments.The marketing approach that should be used for the second segment,which has the second highest lifetime value,is:

• A) offer them price incentives that will increase their purchase level
• B) reward them for their patronage
• C) reward them for their patronage and encourage them to spend more money with the firm
• D) encourage them to increase their purchase level so they can move up to the next highest group

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Definitions:

Variable Overhead Rate

A rate used to allocate variable overhead costs to products or services, which fluctuates with changes in production or activity level.

Overhead Efficiency

Measures how well a company or organization utilizes its overhead expenses to produce goods or provide services.

Fixed Overhead Budget

A plan that outlines the expected fixed costs of operating a business or manufacturing a product, which do not change with production volume or sales levels.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a chosen activity base such as direct labor hours.