Which of the Following Statements Does NOT Describe How Retailers

question 42

Multiple Choice

Which of the following statements does NOT describe how retailers use a customer lifetime value (CLV) ?

• A) CLV is used to identify and cater to the best and more profitable customers.
• B) CLV should be estimated under the assumption that the customer's future purchase behaviors will be the same as they have been in the past.
• C) Sophisticated statistical methods are typically used to estimate the future contributions from past purchases.
• D) An RFM analysis is often used by catalog retailers and direct marketers in estimating their customers' lifetime value.
• E) A customer who spends $800 twice a year has a higher CLV than a customer that spends $100 each month.

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Definitions:

Mens Rea

A legal principle that considers the intent of the mind to commit a crime; essential for establishing criminal liability.

Independent Director Control

A theory of corporate control that states that the best way to make certain that corporate decisions are made in the best interests of the corporation is to make sure that the decision makers themselves are not affected by the decisions.

Corporate Democracy

The system or practices within a corporation that allow for the participation and voting rights of shareholders in company decision-making processes.

Business Judgment Rule

A legal principle that protects the decisions of corporate directors and officers, made in good faith and with reasonable diligence, from being second-guessed by courts.