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A Retail Store Sells a Popular Cosmetic Called Devine and the Store

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Essay

A retail store sells a popular cosmetic called Devine and the store manager was given $100,000 by the corporate office to improve store performance any way she thinks best. The "base case" information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 17%, and a repurchase frequency of 3 times a year. If these improvement funds could be used to either increase the contribution margin to 0.58 or reduce the customer defection rate to 15% or increase the repurchase frequency to 4 times per year, what is the best way to spend these funds? (Assume all other variables remain at the base case level for each improvement option.)
You may want to use the table below to help organize your computations and answer. A retail store sells a popular cosmetic called Devine and the store manager was given $100,000 by the corporate office to improve store performance any way she thinks best. The  base case  information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 17%, and a repurchase frequency of 3 times a year. If these improvement funds could be used to either increase the contribution margin to 0.58 or reduce the customer defection rate to 15% or increase the repurchase frequency to 4 times per year, what is the best way to spend these funds? (Assume all other variables remain at the base case level for each improvement option.) You may want to use the table below to help organize your computations and answer.   Note: BLC is 1/.17 = 5.882 years and 1/.15 = 6.67 years. Note: BLC is 1/.17 = 5.882 years and 1/.15 = 6.67 years.


Definitions:

Athletic

Relating to athletes or the physical skills, competencies, and attributes required in sports or physical activities.

Sloppy

Lacking care, precision, or neatness in execution or appearance.

Assertive

The quality of being confident and self-assured in stating one's opinions or needs directly and respectfully.

Extraversion

A personality trait characterized by outgoingness, high energy, and sociability, contrasting with introversion.

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