Conroy's Acura Case Exercise
At the time of the case in 2006, Terrence Conroy is contemplating the challenge of how to increase the profitability of his dealership. With the rise of Internet car sales and the availability of competitive market pricing information, Conroy's Acura is finding it more and more difficult to attract new customers and retain existing customers.
Assume you have just been hired as an Analyst at Conroy's Acura. You have been observing the debate between Vice President of Sales, Rachel Di Lima, and the sales staff. Di Lima advocates more resources be allocated to retaining existing customers while the sales staff argues that in order to be competitive prices need to be lower.
You recall from your Principles of Marketing class a concept called Customer Lifetime Value and you suggest that a CLTV model might be a good way to determine which approach would be best. Terrence Conroy says he doesn't know what a CLTV model is but if you can build something that will help settle debate, he would want to see it.
For this case exercise I would like you to focus on the following 4 questions. For each question, please be specific, show your work, and clearly & concisely articulate any logic and/or assumptions required to support your response. It is up to you how best to submit your responses. I recommend an Excel file with embedded text boxes to explain your logic and answers.
Question 1:Using a spreadsheet program (i.e. Excel), construct a CLTV model based on the information available in the case. Though all of the key data points are located within the case text, much of the information is summarized on page 4. Note that a formal CLTV formula is provided on page 5.
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