Moonstruck sells fat-tire bicycles.
An average customer for Moonstruckbuys a bicycles every five years and spends $500 every time theybuy one. An average customer also spends $250 in parts andservice.
An excellent customer buys 8 bicyclesin their lifetime and spends $800 every time they buy one. Anexcellent customer spends $500 in parts and service very year.
The average profit margin forMoonstruck on its bicycles is 25%.
The average profit margin forMoonstruck on service and parts is 50%.
Moonstruck customers buy their firstbicycle when they are 30 and ride bicycles until they are 80 yearsof age.
1. Moonstruck is interested tomaximize the Customer Lifetime Value. What are the variables thatmanagement can manipulate to try to maximize CLTV, i.e., make CLTVas large as possible?
2. What are the applications of Market Basket Analysis? Give twoexamples.
