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02-11-2022
Business

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. a direct catalog retailer of fashion goods is contemplating whether or not to attract new customers using names purchased from a list broker or by randomly sending out catalogs. the cost of sending a catalog (which includes production and mailing) is $0.5. from experience, the company anticipates the response rate from a random mailing to be 1%. by analyzing the buying behavior and demographics of current customers, the retailer estimates it can rent names selectively from the broker to achieve a response rate of 4%. the list broker has set a price of $0.2 for each name. a. what is the acquisition costs associated with each source of potential customers?

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