INSTRUCTIONS Exam 2: 1.This is an individual take-home exam. 2.The exam contains 5 pages. 3.You may use class lecture materials, the textbook, and personal notes. 4.Show all calculations clearly and label each step for full credit using Excel to submit your calculations. In the document, separate the questions by "sheets" for easy readability. 5.For open-ended strategic questions, justify your reasoning with data, course concepts, or logical arguments. 6.Clearly label your answers and ensure they are well-organized. AI & EXTERNAL ASSISTANCE POLICY 1.You may NOT use ChatGPT, Bard, Bing AI, or any other AI-based tools to generate, refine, or verify your responses. 2.Your answers must be your own and reflect your critical thinking and understanding of the course material. 3.Exams that show patterns inconsistent with coursework or closely resemble AI-generated content will be flagged for review. 1.CP1 is a startup specializing in plant-based protein drinks, recently launched its first product in Austin, TX. With positive word-of-mouth and strong sampling at local retailers, the company is seeing early momentum—but needs to evaluate performance and make data-driven decisions about production, marketing, and customer retention strategies. You’ve been hired as a product marketing consultant to analyze customer acquisition and retention during the first year and help CP1 forecast future demand. From market data, CP1 estimates a total addressable market (TAM) of 500,000 households. In Q1, 25,000 households tried CP1 for the first time, and 30% of those trial users made at least one repeat purchase that quarter. By the end of Year 1, CP1 has a customer base of 100,000 households, of which 60,000 are still active. The average active customer makes 3 purchases per quarter, buying 6 bottles per purchase. Market research indicated that the average retention rate in the alternative protein market is 50%. Calculate CP1’s trial rate for Q1 (the number of households that tried the product as a percentage of TAM). What does this tell you about the initial market response? Why is this metric important for evaluating customer acquisition and product-market fit? (6 points) What is CP1’s customer retention rate after one year? Explain how this differs from the trial rate and what it tells you about long-term customer value. (4 points) Using the number of active customers, estimate CP1’s quarterly unit sales volume. Show your work. (2 points) 2.CREATE is a children's arts and crafts studio that offers weekly summer camps. To increase enrollment and attract new families, CREATE recently ran a marketing promotion for one month before school ended to market its summer program. The goal was to boost signups without damaging the studio’s premium brand image or long-term customer value. As CREATE’s marketing analyst, you’ve been tasked with evaluating the effectiveness of the promotion and recommending whether and how similar promotions should be used in the future. The summer camp is priced at $495 per student per week. Based on historical data, baseline enrollment before the promotion averaged 150 students per week. During a one-week promotion period, a total of 400 students enrolled. The company spent $10,000 on marketing the promotion, and 35% of promotion buyers re-enrolled for a second week. Calculate the incremental sales volume generated by the promotion. Why is incremental volume important when evaluating promotion effectiveness? (4 points) Calculate the percentage lift in sales during the promotion compared to baseline. Why might this number be misleading if considered in isolation? (4 points) Based on the repeat purchase rate, estimate the number of promotion-driven customers likely to return. How does this insight influence your view of the promotion’s short-term versus long-term impact? (4 points) Calculate the cost per incremental student acquired through the promotion. Then, calculate the advertising elasticity of demand (AED) using CREATE’s baseline weekly ad spend of $1,250 and promotion month spend of $10,000. What does this tell you about the promotion’s efficiency and demand responsiveness? (4 points) 3.H2O Pure is preparing to launch a new home water filtration system designed to attach directly to standard kitchen faucets. The company is currently evaluating two product models: a single-use monthly disposable filter made with sustainable materials and offered at a lower price, or a reusable filter system that requires a higher upfront investment but includes lower-priced monthly cartridge replacements. As a startup committed to sustainability, accessibility, and long-term profitability, H2O Pure must carefully weigh customer experience, brand positioning, and financial outcomes. You have been brought on as a marketing and strategy consultant to help the company determine which model is best suited for launch. For the Reusable Model, the product is priced at $45 for the reusable base unit and $5 for each monthly cartridge. In Year 1, the company projects sales of 12,000 base units, with 10% annual growth compounded over time. The cost of goods sold (COGS) is $20 for the base and $1.50 per cartridge. Fulfillment and marketing expenses are estimated at $5 per base unit and $1 per cartridge. Based on early testing, 75% of customers are expected to remain subscribed for at least two years. The Single-Use Model is priced at $18 per filter, which must be replaced monthly. The company anticipates 20,000 customers in the first year, with 5% annual growth thereafter. The COGS is $6 per filter and fulfillment and marketing costs are $3 per unit. Customer retention is expected to be strong, with 70% of users remaining subscribed for at least two years. As part of your analysis, H2O Pure has asked you to evaluate both financial performance and strategic alignment with the brand’s values and growth goals. Please answer the following questions supporting your responses with calculations, clear assumptions, and strategic reasoning. Evaluate the advantages and disadvantages of the reusable and single-use models. Consider how each aligns with customer behavior, brand positioning, sustainability, and growth potential. (5 points) Using the data provided, calculate the Year 1 total revenue, total cost, and total profit for each model. Clearly show your calculations. You may assume that customers begin purchasing at the start of the year. (4 points) Based on the subscription retention estimates, calculate the expected customer lifetime value (CLV) for each model over 2 years. Use a basic definition of CLV as revenue minus cost per customer over the 2-year subscription period. How do these values affect the long-term business potential of each approach? Assume no discounting is necessary and ignore CAC. (6 points) Which product model would you recommend H2O Pure launch? Justify your answer with both financial analysis and strategic alignment with the company’s values and goals. (5 points) 4.You’ve just been hired as the Lifecycle Marketing Strategist at a fast-growing wellness startup called GlowBar, which sells functional skincare products designed to support hormonal balance. Until now, GlowBar’s growth has been driven mostly by founder-led social media posts, a few press mentions, and word-of-mouth referrals. The leadership team is eager to scale customer acquisition and increase customer lifetime value but is unclear about which marketing metrics truly matter. They’ve been tracking vanity metrics like Instagram likes, total website visits, and brand mentions — but they’re struggling to tie those numbers to customer acquisition, revenue, or ROI. Your job is to develop a marketing strategy rooted in the right metrics and explain how those metrics will support sustainable growth. Based on the 8-stage marketing funnel framework discussed by Natalie Rodriguez https://www.canva.com/design/DAGiAAcvcwc/zwHW7M9CF... (e.g., Awareness ? Advocacy), choose the three most important stages for GlowBar given their objectives, and identify one key metric you would track each of the stages you identify. For each metric, explain why it matters, how you would measure it, and what business decision it would make. (6 points) GlowBar has $25,000 to allocate across marketing experiments for Q2. Using principles from Natalie’s lecture, propose two to three tactics you would test and the metrics you’d track to evaluate success. Explain why these choices are strategic based on the company’s current stage. (4 points) The founders insist on increasing Instagram followers as a top goal. If the founders continue to push for vanity metrics, what risks could GlowBar face? How can your recommendation help mitigate those? How can you reframe the conversation to shift focus on more impactful growth metrics? (4 points)
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