x.Hmnecker Company, a growing mail order clothing and accessory company, is conc
ID: 2433812 • Letter: X
Question
x.Hmnecker Company, a growing mail order clothing and accessory company, is concerned about its growing marketing customer ordering patterns for the past year and identified four different types of customers, as Illustrated in the following table. Kronecker sends catalogs and flyers to all its customers several times a year. Orders are taken by mail or over the phone. Kronecker maintains a toll free number for customers to use when placing orders over the phone. Kronecker prides itself on the personal attention it proides shoppers who order over the phone. All purchases are paid for by check or credit card. Kronecker has a very generous return policy if customers are not satisfied with the merchandise received. Customers must pay return shipping charges, but their purchase price is then fully refunded.Explanation / Answer
Customer 1
Customer 2
Customer 3
Customer 4
$1,000
$1,000
$2,500
$3,000
0
$200
$500
$1,500
$1,000
$800
$2,000
$1,500
$750
$600
$1,500
$1,125
0
$30
$20
0
$20
0
0
$80
0
$20
$10
$120
$4
0
0
$48
$50
$50
$50
$50
$824
$700
$1,580
$1,423
$176
$100
$420
$77
17.60%
12.50%
21%
5.13%
Customer 1
Customer 2
Customer 3
Customer 4
Sales$1,000
$1,000
$2,500
$3,000
Less : Returns0
$200
$500
$1,500
Net Sales$1,000
$800
$2,000
$1,500
Cost of Goods Sold 75% of Sales$750
$600
$1,500
$1,125
Processing mail orders $5per order0
$30
$20
0
Process phone orders $80 per hour$20
0
0
$80
Process returns $5 per itemreturned0
$20
$10
$120
Process overnight delivery requests $4 per request$4
0
0
$48
Maintain customer relations$50
$50
$50
$50
Total$824
$700
$1,580
$1,423
Profit$176
$100
$420
$77
Profit % (on net Sales)17.60%
12.50%
21%
5.13%
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