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    Strategic Marketing Management

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    1. Given the extreme health risks, should marketers stop selling cigarettes even though they are legal and demanded by consumers? Should cigarette marketers continue to use marketing tactics that are restricted in one country in other countries where they are not restricted? (8)

    2. Explain the difference between share of customer and customer equity. Why are these concepts important to marketers? (7)

    3. Discuss any five (5) trends impacting marketing and the implications of these trends on how marketers deliver value to customers. (10)

    4. Select a retailer and calculate how much are you worth to that retailer if you continue to shop there for the rest of your life (your customer lifetime value)? What factors should you consider when deriving an estimate of your lifetime value to the retailer? How can the retailer increase your lifetime value? (These require your reflective Thinking; analytic Reasoning) (10)
    Hints: Students can select any store of their choice but they should consider factors such as marketing costs to attract and keep them as a customer, the length of time they are a customer, and the revenues they generate for the retailer. Calculating customer lifetime value can be very complicated. Intuitively, however, it can be a fairly simple net present value calculation. To determine a basic customer lifetime value, each stream of profit is discounted back to its present value (PV) and then summed. The basic equation for calculating net present value (NPV) is:
    Where, Ct =-- t - Time of the cash flow N - total customer lifetime r- discount rate Cr - net cash flow (the profit) at time t (the initial cost of acquiring a customer would be a negative profit at time 0).

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    Solution Preview

    1. Given the extreme health risks marketers should stop selling cigarettes even though these are demanded by consumers. From the deontological ethical perspective, it is the duty of marketers not to sell any product that can harm the consumer. Since cigarettes can harm consumers the marketer should not sell them. Marketing tactics restricted in one country are restricted because these tactics are unethical. These tactics should not be used in other countries where these are not restricted. From the virtue ethics perspective it would not be an act of good character if tactics used by cigarette marketers banned in one country are used in another country.

    2. Share of customers is the percent of customers that buy a company's product of all customers buying that product category. In contrast customer equity is the total combined customer lifetime value. Customer equity is the value of the potential future revenue generated by a company's customers in a lifetime. The share of the customer is important to marketers because they must try to have a higher share of a customer. This makes if difficult to switch over to another provider. Customer ...

    Solution Summary

    The answer to this problem explains marketing strategies. The references related to the answer are also included.