MKTG 4110 – Research and Analytics, Spring 2024 Homework 5

Nutramix was founded in 2016 at Charlotte, North Carolina. They are  known for their specialty gummies targeted at adults. The company differentiates its gummies by making them 100%  organic,  vegan,  sugar-free  and  allergen-safe. They also claim that these vitamin gummies are really delicious. As its popularity continues to soar, Nutramix has managed to  build a database of 60,000 consumers and they want to implement  RFM analysis for tactical targeting purposes to avoid overspending on the marketing efforts.

Nutramix decided to send email campaign with details about all their adult gummy offerings to a randomly selected 4,055 consumers.  The customer response to the marketing campaign and the subsequent invoice details were collected. As the marketing analytics manager, you are required to help Nutramix in this exercise. The data for this exercise includes the following variables:

Answer the following questions to help the Nutramix:

Question  1. Create quintile variables for recency, frequency and monetary where 1 is highest.  (1 point)

(Hint: use the “quantcut ”function from gtools package)

Question  2.   Create a bar chart showing the response rate (i.e., the proportion of customers who bought something) to this email by rfm index. What insights can you derive from this chart? (1 point)

Question 3. Which RFM cell(s) has the highest average dollars spent in response to the email marketing campaign? (2 points)

Question 4. If the cost per email is $.75, and the average net revenue per sale is $14.70. What is the breakeven response rate? (1 point)

Question 5. What is the projected

a)         profit in dollars

b)         return on marketing expenditures

if you expand the mailing campaign to all 60,000 customers (1 point)

Question 6. What is the projected

a)         profit in dollars

b)         return on marketing expenditures

if you expand the mailing campaign to only those of the 60,000 customers in RFM cells with a response rate that is equal to or greater than the breakeven response rate. (1 point)

Question 7. What is the actual dollars spent in response to the email marketing campaign by RFM cells with response rates exceeding the breakeven rate. (1 point)