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Summary
The Maru Batting Center is a Japanese company that offers individuals an opportunity to practice how to make hits in baseball and softball in their batting cages. The company has a relaxed policy that allows clients to book for training within 24 hours from their due date. Importantly, this strategy enables the organization to reduce the need for full-time employees, and instead it hired part-time workers depending on its appointment needs.
The company serves four categories of players: Little Leaguers, Summer Sluggers, Elite Ballplayers, and Entertainment Seekers. Little Leaguers are young players who are between 6 to 15 years. These players have an attrition rate of 25 percent. They also require 2 part-time instructors and a coach whom Maru Batting Center (MBC) pays yen 3000 per hour. MBC charges the parents Yen 6500 per child. The organization also incurs an advertisement cost of Yen 1000 to contact a Little Leaguer, of which 10% of them become regular players.
Summer Sluggers are adults who play baseball and softball. MBC charges these persons Yen 3000 per hour. These individuals require one part-time employee when playing. They also have a high attrition rate of 50% due to personal issues. The marketing cost per player is Yen 1500 and their response rate is just 15 percent. Elite Ballplayers are devoted sports personalities between 16 and 35 years. These individuals use only one part time employee during their training. They also require professional instructors, whom MBC pays Yen 4,500 each. MBC charges them Yen 7500 annually, and they have a retention rate of 60%.
Entertainment Seekers refer to individuals who just play baseball and soft ball for fun. They are at times spectators. MBC charges them Yen 4000 per hour. These individuals require two part-time workers. The average retention rate for these individuals is 35%. MBC is seeking ways in which it can attract these individuals to consume more of its products. It also aims at increasing their retention rate.
Questions

  1. What is the customer acquisition cost for:
  2. A Little Leaguer. Yen 10,000
  3. A Summer Slugger. Yen 10,000
  4. An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts’ magazine. Yen 60,000.
  5. An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala event. Yen 50,000.
  6. An Entertainment Seeker Yen 2,000.
  7. How soon will MBC break even for the following customers? (Ignore time value of money)
  8. A Little Leaguer: Break even occurs after 12 matches, which is after 6 hours
  9. A Summer Slugger: Breakeven occurs after 26 matches, which is after 13 hours.
  10. An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts’ magazine. Breakeven occurs after 133 matches, which is after 66.5 hours.
  11. An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala event. Breakeven occurs after 111 matches, which is after 55.5 hours.
  12. An Entertainment Seeker. Breakeven occurs after 10 matches, which is after 5 hours.
  13. How soon will MBC break even for the following customers? (Assume time value of money where 100% of customers will experience attrition once NPV of annual profits per customer falls below Yen 100)
  14. A Little Leaguer. Break even occurs after 12 matches, which is after 6 hours
  15. A Summer Slugger. Breakeven occurs after 26 matches, which is after 13 hours.
  16. An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts’ magazine. Breakeven occurs after 133 matches, which is after 66.5 hours.
  17. An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala event. Breakeven occurs after 111 matches, which is after 55.5 hours.
  18. An Entertainment Seeker. Breakeven occurs after 10 matches, which is after 5 hours.
  19. Which is the most attractive customer segment for MBC to target? Explain your reasoning.

The most attractive market segment is Little Leaguers. This segment has the highest margin per hour rate due to its ability to have a high retention rate (75%) and create interest (10%) among non-players to join the game. In addition, this segment only takes a short period, of just 6 hours, to breakeven.