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Models
Linking Marketing Expenditures and Price to Acquisition
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exp
= the universal constant which is
approximately equal to 2.7
a =
the acquisition probability
ka
= the maximum acquisition probability
d
= the acquisition
price sensitivity parameter
Pi,a,t,
= the acquisition price offered to segment i at
time t
Bi,a,t
= the acquisition expenditure
l = the rate at
which acquisition expenditures affect the acquisition
probability |
Let
us translate. This equation shows that there is a maximum acquisition
probability determined for any given industry, ka.
The coefficient d determines how
great an impact the acquisition price has on the customer’s
first purchase. Higher values of d imply that customers are more price sensitive. The coefficient
l in front of
BI,a,t determines how great an impact acquisition
spending has on the acquisition probability. The large
l is, the higher the acquisition probability for a fixed
spending level.
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