4. Snyder’s Moving company has two segments of customer: Small Business (SB) and Residential. 10% of Snyder’s 2,200 clients fall into both categories, using Snyder’s as their mover of choice for both their business and personal needs. The remaining clients are split evenly between segments. A client who falls into one category will use Snyder’s once every 3 years. Clients who fall into both categories use Snyder’s twice every 3 years. SB moves cost 15% more to the clients than Residential moves due to additional insurance costs for Snyder’s. The average profit Snyder’s makes per move, regardless of which type, is $260. Snyder recently launched a marketing campaign to all SB-only clients to encourage them to use Snyder’s for residential moves. 10% of recipients decided to do so. Assuming the campaign cost $500 to execute, how profitable was it?

$12,480

$25,240

$50,480

$56,240

If the campaign of Snyder’s Moving company costs $500 to execute, it has been computed that the profit will be C. $50,480.

Firstly, the customer base will be:

= 50% × [2200 - (10% × 2200)]

= 50% × (2200 - 220)

= 990

The increase in customers will be:

= 10% × 990

= 99

The additional profit will be:

= [(99 × $260) - $500] × 2

= ($25740 - $500) × 2

= $50480

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Answer:

10% SB clients will move due to the promotion. The Profit will be $25,240

Step-by-step explanation:

Find the number of clients in both SB and personal:

10% x 2200 = 220

Find the number of SB clients:

(2200 - 220)/2 = 990 ( the rest of clients will be evenly splitted)

Find the number of SB clients who will move:

10% x 990 = 99

Find the profit due to the move:  (Number of ppl moved  x Average Profit - Initial Investment)

99 x $260 - $500 = $25,240

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