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Version:0.9 StartHTML:0000000105 EndHTML:0000009396… Version:0.9 StartHTML:0000000105 EndHTML:0000009396 StartFragment:0000000141 EndFragment:0000009356A fictitious firm, Erinco, is looking to improve their business and have asked you for some marketing help.The company has given you the following information for fiscal year ending May 31, 2021:? Erinco is the exclusive Canadian reseller of specialty board games targeted at helping active SeniorCitizen’s keep their brains active. The target market is simply stated as seniors between the ages of65 and 80 years old.? There are 20 different games that the company re-sells including examples such as BrainTeaser,KeepitActive, UpandUp, YoungatHeart and BrainKing. The games sell at retail for $40 (retail sellingprice). The company releases new updated versions of each game every year.? The COGS for each game is estimated at $12 (largely the fees paid to the reseller). Shipping is paidfor by the customer.? The company sells 100% through their ecommerce presence that they have setup through acompetitor to Shopify. Assume for this company charges a set fee of 7% of total revenue (notincluding taxes) for all transactions for use of their platform.? 100% of revenues come from Canada right now.? At the beginning of the fiscal year (June 1, 2021), the CRM system counted more than 12,400active customers in their database. Over the course of the year Erinco added 2,500 new/first timecustomers and ended the year with 11,400 customers in their database. The difference is melt/churndue to seniors no longer being customers. Normally about 5% of customer base at beg of year is nolonger there at end due to death.? On average over past few years each new customer buys an average of 1 board game in the firstyear and ongoing active customers buy an average of 2 games per year each year thereafter.? Erinco spends $190,000 per year on acquiring new customers. All of this goes to cover salaries,benefits, and expenses (including marketing campaigns) associated with the marketing and salesorganization.? The total OPEX (largely overhead and including $190,000 for new customer acquisition) is $410,000? Erinco can borrow money from the bank at a rate of prime+ 2%. This is the discount rate. Assumeprime is 4% for this example.The CEO of Erinco, Tarra Millerano has asked you to advise her on how you can help her growprofitability (EBITDA) next year by 130%. Please answer the following questions below:a) If Erinco operates the same way from June 1, 2022 to May 31, 2023 (spends the same, achieves thesame # of new customers, same spend, same % total melt) as did in prior year, will it achieve theEBITDA target of a 130% increase from prior year? Show work and explain. (5 points)b) Detail a revenue model for this business based on data given in the case and outline how you couldinvest in additional marketing communications to drive an increase in # of games purchased perperson year so that you could achieve an EBITDA increase of more than 200% in upcoming year?(7 points)c) Is this a good business based on the data in the case? Explain. (3 points)Business Economics

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