Assignment: Individual Case Write-up
Read the case, "Hubble Contact Lenses: Data-Driven Direct to Consumer Marketing," (case ID 519011-PDF-ENG) and answer the following questions.
A. Briefly describe Hubble's current business model.
B. Which consumer and technological changes enabled the emergence of digitally native brands in the last few years?
C. Does Hubble have a competitive advantage?
D. How efficient is Hubble's business? For its computation, please follow the steps below.
a. How many months does an average consumer stay with Hubble once she subscribes to the service? Refer any reference site such as this and use monthly discount rate of 0 for computation.
b. What is the margin per box and how many boxes does an average consumer purchase per month?
c. What is the expected gross contribution of an average consumer during her life time with the company? Do not forget to include the initial cost of a free box. This is LTV (life time value).
d. What is the average customer acquisition cost (CAC) across all marketing channels? Refer to Exhibit 9.
e. Compute LTV/CAC. Is this value greater than 3? Ratio of 3 is the bench mark for a successful SaaS - software as a service - subscription model in venture capitalist community.
E. Over time, do you expect the consumer acquisition cost to go up or down? Why? What do you suggest to improve the LTV/CAC ratio from the marketing perspective?