Direct Marketer, Guthy Renker Australia, Markets a Number of Skincare

Direct marketer, Guthy Renker Australia, markets a number of skincare products including Pro- Activ, Reclaim, Meaningful Beauty, Sheer Cover and Wen haircare. A distinctive feature of Guthy Renker's direct sales approach is that customers are offered deep discounts on the initial order along with a choice of free products to be sent with the first shipment. Following purchase, customers automatically become members of the relevant Guthy Renker product club which establishes a relationship between the company and the consumer. On a quarterly basis, the company sends three months' supply of the product and invoices club members for the goods.
Members always retain the option of returning the goods and terminating their membership at any time. This "club concept" used in association with direct sales is based on the philosophy that:

A) consumers are unlikely to value the benefit of club membership unless it is accompanied by incentives such as discounts and free samples.
B) to win new customers, aggressive sales tactics along with attractive incentives are required.
C) intensive advertising and promotion is required to attract new customers and sell the benefits of club membership.
D) short- term costs associated with customer acquisition are worthwhile when customers stay with the company long enough to repay the cost of attracting them.
E) none of the above

Correct Answer:

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