Question 1

The term ________________________ refers to the current value of future profits that will accrue from acquired customers.

Accepted Answer

Customer Lifetime Value or CLV (sometimes also abbreviated as CLTV or LTV

Question 2

Describe the experiments Rent the Runway's founders conducted to verify their idea even before building out their website and operations model.

Accepted Answer

One test involved purchasing 100 dresses and setting up a popup rental shop for college students. Later tests investigated how much customers were willing to pay, and verified that women were willing to rent from a photo even if they couldn't try the product on, first (in True MVP style, tests were conducted with PDF photos rather than building a full-blown website). All this helped provide confidence in their concept and armed the founders for making a persuading pitch to investors.

Question 3

The halo-effect from a positive experience renting a designer's more daring dresses may prompt a woman to purchase more frequently-worn staples like a little black cocktail dress, leather leggings, or accessories.

Accepted Answer

The halo-effect describes the phenomenon where a positive experience with a particular product or service can lead to a more positive overall perception of the brand, which can result in increased purchases. In this case, a positive experience renting more daring dresses from a designer could lead a woman to have a more positive perception of the brand, which could encourage her to purchase more frequently-worn staples like a little black cocktail dress or accessories.

Question 4

Time Magazine has called Rent the Runway one of the country's 25 Best Websites

Accepted Answer

The answer of Time Magazine has called Rent the Runway...

Question 5

The term __________________ refers to the rate at which consumers leave a product or service.

Accepted Answer

The answer of The term __________________ refers to the rate...

Question 6

Rent the Runway rentals are often only 25 percent of a dress's retail price.

Accepted Answer

The answer of Rent the Runway rentals are often only...

Question 7

Several have wondered how big sharing firms can get. Airbnb has more beds than any hotel chain and Uber dwarfs any taxi or car service firm, but ZipCar never grew as large as major car rental firms. To get a sense of the size of the firm, Rent the Runway has had over 5.5 million women as customers of their service.

Accepted Answer

The statement is true.

Question 8

Most e-commerce shoppers buy brands they are already familiar; however, ____percent of Rent the Runway customers rent brands they've never bought before.

Accepted Answer

98 percent of Rent the Runway customers rent brands they've never bought before, showcasing the platform's ability to introduce consumers to new brands.

Question 9

Determining product/market fit is often very expensive for entrepreneurs, since it amounts, essentially, to fully building out a firm's website and operational model.

Accepted Answer

Determining product/market fit can involve various methods, such as conducting market research, developing a minimal viable product, and testing it with potential customers. Fully building out a firm's website and operational model may not necessarily be required and can be costly, especially in the early stages of a startup.

Question 10

________________________ refers to the value of future cash flows discounted into today's dollars (it is discounted because a dollar today should be worth more in the future assuming inflation or the potential to earn money on the dollar if it is invested).

Accepted Answer

The answer of ________________________ refers to the value of future...

Question 11

According to CEO, Jenn Hyman, Rent the Runway is a "fashion company with______________"

Accepted Answer

The answer of According to CEO, Jenn Hyman, Rent the...

Question 12

The term ______________________ conveys the degree to which a product satisfies market demand. Successful efforts should be desired by customers, and scale into large, profitable businesses.

Accepted Answer

The answer of The term ______________________ conveys the degree to...

Question 13

Essay: How does the Rent the Runway model compare with firms like Uber and Spotify?

Accepted Answer

The answer of Essay: How does the Rent the Runway...

Question 14

Circle the equation that is true most firms with a profitable customer base:

Accepted Answer

A profitable customer base means that the lifetime value of a customer is higher than the cost of acquiring that customer. Therefore, option A is true: Customer Acquisition Costs (CAC) should be lower than the Customer Lifetime Value (CLV) in order to ensure a positive Net Present Value (NPV) from future customer profits. This ensures that the firm is able to generate a return on its investment in customer acquisition. Option B is incorrect because if CLV is lower than CAC, it doesn't make sense for a firm to invest in acquiring such customers. Option C is incorrect because if NPV is lower than CLV, then the investment in customer acquisition is not worthwhile. Option D is incorrect because it is talking about the minimum viable product and not customer acquisition.

Question 15

____________________ refers to the amount of money a firm spends to convince a customer to buy (or in the case of free products, try or use) a product or service.

Accepted Answer

The answer of ____________________ refers to the amount of money...

Question 16

The term ____________________ refers to when founders of a company alter their product offering, business model, or target market in hopes of crafting a more viable business.

Accepted Answer

The answer of The term ____________________ refers to when founders...

Question 17

The term _______________________ is often used in entrepreneurship and new product development and refers to a bare-bones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea.

Accepted Answer

The answer of The term _______________________ is often used in...

Question 18

Which of the following did not help create demand for Rent the Runway?

Accepted Answer

Option C mentions flash sales sites, which were not a factor in creating demand for Rent the Runway. The other options A, B, and D all suggest factors that led to the creation of demand for the company's services.

Question 19

Which of the following is not a reason why Rent the Runway appeals to designers?

Accepted Answer

All of the choices convey the site's appeal to designers, therefore none of them are not a reason why Rent the Runway appeals to designers.

Question 20

Customers who are on the fence about a choice can choose a second style as a backup for an additional fee.

Accepted Answer

This statement implies that the company offers a backup option to customers for an additional fee, giving them the choice to have a second style as a backup option.

Quiz 12: Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech With Fashion, John Gallaugher - Information Systems: a Managers Guide to Harnessing Technology, Version 6.0