The Green Corporation is a software start-up company in need of a marketing plan for exposure in
Question:
The Green Corporation is a software start-up company in need of a marketing plan for exposure in the marketplace. The Green Company has hired your marketing firm to assist in making these management decisions.
Your marketing firm has provided the following information about the industry exposure effectiveness rating per ad, their estimate of the number of potential new customers reached per ad, and the cost for each ad in the table below.
Media | Exposure Rating per Ad | New Customers per Ad | Cost per Ad |
|---|---|---|---|
TV (first 10 ads) | 100 | 5,000 | $10,000 |
TV (more than 10 ads) | 60 | 2,000 | $10,000 |
Radio (first 15 ads) | 30 | 3,000 | $3,000 |
Radio (more than 15 ads) | 25 | 1,500 | $3,000 |
Internet (first 20 ads) | 15 | 1,500 | $1,000 |
Internet (more than 20 ads) | 5 | 900 | $1,000 |
The exposure rating is based on the value of the ad to potential new customers. It is a function of a variety of variables such as image, message recall, visual and audio appeal.
TV Exposure
As shown in the above chart, TV advertisement has the highest exposure effectiveness rating along with the greatest potential for reaching new customers up to the first 10 ads. Both the exposure rating and new customers per ad decrease for more than 10 ads but cost the same as the first 10 ads.
Radio Exposure
The next medium, radio, is more effective on both exposure and new customers per ad on the first 15 ads and decreases to the numbers shown in the chart above for more than 15 ads at the same cost per ad.
Internet
The last medium proposed, internet, is more effective on both exposure and new customer per ad on the first 20 ads, decreasing on both variables for ads of more than 20 at the same cost.
Budget and Guidelines
The Green Corporation’s marketing budget is limited to $300,000 in total. To balance the advertising campaign and make use of all advertising media, The Green Corporation management team also has adopted the following guidelines:
Use at least twice as many radio advertisements as television advertisements.
Use no more than 20 television advertisements.
The television advertising budget should be at least $150,000.
The radio advertising budget is restricted to a maximum of $105,000.
The internet advertising budget is to be at least $45,000.
At least 100,000 potential customers must be reached.
Your marketing firm has agreed to work within these guidelines and provide a recommendation as to how the $300,000 advertising budget should be allocated among television, radio, and internet advertising for the Green Corporation.
1. Using Excel Solver, develop a linear programming model that can be used to determine the advertising budget allocation for the Green Corporation where the objective function is to maximize the total exposure rating across all media of the advertising campaign.
2. Present a schedule summarizing the recommended number of television, radio, and internet ads and the budget allocation for each medium. Show the total exposure and indicate the total number of potential new customers reached based on your linear programming model developed in question 1.
3. Using Excel Solver, develop a linear programming model that can be used to determine the advertising budget allocation for the Green Corporation where the objective function is to maximize the total number of new customers reached across all media of the advertising campaign.
4. Present a schedule summarizing the recommended number of television, radio, and internet ads and the budget allocation for each medium. Show the total exposure and indicate the total number of potential new customers reached based on your linear programming model developed in question 3.
5. Compare and contrast the results obtained from your linear programming models and schedules in questions 1 through 4. Then, make a recommendation to the Green Corporation for its advertising campaign based on the results of all of your calculations. Do you recommend basing the advertising campaign on maximizing total exposure rating or based on maximizing the total number of customers? Fully explain your recommendations.
Expert Answer:
To solve this problem well first set up two linear programming models in Excel Solver one to maximize the total exposure rating across all media and a... View the full answer
