Managerial Report

Develop a spreadsheet model that can be used to determine the advertising budget allocation for the

Flamingo Grill. Include a discussion of the following in your report.

1. A schedule showing the recommended number of television, radio, and newspaper

advertisements and the budget allocation for each media. Show the total exposure and

indicate the total number of potential new customers reached.

2. How would the total exposure change if an additional $10,000 were added to the

advertising budget?

3. A discussion of the ranges for the objective function coefficients. What do the ranges

indicate about how sensitive the recommended solution is to HJ's exposure rating

coefficients?

4. After reviewing HJ's recommendation, the Flamingo's management team asked how the

recommendation would change if the objective of the advertising campaign was to

maximise the number of potential new customers reached. Develop the media schedule

under this objective.

5. Compare the recommendations from parts 1 and 4. What is your recommendation for the

1. Flamingo Grill's advertising campaign?
   

Planning an Advertising Campaign HJ agreed to work with these guidelines and provide a recommendation as to how the $279,000 The Flamingo Grill is an upscale restaurant located in St Petersburg, Florida. To help plan an advertising budget should be allocated among television, radio, and newspaper advertising. advertising campaign for the coming season, Flamingo's management team hired the advertising firm of Haskell & Johnson (HJ). The management team requested HJ's recommendation conceming how the advertising budget should be distributed across television, radio, and newspaper advertisements. Managerial Report The budget has been set at $279,000. Develop a spreadsheet model that can be used to determine the advertising budget allocation for the In a meeting with Flamingo's management team, HJ consultant provided the following Flamingo Grill. Include a discussion of the following in your report. 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. A schedule showing the recommended number of television, radio, and newspaper advertisements and the budget allocation for each media. Show the total exposure and indicate the total number of potential new customers reached. 2. How would the total exposure change if an additional $10,000 were added to the Advertising Media Exposure Rating per Ad New Customers per Ad Cost per Ad advertising budget? Television 90 4000 $10,000 3. A discussion of the ranges for the objective function coefficients. What do the ranges Radio 25 indicate about how sensitive the recommended solution is to HJ's exposure rating 2000 $3,000 coefficients? Newspaper 1000 $1,000 After reviewing HJ's recommendation, the Flamingo's management team asked how the recommendation would change if the objective of the advertising campaign was to maximise the number of potential new customers reached. Develop the media schedule The exposure rating is viewed as measure of the value of the ad to both existing customers and under this objective. potential new customers. It is a function of such things as image, message recall, visual and audio 5. Compare the recommendations from parts 1 and 4. What is your recommendation for the appeal, and so on. As expected, the more expensive television advertisement has the highest Flamingo Grill's advertising campaign? exposure effectiveness rating along with the greatest potential for reaching new customers. At this point, the HJ consultants pointed out that the data concerning the exposure and reach were only applicable to the first few ads in each media. For television, HJ stated that the exposure rating of 90 and the 4000 new customers reached per ad were reliable for the first 10 television ads. After 10 ads, the benefit is expected to decline. For planning purposes, HJ recommended reducing the exposure rating to 55 and the estimate of the potential new customers reached to 1500 for any television ads beyond 10. For radio ads, the preceding data are reliable up to a maximum of 15 ads. Beyond 15 ads, the exposure rating declines to 20 and number of new customers reached declines to 1200 per ad. Similarly, for newspaper ads, the preceding data are reliable up to a maximum of 20; the exposure rating declines to 5 and the potential number of new customers reached declines to 800 for additional ads. Flamingo's management team accepted maximising the total exposure rating, across all the media, as the objective of the advertising campaign. Because of management's concern with attracting new customers, management stated that the advertising campaign must reach at least 100,000 new customers. To balance the advertising campaign and make use of all advertising media, Flamingo's management team also adopted the following guidelines. . Use at least twice as many radio advertisements as television advertisements. . Use no more than 20 television advertisements. . The television budget should be at least $140,000. . The radio advertising budget is restricted to a maximum of $99,000. The newspaper budget is to be at least $30,000