Linear Programming Case
Planning an Advertising Campaign
The Flamingo Grill is an upscale restaurant located in St. Petersburg, Florida. They have asked you to help them plan their advertising campaign for the coming season. They requested your recommendation concerning how the advertising budget should be distributed across television, radio, and newspaper advertisements. The budget has been set at $300,000.
In a meeting with Flamingo management you are 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.
Exposure Rating per Ad
New Customers per Ad
Cost per Ad
Flamingo management team indicated maximizing the total exposure rating, across all media, as the objective function 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 media, Flamingo's management team also provided the following guidelines.
- Use at least as twice as many radio advertisements as television advertisements.
- Use no more than 20 television advertisements.
- The television budget must be at least $140,000.
- The radio advertising budget is restricted to a maximum of $100,000.
- The newspaper budget is to be at least $30,000.
You have agreed to work with these guidelines and provide a recommendation as how the $300,000 advertising budget should be allocated among TV, Radio, and newspaper advertising.
Develop a model that can be used to determine the advertising budget allocation for Flamingo Grill. Include a discussion of the following in your report.
- 1- A schedule showing the recommended number of TV, Radio, and Newspaper advertisements and the budget allocation for each media. Find total exposure and indicate the total number of potential new customers reached.
- 2- How would the above recommendation change if an additional $50,000 were added to the advertising budget.
- 3- How the advertising campaign schedule change if the objective function of the advertising campaign is to maximize the number of new customers reached. Show the new ad campaign with number and budget for each media as in part (1).
A media marketing research indicates that the data concerning exposure and customer reach were only applicable to the first few ads in each media. For television, the exposure rating of 90 and the new customer reached per ad were reliable for the first 10 TV ads. After 10 TV ads, the benefit is expected to decline. It is estimated that after 10 TV ads, the exposure rating declines to 55 and new customers reached is reduced to 2500. For radio ads beyond 15, the exposure rating declines to 20 and new customers reached declines to 1000 per ad. Similarly, for newspaper ads above 20, the exposure rating declines to 5 and new customers reached declines to 700.
Develop a new model under above conditions and prepare a report similar to part A.