Question

CASE PROBLEM

ABC Computers has hired a marketing service firm to develop an advertising strategy for promoting ABC’s computer software sales. The marketing firm has recommended that ABC use spot announcements on both television and radio as the advertising media for the proposed promotional campaign. Advertising strategy guidelines are expressed as follows:

1. Use at least 30 announcements for combined television and radio coverage.

2. Do not use more than 25 radio announcements.

3. The number of radio announcements cannot be less than the number of television announcements.

The television station has quoted a cost of P2400 per announcement, and the radio station has quoted a cost of P600 per spot announcement. ABC’s advertising budget has been set at P51000. The marketing services firm has rated the various advertising media in terms of audio coverage and recall power of the advertisement. For ABC’s media alternatives, the television announcement is rated at 600, and the radio announcement is rated at 200. ABC’s president would like to know how many televisions and how many radio spot announcements should be used to maximize the overall rating of the advertising campaign.

ABC’s president believes the television station will consider running the ABC spot announcement on its highly rated evening news program (at the same cost) if ABC will consider using additional television announcements.

Managerial Report

Perform an analysis of advertising strategy for ABC Computers and prepare a report to ABC’s president presenting your findings and recommendations. Include ( but do not limit your discussion to) a consideration of the following:

1. The news program rating that would be necessary before it would make sense to increase the number of television spots
2. The number of television spots that should be purchased if the news program is rated highly enough to make increasing the number of television spots advisable

Answer 1