Advertising Strategy

Midtown Motors, Inc., has hired a marketing services firm to develop an advertising strategy for promoting Midtown’s used car sales. The marketing firm has recommended that Midtown 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 $1,200 per spot announcement and the radio station has quoted a cost of $300 per spot announcement. Midtown’s advertising budget has been set at $25,500. The marketing services firm has rated the various advertising media in terms of audience coverage and recall power of the advertisement. For Midtown’s media alternatives, the television announcement is rated at 600 and the radio announcement is rated at 200. Midtown’s president would like to know how many television and how many radio spot announcements should be used in order to maximize the overall rating of the advertising campaign.

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

Managerial Report

Perform an analysis of advertising strategy for Midtown Motors and prepare a report to Midtown’s president presenting your findings and recommendations. In your report, consider the following:

1. The recommended number of television and radio spot announcements.
2. The relative merits of each advertising medium (do the cost-benefit analysis here).
3. The rating that would be necessary for the news program before it would make sense to increase the number of television spots.
4. 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.
5. The restrictions placed on the advertising strategy that Midtown might want to consider relaxing or altering.
6. The best use of any possible increase in the advertising budget.
7. Any other information that may help Midtown’s president make the advertising strategy decision.

Solve using Excel Solver function considering the shadow price instead of dual price. Include a copy of your linear programming model and Excel solution in an appendix to your report.

It does not have to be long. Two/three pages of text are perfectly fine. Make the report flow as uninterrupted text and place the linear program (!), all calculations and computer output in appendices making references to them in the text