Application Problem - Marketing Operation Research Application Problem - Marketing By Anitha Chandran Chitra.R Radha.R Sudhit Sethi

MEDIA SELECTION

INTRODUCTION

Question Relax and Enjoy Lake Development Corporation is developing a lakeside community at a privately owned lake.Their primary market includes all the middle and upper income families. Relax and Enjoy Lake Development Corporation has employed the advertising firm of Boone, Phillips and Jackson (BP&J) to design the promotional campaign. BP&J have recommended that the first months advertising be restricted to only 5 media.

BP&J have collected data on - Number of Potential Customers Reached - Cost per advertisement - Maximum number of times each medium is available - Exposure quality rating for each 5 media

Advertising Media Alternatives for Relax and Enjoy Number of Potential Customers Reached Cost per advertisement ($) Maximum number of times each medium is available per month Exposure quality rating (units) Daytime TV (1 min) 1000 1500 15 65 Evening TV(30 sec) 2000 3000 10 90 Daily Newspapers (1/2 page) 400 25 40 Sunday Newspapers 2500 4 60 Radio 300 100 30 20

Relax and Enjoy provided BP&J with the advertising budget of $30,000 for the first month’s campaign. In addition there were some restrictions. - At least 10 TV commercials must be used - At least 50,000 potential customers must be reached - Not more than $18,000 may be spent on TV ads

Decision Variable The decision to be made is how many times to use each medium. The decision variables are: DTV – number of times daytime TV is used ETV - number of times daytime TV is used DN - number of times daytime TV is used SN - number of times daytime TV is used R - number of times daytime TV is used

Objective Function Objective – To maximize the total exposure quality units for the overall media selection plan. Objective Function Max Z = 65DTV+90ETV+40DN+60SN+20R

Constraints Availability of Media DTV<=15 ETV<=10 DN<=25 SN<= 4 R<=30

Advertising budget is not more than $30,000 1500DTV+3000ETV+400DN+1000SN+100R<=30000 Television Restrictions DTV+ ETV >=10 1500DTV + 3000ETV <=18,000

Customers Reached 1000DTV+2000ETV+1500DN+2500SN+300R>=50000 Non-Negativity DTV,ETV,DN,SN,R>=0

MARKETING RESEARCH

Introduction Market research is conducted to learn consumer characteristics, attitudes and preferences. Market research firms include designing study, conducting market surveys, analyzing the data collected and providing summary reports and recommendations.

QUESTION Market survey,Inc (MSI), specializes in evaluating consumer reaction to new product, services and advertising campaigns. A client firm has requested MSI’s assistance in ascertaining consumer reaction to a recently marketed household product. During meetings with the client, MSI agreed to conduct door-to-door personal interviews to obtain responses from households with children and households without children. In additional, MSI agreed to conduct both day and evening interviews. Specifically, the client’s contract called for MSI to conduct 1000 interviews under the following quota guidelines:

Interview at least 400 households with children. Interview at least 400 households without children. The total number of households interviewed during the evening must be at least as great as the number of households interviewed during the day. At least 40% of the interview for households with children must be conducted during the evening. At least 60% of the interviews for households without children must be conducted during the evening.

Because the interviews for households with children take additional interviewers time and because evening interviewers are paid more than the daytime interviewers, the cost varies with the type of interview. Based on previous research studies, estimates of the interview costs are as follows: Household Day Evening Children $20 $25 No Children $18

What is the household, time of day interview plan that will satisfy the contract requirements at a minimum total interviewing cost?

Decision Variables DC = No of daytime interviews of households with children. EC= No of evening interviews of households with children DNC= No of daytime interviews of households without children ENC= No of evening interviews of households without children.

Objective Function Min 20DC+ 25 EC + 18DNC + 20ENC

Constrain 1 “the client’s contract called for MSI to conduct 1000 interviews” DC+ EC + DNC + ENC + 1000

Constrain 2 Interview at least 400 households with children. DC+ EC >= 400

Constrain 3 Interview at least 400 households without children. DNC + ENC >= 400

Constrain 4 The total number of households interviewed during the evening must be at least as great as the number of households interviewed during the day. EC + ENC >= DC + DNC -DC + EC -DNC + ENC >= 0

Constrain 5 At least 40% of the interview for households with children must be conducted during the evening. EC>= 0.4( DC + EC ) or -0.4DC + 0.6 EC >= 0

Constrain 6 At least 60% of the interviews for households without children must be conducted during the evening. ENC >= 0.6 ( DNC + ENC ) or -0.6 DNC + 0.4 ENC >= 0

Non Negativity DC ,EC ,DNC ,ENC >= 0

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