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

2. MEDIA SELECTION

3. INTRODUCTION

4. 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.

5. 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

6. 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

7. 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

8. 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

9. 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

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

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

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

13. MARKETING RESEARCH

14. 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.

15. 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:

16. 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.

17. 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

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

19. 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.

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

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

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

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

24. 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

25. 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 EC >= 0

26. 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 ENC >= 0

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

28. THANK YOU