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.
Advertising Media Exposure Rating per Ad New Customers per Ad Cost per Ad Television 90 4000 $10,000 Radio 25 2000 $3000 Newspaper 10 1000 $1000  
The exposure rating is viewed as a measure of the value of the ad to both existing customers and potential new customers. It is a function of such things as image, message recall, visual and audio appeal, and so on. As expected, the more expensive television advertisement has the highest exposure effectiveness rating along with the greatest potential for reaching new customers.
At this point, the HJ consultants pointed out that the data concerning exposure and reach were only applicable to the first few ads in each medium. For television, HJ stated that the exposure rating of 90 and the 4000 new customers reached per ad were reliable for the first 10 television ads. After 10 ads, the benefit is expected to decline. For planning purposes, HJ recommended reducing the exposure rating to 55 and the estimate of the potential nw customers reached to 1500 for any television ads beyond 10. For radio ads, the preceding data are reliable up to a maximum of 15 ads. Beyond 15 ads, the exposure rating declines to 20 and the number of new customers reached declined to 1200 per ad. Similarly, for newspaper ads, the preceding data are reliable up to a maximum of 20; the exposure rating declines to 5 and the…