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DATA ENVELOPMENT ANALYSIS 201

l Use no more than 20 television
Exposure New
advertisements.
Advertising Rating Customers Cost
l The television budget should be at least
Media per Ad per Ad per Ad
R140 000.
Television 90 4 000 R10 000
l The Internet advertising budget is restricted to
Internet 25 2 000 R3 000
a maximum of R99 000.
Newspaper 10 1 000 R1 000
l The newspaper budget is to be at least
R30,000.
The exposure rating is viewed as a measure of
the value of the ad to both existing customers and
HJ agreed to work with these guidelines and provide
potential new customers. It is a function of such
a recommendation as to how the R279 000 advertis-
things as image, message recall, visual and audio
ing budget should be allocated among television,
appeal and so on. As expected, the more expensive
radio and newspaper advertising.
television advertisement has the highest exposure
effectiveness rating along with the greatest potential Managerial Report
for reaching new customers.
At this point, the HJ consultants pointed out that Develop a model that can be used to determine
the data concerning exposure and reach were only the advertising budget allocation for the restau-
applicable to the first few ads in each media. For tele- rant. Include a discussion of the following in your
vision, HJ stated that the exposure rating of 90 and the report.
4000 new customers reached per ad were reliable for 1 A schedule showing the recommended number
the first ten television ads. After ten ads, the benefit is of television, Internet and newspaper
expected to decline. For planning purposes, HJ rec- advertisements and the budget allocation for
ommended reducing the exposure rating to 55 and
each media. Show the total exposure and
the estimate of the potential new customers reached
indicate the total number of potential new
to 1500 for any television ads beyond ten. For Internet
customers reached.
ads, the preceding data are reliable up to a maximum
2 How would the total exposure change if an
of 15 ads. Beyond 15 ads, the exposure rating
additional R10 000 were added to the advertising
declines to 20 and the number of new customers
budget?
reached declines to 1200 per ad. Similarly, for news-
paper ads, the preceding data are reliable up to a 3 A discussion of the ranges for the objective
maximum of 20; the exposure rating declines to five function coefficients. What do the ranges
and the potential number of new customers reached indicate about how sensitive the
declines to 800 for additional ads. recommended solutionistoHJ’sexposure
The restaurant’s management team accepted rating coefficients?
maximizing the total exposure rating, across all media, 4 After reviewing HJ’s recommendation, the
as the objective of the advertising campaign. Because restaurant’s management team asked how the
of management’s concern with attracting new cus- recommendation would change if the objective
tomers, management stated that the advertising cam- of the advertising campaign was to maximize the
paign must reach at least 100 000 new customers. To number of potential new customers reached.
balance the advertising campaign and make use of all Develop the media schedule under this
advertising media, Flamingo’s management team objective.
also adopted the following guidelines. 5 Compare the recommendations from parts 1 and
l Use at least twice as many Internet 4. What is your recommendation for the
advertisements as television advertisements. advertising campaign?

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