Mega Marketing is planning a concentrated one week advertising campaign for their new CutsEverything
SuperKnife. The ads have been designed and produced and now they wish to determine
how much money to spend in each advertising outlet. In reality, they have hundreds of possible
outlets to choose from. We will illustrate their problem with two outlets: Prime-time TV, and
news magazines.
The problem of optimally spending advertising dollars can be formulated in many ways. For
instance, given a xed budget, the goal might be to maximize the number of target customers
reached (a target customer is a customer with a reasonable chance of purchasing the product).
An alternative approach, which we adopt here, is to dene targets for reaching each market
segment and to minimize the money spent to reach those targets. For this product, the target
segments are Teenage Boys, Auent Women (ages 40-49), and Retired Men. Each minute of
primetime TV and page of newsmagazine advertisement reaches the following number of people (in
millions):