Academic journal article Journal of the International Academy for Case Studies

Optimizing the Advertising Budget for a Regional Business: The Case of Cycle World

Academic journal article Journal of the International Academy for Case Studies

Optimizing the Advertising Budget for a Regional Business: The Case of Cycle World

Article excerpt

CASE DESCRIPTION

The primary goal of this case is for you to learn how a media planning consultant can optimize the effectiveness of a client's magazine marketing campaign budget. Other objectives include: (1) showing the usefulness of Excel and (2) recognizing that some solutions are better than others. This case has a difficulty level of 2-4. This case requires you to have some Excel experience and it can be taught in an Excel spreadsheet course to help better illustrate the usefulness of skills students are learning (difficulty level=2), or it can be taught in a marketing management course to illustrate the value of media planning consultants add to their clients (difficulty level=3-4). This case is also appropriate for M.B.A. students who are taking a pre-requisite course in statistics, spreadsheets, or marketing. This case is designed to be taught in two to three sessions of one-hour fifteen minutes at the undergraduate level. You are expected to spend 6-8 hours of out-of-class time working on the case.

CASE SYNOPSIS

This case illustrates a challenge that many regional private business owners face as their business grows, that is, marketing their services. Lance Landis is a retired professional cyclist who started a regional sport cycling business about three years ago, and although he has valuable skills necessary to repair and sell bicycles, he has no business education training. In the past, Lance has relied on word-of-mouth marketing, but has recently decided to market his business in some magazines. Lance is uncertain to as the most appropriate magazines to advertise in and has hired the company you work for, Keels, to help him determine which magazines best utilize his marketing budget. This case shows the value of (1) using statistics to help optimize managerial decisions, (2) marketing research, and (3) being able to think through a problem when it is not well structured, which is usually the case in the real business world.

INTRODUCTION

After a productive career as a professional cyclist, Lance opened Cycle World in Seattle, WA, U.S.A. Seattle is located in the northwest corner of the U.S.A. and is a city that seems to become more environmentally conscience every year. And with the recent increase in gas prices, his firm will hopefully continue to grow. Lance is now contemplating marketing his business in some magazines to help his business to continue to grow. However, he lacks sufficient skills necessary to make an informed decision. Currently, he has developed a list of magazine names. Table 1 shows Lance's list of magazines.

Lance is aware of his lack of marketing skills and is uncertain to as the most appropriate magazine to advertise in. To help him make a more informed decision, he has hired Keels Inc., a company you work for as a media planning consultant. To better understand Lance's business, you suggest a meeting with him at your firm's headquarters in downtown Seattle.

THE MEETING

At the meeting Lance shows you his list of magazines. And during your discussions it becomes clear that Lance strongly believes some magazines are more appropriate to advertise in than others, even though he admits lacking any evidence supporting his conclusions. In fact, he eventually yells at you and tells you to just advertise in the magazines he is suggesting. You quickly realize that the meeting is getting out of control and suggest a break.

THE BREAK

During the break you re-direct the conversation to the operations at his bicycle shops and the selling process that he uses. This re-direction of the conversation turns out to be a pivotal point in your relationship with Lance. Interestingly, during his explanation of his selling process, Lance unknowingly offers some important information that you think can be very useful. In fact, you interrupt him to ask him to better explain the survey that he has his customers fill-out after purchasing a bicycle. …

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