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.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

The goal of this case is for Keels to develop a marketing plan that best matches customer demographics with magazine reader demographics by product line and increases the effectiveness of Cycle World's marketing budget. Students play the role of a media planner for Keels. This case is an integrated situation where technology (i.e., Excel) helps to provide an efficient solution for a marketing application using statistics. Specifically, it shows (1) descriptive statistics can be informative, but also has limits, (2) that some simple Excel features can help develop a better solution, (3) the importance of critical thinking when the problem is not well structured, which usually is the case in the real business world, (4) how business concepts (e.g., cost/benefit analysis) can impact the final managerial decision.

To illustrate the usefulness of descriptive statistics and critical thinking we recommend a four-stage solution process to this case. First, students develop a solution to the case without any statistical analysis. Second, students compute descriptive statistics for Cycle World's customers and have the opportunity to reconsider their original solution. However, this decision is likely to be based on one primary criterion (e.g., salary or fitness level) and depends on the student's individual preference. Third, students develop a solution while considering several criteria simultaneously. Fourth, students develop a solution that best matches customer demographics with magazine demographics and cost/benefit analysis is performed to offer a final managerial decision with a higher monetary value.

SOLUTIONS

Stage 1: Intuitive Solutions without Statistical Analysis

To solve the problem without any statistical analysis, students will only use magazine name information provided by Lance. Specifically, students have to search for magazines by their names; and only those magazines that have names related to cycling or sports get picked. …

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