TV spots cost $5,000 each; increase sales by 300,000 cans Magazine ads cost $2,000 each; increase sales by 500,000 cans - Total budget: $100,000 - No more than $70,000 on TV spots - No more than $50,000 on Magazine ads - Profit $0.05 on each can sold - TV spots cost $5,000 each; increase sales by 300,000 cans - Magazine ads cost \$2,000 each; increase sales by 500,000 cans - Total budget: $100,000 - No more than $70,000 on TV spots - No more than $50,000 on Magazine ads - Profit $0.05 on each can sold Lab Exercise #3: Soda Ad What if TV ads can only increase sales by 200,000 cans? (i.e. can increase profit by $10,000 instead of $15,000 ) Should our decisions change? Should we allocate more budget for TV spots? Why? - How much more profit can we expect if we increase the budget limit on magazine ads from $50,000 to $60,000 ? How much profit can we expect to lose if we decrease the budget limit on magazine ads from $50,000 to $20,000 ?