The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: $$\begin{array} { | l | l | l | l|}
\hline { \text { Strategy } } & { \text { Cable Network } } \
\hline & \text { Successful } & &\text { Failure } \
\hline \text { Print } & \$ 10 && 10 \
\hline \text { Mixed } & 4 & &14 \
\hline \text { Television } & 1 && 21 \
\hline
\end{array}$$ For what range of probability that the new cable network will be successful will she select the mixed media strategy?

Question

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: $$\begin{array} { | l | l | l | l|} 
\hline   { \text { Strategy } } &  { \text { Cable Network } } \
\hline & \text { Successful } & &\text { Failure } \
 \hline \text { Print } & \$ 10 && 10 \
\hline \text { Mixed } & 4 & &14 \
\hline \text { Television } & 1 && 21 \
\hline
\end{array}$$ For what range of probability that the new cable network will be successful will she select the mixed media strategy?

Quizplus · Accepted Answer

To determine the range of probabilities for when the advertising manager should select the mixed media strategy, we need to compare the cost per thousand hits for the mixed media strategy to the other two options.

If the cable network is successful, then the cost per thousand hits for the mixed media strategy is $4. This is lower than the cost for print advertising ($10) and much lower than the cost for television advertising ($1).

If the cable network is a failure, then the cost per thousand hits for the mixed media strategy is $14. This is higher than the cost for print advertising ($10), but still significantly lower than the cost for television advertising ($21).

Therefore, the advertising manager should select the mixed media strategy if the probability of success for the cable network is within the range where the cost per thousand hits is lower than both the print and television options.

This occurs when the probability of success is between .4 and .7. Therefore, the answer is C) .4-.7.

The Advertising Manager for Roadside Restaurants, Inc For What Range of Probability That the New Cable Network