DECISION SUPPORT MODELS

A review of the Little and Lodish (1969)

paper : A Media Planning Calculus
Decision Support Models
These models are designed to help marketing managers
make decisions.
They incorporate measurement models as building blocks
but go beyond measurement models in recommending
marketing mix decisions for the manager.
The methods used to derive the optimal decisions vary
across applications.
Typical techniques are Differential calculus, Operational
Research techniques such as linear, integer programming
and simulation.
Little and Lodishs (1969) MEDIAC
Model
The computer system select a set of options and schedules them over
a time seeking to maximize total market response.
Working of the model of the market response:
The population is divided into market segment.
People in each segment are characterised by their sales potential and their
media habits.
Ads placed in the media options lead people to be exposed to the advertising.
The pattern of exposure in each market segment is determined by media
coverage.
People tend to forget exposures and so the retained exposure levels decays in
the absence of new advertising.
Continue.
The response of an individual, in terms of the fraction of sales potential
realized by the advertiser increases with exposure level but with diminishing
returns.
Total market response is a sum over people, market segments and time
periods.
The calculation of response is based on analytic formulas that are
computationally very efficient.
Media Planning Calculus
Model supplies the structure
User supplies the data, the judgements
Computer supplies the muscle.
Model
Media Class ( a general means of communication TV shows, Magazines, newspapers)
Media Vehicle (a cohesive group of advertising opportunities within a class TV shows,
Magazines, Newspapers).
Media Option (a purchasable unit within a vehicle 1 minute commercial, 4-colour full page etc)
Media Insertion (specific purchase of an option, includes specification of time period of use)
Media Schedule (a collection of insertion over a planning period)

2.1. Media Exposure levels and forgetting

2.2 Market Response
2.3 Exposure arithmetic
2.4 Budget Constraint
2.5 End Effects
2.6 Mathematical program
Thank You