Transcript Gardenburger Case Adapted from J. Scott Armstrong for use in lectures related to Persuasive Advertising. GB Decisions and Results 11 July 2015

Gardenburger Case
Adapted from J. Scott Armstrong for use in lectures related to
Persuasive Advertising.
GB Decisions and Results 11
July 2015
Learning objectives
Gain experience in using each of the media
allocation methods.
Improve ability to present complex analyses
and data so as to persuade managers.
Apply principles from the course.
Get feedback to improve the media planning
section on your project.
Your recommendations for
Gardenburger’s media plan
How much to spend and how did you
calculate this?
Gardenburger is planning to spend $14
million in a five-week blitz of which $1.5 is
for the Seinfeld commercial (total for year
= about $20 million)
Proposed ad budget
Post your proposed budget on the board
using gallery writing (all groups
simultaneously)
Previous advertising
Your estimate of total expenditures posted on
the board.
What did you do?
Amount spent in past
Reasons to differ*
Effects of reasons to differ*
•Individual estimates first then combine
(Delphi preferred)
Typical practice
Present your proposal for total expenditures
How should you do this?
Structured judgment & combine
Look up estimates of A/S ratios*
Tailor to Gardenburgers
Individual analyses
Use trimmed mean
Ad-to-sales ratio
“food & kindred products”
Elasticity method
Present your proposed budget from elasticity,
Find estimates of elasticity?
Empirical studies*
Show how you adjusted the estimate.
Persuasive ad?
News? Yes
Follow principles? Do an audit.
Copy testing vs. competitive ads?
*Sethuraman and Tellis paper from the Journal of Marketing
Research, 1991, pp. 160-174) Scott’s estimate .02 prior to
adjustment, and about the same after adjustment.
Propose total ad expenditure using
elasticity method
Present your proposed budget from the
elasticity method
Apply Wright’s Rule*
elasticity x gross margin
* Scott’s estimate: 0.2 x gross margin = $0.4 million
Decomposition method
Your estimate? Please post on the board.
Sources used?
Methods used?
Scott’s Media Recommendations
Sell Seinfeld time
Analyze other media
Use brainwriting
Free samples in grocery stores?
Print media?
Gardenburger Commercial
Suggest ways to improve the commercial
Recommendations on the commercial?
Results of your audit of the TV
commercial
What happened
Stock price
Steady rise from $7 April 1997 to $9 in April
1998
Then to $15 over next two months
Under $1 by Jan 2001
Continued a decline to bankruptcy in 2005
How to avoid a Gardenburger
Calculate ROI
– Total budget (as we showed)
– By media
• Gallery writing for a large list of media
• Delphi for initial screening
• Then calculate ROI for each media and allocate