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BrainCell Internet Advertising

Solver and resource allocation exercise

Introduction
You are working on an Internet advertising analysis for BrainCell, an online cell phone provider and
retailer. The firm has recently done a "qualitative response assessment" and that information may
improve the cost-effectiveness of the Internet advertising strategy. The problem you face is to decide
how much to spend in total and how to allocate that budget in six countries in the European Union.

How to use this spreadsheet

This spreadsheet and the associated exercise are intended to familiarize you with building formulas in
Excel, to teach you to use Excel’s Solver function, and to introduce the concept of response functions.
Follow the step-by-step procedure described in the tutorial.

Bright yellow indicates a cell you should fill-in or modify.

 stored in a retrieval system, used in a spreadsheet, or
rding or otherwise – without the permission of DecisionPro, Inc.
Market Research Data and Base Scenario
Key figures and base scenario for 6 European countries.
United
Key Figures / Countries France Germany Poland Italy
Kingdom
Planned Internet advertising
115,000 € 187,500 € 187,500 € 40,000 € 150,000 €
budget
Acquired customers
11,200 16,200 12,300 1,900 15,400
(expected)
Population (thousands) 61,350 82,509 60,363 38,109 59,546
Internet usage 53.7% 61.1% 62.3% 29.9% 52.9%
Mobile phone penetration 81% 85% 108% 72% 125%
Per capita gross national
$34,810 $34,580 $37,600 $7,110 $30,010
income
Estimated target population 462,000 740,000 770,000 120,000 590,000
Gross margins (6 months) per
30 € 28 € 25 € 18 € 25 €
acquired customer

Recommended Scenario
This area will contain recommended effort and predicted outcome values.
United
Key Figures / Countries France Germany Poland Italy
Kingdom
Internet advertising budget 115,000 € 187,500 € 187,500 € 40,000 € 150,000 €
Acquired customers 11,200 16,200 12,300 1,900 15,400
Gross margins 336,000 € 453,600 € 307,500 € 34,200 € 385,000 €
Net margins 221,000 € 266,100 € 120,000 € -5,800 € 235,000 €
Acquisition cost / customer 10 € 12 € 15 € 21 € 10 €
Return on investment 192% 142% 64% -15% 157%
Market share 2.4% 2.2% 1.6% 1.6% 2.6%

Total advertising budget 742,500 € <<< You fill in here

Total gross margins 1,621,900 € <<< You fill in here
Total net margins 879,400 € <<< You fill in here
 Spain

62,500 €

4,800

45,003
43.9%
106%
$25,360
265,000
22 €

Spain
62,500 € <<< Input your recommendations here
4,800
105,600 € <<< You fill in here = Number of customers x Gross margins per customer
43,100 € <<< You fill in here = Gross margins - Advertising budget
13 € <<< You fill in here = Advertising budget / Number of customers
69% <<< You fill in here = Net margins / Advertising budget
1.8% <<< You fill in here = Number of customers / Market size (target population)
 soft Excel 16.0 Answer Report
Internet Advertising Data (Solver).xls]BrainCell
t Created: 26-12-2020 11:09:39
d to the current solution. All Constraints are satisfied.
Solver Engine
Engine: GRG Nonlinear
Solution Time: 0.203 Seconds.
Iterations: 15 Subproblems: 0
Solver Options
e 100 sec, Iterations 100, Precision 0.000001
on Size 100, Random Seed 0, Derivatives Forward, Require Bounds
ger Sols Unlimited, Integer Tolerance 5%, Solve Without Integer Constraints

Objective Cell (Max)

Cell Name Original Value Final Value
$C$28 Total net margins France 879,400 € 1,167,115 €

Variable Cells
Cell Name Original Value Final Value Integer
$C$18 Internet advertising budget France 115,000 € 256,071 € Contin
$D$18 Internet advertising budget Germany 187,500 € 407,495 € Contin
$E$18 Internet advertising budget United Kingdom 187,500 € 233,776 € Contin
$F$18 Internet advertising budget Poland 40,000 € 8,589 € Contin
$G$18 Internet advertising budget Italy 150,000 € 405,627 € Contin
$H$18 Internet advertising budget Spain 62,500 € 85,154 € Contin

Constraints
Cell Name Cell Value Formula Status Slack
$C$18 Internet advertising budget France 256,071 € $C$18>=0.01 Not Binding 256,071 €
$D$18 Internet advertising budget Germany 407,495 € $D$18>=0.01 Not Binding 407,495 €
$E$18 Internet advertising budget United Kingdom 233,776 € $E$18>=0.01 Not Binding 233,776 €
$F$18 Internet advertising budget Poland 8,589 € $F$18>=0.01 Not Binding 8,589 €
$G$18 Internet advertising budget Italy 405,627 € $G$18>=0.01 Not Binding 405,626 €
$H$18 Internet advertising budget Spain 85,154 € $H$18>=0.01 Not Binding 85,154 €
Calibration Data
For each country, estimate acquired customers for different levels of advertising budget
You can use the keywords "None" (=0%), "Current effort" (=100%) and "Saturation" (=infinity) to describe effort lev
Planned
Planned Planned Acquired Acquired
Acquired Internet
Internet Internet customers customers
customers advertising
Effort levels / Segments advertising advertising (expected) (expected)
(expected) budget for
budget for budget for for for United
for France United
France Germany Germany Kingdom
Kingdom

Lowest effort None 0% None 0% None 0%

Low effort 50% 55% 50% 54% 50% 57%

Current Current Current

Medium effort 100% 100% 100%
effort effort effort

Higher effort 150% 130% 150% 133% 150% 130%

Highest effort Saturation 268% Saturation 278% Saturation 262%

finity) to describe effort levels

Planned Planned Planned

Acquired Acquired Acquired
Internet Internet Internet
customers customers customers
advertising advertising advertising
(expected) (expected) (expected)
budget for budget for budget for
for Poland for Italy for Spain
Poland Italy Spain

None 0% None 0% None 0%

50% 58% 50% 52% 50% 56%

Current Current Current

100% 100% 100%
effort effort effort

150% 132% 150% 135% 150% 131%

Saturation 284% Saturation 282% Saturation 281%