FERNANDEZ, ARIEL RAFAEL M.

BSIE 4-4

ACTIVITY 1: PROBLEM ANALYSIS

Scenario:
In 1991, 60% of all commercial radio stations in the United States lost money. For a
radio station to remain solvent, it must have a significant revenue stream from advertisers.
Advertisers, in turn, target the markets they consider desirable (i.e., based on listener’s income,
spending, and interests), and for the past several years, this target has been the age group from
25 to 54. Along with the revenue loss, the number of radio stations playing the Top 40 songs
(i.e., the 40 most popular songs of the week) has decreased by a factor of 2 in the past three
years, as did the audience for the Top 40 songs. Many stations tried playing a blend of current
hits and hit from 10 to 20 years ago; however, this blend irritated the younger listeners and did
not seem to solve the economic problem. Apply the problem analysis to this situation. (Source:
Adapted from The International Herald Tribune, p. 7, March 24, 1993.)

Is Is Not Distinction

What Loss of revenue Growth of revenue Different revenue

streams

When 1991 Before or after 1991 Different year

Where Commercial radio Commercial radio Different

stations in the United stations in other country country/location
States

60% of all commercial 40% of all commercial Different proportion of

radio stations radio stations radio stations that faced
losses and those that
did not

Extent

The number of radio The number of radio

stations playing Top 40 stations playing Top 40
songs and their songs and their Different degrees of
audience in the past audience in the past decline
three years has been three years has
halved. decreased less than
half of its current status
Problem Statement:

In 1991, There was a loss of revenue in the United States Radio Industry which led to a
financial loss of 60% of all commercial radio stations and for those that are playing the Top 40
songs to decrease by half in the past three years.