FURNITURE: INCREASING BUDGET

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FURNITURE INCREASING BUDGET
Situation A local furniture store consistently
uses television two weeks a month. Over 50 of
the advertising budget goes to the MMC station.
However, the stores advertising budget of
100,000 is only 4 to total sales of 2.5
million. This is about 1/2 half the national
average. According to Schonfeld and Associates
the average is 8.6 advertising to sales. Data
Use the question, In the past 2 years, where did
you make your last purchase of furniture? and
the Media Schedule portionof Q
Software. Approach Since the store has been
consistent with the schedule for a few years, it
is logical to conclude that the reach of the
weekly schedule delivers the market share. If
the store spent more money to improve reach among
furniture shoppers then market share should also
increase.
First, analyze the stores market share. The 4
share equates to 2750 transactions. (NOTE
Target Furniture Decision Maker. Question Last
Purchase Location M/S. Process, then
click-display-format-population-HH population.
Choose HH population in this case since furniture
is a household purchase.) Divide the stores
total sales by of transactions. Average
transaction 909. The storeowner was impressed
on how close this was to his actual
figures. Next, go to media schedule and input
the programs, frequencies, and costs. The
current schedule costs 2100 and reaches 60.5 of
furniture shoppers. As stated earlier, this has
been a consistent schedule for several years. By
implementing this twice a month it delivers a 4
market share. The proposed schedule costs 4200
and reaches 67.8 of furniture shoppers. This is
a 12 increase over the current schedule. Based
on the 12 increase in reach, if all things
remain consistent with the store (i.e., closing
ratio, merchandise mix, market dynamics), then
the proposed schedule will boost market share by
the same ratio to 4.5, transactions to 3080, and
total sales to 2.8 million. The additional
50,000 in advertising is projected to deliver an
additional 300,000 in sales. Now remember, this
is just an estimate, but it puts the Account
Executive in the position to show an advertiser
how additional reach can impact sales.
SOS-5