Case 7 Advertising Experiments at the Ohio Art Company

I Wayan Wahyu Gautama 29115597 Marketing Management Case 7: Advertising Experiments at the Ohio Art Company 1.

Background  Ohio Art Company is the toys company located in Bryan, Ohio.  Get 25% revenue from toys for writing and drawing sales.  Established more than 40 years and sold over 100 million units in dozen of countries.  Custom metal lithography contribute one-third of company's revenue.

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Product Information Product Name

Description

Etch A Sketch

An Etch A Sketch has a thick, flat gray screen in a red plastic frame. There are two knobs on the front of the frame in the lower corners.

Betty Spaghetty

A bendable rubber doll portrayed as a fun-loving teenager or preteen who is stereotypically obsessed with her looks.

Picture

Business Situation  In 1998, sales increasing 27% to $45.9 million as newly introduced product, Betty Spaghetty.  Ohio Art Company lost $1.8 million because the cancellation of $15.2 million toys order by major retailer in 1998.  In 2001, there are shifted production of Etch A Sketch from Ohio to China makes the cost reduce for 20% or 30% and get $3.1 million profit.  Conduct an advertising experiment on Etch A Sketch and Betty Spaghetty.

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Competition Situation Compete with other toys product from mass merchant which is held substantial power in distribution channel, so it needs to lowering the cost to compete effectively.

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Marketing Mix Product

Price

Etch A Sketch Betty Spaghetty

$12.99 $5.99 to $19.99

Place

Promotion

Retailer Mass Merchant

Advertisement through: TV commercial Radio commercial Featured on movies (toy story)

Problems Is advertising become the right decision to increasing the sales of the product based on the experiment?

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Alternative Evaluation for the experiment will give the company the result of advertising effectiveness on building consumer demand.  Advertising experiment for Etch A Sketch  Advertising experiment for Betty Spaghetty

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Alternative Analysis Experiments

Analysis

Etch A Sketch

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Significantly increasing sales during advertisement

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National television advertising campaign Aired at Cincinnati only 27 November – 16 December 2006 Targeting adult Cost $75,000

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Television and radio commercial Aired at California and Arizona Targeting girls (age 2 to 11) 17 Juni – 14 Juli 2007 Cost $31,500

Reach 56% gross margin

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Betty Spaghetty

Result

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Solution Boost the advertising of product line is effective on increasing the product sales of Ohio Art Company in certain condition or applying the right promotion strategy to increasing the sales. To determine if the advertising budget justified with the advertising cost, company need more information or data to provide the accurate result for the experiment.