Based on the information below and the fact that a typical customer fo

Hi,

First of all, Kudos to axs for posting the right solutions with correct explanations.

Here are our detailed solutions to the three questions:

1.First of all, we need to find out the relevant statement of the Head of Marketing (HOM). To do that we go to Tab 2. According to the Head of Marketing – the target should be to reach maximum number of target customers for a dollar spent on advertising.
Now, who are target customers. To do that, we look at Tab 1. These are customers who earn between $40K and $60K.
Based on the criterion by HOM, we can see that for HOM statement to hold, the number of viewers of “The Beach Show”, who are the target customers, must be less than or equal to such number for “A Tea with Shinie”. (Please note that ad rates are same for both the shows).
Therefore, the maximum of viewers of “The Beach Show” who are target customers will be the same as the number of target customers who view “A Tea with Shinie”.

How do we find the number of target customers who view Shinie? Let us visit Tab 1.
For this, we use the following statement:
In the show “A tea with Shinie”, there is only a miniscule number of viewers (around 5% of the viewers), who earn than $40K annually. Besides, half of these earn more than $60K, thus not our target customers
The show has 1.24 Million viewers. Since 5% of viewers earn more than $40K, the number of people who could be potential customers = 62,000
However, we are also given that half of them earn more than $60K, thus the number of viewers in the salary range $40K to $60K is 62K/2 = 31K.Thus, target customers who view “A Tea with Shinie” = 2.5% of 1.24mn = 31K

Therefore, the correct option is A. (The image on the right side shows a screenshot of a screen of the audio-visual solution on e-GMAT)

2. We need to find out the number of viewers of “Hand in Hand”, whose salaries fall in the range $40K to $60K (criterion for customer target category).
To answer this question we will have to combine the information from Tab 2 with the information in the question. In Tab 2, the head of marketing says that out of 2.4mn views of Hand in Hand, 1.2mn don’t earn more than $20K and not even a single viewer earns more than $50K, which implies, that there are 1.2mn viewers in the $20K to $50K range. Furthermore, the question stem states that the 1.2mn users are uniformly distributed in this range, i.e. there are as many users in $20K to $30 K as there are in $30K to $40K and so forth.

However, our range of interest is only $40K to $50K; one third of the range of salary. Hence, the number of viewers in this range is only one third of 1.2 million = 400K.

Hence, choice A is correct.

3. The question asks us to find out the %age of viewers who fall in the target category for the show “News Roundup” such that the company does not spend on “A tea with Shinie”. And this has to be based on the criertion indicated by the Head of Marketing. Per this criterion, the goal is to maximize the number of viewers per advertising dollar spent. Or in other words minimize the cost to reach a target customer.
Thus, for every advertising dollar spent, the company should reach the maximum number of target customers. Hence for the company to choose “News Roundup” over “A Tea with Shinie”: “News Roundup” cost/target customer should be lower than that of “A tea with Shinie”.

Since, the comparison of number of target customers is for every dollar spent, it also means that if Show A charges 5 times the amount of the amount charged by Show B, then for advertising on Show A, we must reach at least 5 users.
We already know that the # of target users in “A tea with Shinie” is 31K (from question 1)
The cost of advertisement = $9.6K
Hence, the cost per user is $9.6K/31K
Note, that the cost of advertisement for News Round up is $96K, 10 times that of “A tea with Shinie”. Hence, we don’t even have to calculate, we can easily say that the number of viewers for News Round up should be at least 10 times that of “A tea with Shinie” = 310K
To calculate the percentage, lets divide the numbers
310000/24000000 = ~1.3 percent.

Therefore, Option D is the correct choice.

Let me know if anyone has any doubts on this.

Thanks,
Chiranjeev Singh

Hi Olga,

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Thanks
Chiranjeev Singh

Hi Chiranjeev,

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Advanced Thanks!

Olga

Olga Kovshanova, MBA, MA
Hotel Professional Extraordinaire
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