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# Multi-Source Reasoning Question – ADVERTISING CHANNELS

Author Message
e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2231

Kudos [?]: 8807 [0], given: 328

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11 Dec 2012, 10:40
Expert's post
3
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Hi folks,

Try out this new Multi-Source Reasoning question. Please feel free to put your analysis and comments as well. Looking forward to your responses.

TAB 1 - PROPOSAL

Based on the information below and the fact that a typical customer for our product would have an annual salary in the range \$40K - \$60K, we propose that our ad budget be equally divided between “News Roundup” and “The Beach Show”. The other two shows have been rejected on the following grounds:
- For 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 are not our target customers.
- For the show “Hand in Hand”, the average salary of viewers is below the minimum salary of our target customer.

TAB 2 – HEAD OF MARKETING

I have gone through the proposal prepared by the ad department. I have a few observations:
- Our target should be to reach maximum number of target customers per dollar spent on advertising. If, in the process, we also get to reach other people, it is better. Thus, I don’t find any reason for selecting “The Beach Show” over “A Tea with Shinie”.
- Similarly, I don’t agree with the reason for rejection of “Hand in Hand”. We know that of the 2.4M viewers, who watch the show, 1.2M don’t earn more than \$20K and not even a single viewer earns more than \$50K. Therefore, I think a significant number of people are in our customer target range.

Based on these, I would like the ad department to reconsider their proposal.

QUESTIONS

Based on the information presented, answer the following questions:

1. What is the maximum number of viewers (approx..) that must watch the show “The Beach Show”, who fall in the customer target category, such that the statement of the Head of Marketing holds true?
A. 31K
B. 24K
C.46K
D. 48K
E. The statement of the Head of Marketing always holds true

2. Assuming that the viewers who earn between \$20K and \$50K are uniformly distributed across this range, what is the number of viewers of “Hand in Hand” show who fall in the target customer category of the company?
A. 400K
B. 1,200K
C. 300K
D. Zero
E. Can’t say on the basis of information given

3. As per argument of the head of marketing, the company has a criterion for deciding on the TV programs to advertise to. Assuming that the company had to decide on one of the shows, based on this criterion, what is the minimum percentage of viewers of the show, “News Roundup”, which should fall within the target customer criteria, so that the company chooses it over “A Tea with Shinie”?
A. 0.45%
B. 0.5%
C. 1.0%
D. 1.3%
E. 2%

- Chiranjeev Singh
_________________

| '4 out of Top 5' Instructors on gmatclub | 70 point improvement guarantee | www.e-gmat.com

Kudos [?]: 8807 [0], given: 328

Intern
Joined: 28 Jan 2011
Posts: 7

Kudos [?]: 11 [4], given: 0

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12 Dec 2012, 18:14
4
KUDOS
1. What is the maximum number of viewers (approx.) that must watch the show “The Beach Show”, who fall in the customer target category, such that the statement of the Head of Marketing holds true?

Marketing says "target should be to reach maximum number of target customers per dollar spent on advertising", and further says that there's no reason to prefer “The Beach Show” over “A Tea with Shinie”.
This means that the customer/\$ for “The Beach Show” must be no more than that for “A Tea with Shinie” (otherwise the former would be preferred).
Further, since the advertising \$ are the same for “A Tea with Shinie” and “The Beach Show”, we can ignore the \$; we must show that the number of viewers for “The Beach Show” is not greater than that for “A Tea with Shinie”.
For the show “A Tea with Shinie”, 5% of the viewers earn more than \$40K annually, but half of these earn more than \$60K. Our target group is those earning between \$40k and \$60k.
Therefore, 2.5% of viewers earn more than \$40k but less than \$60k (the target group). 2.5% of 1.24M = 31000 viewers.
Therefore, the number of viewers for “The Beach Show” should not exceed 31000, which is answer (A).

2. Assuming that the viewers who earn between \$20K and \$50K are uniformly distributed across this range, what is the number of viewers of “Hand in Hand” show who fall in the target customer category of the company?

For “Hand in Hand”, 1/2 of the viewers earn less than \$20k, so 1/2 earn more than \$40k; but all earn less than \$50k. Therefore there are 1/2 * 2.4M = 1.2M who earn between \$20k and \$50k.
If the incomes are distributed uniformly, then those who earn between \$40k and \$50k (a range of \$10k), who are in the target audience, are 1/3 of those earning between \$20k and \$50k (a range of \$30k).
1/3 of 1.2M = 400k, which is answer (A).

3. As per argument of the head of marketing, the company has a criterion for deciding on the TV programs to advertise to. Assuming that the company had to decide on one of the shows, based on this criterion, what is the minimum percentage of viewers of the show, “News Roundup”, which should fall within the target customer criteria, so that the company chooses it over “A Tea with Shinie”?

As we already know from #1 above, Marketing says "target should be to reach maximum number of target customers per dollar spent on advertising". We also already know that there are 31000 viewers of “A Tea with Shinie” who are in the target group. For this show, the customer/\$ = 31000 / \$9600 = 3.23. (OK, there are some decimal places I'm not showing).
Therefore we want a higher number than 3.23 for “News Roundup”.
That is, customer / \$ > 3.23. We already know the \$ figure, \$96000. Therefore viewing customers = 96000 * 3.23 = 310000.
310000 out of a total of 24M = 1.29%. Therefore the answer is (D), 1.3%.

Kudos [?]: 11 [4], given: 0

Intern
Status: Destination Sales and Guest Relations Manager for Russia, CIS & Eastern Europe
Affiliations: Starwood Hotels: The Grand Mauritian & Le Meridien
Joined: 09 Nov 2012
Posts: 9

Kudos [?]: 5 [0], given: 3

Location: Mauritius
Olga: Kovshanova, MBA, MA
Concentration: General Management, Marketing
GMAT Date: 02-20-2013
GPA: 3.9
WE: Sales (Hospitality and Tourism)

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13 Dec 2012, 10:56
Thanks Chiranjeev!

Please where can more Multi-Source Reasoning Questions be found?

Hopeful with explanations?

Olga
_________________

Olga Kovshanova, MBA, MA
Hotel Professional Extraordinaire
Destination Sales and Guest Relations Manager for Russia, CIS & Eastern Europe
Starwood Hotels: The Grand Mauritian & Le Meridien
M: +230-717-5790 evenings

Kudos [?]: 5 [0], given: 3

e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2231

Kudos [?]: 8807 [2], given: 328

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15 Dec 2012, 09:36
2
KUDOS
Expert's post
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)
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
_________________

| '4 out of Top 5' Instructors on gmatclub | 70 point improvement guarantee | www.e-gmat.com

Kudos [?]: 8807 [2], given: 328

e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2231

Kudos [?]: 8807 [0], given: 328

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15 Dec 2012, 09:56
OlgaKovshanovaMBAMA wrote:
Thanks Chiranjeev!

Please where can more Multi-Source Reasoning Questions be found?

Hopeful with explanations?

Olga

Hi Olga,

e-GMAT has recently launched a full-fledged course on IR with 15+ hours of interactive audio visual content on IR. It encompasses 35 concepts, 120+ original questions, and 2 full length Mock Tests. Once you register for the course, you would find a number of original MSR questions there. Click here to know about the various courses available on e-GMAT.

Feel free to ask in case of any queries.

Thanks
Chiranjeev Singh
_________________

| '4 out of Top 5' Instructors on gmatclub | 70 point improvement guarantee | www.e-gmat.com

Kudos [?]: 8807 [0], given: 328

Intern
Status: Destination Sales and Guest Relations Manager for Russia, CIS & Eastern Europe
Affiliations: Starwood Hotels: The Grand Mauritian & Le Meridien
Joined: 09 Nov 2012
Posts: 9

Kudos [?]: 5 [0], given: 3

Location: Mauritius
Olga: Kovshanova, MBA, MA
Concentration: General Management, Marketing
GMAT Date: 02-20-2013
GPA: 3.9
WE: Sales (Hospitality and Tourism)

### Show Tags

15 Dec 2012, 21:29
Hi Chiranjeev,

I have purchased the full e-GMAT package promo "Verbal Online + Grockit" which includes all:
1) e-GMAT SC course (\$69)
2) e-GMAT Critical Reasoning course (\$69)
3) e-GMAT Reading Comprehension course (\$89)
4) e-GMAT Integrated Reasoning course (\$79)
5) e-GMAT OG SC solutions (\$39)
6) 12 month Grockit membership (\$350 value)

Please point me to the Multi-Source Reasoning Questions?

Olga

Olga Kovshanova, MBA, MA
Hotel Professional Extraordinaire
Destination Sales and Guest Relations Manager for Russia, CIS & Eastern Europe
Starwood Hotels: The Grand Mauritian & Le Meridien
M: +230-717-5790 evenings
_________________

Olga Kovshanova, MBA, MA
Hotel Professional Extraordinaire
Destination Sales and Guest Relations Manager for Russia, CIS & Eastern Europe
Starwood Hotels: The Grand Mauritian & Le Meridien
M: +230-717-5790 evenings

Kudos [?]: 5 [0], given: 3

Re: Multi-Source Reasoning Question – ADVERTISING CHANNELS   [#permalink] 15 Dec 2012, 21:29
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