A marketing manager has developed a regression model to predict quarterly sales of his company’s down jackets based on price and amount spent on advertising. An intern suggests that he include an indicator (dummy) variable for the Fall quarter.
a) How would you code such a variable? (What values would it have for each quarter?)
b) Why does the intern’s suggestion make sense?
c) Do you think a regression with the indicator variable for Fall would model down jacket sales better than one without that predictor?