Youre an employee in the market research department of a company that manufactures oral hygiene products. Youre

Question:

You’re an employee in the market research department of a company that manufactures oral hygiene products. You’re given the task of determining weekly sales of the toothpaste Senso White at a specific drugstore chain over the past 3 years. You attempt to estimate the factors influencing weekly market share using the regression in Fig. 10.20. The potential factors include:

• The price of Senso White (in €)

• Senso White advertised with leaflets by the drugstore chain (0 = no; 1 = yes)

• Other toothpaste brands advertised with leaflets by the drugstore chain (0 = no;1 = yes)

• Other toothpaste brands advertised in daily newspapers by the drugstore chain (0 = no; 1 = yes)

• Senso White advertised in daily newspapers by the drugstore chain (0 = no;1 = yes)

• Senso White advertised with leaflets that contain images by the drugstore chain (0 = no; 1 = yes)

(a) Derive the regression equation in algebraic form from Fig. 10.20.

(b) What sales can be expected with a toothpaste price of €2.50 when the drugstore chain uses no advertising for Senso White and uses leaflets for a competing toothpaste?

(d) What is the beta needed for?

(e) Assume you want to improve the model by introducing a price threshold effect to account for sales starting with €2.50. What is the scale of the price threshold effect? Which values should be used to code this variable in the regression?

Figure 10.20 Model 1 Model 1 R 883 Regression. Residual Total Model R Square .780 Sum of Squares 18627504.189 Model