1. A major supermarket chain wants to determine the effect of promotion on relative competitiveness. Data were obtained from 15 states on the promotional expenses relative to a major competitor (competitor expenses = 100) and on sales relative to this competitor

(competitor sales = 100).

Store No.
Relative Promotional Expense Relative Sales 1 95 98 2 92 94 3 103 110 4 115 125 5 77 82 6 79 84 7 105 112 8 94 99 9 85 93 10 101 107 11 106 114 12 120 132 13 118 129 14 75 79 15 99 105 You are assigned the task of telling the manager whether there is any relationship between relative promotional expense and relative sales.

a. Plot the relative sales (y-axis) against the relative promotional expense (x-axis), and interpret this diagram.

b. Which measure would you use to determine whether there is a relationship between the two variables?
Explain.

c. Run a bivariate regression analysis of relative sales on relative promotional expense.

d. Interpret the regression coefficients.

e. Is the regression relationship significant?

f. If the company matched the competitor in terms of promotional expense (if the relative promotional expense was 100), what would the company’s relative sales be?
g. Interpret the resulting r2.