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

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 the diagram.
b Which measure would you use to determine whether there is a relationship between the two variables? Why?
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 expense was 100), what would the company’s relative sales be?
g Interpret the resulting r2.

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City number Relative promotional expense Relative sales 12 95 92 3 103 45 4 115. 125 98 94 110 77 82