Mark Price, the new productions manager for Speakers and Company, needs to fi nd out which variable most affects the demand for their line of stereo speakers. He is uncertain whether the unit price of the product or the effects of increased marketing are the main drivers in sales and wants to use regression analysis to fi gure out which factor drives more demand for their particular market. Pertinent information was collected by an extensive marketing project that lasted over the past 10 years and was reduced to the data that follow:

YEAR SALES/UNIT

(THOUSANDS) PRICE/UNIT ADVERTISING

($000)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 400 700 900 1,300 1,150 1,200 900 1,100 980 1,234 925 800 280 215 211 210 215 200 225 207 220 211 227 245 600 835 1,100 1,400 1,200 1,300 900 1,100 700 900 700 690

a. Perform a regression analysis based on these data using Excel. Answer the following questions based on your results.

b. Which variable, price or advertising, has a larger effect on sales and how do you know?

c. Predict average yearly speaker sales for Speakers and Company based on the regression results if the price was $300 per unit and the amount spent on advertising (in thousands)

was $900.