Impact of advertising on market share. The audience for a product’s advertising can be divided into four segments according to the degree of exposure received as a result of the advertising. These segments are groups of consumers who receive very high (VH), high (H), medium (M), or low (L) exposure to the advertising. A company is interested in exploring whether its advertising effort affects its product’s market share. Accordingly, the company identifies 24 sample groups of consumers who have been exposed to its advertising, six groups at each exposure level. Then, the company determines its product’s market share within each group.

a. Write a regression model that expresses the company’s market share as a function of advertising exposure level. Define all terms in your model and list any assumptions you make about them.

b. Did you include interaction terms in your model? Why or why not?

c. The data in the table were obtained by the company. Fit the model in part a to the data.

d. Is there evidence to suggest that the firm’s expected market share differs for different levels of advertising exposure? Test using a = .05.