Reference no: EM133356827

The company's in-store demo was launched in November of 2016. Due to limited marketing resources, management was pressured to cut any marketing expense that did not directly contribute to GoodMorning's results. By July of 2017, several concerns were raised within the company about the effectiveness of the in-store demo program. Some questioned whether the demos boosted sales at all, while others were concerned that any boost was only temporary and that sales would revert to normal levels shortly afterward. Some executives questioned whether the increase in sales volume could justify the associated costs.

At the senior manager meeting, GoodMorning management asked Jim Martin, GoodMorning's Marketing manager to justify the demo and endcap activities. Jim returned to his computer after the meeting and poured over the sales and promotion spreadsheet from the last few months. He recognized that statistics could be used to help his case. He decided to apply regression analysis to the sales and promotion data (GoodMorning.xlsx 

Download GoodMorning.xlsx

) to enable a decision on whether or not the company should continue its promotional programs.

Model 1:

Build a regression model with all variables in the data to explain the relationship between sales and promotional efforts. Let us refer to this model as Model A. Create the residual plot and the scatter plot of fit vs. UnitsSold.

1. Include the StatTools regression output as Exhibit 1. Copy and paste the regression output, and the plots. Write out the estimated regression equation (copy and paste the equation from StatTools report).
2. Discuss the performance and validity of the model, and how to improve and refine the model.

Model 2:

Build the best valid regression model to explain the relationship between sales and promotional efforts. You may use any transformation of your variables. Let us refer to this model as Model 2. Create the residual plot and the scatter plot of fit vs. UnitsSold.

1.  Include the StatTools regression output as Exhibit 2. Copy and paste the regression output, and the plots. Write out the estimated regression equation (copy and paste the equation from StatTools report).
2. Discuss the validity of the model.

Based on your model answer the following questions. Reference any tables/figures that you need to make your point:

1.  Does the in-store demo program boost the sales? If so, for how long does the sales lift last? Explain your answer.
2.  Does the placement of the product within the store (endcap promotion) affect the sales? Explain your answer.
3.  What other factors affect the sales of GoodMorning product? Explain your answer.
4.  Based on the regression output, what are your recommendations to GoodMorning management?