One Of The Characteristics Of The Modern Business Environment Is The Variety Explosion For Instance Colgate Offers M 1 (79.66 KiB) Viewed 37 times
One Of The Characteristics Of The Modern Business Environment Is The Variety Explosion For Instance Colgate Offers M 2 (63.68 KiB) Viewed 37 times
One of the characteristics of the modern business environment is the "variety explosion". For instance, Colgate offers more than 30 types of toothpaste in the US currently, plus more in other parts of the world and several more that were offered in the past but then discontinued. When a new variety is introduced, what are the factors that impact its success? To understand this, an unnamed toothpaste company collected data on 29 types of toothpaste it had launched over the past 15 years. The data is available in the attached Excel file. Use these data to answer questions (a) to (f) below. The variables are defined as: Sales: The number of standard-size toothpaste tubes of that variety sold in the first 2 years of the product's existence, in thousands. Ads: The total spending on advertising specifically that variety of toothpaste, over the same 2- year horizon, in thousands of dollars. FocusGroup: A dummy variable indicating whether or not a focus group was used in the market research conducted prior to the variety's launch. A 1 indicates a focus group consisting of potential customers was used. A 0 indicates no focus group was used; the entire decision involved only Colgate executives. Unemp: The average US unemployment rate (in percentage points) during the 2-year horizon. This is a proxy for overall economic conditions in the US during the 2-year horizon. Two decimal places is sufficient for reporting all values and conducting all numerical calculations. a) Estimate Sales as a function of Ads and FocusGroup only. Call this "Model2", to indicate it is a 2-variable model. In the table below, report the estimated coefficients and the indicators of model quality. Estimated Coefficient Intercept Ads FocusGroup Model output Value Adjusted R2 Std. Error of Estimates p-value of F test
E2 1 Sales 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 A 2382 1093 1474 782 1356 1055 834 1007 280 1003 1878 817 1901 781 1456 1045 1744 1528 7 1754 1111 768 134 204 527 869 1816 1852 2234 Ads B 761 332 300 440 656 251 776 729 111 525 781 470 641 111 675 514 696 458 393 866 504 335 153 203 236 246 768 617 786 Jx C FocusGroup 0 0 0 0 0 0 1 1 0 1 0 1 0 1 1 0 0 0 1 0 0 0 1 1 0 0 0 0 1 Unemp 5 5.5 4.3 6.9 8.1 in in 00 00 00 00 10 12 8.2 8.6 7.6 5.3 8.3 6.6 8 5.8 5 5.3 7.6. 8.9 5.5 5.8 7.7 7.6 7.7 bo in 8 5.4 6.4 8.1 4.9 7.2 4.1 E F
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