Natalie Kremer

MKTG 470-Sec 02
Professor Park
04/21/22
MKTG 470: Regression Analysis Assignment
Problem Statement
By us- ing ‘re-
gres- sion
analy- sis, we
want to pre-
dict sales
based on the
money spent
on dif- ferent
plat- forms
for mar-
keting (TV,
Radio, News-
paper).

Use the ad-

vertis- ing
dataset
and analy-
ses the relationship between ‘TV’, ‘Radio’, and ‘Newspaper’ advertising and ‘sales’ using a linear re-
gression model.

Question 1. Create a scatter plot that shows the relationship between TV ads and Sales.

Question2. Do you see a relational pattern between TV ads and Sales in the scatter plot?
Since the data is showing an uphill pattern as we move from left to right, this indicates a positive re-
lationship between the X (TV ads) and Y-axis (Sales). As the X-values increase (move to the right), the
Y-values tend to increase as well (move up). Therefore, as the number of TV ads goes up, the sales
are also increasing.
Question 3. Calculate correlation coefficients between 4 variables
TV Radio Newspaper Sales

TV 1

Radio 0.05480866 1

Newspaper 0.05664787 0.35410375 1

Sales 0.90120791 0.3496311 0.15796003 1

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 Question 4. Run this linear regression.
Sales = b0 + b1×TV + b2×Radio + b3×Newspaper
Sales are the dependent variable. TV, Radio, and Newspaper ads are independent variables.
Coefficients Standard Error t Stat P-value
Intercept 4.625124079 0.307501165 15.040997 1.6827E-34
TV 0.05444578 0.001375188 39.5915245 1.8929E-95
Radio 0.107001228 0.008489563 12.6038566 4.6021E-27
Newspaper 0.000335658 0.005788056 0.05799148 0.9538145

Question 5. Interpret four coefficients in this result (i.e., b0, b1, b2, b3).
b0 is the intercept. b1, b2, and b3 are coefficients of TV, Radio, and Newspaper respectively.
bo= intercept/sales= 4.63 Expected sales are 4.63 if money spent on advertising is zero.
b1= TV= 0.05
TV advertising will add the most in additional sales; predicted to increase by 5% when the
b2= Radio= 0.11
Radio advertising will add an additional 0.11 increase in sales.
b3= Newspaper= 0.00
Newspaper advertising will add the least in additional sales with only a 0.0003 increase.
The sign of a regression coefficient tells you whether there is a positive or a negative correlation be-
tween each independent variable and the dependent variable(s). A positive coefficient indicates that
as the value of the independent variable increases, the mean of the dependent variables also tends
to increase. The coefficient value signifies how much of the mean of the dependent variable(s)
changes given a one-unit shift in the independent variable while holding all other variables in the
model constant. This property of holding the other variables constant is crucial because it allows you
to assess the effect of each variable in isolation from the others.

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