Assignment 19

The Marketing Plan

Data Management & Analysis
by
Jatin Yadav
M23MSA044

Q1. Is there a relationship between advertising sales and budget?

Ans.
Regression Statistics
Multiple R 0.97361081
R Square 0.94791802
Adjusted R
Square 0.94693534
Standard Error 1.12933782
Observations 163

Standard
Coefficients Error t Stat P-value
3.8894095 16.079655
Intercept 7 0.24188388 8 3.6923E-35
0.0391685 30.962809
TV 7 0.00126502 2 3.1826E-69
0.2153968 31.672693
radio 5 0.00680071 7 1.4273E-70
-
0.7703810
newspaper -0.0035461 0.00460304 1 0.44221707

Yes, there is a relationship between advertising sales and budget. The regression analysis
demonstrates a statistically significant relationship between advertising budgets and sales.
Q2. How strong is the relationship?

Ans. From the Regression Analysis on seeing the R-Square value. The relationship is quite
strong. The R-squared value of approximately 0.948 suggests that about 94.8% of the variation
in sales can be explained by the advertising budgets. This is a high R-squared value, indicating a
strong relationship.

Q3. Which media contribute to sales?

Ans. TV: The coefficient for the TV advertising budget is approximately 0.0392. This means that,
all other factors being equal, for every one-unit increase in the TV advertising budget, sales are
estimated to increase by approximately 0.0392 units.
Radio: The coefficient for the radio advertising budget is approximately 0.2154. This indicates
that for every one-unit increase in the radio advertising budget, sales are estimated to increase
by approximately 0.2154 units.
Newspaper: The coefficient for the newspaper advertising budget is approximately -0.0035.
This suggests that, all else being equal, an increase in the newspaper advertising budget is
associated with a very small decrease in sales, approximately -0.0035 units. However, this effect
is not statistically significant, as indicated by the relatively high p-value.
Hence, Both TV and radio advertising budgets contribute significantly to sales. TV has a stronger
positive impact, followed by radio.

Q4. How large is the effect of each medium on sales?

Ans. For TV: For every one-unit increase in the TV advertising budget, sales are estimated to
increase by approximately 0.0392 units.
For radio: For every one-unit increase in the radio advertising budget, sales are estimated to
increase by approximately 0.2154 units.
For newspaper: An increase in the newspaper advertising budget is associated with a very small
and statistically insignificant change in sales (-0.0035 units).

Q5. What is the accuracy of our linear model which can be used to predict future sales?
Ans. The standard error of approximately 1.129 indicates that the model's predictions are
relatively accurate.
Q6. Is the actual relationship linear?
Ans. We will use Residual Plots

Yes, the actual relationship is linear since R square (which is 0.947) is greater than 0.4.
And also the plots are scattered around 0 giving a linear relationship.

Q7. Is there synergy among the advertising media?

Ans.
Sales=a+b*TV+c*Radio+d*Newspaper+e*(TV*Newspaper)+f*(TV*Radio)
+g*(Newspaper*Radio)
Sales = 3.89 + 0.039169*TV + 0.215379*RADIO - 0.00355*NEWSPAPER -
0.0001390*(TV*Newspaper) + 0.008436*(TV*Radio) - 0.0007646*(Radio*Newspaper)
Multiple linear regression since there are more than 1 independent variables.