PromoLab Ltd . is a small marketing
analytics consultancy that works with consumer brands in Aotearoa New Zealand.
One of their clients is Frizzle Beverages , a fast-growing sparkling
water company. Frizzle ran a month-long experiment to test whether
advertising had a greater effect on sales during the holiday
season compared to regular weeks. The company tracked weekly advertising
budgets (in $1,000s) and corresponding sales revenue (in $1,000s) over 50
different store-weeks. They flagged each week as either a holiday (1)
or non-holiday (0) period. To estimate the impact, PromoLab estimated the following
regression model : Sales = β₀ + β₁ × AdBudget + β₂ × Holiday + β₃ ×
(AdBudget × Holiday) + ε

where: Sales = total weekly sales revenue (in
$1,000s); AdBudget = weekly advertising budget (in
$1,000s); Holiday = dummy variable: 1 if holiday week, 0 otherwise
and AdBudget × Holiday = interaction variables of advertising budget
and holiday dummy.

The regression result is presented in the accompany Excel output below. Which of the following best describes how the model allows different advertising effectiveness across time periods?

Question

PromoLab  Ltd .  is a small marketing
analytics consultancy that works with consumer brands in Aotearoa New Zealand.
One of their clients is  Frizzle Beverages , a fast-growing sparkling
water company.  Frizzle ran a month-long  experiment to test whether
advertising had a greater effect on sales during the holiday
season compared to regular weeks. The company tracked weekly advertising
budgets (in $1,000s) and corresponding sales revenue (in $1,000s) over 50
different store-weeks. They flagged each week as either a holiday (1)
or non-holiday (0) period.  To estimate the impact, PromoLab estimated the following
regression model :   Sales = β₀ + β₁ × AdBudget + β₂ × Holiday + β₃ ×
(AdBudget × Holiday) + ε

where: Sales = total weekly sales revenue (in
$1,000s); AdBudget  = weekly advertising budget (in
$1,000s); Holiday = dummy variable: 1 if holiday week, 0 otherwise
and AdBudget × Holiday = interaction variables of advertising budget
and holiday dummy.

The regression result is presented in the accompany Excel output below. Which of the following best describes how the model allows  different advertising effectiveness  across time periods?

Answer

By including both a dummy for  Holiday  and an the  AdBudget

Answer

By estimating two separate regressions for each group

Answer

By interacting  AdBudget  with  Holiday , allowing the slope to differ for holidays

Answer

By adding a constant to holiday weeks only

Crowdly

PromoLab Ltd . is a small marketing analytics consultancy that works with co...

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