3.1 Questions to Answer

Recall the Advertising data from Chapter 2. Here are a few important questions that we might seek to address:

1. Is there a relationship between advertising budget and sales?
2. How strong is the relationship between advertising budget and sales? Does knowledge of the advertising budget provide a lot of information about product sales?
3. Which media are associated with sales?
4. How large is the association between each medium and sales? For every dollar spent on advertising in a particular medium, by what amount will sales increase?
5. How accurately can we predict future sales?
6. Is the relationship linear? If there is approximately a straight-line relationship between advertising expenditure in the various media and sales, then linear regression is an appropriate tool. If not, then it may still be possible to transform the predictor or the response so that linear regression can be used.
7. Is there synergy among the advertising media? Or, in stats terms, is there an interaction effect?