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The effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

Sales on ads regression results in a value of 350. This figure will be used by the company to project how the number of weekly television advertisements will change when it is increased to 20.

What is the anticipated change in Sales when Ads increase from 5 to 20 based on these results?

When Ads is 5, Salesi equals +350(5)+Ui S1, and Salesi equals +1750+Ui

Sales are equal to +350 (20) +UI S2 when Ads is 20.

Change anticipated = S2 – S1

= (α+ 7000 +Ui) – (α+ 1750 +Ui)

= 5250

Why should we not be confident in our Part A result?

The efficacy of the message is diminished when consumers see television advertising frequently. Time restricts the message’s visibility as well, particularly for viewers of linear television. However, it could be pricey to purchase a 30-second commercial for local television that airs during local programs or a designated local spot during daytime or prime viewing hours. Companies must first pay for the content’s production in order for television advertising to be successful. If no one in-house has the necessary skills, one might be obliged to engage a scriptwriter in order to develop a TV commercial. A spokesman and on-location performers might be required. To combine the many takes that are filmed, film editors are required. If so, one might need to collaborate with an advertising firm to pull together this talent before beginning.

Even if your local TV station has internal production resources, getting started could be very expensive.

What can you do to find a more reliable estimate of the impact of increasing Advertising from 5 to 20?

Word-of-mouth advertising can be successful, based on what I studied in a marketing management class. Word-of-mouth promotion has the potential to be successful. It possesses the desired traits of excellent credibility, high levels of audience focus, and warm audience reception. It includes a series of questions and answers about the product’s psychological sales tactics as well as its memorability, effectiveness, and frequency. At little to no cost to the company, word-of-mouth marketing disseminates product information to a large number of additional potential customers (and may even include promotional trial demonstrations and free samples). A small firm should develop an advertising strategy that encourages word-of-mouth promotion whenever it is practical.

Your best marketing tool is happy customers.

Effective advertising helps people remember your name, according to


Advertising & PR (2021). Effective Advertising Makes People Remember Your Name. Retrieved on 18 April 2021 from pr/effective-advertising-makes-people-remember-your-name

Kaj P.N. Morel and Ad Th.H. Pruyn (2003), “Consumer Skepticism Toward New Products”, in E– European Advances in Consumer Research Volume 6, eds. Darach Turley and Stephen Brown, Provo, UT: Association for Consumer Research, Pages: 351-358.


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Your firm is attempting to learn the effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

The effectiveness of a newly developed television ad on its sales.

To do this, it has randomly run the ad between 0 and 5 times during one week across a large number of television markets in the United States. It then recorded product sales for the following month for each market. To conduct the analysis, analysts at the firm have assumed the following data-generating process:


Regressing Sales on Ads yields βˆ=350. The firm would like to use this number to project the change in Sales when increasing weekly television ads to 20.

  1. According to these results, what is the expected change in Sales when Ads increase from 5 to 20?
  2. Why should we be sceptical of our result from Part A?
  3. What can you do to find an estimate of the effect of increasing Ads from 5 to 20 that is more credible?

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