These data describe spending by a major pharmaceutical company for promoting a cholesterol- lowering drug. The data cover 39 consecutive weeks and isolate the area around Boston. The variables in this collection are shares. Marketing research often describes the level of promotion in terms of voice. In place of the level of spending, voice is the share of advertising devoted to a specific product. Voice puts spending in context; $10 million might seem like a lot for advertising unless everyone else is spending $200 million.
The column Market Share is sales of this product divided by total sales for such drugs in the Boston area. The column Detail Voice is the ratio of detailing for this drug to the amount of detailing for all cholesterol-lowering drugs in Boston. Detailing counts the number of promotional visits made by representatives of a pharmaceutical company to doctors’ offices.
Formulate the SRM with Y given by the Market Share and X given by the Detail Voice.
(a) Is there statistically significant linear association between market share and the share of detailing?
(b) An advocate of reducing spending for detailing has argued that this product would have more than 20% of the market even if there were no detailing. Does this model support this claim?
(c) Accounting calculations show that at the current level of effort, the profit earned by gaining 1% more market share is 6 times the cost of acquiring 1% more detail voice. Should the company increase detailing?
(d) This regression uses share for both Y and X. Had the analysis been done in percentages, would any of the previous answers change? If so, how?