Fueling Sales at Euro-pet Case Solution
Euro-pet S.A.is one of the leading and valuable multinational companies, which operates gas stations in many European countries. In European countries, the propensity was growing for the supermarkets to attach gas station to their business operations,which in turn posits greater risk to Euro-pet. Consequently, Euro-pet started to brand as well as develop its convenience store co-situated with gas stations. Although, Euro-pet was spending an enormous amount of money on convenience store’s advertisement-sin comparison to the market competitors. Thus, the company’s management is concerned about the fact that the increase in sales related to the advertising efforts justified the spending on advertisement by evaluating and assessing the market data from Marseille, France – metropolitan area.
With core consideration over obtaining the initial overview of the data; the maximum, minimum and average values of the variables, such as: TV, radio, sales and fuel volume are calculated by using the formula in excel. The minimum, maximum and average values of sales are€18969, €28451 and €23063.73, respectively. The minimum, maximum and average values of fuel volume are€56259, €68549 and €62852.76, respectively. The minimum, maximum and average values of TV is €0, €225 and €41.27, respectively; whereas the minimum, maximum and average values of radio are€0, €260 and €80.47, respectively.
The regression analysis shows that the p-value is below than the significance level of 0.05, hence providing a strong statistical evidence of rejecting the null hypothesis which states that there is no significant relationship between sales and fuel volume. Additionally, the t-test is below than 2, which provides a strong evidence that there is a significant relationship between the fuel volume and sales.
The sales at the minimum, maximum and average values of fuel volume levels are calculated by using the formula provided below:
Sales at different fuel volume = (mean value of fuel volume * coefficient)+ intercept
The sales at minimum, maximum and average fuel volume are€18809, €26739 and €23063.73, respectively.
The receptive 95 percent confidence interval for the three estimates are calculated with the use of the formula provided below:
95% Confidence interval = mean (X) +/- t s/SQRn
For 95 percent confidence interval; the z-value is 1.96. The confidence interval of sales at the minimum, maximum and average fuel volume level are63306 and -62398, respectively. The point estimate for the true mean fuel volume level in the sample is 63306, and we are 95 percent confident that that the true mean is between 63306 and -62398.
There is a strong relationship between fuel volume and sales as the sales volume is influencing the c-store sales. Additionally, the c-store sales would have an increase of €0.65 for each additional fuel liter sold. Furthermore, a fuel volume explicates the 37 percent variation in the sales at c-store, but it is not enough to claim the casual relationship between the variables.
The regression analysis is performed to assess the relationship between the sales and two advertising variables, such as: radio and TV. The regression analysis shows that the p-value is below than the significance level of 0.05, which provides a strong statistical evidence of rejecting the null hypothesis that states that there is no relationship between advertising variables and sales.Whereas,the t-value of TV is greater than 2, which means that there is a significant effect of TV on sales. On the other hand, the t-value of radio is less than 2, which means that there is an insignificant effect of radio over sales.
The estimate for c-store sales for particular week with 40 TV GRPs is €22630, whereas the estimate for c-store sales for particular week with 80 Radio GRPs is €22558.
The 95 percent confidence interval of 40 TV GRPs and 80 Radio GRPs are 20.50 and -6.65 and 29.42 and -9.54. The point estimate for the true mean 40 TV GRPs and 80 Radio GRPs in the sample are 20.50 and 29.42 respectively,and we are 95 percent confident that that the true mean of 40 TV GRPs is between 20.50 and -6.65, and of 80 Radio GRPs is between 29.42 and -9.54.
The net impact of c-store on the profit, is calculated with the use of the following formula:
((B*mf)* % ad profit margin)*total stores – amount spent in ad
The net impact of TV and radio on the sales are€797 and €442………………….
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