Case Number: 5-307-505, Year Published: 2007
HBS Number: KEL368
Decision Making, Economics, Regression Analysis, Multiple Regression, Advertising Spending
EuroPet S.A. was a multinational company operating gas stations in many European countries. There was a growing propensity for supermarkets to attach gas stations to their retail operations, which was developing into a major threat to EuroPet. As a result, in the mid-1990s, the company began to develop and brand its own convenience stores co-located with its gas stations. However, the company was spending much more on advertising the convenience stores than its competitors did. Management now had to decide if the increase in sales attributed to advertising efforts justified the advertising spend by analyzing the market data from one large metropolitan area: Marseille, France.
This case shows students how to apply linear regression analysis to study a marketing problem. Students must build a series of linear regression models, reinterpreting their solutions repeatedly depending on the size of the model. For students to develop an overall conclusion, they must critically evaluate the different technical analyses they have performed. This case will develop students’ understanding of the advertising spending problem and the meaning of their various regression models.
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