ABC Sports is a chain of health clubs operating in State XYZ at five different regions, Region 1, Region 2, Region 3, Region 4 and Region 5. The top management

ABC Sports is a chain of health clubs operating in State XYZ at five different regions, Region 1, Region 2, Region 3, Region 4 and Region 5. The top management of the company is interested to evaluate the impacts of various factors on their marketing strategy; in particular, this strategy consists of changing the terms of their offer to consumers, every month. These offer terms include several variables: current price, amount of time free on top of one year’s membership, and guaranteed renewal price. The firm would also sometimes offer a referral programme, which would reward new members for bringing in other new members within their first month of membership. In some months the firm would change the offer twice, rather than once; they observed that this seemed to bring in more new members because of the ‘deadline effect’. Whenever customers made membership enquiries, they were told that the existing offer would be ending soon, and that the new offer would in some way be less favourable; either the price would go up, the amount of time free would be less, or the renewal price would go up. By using many variables in the offer terms the firm was continuously able to have some ‘special’ on offer, either a low price, more time free or a low renewal price and to rotate these terms. As the deadline for the end of any offer drew near, the number of buyers increased. Thus, it seemed that having two ‘close-outs in some months was a desirable strategy. The top management of the company has hired you as the chief economist of ABC Sports health club. You are required to analyse the marketing strategies of the company and suggest few recommendations to the top management. Data on sales, price, amount of time free, renewal price, number of offers changes and incomes are obtained from the marketing’s department and the statistic’s department. Table 1 shows sales for the five different ABC Sports health clubs in the years 2019 and 2020. In Table 2, the values of different variables are shown for the time series data; the values are the same for all health clubs in five regions. Table 1: Sales at ABC Sports Health Clubs (2019 – 2020) Sales
Region 1
Region 2
Region 3
Region 4
Region 5
Jan 2019
487
365
348
235
311
Feb
419
289
297
229
246
Mac
480
292
307
247
285
April
409
336
375
229
275
May
332
350
291
240
212
June
31
283
284
234
228
July
291
268
346
300
267
Aug
280
313
334
219
228
Sep
389
329
389
208
221
Oct
363
280
285
212
136
Nov
358
278
310
210
205
Dec 2019
408
271
295
214
187
Jan 2020
498
302
439
204
241
Feb
392
201
277
204
233
Mac
155
203
331
321
255
April
340
270
331
289
225
May
350
282
360
264
268
June
325
210
213
233
183
July
388
272
219
178
161
Aug
418
273
215
201
170
Sep
386
220
221
171
219
Oct
358
286
239
161
165
Nov
501
339
237
171
176
Dec 2020
447
336
274
202
201 Table 2: Factors Affecting Sales at ABC Sports Health Clubs (2019 – 2020) Sales
Price ($)
Time Free
Renewal
Number of Offers
Income
Price
Changes
Jan 2019
380
3.6
168
2558
Feb
392
9.6
168
1
2583
Mac
371
2.4
168
2602
April
374
3.6
168
2640
May
375
8.4
168
2628
June
364
3.6
168
2649
July
329
3.6
204
2654
Aug
31
3.6
213
2653
Sep
353
3.6
221
2
2652
Oct
386
8.4
180
2652
Nov
386
5.6
180
1
2655
Dec 2019
377
3.6
180
1
2661
Jan 2020
414
9.6
147
1
2656
Feb
424
9.6
166
2687
Mac
388
7.3
180
2680
April
361
3.6
166
2
2603
May
369
3.6
171
2
2676
June
387
7.2
180
2662
July
412
7.2
185
2682
Aug
404
7.2
190
2686
Sep
400
7.2
195
1
2683
Oct
433
7.2
150
2731
Nov
399
5.4
151
2710
Dec 2020
381
3.6
149
1
2745 Note: Price= Average price for the month, taking into account different types of membership sold ($) Time free= Average amount of free time offered during the month (in months). Renewal price= Average annual renewal price offered ($). Income= National disposable personal income at an annual rate ($ billion). a)    Develop a regression model that determines the relationship between sales and price for ABC Sports Health Clubs in Region 1 and Region 2. i.             is the estimated regression equation? ii.          Is price a significant determinant of sales? At what level of significance? iii.         Add income. is the regression equation? iv.          is the demand elasticity and income elasticity for June 2020? Interpret your answers. b)    Develop a multiple regression model with all independent variables except (number of offers changes) included in the model for Region 5. i.            Determine the estimated regression line. ii.          Give an economic interpretation of the coefficients. iii.         Test the hypothesis that there is no relationship between the dependent variable and the independent variable. iv.         Determine the coefficient of determination. v.          Perform analysis of variance including an F test of the overall significance vi.         Determine the best estimate of sales of ABC health club in June 2020. v.           Determine the point price elasticity and income elasticity based on vi). Interpret your answers. vii.        Based on the findings, what advice should the Manager propose to the top management? MULTIPLE R XXX
R—SQUARE XXX STELERROR OF EST. XXX ANALYSIS OF VARIANCE
DF Sum Squares Mean gig}; F—Stat [F- significance Regression XX XXX XXX XXX(XXX]
Error XX XXX XXX Total XX XXX Constant XXX XXX XXX X—l XXX XXX XXX X—2 XXX XXX XXX X—3 XXX XXX XXX X—q- XXX XXX XXX X—5 XXX XXX XXX p-Value XXX
XXX
XXX
XXX
XXX
XXX

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