A+ Rental Cars corporate office offers each franchise location $20,000 each month to spend on local advertising. Some franchises take advantage of this offer, while others do not. We have gone back...

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Answer To: A+ Rental Cars corporate office offers each franchise location $20,000 each month to spend on local...

Mohd answered on Dec 01 2021
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A+ Rental Cars corporate office offers each franchise location $20,000 each month to spend on local advertising. Some franchises take advantage of this offer, while others do not. We have gone back and forth on whether or not this makes sense. Does it make sense to spend money on local advertising? (You may need to run new regressions or analyze the data provided in assignment 2 in different ways to help you answer this question).
 
In your memo, explain your answer to the question above. If you feel that local advertising makes sense, what can you say in regard to the optimal mix of advertisement types? Are there factors missing that would help you improve your analysis of whether local advertising makes sense? What would be your approach to improve the quality of your analysis?
As we can see from figure 2 (correlation matrix) advertising related variables having non significant correlation with response variables. As shown in figure 3 and 4 advertising related variables except (ADblbd: Ad on billboards) are insignificant contributing towards predicting response variables.
We have a coefficient of determination R2 =0.3775. It means almost 38 percent variability can be explained by our model. Advertising related variables are having higher p-values and insignificant coefficient. which makes them very poor predictors.
Maybe we have missed out on collecting important information about advertising variables. Whether we have carefully examined the consumer behaviour and rental market or not. What matters most? How do consumers behave at different siloes? Collect all data from different siloes and analyse that data. We should change our way of advertising like medium procedure.
we must examine our target group.
We can enhance our model by adding significant variables removing irrelevant insignificant variables. We must avoid spending time on those variables, which do not significantly contribute towards predicting response variables. We first identify critical advertising variables for our analysis. We must remove insignificant variables in order to avoid multicollinearity.
Figure1: Correlation matrix
Figure 3:
Figure 4:

A+ Rental Cars: Description of the variables in the data set

predicator variable
independent variable

PownE
Average daily rate A+ Rental Cars charged for its economy cars in a given
week
PownL
Average daily rate A+ Rental Cars charged for its luxury vehicles in a given
week
Pcomp
Average daily rate of the only competitor across all vehicle categories
Session
Binary variable with 1 indicating weeks when college is in session
Weather
Number of days in a week with severe weather
Unemployment
Number of unemployed workers in the county as of Tuesday each week
FlghtWk
Number of flights (in- and outbound) serving the local airport that week
CancWk
Total number of flights cancelled that week
Holiday
Binary variable with 1 indicating weeks of national holidays (long
weekends)
Wrecks
Number of major accidents that week
Discount
Number of customers in a given week using the 15 percent discount off the
base rate offered through our affiliate partner, a credit card company
Upgrade
Number of customers who received a free upgrade to a luxury vehicle due
to the unavailability of economy vehicles
TotalAd
Amount spent on local advertising each week
AdBlbd
Weekly spending on billboard ads
AdPaper
Weekly spending on ads in local newspapers, including the online version
AdTV
Weekly spending on ads placed with local TV
QE
Number of rental contracts initiated each week in the economy category
Q_length
Number of paid days of rentals, grouped by the agreement starting date
Age<25
Number of rental agreements in a given week for which the person listed as
the primary driver on the rental agreement was less than 25 years old
Age25_50
Number of rental agreements for which the person listed as the primary
driver on the rental agreement was between 25 and 50 years of age
Age51+
Number of rental agreements in a given...
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