180 minutes for 6 questions

Nopane was a mature proprietary drug product which had been marketed for a decade. Marketing manager, Jose Russo, worked with an ad agencey to produce television commercials, to be aired on local TV stations, representing two different advertising strategies: one emphasizing what was labeled an “emotional” appeal, the other a “rational” approach.

Russo planned a market test to determine which one to use in a national roll-out at a later stage. He was also uncertain about what level of advertising was needed to support the strategy change. Thus, he proposed that an advertising experiment be conducted to address the following issues:

1. Do the “emotional” and “rational” copy alternatives differ in their effectiveness?
2. What level of advertising should be used for Nopane for the coming fiscal year?

The marketing test (experiment) was done as follows. 

• Two advertising copy treatments (“emotional” and “rational”)  
• Three levels of advertising intensity were to be tested.  Expressed in 6-month expenditures per 100 “prospects” (potential customers) in a geographical area, the levels to be tested were $2.50, $4.75, and $8.00.
• The company had divided the United States into two segments; Segment A consisted of states lying along the East and West Coasts of the United States while the rest of the country comprised Segment B. The two segments contained about equal numbers of total prospects.
• Twelve sales territories (out of a total of 75) were selected at random from the region designated as Segment A, and another twelve were selected from Segment B.

Based on the description, 24 market tests are done and the results are shown below: 

To read the following data: Column 1 is test market ID; Columns 2, 3 and 4 show: which segment (A or B), which copy (rational or emotional) and which level of ad dollors (2.5, 4.75 and 8) were used in that test market; column 5 is the sales of that test market;  column 6 is the competitor’s ad spending in that test market; columns 7 and 8 are two dummy variables corresponding to segment and copy.