Question

You’ve been hired to manage the Notalot Company. Here’s some background: it’s January, 2018, and you are replacing the firm’s last management team, which was fired recently after poor financial performance during the last several quarters. You have 10 years of quarterly data at your disposal. It is apparent from the data that the firm struggled to become profitable in the early years. After attaining some success, the firm’s original management team was fired after the fourth quarter of the fourth year, when they lost a lot of money despite an aggressive effort to boost market share. The new management team that took over returned the company to profitability, but had struggled recently, as noted above.

Your first task as assigned by the firm’s owners: study the company’s history, generate regression results, and estimate demand for the firm’s product. The owners would like your analysis to include a discussion of the effectiveness of advertising and the role played by fourth quarter as well, as the holiday season has historically been very important to the firm’s profitability. They would also like to know how responsive demand is to price changes by the other firms, Acme and Consolidated.

Your next task as assigned by the firm’s owners: analyze the company’s cost structure and provide a pricing strategy for this year. Currently the firm is locked in to 100 units of advertising for each of the first two quarters of the year, but advertising becomes a choice variable after that point. The owners would like your analysis to include recommendations for this year’s fourth quarter as well, factoring in the effect of the holiday season.

Your deliverable will be a written report, professionally done, accompanied by appended material (i.e., your spreadsheets with regression analysis) supporting your conclusions.

Data for the Notalot Company

(Quarterly data including quantity sold, own price charged, prices charged by other sellers Acme and Consolidated, advertising units purchased, and time period)

Answer 1