ASSIGNMENT

Managing Subscriptions at London Today (25%)

London Today is a growing online newspaper that has been offering trial subscriptions to potential customers. To ensure that as many trial subscriptions as possible are converted to regular subscriptions, the London Today marketing depart‐ ment dedicates many hours on marketing efforts geared towards these trial subscribers.

A team consisting of managers from the marketing department wanted to develop a better method of forecasting new subscriptions. Their current approach for forecasting is such that, after examining new subscription data for the previous 2 or 3 months, the team would develop a consensus on what the final forecast should be. A newly hired MBA, Oliver, suggested a more thorough approach and that the department should look for factors that might be helpful in predicting new subscriptions.

The team noted that the forecasts in the last year had been particularly inaccurate because in some months much more time was spent on marketing than in other months. In particular, in the last month, only 1,055 hours were completed since many of the department’s employees were busy during the first week of the month attending training sessions. Oliver suggested that the data for the number of new subscriptions and the number of hours spent on marketing effort for each month for the past 2 years be obtained from company records.

(4%) What criticism can you make concerning the forecasting method the team of managers has been using that involved taking the new subscriptions for the past 3 months as the basis for future projections?

(3%) What factors other than number of marketing hours spent might be useful in predicting the number of new subscriptions? Explain.

(12%) Analyze the data in the file, Subscription data.xlsx, and develop a statistical model to predict the average number of new subscriptions for a month based on the number of marketing hours. Interpret the model and comment on its quality.

(3%) If there are expected to be 1,300 hours spent on marketing in the coming month, estimate the average number of new subscriptions expected for the month. Indicate the assumptions upon which this prediction is based. Do you think these assumptions are valid? Explain.

(3%) Estimate the average number of new subscriptions for a month in which 2,000 hours were spent on marketing. How would you communicate that this is an estimate?