Question

Haverty’s Furniture is a family business that has been selling to retail customers in the Chicago area for many years. The company advertises extensively on radio, TV, and the internet, emphasizing low prices and easy credit terms. The owner would like to review the relationship between sales and the amount spent on advertising. Below is information on sales and advertising expense for the last four months.

a. Calculate the advertising expense as a percentage of sales for each month.
b. Identify any trends or patterns in the data.
c. Provide recommendations for optimizing the advertising budget based on the analysis.

Answer 1

Without specific sales and advertising expense data, we cannot calculate the advertising expense as a percentage of sales. Nevertheless, we can recommend analyzing trends and optimizing the advertising budget by measuring the effectiveness of different advertising campaigns and shifting focus towards the most productive platforms.

Step-by-step explanation:

To analyze the relationship between sales and advertising expense for Haverty's Furniture, we need to calculate the advertising expense as a percentage of sales for each month. This is done by dividing the advertising expense by the sales for that month and multiplying by 100. However, the data for sales and advertising expenses is missing from the provided information, so we cannot perform this calculation directly. Instead, trends and patterns should be determined by analyzing historical advertising and sales data over time. If data shows that increased advertising expenses lead to proportionally increased sales, it would suggest a positive correlation, and the owner could consider increasing the advertising budget. Conversely, if additional spending does not translate to increased sales, the advertising strategy may need revisiting.

As a recommendation, Haverty's Furniture should experiment with diverse advertising channels to determine which are most effective. Embracing digital marketing strategies could also be important, considering the shift from traditional advertising methods to online platforms. By regularly reviewing and analyzing the results of different advertising campaigns, the company can optimize the advertising budget and focus on the strategies that yield the best return on investment.