Business Situation
The primary goal of small businesses is to increase profits. Such enterprises acknowledge that greater profits can only be achieved by increasing sales and reducing operational costs (Andrews & Shimp, 2017) . Sales can be increased by advertising the entity's products to customers. In this respect, increasing the entity's advertising budget is likely to lead to an increase in sales and, further, the entity's profits. However, an increase in advertising expenditure is likely to lead to an increase in operational costs and consequently a reduction in profits (Padhy, 2011) . In this respect, there is a conundrum regarding whether businesses should increase or reduce their advertising expenditure. Collecting and analyzing profit and advertisement expenditure data from a small public company such as XPEL can reveal whether increasing advertising expenditure increases or reduces profits.
Business Question
What is the relationship between the entity’s advertising expenditure and its net profit?
Data Analysis Benefit
Data analysis would enable a small entity such as XPEL to understand the effect of increasing or reducing its advertising expenses on its profits. In this respect, the data analysis process will enable the entity to make informed decisions during the budgeting process.
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Data Needed
The business data that needs to be collected includes the advertising expenses incurred by the entity and the net profit generated in each quarter between 2013 and 2021. In such a case, data beginning the first quarter of 2013 and ending the first quarter of 2021 would be gathered. The sample size would be 33.
Data Gathering Method
The data will be gathered from online sources, specifically XPEL's website, which has the entity's quarter filings for the past decade.
Data Analysis Technique
Regression analysis will be used in the data analysis process. This technique is useful for determining the strength and nature of the relationship between two distinct variables (Hall, 2021) . Therefore, the strength and nature of the relationship between advertising expenditure and net profits can be determined effectively.
References
Andrews, J. C., & Shimp, T. A. (2017). Advertising, promotion, and other aspects of integrated marketing communications . Cengage Learning.
Hall, C. F. (2021). Valuing businesses using regression analysis: A quantitative approach to the guideline company transaction method . Hoboken, New Jersey: Wiley.
Padhy, M. K. (2011). Advertising management: Theory & practice . Laxmi Publications.
