Some members of management of Fairface Cosmetics believe that demand for its products is related to promotional activities of local department stores where the cosmetics are sold. But, others in management believe factors, like local demographics, are stronger determinants of demand behavior. The following data for local annual promotional expenditures for the fairface products and local annual unit sales for fair face lip-gloss have been gathered from 20 stores selected at random from various localities:
| Store |
Unit Sales (1,000s) |
Expenditures (1,000s) |
| 1 |
3.5 |
$12.60 |
| 2 |
7.2 |
15.5 |
| 3 |
3.1 |
10.8 |
| 4 |
1.6 |
8.7 |
| 5 |
8.9 |
20.3 |
| 6 |
5.7 |
21.9 |
| 7 |
6.3 |
25.6 |
| 8 |
9.1 |
14.3 |
| 9 |
10.2 |
15.1 |
| 10 |
7.3 |
18.7 |
| 11 |
2.5 |
9.6 |
| 12 |
4.6 |
12.7 |
| 13 |
8.1 |
16.3 |
| 14 |
2.5 |
8.1 |
| 15 |
3 |
7.5 |
| 16 |
4.8 |
12.4 |
| 17 |
10.2 |
17.3 |
| 18 |
5.1 |
11.2 |
| 19 |
11.3 |
18.5 |
| 20 |
10.4 |
16.7 |
Based upon these data, does it appear that the strength of relationship between sales and promotions expenditures is sufficient to warrant using the linear regression forecasting model? Describe why?