MARKETING RESEARCH Assignment No : 3

Submitted by K.NARESH KUMAR (172) Section-C PGDM-General

Question : The owner of Pizza Corner (a chain of Pizza outlets), Gurgaon would like to build a regression model consisting of six factors to predict the sales of pizzas. Data for the past fifteen months on sales and six different factors were collected for the purpose. Now send me the correlation and regression output with your interpretation and recommendations (Hard Copy Only).

Solution : In statistics, regression analysis is a statistical process for estimating the relationships among variables. It includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables. Multi-collinearity must be avoided in regression. Two methods of regression : 1. Enter Regression Method. 2. Stepwise Regression Method. 2a) Forward Regression Method 2b) Backward Regression Method. i) For Pizza Corner case, dependability by Enter Regression Method is given below :

REGRESSION /MISSING LISTWISE /STATISTICS COEFF OUTS R ANOVA CHANGE /CRITERIA=PIN(.05) POUT(.10) /NOORIGIN /DEPENDENT Sales /METHOD=ENTER DelBoys Adcost Outlets Variants Comp.Int NoofExtCustomer.

Regression
[DataSet1]
Variables Entered/Removed Model Variables Entered No of Ext Customer, Comp. Int, 1 Variants, Del Boys, Outlets, Ad cost
b a

Variables Removed

Method

. Enter

a. Dependent Variable: Sales b. All requested variables entered.

Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .976
a

Change Statistics R Square Change .953 F Change 27.254 6 8 df1 df2 Sig. F Change .000

.953

.918

6.260

a. Predictors: (Constant), No of Ext Customer, Comp. Int, Variants, Del Boys, Outlets, Ad cost

ANOVA Model Regression 1 Residual Total a. Dependent Variable: Sales Sum of Squares 6408.864 313.536 6722.400 df

Mean Square 6 8 14 1068.144 39.192

F 27.254

Sig. .000
b

b. Predictors: (Constant), No of Ext Customer, Comp. Int, Variants, Del Boys, Outlets, Ad cost

Coefficients Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

B (Constant) Del Boys Ad cost 1 Outlets Variants Comp. Int No of Ext Customer a. Dependent Variable: Sales 6.372 .919 .699 1.620 -1.978 .067 .242

Std. Error 32.586 .910 1.303 .618 2.310 2.211 .299

Beta .196 .189 .152 .617 -.147 .003 .182 1.010 .537 2.621 -.856 .030 .808 .850 .342 .606 .031 .417 .977 .442

Interpretation : By Enter Regression Method, significance of Outlets is less than 0.05 and hence it is the most significant factor of sales in Pizza Corner. ii) Now, let us see the stepwise regression methods.

Forward Regression Method for Pizza Corner sales dependency :

REGRESSION /MISSING LISTWISE /STATISTICS COEFF OUTS R ANOVA CHANGE

/CRITERIA=PIN(.05) POUT(.10) /NOORIGIN /DEPENDENT Sales /METHOD=FORWARD DelBoys Adcost Outlets Variants Comp.Int NoofExtCustomer.

Regression
[DataSet1]
Variables Entered/Removed Model Variables Entered
a

Variables Removed

Method Forward (Criterion:

Outlets

. Probability-of-F-to-enter <= .050) Forward (Criterion:

Del Boys

. Probability-of-F-to-enter <= .050)

a. Dependent Variable: Sales

Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 2 .953 .970
a b

Change Statistics R Square Change .908 .033 F Change 127.676 6.535 1 1 13 12 df1 df2 Sig. F Change .000 .025

.908 .940

.900 .930

6.913 5.789

a. Predictors: (Constant), Outlets b. Predictors: (Constant), Outlets, Del Boys

ANOVA Model Regression 1 Residual Total Regression 2 Residual Total a. Dependent Variable: Sales b. Predictors: (Constant), Outlets c. Predictors: (Constant), Outlets, Del Boys Sum of Squares 6101.176 621.224 6722.400 6320.215 402.185 6722.400 df

Mean Square 1 13 14 2 12 14 3160.108 33.515 6101.176 47.786

F 127.676

Sig. .000
b

94.288

.000

Coefficients Model Unstandardized Coefficients

Standardized Coefficients

Sig.

B (Constant) 1 Outlets (Constant) 2 Outlets Del Boys a. Dependent Variable: Sales 2.503 -11.817 1.753 1.640 -13.013

Std. Error 3.746 .222 3.172 .347 .641

Beta -3.474 .953 11.299 -3.726 .667 .338 5.053 2.556 .004 .000 .003 .000 .025

Excluded Variables Model Beta In t

Sig.

Partial Correlation

Collinearity Statistics Tolerance

Del Boys Ad cost 1 Variants Comp. Int No of Ext Customer Ad cost Variants 2 Comp. Int No of Ext Customer a. Dependent Variable: Sales

.338 .400 -.085 -.006 .241

b b b b b c c c c

2.556 2.361 -.600 -.064 1.560 1.085 -.732 .257 .736

.025 .036 .560 .950 .145 .301 .480 .802 .477

.594 .563 -.171 -.018 .411 .311 -.215 .077 .217

.286 .183 .370 .999 .267 .113 .370 .981 .219

.226 -.087 .019 .113

b. Predictors in the Model: (Constant), Outlets c. Predictors in the Model: (Constant), Outlets, Del Boys

Interpretation : In Forward Regression Method, we can find the predictors of sales in steps. First step, only outlets factor was taken along with constant, the significance value was well below considered significance value ie 0.05. So we took delivery boys factor along with outlets and constant. Even then the significance value was less than considered significance value ie 0.05. Variants, Comp. int., No of ext customer, Ad Cost are excluded factors in this method. Hence, outlets and delivery boys are the two factors which predict the sales much more than other factors.

iii)

Backward Regression Method : The best regression method of the three methods.

REGRESSION /MISSING LISTWISE /STATISTICS COEFF OUTS R ANOVA CHANGE /CRITERIA=PIN(.05) POUT(.10) /NOORIGIN /DEPENDENT Sales /METHOD=BACKWARD DelBoys Adcost Outlets Variants Comp.Int NoofExtCustomer.

Regression
[DataSet1]
Variables Entered/Removed Model Variables Entered No of Ext Customer, Comp. 1 Int, Variants, Del Boys, Outlets, Ad cost
b a

Variables Removed

Method

. Enter

Backward (criterion: 2 . Comp. Int Probability of F-to-remove >= .100). Backward (criterion: 3 . Ad cost Probability of F-to-remove >= .100). Backward (criterion: 4 . Variants Probability of F-to-remove >= .100). Backward (criterion: 5 . No of Ext Customer Probability of F-to-remove >= .100). a. Dependent Variable: Sales b. All requested variables entered.

Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 2 3 4 5 .976 .976
a b c

Change Statistics R Square Change .953 .000 -.002 -.008 -.003 F Change 27.254 .001 .429 1.668 .542 6 1 1 1 1 8 8 9 10 11 df1 df2 Sig. F Change .000 .977 .529 .226 .477

.953 .953 .951 .943 .940

.918 .927 .932 .927 .930

6.260 5.903 5.732 5.903 5.789

.975 .971 .970

d e

a. Predictors: (Constant), No of Ext Customer, Comp. Int, Variants, Del Boys, Outlets, Ad cost b. Predictors: (Constant), No of Ext Customer, Variants, Del Boys, Outlets, Ad cost

c. Predictors: (Constant), No of Ext Customer, Variants, Del Boys, Outlets d. Predictors: (Constant), No of Ext Customer, Del Boys, Outlets e. Predictors: (Constant), Del Boys, Outlets

ANOVA Model Regression 1 Residual Total Regression 2 Residual Total Regression 3 Residual Total Regression 4 Residual Total Regression 5 Residual Total a. Dependent Variable: Sales Sum of Squares 6408.864 313.536 6722.400 6408.828 313.572 6722.400 6393.881 328.519 6722.400 6339.099 383.301 6722.400 6320.215 402.185 6722.400 df

Mean Square 6 8 14 5 9 14 4 10 14 3 11 14 2 12 14 3160.108 33.515 2113.033 34.846 1598.470 32.852 1281.766 34.841 1068.144 39.192

F 27.254

Sig. .000
b

36.789

.000

48.657

.000

60.640

.000

94.288

.000

b. Predictors: (Constant), No of Ext Customer, Comp. Int, Variants, Del Boys, Outlets, Ad cost c. Predictors: (Constant), No of Ext Customer, Variants, Del Boys, Outlets, Ad cost d. Predictors: (Constant), No of Ext Customer, Variants, Del Boys, Outlets e. Predictors: (Constant), No of Ext Customer, Del Boys, Outlets f. Predictors: (Constant), Del Boys, Outlets

Coefficients Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

B (Constant) Del Boys Ad cost 1 Outlets Variants Comp. Int No of Ext Customer (Constant) Del Boys 2 Ad cost Outlets Variants No of Ext Customer (Constant) Del Boys 3 Outlets Variants No of Ext Customer (Constant) 4 Del Boys Outlets No of Ext Customer (Constant) 5 Del Boys Outlets a. Dependent Variable: Sales 6.372 .919 .699 1.620 -1.978 .067 .242 7.061 .920 .678 1.629 -2.014 .246 12.422 1.200 1.811 -2.285 .294 -12.690 1.413 1.602 .150 -11.817 1.640 1.753

Std. Error 32.586 .910 1.303 .618 2.310 2.211 .299 21.908 .858 1.035 .522 1.868 .245 19.733 .721 .429 1.769 .227 3.445 .723 .409 .204 3.172 .641 .347

Beta .196 .189 .152 .617 -.147 .003 .182 1.010 .537 2.621 -.856 .030 .808 .322 .189 .147 .620 -.150 .186 1.072 .655 3.123 -1.078 1.003 .630 .247 .689 -.170 .222 1.665 4.223 -1.291 1.294 -3.684 .291 .610 .113 1.955 3.917 .736 -3.726 .338 .667 2.556 5.053 .850 .342 .606 .031 .417 .977 .442 .755 .311 .529 .012 .309 .342 .543 .127 .002 .226 .225 .004 .076 .002 .477 .003 .025 .000

Excluded Variables Model Beta In t

Sig.

Partial Correlation

Collinearity Statistics Tolerance

2 3

Comp. Int Comp. Int Ad cost Comp. Int

.003

b c c

.030 -.320 .655 .151 .909 -1.291 .257 1.085 -.732 .736

.977 .756 .529 .883 .385 .226 .802 .301 .480 .477

.011 -.106 .213 .048 .276 -.378 .077 .311 -.215 .217

.589 .830 .103 .960 .108 .281 .981 .113 .370 .219

-.026 .147 .012 .201 -.170 .019 .226 -.087 .113

d d d e e e e

Ad cost Variants Comp. Int Ad cost

5 Variants No of Ext Customer a. Dependent Variable: Sales

b. Predictors in the Model: (Constant), No of Ext Customer, Variants, Del Boys, Outlets, Ad cost c. Predictors in the Model: (Constant), No of Ext Customer, Variants, Del Boys, Outlets d. Predictors in the Model: (Constant), No of Ext Customer, Del Boys, Outlets e. Predictors in the Model: (Constant), Del Boys, Outlets

Interpretation : In Backward Regression Method, we exclude the factors one by one. Here in the fifth step, we are getting desired significance level below 0.05. So the predicting factors of sale are Outlets and Del Boys.

Discriminant Analysis : From co-efficients table of backward regression, Sales Dependance equation is Y = 6.372 + (0.919)(Del Boys) + (0.699)(Ad Cost) + (1.620)(Outlets) (1.978)(Variants) + (0.067)(Comp Int) + (0.242)(No of Ext Customers)

Correlartion : In statistics, dependence is any statistical relationship between two random variables or two sets of data. Correlation refers to any of a broad class of statistical relationships involving dependence.
CORRELATIONS /VARIABLES=Sales DelBoys Adcost Outlets Variants Comp.Int NoofExtCustomer /PRINT=TWOTAIL NOSIG /STATISTICS DESCRIPTIVES XPROD /MISSING=PAIRWISE.

Correlations
[DataSet1]

Descriptive Statistics Mean Sales Del Boys Ad cost Outlets Variants Comp. Int No of Ext Customer 24.20 6.07 11.07 14.87 13.67 3.40 29.93 Std. Deviation 21.913 4.511 4.758 8.340 1.633 .986 16.529 N 15 15 15 15 15 15 15

Correlations Sales Del Boys Ad cost Outlets Variants Comp. Int Pearson Correlation Sig. (2-tailed) Sales Sum of Squares and Crossproducts Covariance N Pearson Correlation Sig. (2-tailed) Del Boys Sum of Squares and Crossproducts Covariance N 89.129 15 20.352 15 19.424 15 31.795 15 4.952 15 -.457 15 62.719 15 1247.800 284.933 271.933 445.133 69.333 -6.400 878.067 480.171 15 .902
**

No of Ext Customer .880

**

.902

**

.934

**

.953

**

.725

**

-.040 .886 12.200 -.871 15 -.103 .715

.000

.000

.000

.002

.000

6722.400 1247.800 1363.800 2437.400 363.000

4462.200

89.129 15 1

97.414 15 .905
**

174.100 15 .845
**

25.929 15 .672
**

318.729 15 .841
**

.000

.000

.000

.006

.000

Pearson Correlation Sig. (2-tailed) Ad cost Sum of Squares and Crossproducts Covariance N Pearson Correlation Sig. (2-tailed) Outlets Sum of Squares and Crossproducts Covariance N Pearson Correlation Sig. (2-tailed) Variants Sum of Squares and Crossproducts Covariance N Pearson Correlation Sig. (2-tailed) Comp. Int Sum of Squares and Crossproducts Covariance N Pearson Correlation Sig. (2-tailed) No of Ext Customer Sum of Squares and Crossproducts Covariance N

.934

**

.905

**

.904

**

.702

**

-.189 .500 12.400 -.886 15 -.036 .897

.867

**

.000

.000

.000

.004

.000

1363.800

271.933

316.933

502.133

76.333

954.067

97.414 15 .953
**

19.424 15 .845
**

22.638 15 .904
**

35.867 15 1

5.452 15 .794
**

68.148 15 .856
**

.000

.000

.000

.000

.000

2437.400

445.133

502.133

973.733 151.333 -4.200

1651.867

174.100 15 .725
**

31.795 15 .672
**

35.867 15 .702
**

69.552 15 .794
**

10.810 15 1

-.300 15 -.178 .527

117.990 15 .819
**

.002

.006

.004

.000

.000

363.000

69.333

76.333

151.333

37.333 -4.000

309.667

25.929 15 -.040 .886

4.952 15 -.103 .715

5.452 15 -.189 .500

10.810 15 -.036 .897

2.667 15 -.178 .527

-.286 15 1

22.119 15 .006 .983

-12.200

-6.400

-12.400

-4.200

-4.000 13.600

1.400

-.871 15 .880
**

-.457 15 .841
**

-.886 15 .867
**

-.300 15 .856
**

-.286 15 .819
**

.971 15 .006 .983

.100 15 1

.000

.000

.000

.000

.000

4462.200

878.067

954.067 1651.867 309.667

1.400

3824.933

318.729 15

62.719 15

68.148 15

117.990 15

22.119 15

.100 15

273.210 15

**. Correlation is significant at the 0.01 level (2-tailed).

Interpretation : According to Correlation coefficients table, Sales have a positive relationship with Outlets, Del boys , Ad cost, No of ext customers and variants. While sales have negative relationship (dependence) with Comp Int. Controlling other variables constant, if Number of delivery boys is increased by 1 then Sales will increase by 0.919

Controlling other variables constant, if of ad cost is increased by 1 then Sales will increase by 0.699

Controlling other variables constant, if Number of outlets is increased by 1 then Sales will increase by 1.620

Controlling other variables constant, if variants of pizza is increased by 1 then Sales will decrease by 1.978 Controlling other variables constant, if Competitors index is increased by 1 then sales will increase by 0.067

Controlling other variables constant, if Number of existing customers is increased by 1 then sales will increase by 0.242 RECOMMENDATIONS : 1. Increase the no. of delivery boys. 2. Increase the pizza outlets. 3. Reduce the expense on competitors index. 4. Variants dont have any significant effect on sales, so dont spend much on variants.