Analyse Data
Regression Analysis Example
Regression analysis is used to explain or predict the value of one variable based on those of other variables. A common marketing application for regression analysis is in generating sales forecasts. For example, a chain of retail stores may want to set targets for each individual store within the chain. This could be done by just picking a goal for the whole chain and dividing by the number of stores or by multiplying the previous year’s sales for each store by the same growth target for the coming year; however, regression analysis would produce a better result. This is because data on a number of factors (e.g., length of time the store has been open, location, proximity to competitors, size of store, etc.) that could affect sales are investigated to determine which ones actually do and to what extent. Once this is known, forecasts can be generated with greater confidence and also the chain would know what changes would be expected to have the most significant influence on future sales. This would help managers make decisions such as whether to increase the size of an under-performing store or relocate it to a more desirable location.