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MarketMarketResearch CaseResearch Case
AnalysisAnalysis--Kellogs CaseKellogs Case
Members :Members :Anand C.S.Anand C.S. ePGPePGP--0202--008008
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Answer 1Answer 1
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Answer 2Answer 2
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Answer 2aAnswer 2a
The significance is < 0.01 hence therelationship between sales & fuel
volume is a valid one.
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Answer 2bAnswer 2b
C-store sales when fuel consumption isaverage=
-17489.710+0.613X62852.76 =21039.03
C-store sales when fuel consumption ismaximum=-17489.710+0.613X68549 =24530.827
C-store sales when fuel consumption isminimum =-17489.710+0.613X56259=16997.057
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Answer 2cAnswer 2c
Estimated
Value
Standard
Error of
Estimate
Upper
Bound
Lower
Bound
21039.0319 1946.334 20941.72 21136.35
24530.827 1946.334 24433.51 24628.14
16997.057 1946.334 16899.74 17094.37
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Answer 2cAnswer 2c
95% Confidence interval = Estimated value +/- SE * 0.05
= 22456.2 +/- 2137.53*0.05
= 22349.3 to 22563.1
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Answer 2dAnswer 2d There is significant relationship between c-store sales and fuel sales
volume
As the fuel sales volume increases the c-store sales also increases
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Answer 3aAnswer 3a
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Answer 3aAnswer 3a There is significant relationship between TV and Radio GRPs and Product
sales as the significance factor is lesser than 0.1
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Answer 3bAnswer 3b C-store sales for 40 TV GRPs and 80 Radio GRPs =
=22142.385+0.346*40+0.312*80+275.018=22456.2
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Answer 3cAnswer 3c
95% Confidence interval = Estimated value +/- SE * 0.05
= 22456.2 +/- 2137.53*0.05
= 22349.3 to 22563.1
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Answer 3dAnswer 3d
Adjusted R square is 0.239, which means only 23.9% of the increase insales is explained by advertisement spent. Advertisement does notsignificantly boost c-store sales
Net impact could be found using equation
22142.385 + 12.193 X1 + 5.195X2
Where X1 = TV GRPX2 = Radio GRP
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Answer 4bAnswer 4b
Radio is having less significance [0.947] hence it is removed also the sales increase by only 0.7% with unit change inRadio Investment GRP so it is insignificant
Net impact on sales = 19185.39+11.422 * TV GRP + 189.794 * Temperature. For 1 GRP invested in TV advertisementthe sales increase by 11.422 times.
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Answer 4aAnswer 4a
50.4% of variation in sales is explained by temperature hencetemperature is having significance and Tylers criticism is justified
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Answer 4cAnswer 4c
of advertisement = 11.422*No of TVGRPs which should always be lesserthan 19185.390
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Answer 5aAnswer 5a
Sales = -3475.199+5.594TVGRP+68.935Temp-.279FuelV+85.177*fuelpr+895.258Holiday-157.251Visits
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Answer 5bAnswer 5bVariable Slope
CoefficientsMeaning of slope coefficient
TV GRP 5.594 When all other factor remaining the same, 1 GRPincrease in TV Advertisement will increase sales by afactor of 5.594
Temperature 68.935 When all other factor remaining the same, 1degree Cincrease in temperature will increase sales by a factor of68.935
Fuel Volume 0.279 When all other factor remaining the same, 1 litreincrease in average volume of fuel sold per week willincrease sales by a factor of 0.279
Fuel Price 85.177 When all other factor remaining the same, 1 centincrease in average price of fuel in market will increasesales by a factor of 85.177
Sign for this unintuitive. When fuel price increase, thesales should have reduced.
Precipitation -138.504 When all other factor remaining the same, ifprecipitation increase by 1 millimeter sales will decreaseby a factor of -138.504
Holiday 895.258 When all other factor remaining the same, if it is aholiday, sales will increase by a factor of 895.258
Visits -157.251 When all other factor remaining the same, increase in%of 1-2 visits, lead to a decrease sales by a factor of157.251.
Sign for this unintuitive. When % of visits increases
ideally the sales should have increased
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Answer 5cAnswer 5c sales at 95% confidence interval when TV GRP is
increased by 5 rating points = (-3745.199+(TVGRP+5) *5.594+Temperature*68.935+FuelVolume*0.279+Fuel Price*85.177+Precipitation*-138.504+Holiday*895.258+Visits*-157.251)-(-3745.199+TV GRP*5.594+Temperature*68.935+FuelVolume*0.279+Fuel Price*85.177+Precipitation*-138.504+Holiday*895.258+Visits*-157.251)+/-SE*.05
=5 * 5.594 +/- 1015.494*.05 = -22.8047 to78.7447
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Answer 5dAnswer 5d
We conclude that the increase inadvertisement is not profitable
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Answer 6Answer 6
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Answer 6aAnswer 6a
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Answer 6a ContdAnswer 6a Contd
Removing Prec & Visits which arenot meeting Taylors desired level ofsignificance,
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Answer 6Answer 6a) Final Regression Equation: as above;
Coefficients of Dummy variables are significantwith values 90.2%, 19.6%, 34.4%; all are >10%.
b) New value of R^2= 0.677 (0.823)c) The effect of three new variables can be;
the Sales and other variables are notexplained as linear as assumed whenthey were introduced to be scaledvariables.
d) Yes, We believe that this yields betterpredictions than previous regression.
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Answer7Answer7
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Answer 7 ContdAnswer 7 Contd
Yes, week enhances the significanceby 27.1% and holidays do haveinfluence on the sales.
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Answer 8Answer 8
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Answer 8 Contd.Answer 8 Contd.
b) Even dropping week7 & week49; we can not improve thesignificance.
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Answer 8 Contd.Answer 8 Contd.
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Answer 9Answer 9
Ans:9
Overall conclusions:
Radio is an ineffective mean ofAdvertisement. EuroPet shouldconcentrate on TV for Advertising.
Precipitation will also decrease the C-
Store Sales. Due to the Holidays in the week, the
Sales gets lowered.
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