Using Regression Analysis

So we’re going to a grocery store here. Grocery stores are places where they have a lot of promotions if you’re shopping for toothpaste, cereal, detergents. They have these features, promotions and discounts, mainly to grab your attention to their aisle, to their brand. And this is a place where a lot of marketing happens, and a lot of marketing thought goes in to knowing what kind of promotions to run well. Here we are in the toothpaste aisle looking for some Crest toothpaste. It’s very colorful here. They have a lot of brands. You got Crest. You got Sensodyne, Colgate up there. And they all have different kind of promotions going on.

Crest, for example, has this promotion for advancing a healthier, stronger, cleaner mouth from day one. You got another one for Scope plus Crest, which is for clean and fresh feeling. You got these promotions, price promotions precisely, where they’re talking about selling something which is for 3.29 at 2.49. So that seems like a good deal. All these promotions are here to grab your attention when you walk into the aisle looking for toothpaste, to divert your attention to Crest away from other brands like Colgate or such. Now brand managers for Crest would want to know, do these promotions work? Does having a lot of promotions like this here have an effect on consumers? Do consumers react to these promotions?

What happens if we increase the number of promotions from three to four? Or we reduce the number of promotions from three to two? What is the effect on consumers? How do we know how many promotions to run in a week? These are the questions that can be answered using regression analysis.