Answer to Question #215722 in Economics for elsah

Question

1.     Explain clearly the concept of Regression. Explain with suitable examples its role in dealing with business problems. (4 marks)

Answer 1

What is regression analysis for?

Identifying the factors that influence the dependent variable (for example, what most affects brand equity).

Identification of important and unimportant factors, analysis of declared and real importance.

Construction of regression equations and models.

How does it work?

The input to the analysis is one dependent variable and several independent variables that can affect the dependent. All variables should be measured on an interval or dichotomous scale. If it is necessary to include ordinal variables in the analysis (for example, the degree of agreement with a number of statements, measured on a 5-point scale), they must be pre-digitized (using a statistical method to recode into interval variables).

What do we get in the end?

Influence coefficients show which of the independent variables affect the dependent positively and which negatively, and also what is the degree of this influence. In simple linear regression, a coefficient greater than 0 indicates a positive effect of this independent variable on the dependent variable, and a coefficient less than 0 indicates a negative one.

Using a regression equation, you can model different combinations of independent variables and predict what value the dependent variable will take in these cases.

What are the advantages of the method of regression analysis?

Identifying the factors that can most strongly influence the target marketing performance. As a result, we get the opportunity to concentrate efforts on the development of those parameters that can improve the situation and the elimination of those that worsen the target.