Actual Lecture 5

Question 1

What is the use of sales response models?

Answer 1

Business managers need to know how markets respond to the actions they take.

Provide structural insight on how the brand generates sales, market share, customer awareness or any other variable of interest.

Question 2

Definition of a sales response model?

Answer 2

Tries to model a sales response as a function of business activities

Question 3

Internal data + advantages and disadvantages

Answer 3

Comes from the company iteself

Readily available, intra-daily basis, accurate and quick

Only from the company itself - no competitors, no information about psychographics, no info about time of decision

Question 4

Household scanner data + advantages and disadvantages

Answer 4

Data coming from retail UPC scanners or from the company itself

Available for all major retail chains, daily basis, accurate and quick

• Sampling frame only shops, small shops ma y not be considered, no info about psychographics and time of decision

Question 5

Annual Reports

Answer 5

Data coming from annual reports of companies

Available for all public companies

• Available only on yearly/quarterly basis, private companies are not considered, no info about psychographics or time of decision

Question 6

What are three important points we need to take into account when constructing a sales response model?

Answer 6

Inclusion of correct variables is crucial and understanding how they impact sales

Error term - tries to capture unpredictable actions

We also need to consider interaction form

Question 7

The types of sales response models:

Constant Marginal Returns

Answer 7

Linear model

Question 8

The types of sales response models:

Decreasing marginal returns

Answer 8

Multiplicative model

Semi-logarithmic model

Question 9

The types of sales response models:

Saturation volume

Answer 9

Modified exponential model

Question 10

The types of sales response models:

S-shaped

Answer 10

Log-reciprocal model

Logistic model

Question 11

The types of sales response models:

Market share models

Answer 11

Multiplicative interaction model

Multinomial logit model

Question 12

Elasticity?

Answer 12

Change in Quantity Percent/ Change in price %

Question 13

Price elasticity coefficients?

Answer 13

> 1 Elastic

< 1 Inelastic

Question 14

Semi-log model

Answer 14

Doesn’t start at a 0 point. Describes a curved line relationship. Examines the interaction between the variables

Question 15

Elasticity of multiplicative model

Answer 15

ε = α1/beta

Elasticity corresponds to the exponent in the multiplicative model

No need to calculate elasticity

Question 16

Elasticity of Semi-log model

Answer 16

ε = α1/Q

Question 17

How is the multiplicative model structured?

Answer 17

Q = kB1B2

Question 18

What is saturation limit?

Answer 18

The absolute maximum of something. For example, when marketing stops being effective at all.

Question 19

Elasitcity of Log-reciprocal model

Answer 19

ε = α1/X

Question 20

Elasitcity of Log-reciprocal model

Answer 20

ε = α1X (Qmax - Q)/Qmax

Question 21

Difference between log-reciprocal and logistic model

Answer 21

Logistic model has upper limit while the other has no upper limit.

Question 22

Logistic model?

Answer 22

Can predict only probabilities

Question 23

Hysteresis effect

Answer 23

If a stimulus is removed, sales do not go back to original level or if they do its extremely slowly

Question 24

Carry over effect

Answer 24

The possibility that a previous treatement can alter behaviour in a subsequent experimental treatement