lecture 7 summary

Question 1

sales response

Answer 1

is the rate at which sales change because of changes in business activities

Question 2

A model

Answer 2

is a generally simplified mathematical representation of real world relations

Question 3

sales response models

Answer 3

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

Question 4

To further investigate consumer responses to the organisation, we need sales data. There are different sources of sales data as follows:

Answer 4

internal data: data comes from the company itself

household scanner data: data coming from retail upc scanners or from the compan itself

Annual reports: data coming from annual reports of companies

Question 5

We recognize the following types of sales response models

Answer 5

Constant marginal returns: linear model

Decreasing marginal returns: multiplicative model and semi logarithmic model

Saturation volume: modified exponential model

s-shaped: log reciprocal model and logistic model

Market share models: multiplicative interaction model (MCI) and multinomial logit model (MDL)

Question 6

the multiplicative and semi logarithmic models take the following form. T

Answer 6

these are the most common non-linear models. With a multiplicative model it is possible to model diminishing returns to scale. This means that, if x is advertising and Q is sales, diminishing returns to scale indicate that the managerial gains become marginally smaller for every additional unit Q

Question 7

The modified exponential model and log reciprocal model and the logistic model are show. The modified exponential model is a more sophisticated model. The modified exponential model differs from the previous ones because here we have a saturation elvel. it should be clear no matter how high the advertising budget there is a certain upper bound for sales

Question 8

The logistic model has

Answer 8

an upper bound and the values range between 0 and 1. We want to use a logistic model if the DV is binary. So if we want to determine the likelihood that somebody buys a product we would use a logistic model

Question 9

The final models include the MCI model and the MNL model.

Answer 9

Te market share models do not look at the quantity of sales. or at binary variables, but they look at market share. They are models for understanding how business or marketing efforts impact you as a company in a competitive marketplace. The market share could be measured in sales, but is relative to my competitors

Question 10

dynamic response model plus formula

Answer 10

dynamic response model is defined with the following formula

Qt = b0 +b1X1 + aQt-1

Where Qt = sales depend on time

X1 = current effects

Qt-1 = carry over effect