C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 1 1

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 2

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 3 Marketing Research Approaches to Demand Estimation Consumer Surveys –data from survey questions Observational Research –data from observed behavior Consumer Clinics –data from laboratory experiments Market Experiments –data from real market tests

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 4

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 5

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 6 Scatter Diagram Regression Analysis

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 7

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 8 Regression Analysis Regression Line: Line of Best Fit Regression Line: Minimizes the sum of the squared vertical deviations (e t ) of each point from the regression line. Ordinary Least Squares (OLS) Method

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 9

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 10 Ordinary Least Squares (OLS) Model:

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 11 Ordinary Least Squares (OLS) Objective: Determine the slope and intercept that minimize the sum of the squared errors.

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 12 Ordinary Least Squares (OLS) Estimation Procedure

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 13 Ordinary Least Squares (OLS) Estimation Example

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 14 Ordinary Least Squares (OLS) Estimation Example

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 15 Tests of Significance Standard Error of the Slope Estimate

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 16 Tests of Significance Example Calculation

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 17 Tests of Significance Example Calculation

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 18 Tests of Significance Calculation of the t Statistic Degrees of Freedom = (n-k) = (10-2) = 8 Critical Value at 5% level =2.306

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 19 Tests of Significance Decomposition of Sum of Squares Total Variation = Explained Variation + Unexplained Variation

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 20

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 21 Tests of Significance Coefficient of Determination

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 22

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 23 Tests of Significance Coefficient of Correlation

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 24 Multiple Regression Analysis Model:

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 25

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 26

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 27 Multiple Regression Analysis Adjusted Coefficient of Determination

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 28 Multiple Regression Analysis Analysis of Variance and F Statistic

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 29 Problems in Regression Analysis Multicollinearity: Two or more explanatory variables are highly correlated. Heteroskedasticity: Variance of error term is not independent of the Y variable. Autocorrelation: Consecutive error terms are correlated.

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 30

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 31 Durbin-Watson Statistic Test for Autocorrelation If d = 2, autocorrelation is absent.

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 32 Steps in Demand Estimation Model Specification: Identify Variables Collect Data Specify Functional Form Estimate Function Test the Results

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 33 Functional Form Specifications Linear Function: Power Function:Estimation Format:

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 34

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 35

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 36

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 37 Chapter 4 Appendix

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 38

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 39

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 40

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 41 Getting Started Install the Analysis ToolPak add-in from the Excel installation media if it has not already been installed Attach the Analysis ToolPak add-in –From the menu, select Tools and then Add-Ins... –When the Add-Ins dialog appears, select Analysis ToolPak and then click OK.

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 42

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 43 Entering Data Data on each variable must be entered in a separate column Label the top of each column with a symbol or brief description to identify the variable Multiple regression analysis requires that all data on independent variables be in adjacent columns

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 44 Example Data

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 45 Running the Regression Select the Regression tool from the Analysis ToolPak dialog –From the menu, select Tools and then Data Analysis... –On the Data Analysis dialog, scroll down the list of Analysis Tools, select Regression, and then click OK –The Regression tool dialog will then be displayed

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 46

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 47

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 48 Select the Data Ranges Type in the data range for the Y variable or select the range on the worksheet Type in the data range for the X variable(s) or select the range on the worksheet If your ranges include the data labels (recommended) then check the labels option

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 49

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 50 Select an Output Option Output to a selected range –Selection is the upper left corner of the output range Output to a new worksheet –Optionally enter a name for the worksheet Output to a new workbook And then click OK

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 51

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 52 Regression Output

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 53 Multiple Regression Data

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 54

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 55 Regression Output