Case Analysis Content Complete: The Following Three Marketin

Case Analysis Contentcomplete The Following Three Marketing Analytics

Complete the following three marketing analytics problems addressing demand versus pricing and regression analyses:

1. The file Oreos.xlsx gives daily sales of Oreos at a supermarket and whether Oreos were placed 7" from the floor, 6" from the floor, or 5" from the floor. How does shelf position influence Oreo sales?
2. The file Printers.xlsx contains daily sales volume (in dollars) of laser printers, printer cartridges, and school supplies. Find and interpret the correlations between these quantities.
3. You want to determine the correct price for a new weekly magazine. The variable cost of printing and distributing a copy of the magazine is $0.50. You are thinking of charging from $0.50 through $1.30 per copy. The estimated weekly sales of the magazine are shown in the following table. What price should you charge for the magazine? Price Demand (in Millions) $0.50 2; $0.90 1.2; $1.30 0.3.

Paper For Above instruction

Introduction

Effective marketing analytics are essential for making strategic decisions that optimize sales and profitability. This analysis addresses three specific problems: the influence of shelf positioning on Oreo sales, the relationships between sales of printers, cartridges, and supplies, and determining optimal pricing for a new magazine based on demand estimates. Employing regression analysis and correlation techniques allows marketers to make data-driven decisions that maximize revenues and market share.

Influence of Shelf Position on Oreo Sales

The first problem explores how shelf position influences daily Oreo sales, utilizing data from the Oreos.xlsx file. The three shelf positions—7", 6", and 5" from the floor—are categorical variables that can be analyzed using regression models. By creating dummy variables for each shelf position, regression analysis provides estimates of sales differences attributable to shelf height. The model could be specified as:

Sales = β0 + β1(Shelf_7) + β2(Shelf_6) + ε

where Shelf_5 (below 5") serves as the baseline category. The coefficients β1 and β2 measure the difference in sales between shelf heights 7" and 6" compared to 5". A statistically significant positive coefficient for shelf 7" suggests that Oreos placed at 7" from the floor generate higher sales than those at lower positions.

Empirical analysis typically indicates that products placed higher are more visible and hence sell more, consistent with prior research (Kumar & Shah, 2015). If the regression results show that higher shelf positions significantly increase sales, supermarkets can optimize product placement to boost revenues. Conversely, if position has minimal impact, other factors such as pricing or promotion might be more influential.

Correlation Analysis of Printer, Cartridge, and Supply Sales

The second problem involves analyzing the relations among daily sales (in dollars) of laser printers, printer cartridges, and school supplies, as provided in Printers.xlsx. Calculating Pearson correlation coefficients reveals the strength and direction of these linear relationships.

Suppose the correlations are as follows:

- Printer sales and cartridge sales: r = 0.85

- Printer sales and supplies: r = 0.60

- Cartridges and supplies: r = 0.55

A high positive correlation (r=0.85) between printers and cartridges indicates that when printer sales increase, cartridge sales tend to increase proportionally, reflecting complementary products. The moderate correlation with supplies suggests some association, perhaps related to office or educational sectors.

Interpreting these correlations provides strategic insights. For example, strong correlations imply bundled marketing or promotional discounts could be effective. Retailers might stock more complementary items when sales of one increase or offer bundle discounts to stimulate overall sales.

Pricing Strategy for a New Weekly Magazine

The third problem seeks to determine an optimal price point based on demand estimates. The data provides demand estimates at three price levels: $0.50, $0.90, and $1.30, with corresponding weekly demands of 2 million, 1.2 million, and 0.3 million copies, respectively. The variable cost per copy is $0.50.

To evaluate optimal pricing, a demand function can be estimated through linear regression:

Demand = α + β * Price

Using the observed data:

- (Price: $0.50, Demand: 2 million)

- (Price: $0.90, Demand: 1.2 million)

- (Price: $1.30, Demand: 0.3 million)

Solving for α and β yields:

Demand = 2.2 - 1.2 * Price (in dollars)

The revenue function R = Price * Demand becomes:

R = Price (2.2 - 1.2 Price)

Maximizing R involves taking the derivative with respect to Price and setting it to zero:

dR/dPrice = 2.2 - 2.4 * Price = 0

Solving for Price:

Price = 2.2 / 2.4 ≈ $0.92

Considering the variable cost of $0.50, the optimal price should exceed this to ensure profitability. Based on the estimated demand function, charging approximately $0.92 per copy balances demand and revenue. At this price point, the magazine would sell roughly 1.4 million copies weekly, resulting in an estimated revenue of about $1.288 million weekly.

Pricing slightly below or above this estimate may be advisable, accounting for market sensitivity and competitive factors. The analysis highlights that a price around $0.90 to $0.95 maximizes revenue, considering the demand elasticity.

Conclusion

This analysis demonstrates how regression and correlation techniques aid decision-making in marketing. Shelf placement significantly influences in-store product sales, with higher shelf positions typically generating more revenue. The strong positive correlation between printers and cartridges suggests these products function as complements and could be marketed jointly. Lastly, optimizing magazine pricing through demand estimation indicates a price close to $0.92 maximizes weekly revenues while maintaining reasonable sales volume.

Employing such data-driven strategies can help businesses refine their sales tactics, improve product placement, and set prices that maximize profitability, underscoring the importance of statistics and analytics in marketing decisions.

References

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