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In: Finance

How can marketing managers use regression model to forecast sales?

How can marketing managers use regression model to forecast sales?

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Expert Solution

Regression Analysis technique is meant for those companies that need in-depth or quantitative knowledge of what might be impacting sales and how it can be changed in one direction or the other, as necessary.

METHOD TO USE REGRESSION MODEL IN FORECASTING SALES-

Compare the sales to an independent variable, like the number of sales calls. Then collect data for both the total seasonal sales and the total seasonal sales calls for the past five years.

The aim is to compare what influences the number of calls had on the number of sales.

Once the marketing manager has set everything up and have the data, he can get even more granular with that information and review the number of sales calls as it impacts the number of sales each year, and then again for each month during the sales season so that you can determine not only how many new sales reps to hire the following year, but for precisely what months you need to ramp up seasonal sales reps. Then, you filter them out as the sales calls and subsequently the sales themselves, start to thin out.

Regression model equation might be as simple as Y = a + bX in which case the Y is the Sales, the ‘a’ is the intercept and the ‘b’ is the slope. Regression software would be required to run an effective analysis.


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