Regression Analysis as a Managerial Research Tool: A Practical Illustration of Demand Analysis in Pakistan

Abstract

The study is aimed at analyzing demand estimation and forecasting using regression analysis as a Managerial research tool. The article is about estimating demand of Medicam Toothpaste by viewing the effect of various variables like price of Medicam toothpaste, price of Shield toothbrush, price of Colgate toothpaste, advertisement and total revenue on the demand as well as its forecast for the next quarter. The methodology used is multiple regressions using Ordinary least Square method applied on time series data of 1^st quarter of 2007 to 2^nd quarter of 2014. Coefficients of price of Medicam and price of shield toothbrush show negative association with demand of Medicam toothpaste in Pakistan. The coefficients attached with price of Colgate toothpaste, Advertisement and total revenue of the firm are positively related with demand of Medicam toothpaste. Price elasticity of demand is -0.156, cross price elasticity of demand w. r. t. price of Colgate is 0.014, and w. r. t. price of shield tooth paste is - 0.059, advertisement elasticity of demand is 0.076 and total sales elasticity of demand is 0.0247. The forecast result shows that the demand has increased in the 3^rd quarter of 2014 having demand of 48181.53 units.

Keywords: Demand estimation, Demand Forecasting, Elasticities of demand, Regression Analysis, Managerial Research Tools.