Kellogs Case Solution

8/9/2019 Kellogs Case Solution

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MarketMarketResearch CaseResearch Case

AnalysisAnalysis--Kellogs CaseKellogs Case

Members :Members :Anand C.S.Anand C.S. ePGPePGP--0202--008008

Manoj KumarManoj Kumar-- ePGPePGP--0202--039039Arul Deepak SundararajArul Deepak Sundararaj-- ePGPePGP--0202--012012

Dileesh OnniyilDileesh Onniyil--ePGPePGP--0202--025025Arun SRArun SR--ePGPePGP--0202--014014

Gagandeep SinghGagandeep Singh-- ePGPePGP--0202--027027Jomon JoseJomon Jose-- ePGPePGP--0202--032032


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Answer 1Answer 1


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Answer 2Answer 2


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Answer 2aAnswer 2a

The significance is < 0.01 hence therelationship between sales & fuel

volume is a valid one.


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Answer 2bAnswer 2b

C-store sales when fuel consumption isaverage=

-17489.710+0.613X62852.76 =21039.03

C-store sales when fuel consumption ismaximum=-17489.710+0.613X68549 =24530.827

C-store sales when fuel consumption isminimum =-17489.710+0.613X56259=16997.057


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Answer 2cAnswer 2c

Estimated

Value

Standard

Error of

Estimate

Upper

Bound

Lower

Bound

21039.0319 1946.334 20941.72 21136.35

24530.827 1946.334 24433.51 24628.14

16997.057 1946.334 16899.74 17094.37


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Answer 2cAnswer 2c

95% Confidence interval = Estimated value +/- SE * 0.05

= 22456.2 +/- 2137.53*0.05

= 22349.3 to 22563.1


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Answer 2dAnswer 2d There is significant relationship between c-store sales and fuel sales

volume

As the fuel sales volume increases the c-store sales also increases


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Answer 3aAnswer 3a


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Answer 3aAnswer 3a There is significant relationship between TV and Radio GRPs and Product

sales as the significance factor is lesser than 0.1


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Answer 3bAnswer 3b C-store sales for 40 TV GRPs and 80 Radio GRPs =

=22142.385+0.346*40+0.312*80+275.018=22456.2


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Answer 3cAnswer 3c

95% Confidence interval = Estimated value +/- SE * 0.05

= 22456.2 +/- 2137.53*0.05

= 22349.3 to 22563.1


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Answer 3dAnswer 3d

Adjusted R square is 0.239, which means only 23.9% of the increase insales is explained by advertisement spent. Advertisement does notsignificantly boost c-store sales

Net impact could be found using equation

22142.385 + 12.193 X1 + 5.195X2

Where X1 = TV GRPX2 = Radio GRP


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Answer 4bAnswer 4b

Radio is having less significance [0.947] hence it is removed also the sales increase by only 0.7% with unit change inRadio Investment GRP so it is insignificant

Net impact on sales = 19185.39+11.422 * TV GRP + 189.794 * Temperature. For 1 GRP invested in TV advertisementthe sales increase by 11.422 times.


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Answer 4aAnswer 4a

50.4% of variation in sales is explained by temperature hencetemperature is having significance and Tylers criticism is justified


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Answer 4cAnswer 4c

of advertisement = 11.422*No of TVGRPs which should always be lesserthan 19185.390


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Answer 5aAnswer 5a

Sales = -3475.199+5.594TVGRP+68.935Temp-.279FuelV+85.177*fuelpr+895.258Holiday-157.251Visits


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Answer 5bAnswer 5bVariable Slope

CoefficientsMeaning of slope coefficient

TV GRP 5.594 When all other factor remaining the same, 1 GRPincrease in TV Advertisement will increase sales by afactor of 5.594

Temperature 68.935 When all other factor remaining the same, 1degree Cincrease in temperature will increase sales by a factor of68.935

Fuel Volume 0.279 When all other factor remaining the same, 1 litreincrease in average volume of fuel sold per week willincrease sales by a factor of 0.279

Fuel Price 85.177 When all other factor remaining the same, 1 centincrease in average price of fuel in market will increasesales by a factor of 85.177

Sign for this unintuitive. When fuel price increase, thesales should have reduced.

Precipitation -138.504 When all other factor remaining the same, ifprecipitation increase by 1 millimeter sales will decreaseby a factor of -138.504

Holiday 895.258 When all other factor remaining the same, if it is aholiday, sales will increase by a factor of 895.258

Visits -157.251 When all other factor remaining the same, increase in%of 1-2 visits, lead to a decrease sales by a factor of157.251.

Sign for this unintuitive. When % of visits increases

ideally the sales should have increased


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Answer 5cAnswer 5c sales at 95% confidence interval when TV GRP is

increased by 5 rating points = (-3745.199+(TVGRP+5) *5.594+Temperature*68.935+FuelVolume*0.279+Fuel Price*85.177+Precipitation*-138.504+Holiday*895.258+Visits*-157.251)-(-3745.199+TV GRP*5.594+Temperature*68.935+FuelVolume*0.279+Fuel Price*85.177+Precipitation*-138.504+Holiday*895.258+Visits*-157.251)+/-SE*.05

=5 * 5.594 +/- 1015.494*.05 = -22.8047 to78.7447


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Answer 5dAnswer 5d

We conclude that the increase inadvertisement is not profitable


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Answer 6Answer 6


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Answer 6aAnswer 6a


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Answer 6a ContdAnswer 6a Contd

Removing Prec & Visits which arenot meeting Taylors desired level ofsignificance,


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Answer 6Answer 6a) Final Regression Equation: as above;

Coefficients of Dummy variables are significantwith values 90.2%, 19.6%, 34.4%; all are >10%.

b) New value of R^2= 0.677 (0.823)c) The effect of three new variables can be;

the Sales and other variables are notexplained as linear as assumed whenthey were introduced to be scaledvariables.

d) Yes, We believe that this yields betterpredictions than previous regression.


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Answer7Answer7


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Answer 7 ContdAnswer 7 Contd

Yes, week enhances the significanceby 27.1% and holidays do haveinfluence on the sales.


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Answer 8Answer 8


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Answer 8 Contd.Answer 8 Contd.

b) Even dropping week7 & week49; we can not improve thesignificance.


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Answer 8 Contd.Answer 8 Contd.


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Answer 9Answer 9

Ans:9

Overall conclusions:

Radio is an ineffective mean ofAdvertisement. EuroPet shouldconcentrate on TV for Advertising.

Precipitation will also decrease the C-

Store Sales. Due to the Holidays in the week, the

Sales gets lowered.


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