Fit type and how to calculate increase?Hello,
I am trying to find out if there is a correlation between the marketing costs and sales done over the current year.
First, I am not sure what Fit type to use for the data I have.
Linear Fit - RSquare 0,255 (ANOVA p
Polynomial Fit 2 - RSquare 0,263 (ANOVA p
From what I understand the quadratic Polynomial fit gives a better explanation of the variance, but also a higher possibility of error? When I also plot the residuals, the normal quantile plot, is not normal to me, and it is the same with the linear fit and all kinds of polynomial fits.
Even after I apply the tests, I am not sure how to prove that with the increase in marketing costs, the sales also increase, and finally, I do not know how to calculate how much they increase.
I will also upload the file in case you need it.
Data TableRe: Fit type and how to calculate increase?Looks like this is a homework assignment. How about setting up Graph Builder with a Local Data Filter like in the following graph? Should that change your approach?
Re: Fit type and how to calculate increase?First off, you can't prove anything. Increase your degree of confidence, yes, not prove. Seriously, dod you look at the data? Just because you can draw a line on the page doesn't make it useful. There are a few points that are influencing the quantitative analysis. Have you looked for any unusual data points or unusual clusters (related to Croatia)? If you do Multivariate Analysis>Multivariate with the 2 variables you have plotted, you will identify a number of outliers using Mahalanobis. If there were a time series, some simple MR charts would be useful as well.
Re: Fit type and how to calculate increase?Thanks for the replies.
So as far as I understand, Graph Builder would do the work, as I would just have to explain what is seen on the graph.
However, is there any way to measure the correlation between the change in marketing costs and sales, so that I can come up with a number that shows how much are sales increased (decreased) with an increase in marketing costs?
Re: Fit type and how to calculate increase?You may want to take a look at running a Fit Model on your current year sales, specifying marketing cost and country as the Effects. I come up with a .93 Rsquare. It may help explain the data more precisely.
Re: Fit type and how to calculate increase?First of all, this seems like it is synthetic data. Exploring a few different models, it appears that the increase in sales is related to the marketing expenditures, the marketing strategy, and the East/West variable. The R-square of around .88 is not as high as txnelson got, but I prefer this model because having each country as a factor sort of begs the question as to why the countries differ. Given the small size of the data set, I think the East/West variable comes closer to a good explanation of the data. The reason I say the day is almost certainly synthetic, is that the data falls into almost perfectly distinct regions (by market strategy and East/West - and you might want to add an interaction term for those 2) with only a slight deviation from a linear relationship after accounting for those variables. This becomes clear looking at the leverage plots and residuals.
