Analytics Stories

CHAPTER 42What Affects the Sales of a Retail Product?

If a brick-and-mortar retailer wants to survive in today's highly competitive environment, they need to understand what factors affect sales of their products. In this chapter, we show how to develop a simple yet powerful model that can be used to understand the factors that drive product sales.

Painter's Tape

The workbook PaintersTape.xlsx contains two years of weekly sales data for Painter's Tape at a local hardware store. As shown in Figure 42.1, for each week, we are given the following information:

• Units sold (Sales column)
• Quarter of the year (1 = January–March; 2 = April–June; 3 = July–September; 4 = October–December)
• Was the product on display that week? (1 = display; 0 = not on display)
• Was there a coupon for the product in the Sunday paper? (1 = there was a coupon; 0 = no coupon)
• The ratio of the hardware store's price to the product's price at the store's only competitor

Figure 42.1: Painter's tape data

For example, Week 1 was in Quarter 1; 71 units were sold; the product was not on display; there was a coupon in the local paper; and the hardware store's price was 3% lower than the competitor's price.

Assuming these are the only variables that influence unit sales, the usual model used by a marketing analyst to predict sales is

We now explain the unknowns in equation (1):

• Constant is used to scale (1) ...