Measuring Marketing

Chapter 16 Causal Forecast

Measurement Need

Managers may seek to understand how many products produce (the dependent variable, or the “output”) under given demand conditions (the independent variable, or the “input”).

Solutioni

A commonly used technique in causal forecasting is linear regression. In the linear regression method, when the dependent variable (usually the vertical, or y axis on a graph) changes as a result of the change in another variable (plotted as the horizontal, or x axis), it reflects a causal relationship and is represented by a straight line drawn through closely-related data points on the graph. Linear regression helps illustrate if there is a trend to the data, and is represented by a line formula:

$y=a+bx$

Where ...