A company dealing with cosmetics wishes to invest in product promotion through door-to-door marketing. In a duration of Seven months, the annual sales and the amount invested in marketing was as shown below; Amount used in marketing ($ "millions" ) 6 8 10 12 15 17 20 Sales ($ "millions" ) 200 190 240 210 270 280 290 By identifying the dependent and the independent variables; i) Estimate the regression line for the data ii) Interpret the coefficients in part (i) above iii) Estimate the volume of sales if the company decided to invest $25 million in door-to-door marketing
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
A company dealing with cosmetics wishes to invest in product promotion through door-to-door marketing. In a duration of Seven months, the annual sales and the amount invested in marketing was as shown below;
|
Amount used in marketing ($ "millions" ) |
6 | 8 | 10 | 12 | 15 | 17 | 20 |
| Sales ($ "millions" ) | 200 | 190 | 240 | 210 | 270 | 280 | 290 |
By identifying the dependent and the independent variables;
i) Estimate the regression line for the data
ii) Interpret the coefficients in part (i) above
iii) Estimate the volume of sales if the company decided to invest $25 million in door-to-door marketing
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