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Table of Contents.................................................................................................................2
Opening Case.......................................................................................................................3
Strong Predictor Variables of Gross Box Office Takings ...............................................4
Other Potentially Relevant Variables...............................................................................5
Results..............................................................................................................................5
Developed Mathematical Model
..........................................................................................................................................7
Strength of the Model......................................................................................................7
The Need for Multiple Regression...................................................................................8
Case Study 2........................................................................................................................9
1.Multiple Regression Model: Admissions..........................................................................9
Introduction....................................................................................................................10
Results............................................................................................................................10
Coefficient of Multiple Determination: r2 and Adjusted r2...........................................12
Linear Equation for Multiple Regression......................................................................12
Significance of Dependent Variables to the Multiple Linear Regression......................13
Conclusion: Implications of Analysis............................................................................14
2. Other Relevant Variables...............................................................................................15
3. Multiple Regression Model: Movies Seen.....................................................................16
Introduction....................................................................................................................17
Results
........................................................................................................................................17
Coefficient of Multiple Determination: r2 and Adjusted r2...........................................19
Linear Equation for Multiple Regression......................................................................19
Significance of Dependent Variables to the Multiple Linear Regression......................20
Conclusion: Marketing Implications of Analysis..........................................................21
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Opening Case
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1. Dependent and Independent Variables
Several variables are presented that may be related to the yearly gross box
office takings of the top Australian film. Which variables are stronger predictors
of gross box office takings? Might other variables not mentioned here be related
to gross box office takings?
The dependent variable in this section is “Box Office (millions),” since this
is the variable around which relationships are being questioned. This deems
“Number of Admissions,” “Number of Films Screened,” and “Number of Screens”
as dependent variables for this case.
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Other Potentially Relevant Variables
o “Theatres”
o “Top Price of Cinema Tickets”
o “Capacity”
o “Age”
o “No. of Emailed Discount Cinema Tickets Received Last Year”
o “Income (‘000s)”
Other perhaps important variables that have been omitted from the data,
which are also mentioned in Part 2 of the assignment, may be:
Results
Regression Analysis
Regression Statistics
Multiple R 0.644693511
R Square 0.415629723
Adjusted R Square 0.298755668
Standard Error 8.884734142
Observations 19
5
ANOVA
Significance
df SS MS F F
Regression 3.00000 842.16776 280.72259 3.55622 0.04006
Residual 15.00000 1184.07751 78.93850
Total 18.00000 2026.24527
Standard Upper
Coefficients Error t Stat P-value Lower 95% 95%
Intercept -5.71881 25.95778 -0.22031 0.82860 -61.04651 49.60889
Number of
Admissions
(millions) -0.10880 0.36397 -0.29894 0.76909 -0.88459 0.66698
Number of films
screened 0.07348 0.10052 0.73095 0.47608 -0.14078 0.28773
Number of
Screens 0.01799 0.01692 1.06357 0.30435 -0.01807 0.05405
RESIDUAL OUTPUT
6
Developed Mathematical Model
From the given results (above under the heading Results), we can form a
multiple linear regression model based on the coefficients from the results, which
can be used to create a mathematical formula that could predict potential future
values for gross box office takings.
where:
Therefore, the final equation for predicting gross box office takings is:
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that suggests there may not be such a strong relationship between the
dependent and independent variables.
8
Case Study 2
1. Multiple Regression Model: Admissions
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Introduction
For this part of the assignment, an Excel add-in tool for the multiple linear
regression calculations called PHStat was used. This tool greatly reduces the
time and effort required to perform a multiple linear regression analysis. The
output for the multiple linear regression modeling is shown below.
Results
The results for the multiple linear regression analysis are given below:
Regression Statistics
Multiple R 0.987125975
R Square 0.974417691
Adjusted R Square 0.965890255
Standard Error 4.36021864
Observations 21
ANOVA
df SS MS F Significance F
Regression 5 10862.0855 2172.417099 114.2685399 2.1558E-11
Residual 15 285.1725988 19.01150659
Total 20 11147.2581
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Capacity (000
seats) -0.4447 0.1080 -4.1164 0.0009 -0.6750 -0.2144
The given Regression Analysis above presents several key statistics that
are useful for further analysis. These include regression statistics such as r2,
ANOVA (analysis of variance) statistics, and confidence interval estimates.
These are discussed below in more detail.
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Coefficient of Multiple Determination: r2 and Adjusted r2
From the given linear regression analysis above, we can form the multiple
regression equation for the Number of Admissions in the audience demand for
cinema films:
where:
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Number of admissions (millions) = 5.1391 + 0.1199(Number of Screens) +
0.0725 (Theatres) + 0.0474(Number of Films Screened) – 2.5388(Top Price for
Cinema Tickets ($)) – 0.4447(Capacity (000s))
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Dependent Variable t-test Statistic Within (-2.5706, Reject H0?
2.5706)?
X1: No. of Screens 5.3155 No Yes
X2: Theatres 2.0750 Yes No
X3: No. of Films Screened 0.9650 Yes No
X4: Top Price of Cinema Yes No
Tickets -1.2406
X5: Capacity (000 seats) -4.1164 No Yes
From the above results, it can be said that one can be 95% confident that
the independent variables “No. of Screens” and “Capacity” affect the dependent
variable “Number of Admissions.” The other independent variables, “Theatres,”
“No. of Films Screened,” and “Top Price of Cinema Tickets” cannot be proven as
such to affect the dependent variable.
The evident implications for film distributor executives that arise from this
analysis are the “Number of Screens” and “Capacity” of theatres; these are
significant variables when the intention of increasing the number of admissions
(and therefore profit) is involved. If executives wish to increase the number of
admissions in their theatres and increase profits, then they may first wish to
increase the number of screens and capacity of their theatres, based on the
results provided.
It should be noted, however, that even though it could not be proven with
certainty that an increase in “Theatres” and “No. of Films Screened” gave a
definite rise in admissions, it could be seen that there is a positive relationship on
average between these variables and the number of admissions. It would be of
interest to film distributor executives to also take into account this finding.
Increasing the number of theatres and number of films being screened might also
have a positive effect on admissions, albeit on a smaller scale. Of course, the
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decision of which dependent variable to leverage would no doubt depend on
business factors such as the company’s budget, among other things.
The given variables in the linear regression analysis may not be the most
exhaustive list of relevant variables in the equation. Other variables that may
have been important predictors in determining the annual numbers of movie-
goers include the following:
o Screening Times During the Day may be relevant because the audience may
have a particular time during the day that viewing movies is most favourable
i.e. at night, rather than in the afternoons when many people may be working.
o Screening Times During the Year is also a potentially strong indicator in this
analysis, due the fact that people may be unable to attend, or unwilling to
attend, cinemas during certain parts of the year.
o Lastly, the Amount ($) Spent on Advertising for the Film may play a big part in
the reason for why admissions may increase. If one film is given a lot of
advertising, then it would be expected that it’s presence would reach more
people, and more people would therefore know about it and/or attend the
cinema to view it.
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3. Multiple Regression Model: Movies Seen
Some film distributors offer discount cinema tickets via email. Suppose that a
random sample of 25 movie-goers is undertaken, and suppose that the
number of movies the person has seen in the last year, their age and income,
and the number of discount cinema tickets they have received via email in the
last year, is recorded. Use the data to develop a multiple regression model to
predict the number of times an individual goes to the movies per year from
their age, income and number of discount cinema tickets received. Which
particular independent variables seem to have more promise in predicting the
number of times a person goes to the movies? What marketing implications
might be evident from this analysis?
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Introduction
Results
The results for the multiple linear regression analysis are given below:
Regression Statistics
Multiple R 0.598474304
R Square 0.358171492
Adjusted R Square 0.266481705
Standard Error 3.822203471
Observations 25
ANOVA
df SS MS F Significance F
Regression 3.0000 171.2060 57.0687 3.9063 0.0231
Residual 21.0000 306.7940 14.6092
Total 24.0000 478.0000
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RESIDUAL OUTPUT
Observatio
n Predicted No of movies seen Residuals
1 6.1075 -2.1075
2 11.1321 0.8679
3 9.9192 0.0808
4 10.3155 -2.3155
5 14.3334 -3.3334
6 12.3506 -0.3506
7 7.5439 0.4561
8 10.3509 -4.3509
9 12.9997 3.0003
10 6.2117 3.7883
11 10.8029 7.1971
12 8.7083 3.2917
13 9.4561 -8.4561
14 7.2517 4.7483
15 12.3359 2.6641
16 5.8659 -2.8659
17 13.5710 -3.5710
18 10.0921 -2.0921
19 11.3404 3.6596
20 16.9863 2.0137
21 8.9333 3.0667
22 12.3617 1.6383
23 10.1295 -0.1295
24 9.5435 -3.5435
25 11.3570 -3.3570
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Coefficient of Multiple Determination: r2 and Adjusted r2
From the given linear regression analysis above, we can form the multiple
regression equation for the Number of Admissions in the audience demand for
cinema films:
where:
19
The equation above shows by how much the Number of Movies Seen Last
Year increases by the following amount with an increment of 1 in each of the
dependent variables:
o - 0.0521 movies seen last year for each unit increase in “Age”
o 1.1775 movies seen last year for each unit increase in “No. of Emailed
Discount Cinema Tickets Received Last Year.”
o 0.0383 movies seen last year for each unit increase in “Income (‘000s).”
20
Dependent Variable t-test Statistic Within Reject H0?
(-3.1824, 3.1824)?
X1: Age -0.5349 Yes No
X2: No. of Emailed Discount No Yes
Cinema Tickets Received Last
Year 3.2305
X3: Income (‘000s) 0.6458 Yes No
From the above results, it can be said that there is 95% confidence that
the independent variable “No. of Emailed Discount Cinema Tickets Received
Last Year” affects the dependent variable “Number of Movies Seen Last Year.”
The other independent variables, “Age” and “Income (‘000s),” can not be proven
as such to affect the dependent variables.
While less obvious to prove given the results of the t-Test, it should also
be taken into account the other factors of the given multiple linear equation -
“Age” and “Income.” It could be assumed that the older one gets (i.e. the higher
the “Age” value), the lower the value of movies being seen in a year becomes.
Conversely, the more a person is paid (i.e. the higher the “Income (‘000s)” value),
the higher the value of movies being seen may become, based on our results.
Both of these assumptions, while not proven statistically, certainly make sense.
Marketing representatives could use this knowledge to target both younger and
wealthier populations to try and increase the number of movies being seen in any
subsequent year as an initiative to boost company profits.
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