BU.450.740 Retail Analytics Homework 4

发布时间：2023-02-19

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BU.450.740 Retail Analytics

Homework 4

Instructions

• The assignment is due at the beginning of session 5.

• Submission by email or hardcopy is not accepted. Please upload your answers at Canvas.

• The format can be either MS Word or PDF. In case you have trouble converting html to word/pdf, please copy and paste the scanned images onto Word or PDF document.

• For R coding questions, please include your reasoning and explanations for each question. Please do not attach R codes and outputs only.

• You can collaborate and discuss with your colleagues within or outside your assigned group. However, you will be submitting your own write-up.

• Late submission will not be accepted and receive 20% deduction per day.

• For Item 1, please use rmarkdown (or similar packages) to produce the report.

Item 1: Analyzing the factors that influence convenience-store chains’ entry behavior in R

In this exercise you will be using market-chain-level panel data:

“convenience_stores_20200210_raw.csv” from the Japanese convenience-store industry. The data are private; Please do not share with anyone outside the class. Each row is an observation regarding the convenience-store chain’s entry decision (“d_index_entry”), demographics, such as population (“pop”) and income per capita (“incomepc”), and the number of rival chains (“no_rival_chains”) for a given chain (“chain_id”), a given year (“time”), and a given market (“marketid”).

Questions: 20 points in total

1. Descriptive analysis [6 points, 3 points each]

a. Describe the summary statistics of all variables except market ID and chain ID

b. How many chains do we observe in the data? How many markets do we have in the data? What is the data period?

2. Multivariate logit regression [3 points for a.-c. and 5 points for d.]

a. Perform a regression of entry decision on population, income per capita, and the number of rival chains.

b. Are the signs of the estimated parameters as expected? Discuss.

c. Evaluate the statistical significance of each parameter you estimated.

d. Discuss the magnitude of the effect of the change in the number of rival chains on the probability of entry.

Hint 1: For this question, we can use the median values for population and income per capita before and after the change in the number of rival chains.

Hint 2: It suffices to discuss the change in probability of entry in the following three cases.

i. Case (1) When the number of rival chains becomes zero to one

ii. Case (2) When the number of rival chains becomes one to two

iii. Case (3) When the number of rival chains becomes two to three

Item 2: Target Promotion Analysis in ArcGIS.

To answer the questions below, you will be replicating what we covered in zoom on Session 4.

Note: Although some differences exist in the use of platforms (i.e., AGO vs ArcGIS Map), you will find Exercise 3.2 (pages 58-65) from the textbook useful to know more about the data set we use and to understand how we use them. You can download the

textbook’s chapter 3 at

http://downloads2.esri.com/ESRIpress/images/120/ch03_TUTMKTG.pdf

Questions: 5 points each, 20 points in total

1. Which variable should we use to select these 10 counties for TV and radio advertisings?

2. Which ten counties should be included in Outdoor Living’s local advertising campaign? Provide the list of 10 counties.

3. How many target-market families will be reached by this campaign?

4. Produce a map with those 10 selected counties

Item 3: Elasticity

Consider the following values of (the price elasticity of demand, quantity sold in unit, posted price per unit ($USD)):

Cigarettes (-0.5, 10 units, $10)

US luxury cars in the US (- 1.5, 10 units, $40K)

German luxury cars in the US (- 1.3, 10 units, $50K)

Now let’s suppose that the prices of above goods have increased by 10%. I.e., the price of cigarettes is now $11 per unit, US luxury cars $44K per unite, German luxury cars $55K per unit.

Questions: 5 points each, 10 points in total

1. Based on these information, provide an estimate of the impact of a 10% increase in the posted price of each of the above three products on quantity sold of each product. [Hint: your answer should be “For (product), the quantity sold would (increase/decrease) by (number) %.”]

2. Provide an estimate of the impact on revenues of a 5% increase in the price of each of the above three products.

Hint 1: Your answer should be “For (product), the revenue would (increase/decrease) by (number) %.”

Hint 2: The impact on revenues will be given by (P’Q’ – PQ)/PQ = P’Q’/PQ - 1 = (P’/P)*(Q'/Q) - 1, where P’ and Q’ are the new price and new quantity, respectively.