Case Study: Svedka and Elasticity (Venkatesan)
o Students must read and analyze the case and available information. A data file will be provided. Use the data to respond to the case questions with an analytical approach (main analytical case questions are shown on pg. 93-94).
Run a regression of the natural logarithm of sales on all the following: price, print marketing expenditure, outdoor marketing expenditure, broadcast marketing expenditure, and previous year’s sales.
Run a regression of the natural logarithm of change in sales on the natural logarithm of previous period’s prices, and the natural log of marketing expenditures on print, outdoor, and broadcasting.
To understand the influence of vodka quality, run a regression by adding the tier1 and tier2 dummy variables (that indicate whether a vodka brand belongs to first- or second-quality tiers) to the set of independent variables in question 2.
To understand the influence of competition and brand power, run a regression by adding the sum of sales of all the competing brands in the previous year (“lagtotalminussales”) to the independent variables in question 3.
To measure the sales growth of new brands compared to the existent ones, include the variable “firstintro” to the independent variable set in question 4. Firstintro is equal to one in the first three years after a brand is introduced and is zero elsewhere.
Why does the coefficient of price and advertising change in the above regression?
Remember we discussed the regression concept of controlling for other factors and language we would use: “controlling for all other variables” or “controlling for X1, X2, X3”
Also, you might want to look at how other factors impact the percentage change in sales
Based on your analysis of the Vodka market data, what recommendations do you have for Cuvelier regarding the marketing mix for Svedka? This needs to be in memo format.
