Phase 4 Discussion Board - Essay Example

Regression Model for WidgeCorp Beverages Variables considered for forecasting monthly sales. The regression model uses past data to predict future outcomes. It studies the past correlations between two variables, to see how a change in the independent variable affects the dependant variable. (Weiss, 1995)In this case, the dependant variable is the monthly sales of the new cold beverage section which WidgeCorp is about to launch. The sales could depend on a number of factors, hence could be affected by a number of independent variables, which will be explored in the remainder of this paper.

TimeAfter the launch of a particular product, usually it takes time for the consumers to change their purchasing habits and tastes to adapt to the change in the market. Also, the beverage industry is one in which brand loyalty is an important factor. For example, many people are hard core loyals to brands such as Coke or Pepsi, and it would take time to steal market share away from these established brands. As more and more time lapses after the launch, more people would become aware of the product and more trial would be generated.

Optimistically speaking, if consumers like the new product, there would be more repeat purchase as time goes by. Satisfied consumers market the new product even more through the word of mouth as they encourage their friends and family to try it out. Hence, as more time goes by, more and more sales can be generated. Level of Advertisement and PromotionGenerally, for new products, the initial hype created by promotion campaigns is what leads to trial purchase. Even after the launch, the level of advertisement and other promotional activities has a considerable effect on the sales level.

Advertisements can be in the print or electronic media. Other promotional activities can include Below The Line (BTL) activities such as free trial purchases offered to consumers, or free gifts with every purchase of the new product.(Palmer, 2004)For a new product, there has to be large scale advertisement and promotional activity to create awareness about the brand, and to steal the market share away from already established brands. It has already been mentioned that the beverage industry is usually dominated by a few players which have a strong, brand loyal customer base.

A unique brand image needs to be created to appeal to the target audience, so that those loyal to other brands will be attracted towards the new one. This unique brand image can only be done through effective advertisement and promotional campaigns. The more advertisements and promotional activities there are, therefore, the higher the sales level would go. If we were to take the combined effect of time and advertisement/promotion, it would give us an even clearer picture of the success or failure of the new beverage section of WigdeCorp, in terms of its monthly sales.

For example, if there is a lot of initial hype about the new product through advertisement and other forms of promotion, a lot of trial might be generated. However, if we see that as time passes, the level of sales deteriorates, we will know that it is because the customers are dissatisfied with some quality of the drink itself. This quality could be the taste, after-taste, frizz, smell, etc. References:1. Adrian Palmer. (2004). Introduction to Marketing Theory and Practice. Oxford University Press 2. Neil A. Weiss. (1995). Introductory Statistics.

4th Edition. Addison Wesley Publishing Company, Inc..