Estimate three linear demand models using the sales data

Question

Database Marketing Assignment: Price Analyzed

Answer the following four questions. The following attachment has a complete problem

A marketing manager at General Mills analyzed weekly sales data at several stores located at Riverforest Illinois for 399 weeks, and estimated the following demand models for 3 brands (Wheaties 18oz, Cheerios 20oz and Honey Nut Cheerios 14oz).

Then, consider following 3 demand models.

Sales_1t =α+β₁*price_1t++β₂*price_2t +β₃*price_3t +ε_1t         (a)
Sales_2t =α+β₁*price_1t++β₂*price_2t +β₃*price_3t +ε_2t         (b)
Sales_3t =α+β₁*price_1t++β₂*price_2t +β₃*price_3t +ε_3t          (c)

where

Sales_it : Unit sales of brand i at week t
price_it : Unit retail price (cent) per oz of brand i at week t
i=1: Wheaties 18oz, i=2: Cheerios 20oz, i=3: Honey Nut Cheerios 14oz
t : week

1) Estimate three LINEAR demand models using the sales data and report & interpret the regression results including marketing strategies.

2) Using the demand models and estimation results, find an optimal price of Wheaties 18oz when price_2t = 20 cents and price_3t = 23 cents.

Use the unit cost below. Note that variable cost indicates cost (cents) per oz.

	Wheaties	Cheerios	Honey Nut Cheerios
Unit variable cost	14.7 cents	17.1 cents	18.8 cents

3) Compare the optimal price you computed and the trend of actual prices in the data.

4) Using the demand models and estimation results, find self-price elasticity of Honey Nut Cheerios 14oz and cross-price elasticity of Honey Nut Cheerios 14oz with respect to Cheerios 20oz, and interpret the results.

Use the average prices below.

	price1t (Wheaties)	price1t (Cheerios)	price1t (Honey Nut Cheerios)
average unit price	18.2 cents	20.4 cents	22.9 cents

Format your assignment according to the following formatting requirements:

1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.

2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.

3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.

Attachment:- Pricing-Analysis-Cereal-Sales-Data.rar