Regression Analysis Case
According to the regression analysis, the value of R square is 0.969 which means 96.9% change in Sales can be predicted by the change in Ad expenses. Within the range. However, even though Ad expenses and Sales are positively related, the relationship between them cannot be simply explained by single linear relationship. Facebook displays ads to target users according to their profile and online browsing history. However, winery industry mostly make sales in store, rather than selling online. Therefore, Facebook display ads might not directly help to promote the sales of wine. In addition, most of Facebook users are comparatively younger than the target client of winery industry. Displaying ad on Facebook didn't really target the real group of target clients. Finally, it is ineffective for Winery Company to attract customer by displaying online ads. Wine lovers tend to be attracted by the taste and value of wine rather than the package and advertisement of wine. Spending money on PR to promote a better reputation or organize wine tasting event would be more effective to attract customer and promote sales.
We have a result of value of R square that is 0.969. It shows the change in Ad expenses forecast 96.9% change in sales. Although Ad expenses is proportional to the sales, the relationship between them cannot be neatly explained by single linear relationship. Facebook through understand their users profile and online browsing history to display their ads to their target users.
But there is a problem about winery industry that always better to sales in store instead of selling online. Moreover, Facebook and winery industry own different target users because Facebook’s customer are always younger. Displaying ads on Facebook is not a right action because it did not aim the right users. Lastly, the winery company through display online ads that is an effective action for fossicking clients. Winery companies are always through wine taste, technology and history, instead of product packages or publicity. Therefore, Robert Mondavi take a right action that spend more money on PR. There could increase more customers and sales by better reputation and taste.