Posted: April 15th, 2015

Demand Estimation

Group Project 1: Demand Estimation:

Select a firm or an industry preferably in the UAE ( I choose “ STARBUCKS”  and collect time series data on relevant measures of sales, prices, income, advertising, and other relevant (socio-economic) data to support the construction of a multi-variate demand regression model. The student must build the econometric model utilizing Reviews. Results of the analysis must include:

1. An executive summary;
2. Information supporting the choice of the variables, including the socio-economic variables (model specification),
3. Details concerning the model development and data acquired;
4. Interpretation of the statistical results, the coefficients, and the sales forecasts including confidence intervals;
5. A sensitivity analysis for alternative scenarios, and interpretation of the elasticity and the implication to pricing strategy; and
6. Interpretation of the results with implications to business policy.

Criteria

1. Ability to provide a justification for the model specification based on relevant theory and gather the appropriate data
2. Using Reviews to generate forecasted demand outcomes
3. Testing the model for compliance with typical OLS assumptions and making necessary corrections
4. Assessing the impact of the socio-economic variable on the demand for the product under alternative scenarios
5. Discussion of the relevant economic implications of the estimated elasticity
6. Suggesting meaningful implications that inform business policy of a multi-national firm