EUBE, Mia Alexene

MARALIT, Nerierose
VALENCIA, Mikhail

The basis of modelling that we used to estimate or predict the demand of Adidas Stan
Smith White and Gold Leather Shoes is Multiplicative Exponential Model. It readily
accommodates percentage adjustments. Also, because the models are in logarithmic format,
the range of the dependent variable is considerably reduced, meaning that more equal weight
is given to each property or side and the influence of outliers is reduced thus, it is the easiest
and accurate model among other.

Given the amount of sales and those parameters that will affect the demand of our
product (adidas shoes) such as price, advertising and income, we used the regression formula
in excel to derive in a more accurate estimation of demand from the different local branches
of our adidas store. The results that we gather are: for every 1,000 increase in the price there
is a corresponding loss of 38,268.89 in sales or quantity demanded. This explains the theory
of price elasticity or the measure of the change in the quantity demanded or purchased of a
product in relation to its price change. The product that we had is considered as elastic
because it has a greater impact to the sale considering the factor such as the number of close
substitutes available that’s why it has a negative relationship with the sales.

Furthermore, for every 1,000 increase in the advertising there is a corresponding gain
of 1,743.8 in sales or quantity demanded this is because promoting a product can increase
consumer confidence and raise demand, it is used in dealing with competition. And, for every
1,000 increase in the income there is a corresponding gain of 11,077.21 in sales or quantity
demanded, this explains by the consumer’s income affecting demand. When income of a
consumer rises, he can afford to buy more units of a good than he could have done
previously, and would increase his demand as consuming more of a good gives him a higher
satisfaction. Therefore, there is a positive relationship between a consumer's income and the
amount of the good that they are willing or able to buy. And last, for Error, the observed
demand value will seldom equal the exact value predicted by the model where Adjusted R2 is
equal to 0.78. The regression model is a good model or accurate. 78% of variation of
quantities of quantity demanded is accounted for by all the factors. The adjusted R-squared
compensates for the addition of variables and only increases if the new predictor enhances the
model above what would be obtained by probability. Conversely, it will decrease when a
predictor improves the model less than what is predicted by chance.