# Regression Analysis — Process

Sequence of steps to be followed in the development of a regression model.

1. Sample: The sample size should be adequately large to ensure statistical power and generalizability of the regression.
2. Model design: Choose the dependent and plausible explanatory variables. Check assumptions:
• Normality
• Linearity
• Homoscedasticity
• Independence of the error terms.
Often there is also the need to create additional variables to meet some of the below requirements:
• Transformations, in case some assumptions are not met.
• Dummy variables to cater for nonmetric variables.
• Polynomials required if curvilinear relationships exist.
• Interaction terms required if there are moderator effects.
3. Run the model. Variable Selection is usually a combination of methods such as confirmatory, stepwise estimation, forward regression, and backward regression.
4. Examine Results: Output need to be thoroughly examined in the context of the following:
• Issues: Influential observations. Check for multicollinearity.
• Practical Significance: Is it theoretically sound? Are the signs and magnitude of coefficient meaningful?
• Statistical Significance:
2. F-ratio: Standard error of estimation.
3. t-test: Statistical significance of regression coefficients.
4. Residuals: Ensure that residuals meet required criteria.
If model lacks practical/statistical significance or there are modelling issues, the model design must be revised (i.e., back to stage 3).
5. Validation: Cross-validate the regression to assess how well the model can be generalized.

Previous     Next

Use the Search Bar to find content on MarketingMind.

### Marketing Analytics Workshop

In an analytics-driven business environment, this analytics-centred consumer marketing workshop is tailored to the needs of consumer analysts, marketing researchers, brand managers, category managers and seasoned marketing and retailing professionals.

### Digital Marketing Workshop

Unlock the Power of Digital Marketing: Join us for an immersive online experience designed to empower you with the skills and knowledge needed to excel in the dynamic world of digital marketing. In just three days, you will transform into a proficient digital marketer, equipped to craft and implement successful online strategies.