I am given a task to perform an analysis on marketing data and to find out if the prices for the products and marketing budget are set correctly.
In order to do it, I need to find a suitable model of marketing instrumental variables and interpret its validity. The set of variables includes:
- sales volume (number of units sold)
- marketing budget (for advertising)
- number of sales representatives
Data is given for 16 districts.
When I try to perform 2sls in SPSS, I put:
- sales volume - independent;
- price - explanatory
- adv budget and N of sales rep - instrumental.
I get small F value (I found it should be more than 10 if I use one instrument), R squared and p value. It indicates that my model doesn't make sense.
Do I actually do it correctly, using 2SLSS straight without finding extra variables? I assumed that I need to find new variables first by using OLS, and then perform 2SLS in SPSS.
I will appreciate any help and small guidance on using 2sls in SPSS.
Update: Is there an opportunity for someone with extensive marketing mix modelling experience to provide me with more in-depth guidance (via e-mail)? I already found the material I need to use, and I know the steps, but I am afraid to omit some important details which can lead to suboptimal outcome. I need to use multiplicative regression, 2 equations for profit maximization (on price and marketing costs) and finally check how this setting will affect profit and sales. I rely on http://www.anderson.ucla.edu/faculty/dominique.hanssens/content/modeling_marketing_interactions.pdf , since I also have to consider salesforce expenditures, which are part of my marketing budget. Thank you in advance!