Exploratory Analysis of Marketing Data: Trees vs. Regression

Journal of Marketing Research Journal of Marketing Research, Vol. 7, pp. 487-492, 1970

Posted: 9 Feb 2005 Last revised: 13 Aug 2010

See all articles by J. Scott Armstrong

J. Scott Armstrong

University of Pennsylvania - Marketing Department

James G. Andress

Booz-Allen-Hamilton, Inc.

Abstract

This article compares the predictive ability of models developed by two different statistical methods, tree analysis and regression analysis. Each was used in an exploratory study to develop a model to make predictions for a specific marketing situation.

In situations where there are large sample sizes and where the data are subject to interaction, nonlinearities or causal priorities, there is reason to believe that tree analysis will be superior to regression analysis. This study provided support for the use of trees rather than regression for exploratory research in one such situation. Two predictive models were developed from a sample of 2,717 gas stations. Each used conventional decision rules - following what were thought to be the typical rules-of-thumb. Predictions were then made on the gasoline volume for 3,000 stations (virgin data). The predictions generated by the AID model were substantially more accurate than those generated by the regression model. We do not, by any means, regard the problem of trees vs. regression as a closed issue. More evidence is required from other situations to test out the generality of the hypothesis tested in this study. Our impression is that the ideal type of data analysis will employ both trees and regression concurrently.

Keywords: Marketing data, trees analysis vs. regression analysis, forecasting

Suggested Citation

Armstrong, J. Scott and Andress, James G., Exploratory Analysis of Marketing Data: Trees vs. Regression. Journal of Marketing Research Journal of Marketing Research, Vol. 7, pp. 487-492, 1970. Available at SSRN: https://ssrn.com/abstract=664164

J. Scott Armstrong (Contact Author)

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-5087 (Phone)
215-898-2534 (Fax)

HOME PAGE: http://marketing.wharton.upenn.edu/people/faculty/armstrong.cfm

James G. Andress

Booz-Allen-Hamilton, Inc.

5220 Pacific Concourse Drive
Los Angeles, CA 90045

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