Sunday, August 16, 2009

Using structural equations modeling to understand store performance drivers

Structural equations modeling is an extremely good technique to model multiple cause and effect simultaneously. Take for example we want to trace the causal chain from foot fall to conversion to spend dispersion to monthly sales turnover to store profitability. How do we get to see the complete cause and effect chain. Techniques like regression etc cannot handle one outcome variable recursively being a causal variable

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