Ref. No.

: BRM0001

Demand Forecasting of Magic Foods using Multiple

Regression Analysis Technique

South India-based Magic Foods, a leading manufacturer of pickles, has been selling its products
under the brand name ‘Magic’ for over the last two decades. Magic Foods is engaged in the
manufacturing and marketing of high quality Indian processed foods such as pickles, spice pastes,
instant mixes, etc. The company provides a perfect blend of traditional Indian taste with requirements
and preferences of the modern Indian consumer. It combines better taste with natural purity, innovative
packaging and care for health and also comes at reasonable price.
With quality food products and focus on customer satisfaction, Magic Foods maintains a leading
position in the processed food section by widening its customer base and making its products available
at affordable prices in India and abroad. As a part of its initiatives, the company planned to expand
its business to increase the sales of its products in other regions. But for this, the company wants to
know the factors which can increase the sales across different states. However, with some new
companies coming up, very recently the company witnessed an increase in competition across the
industry, resulting in a decrease in its sales.
To discuss the issues, the managing director of the company called a meeting of all the directors
and marketing executives. Many factors were cited for possible fall in sales, but among them no
common factor emerged. The marketing director suggested approaching a company that was well-
versed in business research and everyone agreed.
Magic Foods hired a marketing research agency called Care Research for the job. After listening
to the problem, the agency thought of using a cross section analysis1 of the problem, as there are 30
territories from where it has to collect data. The research company started identifying the variables,
which according to the company, may have a bearing on sales. Based on the collected information
(Exhibit I) and the previous studies done, the marketing agency came out with five important variables,
which are expected to be crucial in determining the sales. These variables are: Market potential in

1
Cross section analysis is done at any particular point of time without time dimension.

This case study was written by R. Muthukumar, IBSCDC. It is intended to be used as the basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. The case was prepared from generalised experiences.

© 2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever
without the permission of the copyright owner.

License to use for IBS Campuses only. Sem II. Class of 2019-2021.
 Demand Forecasting of Magic Foods using Multiple Regression...

the territory, number of shops selling processed foods, number of dealers, number of popular brands
in that territory and population of that territory. Even though there are five important variables, the
marketing director wanted to know the crucial factors on which the company should focus to
significantly increase the sales. He also wanted to know the likely future demand.

Suggested Questions for Discussion

I. Why does the research company choose to use cross-section analysis?
II. Analyse how the marketing agency got the figures for market potential of the territory.
III. Is there any other means through which the company can predict the sales?

License to use for IBS Campuses only. Sem II. Class of 2019-2021.
 Demand Forecasting of Magic Foods using Multiple Regression...

Exhibit I
Marketing Details of the Region
Territory Sales Market Potential No. of No. of No. of Population
No. (in INR of the Territory Shops (in Dealers (in Popular (in
lakh) (in INR lakh) hundred) hundred) Brands thousand)
1 10 16 8 7 12 71
2 8 12 6 6 13 59
3 45 28 19 36 6 135
4 58 43 19 49 2 149
5 10 14 6 12 13 70
6 5 7 4 3 11 45
7 12 16 9 17 13 58
8 56 35 18 45 2 148
9 25 19 15 28 9 103
10 29 24 13 29 9 115
11 52 31 16 40 3 145
12 48 27 18 38 4 139
13 51 32 17 42 3 146
14 9 16 8 8 16 68
15 11 15 7 14 13 73
16 21 16 10 20 11 85
17 4 6 2 2 14 56
18 18 18 7 18 14 68
19 9 15 9 9 14 67
20 8 15 7 4 14 62
21 19 19 8 19 13 70
22 24 15 16 21 16 100
23 30 25 15 30 9 123
24 26 15 14 26 13 102
25 42 26 18 31 6 133
26 6 9 5 5 12 58
27 20 17 11 19 12 80
28 28 19 10 27 8 114
29 50 30 15 39 4 140
30 46 29 17 35 5 134
Prepared by the author

License to use for IBS Campuses only. Sem II. Class of 2019-2021.