SPSS 12

Multiple Linear Regression

Centre for Advanced Research and Training (CART)
Christ University, Bengaluru

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12.1 Statement of Problem

“XYZ” management conducted a survey

to predict the satisfaction levels of its

customers to provide a better foundation for

their marketing efforts.

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12.2 Objective(s)

1. Identify the best regression model to predict customer

satisfaction levels

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12.3 Variables with Measurement

Dependant Variable:
- Customer Satisfaction – (Scale)

Independent Variables:

1. Product Quality (Scale)

2. E-Commerce activities (Scale)
3. Technical support (Scale)
4. Complaint resolution (Scale)
5. Competitive pricing (Scale)
6. Price flexibility (Scale)
7. Delivery speed (Scale)
8. New Products (Scale)
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12.4 Hypothesis

Null hypothesis:

H0: R = 0, the multiple correlation coefficient is equal to zero

i.e ., all regression coefficients are equal to zero (except the intercept)

Alternative hypothesis:

H1: R ≠ 0, the multiple correlation coefficient is not equal to zero

i.e., at least one regression coefficient (except the intercept) is statistically significantly
different from zero

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12.5 What is Required

Following are the minimum requirements to form a multiple

linear regression model:
One dependant variable : Continuous
Independent variables: Two or more
Independent variables must be continuous (or) categorical
(or) both

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12.6 Assumptions

Assumptions:
1. Independence of residuals (No autocorrelation)
2. A linear relationship between the predictor variables and
the dependent variable
3. Homoscedasticity of residuals (equal error variances)
4. No multicollinearity
5. No significant outliers or influential points
6. Residuals are normally distributed

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(Notes)

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12.7 MLR Procedure

standard-multiple-
regression.sav

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12.7 MLR Procedure

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12.8 Testing of Assumptions

Independence of residuals
Checking for a linear relationship
Overall
Partial Regression Plots
Product Quality
E-Commerce activities
Technical support
Complaint resolution
Competitive pricing
Price flexibility
Delivery speed
Checking for homoscedasticity
Checking for multicollinearity
Correlation
Tolerance and VIF
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12.8.1 Independence of residuals

Model Summaryb
Model R R Square Adjusted R Std. Error of the Durbin-Watson
Square Estimate

1 .789a .622 .589 .6992 2.029

a. Predictors: (Constant), X10 - Delivery Speed, X3 - Product Quality, X8 - New

Products, X5 - Technical Support, X4 - E-Commerce Activities, X7 - Competitive
Pricing, X9 - Price Flexibility, X6 - Complaint Resolution
b. Dependent Variable: X11 - Satisfaction

Durbin-Watson test statistic ‘d’ lies between ‘0’ and ‘4’.

• If 0 <= d < 2, then there exist positive autocorrelation

• If 2 < d <= 4, then there exist negative autocorrelation
• If d =2, then there exist no autocorrelation

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12.8.2 Checking for a linear relationship

OVERALL RELATIONSHIP

If the standardized/
studentized residuals
are plotted
independently towards
the unstandardized
predicted values, we
can expect a fairly
good linear
relationship in the
overall model

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

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12.8.2 Checking for a linear relationship

Discussion:

From the partial residual plots it is observed that:

• Positive linear relationship between customer satisfaction and
product quality
• Positive linear relationship between customer satisfaction and E
commerce activities
• Positive linear relationship between customer satisfaction and
complaint resolution
• Some what Positive linear relationship between customer
satisfaction and delivery speed
• There is no significant linear relationship between satisfaction and
the independent variables technical support, competitive pricing ,
new products and price flexibility.

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12.8.3 Testing for Homoscedasticity

If the residual plots

versus predicted
values are widely
scattered without
forming any pattern,
we can expect the
residuals are having
constant variance
throughout the series.

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12.8.4 Testing for Multicollinearity

Multicollinearity can be identified in two stages

Inspection of Correlation Coefficients
Inspection of Tolerance/VIF values

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12.8.4 Testing for Multicollinearity

Inspection of Tolerance/VIF

• If VIF > 10, we

may expect
serious
collinearity
problem among
the independent
variables.
• Here no variable
have VIF > 5.

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12.8.5 Checking for outliers

Detecting outliers
Casewise diagnostics
Studentized deleted residuals
Checking for leverage points
Checking for influential points

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12.8.5 Checking for outliers

Studentized deleted
residuals
Statistics
Studentized Deleted Residual
Valid 100
N
Missing 0
Mean -.0011639 • If all the SDR are
Std. Error of Mean .10135878 within 3 SD limits, then
1.0135878 there exist no outliers.
Std. Deviation
1
• Here there is no single
Range 5.04164
Minimum -2.91623
residual with more
Maximum 2.12541 than 3SD limits.
25 -.5763501
Percentile
50 .0933447
s
75 .6058608

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12.8.5 Checking for outliers

Centered Leverage Values:

Statistics
Centered Leverage Value
Valid 100
N Missin
0
g • The centered leverage
Mean .0800000 points lies from ‘0’ to
.0035542 (n-1)/n
Std. Error of Mean
2
• If the leverage points
.0355422
Std. Deviation
1
are > 0.5, then
Range .18714 seriously we need to
Minimum .01891 investigate about that
Maximum .20605 points.
25 .0569072
Percentile
50 .0756426
s
75 .0985578

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12.8.5 Checking for outliers

Influential points
Statistics

Cook's Distance
Valid 100
N
Missing 0
Mean .0098520
.0155700
Std. Deviation
8 If any point is > 1,
Minimum .00004 then it can be
Maximum .09383 considered as an
25 .0011549
influential point.
Percentile
50 .0043975
s
75 .0124163

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12.8.6 Testing for Normality

Checking for normality can be done in different ways:

Default analysis: Histogram, PP Plot
Studentized residuals and QQ plot

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12.8.6 Testing for Normality

If the data follows normality,

standardized residuals forms
a bell shaped curve with
approximate mean ‘0’ and
standard deviation ‘1’

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12.8.6 Testing for Normality

If the data follows

normality, the
expected
cumulative
probability closely
cluster along the
diagonal line.

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12.8.6 Testing for Normality

Standardized residuals

Tests of Normality
Kolmogorov-Smirnova Shapiro-Wilk

Statisti df Sig. Statisti df Sig.

c c
Standardized
.063 100 .200* .976 100 .059
Residual

*. This is a lower bound of the true significance.

a. Lilliefors Significance Correction

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12.8.6 Testing for Normality

To test the normality we plotted the standardized residuals in
different ways: Histogram, PP Plot, QQ Plot and Normality
tests
From histogram, residuals approximately formed a bell
shaped curve with approximate mean and SD to ‘0’ and ‘1’
respectively.
From PP and QQ Plots we observed that, the points are
closely aligned along the diagonal line.
From Shapiro-Wilk and Kolmogorov-Smirnov tests we
conclude that the residuals are normally distributed.
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12.9 Interpretation

Model Fits
R =0.789
The power of independent variables to predict the values of dependant variable is 78.9%
R2 = 0.622
The independent variables explain 62.2 % of the variability of the dependent variable in this
model
Adjusted R2 = 0.589
The independent variables explains 58.9 % of the variability of the dependent variable in the
population.
Model Summary
Model R R Square Adjusted R Std. Error of the
Square Estimate
1 .789 a
.622 .589 .6992
a. Predictors: (Constant), X10 - Delivery Speed, X3 - Product Quality,
X8 - New Products, X5 - Technical Support, X4 - E-Commerce
Activities, X7 - Competitive Pricing, X9 - Price Flexibility, X6 -
Complaint Resolution

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12.9 Interpretation

Model Fits
Statistical significance
The F-ratio in the ANOVA table is the ratio of the mean sum of squares for regression to the
mean sum of squares for the residuals
It tests whether the regression model is a good fit for the data
The table shows that the independent variables statistically significantly predict the dependent
variable, F(8, 91) = 18.709, p < .0005 (i.e., the regression model is a good fit of the data)
The null hypothesis (the multiple correlation coefficient, R = 0) is rejected
It means at least one regression coefficient (except the intercept) is statistically significantly
different from zero.
ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regression 73.174 8 9.147 18.709 .000b
1 Residual 44.491 91 .489
Total 117.665 99
a. Dependent Variable: X11 - Satisfaction
b. Predictors: (Constant), X10 - Delivery Speed, X3 - Product Quality, X8 - New
Products, X5 - Technical Support, X4 - E-Commerce Activities, X7 - Competitive Pricing,
X9 - Price Flexibility, X6 - Complaint Resolution
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Prediction

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Prediction
Regression Equation:
• Predicted Customer satisfaction = -0.629 + 0.366 (Product quality) +
0.390 (E-Commerce activities) + 0.035 (Technical support) + 0.309
(Complaint resolution) + 0.01 (Competitive pricing) + 0.043 (New
products) – 0.027 (Price flexibility) + 0.314 (Delivery speed)

Estimation of Customer satisfaction:

• Predict Customer satisfaction for someone scores of independent
variables product quality 9, E-Commerce activities 4, Technical
support 3.2, Complaint resolution 6.3, Competitive pricing 7, New
products 5.6, Price flexibility 4.9 and delivery speed 4.2
• Predicted Customer satisfaction = -0.629 + 0.366 (9) + 0.390 (4) +
0.035 (3.2) + 0.309 (6.3) + 0.01 (7) + 0.043 (5.6) – 0.027 (4.9) + 0.314
(4.2)
• Predicted Customer satisfaction = 6.221

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Reporting
A multiple regression was run to predict customer satisfaction from Product quality, E-
Commerce activities, Technical support, Complaint resolution, Competitive pricing, New
products, Price flexibility and delivery speed. The assumptions of linearity, independence of
errors, homoscedasticity, unusual points and normality of residuals were met. These variables
statistically significantly predicted Customer satisfaction, F(8, 91) = 18.709, p < .0005, adj.
R2 = .589. Out of eight variables 3 are added statistically significantly to the prediction, p
< .05 and 5 are not. Regression coefficients and standard errors can be found in below Table.
Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) -.629 .912 -.690 .492
X3 - Product Quality .366 .063 .467 5.776 .000
X4 - E-Commerce .390 .107 .251 3.639 .000
Activities
X5 - Technical Support .035 .050 .048 .698 .487
1 X6 - Complaint .309 .119 .342 2.592 .011
Resolution
X7 - Competitive Pricing .015 .058 .022 .264 .792
X8 - New Products .043 .048 .059 .896 .372
X9 - Price Flexibility -.027 .095 -.030 -.283 .778

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X10 - Delivery Speed
and .207 .212 1.515 .133

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Further Discussion

A multiple regression model removing the statistically

insignificant variables in the model
Including the distribution type (Categorical variable)
Applying the step wise regression model

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