The Regression Analysis Process

At a general level, the three steps in the regression process are:

1. Develop an equation. The first step is to identify the question that needs to be answered, and determine the variables that are likely to provide the answer. For example, if the problem is to forecast market demand, you may want to consider variables such as pricing and production.

2. Collect the data. The next step is to gather data for the dependent and independent variables in the regression model. In general, analyzing more data will yield more significant results. Therefore, it is common to collect data covering a prolonged time period. Depending upon the variables being analyzed, the data may be retrieved internally, such as from company databases, or externally, such as from public or private sector research organizations.

3. Conduct and interpret the analysis. The next step is to input the data into a regression analysis tool such as Minitab, SPSS, SAS, or Microsoft Excel, depending upon the complexity of the regression analysis. Each software package requires its own method for entering regression model data.