The use of covariance analysis as a means of analysing the price-setting policy for a company's product

Date of publication: June 15, 1971


Covariance analysis is a combination of regression analysis and the analysis of variance. From the latter's standpoint it can be used with any of the above experimental designs to increase the precision of the experiment by removing one or more uncontrolled variables from the error term. From a regression standpoint it can be used to compare several regression lines to test whether they differ significantly from each other and to identify the sources of variance. This paper will illustrate the use of covariance analysis, primarily from a regression standpoint using an example taken from industrial marketing. At a later stage it will be suggested that covariance analysis can be used in the analysis of variance context to examine the competitiveness of price-setting policies by companies,

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