How best to explain Trendlines to my boss?

[niravrph]

Hi there,

So I have added Trendlines to my charts showing the upward/downward trend in sales for my company's products. How can I explain the meaning of these arrows? By that, I don't mean the definition. I know that's published everywhere. By that I mean how can I explain the difference of one slope versus the slightly similar (but not exactly the same) slope of another in layman's terms? Would data labels of the R-squared value be sufficiently explanatory? I'm thinking probably not.

Here's a link to an example. Hope you can access it.

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B64ofPSgPobtNWVjMDQ0ZGYtYjM4Ni00YWM5LWFhNzQtNzMzZjRhZDY2MDYx&hl=en_US&authkey=CP3s8OMB

If I was my boss I would ask "What do the trendlines mean to me? Should I panic if the trendline is downward sloping? A little downward sloping means what? A little upward sloping means what?"

Would appreciate some thoughts from the community. Often I DO in Excel... without truly knowing or being able to explain what I have just done!

Thank you.

 

[seenfresh]

I would start with labeling your charts, at first glance it is not evident what the underlying data represents. You mentioned sales, but the x axis shows numbers in decimals... is this percentages, other statistical measure (R-square)...etc? What is the difference between all of the charts? You also mentioned product sales, does each chart represent a specific product category? What is the definition of R-square for purposes of your analysis?

 

[niravrph]

Sorry about that.. for some reason the X-axis converted to decimals. It should be %-age market share.

The difference between each of these charts is 4 products, two cities per product (NY & Phila.) - 8 charts total.

I added the X-axis label to show share %-age.

Now about those trendlines.... thoughts how to explain them?

Thanks!

 

[seenfresh]

Let's walk through one of your charts as an example and I'm pretty sure you will answer your own question

Let's review the very first chart on the upper left hand corner "New York". Let's call this product A.

Let me know if my interpretation of the data is correct.

Blue line - represents products A's actual sales as a % of market share. In other words, for January roughly 4% of all product A's in New York were sold by your company? Thus, resulting in a 4% market share.

Red line - this is your company's baseline. In other words, budgeted/expected market share?

Green line - Nation Metros Baseline, represents U.S. average total market share % by major city of product A?

Once we define these definitions properly it will be easier to understand the context of your analysis and measurement.

 

[niravrph]

Hi,

Blue line - Correct.
Red line - Correct. This is the budgeted/expected market share for the New York metro.
Green line - This is the overall budgeted/expected market share for ALL metros within my company.

The trendline I inputted was based on the New York numbers.

Thanks.

 

[seenfresh]

Let's break this down some more...

Based on the format/layout of your chart the direction of the trend line will always point upward... because this data is time sensitive starting with earliest time period "January" and moving up to "May". A negative trend line would result in the upward arrow moving to the left resulting in a decrease in market share and a positive trend line would result in the upward arrow moving to the right resulting in an increase in market share...

After clarifying this, explain to me what you think is happening in our example "New York" chart? Also, since this chart is only for "New York" territory, does it make sense to include the Green line since we already have a budget/expectation line specifically for "New York"?

Also, note the budget/expectation line is the basis of our measurement/analysis it is the standard at which we will be comparing against.

 

[niravrph]

Hi,

I don't think the trendline will always point upward. Actually the New York chart on the top right shows a downward/right slope - signifying a negative market share trend(line). Is my understanding correct?

I was asked to include a comparison of New York versus all the other Metros in the company so the chart shows how NY is performing against its own target as well as how it is performing against the nation as a whole.

Let me know if I did not answer your questions as you intended.

Thanks.

 

[seenfresh]

Trend lines are visual representation of a "trend" over a period of time. Is an average based on the highs and lows.

The key to remember is that it over a period of time, so in this case we are comparing from our start date "January" to our end date "May" from oldest to current. From January to May what is the average change, a trend line will show a visual representation of the linear change over this time frame.

For example, the chart on the top left shows a positive trend line, showing an increase over time in the actual market share% and the trend line of the chart on the top right shows a slight negative trend line. This negative trend line can be explained as follows: January was your best month with roughly 51% of the market share and in Feb through May the actual market share went down under 50% in some cases. If January is your base period and May is your ending/current period it looks like you started great and lost market share as you progressed from Feb to May, resulting in a negative trend...This chart tells us that over time you are losing market share. Does this make sense?