Description of a Business Context Special Project

Description of a Business Context Special Project

Instructions/Descriptions

Description of a Business Context Special Project

Statistics FOR Business –

Special Project (Example #2)

Name: Student B Date: ____________

Part A: Description of Business Context

Write a brief summary of the business context (e.g., manufacturing, marketing, finance, etc.) including the name of the company or organization.

Crystal Geyser (Company) sells bottled water, collected from alpine springs, through various U.S. retail channels.

Part B: Problem/Issue

State the business problem/issue to be addressed using statistics and why this problem/issue is important to the company/organization.

Several new competitors have entered the market during the past year, eroding some of the Company’s customer base. The Company wants to revive its sales through the implementation of a new marketing campaign. As part of this process, the Company wants to determine the popularity of its product among customers of different socioeconomic status.

Part C: Statistical Procedure

Explain the statistical procedure (NOTE: Focus on ONE statistical procedure only)

1. Independent variable:
2. a) What is the variable: Socioeconomic status
3. b) How it is measured (e.g., revenue measured in “dollars”; height measured as “short, average, tall”) Low, middle, high
4. c) Level of measurement (nominal, ordinal, interval, or ratio): Ordinal
5. Dependent variable:
6. a) What is the variable: Frequency of purchase
7. b) How it is measured (e.g., revenue measured in “dollars”; height measured as “short, average, tall”) Never purchase, occasionally purchase, frequently purchase
8. c) Level of measurement (nominal, ordinal, interval, or ratio): Ordinal
9. Name of the procedure/formula (e.g., ANOVA, Chi-Square, Hypothesis Test using z formula, Regression Analysis, etc.). NOTE: The procedure/ formula must be one that was covered in the course: Chi-Square test
10. Describe the statistical rationale/justification for choosing this procedure/ formula: Chi-Square test for independence is used when the independent variable has 2 or more groups (nominal or ordinal level) and when the dependent variable is measured at the nominal or ordinal level.
11. Describe how the data are collected by the business/organization: The Company hired a market research firm to conduct a survey of a sample of customers drawn from the target population. Response data were collected via a telephone survey.

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Describe how the data are analyzed (i.e., how the statistical procedure is performed): The null and alternative hypotheses are defined (H0: There are no differences among the groups with respect to their frequency of purchase. H1: There are differences among the groups with respect to their frequency of purchase.); an alpha level is set; Chi-square is calculated using the formula: χ2 = ∑[(fi,j – ei,j)2 ÷ ei,j]; the calculated χ2 value is compared to the critical χ2 value (found in the χ2 table); if χ2 calculated < χ2 critical H0 is accepted and if χ2 calculated > χ2 critical H0 is rejected.

Part D: Decision/Interpretation

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Explain the type of business decision that the company/organization would make as a result of this statistical analysis. If H0 is accepted, Crystal Geyser can conclude that it does not need to differentiate its advertising/marketing strategy by socioeconomic status. If H0 were rejected, Crystal Geyser would further analyze the survey results to determine which socioeconomic group(s) to specifically target in its new marketing campaign.

Description of a Business Context Special Project

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