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LEARNING OBJECTIVES To learn how differences are used for market segmentation decisions To understand when t-tests or z-tests are appropriate and why you do not need to worry about this issue To be able to test the differences between two percentages or means for two independent groups To know what is a pair samples difference test and when to use it To comprehend ANOVA and how to interpret ANOVA output To learn how to perform differences tests for means using !

CHAPTER OUTLINE MARKET SEGMENTATION IN THE NEW ZEALAND WINE MARKET WHY DIFFERENCES ARE IMPORTANT SMALL SAMPLE SIZES: THE USE OF A T-TEST OR A Z-TEST AND HOW SPSS ELIMINATES THE WORRY TESTING FOR SIGNIFICANT DIFFERENCES BETWEEN TWO GROUPS RETURN TO YOUR INTEGRATED CASE "ifferences between !ercentages with Two #roups $%ndependent amples& 'sing ! for "ifferences (etween !ercentages of Two #roups "ifferences between )eans with Two #roups $%ndependent amples& The *obbits+ ,hoice -estaurant ur.ey/ *ow to !erform an %ndependent amples ignificance of "ifferences between )eans Test with ! DIFFERENCES BETWEEN TWO MEANS WITHIN THE SAME SAMPLE (PAIRED SAMPLE) The *obbits+ ,hoice -estaurant ur.ey/ *ow to !erform a !aired amples ignificance of "ifferences (etween )eans Test with ! ONLINE SURVEYS AND DATABASES A !SIGNIFICANCE" CHALLENGE TO MARKETING RESEARCHER

012

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

TESTING FOR SIGNIFICANT DIFFERENCES IN MEANS AMONG MORE THAN TWO GROUPS: ANALYSIS OF VARIANCE (asic 4ogic in Analysis of Variance *ow to "etermine tatistically ignificant "ifferences Among #roup )eans The *obbits+ ,hoice -estaurant ur.ey/ *ow to -un Analysis of Variance on ! Applying ANOVA $Analysis of Variance& n-5ay ANOVA KEY TERMS tatistical significance of differences table difference t test Null hypothesis ignificance of differences between two percentages ignificance of difference between two means !aired samples test for the difference between two means ANOVA $analysis of .ariance& !ost hoc tests One-way ANOVA %nteraction effects TEACHING SUGGESTIONS 37 This chapter perpetuates the impro.ement o.er pre.ious .ersions of the te8tbook instituted in the fourth edition7 !rior editions which included confidence inter.als9 hypothesis tests9 mean differences9 and ANOVA in a single9 long chapter7 Also9 there are fewer statistical differences formulas although those that remain are simplified somewhat7 #reater emphasis is placed on identifying and interpreting rele.ant parts 6lagging procedure "uncan+s multiple range test n-way ANOVA )eaningful difference Actionable difference z test

:0

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

of ! output7 *opefully9 instructors will find this material less difficult for students to understand and easier to teach7 07 The chapter begins by claiming that market segmentation is a .ery important and the basis for market researchers to in.estigate statistically significant differences among identifiable groups of consumers7 One may use one+s fa.orite or most familiar market segmentation e8ample to augment or emphasize the segmentation differences central point7 To identify market segments is only the beginning point of the marketing research notion of significant differences7 Once the segments are identified9 marketing research re;uires that data be gathered about the consumption patterns of the market segments9 and then9 these patterns are assessed statistically for significant differences7 The statistical concepts used to compare segments are percentages and means7 %t is important to emphasize that marketing segmentation is a conceptual notion9 for whereas segments can be identified in a great many ways9 they are not managerially rele.ant until statistically significant differences between them are shown that are useful from a marketing strategy standpoint7 As a simple e8ample9 take a florist that segments the local market by geographic area/ North9 <ast9 5est9 and outh7 The a.erage dollars spent per purchase is calculated for three flower-gi.ing days in the year7 Assume that differences of =>? are not significant7 Area 6ather+s "ay )other+s "ay Valentine+s "ay North >0@ >32 >?@ <ast 5est outh >03 >3? >?? >A3 >32 >AB >3: >0? >3@

5hat are the promotional implications of these findingsC Answer by day7 6ather+s "ay D promote hea.ily to the outh )other+s "ay D promote hea.ily to the outh and <ast Valentine+s "ay D !romote hea.ily to the North9 moderately to the 5est and lightly to the <ast and outh A7 The differences between groups is taken with percentages first because the formulas are less complicated9 and students can relate to them easier than they can relate to the means differences formulas7 The chapter mo.es ;uickly from percentage differences

:A

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

to means differences to ! independent samples t test procedure because the intent is to ha.e students understand the ! output and not become bogged down on computations7 %nstructors who are more concerned with their students+ learning of the formulas may wish to dwell longer on the formulas and ha.e students do in-class or other e8ercises that re;uire them to use these formulas correctly7 :7 tudents sometimes appear traumatized by their e8periences in their business statistics course7 The section on mall ample izes/ The 'se of a t Test or a z Test and *ow ! <liminates the 5orry is included to con.ince students that ! will always issue the proper statistical significance le.el7 %t may be .aluable to go o.er this section at least briefly to help students understand that they are not responsible for determining the proper statistic and how to look up its significance7

?7 The flag wa.ing )arketing -esearch %nsight is not meant to be simply cute7 tudents often find statistical concepts and terminology intimidating9 and the flag wa.ing analogy gi.es them something tangible to lock onto7 The authors9 of course9 realize that statistical significance is greatly affected by sample size9 and the flag wa.ing )-% does not admit to the role of sample size7 The intent it to gi.e students a signal as to when to look further into the post hoc findings7 This signal is especially useful for cross-tabulation and correlation treated in chapter 3E $ne8t& because students typically o.erlook the significance test with these analyses7 %f they learn the signal with differences tests9 this learning is generalizable to working with associati.e and predicti.e analyses7 B7 The assumption of e;ual .ariances in the two samples of a t test for the significance of the difference between two means is not discussed in the te8t+s co.erage of these computations7 *owe.er9 students will encounter it when they perform t tests with ! for 5indows7 The description includes comments on 4e.ene+s Test for <;uality of Variances9 which is included in the ! output for a t test7 %nstructors who wish may want to co.er the e;ual .ariances assumption test in class presentation and introduce students to the formulas with their own materials7 27 The paired samples t test procedure is much less commonly used than is the independent samples t test7 The latter is the basis for finding statistically significant differences between two groups $market segments&9 while the pair samples test determines differences within a market segment7 6or e8ample9 males may differ from females on their satisfaction with an online catalog purchasing system9 determined .ia an independent samples t test7 At the same time males may prefer to purchase catalog items online more than on the telephone9 and this would be determined using a paired-samples t test7 5omen9 although a separate market segment9 may prefer telephone purchases o.er online purchases with catalog items7 E7 %nstructors should be forewarned that the section on Online ur.eys and "atabases D A F ignificance+ ,hallenge to )arketing -esearchers may be misinterpreted by inattenti.e students7 The point here is that with .ery large samples9 practically e.erything becomes statistically significant because the sample size plays a key role

::

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

in determining statistical significance7 As the sample size increases9 more statistical significance is found9 and with gigantic databases9 statistical tests are unnecessary7 %nattenti.e students may Gump to the conclusion that statistical significance tests are never needed if one uses the rules of thumb pro.ided in the )arketing -esearch %nsight7 This conclusion is gra.ely wrong for traditional marketing research situations9 and instructors may wish to emphasize that database marketing research is emerging but not fully in place7 o9 the significant tests in this and other chapters are something students must understand7 17 The description of one-way analysis of .ariance is not in depth7 %nstructors who desire students to ha.e more knowledge of ANOVA may use this description as a foundation and mo.e to a more in-depth co.erage with their own materials7 ! for 5indows will accommodate ad.anced use of one-way and n-way ANOVA7 3@7 The "uncan+s )ultiple -ange post hoc test was selected abo.e other post hoc tests due to its descripti.e presentation of significant differences between group means7 The tests not discussed can be assigned to indi.idual students with the re;uirement to perform background research and to make a presentation of their findings on the test to the class7 Alternati.ely9 instructors may want to assign students the task of performing .arious post hoc tests with ! for 5indows and comparing their findings7 ACTIVE LEARNING E#ERCISES C$%&'%$()*+, (* D-(-./)+- S)0+)1)&$+( D)11-.-+&-, B-(2--+ P-.&-+(, The calculations are pro.ided in the last column7 Note that the fre;uencies ha.e been computed to percentages in the table7 The only statistically significant difference is in 6) radio ads where the computed z is 07:@ and greater than the 1?H le.el of confidence z of 371B7 Total -ecall newspaper ads J*)+-3 3@@ :? $:?H& D)3 +*( J*)+ A@ 3? $?@H& D)11-.-+&- F)+3)+0 z= = p3 p 0 s p3 p0 :? ?@

:?

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

E1 $E1H&

0@ $B2H&

z= =

p3 p 0 s p3 p0 E1 B2

E1 x33 B2 xAA + 3@@ A@ 00 = 1721 + 2A72 00 = 173A 07:@ -ecall Iellow !ages ads 3B $3BH& ? $32H& z= = p3 p 0 s p3 p0 3B 32

3B xE: 32 xEA + 3@@ A@ 3 = 3A7:: + :27@A 3 = 2722 73A -ecall local TV news ads 03 $03H& B $0@H& z= = p3 p 0 s p3 p0 03 0@

03x21 0@ xE@ + 3@@ A@ 3 = 3B7?1 + ?A7?? 3 = E7AB 730 P-.1*./ M-$+, D)11-.-+&-, A+$%4,), 2)(5 SPSS 6or this acti.e learning e8ercise9 students must use ! and the *obbit+s ,hoice -estaurant sur.ey dataset to determine if there is a difference in the total monthly restaurant e8penditures for the subscribers to City Magazine .ersus the nonsubscribers7 The ! output follows and shows that there is a significant difference/ subscribers spend about >0@E9 while nonsubscribers spend about >3@3 per month on the a.erage7 :B

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

Group Statistics Do you subscribe to City Magazine? Yes o Mean 181 219 $208.2983 $101.9132 +t%. De,iation $83.30793 $69.67768 +t%. -rror Mean $6.19223 $4.70838

!o" #any tota$ %o$$ars %o you s&en% &er #ont' in restaurants ()or your #ea$s on$y*?

Independent Samples Test 1e,ene2s 3est )or -/ua$ity o) 4ariances t5test )or -/ua$ity o) Means 9.7 Con)i%ence 8nter,a$ o) t'e Di))erence 1o"er 6&&er $91.34744 $91.08.87 $121.423 $121.684

0 !o" #any tota$ %o$$ars %o you s&en% &er #ont' in restaurants ()or your #ea$s on$y*? -/ua$ ,ariances assu#e% -/ua$ ,ariances not assu#e% 10.161

+ig. .002

t 13.908 13.676

%) 398 3.1.337

P-.1*./ A+$%4,), *1 V$.)$+&- 2)(5 SPSS tudents must use ! +s ANOVA routine to select the factor of newspaper section most read and the dependent .ariable of how much is typically spent in restaurants per month7 The following output indicates that the o.erall 6 is significant9 and the "uncan+s post hoc test table re.eals that each radio programming listening group is different from all other groups7

ANOVA !o" #any tota$ %o$$ars %o you s&en% &er #ont' in restaurants ()or your #ea$s on$y*? +u# o) +/uares 1618.91 1633008 32.1.99 %) 3 381 384 Mean +/uare .39.30.432 4286.109 0 12..879 +ig. .000

:2

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

How many total dollars do you spend per month in restaurants (for your meals only)? Duncan 3o "'ic' ty&e o) ra%io &rogra##ing %o you #ost o)ten $isten? Country=;estern >oc? 3a$?@ e"s -asy 1istening +ig.

a<b

66 1.9 82 78

1 $.1.1364

1.000

1.000

1.000

$247.7692 1.000

Means )or grou&s in 'o#ogeneous subsets are %is&$aye%. a. 6ses !ar#onic Mean +a#&$e +ize A 86.102. b. 3'e grou& sizes are une/ua$. 3'e 'ar#onic #ean o) t'e grou& sizes is use%. 3y&e 8 error $e,e$s are not guarantee%.

ANSWERS TO END-OF-CHAPTER 6UESTIONS 3. What are differences and why should market researchers be concerned with them? Why are marketing managers concerned with them? -e.iew ;uestion7 %mportant7 tudents will need to re.iew the section on 5hy "ifferences Are

"ifferences in consumers are the bases for marketing segmentation9 effecti.e marketing positioning strategy9 and competiti.e ad.antage7 %n order to be useful to the researcher $and manager&9 differences must be/ significant9 meaningful9 stable9 and actionable7 2. What is considered to be a small sample!" and why is this concept a concern to statisticians? To what extent do market researchers concern themsel#es with small samples? Why? -e.iew ;uestion7 tudents will need to understand the appropriate use of z tests .ersus t tests and to refer to the large databases that are now pre.alent in marketing research7 The statistician refers to a small sample as any sample that has less than or e;ual to A@ respondents9 and this condition re;uires the use of a t test7 )arket researchers are not concerned with small samples because statistical programs automatically adGust for the correct statistic7 Also9 with databases and huge samples that can accompany online sur.eys9 market researchers rarely work with such small samples7 $. When a market researcher compares the responses of two identifiable groups with respect to their answers to the same %uestion! what is this called? -e.iew ;uestion7 This ;uestion re;uires an understanding of the test of the significance of the difference between means of two groups $independent samples t test&7 :E

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

%t is a difference of means test $or means difference test&7 The two groups constitute independent groups9 and with ! 9 the test is called an independent samples t test7 &. With regard to differences tests! briefly define and describe each of the following' -e.iew ;uestion7 tudents are re;uired to define each notion7 The descriptions follow each term7 a. (ull hypothesis The hypothesis that the difference in their population parameters is e;ual to zero7 b. )ampling distribution The assumption is made that the differences ha.e been computed for comparisons of the two sample statistics for many repeated samplings7 %f the null hypothesis is true9 this distribution of differences follows the normal cur.e with a mean e;ual to zero and a standard error e;ual to one7 c. )ignificant difference tatistical significance of differences means that the differences found in the sample$s& may be assumed to e8ist in the population$s& from which the random samples are drawn7 *. +elate the formula and identify each formula,s components in the test of significant differences between two groups for when the %uestion in#ol#ed is-e.iew ;uestion7 To answer these ;uestions9 students must be able to distinguish between percentages and means differences tests7 a. . yes/no" type of %uestion This is a nominal scale situation9 so the percentage formula must be used7 The formula isJ

:1

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

z=

p3 p 0 s p3 p0

5here/

p3 K percentage found in sample 3

b. . metric scale0type of %uestion This is an inter.al or ratio scale .ariable situation9 so the mean formula must be used7 This formula isJ

z= x3 x 0 s x3 x0

5here/

x3 = mean found in sample 3

1. .re the following two sample results significantly different? Application ;uestion7 tudents must determine what formula to use9 make correct computations9 and interpret the findings. )ample 3 Mean' 37.1 )td. de#'3.* n ; 3*7 )ample 2 Mean' 33.8 )td. de#' 2.* n ; $77 Confidence 4e#el 9*: 2our 5inding?66666

?@

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

)eans and standard de.iations are pro.ided in this e8ample9 so the formula for mean differences must be used7

z= = x3 x 0 s x3 x0 3@7B 3372 37? x37? 07? x 07? + 3?@ A@@ 373 070? B70? + 3?@ A@@ 373

The computed z is greater than 371B9 so the difference is significant at the 1?H le.el7 )ample 3 <ercent' &*: n ; $*7 )ample 2 <ercent' *&: n ; 2*7 Confidence 4e#el 99: 2our 5inding?6666

!ercentages are in.ol.ed9 so the difference between percentages formula must be used7 z= = p3 p 0 s p3 p0 :? ?:

The computed z is -073E which is less than 07?B9 so the difference between these two percentages is not significant at the 11H le.el7 ?3

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

2our 5inding?6666

)eans and standard de.iations are in.ol.ed9 so the means difference formula must be used7

x3 x 0 s x3 x0 3?@@ 30?@

z= =

??@ x??@ ?@@ x?@@ + 30@@ ?@@ 0?@ = A@0?@@ 0?@@@@ + 30@@ ?@@ 0?@ = 0?0 + 7?@@ 0?@ = 027: = 1730

The computed z .alue is greater than 371B9 so the difference between these two means is statistically significant at the 1?H le.el of confidence7 8. What is a paired0samples test? )pecifically how are the samples paired"? -e.iew ;uestion7 tudents must show an understanding of comparing means of two ;uestions answered by the same sample7 %f a researcher has a ;uestionnaire with identically or .ery similarly scaled ;uestions $such as se.eral ?-point disagree-agree 4ikert statements& that are rated by a sample of respondents9 the significance of the difference between the means of any two compared ;uestions can be assessed with a paired-samples test7 Any two .ariables that are scaled similarly can be paired and tested7

?0

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

=. When should one0way .(>?. be used and why? -e.iew ;uestion7 This ;uestion re;uires students to re.iew the basics of ANOVA7 ANOVA is used when comparing means for A or more groups7 %t is used because it is more efficient than performing many independent t tests for the significance of the difference between two means because a single 6 test is used7 17 When a researcher finds a significant 5 #alue in analysis of #ariance! why can it be considered a flagging" de#ice? -e.iew ;uestion7 tudents must demonstrate a conceptual understanding of the interpretation of the significance le.el in an ANOVA output7 ANOVA is a flagging de.ice7 %f at least one pair of means has a statistically significant difference9 ANOVA will signal this by indicating significance7 Then9 it is up to the researcher to conduct further tests to determine precisely how many statistically significant differences actually e8ist and which ones they are7 3@7 The circulation manager of the "aily Ad.ocate commissions a market research study to determine what factors underlie the circulation attrition. )pecifically! the sur#ey is designed to compare current "aily Ad.ocate subscribers with those who ha#e dropped their subscriptions in the past year. . telephone sur#ey is conducted with both sets of indi#iduals. 5ollowing is a summary of the key findings from the study. Item Current Lost Subscriber Subscribers s 27.3 yrs *.& yrs 28.2 yrs 3.$ yrs =8: =*: 82: 89: 3$: 2$: Significanc e

@ 4ength of residence in the city .777 4ength of time as a subscriber .777 Watch local T? news program AsB .$82 Watch national news programAsB .*&7 >btain news from the Cnternet .72* )atisfactionD with... Eeli#ery of newspaper *.* &.9 .&*9 Co#erage of local news 1.3 *.= .2&= Co#erage of national news *.* 2.$ .7$3 Co#erage of local sports 1.$ *.9 .&12 Co#erage of national sports *.8 $.2 .773 Co#erage of local social news *.= *.2 .1*9 Fditorial stance of the newspaper 1.3 &.7 .773 ?alue for subscription price *.2 &.= .&1= D@ased on a 80point scale where 3;#ery dissatisfied and 8;#ery satisfied Cnterpret these findings for the Circulation Manager.

?A

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

The findings re.eal B significant differences at the 1?H le.el of confidence7 trictly speaking9 there are Gust differences and not greater or lesser difference unless the significance le.el is 7@0? or less7 The interpretation is that lost subscribers are/ younger9 shorter subscribers9 more likely to use the %nternet for news9 less satisfied with the Eaily .d#ocate+s co.erage of national news and sports9 and less fa.orable about the editorial stance of the newspaper7 33. . researcher is in#estigating different types of customers for a sporting goods store. Cn a sur#ey! respondents ha#e indicated how much they exercise in approximate minutes per week. These respondents ha#e also rated the performance of the sporting goods store across 32 difference characteristics such as good #alue for the price! con#enience of location! helpfulness of the sales clerks! and so on. The researcher used a 308 rating scale for these 32 characteristics where 3; poor performance" and 8; excellent performance." Gow can the researcher in#estigate differences in the ratings based on the amount of exercise reported by the respondents? Application ;uestion/ tudents must realize that for this ;uestion9 groups must be identified in order to compare differences7 The researcher could use a median split on the number of minutes of e8ercise per week to identify the low .ersus the high e8ercise groups7 Then9 he or she could use tests of the differences in the performance means7 Alternati.ely9 the researcher could use ;uartiles or some other splitting method to identify more than two groups7 5ith more than 0 groups9 ANOVA should be used7 32. . marketing manager of Collections! Ftc! a Web0based catalog sales company! uses a segmentation scheme based on the incomes of target customers. The segmentation system has four segments' A3B low income! A2B moderate income! A$B high income! and A&B wealthy. The company database holds information on e#ery customer,s purchases o#er the past se#eral years! and the total dollars spent at Collections! Ftc. is one of the prominent #ariables. Hsing Microsoft Fxcel on this database! the marketing manager finds that the a#erage total dollar purchases for the four groups are as follows. Market )egment 4ow income Moderate income Gigh income .#erage Total Eollar <urchases I373 I327 I2$3

?:

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

Wealthy

I*9*

Construct a table that is based on the Euncan,s Multiple +ange test table concept discussed in the chapter that illustrates that the 4ow and Moderate Cncome groups are not different from each other! but the other groups are significantly different from one another. Application ;uestion7 This ;uestions re;uires that students understand and can apply the mean differences .isual approach used by the "uncan+s )ultiple -ange test table presentation7 The table would look like the following7 )arket egment A.erage Total "ollar !urchases 4ow income )oderate income *igh income 5ealthy >3@3 >30@ >0A3 >?1? #roup #roup #roup A A ( ,

3$. Gow would a grocery store chain company go about constructing and #alidating a market segmentation system? Take the possible segmentation #ariables of family type Asingle! couple! or with childrenB and occupation Askilled labor! professional! or retiredB. Cndicate the steps you would take and any considerations you would take into account as a researcher in#estigating if there was a useful segmentation system for the grocery store chain company using these two demographic #ariables as the basis. Application ;uestion7 This ;uestion re;uires an understanding of analysis of .ariance7 There are two factors in.ol.ed/ family type with A different le.els and occupation with A le.els7 The store would need to determine a metric measure such as total dollar purchases per week across a sample of customers representing all $A8A& nine possible combinations7 Then9 a researcher could perform a 0-way ANOVA to find what significant differences e8ist among the nine different segments7 canner data could be used if the researcher wanted to replicate or compare the findings across many weeks to insure that the market segments are indeed different7 CASE SOLUTIONS C$,- 1771 D*+8( Y*' J',( H$(- )( W5-+9: (P$.( II) C$,- O;<-&()=-

??

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

This case re;uires students to identify what differences analysis tests should be conducted based on identification of nominal or metric scaled .ariables7 A+,2-., (* C$,- 6'-,()*+, Cndicate the specific differences statistical tests that should be conducted to answer each of the research %uestions 3! 2! and $ in the email attachment Marsha sent to Josh. Cn each of your answers! tell precisely what is the grouping #ariable! what is the #ariable being used to compare the groups to each other! and if percentages or means are to be compared. The answers follow7 R-,-$.&5 6'-,()*+ 37 "o regular !!! patrons differ from those who are not regular patrons9 and if so9 howC G.*'>)+0 V$.)$;%'se 3K do not use !ets9 regularly !ets9 L 0K use !ets regularly how oftenC T$.0-( V$.)$;%-, D)11-.-+&-, T-,( %ndependent samples t-test as the target .ariable are ratio or inter.al

07 "o regular !!! patrons recall seeing !!! newspaper ad.ertising more or less than those who do not use !!! regularlyC A7 "o !!! customers differ by household

Times Actual .isited number of !!! in times past year Amount Actual spent dollar on last amount .isit to rounded to !!! dollars *ow 3-2 scale likely where/ to buy at !!! 3Kunlikely9 ne8t 2K.ery time $3- likely 2 scale& Number Actual of pets number of owned pets 'se 3K do not use -ecall 3Kyes !ets9 regularly seeing a 0Kno !ets9 L 0K use !!! !ets regularly newspaper how ad in the oftenC past monthC 'se 3K do not use %ncome 3Kbelow !ets9 regularly le.el >0@9@@@ !ets9 L 0K use

?B

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

<tc7

the target .ariable9 than do independent samples t-test as the target .ariable is metric

C$,- 177? W$,5)+0(*+ S(.--( B),(.* I/>*.($+&--P-.1*./$+&- S'.=-4 C$,- O;<-&()=tudents are re;uired to assess the results of significance tests performed on the means of two independent groups9 and they must glean managerial implications from their assessments7 A+,2-., (* C$,- 6'-,()*+, 37 Cnterpret these findings for Ms. Wilson What do they say about the two subpopulations of lunch and dinner patrons? The two tables in the case are gi.en below with annotations of significanceM nonsignificance in the right-hand column7 Attributes that ha.e significant differences are in bold7 T$;%- A I/>*.($+&-@ *1 S-%-&(-3 R-,($'.$+( A((.);'(-, ;4 T4>- *1 P$(.*+ C$1-(-.)$ A((.);'(,ourteous employees *elpful employees Nuality of ser.ice F.-,5+-,, *1 ,$%$3 )(-/, H)05 +'(.)()*+$% =$%'- *1 /-$%, O=-.$%% E'$%)(4 *1 /-$%, ,omfortable seating "iscounts for fre;uent patrons Appetizing look of items L'+&5 ?70E ?70@ ?7@2 A7B7 A7BD C7F7 :71B :7E1 :7EE D)++-. ?73E ?73? :71E C7AB C7CC C7AD :71? :72? :7@0 S)07 @712E @7E2B @7?:@ B7BDC B7BCA B7BDA @71EB @72?0 @7@?0 A,,-,,/-+( Not sig Not sig Not sig S)0 S)0 S)0 Not sig Not sig Not sig

?2

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

peed of ser.ice R-%$G-3 $(/*,>5-.G**3-($,()+0 3),5-, Ade;uate lighting G**3 =$.)-(4 *1 -+(.--, 4ow price of specials L$.0- >*.()*+, ,lean surroundings

Not sig S)0 S)0 Not sig S)0 Not sig S)0 Not sig

O(ased on a scale where 3 K unimportant and 2 K .ery important "irectional tests are not called for as there was no a priori indication that one group+s mean$s& would be greater or less than the other group+s mean$s&7 There are eight significant differences $at the 1?H le.el of confidence&9 and lunch patrons attach more importance to si8 of these attributes than do dinner patrons7 -ela8ed atmosphere is the only attribute held more important for dinner patrons than for lunch patrons7 T$;%- B E=$%'$()*+ *1 W$,5)+0(*+ S(.--( B),(.* P-.1*./$+&-@@ *+ S-%-&(-3 A((.);'(-, ;4 T4>- *1 P$(.*+ B),(.* A((.);'(,ourteous employees H-%>1'% -/>%*4--, Nuality of ser.ice F.-,5+-,, *1 ,$%$3 )(-/, *igh nutritional .alue of meals O.erall ;uality of meals ,omfortable seating D),&*'+(, 1*. 1.-E'-+( >$(.*+, A>>-()J)+0 %**K *1 )(-/, S>--3 *1 ,-.=)&R-%$G-3 $(/*,>5-.G**3-($,()+0 3),5-, L'+&5 ?721 A7HD ?7?: A7HB ?701 :7:E :7BA A7CA A7IA A7A? C7FI A7D1 ?E D)++-. ?7:B A7A1 ?7B@ C7CI ?70A :7:B :7?A C7AI C7IC C7?? A7ID C7D7 S)07 @73E0 B7BCC @702B B7BB1 @7312 @7?BE @7AE1 B7BBF B7BCA B7B1B B7BI1 B7BCH A,,-,,/-+( Not sig S)0 Not sig S)0 Not sig Not sig Not sig S)0 S)0 S)0 S)0 S)0

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

Ade;uate lighting G**3 =$.)-(4 *1 -+(.--, L*2 >.)&- *1 ,>-&)$%, L$.0- >*.()*+, ,lean surroundings

OO(ased on a scale where 3 K .ery dissatisfied and 2 K .ery satisfied Ten of the attributes ha.e resulted in significant differences $at the 1?H le.el of confidence&9 and se.en of them are rated higher in performance by lunch patrons than they are rated by dinner patrons7 The attributes rela8ed atmosphere9 low price of specials9 and large portions are rated higher by dinner patrons than they are rated by lunch patrons7 2. What managerial implications are apparent from these findings? Table A ranks the attributes9 roughly9 by o.erall importance for both groups7 )s7 5ilson should note that employee factors are most important9 so she should make sure that the (istro employees are courteous9 helpful9 and pro.ide good ser.ice7 The lunch patrons are more demanding than are the dinner patrons as e.idenced in the higher importance ratings they ga.e for specific cafeteria attributes7 he should be especially concerned with running a tight ship during the lunch hours7 Table ( re.eals that there is room for impro.ement7 The a.erages range from a low of A72? to a high of B7EB9 but most are in the :-? range7 On the 2-point satisfaction scale9 a : is the neutral position9 so 5ashington treet (istro+s performance can certainly be impro.ed7 The reasons for differences in the two groups+ satisfaction le.els is not known9 but two possibilities e8ist7 6irst9 there may be real differences in the (istro+s performance during lunch .ersus dinner hours7 )s7 5ilson should determine any systematic differences in the (istro+s operations for the lunches .ersus dinners using the significantly different characteristics as a basis7 6or instance9 freshness of salad items is rated higher by lunch patrons than by dinner patrons workers7 Are the dinner patrons getting lefto.ers from the lunch menu items not soldC econd9 )s7 5ilson has already noted demographic segmentation differences/ dinner patrons are more likely to be young professionals are more casual than the lunch patrons7 The dinner patrons may be looking for a place to rela8 after a hard day9 while the lunch patrons may want a nutritious lunch ;uickly in the middle of a busy workday7

?1

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

C$,- 177D T5- H*;;)(8, C5*)&- R-,($'.$+( S'.=-4 D)11-.-+&-, A+$%4,), C$,- O;<-&()=The obGecti.e of this integrated case item is to ha.e students identify what differences tests are appropriate9 to run them9 and interpret them correctly7 37 Jeff wonders if The Gobbit,s Choice +estaurant is more appealing to women that it is to men or #ice #ersa. <erform the proper analysis! interpret it! and answer Jeff,s %uestion. The ;uestion concerns two groups/ men and women7 The appealing .ariable is the how likely would it be for you to patronize this restaurant7 The proper analysis is an independent samples t test9 and the output follows7

Group Statistics ;'at is your gen%er? Ma$e 0e#a$e Mean 204 196 3.02 2.98 +t%. De,iation 1.2.1 1.226 +t%. -rror Mean .088 .088

!o" $i?e$y "ou$% it be )or you to &atronize t'is restaurant (ne" u&sca$e restaurant*?

Independent Samples Test 1e,ene2s 3est )or -/ua$ity o) 4ariances t5test )or -/ua$ity o) Means 9.7 Con)i%ence 8nter,a$ o) t'e Di))erence 1o"er 6&&er 5.209 5.209 .279 .278

0 !o" $i?e$y "ou$% it be )or you to &atronize t'is restaurant (ne" u&sca$e restaurant*? -/ua$ ,ariances assu#e% -/ua$ ,ariances not assu#e% .380

+ig. ..38

t .282 .282

%) 398 397.8.2

As can be seen9 the means are ;uite similar $A7@0 and 071E&7 The 4e.ene+s test indicates that the e;ual .ariances assumed condition is in effect9 and the ig $0tailed& .alue of 722E means that the null hypothesis is supported7 )en and women do not differ with respect to their likelihood to use the upscale restaurant described in the ;uestionnaire7 07 With respect to the location of The Gobbit,s Choice +estaurant! is a waterfront #iewer preferred more than a dri#e less than $7 minutes? *ere9 two ;uestions are being compared7 (oth are measured with a 4ikert disagreeagree scale9 so it is appropriate to use a paired-samples t test7 The output follows7

B@

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

aired Samples Statistics Mean 3.42 2.73 +t%. De,iation 1.333 1.311 +t%. -rror Mean .067 .066

Bair 1

400 400

aired Samples !orrelations Corre$ation Bair 1 Bre)er ;ater)ront 4ie" = Bre)er Dri,e 1ess t'an 30 Minutes 400 5.80. +ig. .000

aired Samples Test Baire% Di))erences 9.7 Con)i%ence 8nter,a$ o) t'e Di))erence 1o"er 6&&er .4. .94

Mean Bair 1 Bre)er ;ater)ront 4ie" 5 Bre)er Dri,e 1ess t'an 30 Minutes .69

t ...32

%) 399

The means arithmetically different $A7:0 .ersus 072A&9 and the ig $0-tailed& .alue is 7 @@@7 The interpretation is that these two restaurant features are not preferred e;ually7 %n fact9 the waterfront .iew is more preferred than a A@-minute dri.e7 A7 With respect to the restaurant,s atmosphere is a string %uartet preferred o#er a Kazz combo? Again9 two ;uestions are being compared9 so the paired-samples t test procedure should be used7 Output follows7

aired Samples Statistics Mean 2..0 3.70 +t%. De,iation 1.420 1.221 +t%. -rror Mean .071 .061

Bair 1

400 400

aired Samples !orrelations Corre$ation Bair 1 Bre)er +tring Cuartet = Bre)er Dazz Co#bo 400 5.620 +ig. .000

B3

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

aired Samples Test Baire% Di))erences 9.7 Con)i%ence 8nter,a$ o) t'e Di))erence 1o"er 6&&er 51.43 5.96

t 510.030

%) 399

There is ;uite a bit of difference $A72 .ersus 07?&9 and the significance le.el of 7@@@ indicates that the difference is statistically significant7 Pazz is preferred o.er classical $string ;uartet& music7 :7 What about unusual entrees #ersus unusual desserts? The paired-sample t test procedure yields the following results7

aired Samples Statistics Mean 2.41 2.40 +t%. De,iation 1..14 1...0 +t%. -rror Mean .076 .077

Bair 1

400 400

aired Samples !orrelations Corre$ation Bair 1 Bre)er 6nusua$ Desserts = Bre)er 6nusua$ -ntrees 400 .868 +ig. .000

aired Samples Test Baire% Di))erences 9.7 Con)i%ence 8nter,a$ o) t'e Di))erence 1o"er 6&&er 5.07 .08

t .064

%) 399

The means are almost e;ual9 and the significance le.el of 71:1 indicates support for the null hypothesis7 o9 there is no difference in the preference of unusual entrees .ersus unusual deserts7 ?7 Cn general! establishments are appealing to higher income households! while they are less appealing to lower income households. Cs this pattern the case for The Gobbit,s Choice +estaurant? As noted in Nuestion 39 preference is measured by the likely to patronize .ariable7 %n this case9 there are 2 different income groups9 so one-way analysis of .ariance $ANOVA& is called for7 The output follows7 B0

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

ANOVA !o" $i?e$y "ou$% it be )or you to &atronize t'is restaurant (ne" u&sca$e restaurant*? +u# o) +/uares 4.3.301 1.7.697 610.998 %) 6 393 399 Mean +/uare 7....0 .401 0 188.280 +ig. .000

How li$ely would it #e for you to patroni%e this restaurant (new upscale restaurant)? Duncan ;'ic' o) t'e )o$$o"ing categories best %escribes be)ore $1.<000 toyour $24<999 taE 'ouse'o$% inco#e? F$1.<000 $2.<000 to $49<999 $.0<000 to $74<999 $7.<000 to $99<999 $1.0<000G $100<000 to $149<999 +ig.

a<b

..69

.714

1.000

Means )or grou&s in 'o#ogeneous subsets are %is&$aye%. a. 6ses !ar#onic Mean +a#&$e +ize A 37.136. b. 3'e grou& sizes are une/ua$. 3'e 'ar#onic #ean o) t'e grou& sizes is use%. 3y&e 8 error $e,e$s are not guarantee%.

The ANOVA table reports a significance le.el of 7@@@ that signifies that at least one pair of income le.els has a significant difference in preference7 The "uncan+s test table re.eals that four groups of significant differences e8ist7 The two lowest income le.els ha.e the lowest preference for an upscale restaurant9 and they are not statistically different from each other7 The ne8t two income le.els are not different from each other9 but they are different from all other le.els7 The fifth le.el occupies a significantly different le.el of preference9 while the two highest income le.els represent the highest le.el of preference for an upscale restaurant7 Although these two income le.els are not significantly different from each other9 they are significantly different from all other income le.els7 The pattern is consistent with the notion of greater preference for upscale restaurants with greater income7 B7 Jeff and Cory speculated that the different geographic areas that they identified by zip codes would ha#e different reactions to the prospect of patronizing a new upscale restaurant. .re these anticipated differences substantiated by the sur#ey? <erform the proper analysis and interpret your findings.

BA

,hapter 32/ Testing for "ifferences (etween Two #roups or Among )ore Than Two #roups

There are : zip code geographic areas $A9 (9 ,9 and "&7 (ecause more than two groups are being compared9 a one-way ANOVA is re;uired7 Output follows7

ANOVA !o" $i?e$y "ou$% it be )or you to &atronize t'is restaurant (ne" u&sca$e restaurant*? +u# o) +/uares 370.710 240.287 610.998 %) 3 396 399 Mean +/uare 123..70 .607 0 203.647 +ig. .000

How li$ely would it #e for you to patroni%e this restaurant (new upscale restaurant)? Duncan B$ease c'ec? t'e $etter t'at inc$u%es t'e Hi& Co%e D (10< 11<in ="'ic' 12* you $i,e (co%e% by $etter*. I (1 = 2* C (6< 7< 8< = 9* 9 (3< 4< = .* +ig.

a<b

40 20 220 120

+ubset )or a$&'a A .0. 1 2 3 1.18 1.20 2.8. .878 1.000 4.18 1.000

Means )or grou&s in 'o#ogeneous subsets are %is&$aye%. a. 6ses !ar#onic Mean +a#&$e +ize A 4...17. b. 3'e grou& sizes are une/ua$. 3'e 'ar#onic #ean o) t'e grou& sizes is use%. 3y&e 8 error $e,e$s are not guarantee%.

The output indicates that significant differences do e8ist between the .arious groups9 and the "uncan+s table re.eals that zip code area ( has the highest preference for an upscale restaurant while areas " and A ha.e the lowest preference7 This finding is consistent with Peff+s thinking about the preferences of these areas7

B:

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