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Case 1: The Springville Herald

The marketing department team met collectively to study the results of the new subscriptions forecasting model. Paul Kravitz, the market research director, asked the group to consider how new subscriptions could be increased and how those customers who agreed to trial subscriptions plans could be kept as subscribers after the trial period ended. Lauren Alfonso, a district sales manager, suggested that a survey be undertaken to determine various characteristics of readers of the newspaper who were not home-delivery subscribers. After a great deal of discussion by the group, a questionnaire was developed as follows.

1.Do you or a member of your household ever purchase the Springville Herald? (1). Yes (2). No [ If the respondent answer no, the interview is terminated]

6.Where are you most likely to purchase the Springville Herald? (1)Convenience store (2)Stationery/candy store (3) Vending machine (4)Supermarket (5)Other__________ 2.Do you receive the Springville Herald via 7. Would you consider subscribing to the home delivery? Springville Herald for a trial period if a (1). Yes (2). No discount was offered? [If no, skip question 4.] (1)Yes (2) No [If no, skip to question 9.] 3. Do you receive the Springville Herald : 8.The Springville Herald currently costs 50 (1) Monday-Saturday (2) cents on Monday-Saturday and $1.50 on Sunday only Sunday for a total of $4.5 per week .How [Skip to question 9] much would you be willing to pay per week to obtain home delivery for a 90-day trial period?_______________ 4.How often during the Monday-Saturday 9. Do you read a daily newspaper other period do you purchase the Springville than the Springville Herald ? Herald ? (1)Yes (2) No (1)Every day (2)Most day (3)Occasionally 5.How often do you purchase the 10. As an incentive to long-term

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Springville Herald on Sundays? subscribers, the newspaper is considering (1) Every Sunday (2) 2-3 Sundays a month the possibility of offering all subscribers (3) Once a month who pay for 6 months of home delivery in advance (about $100) a card that would provide discounts a list of restaurants in Springville. Would you want to obtain such a card under the term of this offer? (1)Yes (2) No A random sample of 500 households located in Springville was selected for a telephone survey that was to be conducted using the random-digit dialing method. In this approach, used to reach households that have unlisted telephone numbers, the last four digit of a telephone number are randomly selected to go with the telephone exchange that consists of the first three numbers. Only those exchanges that are contained in Springville are used.(For example, If the exchanges 676,759,and 923 are available in Springville, the exchange would first be randomly selected among these three, and then the last four digits would be randomly selected to produce the telephone number to be dialed.) Of the 500 households selected, 94 either refused to participate, could not be contacted after repeated attempts, or represented telephone numbers that were not in service or belonged to non residences (remember that random digit dialing was used). The summary results were as follows Households Herald Yes No that purchase Springville Households that receive the Springville Herald via home delivery 352 Yes 136 54 No 216 Purchase behavior of non subscribers Saturday editions Every Sunday 78 2-3 Sundays a month 95 Once a month 43 Consider discount Yes No trial period subscription 46 170 with

Type of subscription for home delivery Monday Saturday Sunday only Every day Location of purchase Convenience store Stationary/ Candy store Vending machine Supermarket Other 74 95 21 13 13 18 25 93

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How much would you be for a 90-day trial period? $4.15 3.6 4.1 3.6 3.6 3.15 4.0 3.75 4.0 3.25 3.75 3.65 4.0 4.1 3.9 3.0 3.4 4.0 3.8 3.5 3.5 3.9 3.95 4.3 4.2 3.3 3.85 3.2 4.4 3.8 2.85 3.75 3.8 3.9 willing to pay per week to obtain home delivery 3.6 3.75 3.5 4.1 3.5 3.4 4.4 3.33 3.75 4.25 3.75 3.5

Read daily newspaper other than the Would prepay 6 months to Springville Herald restaurant discount card Yes 138 Yes 66 No 214 No 286 I.

receive

Some members of the marketing department team raised questions about the use of the random-digit dialing method used in the survey. Prepare a short report for the team that a. indicates the advantages and disadvantages of conducting the survey using a random digit dialing the telephone survey. b. suggest an alternative approach for conducting the survey .What would be the advantages and disadvantages of conducting the surveys based on this alternative approach? II. Analyze the results of the survey of households in Springville. Write a report for the marketing department team that discusses the marketing implication of the survey results for the Springville Herald.

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case 2.1 FRITO-LAY TARGETS THE HISPANIC MARKET

Frito Company was founded in 1932 in San Antonio, Texas, by Elmer Doolin. H. W. Lay & Company was founded in Atlanta, Georgia, by Harman W. Lay in 1938. In 1961, the two companies merged to form Frito-Lay, Inc., with headquarters in Texas. Frito-Lay produced, distributed, and marketed snack foods with particular emphasis on various types of chips. In 1965, the company merged with Pepsi-Cola to form PepsiCo, Inc. Three decades later, Pepsi-Cola combined its domestic and international snack food operations into one business unit called Frito-Lay Company. Today, Frito-Lay brands account for 59% of the U.S. snack ship industry, and there are more than 45,000 Frito-Lay employees in the United States and Canada. In the late 1990s, despite its overall popularity, Frito-Lay faced a general lack of appeal to Hispanics, a fast-growing U.S. market. In an effort to better penetrate that market, Frito-Lay hired various market researchers to determine why Hispanics were not purchasing their products as often as company officials had hoped and what could be done about the problem. In the studies, market researchers discovered that Hispanics thought Frito-Lay products were too bland, Frito-Lay advertisements were not being widely viewed by Hispanics, and Hispanics tended to purchase snacks in small bags at local grocery stores rather than in the large family-style bags sold at large supermarkets. Focus groups composed of male teens and male young adults a group that tends to consume a lot of chips were formed. The researchers determined that even though many of the teens spoke English at school, they spoke Spanish at home with their family. From this discovery, it was concluded that Spanish advertisements would be needed to reach Hispanics. In addition, the use of Spanish rock music, a growing movement in the Hispanic youth culture, could be effective in some ads. Researchers also found that using a Happy Face logo, which is an icon of Frito-Lays sister company in Mexico, was effective. Because it reminded the 63% of all Hispanics in the United States who are Mexican American of snack foods from home, the logo increased product familiarity. As a result of this research, Frito-Lay launched its first Hispanic products in San Antonio, in 1997. Within a few of years, sales of the Doritos brand improved 32% in Hispanic areas. In May 2002, Frito-Lay teamed up with its Mexican affiliate, Sabritas, to launch a new line of products to further appeal to Hispanic customers. Included in these offerings are Sabritas Adobadas tomato and chile potato chips, Sabritones Churrumais fried corn strips with chile and lime seasonings, Crujitos queso and chile flavor puffed corn twists, Fritos Sabrositas lime and chile chips, El Isleno Plantains, and others. Discussion In the research process for Frito-Lay Company, many different numerical questions were raised regarding Frito-Lay products, advertising techniques, and purchase patterns among Hispanics. In each of these areas, statistics in particular, hypothesis testing plays a central role. Using the case information and the concepts of statistical hypothesis testing, discuss the following:

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1. Many proportions were generated in the focus groups and market research that were conducted for this project, including the proportion of the market that is Hispanic, the proportion of Hispanic grocery shoppers that are women, the proportion of chip purchasers that are teens, and so on. Use techniques presented in this chapter to analyze each of the following and discuss how the results might affect marketing decision makers regarding the Hispanic market. a. The case information stated that 63% of all U.S. Hispanics are Mexican American. How might we test that figure? Suppose 850 U.S. Hispanics are randomly selected using U.S. Census Bureau information. Suppose 575 state that they are Mexican Americans. Test the 63% percentage using an alpha of .05. b. Suppose that in the past, 94% of all Hispanic grocery shoppers were women. Perhaps due to changing cultural values, we believe that more Hispanic men are now grocery shopping. We randomly sample 689 Hispanic grocery shoppers from around the United States and 606 are women. Does this result provide enough evidence to conclude that a lower proportion of Hispanic grocery shoppers now are women? c. What proportion of Hispanics listen primarily to advertisements in Spanish? Suppose one source says that in the past the proportion has been about .83. We want to test to determine whether this figure is true. A random sample of 438 Hispanics is selected, and the Minitab results of testing this hypothesis are shown here. Discuss and explain this output and the implications of this study using =.05. Test and CI for One Proportion Test of p = 0.83 vs p not = 0.83 Sample p 0.792237 Exact P-value 0.042

Sample 1

X 347

N 438

95% CI (0.751184, 0.829290)

2. The statistical mean can be used to measure various aspects of the Hispanic culture and the Hispanic market, including size of purchase, frequency of purchase, age of consumer, size of store, and so on. Use techniques presented in this chapter to analyze each of the following and discuss how the results might affect marketing decisions.

a.

What is the average age of a purchaser of Doritos Salsa Verde? Suppose initial tests indicate that the mean age is 31. Is this figure really correct?

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test whether it is, a researcher randomly contacts 24 purchasers of Doritos Salsa Verde with results shown in the following Excel output. Discuss the output in terms of a hypothesis test to determine whether the mean age is actually 31. Let be .01. Assume that ages of purchasers are normally distributed in the population. Mean 28.81
To

Variance Observations=n= df t Stat p-value( two-tailed)

50.2651 24 23 -1.52 0.1431

b. What is the average expenditure of a Hispanic customer on chips per year? Suppose it is hypothesized that the figure is $45 per year. A researcher who knows the Hispanic market believes that this figure is too high and wants to prove her case. She randomly selects 18 Hispanics, has them keep a log of grocery purchases for one year, and obtains the following figures. Analyze the data using techniques from this chapter and an alpha of .05. Assume that expenditures per customer are normally distributed in the population. $55 37 59 57 27 28 16 4 46 25 34 38 62 58 9 3 34 50

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Case Study 2.2 BONANZA INTERNATIONAL

Bonanza International is one of the top 15 fast food franchisers in the United States. Like McDonald s, Burger King, and most others, Bonanza uses a menu board to inform customers about its products. One of Bonanza s bright young executives believes that not all positions on the board are equal ; specifically, that the position of the menu item on the board influences sales. If this hypothesis is true, Bonanza would be well advised to place its high profit items un the positions that produce the highest sales. After watching the eye movements of several people, the executive determined that customers first look at the upper right hand corner , then cross the top row toward the left - hand side then move down to the lower left hand corner, and finally scan across the bottom toward the right. This analysis suggests that items listed un the upper right hand corner may achieve higher than items listed in the lower left hand corner. In order to test this hypothesis, 10 stores with similar characteristics were selected as test restaurants, and two moderately popular items selected as test menu items. During weeks one and three ( of a four week study ) , item A was placed in upper right hand corner, and item B was placed in the lower left hand corner. During weeks two and four, the positions were reversed. The number of sales of each item was recorded, and the results are summarized in Tables A and B. These data are also stored in columns 1 through 4 of file Bonanza. On the basis of the data, what can you conclude regarding the executive s belief ?

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Table A

Sales of Item A Sales with item A in lower left hand corner 485 681 138 237 258 725 553 524 384 529

Store 1 2 3 4 5 6 7 8 9 10

Sales with item A in upper right hand corner 642 912 221 312 295 775 511 726 476 570 Table B

Sales of Item B Sales with item B in lower left hand corner 351 330 160 305 289 500 341 670 270 570

Store 1 2 3 4 5 6 7 8 9 10

Sales with item B in upper right hand corner 372 334 160 285 271 464 327 642 213 493

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Case 3.1 : Host Selling and Announcer Commercials

A study was undertaken to compare the effects to host selling commercials and commercials in which the announcer describes to viewers why they should buy a particular product. Host selling commercials feature a children s show personality or television character who extols the virtues of the product. In 2002 ,the National Association of Broadcasters prohibited using show characters to advertise products during the same program in which the characters appear. However, this prohibition was overturned in 2007 by a judge s decree. The objective of the study was to determine whether the two types of advertisements have different effects on children watching them. The experiment utilized two groups of children ranging in age 6 to 10. One group of 121 children watched a program in which two host selling commercials appears. The commercials tried to sell Canary Crunch, a breakfast cereal. A second group of 121 children watched the same program but was exposed to two announcer commercials for the same product. Immediately after the show, the children were given a questionnaire that test their memory concerning the commercials they had watched. Each child was graded (on a scale of 10) on his or her ability to remember details of the commercials. In addition, each child was offered a free box of cereal. The children were shown four different brands of cereal- Froot Loops, Blue Berries,Kangaroo Hops, and Canary Crunch ( the advertised cereal) - and asked to pick the one they wanted. The results are stored in the file Host Selling in the following way. Column 1 : score of all 242 children on the recall test Column 2 : children s choice of cereal, where 1 = Froot Loops , 2 = Blue Berries,. 3 = Kangaroo Hops, and 4 = Canary Crunch Column 3: 1= children who watched host commercials, and 2 = = children who watched announcers commercials What conclusions can be drawn from this data?

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Case 4 : Ambulance and Fire Department Response Interval Study

Every year, thousands of people die of heart attacks partly because of delays in waiting for emergency medical care to arrive. One form of heart attack is ventricular fibrillation rhythm, which is treated by a defibrillator. However, immediate medical attention is critical. In general, if a patient receives treatment within 8 minutes, he or she is very likely to survive. It is estimated that the probability of survival is reduced by 7% to 10% for each minute thereafter that defibrillation is delayed. The region in the Ambulance and Fire Department Response Interval Study is composed of the three cities of Cambridge, Waterloo, and Kitchener. Each city has a fire department, and the region has a 911 emergency telephone system. When a medical-related call is received by the Police Dispatch Center, it is relayed to the Center Ambulance Communication Center (CACC). The CACC dispatches both the ambulance and the fire department to certain calls that match one of several criteria indicating the need for fire department personnel. There are two ambulance services that cover the region: the Cambridge Memorial Hospital Ambulance Service and the Kitchener-Waterloo Regional Ambulance Service. Currently, ambulance personnel sent to the patient after a 911 call perform all defibrillation. A city counselor recently suggested that, since the fire department has more centers, it is likely that fire department personnel could arrive at the scene more quickly than ambulance personnel. A study was undertaken to determine whether fire department personnel should be trained in the use of defibrillators and sent to treat ventricular fibrillation rhythm. Between March 1, 1994, and August 31, 1994, all calls that involved both ambulance and fire department personnel were monitored. The times for each service to arrive at the scene were recorded using the following format: Column Column Column Column Column 1: 2: 3: 4: 5: Call number for Cambridge calls Time in minutes for the ambulance to arrive Time in minutes for fire truck to arrive Call number for Kitchener calls Time in minutes for the ambulance to arrive

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Column Column Column Column

6: 7: 8: 9:

Time in minutes for fire truck to arrive Call number for Waterloo calls Time in minutes for the ambulance to arrive Time in minutes for fire truck to arrive

It has been decided that the training of fire department personnel is warranted only if it can be shown that a fire truck arrives at the scene on average more than 1 minute sooner than an ambulance and that the frequency of arrival within 8 minutes is greater for the fire department. What conclusion can be drawn from the data? Case 5 : THE CLARKSON COMPANY: A DIVISION OF TYCO INTERNATIONAL In 1950, J.R. Clarkson founded a family-owned industrial valve design and manufacturing company in Sparks, Nevada. For almost a half century, the company, known as the Clarkson Company, worked on advancing metal and mineral processing. The Clarkson Company became known for its knife-gate and control valves, introduced in the 1970s, that are able to halt and isolate sections of slurry flow. By the late 1990s, the company had become a key supplier of knife-gate valves, helping to control the flow in many of the piping systems around the world in different industries, including mining, energy, and wastewater treatment. The knife-gate valve uses a steel gate like a blade that lowers into a slurry flow to create a bubble-tight seal. While conventional metal gates fill with hardened slurry and fail easily thereby requiring high maintenance, Clarksons design introduced an easily replaceable snap-in elastomer sleeve that is durable, versatile, and handles both high pressure and temperature variation. Pipeline operators value Clarksons elastomer sleeve because traditional seals have cost between $75 and $500 to replace, and considerable revenue is lost when a slurry system is stopped for maintenance repairs. Clarksons product lasts longer and is easier to replace. In the late 1990s, the Clarkson Company was acquired by Tyco Valves & Controls, a division of Tyco International, Ltd. Tyco Valves & Controls, located in Reno, Nevada, and having ISO 9000 certification, continues to produce, market, and distribute products under the Clarkson brand name, including the popular knife-gate valve.

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Discussion 1. The successful Clarkson knife-gate valve contains a wafer that is thin and light. Yet, the wafer is so strong it can operate with up to 150 pounds-per-square-inch (psi) of pressure on it, making it much stronger than those of competing brands. Suppose Tyco engineers have developed a new wafer that is even stronger. They want to set up an experimental design to test the strength of the wafer but they want to conduct the tests under three different temperature conditions, 70, 110, and 150. In addition, suppose Tyco uses two different suppliers (company A and company B) of the synthetic materials that are used to manufacture the wafers. Some wafers are made primarily of raw materials supplied by company A, and some are made primarily of raw materials from company B. Thus, the engineers have set up a 2 x 3 factorial design with temperature and supplier as the independent variables and pressure (measured in psi) as the dependent variable. Data are gathered and are shown here. Analyze the data and discuss the business implications of the findings. If you were conducting the study, what would you report to the engineers?

Temperature 70 163 Supplier A 159 161 158 Supplier B 154 164 110 157 162 155 159 157 160 150 146 137 140 150 142 155

2. Pipeline operators estimate that it costs between $75 and $500 in U.S. currency to replace each seal, thus making the Clarkson longer-

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lasting valves more attractive. Tyco does business with pipeline companies around the world. Suppose in an attempt to develop marketing materials, Tyco marketers are interested in determining whether there is a significant difference in the cost of replacing pipeline seals in different countries. Four countries Canada, Colombia, Taiwan, and the United States are chosen for the study. Pipeline operators from equivalent operations are selected from companies in each country. The operators keep a cost log of seal replacements. A random sample of the data follows. Use these data to help Tyco determine whether there is a difference in the cost of seal replacements in the various countries. Explain your answer and tell how Tyco might use the information in their marketing materials.

Canada

Colombia

Taiwan

United States $230 190 225 220 215 245 230

$215 205 245 270 290 260 225

$355 280 300 330 360 340 300

$170 190 235 195 205 180 190

3. In the late 1980s, the Clarkson Company installed a manufacturing resource planning system. Using this and other quality improvement approaches, the company was able to reduce lead-time from six to eight weeks to less than two weeks. Suppose that Tyco now uses a similar system and wants to test to determine whether lead-times differ significantly according to the type of valve it is manufacturing. As a control of the experiment, they are including in the study, as a blocking variable, the day of the week the valve was ordered. One

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lead-time was selected per valve per day of the week. The data are given here in weeks. Analyze the data and discuss your findings.
Type of Valve Safety Monday Tuesday Wednesday Thursday Friday 1.6 1.8 1.0 1.8 2.0 Butterfly 2.2 2.0 1.8 2.2 2.4 Clack 1.3 1.4 1.0 1.4 1.5 Slide 1.8 1.5 1.6 1.6 1.8 Poppet 2.5 2.4 2.0 1.8 2.2 Needle 0.8 1.0 0.8 0.6 1.2

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