June 7, 2019

ANSWERS TO REVIEW QUESTIONS

1. What are differences and why should marketing researchers be concerned with them?

Differences are instances where two (or more) groups are not the same. Market

segmentation holds that within a product market there are different types of consumers who

2. What are the three ways a researcher can investigate for differences?

There are three ways a researcher can analyze for differences: (1) compare one group to

3. Why does the nature of the scale (categorical or metric) being used matter when performing

a differences test?

With a categorical scale, one must use percentage differences, while with a metric scale, one

4. What is the null hypothesis and what is the alternative hypothesis for a differences test?

To test whether a true difference exists between two group percentages or averages, we test

the null hypothesis that the difference in their population parameters is equal to zero. The

5. When the percentages or the averages of two groups are compared, what is the nature of the

comparison operation?

6. When a standard error of a difference (between percentages or averages) is computed, what

two factors are taken into account, and how does each affect the size of the standard error?

In essence, the standard error of a difference is the sum of the standard errors of the two

percentages or averages being compared. The standard error of the percent of the average is

7. Describe how a directional hypothesis about the difference between two percentages or two

averages is tested.

The procedure is identical to directional hypotheses that are stipulated in hypothesis tests.

That is, you must first look at the sign of the computed z value to check that it is consistent

8. What is ANOVA, and when is it used? Why is it termed efficient?

Analysis of variance, sometimes called ANOVA, is used to accomplish such differences

tests for the averages when three or more groups are involved. ANOVA is a very efficient and

9. What is the null hypothesis in ANOVA?

The null hypothesis in ANOVA is that none of the all possible group-to-group averages is

10. How is a test of the difference between the averages of two variables different from a test of

the difference between the averages of two groups with the same variable? How is it similar?

ANSWERS TO APPLICATION QUESTIONS

11. Are the following two sample results significantly different?

a. Sample 1 mean of 10.6, s.d. of 1.5, n of 150; sample 2 mean of 11.7, s.d. of 2.5, n of

300; level of 95%

No, two means are not statistically significant in their differences.

b. Sample 1 percent of 45%, n of 350; sample 2 percent of 54%, n of 250; level of 99%

300

5.2

22

z

4 654

554 5

z

c. Sample 1 mean of 1,500, s.d. of 550, n of 1,200; sample 2 mean of 1,250, s.d. of 500,

n of 500, level of 95%

There is a statistically significant difference.

12. Demonstrate your understanding of your work in question 11, by drawing the sampling

distributions of each case—a, b, and c—in the format presented in Figure 13.1.

13. A researcher is investigating different types of customers for a sporting goods store. In a

survey, respondents have indicated how much they exercise in approximate minutes per

week. These respondents have also rated the performance of the sporting goods store across

twelve difference characteristics such as good value for the price, convenience of location,

and helpfulness of the sales clerks. The researcher used a 7-point rating scale for these

twelve characteristics where 1 = poor performance and 7 = excellent performance. How can

the researcher investigate differences in the ratings based on the amount of exercise reported

by the respondents?

There are three groups based on their weekly exercise time range, for example there could be

14. A shoe manufacturer suspects there are six market segments that it can use effectively in its

target marketing: toddlers, middle-school children, high school students, young and active

4.27

22

z

adults, professionals, and senior citizens. How many pairs of averages can be assessed for

significant differences? Specify each separate pair.

There are 18 separate pairs. Here is a matrix that identifies all of the pairs.

Toddler Middle

School

Children

High

School

Students

Young and

Active

Adults

Professionals Senior

Citizens

Middle

School

Children

15. A marketing manager of a Web-based catalog sales company uses a segmentation scheme

based on the incomes of target customers. The segmentation system has four segments: (1)

low income, (2) moderate income, (3) high income, and (4) wealthy. The company database

holds information on every customer's purchases over the past several years, and the total

dollars spent is one of the prominent variables. The marketing manager finds that the

average total dollar purchases for the four groups are as follows:

Market Segment Average Total Dollar Purchases

Construct a table that is based on how the XL Data Analyst presents its findings for ANOVA

that illustrates that the low- and moderate-income groups are not different from each other,

but the other groups are significantly different from one another.

The result would look like the following:

Low

income

Moderate

income

High

income

Wealthy

income

Moderate

income

CASE SOLUTIONS

Case 13.1 The Daily Advocate Lost Subscribers Survey

Case Objective: Students must interpret the findings of several differences analyses and come

up with market segmentation strategies based on these findings.

Answers to Case Questions

1. Why has the Daily Advocate’s circulation fallen in the face of a population boom in Capital

City?

The table below is reconstructed from the one in the case, so only the variables with

significant differences are reported.

Variable Analyzed

Current

Subscribers

Lost

Subscribers Difference Finding

The lost subscribers are relatively new to the city (5.4 years), and their subscription length is

short due to being newcomers and dropping the subscription. Compared to the current

subscribers, the lost subscribers use the Internet as a news source. They are relatively

2. What marketing strategies should the Daily Advocate consider in order to sustain itself as

the primary news vehicle in Capital City?

The new residents of Capital City are a new market segment in high-tech/Internet delivery of

news, and they are definitely oriented toward national news and sports. (They are probably

Case 13.2 Integrated Case: The Advanced Automobile Concepts Survey

Differences Analysis

Case Objective: Students must perform the appropriate differences analyses on the Advanced

Automobile Concepts survey data to answer the questions posed by the

principals. Market segmentation differences are to be found and their

appropriate target market descriptions generated.

Answers to Case Questions

Your task is to apply appropriate differences analysis to your AAConcepts XL

Data Analyst data set to determine the target market descriptions for each

of the ve possible hybrid models.

The six demographic variables to be used as grouping variables are:

Gender (2 groups), Marital status (2 groups), Age category (7 groups),

It is more efficient to perform the di4erences tests by demographic

Gender: males prefer the super cycle more than females; females

prefer the standard size four-seat model more than males.

Gender Male Female Difference Equal?*

Preference: Super Cycle

*Yes = Equal

No = Not Equal at 95% level of significance

Marital status: Unmarrieds prefer the Super Cycle and Runabout Sport more than marrieds;

Marital status Unmarried Married Difference Equal?*

Preference: Super Cycle

*Yes = Equal

No = Not Equal at 95% level of significance

Age category: Super Cycle is most preferred by the youngest drivers.

Preference: Super Cycle one-seat hybrid

Group 50 to 64 35 to 49

65 and

older 25 to 34 18 to 24

Age category: Runabout Sport is most preferred by the youngest drivers.

Preference: Runabout Sport two-seat hybrid

Group 50 to 64 25 to 34 35 to 49

65 and

older 18 to 24

Age category: Runabout with luggage is most preferred by the 18–34s.