You are a marketing manager for a company that makes ready-to-eat breakfast cereals. Your company recently initiated a loyalty program for consumers, which resulted in a large purchaser database. The brand managers are eager to mine the available data, which they can use to design more effective promotional programs. The management of your organization believes that to be effective, these programs have to take into account significant cross-region (i.e., the East Coast, the West Coast, the Midwest, and the South) purchase differences. Your task is to test the hypothesis that there are significant cross-region differences in purchasing patterns. Management has suggested that you use six different two-way comparisons (directly comparing each region with every other region), with each two-way comparison being suggested at the 5% level.
- Assess how appropriate management’s proposed use of hypothesis testing would be to validate management’s belief in cross-region purchase differences.
- Explain the goal of this hypothesis testing experiment.
- Describe the mechanics of this hypothesis testing process.
- Explain why the organization would go through the trouble of hypothesis testing in this situation. Support your discussion with relevant examples, research, and rationale.