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 O  

 

1. Surveys are the most popular research method used in Marketing Research.

2. The other widely used class of study is known as experimentation. Just like in a
laboratory, we manipulate certain variables (usually marketing related ones in
Marketing Research), and observe changes in other variables (like sales, or
consumer preferences, behaviour or attitude for example).

3. The application areas for experiments are wide. Whenever a marketing mix
variable (independent variable) such as price, a specific promotion or type of
distribution, even specific elements like shelf space, or colour of packaging etc is
changed, we would want to know its effect.

4. Under proper conditions, an experiment can tell us the effects of specific

variations in one or more elements, of the marketing mix.

5. An experiment can be done with only one independent variable (factor) or with
multiple independent variables.
 
  

ã This research is conducted in a controlled
environment. It examines the effect of
factor(s) on a response variable. Such an
analysis is conducted with the help of
ANOVA.
 
The Analysis of Variance technique is used when the independent variables are of
nominal scale (categorical) and the dependent variable is metric (continuous).

|


The design of the experiment is most critical in performing any experiment to be
analyzed through the technique of ANOVA.

There are four major types are ±

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A one±independent variable experiment is called  ' . ANOVA
stands for Analysis of Variance, the generic name given to a set of techniques for
studying 
        
 
 
 
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If we hypothesize that there is also a Blocking Variable in addition to one
independent variable, we can use a.
  
 
When more than one factors (independent
variables) are studied, it is known as a Factorial
experiment. Also known as n-way ANOVA

,
When more than one dependent variable is studied,
the technique called MANOVA or ,  


 is used.
  

Marketing researchers are often interested in examining the

differences in the mean values of the dependent variable for several
categories of a single independent variable or factor.

 
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The independent variable may be different levels of prices, or different pack sizes,
or different product colours, and the effect (dependent variable) could be sales,
preferences or attitudes towards the brand.
 Some more examples:

ã o the various segments differ in terms of their volume of

product consumption?
ã o the brand evaluations of groups exposed to different
commercials vary?
ã What is the effect of consumers' familiarity with the store
(measured as high, medium, and low) on preference for the
store?
 Relationship with t-test


 ! is used as
a test of means for two or more populations,
hence extension of t-test for difference of
means. The null hypothesis, typically, is
that all means are equal.
Öonducting One-way ANOVA
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ã s
 
- The null hypothesis that the category

means are equal in the population is tested by an s

 
 based on the ratio of mean square related
to independent variable and mean square related to
error.

ã , 
% - This is the sum of squares divided

by the appropriate degrees of freedom.
   



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ã OO This is the total variation in *.
ã OO
 Also denoted as OO, this is the variation
in * related to the variation in the means of the
categories of . This represents variation between
the categories of , or the portion of the sum of
squares in * related to .

ã OO Also referred to as OO

, this is the
variation in * due to the variation within each of
the categories of . This variation is not
accounted for by .
 Ö



 
 
 


ecompose the Total Variation

The total variation in *, denoted by

, can be
decomposed into two components:

OO XOO
 .OO

where the subscripts ð



and 
refer to the

categories of .

ð


is the variation in * related to the

variation in the means of the categories of . For this
reason,

ð


is also denoted as

.


is the

variation in * related to the variation within each category
of .


is not accounted for by . Therefore it is
referred to as


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OO XOO .OO

where
( 2


y = (*  -* )
 =1



 = 
(*  -* )2
 =1





 =  (*  -*  )2
 
* = individual observation
 = mean for category 
 = mean over the whole sample, or grand mean
* = th observation in the th category
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 Strength of Measure

In analysis of variance, we estimate two measures of

variation: within groups (


) and between groups
(

ð


). Thus, by comparing the * variance estimates

based on between-group and within-group variation, we
can test the null hypothesis.

, 
    

The strength of the effects of on * are measured as
follows:

Ș2 =

/

 = (

 -


 )/



The value of Ș2 varies between 0 and 1.

 Test Significance
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Test Significance
The null hypothesis may be tested by the  statistic
based on the ratio between these two estimates:

  ( - 1)
     

  (( - ) 
 

This statistic follows the  distribution, with (- 1) and

(( - ) degrees of freedom (df).
 Ö



 
 
 


Interpret the Results

ã If the null hypothesis of equal category means is not
rejected, then the independent variable does not have a
significant effect on the dependent variable.
ã On the other hand, if the null hypothesis is rejected, then
the effect of the independent variable is significant.
ã Tukey¶s test can be used to see which pairs of groups are
significantly different or else.
  
 -

The department store is attempting to determine

the effect of in-store promotion (X) on sales (Y).

The null hypothesis is that the category means are

equal:
H0: µ1 = µ2 = µ3
H1: At least one of the means is different from others.
Į = 0.05
÷ffect of Promotion and Ölientele on Sales
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 Illustrative Applications of One-way
Analysis of Variance
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OO X31<)1<;!(.:<)1<;!( .31<)1<;!( .8<)1<;!( .:<)1<;!(

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.8<)1<;!( .8<)1<;!( .;<)1<;!( .:<)1<;!( .<<)1<;!(
=<)1<;!(.9<)1<;!( .9<)1<;!( .<<)1<;!( .=<)1<;!(
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.(<)1<;!( .4<)1<;!( .(<)1<;!( .3<)1<;!( .(<)1<;!(

X4):44!( .():44!( .4):44!( .3):44!( .():44!(

.3):44!( .():44!( .1):44!( .1):44!( .1)1<;!(
.3):44!( .3):44!( .1):44!( .():44!( .1)1<;!(
()1<;!( .3)1<;!( .3)1<;!( .1)1<;!( .()1<;!(
.3)1<;!( .1):444!( .1)1<;!( .()1<;!( .3)1<;!(
.=)1<;!( .4)1<;!( .=)1<;!( .9)1<;!( .=)1<;!(
X389)8<;
 Illustrative Applications of One-way
Analysis of Variance (cont.)
OO X318)4<)1<;!( .31<)(<)1<;!( .314);<)1<;!(
X31()(44!( .311)344!( .31()4<;!(
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.8<)(!( .8<)(!(.;<)(!(.:<)(!(.<<)(!(
.=<)(!( .9<)(!(.9<)(!(.<<)(!(.=<)(!(
.94);!( .;4);!(.<4);!(.=4);!(.94);!(
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X3);!( .1);!(.3);!( .1)4!( .1);!(

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 Illustrative Applications of One-way
Analysis of Variance
It can be verified that
OO XOO .OO

as follows:
185.867 = 106.067 +79.80
The strength of the effects of on * are measured as follows:
: ( XOO5OO
= 106.067/185.867
= 0.571
In other words, 57.1% of the variation in sales (Y) is accounted for by in-store
promotion (X), indicating a modest effect.
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Three different versions of advertising copy have been created by an advertising agency
for a campaign. Let us call these versions of copy A ÖOPY 1, 2 and 3. Now, the ad
agency wants to test which of these three versions of the advertising copy is preferred
by its target population, before they launch the campaign.

A sample of 18 respondents is selected from the target population in the nearby areas of
the city. At random, these 18 respondents are assigned to the 3 versions of ad copy.
÷ach version of ad copy is thus shown to six of the respondents.

The respondents are asked to rate their liking for the ad copy shown to them on a scale
of 1 to 10. (1 = Not liked at all, 10 = Liked a lot, and other values in between these
two). The ratings given by the 18 respondents are tabulated.


 
 


1 1 6.00
2 1 7.00
3 1 5.00
4 1 8.00
5 1 8.00
6 1 8.00
7 2 4.00
8 2 4.00
9 2 5.00
10 2 7.00
11 2 7.00
12 2 6.00
13 3 5.00
14 3 5.00
15 3 4.00
16 3 7.00
17 3 8.00
18 3 7.00
 Ratings
Respondents Adcopy1 Adcopy2 Adcopy3



 

  


  
   
 

F2,15 = 7.70
The codes in the    A, column (1,2,3) indicate

the di erent versions o the ad. The last column,

  ¶, is the rating given by a respondent to the

adcopy seen by him/her. Thus, six respondents have

rated each ad. lease note, that these eighteen

respondents ere randomly assigned to each o the

three ad versions. This random assignment is called a

completely randomised assignment or design.



T h is in p u t d ata is in p u t in to a statistical
p ack ag e fo r p erfo rm in g a O n e-W ay A N O V A ,
b ecau se w e h av e o n ly 1 categ o rical facto r (A d
co p y ) at 3 lev els ± 1 , 2 , 3 an d 1 d ep en d en t
v ariab le ± R atin g .
O u tp u t
„„„„„„„„„„„

S o u rce o f Sum of F M ean F S ig .

V ariatio n S q u ares S q u are of F

B etw een 7 .0 0 0 2 3 .5 0 0 1 .7 8 0 .2 0 3
G ro u p s
W ith in 2 9 .5 0 0 15 1 .9 6 7
G ro u p s
T o tal 3 6 .5 0 0 17 2 .1 4 7
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1. The assignment of our sample of 18 in the above manner assumes that

the magazine in which the version of adcopy appears may have an
impact on the ratings. We can test this hypothesis - in fact, two
hypotheses - by doing an ANOVA with a randomized block design.

2. For this purpose, we use the variable Rating¶ as the dependent

variable, and Adcopy¶ as the factor, and Magazine¶ as the block.
3. A block is defined as some variable which could affect the relationship
between the independent factor and the dependent variable under study in an
ANOVA. In our example, the magazine in which the advertisement appears
could influence the Rating given to Adcopy by the respondents. We are trying
to remove the effect of the magazine used, by "blocking" its effect, or treating
the block separately.

4. If we do not block on a variable, its effect gets included with the error
(residual) term. This may lead to wrong conclusions about the relationship
between the independent and dependent variables. In that sense, a randomised
block design is more "powerful" than a simple one-way ANOVA, if the block
effect is significantly influencing the relationship.
 

 


Mean rating of the A ÖOPY is the same for all 3 versions.

 
 


Block¶ used (Magazine in this case) has no effect on mean ratings

given to A ÖOPY versions by respondents.

 


Source of SS F MS F Sig
V ariation of F
R esidual 3.67 10 .37
A dcop y 7.00 2 3.50 9.55 .005
M agazine 25.83 5 5.17 14.09 .000
(M odel) 32.83 7 4.69 12.79 .000
(T otal) 36.50 17 2.15
        
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1. To test if the null hypotheses are rejected or not, we turn to the last column which
gives the result of an F-test for any assumed confidence level. We will assume we wanted
to test these hypotheses at the 95 percent confidence level.

2. We know that the significance level of F in the last column should be less than 0.05 for
the null hypothesis to be rejected. We see that for both the rows labelled A ÖOPY and
MAGAZIN÷, the significance of F is less than .05. It is .005 for A ÖOPY and .000 for
MAGAZIN÷. &
 
 +    
 

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3. Please note that the Blocking Factor being considered separately has now led us to a
different conclusion from that in a completely randomized test of the same basic data.
This makes the randomized block test a better test when we suspect that a blocking factor
affects the relationship between the independent variable and the dependent variable.
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Any number of factors can be tested simultaneously for their effects on the
dependent variable.
This type of design is employed when we have 2 or more independent
variables or factors. The major advantage of this design is that multiple
factors can be simultaneously tested. There are two kinds of effects that we
can test. One is called the Main ÷ffect. The second is called the Interaction
÷ffect. To illustrate, we will take up an example.
  
   |
5&''!

In this example, we assume that we are testing for a toilet soap brand, the effect of
two Factors (independent variables) ± 6# |
 and 6 - on 

(dependent variable). We would like to know (1) if each of the Factors
independently affects Sales (called the Main ÷ffects), and (2) if there is a
combined effect of Pack esign and Price (called the 2 way Interaction ÷ffect) on
Sales.

If there are 3 factors in a study, then we could test for all 2-way interaction effects
and the 3-way interaction effect, in addition to the Main ÷ffects of the individual
factors.

The experiment is conducted in a simulated environment on 18 randomly selected

respondents. &   4   

 B 
) 8/ 
) 33  
) 3=/  4   

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  +   

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The coding of these variables is 1, 2, 3 respectively for Rs. 8, 11 and 14 and 1, 2,

3 for Blue, Red and Green in the case of Pack esign.
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Öum„„ „ ,„ um„„ „P
„  g„„Öum„„ „P 
„P„t„tht„
v„thugh„P „ „„ t uu„mt „v b,„f„th„u„f„ANOVA,„b g„
„ t„v b,„ t„h„t„b„tt„„„ tg „v b
„H „th„
 g„(,„,„)„f„P 

We find that the significance of F values are

Pack esign - .248 (Main ÷ffect 1)

Price - .000 (Main ÷ffect 2)
Pack esign by Price - .646 (Interaction ÷ffect)

Hypothesis 1 cannot be rejected, as the significance of F values is greater

than 0.05 i.e. 0.248.

The Price effect, one of the two main effects, is significant statistically, at 95
percent confidence level. This means that hypothesis no. 2 is rejected.

Hypothesis 3 cannot be rejected, as the significance of F values is greater

than 0.05 as 0.646.

Thus, we conclude that Price alone has an impact on Sales. Neither Pack
esign alone nor the combination of Pack esign with Price have any
significant impact on Sales of the toilet soap.