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Application of ANOVA and Chi

The document discusses the application of ANOVA and Chi-Square tests in business decision-making, focusing on customer satisfaction scores from three training programs and the influence of age on eco-friendly product preferences. ANOVA results indicate significant differences in customer satisfaction, with blended training being the most preferred. The Chi-Square test reveals that customer preference for eco-friendly products is dependent on age, suggesting targeted marketing strategies for different age groups.

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112 views3 pages

Application of ANOVA and Chi

The document discusses the application of ANOVA and Chi-Square tests in business decision-making, focusing on customer satisfaction scores from three training programs and the influence of age on eco-friendly product preferences. ANOVA results indicate significant differences in customer satisfaction, with blended training being the most preferred. The Chi-Square test reveals that customer preference for eco-friendly products is dependent on age, suggesting targeted marketing strategies for different age groups.

Uploaded by

pinebrennan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Application of ANOVA and Chi-Square Tests in Business Decision-

Making.

Part 1: ANOVA

The null (Ho) hypothesis: There is no significant difference in the mean customer satisfaction

scores among the three training programs (Traditional, Online, and Blended). The alternative

(H1) hypothesis: At least one training program has significant statistical differences in its mean

satisfaction results.

ANOVA (Analysis of Variance) stands as the most appropriate statistical tool for determining

whether three or more distinct groups demonstrate different mean values. We have three training

programs namely Traditional, Online and Blended which we want to evaluate for differences in

customer satisfaction scores. ANOVA is appropriate because we have one independent variable

(training program) which contains three different levels (Traditional, Online, Blended). The

measurement of customer satisfaction score occurs as a continuous variable through numerical

values. ANOVA enables researchers to confirm whether identified differences between means

result from the training program's genuine effects.

ANOVA analysis has yielded a critical value of 3.0738 and a computed F-statistic of 7.8445 The

positive relationship between these values allows us to decline the H₀ null hypothesis. The

results show that the statistical analysis supports the hypothesis that a significant difference

exists between the satisfaction ratings of customers from all three training methods. Research

shows that a minimum of one instructional approach achieves better customer satisfaction than

the other methods.


The company needs to choose the training method which brings the highest customer satisfaction

because a meaningful difference has been detected. Blended training stands out as the preferred

program by customers since it achieves an average satisfaction score of 8.2.

Part 2: Chi-Square Test

The null (Ho) hypothesis: Customer preference for eco-friendly products is independent of age

group. The alternative (H1) hypothesis: Customer preference for eco-friendly products is

dependent on age group.

A Chi-Square test of independence helps determine whether two categorical variables show any

connection in their relationship. Two variables used in this analysis belong to categories: Age

Group includes the segments 18-34, 35-54 and 55+ while Product Preference contains Eco-

Friendly and Traditional options. The Chi-Square test proves to be suitable as the data exists in a

contingency table and independence needs verification.

The calculation method for obtaining expected frequency values in a contingency table consists

of:

row total ×column total


E=
grand total

(100 ×150)
For 18-34 (Eco-Friendly): E= =50
300

(100 ×150)
For 18-34 (Traditional): E= =50
300

(100 ×150)
For 35-54 (Eco-Friendly): E= =50
300
(100 ×150)
For 35-54 (Traditional): E= =50
300

(100 ×150)
For 55+ (Eco-Friendly): E= =50
300

(100 ×150)
For 55+ (Traditional): E= =50
300

The formula for the Chi-Square test statistic is:


2
(O−E)
x =∑
2
where O is the observed frequency and E is the expected frequency.
E

Chi-Square test statistic, X2 = 8

Degrees of freedom, df =( rows−1 ) ×(columns−1)

df =( 3−2 ) × (2−1 )=2

Using the Chi-Square table at ∝ = 0.05, the critical value for df = 2 is 5.991

Since 8 > 5.991, we reject the null hypothesis. The findings permit us to state that age group

influences how customers choose between eco-friendly and traditional products. Age functions

as a determining factor for which type of products customers will choose.

The company needs to direct its eco-friendly product marketing strategies toward the 18-34 age

demographic group that shows superior demand for sustainable items. Since customers above 55

prefer traditional products, the company should consider launching awareness campaigns to

explain eco-friendly option benefits. The company should develop sustainable product

innovations aimed at younger consumers although maintenance of traditional products remains

vital for older customer satisfaction.

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