Question 14.63

14.63 Promotions and the expected price of a product.

If a supermarket product is frequently offered at a reduced price, do customers expect the price of the product to be lower in the future? This question was examined by researchers in a study conducted on students enrolled in an introductory management course at a large midwestern university. For 10 weeks, 160 subjects read weekly ads for the same product. Students were randomly assigned to read one, three, five, or seven ads featuring price promotions during the 10-week period. They were then asked to estimate what the product’s price would be the following week.16 Table 14.1 gives the data.

ppromo

755

  1. Make a Normal quantile plot for the data in each of the four treatment groups. Summarize the information in the plots and draw a conclusion regarding the Normality of these data.
  2. Summarize the data with a table containing the sample size, mean, and standard deviation for each group.
  3. Is the assumption of equal standard deviations reasonable here? Explain why or why not.
  4. Carry out a one-way ANOVA. Give the hypotheses, the test statistic with its degrees of freedom, and the -value. Summarize your conclusion.

14.63

(a) All four Normal quantile plots show roughly Normal distributions with only minor departures from Normality.

(b)

Price
Level of Promotions Mean Std Dev
1 40 4.2240 0.2734
3 40 4.0628 0.1742
5 40 3.7590 0.2526
7 40 3.5488 0.2750

(c) Yes, the largest is less than twice the smallest ; . (d) : not all of the are equal, . There are significant price estimate differences among the four groups, which read different numbers of promotions.