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RES/342 Week 2 Answer Guide - Statistics

Hypothesis Testing in Marketing

Hypothesis Testing in Marketing           

Hypothesis testing is a valuable research method in the field of marketing. Businesses want to know if the impact of their advertisements is worth their investment, and statistical analysis can greatly assist this research goal. The article used in this analysis, Strategic Marketing in Chinese Manufacturing Companies, by Guo Huon, analyzes the impact of Chinese manufacturers’ marketing efforts. Data was collected via an internet survey of manufacturing companies that employ 50 or more people. The null hypothesis states that the Chinese companies are more successful when they invest in marketing techniques that raise volume, rather than invest in productivity and quality improvements. In their efforts to raise volume, the Chinese companies will also lower prices to supplement their marketing practices. The article compares several different alternative hypotheses that could reject the null hypothesis. 


Alternative hypotheses are proposed that follow principles that have been developed in Western countries in the field of marketing. First, the author states the alternative hypothesis that Chinese companies that invest in the quality of their products will be the superior performers in their industry. Adding value to the product will attract long term customers and avoid losses caused by inferior manufacturing practices. Adding value to the product could include both product innovation and quality control improvements in manufacturing. Data was gathered from the sample population by asking questions related to companies’ marketing practices and how it relates to their primary customer base. A sample population of 89 subjects was used, so the central limit theorem should have a degree of validity in this research. The goal of this research is to find methods that are most effective for the purpose of increases market share of the primary customer base.
Results of the survey have shown that Chinese manufacturers are split between the strategy of improving quality (49%) and the strategy of improving volume (51%). This data supports the null hypothesis that most effective strategy to increase market share is to invest in marketing techniques that increase sales volume. The author states that the results of this data should be reviewed with a certain amount of skepticism because marketing strategy is not the only factor that determines a company’s success. Many other factors exist beyond marketing that contribute to the success or failure of a company. Regardless, the results of this survey support the null hypothesis and the level or rejection was not sufficient to accept the alternative hypothesis. In brief, hypothesis testing was used in this scenario to compare the performance of a company with their marketing strategy.

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