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# Executive Summary This report has been split into three stages of statistical analysis based on key issues

raised by Crazy Johnny’s M-Tone. From the analysis of the data sample, the following conclusions were made: 1a. Customer database • Database is approximately comprised of equal numbers of female and male customers. • Most of the customers are from the 15-19 and 20-24 age brackets. 1b. Customer usage patterns • An average customer approximately spends $32 and buys 13 ringtones a year • The majority of total customer expenditure comes from the 15-19, 20-24 and 25-29 age brackets. 2. Customer satisfaction • Female customers are generally more satisfied (where satisfied refers to ‘satisfied’ or ‘very satisfied’) with the company service and content than male customers. • Generally, customer satisfaction decreases as the price per ringtone increases. • Generally, customer expenditure increases as customer satisfaction increases. 3. Key Performance Indicators • Although there was sufficient evidence to suggest that customers are buying more than 10 ringtones a year, there was insufficient evidence to suggest that customers spent more than $30 a year. However there was no evidence to suggest that the company’s prediction, that customers will spend $30, was not satisfied. Introduction This report aims to analyse Crazy Johnny MTone’s customer database, their usage patterns, whether they are satisfied with the company service and content and whether the company is achieving its performance goals. An analysis of the data is based on 200 observations with variables of gender, age, expenditure (amount spent in a year) and frequency (number of ringtones bought in a year) considered.

D ynamic E conometric C onsulting S ervices

**Crazy Johnny’s M-Tone
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Statistical Analysis Customer Database and Usage Patterns Customer Satisfaction Key Performance Indicators

Using inferential statistics (point and interval estimators and hypothesis testing), information about population parameters will be Vanessa Hu extracted using the sample data. No data omissions will be made, even though one customer is comparatively older than the 3419203 other customers. It was decided that the customer was representative of the mature age market of Crazy Johnny MTone, and thus not an outlier.

Although the sample data can give a valid estimate of the population parameters because it is large and randomly selected.Dynamic Econometric Consulting Services (DECS) However there is a limitation to this report. 2 . it is still only an estimate and is not a definite analysis.

This implies that most of the customers are young. mean (approximately 20) and median (17) the same for both males and females. market of Crazy Johnny’s M-Tone for both females and marketing. Therefore there is a strong positive correlation between the two variables. 3 . as indicated by Figure 2. content.50% 47.04 20. 44% satisfied and age groups (10-14 theywith make a small proportion 7% very satisfied.1 Standard 17. it can be seen that the majority of female customers (69%) show some form of satisfaction with the company service and content. there is no target gender. Customer satisfaction Statistic Female Male Customer database 1b) Usage patterns Statistic Mean Expenditure 31. with 61% satisfied and of 8% very satisfied. the correlation co-efficient between customer satisfaction and price the customers paid n for each ringtone is -0. and suggests that customers exhibit ́ lower satisfaction levels when they have to pay higher prices. Levels of dissatisfaction are not very high The database is comprised approximately equally From Figures 4 and 5 it can be seen that the target (31% ) with only 17% of customers dissatisfied both female and male customers.18 Figure 7 – Percentage satisfaction of male customers deviation Figure 3 – Average expenditure and average number of ringtones bought per customer Figure 4 – Percentage expenditure spent by females Figure 1 – Descriptive statistics of customer database Figure 5 – Percentage expenditure spent by males From Figure 6.21 Number 105 95 200 Figure 6 – Percentage satisfaction of female customers Percentage 52. male customers are96% overall less satisfied. ́ In Figure 8. proportion of the total expenditure. High levels of dissatisfaction (49%) are exhibited % of customers dissatisfied and of the with total38 sample size and thus only spend a 11% smallvery Figure 2 – Age distribution of female and male dissatisfied.Figure 10 – Dynamic Econometric Consulting Services (DECS) 1 STATISTICAL ANALYSIS PART 2 EXECUTIVE SUMMARY 1a) Customer database 2. more specifically in the 15-19 and 20-24 age brackets. The proportion of total expenditure at these age groups for females is 94% and Figure 7 shows that compared to female customers. The histograms for both genders is positively skewed and unimodal.66 20 17 5.76 20 17 6.33 Ringtones 12. In terms and of 14% very dissatisfied.65.57.56 20 17 4. males should be 15-29. as customer satisfaction increases the amount customers spend on ringtones also tends to increase.50% 100% Mean A g e Median Mode Standard deviation 20. the correlation co-efficient between customer satisfaction and expenditure was found to be 0. Although there are customers from male customers (51%) show some form of satisfaction with the customer serviceand and30+). This indicates a strong negative relationship between the two variables.19 7. That is.1 20. n customers X Figure 8 – Satisfaction levels for price paid for each ringtones s level of The age distributions of male and female customers are Figure 9 – Customer expenditure at each customer satisfaction similar. X s In Figure 9. Only just over half other of for males . with the modal class (21).

95 =( 23. σ/ n ́ ± z α / 2 s = 27.27 and $30.1 ) . suggesting that males spend relatively more compared to females. Additionally. Therefore an unknown σ can be σ / √n ́ −μ X ≤ z α /2 . Confidence interval for ‘dissatisfied’ customers As n = 54 is large.645 16.1.27. the mean spending made by females when they are ‘satisfied’ lies between this interval while the mean spending made by males lies above this interval.39.87. where α = 0.65 = ( 35. the mean spending made by ‘satisfied’ customers would lie within $35. Confidence intervals do not need to be constructed for the 1st and 4th satisfaction level as the standard deviation for those sample data is small. To support the relationship.07 ± 1. where α = 0. 90 of them would have a mean spending made by customers within $23. the number of customers. Therefore an unknown σ can be σ / √n ́ −μ X ≤ z α /2 . The confidence interval is given by 90% CI −z α/ 2 ≤ ́ −μ X N (0.87 ) ¿X √n √ 54 ( ) ( ) Despite the variability in customer expenditure at the ‘dissatisfied level’.Dynamic Econometric Consulting Services (DECS) Descriptive statistics for customer expenditure at each level of customer satisfaction. It can be seen that the mean spending made by both females and males when they are ‘dissatisfied’ lies between this confidence interval. 4 .06. it can be determined that there is notable variability in the amount of spending at the 2nd and 3rd satisfaction level compared to the 1st and 4th level. that customer expenditure increases as customer satisfaction increases. The confidence interval is given by 90% CI −z α/ 2 ≤ ́ −μ X N (0.645 12. σ/ n ́ ± z α / 2 s = 37. this confidence interval infers that if 100 samples were drawn from the population. by Central Limit Theorem replaced by s in large sample sizes. where n is x is the mean expenditure ($) and s is the standard deviation ($).06 and $39.1.1 ) ¿X √n √ 106 ( ) ( ) Even though the customer expenditure at a ‘satisfied’ level shows high variability. a 90% confidence interval will be constructed to find a smaller range and it will be observed whether the mean spending made by female or male customers lies within this confidence interval.30. the confidence interval implies that. if many samples were drawn out. by Central Limit Theorem replaced by s in large sample sizes.10 with 90% probability.08 ± 1.1 ) . Confidence interval for ‘satisfied’ customers As n = 106 is large. ́ From Figure 8 and 10.

Therefore. That is.05 = 1. will be rejected if the test statistic is in the rejection region (Z > Zα/2). which is the probability of obtaining anot value of the test Therefore. given that the null is true. the p-value of 0 is less than 0. that customers buy 10 ringtones.05 = 1. A one-tail hypothesis test (significance level = 0.645 alternate hypothesis.1379 p-value = P(Z > 1. will be rejected if the test statistic is in the rejection region (Z > testing Zα/2).645) and there is sufficient evidence to reject the null hypothesis in favour of the alternative hypothesis at a 5% significance level.645) and there is sufficient statistic extreme that observed. the Z-scorein ofthe 1.353 > 1. The null hypothesis is assumed true unless there is sufficient evidenceσto reject it in favour of the Z0.05 and this supports the conclusion that there is insufficient evidence p-value = P(Z 4. evidence Figure more 11 to . that customers spend $30.353 does lie within the rejection region (z > 1. • KPI 2 – Customers will spend $30 in a year.645 ́ ́ X σ Test statistic (s ) Z= Alternative hypothesis H1: p >10 Rejection region ́ − μ 31.3621 = 0.5 – 0.19 / √ 200 1. that customers buy more than 10 ringtones.05 Z0.The standard normal showing the test statistic for KPI 2 Calculation of p-value for KPI 2 Calculation of p-value KPI–1 P(0 < Z < 1. the p-value of 0. The null hypothesis. Key Performance (KPIs) Hypothesis testing forIndicators KPI 2 Gender Crazy two key performance indicators for analysis: Crazy Johnny’s Johnny’s M-Tone M-Tone gave predicted that customers would spend $30 in a year.05) can be established to determine whether this goal has been achieved.094 does nottest.reject The standard the than null normal hypothesis showing in favour the test of the statistic alternative forhypothesis KPI hypothesis 1 at a 5% be significance level.094)for = 0. The is assumed true unless there is sufficient evidence to reject it in favour of the Hypothesis fornull KPI hypothesis 1 alternate hypothesis.1379 exceeds 0.645 To support the findings hypothesis the p-value. 5 . will calculated.353 σ / √ n 7. that customers spend more than $30.094 ≯ 1.094 σ / √ n 17.33 − 30 X = =1.5 = 0 to reject the > null hypothesis. Alternative hypothesis Null hypothesis H01:: p p= >30 H 10 Rejection region Significance level α = 0.094) = 0.Dynamic Econometric Consulting Services (DECS) STATISTICAL ANALYSIS PART STATISTICAL STATISTICAL ANALYSIS ANALYSIS PART PART 3 32 3.353) = 0. Furthermore.05) can be established to determine whether this goal has been H0: p = 30 = 0.18 / √ 200 4. lie within the rejection region (z > 1.05 achieved. The null hypothesis.5 – 0. a sampling distribution of a sample mean is approximately normal irrespective of population distribution Null hypothesis Significance level • KPI 1 – Customers will download 10 ringtones in a year. Female X A one-tail hypothesis test (significance level =α 0. As the sample size is large (n = 200) CLT can be employed.353) = 0.5 ́ − μ 12.21 −10 X = = 4. the Z-score of 4. Crazy Johnny’s M-Tone predicted that customers would buy 10 ringtones in a year.645 Test statistic Z= Figure 12 . Furthermore.05 and this supports the conclusion that there is sufficient evidence to reject the null hypothesis.5 – P(0 < Z < 4.

07 at a dissatisfied level.65).33 at a very satisfied level.Dynamic Econometric Consulting Services (DECS) CONCLUSION Conclusion The following conclusions were obtained from the analysis of the sample data provided. $37. 20-24 and 25-29 age brackets. suggesting that as customer satisfaction increases. Customer satisfaction Female customers exhibit greater satisfaction with company service and content than male customers with the majority of female customers (69%) just over half of male customers (51%) showing some form of satisfaction. The correlation co-efficient between price/per ringtone and customer satisfaction is negative that as price per ringtone increases. An average customer approximately spends $32 and approximately buys 13 ringtones a year and the majority of total customer expenditure comes from the 15-19. To identify the relationship between customer satisfaction and customer expenditure. . Customer database and usage patterns The database is split approximately equally amongst the two genders (females at 52. There was insufficient evidence to suggest that Crazy Johnny’s M-Tone was outperforming KPI 2 as there was a failure to reject the null hypothesis in favour of the alternative hypothesis at a 5% significance level. customer satisfaction decreases. customer expenditure increases.57). $49. (-0. suggesting The mean expenditure for customers is: • • • • $5.5% and males at 47. the correlation co-efficient was found to be largely positive (0.32 at a very dissatisfied level. However the failure to reject the null hypothesis also meant that there was no evidence to suggest that KPI 2 was not met.08 at a satisfied level. $27.5%) with the majority of customers coming from the 15-19 and 20-24 age brackets. Key Performance Indicators There was sufficient evidence to suggest that Crazy Johnny’s M-Tone was outperforming KPI 1.