ANOVA: Case 1

An FMCG company desires to go on a promotional campaign to increase its revenues and

profitability. The promotional discounts being planned are 10%, 15% and 20% of the MRP of
their products. While it is known that the highest promotional discount would result in the
maximum growth in revenues, their concern is also to improve profitability. Therefore they have
decided to test out the three promotional schemes at 8 retail outlets for each scheme before
launching the scheme which is most profitable on a national scale.

As part of the test, they ran one scheme at each outlet for 15 days and tracked the growth in
profitability for the same store as compared to the same 15 day period the previous year. The
data for the 24 outlets is provided below along with the promotional scheme used.

Store No. Promotional Discount Growth in profits (%)

1 10% 8
2 10% 9
3 20% 9
4 15% 21
5 20% 11
6 10% 7
7 10% 6
8 10% 4
9 20% 14
10 20% 11
11 15% 18
12 15% 16
13 15% 17
14 20% 10
15 10% 6
16 10% 8
17 20% 12
18 20% 15
19 15% 13
20 15% 12
21 15% 15
22 15% 10
23 20% 8
24 10% 7
Case Questions:

1. Do you think the different promotion discounts result in different growth in profitability?
2. Frame a null hypothesis to evaluate your thinking.
3. Test out the null hypothesis using a suitable statistical test.
4. What conclusion can you draw from your analysis? Justify your conclusion.

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