Package Design Preference by

Colors Consumers

Yellow 6
White 11
Red 12
Black 16
Orange 9
Green 22
Pink 4
Blue 20
TOTAL 100

A. Null Hypothesis H0 : All colors are equally preferred.

B. Alternative Hypothesis Ha : They are not equally preferred.

Solution: If you look at the data, you may be tempted to infer that Blue is the most preferred
color. Statistically, you have to find out whether this preference could have arisen due to chance.
The appropriate test statistic is the c² test of goodness of fit.
C. a is the level of significance. 5%

D. The degrees of freedom: K-1 = 7

E. A test statistics is calculated:
 PACKAGE OBSERVED EXPECTED (O-E)2
DESIGN FREQUENCIES FREQUENCIES
COLORS (O) (E)

Yellow 6 12.5 42.25 3.38

White 11 12.5 2.25 0.18
Red 12 12.5 0.25 0.02
Black 16 12.5 12.25 0.98
Orange 9 12.5 12.25 0.98
Green 22 12.5 90.25 7.22
Pink 4 12.5 72.25 5.78
Blue 20 12.5 56.25 4.5
TOTAL 100 100 23.04

Please note that under the null hypothesis of equal preference for all colors being true, the
expected frequencies for all the colors will be equal to 12.5. Applying the formula

We get the computed value of chi-square ( c²) = 14.607

The critical value of c2 at 5% level of significance for 7 degrees of freedom is 14.067. So, the
null hypothesis is rejected. The inference is that all colors are not equally preferred by the
consumers. In particular, Blue is the most preferred one. The marketing manager can introduce
blue color package in the market.