Market Research

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Prof. Dr. Daniel U. Assmus
 Bi-variate statistical tests

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Prof. Dr. Daniel U. Assmus
 Chi-Square
• If you want to know if there’s a relationship between two categorical
variables (with two or more levels each) the appropriate test is a chi-
square.
• Examples:
Is there a relationship between gender and hair color?
Is there a relationship between state of residence and whether or not one
is married or unmarried?
Is there a relationship between make of car one drives and ethnicity?
• Ho is that there is no relationship between the two variables while Ha is
that there is a relationship.
• Interpretation:
If the associated p value is less than alpha (here .05), or chi-square is
larger than critical chi-square, you would conclude that Ha is supported
and that there is a significant relationship.

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Prof. Dr. Daniel U. Assmus
 T-test
• If you want to know if there’s a difference between two groups (a
categorical variable with exactly two levels) on a continuous variable the
appropriate test is a t-test.
• Examples:
Is there a difference between men and women in terms of how many
hours per week they devote to housework?
Is there a difference between whether one is in management or not and
how satisfied one is with the job (measured continuously)?
Do individuals who have at least one month of vacation per year have
lower blood pressure than those who have less than one month of
vacation per year?
• Ho is that there is no difference on the continuous variable between the
two groups while Ha is that there is a difference (two-tailed test) or that
one group is greater than the other (one-tailed test).

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Prof. Dr. Daniel U. Assmus
 T-test
• Interpretation:
o Initially test for whether the variances are equal.
If p < 0.1, then use the t-test for unequal variances else use
the t-test for equal variances (use F-Test in Excel).
o If the absolute value of the calculated t statistic exceeds
the critical value of the t statistic or if the associated p
value is less than alpha (here 0.05 for alpha), you would
conclude that Ha is supported and that there is a
significant difference.

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Prof. Dr. Daniel U. Assmus
 Correlation
• If you want to know if there’s a (linear!) relationship between two
continuous variables the appropriate test is a correlation.
• Examples:
Is there a relationship between age and income?
Is there a relationship between number of years of education and
cholesterol level?
Is there a relationship between number of close friends an individual
reports having and number of days work is missed per year?
• Ho is that there is no relationship between the two continuous variables
while Ha is that there is a relationship (either positive or negative).
• Interpretation:
If the p value associated with the correlation coefficient is less than alpha
(here 0.05 for alpha), you would conclude that Ha is supported and that
there is a significant relationship. NOTE: To get the p value in Excel, you
must use the regression test; the correlation test does not return the
associated p value.

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Prof. Dr. Daniel U. Assmus
 One-Way ANOVA
• If you want to know if there’s a difference between groups (a categorical
variable with more than two levels) on a continuous variable the
appropriate test is a one-way ANOVA.
• Examples:
Is there a difference between people in managerial, professional, and blue
collar occupations in terms of how many hours per week they devote to
housework?
Is there a difference between individuals less than 30 years old, individuals
between 30 and 50, and individuals over 50 in job satisfaction (measured
continuously)?
Do average household income levels vary depending on state of
residency?
• Ho is that there is no difference on the continuous variable between the
groups while Ha is that there is a difference.

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Prof. Dr. Daniel U. Assmus
 One-Way ANOVA
• Interpretation:
If the p value associated with the one-way ANOVA is less than
alpha (here 0.05 for alpha), you would conclude that Ha is
supported and that there is a significant difference.

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Prof. Dr. Daniel U. Assmus
 Simple Linear Regression
• If you have two continuous variables and 1) one of the variables
can be considered the dependent variable and the other can be
considered the independent variable, and 2) you are interested in
prediction, the appropriate analysis is simple linear regression.
• Examples:
Is income predicted by the number of years of education one has?
Is the demand for new dishwashers in a year predicted by the
average age of installed dishwashers?
Is the price of a stock predicted by the general move of the stock
market as measure by the Russell 5000?
• Ho is that the model (the independent variable is predictive of the
dependent variable) is not significant while Ha is that the model is
significant.

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Prof. Dr. Daniel U. Assmus
 Simple Linear Regression
• Interpretation:
If the p value associated with the model is less than alpha
(0.05 for alpha), you would conclude that Ha is supported and
that the model is significant.
You would also want to look at the values for r square that
expresses the percentage of variation in the dependent
variable that is accounted for by the independent variable.
And if the model is statistically significant, you’d normally be
interested in developing the prediction equation in the form Y
= a + bX.

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Prof. Dr. Daniel U. Assmus