CUSTOMER AND

MARKET RESEARCH
Jessy Nair PhD
Associate Professor
Department of Management Studies
CUSTOMER AND MARKET RESEARCH
ANOVA

Jessy Nair
Department of Management Studies
CUSTOMER AND MARKET RESEARCH
Syllabus: Contents
Chapter Title / Reference
Class No. Topics to be covered
Literature

Introduction to Market Research types, Research process, Research design, cases and
1.
research exercise in marketing context

Measurement and Concept of measurement, Levels of scale measurement, Criteria

Scaling, and for good measurement, exercise in marketing context, Basic
2. Questionnaire Design considerations in questionnaire design, open-ended versus fixed-
alternative, phrasing, constructing questions

Sampling, Classification of sampling techniques-Probability and

3. Research Design
non-probability, sampling plan, exercise in marketing context
Application of Hypothesis testing, concept of bi-variate analysis,
4. Cross-tabulation Cross-tabulation of more than two variables, Chi-square test for
Goodness of Fit, exercise in marketing context

t- Test, independent samples t- Test and paired samples t- Test,

5. ANOVA
ANOVA, exercise in marketing context
CUSTOMER AND MARKET RESEARCH
Research Design

MARKETING RESEARCH: TEXT AND

CASES, Rajendra Nargundkar
APPLIED MARKETING RESEARCH
Introduction to Market Research: Recall: Steps in research

(Malhotra, Naresh K., Nunan, Daniel, Birks, David F., 2017)

CUSTOMER AND MARKET RESEARCH
Introduction to Market Research: Recall Steps in Research Process

Business Research Methods, Zikmund, William G, Cengage Learning, New Delhi, 9th
Edition, 2019
CUSTOMER AND MARKET RESEARCH
Measurement and Scaling, and Questionnaire Design: Recall from Unit 2

Research Design

Exploratory Conclusive
Research Design Research Design

Descriptive Explanatory
(Causal)
Research Research

Cross-Sectional Longitudinal Design

Design
CUSTOMER AND MARKET RESEARCH
Measurement and Scaling: Recall from Unit 2

Table: Illustration of Primary Scales of Measurement

No. Nominal Scale Ordinal Scale Interval Scale Ratio Scale
Preference Preference $ Spent Last 3
Store Rankings Blank Ratings Blank Months
Blank Blank Blank Blank 1–7 11–17 Blank
1. Nordstrom 7 79 5 15 0
2. Macy’s 2 25 7 17 200
3. Target 8 82 4 14 0
4. Kohl’s 3 30 6 16 100
5. JCPenney 1 10 7 17 250
6. Neiman-Marcus 5 53 5 15 35
7. Marshalls 9 95 4 14 0
8. Saks Fifth Avenue 6 61 5 15 100
9. Dillard’s 4 45 6 16 0
10. Wal-Mart 10 115 2 12 10

Source: Malhotra, N., Nunan, D., & Birks, D. (2017). Marketing research:
An applied approach. Pearson.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis-1. Frequencies

Table 1 (spreadsheet shared) contains data for 30 participants, giving

➢ the gender (1 = male, 2 = female),

➢ familiarity with the internet (1 = very unfamiliar, 7 = very
➢ familiar),
➢ internet usage in hours per week,
➢ attitude towards the internet and towards technology,
➢ both measured on a seven-point scale (1 = very unfavourable, 7 = very
favourable) and
➢ whether the participants have done online shopping or banking (1 = yes,
2 = no).

For purposes of learning, we consider only a small number of observations.

In actual practice, frequencies, cross-tabulations and hypothesis tests are
performed on much larger samples.
For example, the FIBA study sample size was 4,288.
CUSTOMER AND MARKET RESEARCH
ANOVA: VARIABLES

A variable is anything that can take on differing or varying values.

The values can differ at various times for the same object or person, or at
the same time for different objects or persons.

Examples of variables are production units, absenteeism, and motivation.

Example Production units: One worker in the manufacturing department

may produce one widget per minute, a second might produce two per
minute, a third might produce five per minute. It is also possible that the
same member could produce one widget the first minute, and five the next
minute. In both cases, the number of widgets produced has taken on
different values, and is therefore a variable.

Example Absenteeism: Today three members in the sales department may

be absent, tomorrow six members may not show up for work; the day after,
there may be no one absent. The value can thus theoretically range from
zero to all being absent, on the absenteeism variable.
CUSTOMER AND MARKET RESEARCH
ANOVA: Types of Variables

Four main types of variables are discussed in this chapter:

1. The dependent variable (also known as the criterion variable).
2. The independent variable (also known as the predictor variable).
3. The moderating variable.
4. The intervening variable.

1. Dependent Variable
The dependent variable is the variable of primary interest to the researcher.
The researcher‘s goal is to understand and describe the dependent variable, or to
explain its variability, or predict it.
For this purpose, the researcher will be interested in quantifying and measuring
the dependent variable, as well as the other variables that influence this variable.
Example A manager is concerned that the sales of a new product introduced after
test marketing it do not meet with his expectations.
The dependent variable here is sales. Since the sales of the product can vary—can
be low, medium, or high—it is a variable; since sales is the main focus of interest to
the manager, it is the dependent variable.
CUSTOMER AND MARKET RESEARCH
ANOVA : Types of Variables

2. Independent Variable
An independent variable is one that influences the dependent variable in
either a positive or negative way.
That is, when the independent variable is present, the dependent variable is
also present, and with each unit of increase in the independent variable, there
is an increase or decrease in the dependent variable also.
In other words, the variance in the dependent variable is accounted for by the
independent variable.

Example Research studies indicate that successful new product development

has an influence on the stock market price of the company.
That is, the more successful the new product turns out to be, the higher will
be the stock market price of that firm.
Therefore, the success of the new product is the independent variable, and
stock market price the dependent variable. The degree of perceived success of
the new product developed will explain the variance in the stock market price
of the company.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis 3. Chi-square

Chi-square (χ2) : Statistics commonly used for assessing the statistical

significance and strength of association of cross-tabulated variables.

Relationship between two nominal variables: χ2 test

The statistical significance of the observed association is commonly
measured by the chi-square statistic.
The strength of association, or degree of association, is important
from a practical or substantive perspective.
Generally, the strength of association is of interest only if the
association is statistically significant.
The strength of the association can be measured by the
➢ phi correlation coefficient,
➢ the contingency coefficient,
➢ Cramer’s V and the
➢ lambda coefficient.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis

Chi-squared Test : An Illustration Tabulated data set2

S. INCOME CO INTENT INT

No DE COD
. E
1 Less Than 5000 1 NONE 1
Let us assume that we have conducted a consumer 2 Less Than 5000 1 LOW 2
3 Less Than 5000 1 LOW 2
4 Less Than 5000 1 NONE 1
5 Less Than 5000 1 HIGH 3
survey for a brand of detergent. One of the questions 6 5001-10000 2 LOW 2
7 5001-10000 2 HIGH 3
8 5001-10000 2 VERY 4
dealt with income category of the respondent. HIGH
9 5001-10000 2 HIGH 3
10 5001-10000 2 LOW 2
Another asked the respondent to rate his purchase 11 10001-20000 3 HIGH 3
12 10001-20000 3 VERY 4
HIGH
13 10001-20000 3 CERTAIN 5
intention. These two variables are listed in Table 1. 14 10001-20000 3 HIGH 3
15 10001-20000 3 VERY 4
HIGH
16 Above 20000 4 HIGH 3
17 Above 20000 4 CERTAIN 5
18 Above 20000 4 VERY 4
HIGH
19 Above 20000 4 CERTAIN 5
20 Above 20000 4 CERTAIN 5
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis

Cross-tab for data set 2

The cross-tabulation shows the number of respondents falling into each cell
(a cell is the combination of one INCOME category with one PURCHASE
INTENTION category). For example, 2 respondents with income less than
Rs. 5,000 per month said they had no intention of buying this detergent
brand.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis – Chi-square

Measures of the Strength of Association Between Variables

In our discussion of the chi-square test so far, we have only looked at

the statistical significance by looking at the p-value (probability
value) reported on the computer output.

This does not tell us the strength of the association between the two
variables in the crosstab. If we want a measure of the strength, we
have to request the package to give us one of the following (these
measures are called the indexes of agreement):

1. Contingency Coefficient C
2. Cramer's V
3. The Phi Correlation Coefficient
4. Goodman and Kruskal's Lambda Asymmetric Coefficient

We will briefly discuss these indexes of agreement, as these

measures are known.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis

1. The Contingency Coefficient lies between 0 and 1, and can be used for
any crosstab with any number of rows (R) and any number of columns(C),
provided R and C are equal (symmetric crosstab). However, it cannot attain
the maximum value of 1. The maximum value of the Contingency
Coefficient depends on the number of rows and columns in the crosstab.
For instance, it can be a maximum of .707 in a 2x2 table, and a maximum
of .87 in a 4x4 table.

2. Cramer's V is a variation of the Phi Correlation Coefficient, but it is not

restricted to 2x2 tables. It can have a maximum value of 1.

3. Phi Correlation Coefficient is used mainly for 2x2 contingency tables

(crosstabs) because otherwise its value can go beyond the 0-1 range,
which becomes difficult to interpret.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis

4. Lambda Asymmetric Coefficient measures the error reduction

in predicting the value (category) of one variable (say, the column
variable), if we know the category (or value) of the other (say,
row ) variable. Thus, if Lambda (for the Row Variable, given the
Column Variable), is 0.43, the reduction in error in predicting the
row variable value, given the column variable value is 0.43, or 43
percent.

Similarly, we could compute Lambda Asymmetric for the Row

Variable, given knowledge of the Column Variable. Also, Lambda
Symmetric could also be computed as a weighted average of the
above two Lambda Asymmetric values (for the row and the
column variables).
 CUSTOMER AND MARKET RESEARCH
CHISQUARE - SPSS

The major cross-tabulation program is CROSSTABS. This program will display cross-
classification tables and provide cell counts, row and column percentages, the chi-square test
for significance and all the measures of the strength of the association that have been
discussed.
To select these procedures, click
Analyze>Descriptive Statistics>Crosstabs
We give detailed steps for running the cross-tabulation of gender and usage of the internet
given in Table 20.3 and calculating the chi-square, contingency coefficient and Cramer’s V:
1 Select ANALYZE on the SPAA menu bar.
2 Click on DESCRIPTIVE STATISTICS and select CROSSTABS.
3 Move the variable ‘Internet Usage Group [iusagegr]’ to the ROW(S) box.
4 Move the variable ‘Sex [sex]’ to the COLUMN(S) box.
5 Click CELLS.
6 Select OBSERVED under COUNTS and COLUMN under PERCENTAGES.
7 Click CONTINUE.
8 Click STATISTICS.
9 Click CHI-SQUARE, PHI and CRAMER’S V.
10 Click CONTINUE.
11 Click OK.
CUSTOMER AND MARKET RESEARCH
Cross-tabulation: Data analysis : 3. Hypotheses tests – Unit5

Hypotheses testing is classified into

A. Parametric tests
Hypothesis testing procedures that assume that the variables of
interest are measured on at least an interval scale.
Interval level scale: Numbers indicate the magnitude of difference
between items, but there is no absolute zero point. Ex: attitude (Likert)
scales and opinion scales.
Ratio level scale: Numbers indicate magnitude of difference and there is a
fixed zero point. Ratios can be calculated. Ex: age, income, price, and
costs.

B. Non-parametric tests
Hypothesis testing procedures that assume that the variables are
measured on a nominal or ordinal scale.
Nominal level Scale: Any numbers used are mere labels: they express no
mathematical properties. Ex: SKU inventory codes and UPC bar codes.
Ordinal level scale: Numbers indicate the relative position of items, but
not the magnitude of difference. Ex: preference ranking.
CUSTOMER AND MARKET RESEARCH
ANOVA: PARAMETRIC TESTS

Parametric and non-parametric tests are available for testing

hypotheses related to differences.

In the parametric case, the t test is used to examine hypotheses

related to the population mean.

Different forms of the t test are suitable for testing hypotheses

based on
➢ one sample,
➢ two independent samples or
➢ paired samples.
CUSTOMER AND MARKET RESEARCH
ANOVA: Introduction and Applications

1. Surveys are the most popular research method used in Marketing

Research.

2. The other widely used class of study is known as experimentation. Just

like in a laboratory, we manipulate certain variables (usually marketing
related ones in Marketing Research), and observe changes in other variables
(like sales, or consumer preferences, behaviour or attitude for example).

3. The application areas for experiments are wide. Whenever a marketing

mix variable (independent variable) such as price, a specific promotion or
type of distribution, even specific elements like shelf space, or colour of
packaging etc is changed, we would want to know its effect.

4. Under proper conditions, an experiment can tell us the effects of specific

variations in one or more elements, of the marketing mix.

5. An experiment can be done with only one independent variable (factor)

or with multiple independent variables.
CUSTOMER AND MARKET RESEARCH
ANOVA: Introduction and Applications

A one–independent variable experiment is called one-way ANOVA.

ANOVA stands for Analysis of Variance, the generic name given to a
set of techniques for studying cause-and-effect of one or more
factors on a single dependent variable.

When more than one dependent variable is studied, the technique

called MANOVA or Multivariate Analysis of Variance is used.
However, we will limit ourselves to the discussion of three major
types of ANOVA .

We discuss procedures for examining differences between more

than two means or medians. These procedures are called analysis of
variance and analysis of covariance. These procedures have
traditionally been used for analysing experimental data, but they
are also used for analysing survey or observational data.
CUSTOMER AND MARKET RESEARCH
ANOVA

ANOVA: A statistical technique for examining the differences

among means for two or more populations.

Factors: Categorical independent variables in ANOVA. The independent

variables must all be categorical (non-metric) to use ANOVA.

Treatment: In ANOVA, a particular combination of factor levels or

categories.

One-way analysis of variance

An ANOVA technique in which there is only one factor.
n-way analysis of variance
An ANOVA model where two or more factors are involved.
CUSTOMER AND MARKET RESEARCH
ANOVA: TYPES – ONE-WAY ANOVA
One-Way ANOVA
This particular design is used when there is only one categorical independent
variable, and one dependent (metric) variable.
Each category of an independent variable is called a level. The independent
variable may be different levels of prices, or different pack sizes, or different
product colours, and the effect (dependent variable) could be sales, preferences
or attitudes towards the brand.
In the example that follows, we will look at advertising copy alternatives as the
independent variable, and preference rating for the advertising copy as the
dependent variable.
Worked Example Problem:
In this example, we assume that three different versions of advertising copy
have been created by an advertising agency for a campaign. Let us call these
versions of copy ADCOPY 1, 2 and 3. Now, the ad agency wants to test which of
these three versions of the advertising copy is preferred by its target
population, before they launch the campaign.

A sample of 18 respondents is selected from the target population in the

nearby areas of the city. At random, these 18 respondents are assigned to the 3
versions of ad copy. Each version of ad copy is thus shown to six of the
respondents.
The respondents are asked to rate their liking for the ad copy shown to them
CUSTOMER AND MARKET RESEARCH
ANOVA : Introduction and Applications
Variables
The Analysis of Variance technique is used when the independent variables are
of nominal scale (categorical) and the dependent variable is metric
(continuous).

Design

The design of the experiment is the most critical in performing any experiment
to be analysed through the technique of ANOVA.

There are four major types of designs, of which three frequently used types will
be illustrated with a worked out example each.

These four major types are –

•Completely Randomised Design in a One-Way ANOVA (Single Factor)
•Randomised Block Design (Single Blocking Factor)
•Latin Square Design (Two Blocking Factors)
•Factorial Design with 2 or more Factors.
CUSTOMER AND MARKET RESEARCH
ANOVA

Sr. No. Ad Rating The codes in the ‘ad copy’, column

copy
1 1 6.00 (1,2,3) indicate the different versions
2 1 7.00 of the ad.
3 1 5.00 The last column, ‘rating’, is the rating
4 1 8.00
5 1 8.00 given by a respondent to the adcopy
6 1 8.00 seen by him/her.
7 2 4.00 Thus, six respondents have rated each
8 2 4.00
9 2 5.00 ad.
10 2 7.00 Note, that these eighteen respondents
11 2 7.00 were randomly assigned to each of the
12 2 6.00
13 3 5.00 three ad versions.
14 3 5.00 This random assignment is called a
15 3 4.00 completely randomised assignment or
16 3 7.00
17 3 8.00 design.
18 3 7.00
CUSTOMER AND MARKET RESEARCH
ANOVA – One Way ANOVA – Output and Interpretation

The input data with SPSS statistical package for performing a One-
Way ANOVA.
Because we have only 1 categorical factor (Ad copy) at 3 levels – 1,
2, 3 and 1 dependent variable – Rating.
Output : The output of the computerised One-Way ANOVA.

Source of Sum of DF Mean F Sig. of

Variation Squares Square F

Main 7.000 2 3.500 1.780 .203

Effects
ADCOPY 7.000 2 3.500 1.780 .203
Explained 7.000 2 3.500 1.780 .203
Residual 29.500 15 1.967
Total 36.500 17 2.147
CUSTOMER AND MARKET RESEARCH
ANOVA

sr. no. sales packdesn price

1 500 1 1
2 440 2 1
3 360 3 1
4 300 1 2
5 280 2 2
6 250 3 2
7 200 1 3
8 150 2 3
9 250 3 3
10 600 1 1
11 450 2 1
12 510 3 1
13 400 1 2
14 350 2 2
15 300 3 2
16 250 1 3
17 275 2 3
18 220 3 3
CUSTOMER AND MARKET RESEARCH
ANOVA

Let us first look at Sources of Variation listed in the first column.

The last source of variation listed is the Residual or error term.
But we are interested in the two Main Effects and one Interaction
Effect.

In this case, we are testing three hypotheses –

The mean level of Sales remains the same for all 3 levels of Pack
Design (Main Effect 1).
The mean level of Sales remains the same for all 3 levels of Price
(Main Effect 2).
The mean level of Sales remains the same for all combinations of
Pack Design and Price (Interaction Effect).

Assuming 0.05 level of significance, we check whether for each of

the rows corresponding to the above hypotheses, the significance
of F is below 0.05 in the last column of fig. 6.
CUSTOMER AND MARKET RESEARCH
ANOVA

We find that the significance of F values are

Pack Design - .248 (Main Effect 1)

Price - .000 (Main Effect 2)
Pack Design by Price - .646 (Interaction Effect)

Therefore, only the Price effect, one of the two main

effects, is significant statistically, at 95 percent confidence
level. This means that hypothesis no. 2 is rejected.

Hypothesis 1 and 3 cannot be rejected, as the significance

of F values are greater than .05 in both cases - .248 and
.646 respectively).

Thus, we conclude that Price alone has an impact on

Sales. Neither Pack Design alone nor the combination of
Pack Design with Price have any significant impact on
Sales of the toilet soap.
CUSTOMER AND MARKET RESEARCH
ANOVA: t test

t test : A univariate hypothesis test using the t distribution, which is used

when the standard deviation is unknown and the sample size is small.

The procedure for hypothesis testing, for the special case when the t statistic is used, is
as follows:
1 Formulate the null (H0) and the alternative (H1) hypotheses.
2 Select the appropriate formula for the t statistic.
3 Select a significance level, a, for testing H0. Typically, the 0.05 level is selected.
4. Calculate the degrees of freedom and estimate the probability of getting a more
extreme value of the statistic. (Alternatively, calculate the critical value of the t statistic.)
5. If the probability computed in step 6 is smaller than the significance level selected in
step 3, reject H0. If the probability is larger, do not reject H0. (Alternatively, if the
absolute value of the calculated t statistic in step 5 is larger than the absolute critical
value determined in step 6, reject H0. If the absolute calculated value is smaller than the
absolute critical value, do not reject H0.) Failure to reject H0 does not necessarily imply
that H0 is true. It only means that the true state is not significantly different from that
assumed by H0.
6. Express the conclusion reached by the t test in terms of the marketing research
problem.
CUSTOMER AND MARKET RESEARCH
ANOVA: t –Test with SPSS…

The major program for conducting parametric tests in SPSS is COMPARE

MEANS.
This program can be used to conduct t tests on one sample or independent or
paired samples.
To select these procedures using SPSS for Windows, click
Analyze>Compare Means>Means . . .
Analyze>Compare Means>One-Sample T Test . . .
Analyze>Compare Means>Independent-Samples T Test . . .
Analyze>Compare Means>Paired-Samples T Test . . .

We give detailed steps for running a one-sample test on the dataset 1.

To test the hypothesis that the mean familiarity rating exceeds 4.0.
The null hypothesis is that the mean familiarity rating is less than or equal to 4.0:
1 Select ANALYZE from the SPSS menu bar.
2 Click COMPARE MEANS and then ONE SAMPLE T TEST.
3 Move ‘Familiarity [familiar]’ into the TEST VARIABLE(S) box.
4 Type ‘4’ in the TEST VALUE box.
5 Click OK.
CUSTOMER AND MARKET RESEARCH
ANOVA: t –Test with SPSS

We give the detailed steps for running a two-independent-samples t test on the data
of Data set 1.
The null hypothesis is that the internet usage for males and females is the same:
1 Select ANALYZE from the SPSS menu bar.
2 Click COMPARE MEANS and then INDEPENDENT SAMPLES T TEST.
3 Move ‘Internet Usage Hrs/Week [iusage]’ into the TEST VARIABLE(S) box.
4 Move ‘Sex [sex]’ to the GROUPING VARIABLE box.
5 Click DEFINE GROUPS.
6 Type ‘1’ in box GROUP 1 and ‘2’ in box GROUP 2.
7 Click CONTINUE.
8 Click OK.
We give the detailed steps for running a paired samples t test on the data set 1
The null hypothesis is that there is no difference in the attitude towards the
internet and attitude towards technology:
1 Select ANALYZE from the SPSS menu bar.
2 Click COMPARE MEANS and then PAIRED SAMPLES T TEST.
3 Move ‘Attitude Toward Internet [i_attitude]’ and then select ‘Attitude Toward
Technology [t_attitude]’.
Move these variables into the PAIRED VARIABLE(S) box.
4 Click OK.
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ANOVA
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End of class 4.3
THANK YOU
Jessy Nair Ph.D.
Associate Professor,
Department of Management Studies
jessynair@pes.edu