Question

Describe a situation when you would use ANOVA (Analysis of Variance) to improve a marketing strategy.

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Answer 1

Analysis of Variance (ANOVA) is a statistical method used to test differences between two or more means. It may seem odd that the technique is called “Analysis of Variance” rather than “Analysis of Means.” As you will see, the name is appropriate because inferences about means are made by analyzing variance. ANOVA is used to test general rather than specific differences among means. This can be seen best by example. In the case study “Smiles and Leniency,” the effect of different types of smiles on the leniency shown to a person was investigated. Four different types of smiles (neutral, false, felt, miserable) were investigated. The chapter “All Pairwise Comparisons among Means” showed how to test differences among means.

Bundling is a marketing strategy that involves the sale of two or more separate products in one package. It is frequently used to introduce a new product or brand. For example, a new hair gel might be bundled with a popular shampoo, or a new cell phone might be bundled with a new wireless service contract. While much research has been done in terms of evaluating the quality of a bundle, relatively little has been done on the effects of bundling. Do the characteristics of the partnered product affect a consumer’s opinion of the new product? One characteristic of interest would be the partnered product’s functional relatedness, or complementarity.3 If the partnered product is used in conjunction with the new product, does that enhance the consumer’s perception of the new product? To design a study to answer this question, we first need to determine an appropriate target group. This will depend on the new product under consideration. Suppose we’re interested in introducing a new surround sound receiver and, therefore, decide to focus on college-age consumers of electronics. For our partnered products, we decide on a six-piece speaker system as the complementary product and a digital camera as the noncomplementary product. Because consumers have been shown to respond differently to products based on the product’s brand image, our design should also take that into account. Let’s consider a two-way ANOVA for this study.