Question

For the following situation, identify the variable(s) involved (name and categories) and the test you would run to analyze the data:

A marketing firm producing detergents is interested in studying the consumer behavior in the context of purchase decision of detergents in a specific market. This company is a major player in the detergent market that is characterized by intense competition. It would like to know in particular whether the income level of the consumers (measured as lower, middle, upper middle, and upper class) influence their choice of the brand. Currently there are four brands in the market. Brand 1 and Brand 2 are the premium brands while Brand 3 and Brand 4 are the economy brands.

	a.	Descriptive Statistics
	b.	Chi-square goodness of fit
	c.	Frequency table
	d.	Chi-Square of Independence

Answer 1

d. Chi-Square of Independence

For the given scenario, we have the null and alternative hypotheses as below:

Null hypothesis: H₀: Two categorical variables income level of the consumers and brand type are independent.

Alternative hypothesis: H_a: Two categorical variables income level of the consumers and brand type are dependent.

The variable and categories for this test are given as below:

First variable: Income level of the consumers with four categories such as lower, middle, upper middle, and upper class.

Second variable: Brand type with two categories such as premium and economy.