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Alex Hamilton founded Hamilton Marketing Services after leaving a major marketing consulting firm in Chicago. Hamilton Marketing Services focuses on small to medium sized retail

Alex Hamilton founded Hamilton Marketing Services after leaving a major marketing consulting firm in Chicago. Hamilton Marketing Services focuses on small to medium sized retail firms and has been quite successful in providing a wide range of marketing and advertising services.

A few weeks ago, a relatively new customer that Alex himself has been working with for the past several months called with an idea. This customer, a pet-grooming company, is interested in changing the way it prices its full-service dog-grooming service. The customer is considering two options: (1) a flat $40.00 per-visit price and (2) a $30.00 per-visit price if the dog owner signs up for a series of four groomings. However, the pet-grooming service is unsure how these options would be received by its customers. The owner was hoping there was some type of study Alex could have his company do that would provide information on what the difference in response rates would be for the two pricing options. He was interested in determining if one option would bring in more revenue than the other.

At the time, Alex suggested that a flier with an attached coupon be sent to a random sample of potential customers. One sample of customers would receive the coupon listing the $40.00 price. A second sample of customers would receive the coupon listing the $30.00 price and the requirement for signing up for a series of four visits. Each coupon would have an expiration date of one month from the date of issue. Then the pet-grooming store owner could track the responses to these coupon offers and bring the data back to Alex for analysis.

Yesterday, the pet store owner emailed an Excel file called "Grooming Price Test" to Alex. Alex has now asked you to assist with the analysis. He has mentioned using a 95% confidence interval and wants a short report describing the data and summarizing which pricing strategy is preferred both from a proportion-response standpoint and from a revenue-producing standpoint.

1. Compute a sample proportion for the responses for the two coupon options under consideration.(from the table below)

2. Develop a 95% confidence interval for the difference between the proportions of responses between the two options.

3. Use the confidence interval developed in (2) to draw a conclusion regarding whether or not there is any statistical evidence that there is a difference in response rates between the two coupon options.

4. Determine whether or not there is a difference between the two coupon options in terms of revenue generated.

5. Identify any other issues or factors that should be considered in deciding which coupon option to use.

6. Develop a short report summarizing your analysis and conclusions.

Coupon Number $40.00 Offer Favorable Reply (Yes/No) $30.00 Offer Favorable Reply (Yes/No)
1 No No
2 Yes No
3 No No
4 No No
5 No No
6 No Yes
7 Yes No
8 No Yes
9 No No
10 Yes No
11 No No
12 Yes No
13 Yes No
14 No No
15 No No
16 Yes No
17 No No
18 No No
19 No No
20 No No
21 No No
22 No No
23 No No
24 No No
25 No No
26 No No
27 No No
28 No No
29 No No
30 No No
31 No No
32 Yes Yes
33 No No
34 No Yes
35 No No
36 No No
37 No Yes
38 No No
39 No No
40 No No
41 Yes No
42 No Yes
43 Yes No
44 No No
45 No No
46 No No
47 No No
48 No No
49 Yes No
50 No No
51 Yes Yes
52 No No
53 Yes No
54 No No
55 No Yes
56 No Yes
57 No Yes
58 No No
59 Yes No
60 Yes No
61 No Yes
62 No No
63 No No
64 No No
65 No No
66 No No
67 No No
68 No Yes
69 No No
70 No No
71 No No
72 No No
73 No No
74 No No
75 No No
76 No No
77 Yes No
78 Yes Yes
79 No No
80 No Yes

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