One of the 4P's in marketing is Promotion.

Five years ago, 36% of mid-size companies that are in the same market (as your company) spent more than $25,000 on advertising.

The new marketing manager wants to see if this figure is different from the past before deciding on the marketing budget for the next fiscal year. A random sample of 50 mid-size companies that are in the same market was drawn and 26 of them spent more than $25,000 on advertising in the current year.

a) Set up the null hypothesis and the alternative hypothesis. [2+2 marks]

Note: Make sure you define all symbols used.

Define p as the proportion of all companies (that are in the same market and similar size) that spend more than $25,000 on advertising.

H0: p = 0.36

Ha: p <> 0.36

b) Calculate the test statistic and find the p-value. [3marks]

TS = [0.52-0.36]/sqrt[0.36*0.64/50] = 2.357 or 2.36

p-value = 2*P(Z > 2.36) = 2*(1-0.9909) = 2*0.0091 = 0.018

How did this 0.53 was found out?