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Module III - Inference

Assume that you work for a chain of food stores and that you are interested in how your companys prices compare with your competitors. Since a food store carries many items, it is likely that you are higher on some products than on others. The goal of the study is to determine whether or not you can claim to be significantly lower in price than any of your competitors.

A random sample of 36 products, from the thousands available, were priced at six food stores in the Macomb, Illinois area in 1980. The prices are attached. If a name brand existed for a product, the same name brand was priced at all the eight stores, if possible. In addition, if a store had an equivalent house brand, its price was also recorded. (Note that W. Pierce has no house brands.) The data is contained in the EXCEL file grocdata.xls included in the supplementary files for this Module. You will note, as you look at the data, that some data is missing and also that in some cases, the house brand costs more than the name brand (probably resulting from a sale on the day of the price check).

Assignment:

You are to assume that you are employed at one of the five stores (do not pick W. Pierce). You are to determine if your store is significantly lower or higher in cost than the other five stores listed. You need to pick a market basket of items by randomly picking 25 of the 36 items on which to base a decision. For each of the items chosen, you should randomly decide if you will include the name or house brand of that item in your market basket.

Knowledge of your companys relative position compared to the other companies would be quite useful in advertising. If you turn out to be significantly lower you could use this fact in your ads. If you turn out to be the same as the other companies you might wish to emphasize service, quality, or brand selection in your advertising. If you turn out to be significantly higher, Im not sure you could spin the result but perhaps such a result would lead to deeper questions about the management of the company.

You should work with an overall alpha level of .05.