Quantitative Analysis & Decision Making / Hypothesis Testing

You are a marketing manager for a company that makes ready-to-eat breakfast cereals. Your company recently initiated a loyalty program for consumers, which resulted in a large purchaser database. The brand managers are eager to mine the available data, which they can use to design more effective promotional programs. The management of your organization believes that to be effective, these programs have to take into account significant cross-region (i.e., the East Coast, the West Coast, the Midwest, and the South) purchase differences. Your task is to test the hypothesis that there are significant cross-region differences in purchasing patterns. Describe how you would use hypothesis testing to validate the management’s belief of cross-region purchase differences. In addressing this, be sure to answer the following questions:

  • What is the goal of testing this hypothesis?
  • What would be the mechanics of this hypothesis testing process?
  • Why go through the trouble of hypothesis testing in this situation?

Justify your answers with examples and reasoning