Advanced Marketing Research -

Concept Notes

Advanced Marketing Research

(with SPSS)
Hypothesis Testing and t-Tests

Dr. Vikas Goyal

Statistical Hypothesis Testing

• Hypothesis is a statement that tries to explain
observed results of a phenomenon
• Hypothesis may be testable or non-testable
• Sales promotions leads to higher sales
• There are other earth like planets; etc.
• In marketing research projects we mostly deal
with hypotheses that are statistically testable
based on the observable evidences/results.

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Concept Notes

The Null Hypothesis

• The null hypothesis refers to a specified value of
the population parameter (e.g., m, s, p ), not a
sample statistic (e.g., X ).
• A null hypothesis is a statement of the status
quo, one of no difference or no effect. If the null
hypothesis is not rejected, no changes will be
made.
• A null hypothesis may be rejected, but it can
never be accepted based on a single test.
– In classical hypothesis testing, there is no way to
determine whether the null hypothesis is true.
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The Alternative Hypothesis

• An alternative hypothesis is the one which
proposes to explain the observed results,
when the null hypothesis is being rejected (or
is not able to explain the observed results).
• Alternative hypothesis is drawn in such a way
that rejection of null hypothesis implies that
alternative hypothesis can be accepted.

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The Alternative Hypothesis

• Different alternative hypothesis can be drawn from the same Null
hypothesis:
– H0: Higher prices will lead to lower sales
– H1: price has no effect on sales
– H1: Higher price leads to higher sales, due to higher price-quality
perception

• Rejection of null hypothesis does not make the alternative

hypothesis as absolute true or non-refutable.

• We can only conclude that based on our results the null hypothesis
does not hold and therefore the proposed alternative hypothesis
can/may be true.

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Steps Involved in Hypothesis Testing

1. Identify H0 (The Null Hypothesis)
2. Formulate H1 (Broad/specific – based on the trade off)
3. Identify the type (metric/non-metric) and the role
(DV/IV/Control/Moderator) of each variable in your H1
4. Choose desired level of significance (p-value)
based on the implications / criticality of findings.
P-Value: What is the probability that the observed
results would occur if the null hypothesis were true?
5. ‘Reject’ or ‘Not able to reject’ the null.
6. Draw conclusions and action pointers.
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Concept Notes

• If this p-value is very small (traditionally 5% or

1%), it suggests that the observed data is
inconsistent with the assumption of H0, (i.e. of no
relationship), and
• Thus H0 can be rejected and it can be said that a
relationship does exist.
• P-Value answers the question: What is the
probability that the observed results would
occur if the null hypothesis were true?
• Assuming that H0 is true, what is the probability
of obtaining the observed results? i.e. P-value:
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T-Tests
• Comparing means: The test of mean levels

• One-Sample t-test
– Comparing the mean level of a variable against an
absolute (numeric) value.
• Paired/Related Sample t-test
– When comparing the mean levels of two variables
• 2-Independent Sample t-test
– When comparing the mean levels of a variable across
two independent groups.

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Concept Notes

T-test in MS Excel
• =ttest(array1, array2, tail, type)

• Tail:
• 1 – one tailed test
• 2 – two tailed test

• Type:
• 1 – paired
• 2 – independent (equal variance assumed)
• 3 – independent (unequal variance assumed)
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Practice Questions
• Determine which stores have familiarity rating
higher than 3.
• Determine if number of saving a/c is higher than
checking a/c.
• Determine if the following pairs differ on their
familiarity ratings.
– Kmart & Sears
– Kmart and Walmart
– Nieman and JCPenney
• Determine if there is any relationship between the
residence status (Owned/Rented) and
– the number of family members
– # children under 6
– # children over 6
– # children not living at home Advanced Marketing Research
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