MGMT601_2305A_03_ColeKaylie_IP3-2(2)

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Colorado Technical University *

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Jan 9, 2024

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1 Unit 3 IP Kaylie Cole Unit 3 IP Colorado Technical University 3 December 2023
2 Unit 3 IP Introduction The management question at hand is whether to expand the Outdoor Sporting Goods company's market to Lincoln Park (60614) or maintain the existing market. The specific decision involves two product lines, PLA and PLB. In Unit 2, the recommendation was made based on general economic, educational, and household income information to expand. In order to formu- late hypotheses for chi-square testing, we must define our null and alternative hypotheses. Null Hypothesis (HO) For Product Line A (PLA): \(H_0: \text{PLAo} = \text{PLAe}\) For Product Line B (PLB): \(H_0: \text{PLBo} = \text{PLBe}\) The null hypothesis assumes that the observed product line sales in Lincoln Park are equal to the expected product line sales based on general U.S. demographics. Alternative Hypothesis (H1) For Product Line A (PLA): \(H_1: \text{PLAo} \neq \text{PLAe}\) For Product Line B (PLB): \(H_1: \text{PLBo} \neq \text{PLBe}\) The alternative hypothesis implies a significant difference between observed and ex- pected product line sales in Lincoln Park. Chi-Square Justification The chi-square test is chosen for this scenario due to its suitability for categorical data analysis, specifically the comparison of observed and expected frequencies. In this context, we use it to evaluate whether the distribution of product line sales in Lincoln Park differs signifi- cantly from what would be expected based on U.S. demographics. The assumptions are based on an alpha level of 0.05 and 5 degrees of freedom, considering the limitations of available data.
3 Unit 3 IP This preliminary chi-square analysis, focused on mean household income and cost of liv- ing index, acts as a compass for the Board of Directors. Hypothetical if the analysis indicates a significant difference in purchasing behavior, it signals that the market dynamics in 60614 might necessitate a tailored approach for product A and B. Beyond the Formulas On the other hand, if no significant difference is found, it strengthens the rationale for a consistent marketing strategy across locations. Beyond formulas, this approach provides a strate- gic glimpse into the potential success and alignment of the outdoor sporting goods client's prod- ucts with the unique economic landscape of 60614, aiding informed decision-making in market expansion. Conclusion If the chi-square test indicates a significant difference between observed and expected sales for either product line, it suggests that the market dynamics in Lincoln Park deviate from the national average. This insight is crucial for the Board of Directors as it provides evidence to either support or question the initial decision to expand. A significant result may prompt a reevaluation of the expansion strategy, considering the unique characteristics of the Lincoln Park market, such as its high Cost of Living index. The outcomes contribute valuable information for strategic decision-making, aligning the company's product lines with the specific needs and pur- chasing behavior of the local population.
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4 Unit 3 IP References Bozeman Science. (2011, November 13). Chi-squared test [Video]. YouTube. https://www.y - outube.com/watch?v=WXPBoFDqNVk The Organic Chemistry Tutor. (2019, November 22). Chi Square Test. YouTube. https://m.y - outube.com/watch?v=HKDqlYSLt68 Mirabile, H. (2023, November 28). Unit 2 - Live Chat - Week 3-Common Statistical Test Re- trieved from Colorado Technical University, Virtual Campus: https://campus.ctuonline.edu