Advertising. A study was undertaken by a company that markets iced tea to determine the ef...

Advertising. A study was undertaken by a company that markets iced tea to determine the effectiveness of three types of advertising: (a) price discounts, (b) manufacturer’s coupons, and (c) rebates. Three cities of nearly equal size are selected for the experiment. Each of the advertising strategies is to be used for a period of 2 months in each city, and the sales of the company’s iced tea recorded for the 2-month period. It is known, however, that iced tea sales are highly seasonal. Thus, the months selected for a particular ad strategy could highly influence the level of sales. A randomized block design is used to eliminate the seasonal effects.

For each time period (block), the advertising strategies (treatments) are randomly assigned to the three cities. The results are shown in Table 9.6.

The variable ADV is coded as 1 = price discounts, 2 = manufacturer’s coupons, and 3 = rebates. The variable BLOCK is coded as 1 = first 2-month period, 2 = second 2-month period, and 3 = third 2-month period.

Treating the experiment as a randomized block design, the ANOVA in Figure 9.13 was obtained. Use the results to determine whether the effects of the advertising strategies differ. Use a 5% level of significance. State any hypotheses to be tested, the decision rule, the test statistic, and your decision.

These data are available in a file named ADVERT9 on the CD in three columns: SALES, ADV, and BLOCK for MINITAB. The Excel Spreadsheet contains the data in the form needed for the Excel analysis as discussed earlier in this section.

TABLE 9.6: Data for Advertising Exercise

FIGURE 9.13: ANOVA Output for Advertising Exercise.