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Business Analytics

QBUS2810: Statistical Modelling for Business

Semester 1, 2023

Week 1 Tutorial

Task 1

The book Business Analytics for Managers, by Wolfgang Jank, published by (Springer), http://www.springer.com/gp/book/9781461404057 has an example of a customer database compiled by a company called Direct Marketing.  The data are in the file  Table 2. 6 DirectMarketing. csv. The business problem is assessing and predicting how much cus-tomers with different profiles spend on direct marketing products, with the objective of targeting sales and marketing efforts.

The response variable here is amount spent (in dollars) on Direct Marketing products by each of their customers.

Some predictor variables include: salary, age range, marital status, number of children, number of catalogues sent to customer, spending history (high/low/medium), whether customer is a homeowner, location of nearest competing physical store (far/close).

In this tutorial you will examine the question as to the effect of location of nearest store on amount spent; with focus on the question as to whether customers living ’close’ to a competing store tend to spend less than those living ’far’ from a competing store.

(a)  Conduct an exploratory analysis on each variable individually.

(b)  Conduct an exploratory analysis related to the primary question:  is there a difference in customer’s spending based on the location of the nearest competing store?

(c)  Conduct a Student-t test for a relationship between amount spent and location of nearest competitor.  Assess whether the assumptions for the test are met, or not.

(d) Find a 95% confidence interval for the difference in average amount spent between the two groups based on location to nearest competing store.

(e) Formally assess the the question as to whether customers living ’close’ to a com- peting store tend to spend less than those living ’far’ from a competing store.

(f) Using all the results above, fully explain any relationship found between amount spent and location of nearest competing store.