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Statistics for Decision Making

   

Added on  2023-06-11

29 Pages4657 Words394 Views
Statistics and Probability
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Running Head: STATISTICS FOR DECISION MAKING
Statistics for Decision Making
Name of the Student
Name of the University
Course ID
Statistics for Decision Making_1

1STATISTICS FOR DECISION MAKING
Executive Summary
In general, there are different factors that influence demand of a particular good. When it comes
to luxury cars, the choice of specific cars depends on specific taste and preferences of customers.
Despite having almost same price with same features choices differ based on preferences. Sellers
often face problems in determining particular targeted group of buyers for a particular model.
The report analyzes the business problem related to designing marketing strategy of different
luxury cars. The three chosen car models are BMW, Lexus and Mercedes. Along with choice of
cars, customers’ profiles are considered in terms of age, income and education years. Total 420
people are surveyed to have an idea regarding choices of three different models. In the sample
surveyed maximum number of people prefer Mercedes followed by Lexus and BMW. In case of
BMW buyers are relatively younger with a relatively lower income and lesser education years.
Buyers of Mercedes are mostly older people with a relatively higher income and higher
education years. The business problem is again analyzed in reference statistical problem like
finding out the location, shape and variability of the distribution of age, income and years of
education. The distribution of three different variables differs for the three different car models.
The average age for buyers of BMW cars is 45 years while that for Lexus and Mercedes are 50
and 52 years respectively. Buyers of BMW, Lexus and Mercedes have a respective income of
139271 dollars, 154186 dollars and 184423 dollars. The average education years for BMW,
Lexus and Mercedes car are almost same and is equal to 16 years. Average age, income and
education years differs significantly among the three chosen group of buyers. The regression
model confirms that older with having a higher income and higher education years prefers
Mercedes to BMW or Lexus.
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2STATISTICS FOR DECISION MAKING
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3STATISTICS FOR DECISION MAKING
Table of Contents
1. Introduction..................................................................................................................................3
1.1 Business Problem...................................................................................................................3
1.2 Statistical Problem.................................................................................................................3
2. Analysis.......................................................................................................................................4
2.1 Output based on different age groups....................................................................................4
2.2 Analysis based on different income groups...........................................................................9
2.3 Output based on various education years............................................................................14
2.4 Hypothesis testing 4.............................................................................................................19
2.5 Hypothesis testing 5.............................................................................................................20
2.6 Hypothesis testing 6.............................................................................................................21
2.7 Hypothesis testing 7.............................................................................................................22
3. Conclusion and Recommendation.............................................................................................24
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4STATISTICS FOR DECISION MAKING
1. Introduction
1.1 Business Problem
The Automobile Association attempts to analyze demand for different luxury cars.
Demand are analyzed among households having different ages, incomes and education years.
The business aims to find out preferences for BMW, Lexus and Mercedes among different
households. The business problem is to understand how age, income and education years’
influence the purchasing decision of different luxury cars. More specifically, the objective is to
analyze preference of buyers for the three different car models based on their age, income and
education. The information regarding customers’ profile of specific car model is helpful for
Automobile businesses to determine specific strategy.
1.2 Statistical Problem
The business problem is to be evaluated in light of statistical knowledge and
interpretation. In order to determine specific form of distribution for age, income and education
years including location and shape of the distribution various measures of central tendency and
dispersions have been used. The association is willing to know whether buyers if BMW, Lexus
and Mercedes have different average ages, average income and average education years.
Hypothesis testing is done to find out whether average age, income and education years differ
significantly among three different group of buyers. Logistic regression is conducted to test the
claim that older people with higher income and higher education mostly prefer Mercedes over
BMW and Lexus.
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5STATISTICS FOR DECISION MAKING
2. Analysis
2.1 Output based on different age groups
Table 1: Ages of buyers of different luxury cars
Count of Age
(Years) Column Labels
Row Labels 1 2 3
Grand
Total
35-39 6 6 4 16
40-44 52 14 20 86
45-49 52 46 26 124
50-54 14 36 48 98
55-59 6 28 34 68
60-64 6 16 22
65-70 4 2 6
Grand Total 130
14
0
15
0 420
35-39 40-44 45-49 50-54 55-59 60-64 65-70
0
10
20
30
40
50
60
1
2
3
Figure 1: Ages of buyers of different luxury cars
The ages are divided into seven groups ranging between 35 and 70. For the age groups 35-39,
there are 6 people preferring BMW, 6 people preferring Lexis and 4 people preferring Mercedes.
In the age group 40-44, maximum number of people prefer BMW followed by Mercedes and
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