Data Analysis for Business Decisions Essay

1. Introduction: destination marketing Honeymoon Destinations is a business that produces video footage that contains resort-specific and region-specific footage regarding the most popular honeymoon destination resorts including: Hawaiian Islands, Caribbean Islands, Mexico and Florida. The marketing of destinations serve to guide newlyweds by means of capturing videos –including rating each resort based on the most important characteristics such as view, cost and accommodations. These footages attempt to generate an attractive, fascinating and informative product on what the newlyweds can expect on their â€Å"once in a lifetime† expedition. (Parry, Mark, 1999) 2. Honeymoon Destinations Market: Studies have indicated that in the past decade, there has been a significant increase in the amount that newlyweds spent on weddings and in the average age of first time brides and grooms. U.S. Department of Health and Human Services’ findings conclude that in the year 1967, the average age is 23.8 and 21.6 for men and women, respectively. However, the average age has increased to 26.4 and 24.5 for men and woman, respectively in the year 1987. This indicates that because first-time brides and grooms are postponing their weddings, they may more financial resources to spend more on honeymoon expenditures down the line. (Parry, Mark, 1999) 3. Data Analysis: Honeymoon Destinations has developed and administered a marketing feasibility study in order to investigate the impending demand for honeymoon destination videos. A survey has been mailed to 260 recent bridal fair participants in the area. Out of the 260 prospective participants, 91 have successfully submitted a response—with a calculated response rate of 35%. In order to understand the complexity of honeymoon destination marketing by means of video footage to newlyweds, this report attempts to analyze, calculate and investigate various data techniques for business decisions in the area of strategic marketing and management of honeymoon destinations. Additionally, this paper is based on data analysis research pertaining to the honeymoon destination direct mail survey where comprehensive frameworks have been tested and implemented— discussing a broad range of destination marketing channels, sources and references for the company to further improve current and future busi ness decisions in the honeymoon destination marketing industry. (Parry, Mark, 1999) First Case Scenario: The analysis has focused on the company’s marketing and distribution to as few as channels as possible. Additionally, the report has analyzed what the very best channels would be based on what the data indicates. The survey question reads â€Å"From what source would you be likely to purchase the video?† The sources (distribution channels) have been investigated as to look at what sources people utilized to purchase the honeymoon destination video. The descriptive analysis has calculated the count (number) of total recipients who responded—which was measured at 91—and the mode (frequency) of the 91 recipients who responded with a 1 (check) or a 0 (no check) and has calculated the count (number) of recipients. In this section, the table and graph above contains the percentage of respondents who stated that they could be likely to purchase a video from a particular source. The sum amount of responses for variables 45-52 have been divided by the total (count) of the low income group (income level of $25,000-$69,000 and high income group (income level of $70,000-92,000). For instance, using the source Bridal Shops—the sum of this particular variable is calculated at 19. The sum is then divided by the total count of the low income group, which is calculated at 0.35 or 35%. Using the same source, the sum of this particular variable is calculated at 10. The sum of 10 is then divided by the total count of the high-income group, which is calculated at 0.28 or 28%. The data findings indicate that both the low-income and high-income group is less likely to purchase a video from the Bridal Shop source. Another source that would both groups would not be likely to purchase a video from is the Video Rental Store—the data is calculated at 18% and 25% for low-income and high-income groups, respectively. (Parry, Mark, 1999) (Bowerman, Bruce L., O’Connell, Richard T., Murphree, Emily S.,2011) Proposal and Recommendations for Scenario One: As a result of implementing descriptive statistics analysis and creating an appropriate graph and tabular representation, the findings conclude that the most popular channel types to purchase videos are from: 1. Bridal magazines: which was calculated that 75% of people in the lower income bracket and 82% of people in the higher income bracket. For this particular channel, people with higher income would be most likely to purchase videos from Bridal Magazines than people with lower income. 2. Travel Magazines: which was calculated that 77.8% of people in the lower income bracket and 82% of people in the higher income bracket. For this particular channel, findings conclude that there is very little difference in the type of income group that would purchase videos from the travel magazines. Honeymoon Destinations should focus more attention on using Travel Magazines and Bridal Magazines as the most effective marketing and distribution channels for advertizing honeymoon video footage to newlyweds—for both the low-income and high-income groups. When it comes to investing in a honeymoon getaway, the travel possibilities can be endless; however the choices and the decision may leave the couples feeling confused and undecided. (Parry, Mark, 1999) This leads an important question— who is primarily responsible for researching a possible honeymoon resort and who makes the decision in selecting the most preferred destination—the bride, groom or both? As indicated in the above graph, the bride takes primary responsibility in researching possible honeymoon getaways measured at 76.9% of the time, 11 % for grooms and 12.1% of the time both take equal responsibility in looking for honeymoon resorts. However, 82.4% of the time both couples share equal responsibility on making the actual decision on a honeymoon destination, whereas a mere 8.8% for brides and 8.8% of grooms take primary responsibility in making a decision. With the stress that unavoidably accompanies wedding planning, Honeymoon Destinations can utilize Bridal Magazines and Travel Magazines as its best marketing and distribution sources to further assist couples in researching and deciding on the perfect destination and itinerary–as a result, the couples can enjoy their once in a lifetime getaway. [ (Parry, Mark, 1999) ] Second Case Scenario: For this particular case scenario, it is believed that the individuals in the target group— Individuals with higher incomes—is more willing to spend at least $15.00 on the Honeymoon Destinations Video. This report tests this hypothesis. The analysis only observed individuals with higher incomes (upper half of the sample; $70,000 or more). A z test could not be measured because it requires knowing more information than what was available in the survey analysis. A z-test requires knowing the value of a population standard deviation (sigma) to be able to compute the standard error of the estimate. In most instances, this is rarely known—such in this case. The data calculated the standard deviation of the sampling distribution (measured at 3.852848874). As a result a one-sample, one-sided t-Test was employed for the sample higher-income group (variable 53) because the population standard deviation was not available in a sample of 91 participants in the direct-mail survey; the sample standard deviation was utilized as an estimate for testing purposes. (See descriptive and statistical analysis below) (Bowerman, Bruce L., O’Connell, Richard T., & Murphree, Emily S., 2011) Utilizing the one-sample, one-sided t-Test. the test statistic is t = 20.41606. 4. The P value of 0.00001 has been calculated for the possible test condition and compared it to the alpha level of 0.05. Therefore, the P value has determined to reject the null hypothesis. 5. Conclusion: We can observe that 20.41606 > 0.00001 in a one tail test (upper); thus the absolute value of our test statistic is greater than the associated p-value and is in the rejection region (and p-value has determined to reject the null hypothesis). Therefore, we reject the null hypothesis in favor of the alternative hypothesis. Therefore, the data analysis findings can statistically conclude that the sample provides enough evidence that the average amount the high-income group will be willing to spend is more than $15 for the Honeymoon Destinations Video. If the alpha was measured at .01 and .10 with the P –value still at 0.00001, the null hypothesis would still be rejected in favor of the alternative hypothesis. (Bowerman, Bruce L., O’Connell, Richard T., & Murphree, Emily S., 2011) Third Case Scenario: For the last case scenario, the analysis report is more interested in developing an estimate for what the average individual would be willing to pay rather than computing a hypothesis testing. Therefore, 95% confidence intervals have been developed for the average price individuals would be willing to pay: one for the lower-income group and one for the higher-income group. Dividing variable 54 into a low-income group and high-income group and also dividing Variable 53 (Amount willing to pay to purchase Honeymoon Destinations Video)—producing the below descriptive analysis of the sample average, standard deviation and sample size for the low and high income groups. The population standard deviation is not known, therefore, the sample standard deviation for low-income and high-income groups is estimated which is calculated at 6.876349 and 3.852849, respectively—utilizing variable 53. (Parry, Mark, 1999) (Bowerman, Bruce L., O’Connell, Richard T., Murphree, Emily S., 2011) The sample size (n) of 55 for low-income group measures the sample average amount willing to pay for the video is $8.89 (rounded up). The sample standard deviation is calculated at 6.876349. A 95% confidence interval has been developed for the average price the low-income group is willing to pay for the video at $8.89. The findings indicate that the confidence interval is 7.03 for the lower limit and 10.75 for the higher limit of amount willing to pay for the video, respectively. The margin of error of 1.86 (the degree of accuracy in the analysis) is the t-multiple of 2.005 times the standard error of the estimation at 0.93 which indicates how far the confidence level would extend on each some of the point estimate. Conversely, the sample size (n) of 36 for high-income group measures the sample average amount willing to pay for the video is $28.11 (rounded up). The sample standard deviation is calculated at 3.852849. A 95% confidence interval has been developed for the average price the high-income group is willing to pay for the video at $28.11. The findings indicate that the confidence interval is $26.81 for the lower limit and $29.41 for the higher limit of amount willing to pay for the video, respectively. The margin of error of 1.30 (the degree of accuracy in the analysis) is the t-multiple of 2.030 times the standard error of the estimation at 0.64 which indicates how far the confidence level would extend on each some of the point estimate. (Bowerman, Bruce L., O’Connell, Richard T., Murphree, Emily S., 2011) As part of the comparative analysis between the low-income group and high-income group— assuming that if this procedure were to be repeated on multiple samples—the calculated confidence interval would encompass the true population parameter 95% of the time. Thus, the repeated samples that are taken from both groups, 95% of the time, the average amount people in the low-income group willing to pay will be between $7.03 and $10.75. And, 95% of the time, the average amount people in the high-income group willing to pay will be between $26.81 and $29.41. (Bowerman, Bruce L., O’Connell, Richard T., Murphree, Emily S., 2011) Proposal and Recommendations for Scenario Two and Three: Although it has been suggested to sell each 45 minute video for a retail price of $14.95, the Company needs to recognize that it’s difficult to appeal to all consumers in the honeymoon marketplace, or at least cannot appeal to all consumers in the same way. Consumers are extremely diverse, widely scattered and significantly varied in their particular needs and purchasing practices. It’s important to note that low-income individuals who are looking to book a honeymoon resort face challenges of economic stability and an increase in the amount spent towards weddings. Since the high-income group is willing to pay more between $26.81 and $29.41, whereas the low-income group is willing to pay between $7.03 and $10.75 for honeymoon destinations videos, the company must shift from mass marketing strategies to both a target marketing and differential pricing method. (See diagram below) Customer-Driven Marketing Strategy: Creating Value for Target Customers First, the company must effectively identify and select diverse market segments (i.e. low income, high income, age, etc), differentiate based on their interest/financial resources and needs—and further improve channels of distribution/products/services tailored to each particular population segment in various affluent and discounted retail store locations. Secondly, Honeymoon Destinations can then implement a differential pricing practice which entails charging the high-income group more, while charging the low-income group less for the same product—which in this case is the honeymoon video. (Marshall, Greg W. & Johnston, Mark, 2010) Possible implications of differential pricing: If Honeymoon Destinations sells the 45 minute video footage for several different prices, higher income individuals who are willing and able to spend more than $15.00 for the video may end up deciding it’s cheaper to pay for the lower priced video. However, this would force the lower-income individuals to pay more. (Marshall, Greg W. & Johnston, Mark, 2010) Each difference has potential to either create company costs as well as customer benefits. A difference is worth establishing to the extent that it will satisfy not only the high income group but, more importantly the low income group. The company should look to improve marketing strategies that satisfy both the high-income and low-income groups by meeting the following criteria: 1. Importance: the video will deliver a highly valued benefit to the target group 2. Distinctive and Superior: Emphasize that the company offers a more informative and distinctive video footage over other competitors—which can be tailored based on the target group’s financial resources, needs, desires and personality. 3. Visibility: the video footage is visible and easily accessible to the target audience. Therefore, providing the broadest possible access to the video allows—and encourages differential pricing. Not implementing differential pricing will only ensure that the low-income individuals will have little to no access to purchasing the video they couldn’t otherwise afford. Overall, selecting the best position of the product can be challenging; however, providing a wide-range of choices and prices is crucial to the company’s overall current and future success. (Marshall, Greg W. & Johnston, Mark, 2010) References Bowerman, Bruce L., O’Connell, Richard T., & Murphree, Emily S. (2011). Chapter 9: Hypothesis Testing. In Data Analysis for Business Decisions (Sixth ed., pp. 351-392). New York, NY, USA: McGraw-Hill Companies, Inc. . Bowerman, Bruce L., O’Connell, Richard T., Murphree, Emily S. (2011). Data Analysis for Business Decisions (Sixth ed.). New York, NY, USA: McGraw-Hill Companies, Inc. Marshall, Greg W. & Johnston, Mark. (2010). Marketing Management. New York, NY, USA: McGraw-Hill/Irwin. Parry, Mark. (1999). Honeymoon Destinations. University at Virginia , Darden Graduate School of Business Administration. Charlottesville, VA: Darden Business Publishing. Retrieved December 27, 2012