In the book Business Research Methods, Donald R. Cooper and C. William Emory (1995) discuss a manager who wishes to compare the effectiveness of two methods for training new salespeople. The authors describe the situation as follows:

The company selects 22 sales trainees who are randomly divided into two equal experimental groups—one receives type A and the other type B training. The salespeople are then assigned and managed without regard to the training they have received. At the year’s end, the manager reviews the performances of salespeople in these groups and finds the following results:

(a) Set up the null and alternative hypotheses needed to attempt to establish that type A training results in higher mean weekly sales than does type B training.

H₀: µ_A ? µ_B ?    versus H_a: µ_A ? µ_B  >  

(b) Because different sales trainees are assigned to the two experimental groups, it is reasonable to believe that the two samples are independent. Assuming that the normality assumption holds, and using the equal variances procedure, test the hypotheses you set up in part a at level of significance .10, .05, .01 and .001. How much evidence is there that type A training produces results that are superior to those of type B? (Round your answer to 3 decimal places.)

(c) Use the equal variances procedure to calculate a 95 percent confidence interval for the difference between the mean weekly sales obtained when type A training is used and the mean weekly sales obtained when type B training is used. Interpret this interval. (Round your answer to 2 decimal places.)

Confidence interval [   ,  ]

Jan Northcutt, owner of Northcutt Bikes, started business in 1995. She notices the quality of bikes she purchased for sale in her bike shop declining while the prices went up. She also found it more difficult to obtain the features she wanted on ordered bikes without waiting for months. Her frustration turned to a determination to build her own bikes to her particular customer specifications.

She began by buying all the necessary parts (frames, seats, tires, etc.) and assembling them in a rented garage using two helpers. As the word spread about her shop’s responsiveness to options, delivery, and quality, however, the individual customer base grew to include other bike shops in the area. As her business grew and demanded more of her attention, she soon found it necessary to sell the bike shop itself and concentrate on the production of bikes from a fairly large leased factory space.

As the business continued to grow, she backward integrated more and more processes into her operation, so that now she purchases less than 50% of the component value of the manufactured bikes. This not only improves her control of production quality but also helps her control the costs of production and makes the final product more cost attractive to her customers.

The Current Situation

Jan considers herself a hands-on manager and has typically used her intuition and her knowledge of the market to anticipate production needs. Since one of her founding principles was rapid and reliable delivery to customer specification, she felt she needed to begin production of the basic parts for each particular style of bike well in advance of demand. In that way she could have the basic frame, wheels, and standard accessories started in production prior to the recognition of actual demand, leaving only the optional add-ons to assemble once the order came in. Her turnaround time for an order of less than half the industry average is considered a major strategic advantage, and she feels it is vital for her to maintain or even improve on response time if she is to maintain her successful operation.

As the customer base have grown, however, the number of customers Jan knows personally has shrunk significantly as a percentage of the total customer base for Northcutt Bikes, and many of these new customers are expecting or even demanding very short response times, as that is what attracted them to Northcutt Bikes in the first place. This condition, in addition to the volatility of overall demand, has put a strain on capacity planning. She finds that at times there is a lot of idle time (adding significantly to costs), whereas at other times the demand exceeds capacity and hurts customer response time. The production facility has therefore turned to trying to project demand for certain models, and actually building a finished goods inventory of those models. This has not proven to be too satisfactory, as it has actually hurt costs and some response times. Reasons include the following:

• The finished goods inventory is often not the “right” inventory, meaning shortages for some goods and excessive inventory of others. This condition both hurts responsiveness and increases inventory costs.
• Often, to help maintain responsiveness, inventory is withdrawn from finished goods and reworked, adding to product cost.
• Reworking inventory uses valuable capacity for other customer orders, again resulting in poorer response times and/or increased costs due to expediting. Existing production orders and rework orders are both competing for vital equipment and resources during times of high demand, and scheduling has become a nightmare.

The inventory problem has grown to the point that additional storage space is needed, and that is a cost that Jan would like to avoid if possible.

Another problem that Jan faces is the volatility of demand for bikes. Since she is worried about unproductive idle time and yet does not wish to lay off her workers during times of low demand, she has allowed them to continue to work steadily and build finished goods. This makes the problem of building the “right” finished goods even more important, especially given the tight availability of storage space.

Past Demand

The following shows the monthly demand for one major product line: the standard 26-inch 10-speed street bike. Although it is only one of Jan’s products, it is representative of most of the major product lines currently being produced by Northcutt Bikes. If Jan can find a way to sue this data to more constructively understand her demand, she feels she can probably use the same methodologies to project demand for other major product families. Such knowledge can allow her, she feels, to plan more effectively and continue to be responsive while still controlling costs.

Questions and assignment:

1. Plot the data and describe what you see. What does it mean and how would you use the information from the plot to help you develop a forecast?
2. Use at least two different methodologies to develop as accurate a forecast as possible for the demand. Use each of those methods to project the next four months demand.
3. Which method from question 2 is “better”? How do you know that?
4. How, if at all, could we use Jan’s knowledge of the market to improve the forecast? Would it be better to forecast in quarterly increments instead of monthly? Why or why not?
5. Are there other possible approaches that might improve Jan’s operation and situation? What would they be and how could they help?

In the book Business Research Methods, Donald R. Cooper and C. William Emory (1995) discuss a manager who wishes to compare the effectiveness of two methods for training new salespeople. The authors describe the situation as follows:

The company selects 22 sales trainees who are randomly divided into two equal experimental groups—one receives type A and the other type B training. The salespeople are then assigned and managed without regard to the training they have received. At the year’s end, the manager reviews the performances of salespeople in these groups and finds the following results:

(a) Set up the null and alternative hypotheses needed to attempt to establish that type A training results in higher mean weekly sales than does type B training.

H₀: µ_A ? µ_B ?  versus H_a: µ_A ? µ_B  >

(b) Because different sales trainees are assigned to the two experimental groups, it is reasonable to believe that the two samples are independent. Assuming that the normality assumption holds, and using the equal variances procedure, test the hypotheses you set up in part a at level of significance .10, .05, .01 and .001. How much evidence is there that type A training produces results that are superior to those of type B? (Round your answer to 3 decimal places.)

(c) Use the equal variances procedure to calculate a 95 percent confidence interval for the difference between the mean weekly sales obtained when type A training is used and the mean weekly sales obtained when type B training is used. Interpret this interval. (Round your answer to 2 decimal places.)

Confidence interval [, ]

In 1995, two dermatologists, Dr. Katie Rodan and Dr. Kathy Fields, developed what they believed was a medical breakthrough in fighting acne. Their mission: to help millions of people rid themselves of acne and acnerelated problems. They named their product Proactiv Solutions. This name was chosen because the product could heal existing blemishes and proactively help prevent new ones from forming.

Today, Proactiv is the number-one-selling acne product in the United States. It’s a three-part acne treatment kit that includes a cleanser, toner, and treatment. It’s not sold in stores. Instead, it is sold via infomercials, the company’s website, a subscription service called the “Proactiv Solution Clear Skin Club,” and in select upscale boutiques and kiosks. The way Proactiv reached the point it currently occupies is an interesting story. Early in its life, Proactiv was shaped by three critical marketing decisions, from which the company has not wavered, even to this day. This case recounts these decisions and discusses how the decisions shaped this entrepreneurial venture’s future.

How It Started

Katie Rodan and Kathy Fields met while they were working summer jobs at a cardiovascular research lab in Los Angeles. The lab was developing a drug to treat post– heart attack patients. Both Rodan and Fields enjoyed the exciting pace of the work as well as the camaraderie they shared with the lab’s researchers and doctors. After earning their college degrees, they both went to medical school and became dermatologists. They stayed in touch and often shared with one another how surprised they were at the number of acne patients they were seeing. At the time, the medical research said that only 3 percent of the adult population had acne, but Rodan and Fields became convinced that the number was higher. They were each seeing acne patients on a daily basis, and they weren’t just seeing teenagers. They were seeing women in their 20s, 30s, 40s, and even in their 50s who were suffering from acne and acne-related problems.

Rodan and Fields decided to form a partnership to further investigate the acne issue. They started by talking to their patients, asking them a wide range of acne-related questions. What they found was that the vast majority of their patients hated the acne products on the market. The most common complaints were that the products were very drying and they were very irritating. Worst of all, patients told Rodan and Fields, the available products did not work. At this point, the two physicians started thinking there might be an opportunity for them to create a better product.

Rodan and Fields spent the next couple of years thoroughly investigating the acne products on the market. After testing many of the products on their patients, they made what they believed was a shocking discovery. All of the products on the market were designed to spot-treat a pimple—none were designed to stop the pimple from forming in the first place. This just didn’t make sense to the two dermatologists—from both a practical and a medical standpoint. By the time you see a pimple, whatever treatment you administer, it’s too little too late. In their judgment, not taking steps to prevent acne from developing was akin to not brushing your teeth and instead just going to the dentist to fill cavities. Why not brush your teeth and floss and try to prevent the cavities from developing in the first place?

This revelation motivated Rodan and Fields to start working on a product of their own—one that would be more proactive in preventing acne and acne-related problems. They hired a chemist, and the three worked together for another couple of years. Finally, they had a product they were happy with and that seemed to work and to satisfy their patients.

Important Revelations

To get ideas about how to market and develop their product, which didn’t have a name yet, Rodan hosted dinner parties at her house and conducted brainstorming sessions with the guests. The guests included business executives, market researchers, marketing consultants, an FDA regulatory attorney, the chief financial officer of a major company, and others. One of the things the participants in these sessions stressed to Rodan and Fields was the importance of marketing research. In particular, the group urged Rodan and Fields to hire an unbiased third party to validate their findings. Rodan and Fields took this advice to heart and hired an outside consultant. In focus groups that the consultant led, Rodan and Fields learned two important things about older women. First, evidence suggests that many women who do have acne as a medical condition refuse to believe that such is the case. Second, people don’t like to talk about their acne with others. Rodan and Fields also learned that their product still needed work. There were several aspects of the product that needed improvement, a need that Rodan and Fields fully intended to address and satisfy.

Three Critical Marketing Decisions That Shaped the Future of the Firm

Critical Marketing Decision 1: We’re a Skin Care

Company

After Rodan and Fields reformulated the product again, they hired another marketing consultant to advise them as to how they should proceed to successfully market their product. The first piece of advice they got from the consultant was to think of their product as a skin care product rather than an acne product. At the time, the acne market in the United States was about $250 million a year, a low number by consumer products standards. In contrast, the skin care market was several billion dollars a year, making it much more attractive. The consultant told Rodan and Fields to think of their product as a skin care system that just happens to treat acne, rather than an acne medication alone. This recommendation obviously caused Rodan and Fields to have a much broader vision for the scope of the market for their product.

Critical Marketing Decision 2: Our Name Is Proactiv

After Rodan and Fields started thinking of their product as part of the skin care market, they got advice from a marketing specialist about what to name their product. The name the specialist recommended was Proactiv

(proactive without the e). Looking back, Rodan and Fields admit that initially they didn’t get the reason for this recommendation. They were hoping for a more cosmetic-sounding name, like Dermo-Beautiful. The name Proactiv turned out to be perfect. It captured the essence of what Rodan and Fields were trying to accomplish—to create a product that would be proactive (rather than reactive) in dealing with acne and acne-related issues. In other words, the name Proactiv captured the entrepreneurs’ interest in signaling to customers that their product was intended to prevent the occurrence of additional acne-related problems for them.

Critical Marketing Decision 3: Infomercials

To get their product on the market, Rodan and Fields initially tried to raise investment capital. They were repeatedly turned down. The biggest objection they encountered was the sentiment that if their product was so good and so obvious, why hadn’t Procter & Gamble or Johnson & Johnson already thought of it? “Surely those companies must have dermatologists on their advisory boards telling them what to do,” was the comment repeatedly expressed to Rodan and Fields as they talked to those with investment capital. After giving up on raising capital, Rodan and Fields approached Neutrogena to try to get a licensing deal. Neutrogena passed on the deal but did make a suggestion that resonated with Rodan and Fields. Neutrogena said that the most effective way to sell the product would be via infomercials. Initially, Rodan and Fields were shocked, because they had a fairly low opinion of infomercials. But there was one company, according to people at Neutrogena, named Guthy-Renker that made highquality infomercials for professional products such as Proactiv. Rodan and Fields also got to thinking that an infomercial might be the best way to educate people about their product. The following list lays out the points in favor of using infomercials to sell a product in which Rodan and Fields had a great deal of confidence.

Why Infomercials Have Worked for Proactiv (Infomercials Are 30–60 Minute Programs That Are

Paid for by an Advertiser)

■■ People need to be re-educated about how to treat acne.

■■ The re-education can’t be done in a 30-second or 60-second television commercial, or in a print ad.

■■ Acne is an embarrassing problem, so people will be most open to learning about it in the privacy of their homes.

■■ The demographic group that spends the most time watching infomercials, women in their 20s, 30s, and 40s, are Proactiv’s market.

■■ Infomercials provide Proactiv the opportunity to show heartfelt testimonials of people who have used the product. Showing “before” and “after” pictures of people who have used the product and have experienced dramatic results has been a particularly persuasive tactic.

Guthy-Renker

After being turned down by Neutrogena, Rodan and Fields were about ready to throw in the towel when they met, simply by chance, a person who introduced them to Guthy-Renker, the infomercial company that people at Neutrogena recommended highly. After several meetings, Guthy-Renker offered to license Proactiv and to create an infomercial to sell the product. It also put up the money to buy the media time needed for

the infomercial to be televised. The initial infomercial was targeted toward women in the age group most ignored by the present providers of acne products. The 30-minute spot carefully explained what acne is, how it can affect older women, and how Proactiv was the only product available that potentially prevented acne from occurring. It also offered a complete money-back guarantee. The first infomercial sold twice as much Proactiv as expected, and Guthy-Renker and Proactiv remain close partners today.

It was also Guthy-Renker’s idea to get celebrity endorsements for Proactiv. The first celebrity endorser was Judith Light. Light was followed by Vanessa Williams, and now a number of other celebrities endorse the product.

Proactiv Today

Today, Proactiv is strong. The first Guthy-Renker infomercial ran in 1994, and the product has steadily gained market share since. The company now sells acne treatment in several varieties, including Gentle Formula, Extra Strength, and Proactiv+. Face masks, body washes, and other skin-care products are also sold under the Proactiv name. Proactiv products are now being sold worldwide. Proactiv’s marketing strategy has not substantially changed since the company started. The three marketing decisions described in this case set the direction for the company, and the company remains fully committed to taking only the actions suggested by these decisions.

question: 11-36.

How has Proactiv gone about establishing its brand? To what degree do you believe Proactiv is important in its customers’ lives?

11-38.

Describe Proactiv’s positioning strategy. To what extent did the three critical marketing decisions discussed in the case shape the evolution of Proactiv’s positioning strategy

Please put step by step in Minitab

For the 15-year period between 1995 and 2010, ABC’s monthly return had a standard deviation of 5%. Matthew, a certified financial analyst, wishes to establish whether the standard deviation witnessed during that period still adequately describes the long-term standard deviation of the company’s return. He collects data on the monthly returns recorded between 1^st Jan. 2015 and 31^st Dec. 2016 and computes a monthly standard deviation of 4%.

Carry out a 5% test to determine if the standard deviation computed in the latter period is different from the 15-year value.

Please put step by step in Minitab

Elements of eBay’s strategy have evolved in meaningful ways since the company’s founding in 1995. View the company’s history at www.ebayinc.com/our-company/our-history and other links at the company’s investor relations site (investors.ebayinc.com), and prepare a report that discusses how its strategy has evolved. Your report should also assess how well eBay’s strategy passes the three tests of a winning strategy.

The following data represent x = boat sales and y = boat trailer sales from 1995 through 2000.

1. Determine the Y intercept of the least-squares regression line. (Specify your answer to 2nd decimal point)

2.Determine the slope of the least-squares regression line. (Specify your answer to 3rd decimal point)

3. Based on Q1 and Q2, estimate, for a year during which 500,000 boats are sold, the number of boat trailers that would be sold.

At a sports card show in 1995, James Fitl of Omaha, Nebraska, met Mark Strek, doing businessas Star Cards of San Francisco. On Strek’s representation about the condition of a certain baseballcard, Fitl bought it from Strek for $17,750. In May 1997, Fitl sent the card to Professional SportsAuthenticators, a sports-cards grading service, which told Fitl that the card was ungradable. Fitlcomplained to Strek, who replied that Fitl should have acted within “a typical grace period for theunconditional return of a card, ... 7 days to 1 month” of its receipt. ASA Accugrade, Inc., anothergrading service, agreed that the card was ungradable. Fitl filed a suit in a Nebraska state courtagainst Strek, seeking damages. The court awarded Fitl $17,750, plus his court costs. Strek appealed.The Nebraska Supreme Court affirmed. In the circumstances of this case, notice of a defect in thegoods two years after their purchase was reasonable. Fitl had reasonably relied on Strek’s represen-tation that the goods were “authentic,” which they were not, and when their defects were discovered,Fitl had given a timely notice. “[T]he policies behind the notice requirement, to allow the seller tocorrect a defect, to prepare for negotiation and litigation, and to protect against stale claims at a timebeyond which an investigation can be completed, were not unfairly prejudiced by the lack of an ear-lier notice to Strek. Any problem Strek may have had with the party from whom he obtained thebaseball card was a separate matter from his transaction with Fitl, and an investigation into thesource of the altered card would not have minimized Fitl’s damages?

Who has the burden to show a breach, or its absence, in cases involving attempts to recover damagesfor accepted goods?

In the book Business Research Methods, Donald R. Cooper and C. William Emory (1995) discuss a manager who wishes to compare the effectiveness of two methods for training new salespeople. The authors describe the situation as follows:

The company selects 22 sales trainees who are randomly divided into two equal experimental groups—one receives type A and the other type B training. The salespeople are then assigned and managed without regard to the training they have received. At the year’s end, the manager reviews the performances of salespeople in these groups and finds the following results:

(a) Set up the null and alternative hypotheses needed to attempt to establish that type A training results in higher mean weekly sales than does type B training.

H₀: µ_A ? µ_B ?  versus H_a: µ_A ? µ_B  >

(b) Because different sales trainees are assigned to the two experimental groups, it is reasonable to believe that the two samples are independent. Assuming that the normality assumption holds, and using the equal variances procedure, test the hypotheses you set up in part a at level of significance .10, .05, .01 and .001. How much evidence is there that type A training produces results that are superior to those of type B? (Round your answer to 3 decimal places.)

(c) Use the equal variances procedure to calculate a 95 percent confidence interval for the difference between the mean weekly sales obtained when type A training is used and the mean weekly sales obtained when type B training is used. Interpret this interval. (Round your answer to 2 decimal places.)

Confidence interval [, ]