Understanding Null and Alternative Hypotheses

Is Grandma's Freezer Cold? (Understanding Null and Alternative Hypotheses)

When approaching business research, managers are sometimes confused by the concepts of the null and alternative hypotheses. The concepts are incredibly useful though, when the decision can be framed as a binary choice.

The null hypothesis embodies the condition that nothing has changed. For example, if we wished to learn if deep freezers were cold inside, we could think of the research in terms of null and alternative hypotheses.

The null hypothesis would be that the freezer in our sample is cold inside, which would be the normal condition. The alternative hypothesis would be that the freezer in our sample is not cold.

Therefore, to draw our sample, we walk up to Grandma's deep freezer, open the door, and stick our hand inside. Yes, Grandma's plugged in freezer is cold inside.

Internal validity, which means that what we saw what we thought we saw, is supported because we sensed that the freezer was cold with our own hands.

External validity is good in this case, which means that we can project our sample on the population of freezers that are plugged in (i.e., we did not check air conditioners, tap water, or ovens, but a freezer).

Construct validity, which is the theoretical background of measuring the temperature of freezers by sticking your hand in them, is supported because we have stuck our hand in all sorts of places to ascertain temperature before.

Conclusion validity, or support derived from statistically drawing a conclusion about all freezers from our sample of one, is not very good because our sample is very small.

American Public Opinion and Government Stability

Public opinion both shapes and is shaped by American government policy. Five characteristics of public opinion help explain how this symbiosis contributes to stability (Janda, Berry, & Goldman, 1995): (1) Public opinion about policy can change over time; (2) Public opinion defines the contours of acceptable public policy; (3) Public opinion embodies inaccurate views because citizens are willing to provide opinions to pollsters on unfamiliar subjects; (4) Government tends to respond to public opinion; (5) Government policy does not always immediately reflect public opinion. In sum, while government does not always do exactly what the population says it wants, it does listen to public opinion and adjusts policymaking efforts accordingly over time, when practicable.

Reference

Janda, K., Berry, J.M., & Goldman, J. (1995) The challenge of democracy: Government in America, (4th Ed.). Boston, MA: Houghton Mifflin.

Professional Marketing Practice: the Professional Certified Marketer (PCM) Designation

Over six years ago, the American Marketing Association (AMA) established a program for certifying marketers entitled the Professional Certified Marketer (PCM) designation. I earned this designation in 2002, but have since gone inactive, due to limitations in how much my company and the University will reimburse for professional association dues. Recently, I was contacted by the leaders of a PCM group that is forming on LinkedIn.com

The rationale behind the PCM is that individuals who have dedicated their careers to marketing and have mastered an appropriate body of knowledge deserve recognition. Moreover, the public at large should benefit from a higher level of professionalism by those who dispense marketing advice. Certification supports the notion that there is a body of knowledge that should be mastered by those who practice marketing as a career. Certification may seem pretentious to some, but it is in line with other professions that have sought to raise the threshold for those who would practice in the profession.

For MBAs who are active in marketing roles, it is particularly interesting because just as AMA members must agree to abide by a code of ethics so must PCM holders (whether they are AMA members or not). A copy of the AMA code of ethics can be found here: http://www.marketingpower.com/content435.php An AMA member who violates this code of ethics can be expelled from the Association and any PCM holder can have their certification revoked. It is important to note that the marketing profession is attempting to police unethical practices within its ranks and raise the general level of professionalism of marketers.

With regard to the PCM exam and the marketing profession, a standard principles of marketing will be helpful for exam preparation. Anyone who has an appropriate Bachelor's degree and four years of documented experience or an appropriate Master's degree and two years of documented experience may sit for the PCM exam. The PCM exam is a 5 hour long, 240 question test that covers the following subject matter, which happens to parallel much of the material that we will be discussing in a standard principles of marketing course:

1. Legal, Ethical and Professional Issues in Marketing
1.1 Comply with appropriate regulations, laws and guidelines affecting marketing
1.2 Adhere to applicable ethical codes
1.3 Engage in ongoing professional development to advance competence and practice
2. Relationship, Information and Resource Management
2.1 Set priorities, allocate organizational resources and establish information channels linking departments, disciplines, and/or branch offices regarding marketplace, consumers, and competitors
2.2 Establish and manage internal and external relationships with appropriate/relevant stakeholders to support/facilitate marketing efforts
3. Assessment and Planning of the Strategic Marketing Process
3.1 Conduct environmental analyses by identifying industry trends, analyzing competitors, assessing own organization and researching the customer in order to evaluate a marketing situation and guide strategy development/selection.
3.2 Conduct market research to collect data related to environmental scans, demand forecasts, market segmentation, new product testing, etc. to guide/support marketing strategy development/selection
3.3 Develop a market-product focus by setting marketing objectives (based on marketing and product), segmenting the market, identifying target segment(s), and positioning the product, good, or service
4. Use of the Marketing Mix
4.1 Develop strategies to introduce a new product to a market based on product characteristics, market information and corporate objectives
4.2 Identify appropriate direct marketing promotional strategies (personal selling, advertising, sales promotion, publicity, etc.) to achieve marketing goals
4.3 Develop appropriate retail/wholesale "place" strategies (channel of distribution, store location, etc.) to achieve marketing objectives.
4.4 Develop appropriate pricing strategies (actual price, sale price, MSRP, etc.) by analyzing demand, cost and profit relationships to realize pricing/profitability goals and marketing objectives.
5. Marketing Evaluation
5.1 Monitor and evaluate effectiveness of marketing process(es), programs and outcomes

I recommend the PCM designation for those who are active in marketing, because it is gaining ground as a credential that filters those who have prepared for general marketing management roles from those who have not. Moreover, the designation is not difficult to attain for those who practice marketing and have done well in a rigorous principles of marketing course. For more information on the Professional Certified Marketer (PCM) exam, visit the link below in the references.

Reference

http://www.marketingpower.com/content591.php

Factors of Political Opinion Formation

Ideological orientation is an important factor in forming political opinions, but how do ordinary citizens, who have not developed a consistent set of political attitudes and beliefs, form opinions? Beyond ideological orientation, other factors help shape public opinion: an individual’s own self-interest, a comprehended set of political information, a series of opinion schemas, and the influence of political leadership (Janda, Berry, & Goldman, 1995).

When individuals might benefit or suffer from a particular government policy, they generally respond in terms of their own best interest, unless they feel that acting in one’s self-interest is immoral. Many citizens have no clear opinions on issues that do not affect them personally.

When individuals lack understanding on a political issue, they tend to respond with an opinion based on the latest information received, which can cause polls to fluctuate. Political information obtained through the mass media and filtered through an individual’s political socialization can produce a wide variety of opinions. However, lack of political information does not inhibit most individuals from expressing an opinion.

Various facts, images and perceptions can be mapped into what is called an opinion schema, which can be used as a proxy for a formal political ideology and serve as a guide for forming an opinion on a specific issue, while the opinion is still influenced by an overarching political ideology. These schemas are a means of understanding the images, connections, and values that people attribute to a subject.

Finally, in the absence of specific information, citizens can be swayed for or against a government policy by highly influential political leaders. Public opinion is often more often shaped by the personalities in government via the mass media than a force that actually shapes the government.

Reference

Janda, K., Berry, J.M., & Goldman, J. (1995) The challenge of democracy: Government in America, (4th Ed.). Boston, MA: Houghton Mifflin.

Did Babies Build Roads in Europe? Presumed Causation Between Correlated Variables

A frequent problem with interpretation of data in the social sciences and business research is presumed causation between correlated variables. Two variables can exhibit perfect linear correlation yet not be in a cause and effect relationship. Generally, we need to satisfy at least three stipulations to argue for a cause and effect relationship:

1. Temporal precedence -- the cause happens before the effect.
2. Association between the independent variable (i.e., cause) and dependent variable (i.e., effect) – a linear, geometric, exponential, logarithmic, or some other covariation exists.
3. No reasonable alternatives -- upon careful inspection there are no other reasonable explanations for why the cause would result in the effect.
   

For example, between the years of 1945 and 1962, there were dramatic increases in the number of new roads built in Europe and the number of live births in the United States. (Note that I read this comparison somewhere but I do not recall; I use it frequently when teaching undergraduate statistics, because the face absurdity of the comparison makes the lesson easily remembered by students.) Were babies building roads in Europe? Not likely. Were roads in Europe making it possible for more babies to be born in the good 'ole U.S.A.? Not likely. See, variables can be perfectly correlated and probably unrelated. That is, there is no direct relationship between those variables; a confounding, third variable could be related to both of the correlated variables, which we might assign in this case to the drastic social upheaval that occurred during World War II.

In business research, causation and correlation are frequently confused as well. For example, are the dollars invested in showroom inventory the cause of sales revenue at the retail furniture store? Are the dollars of sales revenue generating investments in new showroom inventory? Still, is a third, confounding variable, such as consumer demand, somehow affecting both? In many cases, the discrete causal variable is not being measured, but at least the three stipulations above must be satisfied to argue for causation between any two known variables.

Enterprise Information Systems: The Problem of Integration

The time and attention of humans is required to integrate the information created, analyzed, and stored by departmental functions. Many impediments to accounting information system integration within the enterprise are easily identifiable, the chief of these being the existence of disconnected information systems that are native to individual functional areas of the organization. These native, function-based information systems are not integrated in any automated sense; instead, cross-functional information systems are integrated by the ultimate software system: people.

Of course, the entire organization must grow to survive, and business process growth inevitably requires storage and retrieval of additional information in departmental database servers, the nexus of business process growth. Such inter-departmental integration challenges are common, as managers require performance reporting that reflects a highly fluid business environment. Even the information systems within departmental functions can grow and morph to introduce intra-departmental integration challenges.

Integration can be partially achieved by integrating similar types of systems and finally the reporting output from those systems (Dunn, Cherrington, & Hollander, 2005). Information system planning can reduce the number and scope of information pockets stored in the various functional silos within the business enterprise by building systems from scratch or obtaining enterprise wide accounting systems. The key concept to understand in information system integration is to re-engineer business processes along with concomitant accounting information systems from the ground-up and avoid partial patching of information systems to achieve necessary integration. However, the low hanging fruit in accounting system re-engineering may be simply capturing and recording the same information with shorter elapsed time and fewer inaccuracies, not necessarily re-engineering the entire business process. The trade-offs seem a matter of project scope.

Reference

Dunn, C., Cherrington, J.O., & Hollander. A.S. (2005). Enterprise information systems: A patterned-based approach, 3rd edition. New York: McGraw-Hill/Irwin.

What is Rebranding?

Rebranding is one of those terms that has cropped up in the last decade or so. Branding means to link a name, trademark or service mark with a product or service. However, rebranding can mean both to assign new name, etc. to a product or service and it can mean to reposition an existing brand. That is, rebranding can mean to make the brand mean something else. Consider that brands have multidimensional properties, such as brand attitude (i.e., consumer's perspective) and brand personality (i.e., manufacturer's perspective); in which case, to rebrand we would start by defining the manufacturer's perspective and try to shape the consumer's perspective toward that end. I realize that this is slightly different than what you'll read in Wikipedia, but I apologize for not updating that page yet...