TABLE 11-12 The Marketing Manager of a Company Producing a New Cereal

question 79

True/False

TABLE 11-12
The marketing manager of a company producing a new cereal aimed for children wants to examine the effect of the color and shape of the box's logo on the approval rating of the cereal. He combined 4 colors and 3 shapes to produce a total of 12 designs. Each logo was presented to 2 different groups (a total of 24 groups) and the approval rating for each was recorded and is shown below. The manager analyzed these data using the α = 0.05 level of significance for all inferences.

Analysis of Variance
Source df SS MS F p
Colors 3 2711.17 903.72 72.30 0.000
Shapes 2 579.00 289.50 23.16 0.000
Interaction 6 150.33 25.06 2.00 0.144
Error 12 150.00 12.50
Total 23 3590.50
-Referring to Table 11-12, based on the results of the hypothesis test, it appears that there is a significant interaction.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed costs in a company's cost structure.

Breakeven Point

is the level of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.

Business Risk

Variation in a company’s financial performance caused by changes in business conditions.

Operating Leverage

A financial ratio that measures the degree to which a firm or project can increase operating income by increasing revenue, highlighting the impact of fixed costs on profits.