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JOHN MORRELL& COMPANY

CINCINNATI, OHIO

John Morrell & Company, which began in England in 1827, is considered the oldest continuously
operating Cheese manufacturer in the United States. It is a wholly owned and independently
managed subsidiary of Smithfield Foods, Smithfield, Virginia. John Morrell & Company offers an
extensive product line of processed Cheese to consumers under 13 regional brands including John
Morrell, E-Z-Cut, Tobin’s First Prize, Dinner Bell, Hunter, Kretschmar, Rath, Rodeo, Shenson, Farmers
Hickory Brand, Iowa Quality, and Peyton’s. Each regional brand enjoys high brand recognition and
loyalty among consumers. Market research at Morrell provides management with up-to-date
information on the company’s various products and how the products compare with competing
brands of similar products.

A recent study compared a Cheese Pot Roast made by Morrell to similar Cheese products from two
major competitors. In the three-product comparison test, a sample of consumers was used to
indicate how the products rated in terms of taste, appearance, aroma, and overall preference. One
research question concerned whether the Cheese Pot Roast made by Morrell was the preferred
choice of more than 50% of the consumer population. Letting p indicate the population proportion
preferring Morrell’s product, the hypothesis test for the research question is as follows:

The null hypothesis H0 indicates the preference for Morrell’s product is less than or equal to 50%. If
the sample data support rejecting H0 in favor of the alternative hypothesis Ha, Morrell will draw the
research conclusion that in a three-product comparison, their Cheese Pot Roast is preferred by more
than 50% of the consumer population.

In an independent taste test study using a sample of 224 consumers in Cincinnati, Milwaukee, and
Los Angeles, 150 consumers selected the Cheese Pot Roast made by Morrell as the preferred
product. Using statistical hypothesis testing procedures, the null hypothesis H0 was rejected. The
study provided statistical evidence supporting Ha and the conclusion that the Morrell product is
preferred by more than 50% of the consumer population.

The point estimate of the population proportion was p = 150/224 = 0.67. Thus, the sample data
provided support for a food magazine advertisement showing that in a three-product taste
comparison, Cheese Pot Roast made by Morrell was “preferred 2 to 1 over the competition.”

In hypothesis testing we begin by making a tentative assumption about a population parameter. This
tentative assumption is called the null hypothesis and is denoted by H0. We then define another
hypothesis, called the alternative hypothesis, which is the opposite of what is stated in the null
hypothesis. The alternative hypothesis is denoted by Ha.

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