Stores advertise price reductions to attract customers. What type of price cut is most attractive? Experiments with more than one factor allow insight into interactions between the factors. A study of the attractiveness of advertised price discounts had two factors: percent of all foods on sale (25%, 50%, 75%, or 100%) and whether the discount was stated precisely (e.g., as in “60% off”) or as a range (as in “40% to 70% off”). Subjects rated the attractiveness of the sale on a scale of 1 to 7.

a. List the treatments for this experiment, assuming researchers will use all combinations of the two factors.

b. Describe how you would randomly assign 200 volunteer subjects to treatments.

c. Explain the purpose of the random assignment in part (b).

d. The figure shows the mean ratings for the eight treatments formed from the two factors. Based on these results, write a careful description of how percent on sale and precise discount versus range of discounts influence the attractiveness of a sale.

Transcribed Image Text:

5 Precise Range 1 25 50 75 100 Percent of goods on sale Mean attractiveness score