Chapter FourteenDid You Know that Degree, Color and Race Make a Difference in Home Refinancing?Did You Know that Disaster Area Declarations are Related to Electoral Votes?Did You Know that the Presence of an NFL Team Boost Rental Costs?Overview of Techniques for Examining AssociationsOverview of Techniques for Examining Associations (Cont’d)Slide 7Overview of Techniques for Examining Associations – Simple Regression Analysis (Cont’d)Slide 9Slide 10Spearman Correlation CoefficientExample: Industrial Marketing FirmTable 14.2 Association Between School Prestige and Performance of GraduatesResultsSpearman Correlation Co-efficientt - DistributionPearson Correlation CoefficientTable 14.3 Bright Detergent DataScatter DiagramExhibit 14.1 Scatter Diagram of Sales and Advertising DataExhibit 14.2 Scatter Diagram of Sales and Number of Competing BrandsPearson CorrelationTwo-Tailed Hypothesis Test For CorrelationsExhibit 14.3 Scatter Diagram Showing a Nonlinear Association Between VariablesNational Insurance Company – Computing Pearson Correlation Among Service Quality ConstructsNational Insurance Company – Computing Pearson Correlation Among Service Quality Constructs (Cont’d)National Insurance Company– Computing Pearson Correlation Among Service Quality Constructs (Cont’d)National Insurance Company– Computing Pearson Correlation Among Service Quality Constructs Using SPSSInterpreting Pearson Correlation CoefficientsSimple Regression AnalysisIndependent Variable vs. Dependent VariableScenario: Curtis Construction Industry LobbyistScenario: Curtis Construction Industry Lobbyist (Cont’d)Scenario: Carol, Chief LibrarianScenario: Carol, Chief Librarian (Cont’d)Scenario: Jack, Trade Show OfficerScenario: Jack, Trade Show Officer (Cont’d)Deriving a Regression EquationExhibit 14.4 Several Subjectivity Constructed Regression LinesRegression Using SPSS – Sales and Advertising DataExhibit 14.5 SPSS Computer Output or Simple Regression Analysis of Sales and Advertising DataStandard ErrorPractical Applications of Regression EquationsPrecautions In Using Regression AnalysisPrecautions In Using Regression Analysis (Cont’d)Multiple Regression AnalysisNational Insurance Company – Multiple Regression Using SPSSNational Insurance Company – Multiple Regression Using SPSS (Cont’d)National Insurance Company– Multiple Regression Using SPSS (Cont’d)Slide 50Slide 51Bright Detergent Case – Multiple Regression Using SPSSBright Detergent Case – Multiple Regression Using SPSS (Cont’d)Slide 54MulticollinearityExhibit 14.9 SPSS Output for a Pair-wise Correlation Analysis of the Data in Table 14.3Chapter FourteenExamining Associations: Correlation and RegressionDid You Know that Degree, Color and Race Make a Difference in Home Refinancing?•A study found that broker fees for purchasers without a college degree pay $1,472 more than those with a college degree–No only did a degree matter, but race was also a factor. African Americans on average paid $500 more than whites, Hispanics $275 more than whites.–Regression analysis was used to determine whether various borrower characteristics had a bearing on the amount of broker fees and closing costs paid.Did You Know that Disaster Area Declarations are Related to Electoral Votes?•A study revealed states that had been declared disaster areas are crucial to presidential elections•Regression analysis revealed that states that are likely to be declared disaster areas were the states that were highest in electoral votesDid You Know that the Presence of an NFL Team Boost Rental Costs?•Regression analysis has revealed that in cities with an NFL team, rental costs for apartment in the central city area were 8 percent higher than in cities without an NFL team•Property tax receipts were also found to be higher in cities with NFL teamsOverview of Techniques for Examining Associations•Spearman Correlation Coefficient Technique•The technique is appropriate when –The degree of association between two sets of ranks (pertaining to two variables) is to be examined•Illustrative research question(s) this technique can answer–Is there a significant relationship between motivation levels of salespeople and the quality of their performance? •Assume that the data on motivation and quality of performance are in the form of ranks, say, 1 through 20, for 20 salespeople who were evaluated subjectively by their supervisor on each variableOverview of Techniques for Examining Associations (Cont’d)•Pearson Correlation Coefficient Technique•This technique is appropriate when–The degree of association between two metric-scaled (interval or ratio) variables is to be examined•Illustrative research question(s) this technique can answer–Is there a significant relationship between customers' age (measured in actual years) and their perceptions of our company's image (measured on a scale of 1 to 7)?Overview of Techniques for Examining Associations (Cont’d)•Simple Regression Analysis Technique–This technique is appropriate when•A mathematical function or equation linking two metric-scaled (interval or ratio) variables is to be constructed, under the assumption that values of one of the two variables is dependent on the values of the otherOverview of Techniques for Examining Associations – Simple Regression Analysis (Cont’d)•Illustrative Research Question(s) this Technique Can Answer–Are sales (measured in dollars) significantly affected by advertising expenditures (measured in dollars)? –What proportion of the variation in sales is accounted for by variation in advertising expenditures? How sensitive are sales to changes in advertising expenditures?Overview of Techniques for Examining Associations (Cont’d)•Multiple Regression Analysis Technique–This technique is appropriate •Under the same conditions as simple regression analysis except that more than two variables are involved wherein one variable is assumed to be dependent on the othersOverview of Techniques for Examining Associations (Cont’d)•Illustrative Research Question(s) this Technique Can Answer–Are sales significantly affected by advertising expenditures and price (where all three variables are measured in dollars)? –What proportion of the variation in sales is accounted for by advertising and price? How sensitive are sales to changes in advertising and price?Spearman Correlation CoefficientA Spearman correlation coefficient is a measure