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Will improving customer service result in higher stock prices for the companies providing the better service? When a companys satisfaction score has improved over the prior years results and is above the national average (currently 75.7), studies show its shares have a good chance of outperforming the broad stock market in the long run (Business- Week, March 2, 2009). The following satisfaction scores of three companies for the 4th quarters of 2007 and 2008 were obtained from the American Customer Satisfaction Index. Assume that the scores are based on a poll of 60 customers from each company. Because the polling has been done for several years, the standard deviation can be assumed to equal 6 points in each case.
Company 2007 Score 2008 ScoreRite Aid 73 76Expedia 75 77J.C. Penney 77 78
a. For Rite Aid, is the increase in the satisfaction score from 2007 to 2008 statistically significant?Use ? ? = :05. What can you conclude?
b. Can you conclude that the 2008 score for Rite Aid is above the national average of 75.7? Use ? ? = :05.
c. For Expedia, is the increase from 2007 to 2008 statistically significant? Use ? = :05.
d. When conducting a hypothesis test with the values given for the standard deviation, sample size, and ?, how large must the increase from 2007 to 2008 be for it to be statistically significant?
e. Use the result of part (d) to state whether the increase for J.C. Penney from 2007 to 2008 is statistically significant.
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