Chapter Sixteen. Analysis of Variance and Covariance. Chapter Outline. Overview Relationship Among Techniques OneWay Analysis of Variance Statistics Associated with OneWay Analysis of Variance Conducting OneWay Analysis of Variance
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Chapter Sixteen
Analysis of Variance and Covariance
5)Illustrative Data
12) Nonmetric Analysis of Variance
13) Multivariate Analysis of Variance
14) Internet and Computer Applications
15) Focus on Burke
16) Summary
17) Key Terms and Concepts
Fig. 16.1
Metric Dependent Variable
One Independent
One or More
Variable
Independent Variables
Categorical:
Categorical
Interval
Binary
Factorial
and Interval
Analysis of
Analysis of
Regression
t Test
Variance
Covariance
More than
One Factor
One Factor
OneWay Analysis
NWay Analysis
of Variance
of Variance
Marketing researchers are often interested in examining the differences in the mean values of the dependent variable for several categories of a single independent variable or factor. For example:
Identify the Dependent and Independent Variables
Decompose the Total Variation
Measure the Effects
Test the Significance
Interpret the Results
Fig. 16.2
The total variation in Y, denoted by SSy, can be decomposed into two components:
SSy = SSbetween + SSwithin
where the subscripts between and within refer to the categories of X. SSbetween is the variation in Y related to the variation in the means of the categories of X. For this reason, SSbetweenis also denoted as SSx. SSwithin is the variation in Y related to the variation within each category of X. SSwithin is not accounted for by X. Therefore it is referred to as SSerror.
The total variation in Y may be decomposed as:
SSy = SSx + SSerror
where
Yi = individual observation
j = mean for category j
= mean over the whole sample, or grand mean
Yij = i th observation in the j th category
N
S
2
Y
S
S
Y
=
(

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y
i
=
1
i
c
S
2
S
S
n
=
(

)
Y
Y
x
j
=
1
j
c
n
S
S
2
Y
S
S
Y
=
(

)
e
r
r
o
r
i
j
j
j
i
Table 16.1
Independent VariableX
Total
CategoriesSample
X1X2X3…Xc
Y1Y1Y1Y1Y1
Y2Y2Y2Y2Y2
: :
: :
YnYnYnYnYN
Y1Y2Y3YcY
Within Category Variation =SSwithin
Total Variation =SSy
Category Mean
Between Category Variation = SSbetween
In analysis of variance, we estimate two measures of variation: within groups (SSwithin) and between groups (SSbetween). Thus, by comparing the Y variance estimates based on betweengroup and withingroup variation, we can test the null hypothesis.
Measure the Effects
The strength of the effects of X on Y are measured as follows:
2 = SSx/SSy = (SSy  SSerror)/SSy
The value of 2 varies between 0 and 1.
In oneway analysis of variance, the interest lies in testing the null hypothesis that the category means are equal in the population.
H0: µ1 = µ2 = µ3 = ........... = µc
Under the null hypothesis, SSx and SSerror come from the same source of variation. In other words, the estimate of the population variance of Y,
= SSx/(c  1)
= Mean square due to X
= MSx
or
= SSerror/(N  c)
= Mean square due to error
= MSerror
The null hypothesis may be tested by the F statistic
based on the ratio between these two estimates:
This statistic follows the F distribution, with (c  1) and
(N  c) degrees of freedom (df).
We illustrate the concepts discussed in this chapter using the data presented in Table 16.2.
The department store is attempting to determine the effect of instore promotion (X) on sales (Y). For the purpose of illustrating hand calculations, the data of Table 16.2 are transformed in Table 16.3 to show the store sales (Yij) for each level of promotion.
The null hypothesis is that the category means are equal:
H0: µ1 = µ2 = µ3.
Table 16.2
TABLE 16.3
EFFECT OF INSTORE PROMOTION ON SALES
Store Level of Instore Promotion
No.HighMediumLow
Normalized Sales _________________
11085
2987
31076
4894
5965
6842
7953
8752
9761
10642
_____________________________________________________
Column Totals836237
Category means: j 83/1062/1037/10
= 8.3= 6.2= 3.7
Grand mean, = (83 + 62 + 37)/30 = 6.067
To test the null hypothesis, the various sums of squares are computed as follows:
SSy = (106.067)2 + (96.067)2 + (106.067)2 + (86.067)2 + (96.067)2
+ (86.067)2 + (96.067)2 + (76.067)2 + (76.067)2 + (66.067)2
+ (86.067)2 + (86.067)2 + (76.067)2 + (96.067)2 + (66.067)2
(46.067)2 + (56.067)2 + (56.067)2 + (66.067)2 + (46.067)2
+ (56.067)2 + (76.067)2 + (66.067)2 + (46.067)2 + (56.067)2
+ (26.067)2 + (36.067)2 + (26.067)2 + (16.067)2 + (26.067)2
=(3.933)2 + (2.933)2 + (3.933)2 + (1.933)2 + (2.933)2
+ (1.933)2 + (2.933)2 + (0.933)2 + (0.933)2 + (0.067)2
+ (1.933)2 + (1.933)2 + (0.933)2 + (2.933)2 + (0.067)2
(2.067)2 + (1.067)2 + (1.067)2 + (0.067)2 + (2.067)2
+ (1.067)2 + (0.9333)2 + (0.067)2 + (2.067)2 + (1.067)2
+ (4.067)2 + (3.067)2 + (4.067)2 + (5.067)2 + (4.067)2
= 185.867
SSx= 10(8.36.067)2 + 10(6.26.067)2 + 10(3.76.067)2
= 10(2.233)2 + 10(0.133)2 + 10(2.367)2
= 106.067
SSerror= (108.3)2 + (98.3)2 + (108.3)2 + (88.3)2 + (98.3)2
+ (88.3)2 + (98.3)2 + (78.3)2 + (78.3)2 + (68.3)2
+ (86.2)2 + (86.2)2 + (76.2)2 + (96.2)2 + (66.2)2
+ (46.2)2 + (56.2)2 + (56.2)2 + (66.2)2 + (46.2)2
+ (53.7)2 + (73.7)2 + (63.7)2 + (43.7)2 + (53.7)2
+ (23.7)2 + (33.7)2 + (23.7)2 + (13.7)2 + (23.7)2
= (1.7)2 + (0.7)2 + (1.7)2 + (0.3)2 + (0.7)2
+ (0.3)2 + (0.7)2 + (1.3)2 + (1.3)2 + (2.3)2
+ (1.8)2 + (1.8)2 + (0.8)2 + (2.8)2 + (0.2)2
+ (2.2)2 + (1.2)2 + (1.2)2 + (0.2)2 + (2.2)2
+ (1.3)2 + (3.3)2 + (2.3)2 + (0.3)2 + (1.3)2
+ (1.7)2 + (0.7)2 + (1.7)2 + (2.7)2 + (1.7)2
= 79.80
It can be verified that
SSy = SSx + SSerror
as follows:
185.867 = 106.067 +79.80
The strength of the effects of X on Y are measured as follows:
2 = SSx/SSy
= 106.067/185.867
= 0.571
In other words, 57.1% of the variation in sales (Y) is accounted for by instore promotion (X), indicating a modest effect. The null hypothesis may now be tested.
= 17.944
Table 16.3
Source of Sum ofdfMean F ratio F prob.
Variationsquaressquare
Between groups106.067253.033 17.944 0.000
(Promotion)
Within groups79.800272.956
(Error)
TOTAL185.867296.409
Cell means
Level of CountMean
Promotion
High (1)108.300
Medium (2)106.200
Low (3)103.700
TOTAL306.067
The salient assumptions in analysis of variance can be summarized as follows.
In marketing research, one is often concerned with the effect of more than one factor simultaneously. For example:
Consider the simple case of two factors X1 and X2 having categories c1 and c2. The total variation in this case is partitioned as follows:
SStotal = SS due to X1 + SS due to X2 + SS due to interaction of X1 and X2 + SSwithin
or
The strength of the joint effect of two factors, called the overall effect, or multiple 2, is measured as follows:
multiple 2 =
The significance of the overall effect may be tested by an F test, as follows
where
dfn=degrees of freedom for the numerator
=(c1  1) + (c2  1) + (c1  1) (c2  1)
=c1c2  1
dfd =degrees of freedom for the denominator
=N  c1c2
MS=mean square
If the overall effect is significant, the next step is to examine the significance of the interactioneffect. Under the null hypothesis of no interaction, the appropriate F test is:
where
dfn = (c1  1) (c2  1)
dfd= N  c1c2
The significance of the main effect of each factor may be tested as follows for X1:
where
dfn = c1  1
dfd= N  c1c2
Table 16.4
Source ofSum ofMean Sig. of
Variationsquares dfsquare F F
Main Effects
Promotion106.067 253.033 54.862 0.000 0.557
Coupon 53.333 153.333 55.172 0.000 0.280
Combined159.400 353.133 54.966 0.000
Twoway 3.267 21.633 1.690 0.226
interaction
Model162.667 532.533 33.655 0.000
Residual (error) 23.200 240.967
TOTAL185.867 296.409
2
Table 16.4 cont.
Cell Means
PromotionCoupon Count Mean
High Yes 5 9.200
High No 5 7.400
Medium Yes 5 7.600
Medium No 5 4.800
Low Yes 5 5.400
Low No 5 2.000
TOTAL 30
Factor Level
Means
PromotionCoupon Count Mean
High 10 8.300
Medium 10 6.200
Low 10 3.700
Yes 15 7.400
No 15 4.733
Grand Mean 30 6.067
When examining the differences in the mean values of the dependent variable related to the effect of the controlled independent variables, it is often necessary to take into account the influence of uncontrolled independent variables. For example:
Table 16.5
Sum ofMeanSig.
Source of Variation SquaresdfSquare Fof F
Covariance
Clientele 0.8381 0.838 0.8620.363
Main effects
Promotion 106.067253.03354.5460.000
Coupon 53.333153.33354.8550.000
Combined 159.400353.13354.6490.000
2Way Interaction
Promotion* Coupon 3.2672 1.633 1.6800.208
Model 163.505627.25128.0280.000
Residual (Error) 22.36223 0.972
TOTAL 185.86729 6.409
CovariateRaw Coefficient
Clientele 0.078
Important issues involved in the interpretation of ANOVA
results include interactions, relative importance of factors,
and multiple comparisons.
Interactions
Relative Importance of Factors
Possible Interaction Effects
Interaction
No Interaction
(Case 1)
Ordinal
(Case 2)
Disordinal
Noncrossover
(Case 3)
Crossover
(Case 4)
Figure 16.3
Case 2: Ordinal Interaction
Case 1: No Interaction
X
X
22
22
X
Y
X
Y
21
21
X
X
X
X
X
X
11
12
13
11
12
13
Case 3: Disordinal Interaction: Noncrossover
Case 4: Disordinal Interaction: Crossover
X
X
22
22
Y
X
Y
21
X
21
X
X
X
X
X
X
11
12
13
11
12
13
Figure 16.4
= 0.557
2
w
2
w
2
w
Note, in Table 16.5, that
SStotal = 106.067 + 53.333 + 3.267 + 23.2
= 185.867
Likewise, the associated with couponing is:
= 0.280
As a guide to interpreting , a large experimental effect produces an index of 0.15 or greater, a medium effect produces an index of around 0.06, and a small effect produces an index of 0.01. In Table 16.5, while the effect of promotion and couponing are both large, the effect of promotion is much larger.
2
w
One way of controlling the differences between subjects is by observing each subject under each experimental condition (see Table 16.7). Since repeated measurements are obtained from each respondent, this design is referred to as withinsubjects design or repeated measures analysis of variance. Repeated measures analysis of variance may be thought of as an extension of the pairedsamples t test to the case of more than two related samples.
Table 16.6
Independent VariableX
SubjectCategoriesTotal
No.Sample
X1X2X3…Xc
1Y11Y12Y13Y1cY1
2Y21Y22Y23Y2cY2
::
::
nYn1Yn2Yn3YncYN
Y1Y2Y3YcY
Between People Variation =SSbetween people
Total Variation =SSy
Category Mean
Within People Category Variation = SSwithin people
In the case of a single factor with repeated measures, the total variation, with nc  1 degrees of freedom, may be split into betweenpeople variation and withinpeople variation.
SStotal= SSbetween people + SSwithin people
The betweenpeople variation, which is related to the differences between the means of people, has n  1 degrees of freedom. The withinpeople variation has n (c  1) degrees of freedom. The withinpeople variation may, in turn, be divided into two different sources of variation. One source is related to the differences between treatment means, and the second consists of residual or error variation. The degrees of freedom corresponding to the treatment variation are c  1, and those corresponding to residual variation are (c  1) (n 1).
Thus,
SSwithin people= SSx + SSerror
A test of the null hypothesis of equal means may now be constructed in the usual way:
So far we have assumed that the dependent variable is measured on an interval or ratio scale. If the dependent variable is nonmetric, however, a different procedure should be used.
Oneway ANOVA can be efficiently performed using the program COMPARE MEANS and then Oneway ANOVA. To select this procedure using SPSS for Windows click:
Analyze>Compare Means>OneWay ANOVA …
Nway analysis of variance and analysis of covariance can be performed using GENERAL LINEAR MODEL. To select this procedure using SPSS for Windows click:
Analyze>General Linear Model>Univariate …