Executive Summary This report has been split into three stages of statistical analysis based on key issues

raised by Crazy Johnnys M-Tone. From the analysis of the data sample, the following conclusions were made: 1a. Customer database Database is approximately comprised of equal numbers of female and male customers. Most of the customers are from the 15-19 and 20-24 age brackets. 1b. Customer usage patterns An average customer approximately spends $32 and buys 13 ringtones a year The majority of total customer expenditure comes from the 15-19, 20-24 and 25-29 age brackets. 2. Customer satisfaction Female customers are generally more satisfied (where satisfied refers to satisfied or very satisfied) with the company service and content than male customers. Generally, customer satisfaction decreases as the price per ringtone increases. Generally, customer expenditure increases as customer satisfaction increases. 3. Key Performance Indicators Although there was sufficient evidence to suggest that customers are buying more than 10 ringtones a year, there was insufficient evidence to suggest that customers spent more than $30 a year. However there was no evidence to suggest that the companys prediction, that customers will spend $30, was not satisfied. Introduction This report aims to analyse Crazy Johnny MTones customer database, their usage patterns, whether they are satisfied with the company service and content and whether the company is achieving its performance goals. An analysis of the data is based on 200 observations with variables of gender, age, expenditure (amount spent in a year) and frequency (number of ringtones bought in a year) considered.

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Crazy Johnnys M-Tone

Statistical Analysis Customer Database and Usage Patterns Customer Satisfaction Key Performance Indicators

Using inferential statistics (point and interval estimators and hypothesis testing), information about population parameters will be Vanessa Hu extracted using the sample data. No data omissions will be made, even though one customer is comparatively older than the 3419203 other customers. It was decided that the customer was representative of the mature age market of Crazy Johnny MTone, and thus not an outlier.

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However there is a limitation to this report. Although the sample data can give a valid estimate of the population parameters because it is large and randomly selected, it is still only an estimate and is not a definite analysis.

Figure 10

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1 STATISTICAL ANALYSIS PART 2 EXECUTIVE SUMMARY

1a) Customer database 2. Customer satisfaction Statistic Female Male Customer database

1b) Usage patterns

Statistic Mean

Expenditure 31.33

Ringtones 12.21

Number 105 95 200 Figure 6 Percentage satisfaction of female customers Percentage 52.50% 47.50% 100% Mean A g e Median Mode Standard deviation 20.56 20 17 4.1 20.76 20 17 6.04 20.66 20 17 5.1

Standard 17.19 7.18 Figure 7 Percentage satisfaction of male customers deviation Figure 3 Average expenditure and average number of ringtones bought per customer

Figure 4 Percentage expenditure spent by females

Figure 1 Descriptive statistics of customer database

Figure 5 Percentage expenditure spent by males

From Figure 6, it can be seen that the majority of female customers (69%) show some form of satisfaction with the company service and content, with 61% satisfied and of 8% very satisfied. Levels of dissatisfaction are not very high The database is comprised approximately equally From Figures 4 and 5 it can be seen that the target (31% ) with only 17% of customers dissatisfied both female and male customers. In terms and of 14% very dissatisfied. market of Crazy Johnnys M-Tone for both females and marketing, there is no target gender. males should be 15-29. The proportion of total expenditure at these age groups for females is 94% and Figure 7 shows that compared to female customers, male customers are96% overall less satisfied. Only just over half other of for males . Although there are customers from male customers (51%) show some form of satisfaction with the customer serviceand and30+), content, 44% satisfied and age groups (10-14 theywith make a small proportion 7% very satisfied. High levels of dissatisfaction (49%) are exhibited % of customers dissatisfied and of the with total38 sample size and thus only spend a 11% smallvery Figure 2 Age distribution of female and male dissatisfied. proportion of the total expenditure. n customers

X Figure 8 Satisfaction levels for price paid for each ringtones s level of The age distributions of male and female customers are Figure 9 Customer expenditure at each customer satisfaction similar, as indicated by Figure 2, with the modal class (21), mean (approximately 20) and median (17) the same for both males and females. The histograms for both genders is positively skewed and unimodal. This implies that most of the customers are young, more specifically in the 15-19 and 20-24 age brackets.

In Figure 8, the correlation co-efficient between customer satisfaction and price the customers paid n for each ringtone is -0.57. This indicates a strong negative relationship between the two variables, and suggests that customers exhibit lower satisfaction levels when they have to pay higher prices. X s In Figure 9, the correlation co-efficient between customer satisfaction and expenditure was found to be 0.65, Therefore there is a strong positive correlation between the two variables. That is, as customer satisfaction increases the amount customers spend on ringtones also tends to increase.

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Descriptive statistics for customer expenditure at each level of customer satisfaction, where n is x is the mean expenditure ($) and s is the standard deviation ($). the number of customers, From Figure 8 and 10, it can be determined that there is notable variability in the amount of spending at the 2nd and 3rd satisfaction level compared to the 1st and 4th level. To support the relationship, that customer expenditure increases as customer satisfaction increases, a 90% confidence interval will be constructed to find a smaller range and it will be observed whether the mean spending made by female or male customers lies within this confidence interval. Confidence intervals do not need to be constructed for the 1st and 4th satisfaction level as the standard deviation for those sample data is small. Confidence interval for dissatisfied customers As n = 54 is large, by Central Limit Theorem replaced by s in large sample sizes. The confidence interval is given by 90% CI z / 2 X N (0,1 ) . Therefore an unknown can be / n X z /2 , where = 0.1. / n

z / 2 s = 27.07 1.645 16.95 =( 23.27,30.87 ) X n 54

( )

Despite the variability in customer expenditure at the dissatisfied level, this confidence interval infers that if 100 samples were drawn from the population, 90 of them would have a mean spending made by customers within $23.27 and $30.87. It can be seen that the mean spending made by both females and males when they are dissatisfied lies between this confidence interval. Confidence interval for satisfied customers As n = 106 is large, by Central Limit Theorem replaced by s in large sample sizes. The confidence interval is given by 90% CI z / 2 X N (0,1 ) . Therefore an unknown can be / n

X z /2 , where = 0.1. / n

z / 2 s = 37.08 1.645 12.65 = ( 35.06,39.1 ) X n 106

( )

Even though the customer expenditure at a satisfied level shows high variability, the confidence interval implies that, if many samples were drawn out, the mean spending made by satisfied customers would lie within $35.06 and $39.10 with 90% probability. Additionally, the mean spending made by females when they are satisfied lies between this interval while the mean spending made by males lies above this interval, suggesting that males spend relatively more compared to females.

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STATISTICAL ANALYSIS PART STATISTICAL STATISTICAL ANALYSIS ANALYSIS PART PART 3 32

3. Key Performance (KPIs) Hypothesis testing forIndicators KPI 2 Gender Crazy two key performance indicators for analysis: Crazy Johnnys Johnnys M-Tone M-Tone gave predicted that customers would spend $30 in a year.

A one-tail hypothesis test (significance level = 0.05) can be established to determine whether this goal has been achieved. The null hypothesis, that customers spend $30, will be rejected if the test statistic is in the rejection region (Z > testing Z/2). The is assumed true unless there is sufficient evidence to reject it in favour of the Hypothesis fornull KPI hypothesis 1 alternate hypothesis, that customers spend more than $30. Crazy Johnnys M-Tone predicted that customers would buy 10 ringtones in a year. As the sample size is large (n = 200) CLT can be employed. That is, a sampling distribution of a sample mean is approximately normal irrespective of population distribution Null hypothesis Significance level

KPI 1 Customers will download 10 ringtones in a year. KPI 2 Customers will spend $30 in a year. Female

X A one-tail hypothesis test (significance level = 0.05) can be established to determine whether this goal has been H0: p = 30 = 0.05 achieved. The null hypothesis, that customers buy 10 ringtones, will be rejected if the test statistic is in the rejection region (Z > Z/2). The null hypothesis is assumed true unless there is sufficient evidenceto reject it in favour of the Z0.05 = 1.645 alternate hypothesis, that customers buy more than 10 ringtones.
Alternative hypothesis Null hypothesis H01:: p p= >30 H 10 Rejection region Significance level = 0.05 Z0.05 = 1.645

Test statistic (s ) Z=

Alternative hypothesis H1: p >10

Rejection region

31.33 30 X = =1.094 / n 17.19 / 200

1.094 1.645 Test statistic

Z=
Figure 12 - The standard normal showing the test statistic for KPI 2 Calculation of p-value for KPI 2 Calculation of p-value KPI1 P(0 < Z < 1.094) = 0.5 0.3621 = 0.1379 p-value = P(Z > 1.094)for = 0.5

12.21 10 X = = 4.353 / n 7.18 / 200

4.353 > 1.645

To support the findings hypothesis the p-value, which is the probability of obtaining anot value of the test Therefore, the Z-scorein ofthe 1.094 does nottest, lie within the rejection region (z > 1.645) and there is sufficient statistic extreme that observed, given that the null is true, will calculated. evidence Figure more 11 to - reject The standard the than null normal hypothesis showing in favour the test of the statistic alternative forhypothesis KPI hypothesis 1 at a 5% be significance level. Furthermore, the p-value of 0.1379 exceeds 0.05 and this supports the conclusion that there is insufficient evidence p-value = P(Z 4.353) = 0.5 P(0 < Z < 4.353) = 0.5 0.5 = 0 to reject the > null hypothesis. Therefore, the Z-score of 4.353 does lie within the rejection region (z > 1.645) and there is sufficient evidence to reject the null hypothesis in favour of the alternative hypothesis at a 5% significance level. Furthermore, the p-value of 0 is less than 0.05 and this supports the conclusion that there is sufficient evidence to reject the null hypothesis.

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CONCLUSION
Conclusion

The following conclusions were obtained from the analysis of the sample data provided.

Customer database and usage patterns The database is split approximately equally amongst the two genders (females at 52.5% and males at 47.5%) with the majority of customers coming from the 15-19 and 20-24 age brackets.

An average customer approximately spends $32 and approximately buys 13 ringtones a year and the majority of total customer expenditure comes from the 15-19, 20-24 and 25-29 age brackets.

Customer satisfaction Female customers exhibit greater satisfaction with company service and content than male customers with the majority of female customers (69%) just over half of male customers (51%) showing some form of satisfaction.

The correlation co-efficient between price/per ringtone and customer satisfaction is negative that as price per ringtone increases, customer satisfaction decreases.

(-0.57), suggesting

The mean expenditure for customers is:

$5.32 at a very dissatisfied level, $27.07 at a dissatisfied level, $37.08 at a satisfied level, $49.33 at a very satisfied level.

To identify the relationship between customer satisfaction and customer expenditure, the correlation co-efficient was found to be largely positive (0.65), suggesting that as customer satisfaction increases, customer expenditure increases.

Key Performance Indicators There was sufficient evidence to suggest that Crazy Johnnys M-Tone was outperforming KPI 1. There was insufficient evidence to suggest that Crazy Johnnys M-Tone was outperforming KPI 2 as there was a failure to reject the null hypothesis in favour of the alternative hypothesis at a 5% significance level. However the failure to reject the null hypothesis also meant that there was no evidence to suggest that KPI 2 was not met.