Carlye Whitaker Statistics 2301 May 2nd, 2013

Price Relationship between Organic and Non -Organic Shampoo

Introduction In the last few years, the number or organic products sold in stores has increased substantially. The reason for such an increase originates from the new found popularity of all-natural products, which are supposedly healthier than other products. These organic products claim they do not have artificial chemicals and substances in them, therefore making them healthier for consumers. Because of these claims, the demand for these products by consumers has steadily increased, consequently boosting the market for organic products. One sector that has had a large increase in organic products is household items, and more specifically, shampoos. Because of this increase in popularity, a statistical analysis will be performed to see if there are differences in price between organic shampoos and non-organic shampoos. The data gathered in the analysis consists of the prices per ounce of 30 different organic shampoos and 30 non-organic shampoos. The data will show if the prices per ounce for organic shampoos and the prices per ounce of non-organic shampoos are more or less expensive respectively.

Data Collection For the collection of data, Google Shopping was used to find a variety of organic and non-organic shampoos. Data about the price per ounce of shampoo and sizes of those shampoos was gathered in order to see if there is a direct relationship between the price per ounce and the type of shampoo that was examined. 30 data points were collected for each category, totaling to 60 shampoos in all. The shampoos were analyzed based on their two categories: organic and non-organic. The price per ounce was calculated for each of the shampoos and the price was measured in U.S. dollars. The variable of the capacity of the bottle of shampoo was measured in ounces. The variable of price per ounce was based on a calculation between these two measurements, and was calculated by dividing the price of the shampoo by the number of fluid ounces it contained. This was calculated because it allowed for the value of the shampoos to be compared directly without the size of bottle affecting that. It was determined that the price per ounce is the response variable and the explanatory variables are the number of ounces per bottle, and whether or not the shampoo is organic. There were no problems found when collecting the data besides running into the same shampoo data repeatedly for more popular shampoo brands. All of the information needed was listed on Google Shopping, which is the primary source for the data collection.

Carlye Whitaker Statistics 2301 May 2nd, 2013

Descriptive Statistics:
Organic Statistics Fl OZ Mean Standard Error Median Standard Deviation Sample Variance Minimum Maximum Sum Count Confidence Level(95.0%) Non-Organic statistics FL OZ Mean Standard Error Median Standard Deviation Minimum Maximum Sum Count Confidence Level(95.0%) 16.458 1.2499 13.5 6.8461 6.5 32 493.74 30 2.5564 Price per OZ Mean Standard Error Median Standard Deviation Minimum Maximum Sum Count Confidence Level(95.0%) 0.3887 0.0554 0.3127 0.3037 0.0555 1.3 11.6625 30 0.1134 12.9476 1.0054 12 5.5069 30.3261 8 33 388.43 30 2.0563 Price per OZ Mean Standard Error Median Standard Deviation Sample Variance Minimum Maximum Sum Count Confidence Level(95.0%) 0.7967 0.0762 0.7345 0.4177 0.1745 0.16 2 23.9028 30 0.1559

Graphs:

Carlye Whitaker Statistics 2301 May 2nd, 2013

Carlye Whitaker Statistics 2301 May 2nd, 2013

Carlye Whitaker Statistics 2301 May 2nd, 2013

Data Analysis: Descriptive Statistics:

For the descriptive statistics, the shampoos were split into the organic and non-organic categories and then analyzed based on the categories of fluid ounces and price per ounce. For the organic shampoos, the mean fluid ounces was 12.9477 while for the non-organic shampoos the mean fluid ounces was 16.458. The mean was larger for the non-organic fluid ounces statistic, which means that on average the bottle for non-organic shampoos was a bigger size. The mean for price per ounce of organic shampoos was 0.7968 and for nonorganic shampoos the mean price per ounce was 0.388. This means that, on average, the organic shampoos cost more when the means of price per ounce are compared. The number of observations used to get each these means was 30 because 30 different organic shampoos and 30 different non-organic shampoos were collected. The standard error for organic shampoos fluid ounce was 1.0054 and for non-organic shampoos was 1.2499. The standard error for organic shampoos price per ounce was 0.0763 and for non-organic shampoos 0.0555. All of these standard errors were calculated by taking the standard deviations that were listed and then by dividing by the square root of the number of observations.

Carlye Whitaker Statistics 2301 May 2nd, 2013

Regression Analysis:
To find the correlation of the regression statistics, the CORREL function was used on Excel, comparing the price per ounce and the number of fluid ounces in each bottle. The result of this equation gave an r-value (correlation) of -0.3478. This indicates that as one variable increases, in this case the price per ounce, the other variable decreases, which would be the number of fluid ounces per bottle. This correlation indicates a weak relationship between the two variables. It is not possible to draw a conclusion of causation based off of the data gathered by the correlation, because correlation cannot be used to show causation. The Significance F value shown in the regression data is used as a Pvalue for the regression. The value calculated is 0.00005237, which is incredibly small, demonstrating that the regression is statistically significant, because it is below the alpha value of 0.05. The equation of the regression line can be drawn based off of the data gathered in the regression statistics. The line can be defined as: = 0.6335 - 0.0148(Fluid Ounces) + 0.3557(Organic/Not Organic) Based off of this data, it is safe to assume that the percentage of Y-hat explained by the variables in this particular data set is 29.23%.

T-Statistic:
The null hypothesis is that the price per ounce for organic shampoos equals the price per ounce of non-organic shampoos. The alternative hypothesis is that the price per ounce of organic shampoos is greater than the price per ounce of non-organic shampoos. This is based off of the calculated regression lines for each variable. The equation to calculate the T-statistic is:

The interpretation of the T-statistic is 4.327 with 29 degrees of freedom. Using Table D, the P-Value that corresponds with 29 degrees of freedom and a 4.327 T-Statistic is smaller than 0.0005. Because this P-value is small, the null hypothesis can be rejected. Based on this result, it is probable to conclude that the price per ounce of organic shampoos is higher than that of non-organic shampoos.

Conclusion
The statistical analysis done on the data shows sufficient evidence that

Carlye Whitaker Statistics 2301 May 2nd, 2013 the organic shampoos are more expensive per ounce than the non-organic shampoos. This is most likely because organic shampoos use more expensive natural ingredients. This conclusion can be drawn based off of the data shown in the scatter plot, which shows a downward-sloping trend. The regression line on the scatter plot for organic shampoos is nearly parallel to the regression line for non-organic shampoos but the one for organic shampoos lies distinctly above the other. Although the relationship is relatively weak, the relationship is still there. This indicates a negatively correlated relationship between the explanatory and response variables. The t-statistic performed on the data shows that there is strong statistical evidence to reject the null hypothesis, which is that the price per ounce of organic shampoo is equal to that of the non-organic shampoo. The descriptive statistics provide further evidence that there is a distinction in value between the two by showing that the mean of the price per ounce of the organic category is higher than the mean price per ounce of the non-organic category. It is plausible to draw the conclusion that the organic shampoos are more highly priced for each ounce in the bottle because the organic shampoos are believed to be higher quality.