Bimble, as a statistical analyst at her company, has been asked to find out the

Question

Bimble, as a statistical analyst at her company, has been asked to find out the customer satisfaction rate of the company's new product. The satisfaction rate for the older product has been known that 73% of customers are satisfied with the older product. Her company wants to ensure that customers will have higher satisfaction rate with the new product so that the company can confidently claim this in their advertisement. As the true customer satisfaction rate for the new product is still unknown, in order to uncover the truth, Bimble took a simple random sample of 250 customers and found that 193 of them reported that they were satisfied with the new product.

c) The CEO seems confused with the 95% confidence interval level and asked "So, you mean 95% of the customers are satisfied with the new product?" Please correct the CEO if necessary by fully interpreting the above confidence interval in plain English.

d) With the above answer, should the CEO be confident that the new product has truly raised customer satisfaction from the old product? (Briefly state why?)

Explanation / Answer

c) 95% confidence level basically means that 95% of the time, the mean value of the sample will lie between the 2 values of the confidence interval. Only in 5% cases, it will be beyond the intervals.

d) The CEO cannot be sure about whether the new product has raised customer satisfaction from the old product. This is because no comparative study has been done about the change in demand level of both the old and the new product. To get the true picture, a comparative analysis needs to be done.

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