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Chapter 12: Advanced Topics, Research Frontiers, and Preparing the Final Report

TRUE/FALSE

1) The concept of heterogeneity is very important to marketing because people respond

differently to the same marketing variable.

Answer: True

Heterogeneity implies people are different and will, therefore, react differently to the same

stimuli.

2) Product recommendation systems use heterogeneity, hierarchical Bayes modeling, and

sample selection bias correction in a single application to predict products a customer will

like.

Answer: True

A product recommendation system is a statistical model that predicts which products a target

customer may like by examining the preferences and purchases of similar consumers.

3) The vast majority of statistical models used in marketing yield only one value for each “β,”

which marketers assume is valid for everyone; yet this concept is in direct contrast to the idea

of heterogeneity.

Answer: True

Although heterogeneity implies people react differently, most marketing models assume

everyone will react the same way when a particular situation is faced or a variable is

modified.

4) One of the most important analytical advances in marketing research in recent years has

been the advent of hierarchical models and Bayesian estimation.

Answer: True

This advance has been especially important when conjoined in the form of Hierarchical

Bayes, or simply HB, models.

5) When there is little data for an individual respondent, nonhierarchical methods permit the

borrowing of information from other respondents to obtain better estimates.

Answer: False

This is an important element of hierarchical methods and why hierarchical methods are

popular.

6) Although hierarchical models are excellent for allowing for individual differences among

respondents and measuring that difference in a meaningful way, they cannot provide

information about where it comes from.

Answer: False

One of the strongest benefits of hierarchical models is that they do provide information about

where the heterogeneity comes from.

7) The predictions from homogenous models are far superior to those from hierarchical

models.

Answer: False

Predictions arising from hierarchical models have been found to be far superior to those from

simple homogeneous models, in terms of providing a better fit to the actual data.

8) With the Markov chain Monte Carlo method of estimating parameters, the process finds

the best fit for each parameter before it moves on to the next parameter.

Answer: False

This process immediately goes to the next parameter, assuming the previous guess was the

right value. It continues to cycle through the parameters thousands of times.

9) The Markov chain Monte Carlo process will yield a single optimal value for each

parameter.

Answer: False

It produces a distribution for each parameter, called a posterior distribution.

10) It is important to remember that a sample that is collected non-randomly will always have

a bias.

Answer: False

Non-random selection does not necessarily mean that the sample is biased.

11) If a sample is collected through a non-random means, it is likely to have a selection bias.

Answer: True

It is rare that an overt selection bias has no effect on a study.

12) With end-point selection bias, data collection begins as soon as data fall above or below

an acceptable threshold.

Answer: True

This is a data-based selection bias that occurs when the researcher makes a judgment that

values are looking good or bad before beginning to record them.

13) When respondents can decide whether or not they want to participate, it is called unequal

selection bias.

Answer: False

It is called self-selection bias.

14) The selection bias of “data mining” occurs when researchers perform a huge number of

analyses and present the most significant results as if they were the only a priori hypotheses.

Answer: True

This is the definition of “data mining” or “fishing” among the study-based selection biases.

15) Generally speaking, selection biases are the most problematic when items are selected

based on values of the outcome variables.

Answer: True

By selecting items based on an outcome variable, what researchers wish to study.

16) The Heckman model can be thought of in terms of two equations: a “selection model”

and a “prediction model.”

Answer: True

Selection describes whether the variable is seen, and the prediction involves how well it

predicts.

17) The selection equation of the Heckman model is an ordered logit model.

Answer: False

It is a binary probit model.

18) For prediction, the Heckman model can use any regression-based model.

Answer: True

The type of regression model does not matter as long as the error term is normally

distributed.

19) In the Heckman model, if the selection model and the prediction model are estimated

separately, the two errors remain uncorrelated, and selection bias is automatically controlled

for.

Answer: False

The error terms remain uncorrelated, which means that the selection biases also remain.

20) In the Heckman model, the more correlated are the errors between the selection model

and the prediction model, the greater the evidence of a selection bias.

Answer: True

A high correlation between the errors indicates the presence of a selection bias.

21) In preparing a written report, a simple graph can convey far more than a table with the

same information.

Answer: True

Most individuals reading a written report can quickly gather the message presented in a

graph.

22) When writing a research report, it is important to remember that the report is designed to

provide information to decision makers, not to showcase intriguing findings of the research.

Answer: True

Research reports are written for decision makers so they can make intelligent decisions.

23) In terms of presenting the research results in the written paper, objectivity refers to the

lack of bias while framing the results so as to make them palatable to management.

Answer: False

Objectivity refers to the lack of bias while stating in clear, unequivocal terms what the

research implies.

24) When writing a report, use plenty of clichés and marketing jargon, because this is the

language that management understands.

Answer: False

Avoid clichés; they convey lazy, hackneyed thinking.

25) The executive summary is a condensed, accurate statement of the report’s most crucial

findings that is the essential element of nearly all research reports.

Answer: True

Because many managers read only the executive summary, it is crucial that this section be

accurate, concise, and well written.

MULTIPLE CHOICE

1) The fact that different people respond differently to the same sale, advertisement or other

marketing variables is

a. Bayes model of reaction

b. heterogeneity

c. homogeneity

d. a results of selection bias

Answer: B

Heterogeneity refers to the fact that not everything is identical; in marketing research, it

refers to the difference in individual’s responses.

2) Within marketing research, “heterogeneity” is generally used to refer to

a. differences in behavior

b. differences in sensitivity

c. differences in outcome

d. differences in characteristics

Answer: B

In marketing research, it is primarily differences in sensitivity or responsiveness that is called

heterogeneity. This is beta or coefficient heterogeneity.

3) In examining the differences between men’s and women’s weight, it can be said that

women have a lower baseline weight then men. This is an example of

a. intercept heterogeneity

b. slope heterogeneity

c. beta heterogeneity

d. coefficient heterogeneity

Answer: A

The intercept heterogeneity in this example refers to the different points where the regression

line would intercept the Y-axis for men and for women.

4) In examining the differences between men’s and women’s weight, it can be said that each

inch of height adds more to men’s weight than to women’s. This is an example of

a. intercept heterogeneity

b. slope heterogeneity

c. Bayes heterogeneity

d. hierarchical heterogeneity

Answer: B

In this example, the difference refers to the difference in the slope of the regression line.

5) Running a separate regression model for each person would yield the best results and

effectively deal with heterogeneity. We do not do this for all of the following reasons except

a. researchers don’t ordinarily have many pieces of data for each individual

b. researchers are looking for a unified explanation of a phenomena

c. individuals tend to give the same answers anyway

d. it is expensive to prepare a separate marketing approach for each individual

Answer: C

Heterogeneity implies that people do not tend to give the same answers.

6) Heterogeneity models go by all of the following names except

a. discrete heterogeneity

b. continuous heterogeneity

c. latent class model

d. Bayesian estimation model

Answer: D

Heterogeneity models include discrete (also called latent class or finite mixture model) and

continuous types.

7) Suppose that the distribution of the value of b for a sample of respondents were as follows:

23% have b = 2

17% have b = 3

30% have b = 4

30% have b = 5

Which type of heterogeneity model does this example fit?

a. discrete

b. continuous

c. Bayes

d. Heckman distribution

Answer: A

Because there are distinct, discrete values for the beta, it fits the discrete heterogeneity model.

8) The most general form of heterogeneity model in current use is called

a. discrete heterogeneity

b. Bayesian hierarchical heterogeneity

c. latent class model

d. finite normal mixture heterogeneity

Answer: D

Finite normal mixture heterogeneity is the most general form of heterogeneity model.

9) In real applications, all of the following complexities of heterogeneity are common except

a. a large number of humps for each coefficient

b. many coefficients

c. homogenous solutions are more accurate

d. the coefficients are correlated

Answer: C

In real applications, it is not uncommon to have a large number of humps for each coefficient,

to have many coefficients, and also to find that the coefficients may be correlated (e.g.,

people who care more about price may care less about styling).

10) The hierarchical Bayes model is called “hierarchical” because

a. it consists of a number of levels

b. it represses the will of the grassroots

c. the error term and slope are related

d. the intercept is known in advance

Answer: A

It is called “hierarchical” because it consists of a number of levels.

11) The hierarchical model allows for all of the following except

a. it allows for different slopes for different respondents

b. it includes individual regressions for each respondent

c. it allows for an explanation as to where the heterogeneity comes from

d. it allows for borrowing missing information from other respondents

Answer: B

The purpose of the hierarchical model is to be able to get away from individual regressions

for each person, yet capture the heterogeneity that is present.

12) With _______________, there is no search for the best parameter values, but instead

guesses are made about the value of each parameter repetitively to arrive at a solution.

a. Bayesian estimation

b. the Heckman model

c. latent model estimation

d. parsimonious modeling

Answer: A

By definition, the Bayesian estimation process guesses the value of the parameters in an

iterative process until a solution is found.

13) In Bayesian analysis, guesses follow a rigorous process called

a. latent Monte Carlo

b. Markov chain Monte Carlo

c. Heckman chain Monte Carlo

d. hierarchical Markov estimation

Answer: B

The guessing process used is Markov chain Monte Carlo, which is set of rigorous guidelines

on how the guessing should progress.

14) The result of the estimation process through rigorous guessing procedures is

a. the best beta value for each parameter

b. the best guess value for each parameter

c. a distribution of the various values of each parameter

d. an estimation of the distance between each data point and the normalized centroid

Answer: C

The Markov chain Monte Carlo process produces a posterior distribution of the values for

each parameter.

15) Having used a Bayesian estimation process, to determine the best value for a parameter,

researchers look

a. at the standard errors plot

b. at the highest point of the posterior distribution

c. for the highest factor loading

d. for the highest beta value

Answer: B

The “best” value is the highest point of the posterior distribution for that parameter.

16) A hierarchical model that is estimated by Bayesian methods is called a

a. hierarchical Bayes model

b. a Heckman model

c. Bayesian heterogeneity model

d. latent class model

Answer: A

By definition, the hierarchical Bayes model is a hierarchical model that is estimated using a

Bayesian method.

17) It is rare that an overt selection bias will

a. have an effect on the outcome of a study

b. have no effect on the outcome of a study

c. have a significant impact on a study

d. will influence a management decision advised by a study

Answer: B

An overt selection bias is extremely likely to have some type of effect on a study’s results.

18) All of the following are data-based selection biases except

a. unequal selection criteria

b. ad hoc rejection

c. endpoint selection

d. premature termination

Answer: A

Unequal selection criteria is a participant-based selection criteria.

19) _______________ is a data-based selection bias that occurs when data are deemed “bad”

using arbitrary criteria, often as they come in, instead of using explicitly-stated or previously

agree-upon standards.

a. Endpoint selection

b. Ad hoc rejection

c. Premature termination

d. Drop-out bias

Answer: B

With ad hoc rejection, the researcher decides arbitrarily that a piece of data looks bad and is,

therefore, rejected.

20) All of the following are participant-based selection biases except

a. unequal selection criteria

b. premature termination

c. drop-out bias

d. self-selection

Answer: B

Premature termination is a data-based selection bias.

21) _______________ occurs when researchers pre-screen potential participants on an

outcome variable.

a. Self-selection

b. Ad hoc rejection

c. Unequal selection criteria

d. Drop-out bias

Answer: C

With unequal selection criteria, a researcher uses an outcome variable to determine who

should participate in the study or in what capacity.

22) An example of a study-based selection bias is

a. endpoint selection

b. self-selection

c. unequal selection criteria

d. file drawer effect

Answer: D

The two types of study-based selection bias are file drawer effect and fishing (data mining).

23) Performing multiple, related studies and reporting only those that support the favored

hypotheses is called

a. drop-out bias

b. self-selection

c. unequal selection criteria

d. file drawer effect

Answer: D

Reporting only a study that supports a favored hypothesis or repeating a study until the

desired effects are obtained is called the file drawer effect.

24) The problem of selection bias was long been recognized by statisticians as a problem

until the introduction of the

a. Markov chain Monte Carlo method

b. hierarchical Bayesian estimation method

c. latent heterogeneity model

d. Heckman model

Answer: D

In 2000, James Heckman was awarded the Nobel Prize in Economics for his development of

the Heckman model to deal with selection bias.

25) Correcting for selection bias relies on the _______________ for selection

a. binary probit model

b. binary logit model

c. ordered probit model

d. ordered logit model

Answer: A

For the selection, the Heckman model uses the binary probit model because its normallydistributed error is somewhat easier to understand.

26) The model for selection in question #23 is used instead of others because

a. it calculates a more accurate error term

b. its normally-distributed error is somewhat easier to work with

c. it predicts more accurately the factor loading

d. its Gumbel-distributed error is somewhat easier to work with

Answer: B

Because the binary probit model produces an error that is normally-distributed and easier to

work with, it is used in the Heckman model.

27) The coefficients of selection bias correction models will automatically correct for any

selection bias if the

a. selection model is estimated before the prediction model

b. prediction model is estimated before the selection model

c. the selection and prediction models are estimated jointly

d. population standard deviation is known

Answer: C

By estimating the two equations jointly, the Heckman model automatically corrects for any

bias.

28) The most common type of selection bias correction model used by researchers is the

a. hierarchical Bayes model

b. fixed normal mixture model

c. Heckman model

d. bias estimation model

Answer: C

The Heckman model is the most frequently used selection bias correction model.

NOTE: The following results from the Application Case Study presented in the text show

means for selection of movies (Selection Distribution) and how they were rated (Prediction

Distribution). Refer to this table to answer the following questions.

29) From the following list of movies, which one is rated the lowest?

a. Classic

b. Family

c. Horror

d. Thriller

Answer: B

Family was rated the lowest (-0.389 mean).

30) Which gender is less likely to select a movie?

a. males

b. females

c. men and women are equally likely to select a movie

d. it cannot be determined from the given data

Answer: A

The -0.022 indicates males are slightly less likely to select a movie.

31) Which type of movie is rated the highest?

a. Action

b. Animation

c. Romance

d. Drama

Answer: B

Animation had a mean rating of 2.110, the highest.

32) Which types of movies are not selected often, yet are rated highly when selected?

a. Classic and Art

b. Thriller and Classic

c. Family and Horror

d. Horror and Art

Answer: A

Classic movies have a selection mean of -2.070, but a rating mean of 1.375; Art movies have

a selection mean of -0.523, but a rating mean of 1.462.

33) Which kind of movies are selected the least often?

a. Drama and Comedy

b. Family and Thriller

c. Family and Thriller

d. Classic and Thriller

Answer: D

Classic and Thriller have the highest negative means for selection.

34) In terms of selection, which two movies have the highest heterogeneity?

a. Action and Animation

b. Animation and Art

c. Family and Classic

d. Art and Horror

Answer: C

The standard deviation for the selection distribution is highest for Family (0.888) and Classic

(1.118) movies.

35) In terms of ratings, which movies have the highest heterogeneity?

a. Action and Animation

b. Animation and Art

c. Family and Classic

d. Art and Horror

Answer: D

The standard deviation for the ratings is highest for Art (0.809) and Horror (0.905).

36) Since many managers only read the _______________ of a written research report, it is

important for it to be accurate, concise, and well-written

a. table of contents

b. executive summary

c. body

d. conclusions and recommendations

Answer: B

The executive summary should be 1-2 pages in length and provide a brief summary of the

crucial findings of the report.

37) A discussion of the methodology used in the research would be found in which section of

the written report?

a. table of contents

b. executive summary

c. body

d. conclusions and recommendations

Answer: C

The methodology is part of the body of the report.

38) The methodology component of the written report should contain all of the following

information except

a. research design

b. sampling plan

c. data analysis procedure

d. research findings

Answer: D

The research findings should be presented in the results component of the report.

39) In using pie charts to illustrate data in written reports, it is advisable not to exceed

a. 3-4 slices

b. 5-6 slices

c. 10-15 slices

d. 20-25 slices

Answer: B

It’s best to stick to a maximum of 5 or 6 slices or the pie chart becomes confusing and

difficult to read.

40) To illustrate multiple comparisons and complex relationships, the best illustrative aid to

use is

a. pie charts

b. histograms

c. bar charts

d. tables

Answer: C

Bar charts are good for multiple comparisons and complex relationships.

SHORT ANSWER

1) Name the two main types of heterogeneity models.

Answer: 1) discrete (or latent class or finite mixture model) heterogeneity

2) continuous heterogeneity

Finite normal mixture heterogeneity is the more general form, which is acceptable as an

answer if the student understands how it relates to these two types.

2) What is the Heckman model, how does it work, and what is it used for?

Answer: The Heckman model is a means of correcting for sample selection bias by

estimating a selection model and a prediction model jointly through Bayesian methods.

3) What increasingly common web feature uses a Heckman model to correct of massive

amounts of missing data, parameter heterogeneity, and Bayesian estimation methods?

Answer: Product recommendation systems.

4) Identify the 4 items that should be summarized in the executive summary section of a

written research report.

Answer: The executive summary should contain:

1) research objectives (and nature of the decision problem)

2) key results

3) conclusions

4) recommendations for action

5) Identify the 4 components of the “body” of the written report.

Answer: The body of the reports should contain:

1) introduction (background)

2) methodology (research design, sampling plan, data collection and analysis procedure)

3) results

4) limitations

ESSAY

1) In the equation

heterogeneity?

, how do the various variables and coefficients relate to

Answer: Heterogeneity of characteristics is denoted by the X variable(s) in regression.

Heterogeneity of behavior or outcomes is denoted by the Y variable in a regression.

Heterogeneity of sensitivities is denoted by

b. This is called b or coefficient or slope heterogeneity, and is generally what is meant by

heterogeneity in marketing research—that different people or objects react differently (in Y)

to the same changes in the X variables. Intercept heterogeneity denotes differences in α.

2) Explain the general procedure of how the Markov chain Monte Carlo works.

Answer: The following steps are followed:

1) Make assumptions (called priors) about what parameters look like. These can be weak

assumptions or even randomly selected.

2) The program starts guessing for each parameter, assuming all other parameters have been

correctly determined.

3) It checks to see if the parameter was a good one by checking the fit with the data. If the

current guess fits the data better than the previous, the value is kept. If not, the program uses

a randomizing device to decide whether to keep it.

4) The procedure them moves to the next parameter, assuming the previous parameter was

correct, and repeats the procedure.

5) The process cycles through all of the parameters in this fashion, usually at least 10,000

times each, until it ends up with distributions of “accepted” guesses for each parameter.

3) Identify and describe the 8 types of selection bias.

Answer: 1) Data-based selection bias: Ad hoc rejection—data deemed as bad is rejected

Endpoint selection—data collection begins when the researcher feels the data has reached an

acceptable threshold

Premature termination—a study is terminated when the results appear to be “clear” to the

researcher

2) Participant-based selection bias: Unequal selection criteria—pre-screening of participants

is done based on one of the outcome variables

Drop-out bias—deleting the data of any participant who did not complete a survey

Self-selection—respondents can decide if they want to participate or not

3) Study-based selection bias: File-drawer effect—when a study is performed multiple times

and only the one that favors the desired results is reported

Data mining—performing a huge number of analysis and presenting the most significant

results as if they were the only a priori hypotheses

4) Discuss 5 general guidelines for a written marketing research report.

Answer: Guidelines for a written report include:

1) consider the audience

2) address promised information needs

3) be concise, yet complete

4) be objective

5) adopt a concise, business-like writing style

5) For most reports, what is the typical format (of 7 sections)?

Answer: 1) Title

2) Table of Contents

3) Table of Tables, Figures, or Graphs

4) Executive Summary

5) Body of Paper

6) Conclusions and Recommendations

7) Appendices

Test Bank for Modern Marketing Research: Concepts, Methods, and Cases

Fred M. Feinberg, Thomas Kinnear, James R. Taylor

9781133188964, 9781133191025, 9780759391710