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The brand manager for Savlon is facing a dilemma

Economics Oct 28, 2020

The brand manager for Savlon is facing a dilemma. The brand has historically communicated on the pitch that the Savlon disinfectant liquid does not burn/irritate post application, unlike its chief competitor, Dettol. This communication has been largely unsuccessful and multiple research modules have indicated that consumers feel that the burning sensation actually links to ‘germs getting killed by the disinfectant’ and lack of it indicates that Savlon is ineffective. The brand manager is evaluating two creative routes to address this perception:

Route 1 (Default route): Focus on the fact that ‘regular antiseptics’ stretch the threshold of pain by adding to it and that Savlon heals without hurting.

Route 2 (New proposed route): Focus on the fact that Savlon is 8x more effective than competition brands without addressing the ‘burning’ aspect of the product

The brand manager ran an A/B test with both the creatives (As part of the test, both creatives were shown to different sets of audience on Facebook ads and the click through rate was checked. The higher the click -through rate, the more effective the creative). The results are shown below:

Showed and Clicked

Showed but Not Clicked

Route 1

18

7

Route 2

42

33

The brand manager wants to determine whether there is a significant difference between Route 1 and Route 2 based on the click-through rates.

Statement 1: There is no difference in the click-through rates between Route 1 and Route 2

Statement 2: There is a difference in the click-through rates between Route 1 and Route 2

Null hypothesis: Statement 1, Alternate hypothesis: Statement 2

Null hypothesis: Statement 2, Alternate hypothesis: Statement 1

Both statements can be interchangeably used as null/alternate hypothesis

Neither of the statements can work as hypotheses

Expert Solution

Null Hypothesis is always constructed and checked for possible rejection using p-value. This means the alternative hypothesis will be the one which company wants to be checked for trueness.

The brand manager of Savlon wishes to determine (through click rates) whether there exist significant difference between Route 1 and Route 2. He wishes to know what works best for the company's benefit.

Hence, option (A) is suitable and correct in the given case where:

Null hypothesis: Statement 1, (Checked for possible rejection)

Alternate hypothesis: Statement 2

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