Advanced Hypothesis Testing Paper
Five business students, with a University of Phoenix learning team, noticed the recent increases of regular unleaded gasoline prices. The students hypothesized the gas prices consumed from corporate stations are not the same price as if purchased from a generic station in a grocery store parking lot, with a confidence interval of 90%. The research team decided to limit the current research to the Houston, Texas area. The students would take a sample, in the natural environment, to include five corporate gas stations and five different grocery stores around Houston. Retailers, such as Wal-Mart, Kroger, and Randall's (big box retailers), are capturing a growing percentage of the market share of gasoline sales from conventional convenience formats, and additionally, have helped to reduce the mean price of gasoline through lower profit margins and competitive practices. Research indicates since the inception of big box retailers, during mid-1980 into the fuel sales market, overall corporate convenience-store fuel sales have decreased by an average of 13% on a national scale (American Independent Business Alliance, 2005). This decrease is estimated to rise by as much as 16% by 2007 and is likely to continue as retail giants such as Wal-Mart and Kroger vie for fuel sales as an incentive to lure more customers into their stores. At the pump advertising, discount cards, and free-gas with in-store purchases are just a few incentives that big box retailers are offering consumers to keep him or her in the stores and these tactics seem to be paying off. Typical profit margins, for big box retailers, in gasoline average about 8% for each gallon of gas sold and are a far reach from corporate gasoline outlets before big box retailers entered the market. Markups of over 20% were once the norm for convenience outlets on gasoline, but profit margins have narrowed drastically as convenience stores try to compete with an ever growing threat...
References: American Independent Business Alliance (2005). Retrieved March 22, 2006, from Google.com.
Weekly U.S. retail gasoline prices. (2006). Retrieved Mar. 22, 2006, from Energy Information Administration Web site: http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html.
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