Chi-Square Measurement and Misuses

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Chi-Square & Misuses The chi-square statistical measurement is an inferential statistic to determine differences among groups. It compares frequency observed with frequency expected. It does not determine where the differences are, just that they do exist. The chi-square measurement is used a lot in business to compare projected budgeted items with actual expense and revenue items to determine any significant differences that could indicate problems or areas for new innovations of products. The chi-square measurement is used to determine how the variables of expenses and revenues relate with each other to ensure that revenues and expenses are in alignment with business projections. It can be used to test markets and what type of products are better sold in geographical areas to determine appropriate business strategies. The chi-square can also be used to determine how changes in product mix may impact revenues and sales. Consumer purchase decisions is another area the chi-square measurement is used to determine what consumers need and want or what influences their purchase decisions to develop new products and appropriate marketing techniques. Even though the chi-square is considered a weak measurement, it is used as a baseline in making business decisions and determining problems that need to be addressed. It acts as an indicator where further investigation and analysis can be made to determine the issues. Once issues are identified, other investigations and analysis
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