Chapter 17, Problem 12P

12. Many businesses use some type of customer loyalty program to encourage repeat customer. A common. example is the buy-ten-get-one-free punch card. Dreze and Nunes (2006) examined a simple variation of this program that appears to give customers a head start

oncompletingtheircards. .One groupofcustomers at a car wash was given a buy-eight-get-one -free card and a second group was given a buy-ten -get-one -free card that had already been punched twice.Although both group needed eight punches to earn a free wash, the group with the two free punches appeared to be closer to reaching their goal. A few months later, the researchers recorded the number of customers whohad completed their cards and earned their free car wash. The following data are similar to the results obtained in the study. Do the data indicate a significant difference between the two card programs. Test with a = .05.

Buy-Eight-Get - One-Free

Buy-Ten (with

reePunches),

Completed NotCompleted

1050 40

1950 31