From the course: Learning Excel: Data Analysis

Formulate a hypothesis - Microsoft Excel Tutorial

From the course: Learning Excel: Data Analysis

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Formulate a hypothesis

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- [Instructor] When you analyze your data using statistics, you should know what aspect of your data you want to test. The statement that embodies your test is called a hypothesis. Your hypothesis is an educated guess about the characteristics of a data set and the circumstance it describes. For example, you could create a hypothesis that says the state a customer lives in is related to the amount of olive oil they order from your company. There are two parts of a hypothesis used for hypothesis testing. The first is the null hypothesis, which simply says that factor A has no effect on B. In the example I gave earlier, it would say that the state a customer lives in has no effect on how much they spend at my store. The alternative hypothesis says factor A affects B. So the state that a customer lives in does affect how much they spend at my store. An alternative hypothesis can be directional or non-directional. A directional hypothesis looks at either a value that is greater than or less than a target. For example, customers who were part of a specific marketing group might spend more than the average based on the effect of that advertising. Whereas customers who were previous customers but had not ordered for awhile would spend less. A non-directional alternative hypothesis looks for a comparison to a specific value. You might say that 30% of customers who ordered one product would order another. And you're looking for variation either above or below. So it can be both instead of just one. So how do you create an effective alternative hypothesis? Well first, you need to state that there is a relationship between the variables, and then base your alternative on your knowledge of the world. For example, if you believe that your advertising campaign will make a difference to sales, you need to state that. You should express your hypothesis simply and briefly and also make sure you can test your alternative hypothesis. Your hypothesis needs to be based on data that you are able to collect and that you believe to be reliable so that you can perform an accurate test.

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