HOW TO FLY ON THE INTERNET

Northern World Airlines is a national carrier contemplating a shift in its marketing strategy toward conducting more of its ticketing and customer service activities over the Internet. One of the alternatives Northern World is considering is the issuing of electronic airline tickets to its passengers. Customers booking their tickets through Northern World's Web site would be sent an e-mail confirmation as soon as the transaction was completed and registered in the company's database. The customer could then take the confirmation number to the airport terminal and check in at Northern World's ticket counter, where he or she would be issued a boarding pass and could check luggage if needed. This system would eliminate a substantial amount of paper processing for Northern World Airlines and would provide quicker service to the customer.

The managers at Northern World are unsure about whether ticker customers would expect lower prices for electronic tickets than for tickets issued in the traditional manner. To help answer this question, Northern World contracted with a marketing research firm to survey approximately 400 of its current customers. The research firm asked these customers three questions: (1) How likely would you be to book airline tickets through the Internet? (2) Would you expect to pay more, the same, or less for an electronic ticket? And (3) If tickets were $300, how much more or less would you be prepared to pay to buy your tickets online? The following table shows the average responses to the third question:

The Northern World managers are interested in finding out whether customers were expecting to pay a substantial difference in prices for an electronic ticket. That is, were the customers expecting to pay more or less than the standard ticket price? If you consider the hypothetical ticket price of $300 used by the research firm in the survey, were the customer's answers significantly above or below that number?

Describe how you would analyze the data in the table above to answer this question. What analysis technique would you use? What would your null hypothesis be? How many statistical comparisons so you need to conduct? Based on your analysis, would you recommend that Northern World Airlines raise, lower, or keep its electronic ticket prices the same?