Introduction:

The paper tries to understand how AJ Davis Department Store tries to understand its customer base and customer segmentation. AJ Davis has brought three of the five customer variables to understand customer effectiveness. The three important variables used by AJ Davis Income, location, credit balance, family size, and years at current household. These variables bring into use how there may or may not be correlated .The study has used numerical data to interpret mean income, minimum and maximum credit balances, and family size as a few credible examples. A detailed numerical analysis of the data is shown below.

The first discussion is based on customer income. A sample of 50 customers of their income is discussed below:

1. Descriptive Statistics: INCOME ($1000)

2. Variable N Mean StDev Minimum Q1 Median Q3

3. Income ($1000) 50 43.48 14.55 21.00 30.00 42.00 55.00

4. Variable Maximum: Income ($1000) 67.00

An examination of the above information shows that the average income of the customers at AJ Davis is $43,480 per year given the 50 customers who were sampled. The sample also shows that 25% of the customers had an income of #30,000 or less and 75% of their customers make $55,000 or less. This lends very valuable insight on how AJ Davis has to price its prodcuts according to the income of the customers. There is a graphical description of how the income distribution is shown.

The histogram of Income shows that customers of AJ DAVIS are between $21,000 to a maximum of $67,000. The sample that was studied showed that most of the customers were taken from the 50 make over $65,000 per year.

The next variable that was studied was a family size of the sample group used for this study.

1. Descriptive Statistics: SIZE

2. Variable N Mean StDev Minimum Q1 Median Q3 Maximum

3. SIZE 50 3.420 1.739 1.000 2.000 3.000 5.000 7.000

A look at the size of the family showed that an average family size comprised of 3.4 persons .The US census bureau average a household at 2.6 people but the average of AJ DAVIS per family is 3.4 people. The range of the sample of 50 customers showed the family size from 1 to 7 individuals per household.

The third variable that was taken was the credit balance of the 50 sampled customers.

The graph of family size of AJ Davis customers shows the extension of the numeric data. it was also seen that the families that shop at AJ’s have a household size of 2 people, with family size of 4 coming next and a family size of 3 coming third. The data and results proved very interesting results .

The next variable studied was the credit balance.

The credit balance of customers shows the credit history of the customers who shop at AJ Davis .It also shows the credit repayment history of AJ DAVIS.

The following is the statistical description of the credit balances of the sample customers.

1. Descriptive Statistics: CREDIT BALANCE($)

2. Variable N Mean StDev Minimum Q1 Median Q3

3. CREDIT BALANCE($) 50 3964 933 1864 3109 4090 4748

4. Variable Maximum CREDIT BALANCE($) 5678

From the data studied it is seen that the average credit balance of AJ customers is $3964. This data also reveals that the minimum credit balance is $1864, while the highest balance is $5678. The sample of 50 customers’ shows that everyone who shops at AJ DAVIS has a credit balance.

The following is the graph of the credit balance of AJ Davis customers.

The graph shows that most of AJ Davis customers have a credit balance of roughly $4000 and have the fewest people have a credit balance of roughly $2000. This also shows that most of the customers at AJ Davis have a credit balance. This also shows that all the variables exist in common.

1. Mean of INCOME

2. Mean of INCOME = 43480

The mean income for the 50 sample customers is $43,480. This mean income is compared by location.

The data also reveals that customers from rural areas have a mean income of $35,000, and from the suburban areas the mean income is $51,000, and lastly the mean income from the urban area customers is $44,000. The graph and comparison shows that the suburban and urban area customers have a mean income higher than the mean of the group as a whole.

This study also shows that there is a positive correlation between the mean family size and the mean years at current residence of the 50 sampled customers. The average family size is 3.42 and these families have stayed in the same residence for a mean period of 12.38 years.

1. Mean of SIZE = 3.42

2. Mean of YEARS = 12.38

The above information explains that the customers of AJ DAVIS have large families and these families tended to stay in the same residences .for quite a long time .We can infer that AJ DAVIS focus should be on large families and are long term customers. To understand this better the correlation coefficient was studied.

1. Pearson correlation of INCOME($1000)

2. CREDIT BALANCE($) = 0.631

The correlation coefficient showed a positive trend between Income and Credit Balance. The Pearson correlation shows that the correlation is .631 or 63.1%. This infers that there is a positive and good correlation between a family’s income and the amount of their credit balance.

Conclusion:

Statistical analysis plays a very important role in studying the data base of AJ DAVIS customer and the long term customer relationship. This data also reveals how AJ DAVIS has to strategize its customer relationship. This gives very important insights as to how AJ DAVIS has to make decisions so that the company can make its operations more profitable by serving the needs of the customers to creating long lasting impression and customer loyalty thereby providing a base for long term customer relationship.