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THE SURVEYING PROCESS AND RESPONSE 1 Surveying Process

SURVEY METHODOLOGY AND SUMMARY STATISTICS

3.2 THE SURVEYING PROCESS AND RESPONSE 1 Surveying Process

A pilot sample of 25 companies, taken from the Microexstat data base of companies, were sent a three page questionnaire in March 1992. Questions covered the nature and scale of the company’s advertising, the nature of competition as well as

conjectural questions asking about firms’ strategic responses to various scenarios. This produced 6 responses and resulted in minor changes to the questionnaire being made. A copy of the final questionnaire is provided in Appendix 2.

In the last two weeks of May 1992, a further 1307 companies were sent the revised questionnaire, making a total of 1332 in all.’’ Letters were addressed to “The Advertising Manager” and the firm was asked to send back the form if they “felt unable to take part in the survey” . In addition, firms were assured that responses would be kept strictly confidential. Questionnaires were marked with an exclusive code matching each firm and in virtually no cases did a responding firm make an attempt to erase this code^^.

Useful replies were received from a further 178 companies. One hundred and six

'^These companies comprised all those on the Microexstat database for which current addresses were held.

'-In the very few cases where this did occur, the firm was identifiable from the envelope.

companies either returned uncompleted questionnaires, or sent a letter explaining why they had not taken part in the survey. In addition, 20 questionnaires were returned with an indication that the company was no longer operating. Excluding these 20 companies, the useful response rate was 13.8%.

In the first two weeks of July, a follow up letter, together with another copy of the questionnaire, was sent to the 1024 firms who had not yet responded.

This second mailing produced 141 valid responses, together with 84 uncompleted forms or letters of explanation. A further 14 forms were returned due to the company no longer operating. Excluding these 14, the useful response rate was 14%.

Excluding the 34 companies known no longer to be operating, 325 useful replies were received out of a total of 1298 companies surveyed. The overall response rate then is 25%.

Including those not wishing to take part in the survey, there were 515 responses of any sort - 39.7% of the firms surveyed. A summary of the reasons which firms gave for not taking part is presented in Appendix 3.

3.2.2 Response By Industry Sector

Questionnaire response by industry group is given in Table 3 .1 . Com panies are

divided into those whose main areas o f production are found within the follow ing

and Others. In this the Microexstat classifications are generally used. However some companies (classified under the Microexstat “Other Groups”) were re-allocated into another group when their questionnaire response clearly indicated that it was

appropriate. In addition water companies listed under Microexstat Group 9 are classified as Utilities. Consumer Goods industries are further divided into Durables and Non-durables. Lastly Retailers are distinguished as another consumer sub-group.

Consumer and producer goods industries are fairly equally represented, with about 40% of the sample in each category. The consumer section is dominated by firms producing non-durables, of which there are 100, as compared to 25 durable goods firms. Completed forms were received from 19 firms classified as retailers, all from within the non-durables group.

A more detailed breakdown of the sample by industry, across both the Microexstat industry groupings and the SIC two-digit industry classifications is given in Appendix 3.

Additional data on sales, turnover, assets, age of company and so on were collected for the responding firms using the Microexstat and FAME databases. Table 3.2 shows the distribution of firm size as classified by 1992 fixed tangible assets for the 307 firms for whom data is held. Respondents cover a wide range of companies from the medium sized, with assets below £1 million, up to the very large with assets over £5 billion.

3.2.3 Sample Selection Tests

In order to investigate the possible problems of sample selection bias, several tests are carried out. The industry sector classification for non-respondents is given in Table 3.1. A chi-square test is used on the null hypothesis that the distribution of firms across producer, consumer and finance sectors is same for both respondents and non­ respondents (including those returning uncompleted forms). The %^(2) statistic works out as 6.85 which is significant at the 5% (but not 1%) level. When the consumer sector firms are split into durables and non-durables, the %^(3) is 7.60 which is significant only at the 10% level. Thus there is weak evidence of selection bias. Namely, slightly more producer firms and slightly fewer consumer firms responded than would be expected from the whole sample.

The second set of tests compare the mean sales, fixed tangible assets and pre-tax profits in 1992 of the respondents and non-respondents. Of the latter, data is held for all three variables for 890 firms, whilst data is available for 303 of the responding firms. The means and standard deviations are reported in Table 3.3. A simple t-test of the difference in means cannot reject the null hypothesis that there is no difference at even the 10% level of significance in any of the three cases.

The sample seems to be quite representative of all firms who were sent questionnaires in terms of size, turnover and profits. The only cause for concern is the suggestion that slightly more firms operating in producer goods markets responded.