Type 2 error, also known as a false negative, occurs when a test fails to reject a false null hypothesis, not detecting an effect when one exists.

‍

Why is understanding Type 2 error important?

Understanding Type 2 error is essential to prevent missed opportunities and failures to identify real issues or effects, which can lead to suboptimal decisions and outcomes.

‍

An easy way to understand Type 2 error is:

It's like missing an opportunity. For example, if a test says your marketing campaign had no effect, but it actually did, and you decide to stop running it, that's a Type 2 error.

Examples of Type 2 Error

A Type 2 error, or false negative, occurs when a test fails to reject a false null hypothesis. For example, in a medical test, a Type 2 error would be failing to diagnose a patient who actually has a disease.

In a marketing context, a Type 2 error could be concluding that a new product feature has no impact on customer satisfaction, when in fact, it does have a positive effect that the test failed to detect. This could lead to the company mistakenly deciding not to implement the feature.

At Kosme Aesthetics, some strategies initially perceived as ineffective turned out to be quite successful once implemented.

Recognizing these 'false negatives' has encouraged us to adopt a more comprehensive testing phase for our marketing initiatives, ensuring that no potentially successful strategy is overlooked.