Question

Data analysis plays an important role in business making decisions. In many situations, we want to make inferences that are based on statistics calculated from sample data to estimate the values of population parameters.   For example, a pollster may be interested in the sample results as a way of estimating the actual proportion of votes that each candidate will receive from a population of voters. In a business setting, do you think it is important to understand the population in which your samples are drawn? If so, why or why not? Are there situations where you feel that sample data is not a true representation of the population? Please explain in the context of the readings for this week.

Answer 1

Data Analysis plays an important role in business making decisions. Infact, the success or failure of any business depends on the proper interpretation of accurate data.Let us suppose a company wants to take decision whether to keep a product or discard it. For this it should have accurate data about the sales of the product, the actual and potential demand of the product. Only then it can take an accurate decision regarding keeping the product or discarding it.

Representative samples are important as they ensure that all relevant types of variables are included in your sample and that the right mix of variables are chosen. If your sample isn’t representative it will be subject to bias. Certain groups may be over-represented and their opinions magnified while others may be under-represented.

It would be expensive and time-consuming to collect data from the whole population of a market. Therefore, market researchers make extensive of sampling from which, through careful design and analysis, marketers can draw information about their chosen market.The first step in good sample design is to ensure that the specification of the target population is as clear and complete as possible. This is to ensure that all elements within the population are represented.

Sampling is important for business in terms of:

Market research Expanding the customer base may mean finding new market niches. A market niche is a group of individuals that have similar demographics such as age, gender, income, geographic location, marital status and education levels. Sampling the population of that niche lets the business know whether this is a lucrative prospect and should be pursued or is lukewarm at best and can be put on the back burner.

New Product Development One method is to develop a new product and find market for it. Other way is to study the market and then develop the product as per market requirements. In both case sampling is of immense importance to find the potential customers.For example people today want to be fit and healthy. A company dealing in soft drinks has to make sure to come out both with sugar and without sugar drink as potential customers for both types will be large.In order to launch the right type of product in right quantity in the right geographical location, sampling has to be done.

Customer Satisfaction A business organization may be interested in knowing whether customers are satisfied with product or not. For this the organization has to conduct a survey. It can be online or in some restaurant or in shopping mall depending upon nature of product. It will be difficult for the organization to approach people personally. A third party can be hired for this.

Sampling gone wrong

Any inferences from a sample refer only to the defined population from which the sample has been properly selected. We may call this the target population. For example a survey revealed that 5% of students who graduated from IIM's Ahmedabad turn out to be criminals. This does not apply to all IIM's located in different parts of India. Also it does not mean that 5% of people all over world who graduate from prestigious institutions turn out to be criminals. A data related to particular city does not relate to other cities or other countries.

Let us take another example. We want to conduct a survey regarding job prospects pf students studying at New York University.We simple walk into the campus and did survey on the basis of students present in campus.The population of interest includes not only the students on campus but also the ones at home, on exchange, abroad, distance education students, part-time students, even the ones who enrolled but are still at high school. So, in this way our survey will not reveal the true picture as the entire population is not taken into account.Populations are hard to define and hard to observe in real life

Sample is easier to contact.we can just go to the NYU campus. Next, let’s enter the canteen, because we know it will be full of people. We can then interview 50 of them. That's a good sample. But still there are drawbacks.Sample must be chosen randomly and should be representative of entire population.We did not choose NYU students randomly. We choose a group of students in canteen who came for lunch.Most members did not even get the chance to be chosen, as they were not on campus. Thus, we conclude the sample was not random.

Our sample did not represent all students in campus.it represented the people who have lunch at the university canteen. If our survey was job prospects of NYU students who eat at university canteen, then our survey was satisfactory.