Statistics for Business Decisions

Statistics in Marketing

Marketing uses a number of statistical techniques both to better understand and target materials to certain groups of customers as well as to measure the effectiveness of various marketing efforts. Some of these techniques are listed below...

Basic Statistics

Indexing

The use of indexes can be used to help identify that certain subgroups of data are different from an established benchmark. For a simplified example, let's compare the population of a hypothetical country and the population of a hypothetical school by age group.

Table A
Age Group	Country	School
0 - 10	20%	40%
11 - 20	20%	40%
21 - 40	20%	10%
41 - 60	20%	10%
61 +	20%	0%
Total	100%	100%

Let's call the percentage distribution for the country the benchmark (this serves as a ruler to compare other groups too). In this case we will take the school percentage distribution column and divide it by the benchmark's percentage distribution. This establishes a new column which we will call the index.

Table B
Age Group	Country	School	Index
0 - 10	20%	40%	2.0
11 - 20	20%	40%	2.0
21 - 40	20%	10%	0.5
41 - 60	20%	10%	0.5
61 +	20%	0%	0.0
Total	100%	100%	1.0

The index column in table B can identify that the age distribution in the school differs significantly from the benchmark (the population of the country). The index indicates how much more or less likely it is to encounter a given group.

Applying Indexes

Indexes can be applied against multiple groups of people and multiple variables. This can aid in understanding how customers differ in certain geographical areas. It can also be used as a basic tool to find if customers you are wanting to target are more likely to live in certain areas.

See Also

• https://openstax.org/details/books/introductory-business-statistics OpenStax: Introductory Business Statistics]]