Statistics is the science that deals with collecting, analyzing and interpreting information. The results of these processes are then presented in some form for further use. Though statistics is a rather specific subject, its outputs are used in nearly all the areas of life. Surely, different practical applications of statistical information require different inputs, but the general rule is that the output gives us an idea of a certain quality – parameter – of a population.
Marketing specialists, for instance, use statistical data for designing and presenting new offers to clients. It is a common practice to test a product on a sample group of target audience before launching the product in the whole market. Some changes and improvement may be made on the basis of such a testing. Similarly, the whole marketing strategy may be modified in response to the findings of the testing. In addition, the information gathered in the course of such studies may be then used by company’s management for deciding whether the particular product will be successful in the market at all. If the data gathered indicates the opposite, the company may decide to just stop working on the particular project and invest into more prospective options.
Standard deviation is the statistical concept that helps companies in making such market entry decisions. Standard deviation concept is very useful for measuring variation in a set of data. So organizations use it for evaluating risk of investing in a particular project or area of operations.
If, however, the results of the testing give positive results, such as statistically significant high customer satisfaction rates and high interest of the prospects, the company has to decide at what market the product will be sold after its launched in the market. This decision always requires some statistical information: the business researches prices of the competitors’ goods and, on the basis of the analysis, defines own pricing strategy. On the language of statistics this process would sound as ‘collect information, interpret and analyze, make a decision on the basis of it.’ The mean concept of statistics is a popular tool for completing this marketing task – it is used for calculating, for instance, an average price for similar goods in the market and, then, getting an idea of what the price for the company’s good should be in order for it to be actively bought by the customers.
Statistical assumptions related to new product marketing can be made on the basis of both qualitative and quantitative data. Though it is pretty common to think that statistics deals mostly with numbers – that is quantitative data, even qualitative data can be used in calculations and making statistical assumptions if coded into numerical values. Qualitative data, such as social position of the prospects, geographic location or behavioral patterns is frequently used by marketing specialists for, actually, determining the target audience for the new product. Computers, which are uses for making such complex calculations, do not understand qualitative information, of course. However, any variable used in this process, even qualitative, can be expressed numerically.
So the qualities of the subject being studied can be analyzed with the help of statistics as well. Statistics, in such cases, helps businesses to determine what qualities of the product are valued by customers more or even how much the quality of one company’s goods is better over that of the other company’s goods.
In most cases a person collecting statistical data will have to deal with exceptions – outliers. Outliers, if did not appear by mistake, will really help a business to understand the received data better.
Outliers may appear for two reasons: a mistake in data recording, or just a variation that goes beyond the ‘standard’ limits. So, if it is a mistake, it should be eliminated. For this reason the accurateness of data should be always checked. If, however, it is just a variation that stands out, it should be analyzed deeper.
Market specialists usually work for their product’s satisfying the needs of the majority of the target audience – statistics always tends to generalize. However, there is always a small fraction of a population that behaves in a different way. But since the size of this fraction is statistically insignificant, the small group is not taken into account because the target population for marketing a particular good is always the largest fraction of the sample. At the same time, the variations may be used by businesses for creating new products – products for people that do not fall into the major category of users.