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Aims and Objectives
Aim:• Understand the use of correlation and ICT
in marketing.
Objectives:• Define correlation.• Explain correlation relationships• Analyse the use of ICT in marketing• Evaluate the ethics of ICT and marketing
Starter
• Define moving averages.
• Define extrapolation.
• Explain two benefits of extrapolation.
• Explain two drawbacks of extrapolation.
Correlation
• A statistical relation between two factors which can be either positive or negative.
• Marketing: correlation between two factors eg. Sunny weather has positive effect on ice cream sales.
• Helps firm identify the most significant factors affecting demand for their product.
Three Types of Correlation
1) Positive Correlation: direct relationship between two variables. Increase in advertising = increase in sales.
2) Negative Correlation: inverse relationship between two factors. Interest rate rises = housing sales fall.
3) No Correlation: no link and no pattern between factors. Price of fish and cinema sales.
Three Types of Correlation
• Positive Correlation: + 1
• No Correlation: 0
• Negative Correlation: -1
Correlation Worksheet
Task:
Describe the types of correlation which occurs
in these markets. Put a quantifiable figure next
to the diagram to describe the correlation &
describe the relationship between variables.
Test Markets
• Simulate full scale launch of product/service on a sample of the target market.
• Goal is to achieve results that represent whole market.
However…• The segment must be an accurate
representation.• Danger that another firm could copy reducing
any competitive adv.
Using ICT in Marketingad
vant
ages • Information can be
processed quickly and used for moving averages/ extrapolation/ correlation.
• Information can be used to build up customer databases and monitor consumer behaviour. di
sadv
anta
ges • Possibility of
information over load- which may slow down the decision making process.
• Decision makers may over-react or misjudge market data leading to strategic errors.
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