Correlation & ICT in Marketing

A2 Business Studies Unit 3

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 Marketing

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.

Tesco stocks up on inside knowledge of shoppers' lives

• Is this morally right?

• Is this merely just a great marketing tool?

• How may this benefit Tesco in the short run and the long run?