3 Interpreting Marketing Data 16 Flashcards
What is extrapolation ?
It involves the use of trend established by historical data to make predictions about future values
What are the benefits of extrapolation ?
A simple method of forecasting
Not much data required
Quick and cheap
What are the drawbacks of extrapolation ?
Unreliable if there is a significant fluctuations in historical data
Assumes past trend will continue into the future
Ignores qualitative factors (e.g. changes in tastes and fashion)
What is correlation ?
A method of sales forecasting, it looks at the strength of a relationship between 2 variables
What are the confidence intervals?
A confidence interval gives the percentage probability that an estimated range of possible values in fact includes the actual value being estimated
Why are the confidence intervals useful as a predictive data tool in business?
Businesses benefit from the use of statistics in estimating or predicting future events
A confidence interval helps the business evaluate the reliability
Types of correlation ?
Positive, Negative, No Correlation
Positive correlation …
A positive relationship exists where as the independent variable increases in value, so does the dependent variable
Negative correlation …
A negative relationship where as the independent variable increases in value, the dependent variable falls in values
No correlación …
There is no obvious relationship between the independent and dependent variable