6 Sigma Categories
Business & Career Improvement
The Importance of Business Statistics
To the non-statistician, business statistics may appear to be an endless stream of numbers that continue from here to eternity, or at least for several boring pages. For the first-class business manager however, statistics is an extremely important science, which uses numbers to collect and categorize facts.
Statistical facts can help determine the value of any given business procedures. Managers who fail to recognize the importance of statistical analysis could very well doom their business enterprises to failure.
Sampling is an important part of business statistics in that the statistician can take information from a small sample group and apply it to the general population. Suppose the marketing specialists come up with an idea that they think might make the company a profit, but they aren’t sure it will work. Marketers can test this idea by offering the product or service to a select group of customers. When the test-marketing program is finished, the statisticians take the figures and study them to help predict whether the procedure will be a success or not when fully completed.
One problem with sampling is that there has to be a large enough sample group that it will be representative of the larger group, or population. Sampling a group of fifteen people will likely be insufficient to make an accurate prediction. Another problem with sampling is that the demographics of age, race, religion, income, profession, must also be similar to that of the population. If the sample group is mostly retirees of a single race, but the population is mostly younger people of various races, then the study of the sample group will likely not correctly predict the outcome of the marketing strategy.
Statisticians take the marketing figures, and use applied theory of mathematics and the theory of probability to predict the success of any proposed marketing action. Many managers, however, fail to plan for requests for sample groups. If marketing wants to run an immediate test marketing procedure with a sampling group, quite often there are no statistics available to them. As a result, many managers try to guess at the demographics of a given community, and quite often, the statistics are inaccurate. The demographics of marketing populations should be constantly gathered and updated so they can be available immediately as needed.
The accuracy of statistical analysis can seem almost uncanny to the uninitiated. Business statistics are something all business managers should consider if they expect maximum profitability for their enterprises.