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
• 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.
disadvantages
advantages
Using ICT in Marketing
• Possibility of
information over loadwhich 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?