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Math Help - Can anyone please advise?

  1. #1
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    Can anyone please advise?

    Your manager has suggested that you should implement a new pricing strategy in order to attract more young people in order to purchase your goods.

    However, the new pricing strategy is profitable only if it is able to attract more than 5% of young people. Market researcher has collected
    the data and found that in a random sample of 1,225 young people only 4% of young people would purchase your goods under the new pricing strategy.

    Can you say that new pricing strategy in not worth implementing?
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  2. #2
    Grand Panjandrum
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    Quote Originally Posted by tikimasala View Post
    Your manager has suggested that you should implement a new pricing strategy in order to attract more young people in order to purchase your goods.

    However, the new pricing strategy is profitable only if it is able to attract more than 5% of young people. Market researcher has collected
    the data and found that in a random sample of 1,225 young people only 4% of young people would purchase your goods under the new pricing strategy.

    Can you say that new pricing strategy in not worth implementing?
    Before starting you can say that there is certainly no evidence that the pricing strategy is worth implementing.

    At the very least we would expect the survey to find more than 5% of the target market would purchase the product.

    Without doing any calculations it is quite obvious that the probability that more than 5% of the target market would buy the product is no better than 50% (this Baysian terminology that the average manager thinks they understand, easily turned into frequentist terminology).

    CB
    Last edited by CaptainBlack; June 28th 2009 at 10:34 AM.
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