The United States formally conducts a census of its entire population every ten years to analyze various demographics of our society. However, this process is terribly inefficient and can be a tremendous drain of time and financial resource; and even with attempts to include literally every individual, the census is not 100% accurate due to errors such as under-counting or misrepresenting. Think how difficult it would be to accurately measure all customers of a business organization. To do so would cause costs to skyrocket; product prices would quickly follow, the customer base would promptly switch to a competitor, and the business would fail (Pearson, 2004). So how can a business, with a limited amount of resources, employ research techniques to examine and analyze a fairly accurate cross-section of its intended audience to gain a competitive edge in the marketplace?
By utilizing statistical analysis, the benefits of business research will be two-fold: it provides tools to summarize collected data (e.g.
central tendency), as well as predicting future behavior in the marketplace (e.g. frequency distribution). "[S]tatistical thinking provides a valuable decision-making framework that can be used effectively for many management decisions" (Peason, 2004). The following are several statistical concepts that will aid in eliminating much of the guesswork of business cost analysis: (a) the measure of central tendency, (b) the mean, median, and mode, (c) the use of standard deviation, and (d) sampling.
More commonly referred to as the "average", the measure of central tendency provides a singular value that is summarizes a set of data by locating the center (Lind, 2002). This value can be associated with a typical, representative member from a grouping of data. More descriptive than just a simple average of values, this concept has several subsets that include the measures of mean (average), median, and...