Targeted Marketing: Using Conditional Probability

Company officials do a study to determine if there is a relationship between income and the chance that a potential customer will purchase a new vitamin. They know that 50% of the potential customers will buy the vitamins, 40% of the potential customers make under $20,000, and 10% of the potential customers both make under $20,000 and are buyers of the vitamin.

a) Currently, sales are made by selecting a person at random from the phone book; a salesperson is able to make 600 contacts per week. The profit from a sale of one bottle of vitamins is $5. What should a salesperson generate in profits each week, if the above information is representative of the population?

b) An information service will sell you the names and phone numbers of people with incomes over $20,000. If the information costs $2 per name, is it worth purchasing the information?

c) Are you comfortable with what they measured? Discuss.

Phase I, goal: What is their goal?

Phase III, What did they measure

d) Who do you measure? What questions would you ask about the sampling methodology?

e), How do you measure the Goals and Forces? For these measurements, discuss the issues of accuracy, reliability, and precision.