The object of market research is to find information that generally refers to people’s opinions about something or someone. It is almost always impossible to poll (ask) everyone who might matter, let’s say all potential voters. In this example, all possible voters would comprise the “universe”. Instead, market researchers examine one part of the universe. That something is called the “sample.”
REMEMBER: The sample is the key ingredient in the recipe or statistical process. No matter how advanced the analysis is, without a sample that accurately reflects the universe you have GIGO.
Perhaps nothing illustrates this point better than the famous literary compendium survey. literary compendium was a successful American magazine. In 1936, he published a poll that predicted that Republican presidential candidate Alf Landon would easily defeat incumbent Franklin Delano Roosevelt’s (FDR) bid for re-election for president. Tea literary compendium used the appropriate analysis. But he did not consider that by simply surveying (sampling) his readers more people in readily available lists, such as telephone directories, he was not sampling typical American voters.
The reason is that during the depths of the Great Depression, only the wealthiest Americans, who tended to be Republicans, could afford a magazine subscription and a telephone. Simultaneously and independently of literary summary, a generally unknown statistician was sampling considerably fewer truly representative American voters (5,000 vs. 2,000,000). He accurately predicted FDR’s landslide victory. Shortly after the elections, literary compendium closed while George Gallup became perhaps the best known of all pollsters.
The Literary Digest sample was what is called “biased.” The Gallup sample was what is called “random.” The laws of probability dictate that a random sample will better represent the universe than any other type of sample. However, to be random, each member of the universe must have an equal chance (equal probability) of being sampled.
Now you can see where literary compendium had a big problem and the result was GIGO.
The first step in this random sampling process is to define the universe. For example, in politics the universe is all those eligible to vote, registered voters, or some other group of people. Much depends on the objective of the survey. Another point is that many surveys pretend to use a random sample or make readers think that the sample was random, when in fact it was not. That’s one of the tricky things about interpreting survey results, and often requires some expert questioning to determine.
Similarly, if you are trying to determine the market potential for a new product, who is likely, not who you want, in your universe? Those are the people you want to randomly sample.
The only improvement in random sampling is when, with high certainty, the universe can be divided into different “strata”. Random sampling from each stratum produces a stratified random sample. But remember that knowing the strata is essential for stratified random samples to be successful predictors.
Sometimes you don’t know what your universe is. One way to try to determine that universe is with randomly selected focus groups from the general population. A future article will discuss focus groups.
