Having the right information and being able to act on it is sometimes the difference between life and death for a small business. Firms need to be able to identify their target consumers and respond to their needs effectively or they risk fading away in an increasingly fast-paced business climate. Statistical research arms managers with some of the important information they need to make more informed and more successful business decisions. Understanding how statistics can be applied to describe markets, develop advertising, set prices and respond to changing consumer demands is an integral part of becoming an effective business manager.
Defining Target Consumers
Statistical research helps inform business decisions by defining the target consumer. Market research -- statistical analysis of consumer trends, buying power and preferences -- helps business managers develop products that better meet the needs of their customers. Using statistical research, businesses can get a better idea of what sorts of products consumers need, how they will use them and what they will be able to pay.
Statistical research is also used to decide how to brand and advertise products or services. Statistical analysis helps to define target consumers, provide information about the industry and describe buying trends. All of this information can be very helpful to business managers and advertisers when making decisions about what sorts of messages to use and what products to feature in advertising. Statistical research about media circulation -- or what kinds of consumers use a certain type of media, and how many -- can help inform decisions about where to purchase advertising.
One of the most important ways that statistical research is used in business decisions is to inform pricing decisions. Pricing a product for success can be difficult, so it's often very important for business managers to be armed with statistical information that can help guide this process. Statistics can help managers determine pricing trends, the sensitivity of consumers to higher or lower prices and the ratio of production costs to price.
According to the Missouri Small Business & Technology Development Centers, businesses' decision-making practices are becoming increasingly reliant on statistics regarding their environmental impact. This is because a serious adverse effect on the environment has the potential to attract both regulatory and press attention and potentially damage a brand's reputation among target markets. Making decisions that help limit a firm's environmental impact requires managers to have information about the potential environmental effects of a given production, distribution or sales method. Firms also use statistical information to determine the potential costs associated with more environmentally friendly business initiatives and to assess their feasibility.