Sampling techniques for Market Research

Basic Terms
Universe / Population
The complete set of any group
e.g. total population of hyderabad.
Sample / Panel
A sub set which represents the Universe.
The selected respondents are called sample and the selection
process is called sampling technique.

Sample
Universe
 Sample
Sample is not a concept solely used by statisticians, We all implement sample for
various purposes in our day to day life, Few examples of samples are :
Every housewife determines whether the soup she is
preparing has an acceptable flavor just by tasting a
spoonful(Sample).
You may test a swimming pools temperature just by dipping your toe into
the water(Sample is the water around your toe).
Before buying a new book many people scan a few pages(Sample) to see
whether it is interesting.
You do not have to drink a whole glass of spoiled milk to ascertain that it
is sour.
A prospective car buyer test drives an automobile to judge the
performance of the vehicle.
Sample size and it’s significance
What should be the size of the Sample (How large or
small it should be) ?
If the sample size(‘n’) is too small, it may not serve
to achieve the objectives, and if it is too large, it may
incur huge cost and waste of resources .
Generally, sample size must be of an optimum size,
it should neither be excessively large nor too small .
Statistically, Sample size should be large enough to
give a desired confidence interval and acceptable error
level.
 Reasons for Sampling
• A universe survey is time consuming, in most of the
cases the decision makers have a time frame.

• The cost of gathering information from the universe is

very towering, this is a compelling consideration In favor
of sampling.

• The accuracy of the information may not be justifiably

enhanced by taking a complete enumeration.
• In some situations the item may not be reusable after the
test (e.g..testing the photographic film by exposing it).
Testing the sample is the only solution in this kind of
situations.
 Managerial Objectives of Sampling
• How representative is the sample to the population.
For e.g. if the decision maker is interested in only a
segment of the population, Sample also should represent the
same.

• The sample should be sufficient enough to give stable

results.

• Using research resources efficiently within the limits of

the time allocated for the project.
 Sampling Process
Define population from which the
Sample is to be drawn.

Establish a ‘frame(source List /

census)’ of the population.

Choose the method of Sampling.

Determine the sample size.

Identify/select the actual members

of the sample.
 Sampling Methods

Sampling methods
Sampling methods

Non probability methods Probability methods

1. Convenience Sampling 1. Simple Random Sampling

2. Snowball sampling 2. Systematic Sampling
3. Quota control Sampling 3. Area Sampling(cluster)
4. Judgment Sampling 4. Stratified Sampling
 Sampling Methods
In probability sampling the population elements
have a known chance of being selected for inclusion in the
sample.
Where as in non probability method, members
of the sample are selected purposefully or accidentally.

Probability methods are more efficient and

scientific in obtaining accurate samples, but in all situations
probability methods are not practical.
 Non probability Methods
1. Convenience Sampling
According to this method, the sample is selected
on the basis of convenience or accessibility.
for example, for testing a new product one can
simply add this to the appropriate product section of a
supermarket and observe how well it moves in
comparison with other products of the category.
The problem with convenience sampling is that
we have no exact way of determining the
representativeness of the chosen sample.
 Non probability Methods
2. Snowball Sampling

According to this method, initial units are

selected using probability methods, but the additional
units are then obtained based on the information of
initial units(referrals).
Reduced sample size and costs are the major
advantages of this method.

But the referral selection process can cause some bias .

 Non probability Methods
2. Judgment Sampling
According to this method, sample is selected
based on the opinion of some experts( also called as
‘sampling by opinion’).
This form of judgment sampling can be applied
only when adequate data are available to describe the
whole populations parameters and it’s sub items.
3. Quota Control Sampling
In this method, the researcher attempts to ensure
the sample selected is representative of the population
by selecting sampling units on the basis of certain
parameter (e.g.., age, sex, occupation)
 Probability Methods(1)
1. Simple Random Sampling
Refers to a method of selecting items from a population such
that every possible sample of a specified size has
an equal chance of being selected.

This method is useful when the entire population is

listed and the sample have to be chosen by some
randomizing method.
The result produced from this method tends to
produce more larger standard errors compared to the
other random sampling methods.
 Probability Methods(2)
2. Systematic Random Sampling
Refers to a sampling technique that involves selecting
the kth item in the population after randomly selecting a
starting point between 1 and k.

The value of k is determined as the ratio of the population size over

the desired sample size.

The representativeness of a systematic sample

depends on the items diverse from each other are spread
out on the list. How ever this sampling method can
produce a better sample than the simple random
sampling.
 Probability Methods(3)
3. Stratified Random Sampling

Refers to a sampling method in which the

population is divided into subgroups called
strata so that each population item belongs to
only one strata.

This sampling procedure separates the

population/Universe into mutually exclusive homogeneous
sets (strata), and then draw samples from each stratum.
 Since the sample is allocated to each stratum, we are able
to get more precise estimates for each stratum also a
better estimate of the whole.
In brief, Stratified sampling results in more reliable and
detailed in formations.
Following questions are relevant in this context.
context
How to form Strata ?.
How to allocate the Sample size to each stratum ?
How the items can be selected from each stratum ?.
Stratified Random Sampling

Proportional Sampling Non proportional Sampling

 Probability Methods(3.a)
3.a. Stratified Proportionate Random Sampling
Proportional allocation is considered most efficient
and optimal design when there is no difference with in the
stratum variance.

A sample of size 1,000 is to be drawn

Universe Stratu m
Stratum Outlettype
Proportion S ize
1 Convenience 25% 250
2 Groceries 40% 400
3 On-Prem ise 30% 300
4 Pharm acies 5% 50
T o ta l : 1000
 Probability Methods(3.b)
3.b. Stratified Disproportionate Random Sampling

According to method, sample items from the stratum

are selected in a non-proportional way.

In some cases, strata differ not only in size but also in

variability, in this situations it is considered reasonable to
take larger samples from the more variable strata and
smaller sample from less variable data.
 Probability Methods(4)
4. Cluster Sampling(Area Sampling)

If the total area of interest(Universe) happens to be

a big one, a convenient way in which a sample can be
taken is to divide the area into a number of smaller non-
overlapping area and then randomly select a number of
these areas(clusters).

This method reduces the cost by concentrating only

on the selected clusters but certainly it’s less precise
than the other random sampling methods.
 Sample Error
Estimate of the likelihood that the sample deviates from
the Universe on the criterion measures.

How can we reduce the Sample Error ?

Increase sample size(Because of the square root formula,
the error is reduced by half if the sample size is
quadrupled.)
Thus, if sample of 100 produce a error of 5%, the sample
size must be 400 for for 2.5% standard error.

Sample Error = Conf.Level x (p x q /n)

 Non - Sampling Errors
In case of Market Research, common non-Sampling
errors are :
Choosing the sample items conveniently
Bias from the interviewee
Bias from the Data collectors
Coding errors
Data Entry Errors
Data Processing errors
Wrong Interpretation
 Confidence Level
 Confidence level or reliability is the expected percentage
of times that the actual value will fall with in the stated
precision levels (Likely hood that the result will fall in the
range).
 For a 95% confidence level, if we do a same test 20
times then it is statistically probable that the results will fall
between the stated level (for ex.61-69 %), at least 19 times.

 In other words, 95 chances in 100 (0.95 in 1) that the

sample result represent the true condition of the
population within a specified precision range against 5
chances in 100(0.05 in 1) that it does not.