Posted in Marketing and Strategy Terms, Total Reads: 567
Definition: Adequate Sample
Adequate sample is the term used to statistics which denotes the minimum size of the sample require to correctly estimate the population parameter. The sample size is said to be adequate if it is large enough to show required degree of precision considering our margin of error and confidence interval.
Let’s say we want to estimate our parameter for the population of 1000 people and we don’t have enough manpower to reach to every person and luckily we don’t need to measure accurately. Here, we will compromise with some error for simplification in our estimation.
Let’s assume we allow that our margin of error can be 5%. That means that our final answer may lie between the (answer-5%) and (answer+5%). Now, suppose our confidence interval is 95% which means that we are 95% sure that our data will fall into the range mentioned above. Now, using the formula (not mentioning here for the sake of simplicity), we can calculate that our required sample size should be at least 278. Now, it means that if we assess 278 persons only who share the similar characteristics to that of 1000 persons, than we will be able to estimate the data so that our answer will lie in the range of (answer-5%) and (answer+5%) 95% of the time.
Consider a scenario in which a firm is going to launch a product in the market with the focus on females between ages of 16-25 years. Now, the firm want to fix the price of the product so that its customers most likely to buy it. Further, the firm has calculated that its market has 1000 females between ages of 16-25 years. Now, using the concept of adequate sampling, the firm can get the suitable price of the product by asking to only 278 females (as explained in the above example) at the cost of some margin of error.
i. The concept of adequate sampling is widely used when the population size is large (~1000 or more)
ii. Adequate sampling is cost-effective and time –saving method for the large population size.
iii. The variation in adequate sample size diminishes as the population size increases. It changes very less above population size of 20000.
i. Adequate sampling introduces some margin of error which may or may not be permissible in the experiment
ii. It is not advised to use when the experiment requires high level of accuracy