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Sampling Plans

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Target Population and Sampling Frame

Target Population

Which units to be included ? Consider Target Population vs. Target Market

Narrow or broad? The narrower the target population, the harder and
costlier it is to collect

Sampling Frame

What is it? Listing from which the sample will be drawn

(A sampling frame is not always used)

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Population vs. Sample
Population Sample
Population mean Sample mean
Measure of true central tendency in the Estimate of population mean
1. Population variance 1. Sample variance
2. Population Standard deviation 2. Sample standard deviation
Measure of variation in the population Estimate of population variance/standard
1. Variance of the sample mean
2. Standard error of the mean
3. Confidence interval
Measures of unreliability of the mean

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Sampling Plans
Probability Samples Non-probability Samples
Each unit has a known probability of Probability of units being included
being included in the sample in the sample is unknown
e.g., A simple random sample e.g., A mall intercept

Sampling error can be inferred Sampling error cannot be inferred

Sampling frame needed Sampling frame not needed

Often more expensive Often less expensive

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Probability Sampling

Each population element has equal chance of being

Simple Random Sampling selected

Population is divided into “strata” and a simple random

Stratified Sampling sample is drawn from each subset

Population is divided into “clusters”, clusters are drawn

Cluster Sampling randomly and units are observed in clusters

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Simple Random Sampling
Observations: X1, X2, X3, …, Xn

1) Computation of sample mean ( X ): Average

2) Computation of sample variance ( S 2 ): Spread around the mean

3) Computation of variance of the mean( S X2 ):

 Inversely related to reliability of the mean

 How much will the mean change as we draw new samples?

S2 Increases with increasing sample variance (S2)

S X2  Decreases with increasing sample size (n)
Coursera (Marketing Strategy Specialization) –
Shameek Sinha
Simple Random Sampling



100 S2 S X2
60 X
-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 M
Profit levels

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Margin of Error: Confidence Interval of the Mean
What is a 95% confidence interval?
If we would draw samples of the same size over and over again, then in 95% of the
time the sample mean would be in this interval

It is a measure of reliability

Where does t come from?

Z – Tables (based on Standard Normal Distribution)

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Stratified Sampling Plan
What is stratified sampling?
The target population & sampling frame are divided into groups (strata) based on one or
more characteristics (e.g., age, gender, state, store size) and different samples are drawn
from each stratum
Stratum 1 Draw n1

Stratum 2 Draw n2

Draw n3
Stratum 3

Draw n4
Stratum 4

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Why Stratification?

1) To obtain representative samples

Proportionate Samples Sample sizes are proportional to stratum sizes (sample
size in stratum same percentage as in population)

2) To obtain more reliable results

3) To guarantee minimum sample sizes so that analyses can be done at the
stratum level (e.g., per country)
Disproportionate Samples Sample sizes are not proportional to stratum sizes

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Computing Sample Mean and Its Variance

 Reweight the sample

 Compute mean and variance of mean per stratum

 Compute mean and variance of mean for the sample

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Determine Optimal Stratum Sample Sizes

 Stratum sample size will depend on:

 Total sample size

 Stratum size
 Variation of observation in stratum

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Post Stratification

 Improve representativeness of sample after collecting the data

 Reweight using same weights as in traditional stratification

 Variables used to compute the weights observed in the data

Coursera (Marketing Strategy Specialization) –

Shameek Sinha
Cluster Sampling
Sometimes there is reason to draw groups (clusters) and observe units within the
sampled cluster.. e.g., city blocks, counties, households, firms

Why? 1) To reduce costs of interviewing

2) More convenient when complete sampling frame is missing but a sampling
frame of clusters is available (e.g. city blocks, firms)
One-stage Cluster Sampling Two-stage Cluster Sampling

Observe all units Draw sample of units

Population Sample Population Sample

Coursera (Marketing Strategy Specialization) –

Shameek Sinha