We live in a Probabilistic world, where randomness isn’t

random as we think, and nothing is random in our world.

Probability are applied in marketing to identify market
trends, and to measure and evaluate the potential of any
market. As we know the success of any product and service is
depend on how we identify our target market and how
effectively we market our product to our target customer.
Probability help us to identify both our market and target
customer to whom we have to sell our product.
In marketing, the probability of a customer to buy our
product is changes with time. Like if a person has tried our
product and loved it, they are most probably to buy it again.
This mean we have to be dynamic and marketing decision
must be made with probability in our mind to reach our
target customer at right time. The more data we collect such
as the age group of our target customer their income and
there likes and dislikes it become easier for us to predict
what happen next in the market.

Scenario analysis
Probability distributions can be used to create the different
scenario. In scenario analyses we use probability distribution
to create several, theoretically distinct possibilities for the
future event. We create three scenarios: worst case, likely
and best case. With the help of probability we plan to
eliminate the worst case scenario and try to put our product
in best case scenario so that we get maximum profit from it.
Sales Forecasting
One important practical use of probability and scenario
analysis in business is to predict future level of sales. It is
impossible to predict the exact future sales; however using
the scenario analysis based on a probability distribution we
can predict the future sale of our product and service and
according to it we plan to make our product and services.

Risk Evaluation
Probability helps us in evaluating the risk we can face in
selling of a product and service. Like if a company is entering
into a new business line. If the company needs to generate 5
crore in revenue in order to break even and probability
distribution tells them that 10% chance that revenue is less
than 5 crore, the company will know what level of risk they
are facing in pursuing that new business line. Either they will
avoid the risk by exiting the business or they will take
measures to mitigate that risk or they will accept the risk and
start the business.

Example: The age profile of a target population is broken

down into 4 groups: below 20, 20 to 30, 30 to 50 and above
50. The proportion of age group falls in group is 20%, 20%,
40% and 20% respectively, and proportion of band buyers is
10%, 15%, 20%AND 15%. Based on this information, the
proportion of brand buyers we can calculate.
Age group(A) Population Brand Buyers P(B/A)XP(A)
(%) P(A) (%) P(B/A)
Below 20 20 15 3
20 to 30 20 20 4
years
30 to 50 40 20 8
years
Over 50 20 25 5
Total 100 20

Which is 20% of the population is our target customer and

we have to target this customer and we have to make our
product and services according to it.