• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

To what extent will does correlation and extrapolation assist Nintendo in forecasting sales?

Extracts from this document...


To what extent will does correlation and extrapolation assist Nintendo in forecasting sales? (34 marks) Correlation is the relationship between two variables. Extrapolation is related to correlation, as it involves plotting a linear regression curve (also known as a line of best fit) which is based upon how two variables are correlated, and extending the line to predict future values. For Nintendo, a computer game and console manufacturing company, a common example would be the relationship between the level of advertising expenditure and the effect of this on sales of its products. The graph to the left shows a strong positive correlation between sales and advertising, meaning if Nintendo increases its advertising, they can expect to see an increase in sales. Because all values are close to the line, as advertising expenditure increases on the x-axis, sales on the y-axis increase proportionately. The regression line can be extended past the '80' figure (meaning �80million) to predict what sales will be like if they spend �100million or even �900million. The uses of such analysis to Nintendo are to an extent very valuable. ...read more.


They could gather past data from previous campaigns and plot the values on a scatter graph to see if there is any correlation. This would aid decision making for the management staff - as they could see whether the operation would be profitable on the whole, and ultimately be worth doing. Albeit, this would only be an estimate of the intended benefit, and in reality things are much more complicated. Following on from the previous paragraph, the main downfall of this analysis is the fact it assumes that previous patterns will continue into the future, and doesn't account for qualitative factors. Qualitative means customers opinions and is not numerically measured. This is a huge factor when considering extrapolating for Nintendo, as technological advancements could revitalise the way games consoles are played in this rapidly changing market. A prime example is the growth of online gaming, which Nintendo have not responded to as quickly as its main competitors the x-box and the PS3. Many years ago when online gaming was not as popular, this would have had a minimal impact on sales, but the data today is less reliable and can make predictions redundant if they don't account for such factors and changes in consumer tastes. ...read more.


the validity and accuracy of the forecasts could be destroyed in a few months with a new technological breakthrough from one of Nintendo's competitors. It also depends on how strong the correlation is between the two variables. A weak correlation is likely to have a higher degree of uncertainty than a relationship that is strong. It is up to the businesses marketing team whether to go project values based upon a weak correlation. Outliers or (anomalous results) can also hinder the accuracy of the regression line unless they are ignored, which again is a decision of Nintendo. The level of uncertainty makes me conclude that ultimately such analytical tools are not of use to Nintendo. Ultimately the use depends on all the previously mentioned factors, some which cannot be accounted for. This leads me to take the conclusion that these statistical tools are not of great worth to Nintendo and they should use a fixed point moving average method to smooth out the overall and underlying trends in their forecasts. This will reduce uncertainty and remove some of the disadvantages and problems which is more beneficial for a large firm such as Nintendo. ?? ?? ?? ?? Business Studies Assessment 2 - Adam Denny ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Marketing and Markets section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Here's what a star student thought of this essay

5 star(s)

Response to the question

The author answers the question fantastically well. As he clearly sets out the pros of using correlation and extrapolation and highlights the cons as well, whilst using his/hers own knowledge of the industry to improve his points. Using own knowledge ...

Read full review

Response to the question

The author answers the question fantastically well. As he clearly sets out the pros of using correlation and extrapolation and highlights the cons as well, whilst using his/hers own knowledge of the industry to improve his points. Using own knowledge is very good, for instance the author highlighted the industry as oligopolistic; as it shows you have a good understanding of the topic and that you are ‘keen.’ The essay starts very well, due to the fact he defined the two techniques in the question, whenever you get an essay (can be any essay) always try to define the key terms and assess what the question is asking, which the author does. He concludes the essay, exceptionally, by bringing all the points he/she made in the essay together. In business studies essays it is important to have a balanced approach, so as to seem impartial and neutral, you shouldn’t be trying to force your argument, but to convey the data in a way that forms an argument, this is something the author does very well, as he/she doesn’t just say ‘extrapolation is the best because it can be accurate’ but says that they can be good, but they do have their draw backs (good examples of this in last three paragraphs.)

Level of analysis

The level of analysis was good as well, as the author went in to some depth looking at the pros and cons of each method. Praise is due for not just saying what each method was, as there is a danger in these sorts of questions of describing, but actually analyzing. He improved his analysis substantially by using own knowledge, as it increased the level of depth they could go into. Another good thing to take away from this essay was the author’s use of an imaginary example to help explain some of his/her’s analysis, namely the example of using a bundle promotion. The use of a graph was very good as well as it gave the reader an exact idea of what they were discussing.

Quality of writing

The spelling and grammar was very good. I do not think there were any errors. The layout was fantastic, as each point of analysis was in its own paragraph, doing this is thoroughly recommended, as it makes the essay easier to read. The author uses good connective words as well, which give a good balance to essay, which is vital in business studies/ economics essays, an example of the connective would be: ‘On one side….but on the other.’ This essay received all five stars, for having great analysis, good spelling and grammar, and having a balanced approach.

Did you find this review helpful? Join our team of reviewers and help other students learn

Reviewed by islander15 11/02/2012

Read less
Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Marketing and Markets essays

  1. Peer reviewed

    Location factors for a business

    3 star(s)

    For example businesses may situate in places such as UK because the total cost of hiring employees will be lower and UK labourers is well educated and trained for jobs. Compulearn will have employees because it will need more than on teacher to help classes also we will need teachers

  2. Introduction to the fashion Industry report

    and visited the Country Road web site, I have enclosed copies of these to look at featuring descriptions and photos of garments that he has designed. Fashion designers must be artistic, creative and know how to use textiles effectively. They need an eye for tone and colour.

  1. Free essay

    Marketing Simulation Game

    In order to get most market share it was not a wise idea to target whole homogenous market (Levitt T. 1974, P.69). We started by focusing on low price segment comprised of students, home and parents as being in infancy and having a fixed budget of $984,000, we wanted to

  2. Sullivan Ford Auto World Report - Discussing Marketing in the Service Industry

    introduced to someone in the service department" there could be a large gap between the expectations they develop about the servicing of vehicles, including its environment, and the service delivered to them. There may be a similar gap at the "front end" of the business if the communication via promotions,

  1. Barnardos PLC - Management

    The number of view from other shareholders. A private company may have only family members and few employees as shareholders. At a shareholder meeting all the views are likely to be heard and discussed. The voting may be more evenly balanced and all the shareholders may agree with a

  2. What is marketing?

    Even marketing term is generally defined from long time ago, not all companies operate according to the marketing concept; many still have either a production orientation or a sale orientation. The evolvement of marketing in the last 50 years can be considered as follows: 1.

  1. Strategic Marketing Report - Virgin Trains

    British engineer, George Stephenson, started work in a coalmine when he was only seven years old. Almost forty years later, in 1825, he went to see his Locomotive no.1 run on first public railway. Four years later, in 1829, George and his son, Robert built the famous 'Rocket', which was faster than any other engine.

  2. Would A Tuck Shop Be A Profitable Business?

    The first question, which I felt did not perform effectively, is question four. I think this was because it was in the form of an open-ended question. This gives very individual answers and also the respondent has to think a lot longer if not just given answers.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work