Joe Stewart of Community Bank has been tasked by the board of directors of the bank with conducting a survey in the community they serve. Community has been a rapidly growing bank serving a single large metropolitan area with five branch banks. It appeals primarily to mid-size commercial customers and has the advantage of being able to cater to the unique needs of the market it serves. Community Bank has been very effective in working around the more homogenized strategies used by the large national banks and has been more agile in this than even some of its other local competitors.

However, its growth is slowing and the board and senior management believe it is time to conduct a market survey among consumers to identify possible opportunities that they have overlooked in their focus on the commercial market. Initially, the thought was to conduct a random sample of consumers in the market. This thought came from several board members and some senior managers who had taken statistics and a few marketing research courses in their college curricula.

Joe has been doing some work using Excel and has determined, for example, that if they do a random sample, then only about 3.8 percent of the people that they survey would be expected to fall within the $200,000 or higher annual household income category. This figure parallels the percentage of households that fall into this category from the most recent U.S. population census. Given that it has already been determined that Community Bank’s budget would support a maximum sample size of 1,000, this would produce only about 38 people in the sample that fall into this category. Similar comparisons have been made for other key subgroups, and Joe has consistently been finding that the expected sample size numbers in many of these targeted subgroups are too small to inspire much confidence in the conclusions they draw about these subgroups.

Questions 

1. Is there another type of probability sample that would better suit the needs of Community Bank? What is that sample type, and how would it better meet its needs?

2. Assuming that Joe thinks this (your answer to question 1) would be a better alternative, how would he justify his recommendations to the board and senior management?

3. What sample size should the bank be seeking in important sub groups? What is the basis for your response?