I'm new to whole concept of Bayes Theorem and its applications to marketing. I've been trying to learn this on my own but unsure if I'm making dumb mistakes or if I'm applying the formula correctly - hopefully you can tell me!
I want to get the probability that a certain age group (say 18 to 25) was the group that converted given a transaction.
This is the data I used (numbers slightly changed):
group 1: age 18-24, 92 transactions, 0.65% conversion rate group 2: 25-34, 458, 0.87% group 3: 35-44, 480, 1.10% group 4: 45-54, 499, 1.36% group 5: 55-64, 582, 1.38% group 6: 65+. 382, 1.43%
Is the following correct?
I formulated the question as: Given a transaction, what is the probability that it came from group X?
I took the transaction proportion and multiplied it by the conversion rate and then divided the whole thing by the sum of all the conditionals
With this data (rounded to the nearest percent), I got 2%, 13%, 18%, 23%, 27% and 18%. So for group 1, the probability that a transaction came from 18-24 is only 2%, is this correct usage?
This feels like it's right but feeling that it's right and it actually be used correctly are two different things!