3 Market Research & Interpreting Market Data Flashcards
Definition of Marketing
the management process of identifying, anticipating and satisfying customer requirements profitably
Role of Marketing
analysing customer needs
advertisements to target market
pricing strategies
brand awareness
increasing market share
Customer-Centric Company
focuses on the key interests of the customers
providing a wide range of goods/availability/high quality/low costs
What is a Market?
a place where buyers and sellers come together and exchange goods/services/money
High Market Share
high sales - high profits (depending on costs)
high outputs - giving the business power over suppliers to negotiate better deals (lower prices higher quality)
high prominence in the market raising profile and strengthening brand (makes launching new goods easier)
What is Market Research used for?
analyse exisiting position of the business
set marketing objectives
asses how effective marketing decisions are
identify possible actions and how to implement
Marketing Analysis Process
Planning (define objectives/develop research plan) → Implementation (implement and collect data) → Control & Review Success (interpret data and report analysis)
Market Research Factors
what/where/when/who/what factors influence their decision/who do they ask
Factors that Influence Customers
POLITICAL self-image, ethics, personal links (emotional)
ECONOMIC price, value for money, running costs
SOCIAL status, social norms, fashion trends
TECHNOLOGICAL reliability, duration, performance, features and specification
Competitiveness Definition
measures the extent to which a business offers good value for money relative to competitors - better customer service, availability of goods, quality, lower price.
Secondary Research Definition & Examples
research conducted by external sources
existing data, census, newspaper, annual reports, government data
Benefits of Secondary Research
less time consuming & costly to conduct
large amounts of data globally (international markets)
time efficient
Drawbacks of Secondary Research
may contain bias
may not be any for new industries
unfocused and not specific to your business
not necessarily legitimate
competitors have access to the same information
Primary Research Definition & Examples
research a data collection conducted first-hand by the business
interviews
surveys
questionnaires
Primary Research Benefits
competitive advantage
specific and focused to your industry/business
useful to analyse customer needs
builds brand loyalty
up to date
Primary Research Drawbacks
time-consuming and costly to conduct
only as good as the person conducting the research
bias potential
low response rates
Target Population
people relevant to the market research being undertaken
Sample
a group that is selected to represent the target population
Sampling Benefits
practical vs asking every member of a populationvalid if carried out correctly
Drawbacks of Sampling
difficult to properly represent a population
invalid if done incorrectly
Random Sampling
every single member of the population has an equal chance of being selected, limits bias potential
Stratified Sampling
researcher divides the population into smaller groups of certain characteristics that don’t overlap (mutually exclusive) to represent the population
Quota Sampling
member selected on a pre-set standard/specific attributes
Quantitative Data (numerical form) Benefits
precise and accurate
often more straightforward to collect/analyse
easily comparable
anonymity
Quantitative Data (numerical form) Drawbacks
does not reveal underlying reasons
may not be accurate
limited by set answers
Qualitative Data (descriptive) Benefits
provides sense/feeling
explanation of numbers
captures changing attributes
encourages discussion
Qualitative Data (descriptive) Drawbacks
subjective (opinions)
harder to analyse
lack of responses
sample bias
Marketing Objectives
Sales Volume - quantity of items sold
Sales Value - value of items sold (revenue)
Sales Growth - rate of growth of the value of items sold
Market Share - share of the market for the items
Brand Loyalty - customers likelihood to buy the items
As value of sales of a product rise, but the volume of sales fall - what happens to the price?
The price of each unit increases - depending on PED.
Sales Growth Targets
Managers will want to measure how much the sales volume/value are increasing. The rate of growth will depend on factors such as overall growth of the market (contracting/shrinking/growing).
% Growth in Sales
( change / original ) x 100
Market Share
( sales of the product / total market sales ) x 100
the amount the business sells as a percentage of the total market
Brand Loyalty Importance
repeat custom
costly to retain customers
creates a valuable competitive advantage
creates barrier to entry for new competitors
brands are valuable as they can be sold later
When will you gain more Market Share?
if the market is contracting
competitor leaves the market
sales increases organically
Market Mapping
used to understand how a brand is perceived in relation to competitors
analyses market conditions (two factors) to identify the position of a product relative
Benefits of Market Mapping
used to help spot a gap in the market
Drawbacks of Market Mapping
entirely subjective
gap in the market may not be appropriate (expensive, low quality)
Examples of market Mapping Axis
low vs high price/quality/volume
necessity vs luxury
light vs heavy
healthy vs unhealthy
simple vs complex
What is Correlation (Interpreting Market data)
correlation occurs when there is an apparent relationship between two factors
Why do sales increase as customer income increases?
Positive correlation as when income increases, disposable income increases and sales will increase.
Example of Negative Correlation
sales vs price
Strength of Correlation
0
no correlation
Strength of Correlation
-0.3
weak negative correlation
Strength of Correlation
+0.8
strong positive correlation
Strength of Correlation
-1
strongest weak correlation
Strength of Correlation
+1
strongest positive correlation
Benefits of Correlation
predict future sales
competitive advantage
considers investment of resources (increase capacity, employ more)
Drawbacks of Correlation
subjective
overconfidence with results
may contain bias
based on past data
doesn’t consider external factors
Extrapolation
Forecasting data by looking at what has happened in the past and that they will continue in the future. ASSUMES that conditions and external factors do not change.
Confidence Level
the probability that the research findings are correct - the % possibility that an estimated range of possible values includes the actual value being estimated (how confident the primary research is representative of customers)
Confidence Interval
the possible range of outcomes for a given confidence level
95% confidence level that sales will be ebtween £500,000 and £700,000
