Analysing Markets

Question 1

What are the 8 reasons and values of market analysis?

Answer 1

• Inform decision making
• Devising strategy
• Understanding the market
• Identify sales patterns
• Realistic target setting
• Keeping up to date with marketing changes
• Review of competitor actions
• Evaluation of past actions

Question 2

What are moving averages used for?

Answer 2

Identify significant trends and sales patterns by SMOOTHING out fluctuations in data.
Allows for better identification of a trend where sufficient data is needed to validate the trend.

Question 3

What are test markets?

Answer 3

Launching of w new product or service along with the planned marketing activities in just one location used to inform sales forecasts.

Question 4

What do test markets do?

Answer 4

• Use a geographical area as representative of the whole market.
• Can collect data and extrapolate to the whole market.

Question 5

Explain extrapolation in terms of test markets

Answer 5

-Using past data to extend an identified trend into the future.
Useful when: trends can be clearly INDENTIFIED and the market is STABLE.
However conditions may change, competitors actions, consumer tastes and market conditions cannot be accurately predicted.

Question 6

Market Analysis involves which 7 factors?

Answer 6

• Consumer trends
• Sales data
• Market Size
• Actions of competitors
• Internal data
• Customer opinion
• Social factors

Question 7

What is a correlation in market analysis?

Answer 7

A relationship between 2 variables e.g. Marketing budget and sales.

Question 8

What are the three types of correlation in test markets?

Answer 8

Positive correlation: two variables move in the same direction. E.g. Sales of ice cream and temperature.

Negative correlation: two variables move in opposite directions.
E.g. As road tax go up the sales of new 4x4’s goes down.

Zero correlation: no relationship between the factors.

Question 9

List 6 uses of information technology in analysing markets.

Answer 9

• Access large amounts of data
• Sophisticated software to analyse complex data and identify trends.
• Internet to collect consumer opinions.
• Availability of statistical information e.g. Census
• Loyalty cards to analyse customer buying habits and profiles.
• Competitor profiles and investor details.

Question 10

List 7 difficulties in analysing marketing data

Answer 10

• May slow the decision making process, loss of a first mover advantage.
• Opportunity cost
• Time and financial cost
• May quickly become out of date
• Past not always a fair indication of future
• Potential over reliance
• Competitors reactions