Analysing Markets And Marketing

Question 1

Reasons for

Answer 1

1. Gathering evidence for devising a new strategy - business will wish to test feasibility of a new strategy - consolidation and expansion of market share in its existing market
2. identifying significant patterns in sales - gain huge competitive advantage over its rivals by anticipating change before competitors

Question 2

What is the value of market analysis?

Answer 2

Market analysis helps a business to understand its existing markets. The data and understanding gathered also allow a business to prepare for the future, by enabling it to forecast sales and other data

Question 3

Methods of analysing trends

Answer 3

1. Test marketing
2. Moving averages and extrapolation
3. Correlation

Question 4

The implications of incorrect forecasting

Answer 4

1. If sales are overestimated there is likely to be a waste of resources as the firm will produce too much. The cost to the firm depends on whether the products are perishable and how expensive they are to store.
2. Underestimation also causes problems, this opportunity cost of lost sales is high, especially if customer goodwill is undermined.

Question 5

The uses of information technology in analysing markets?

Answer 5

1. IT based system can complete quantitative forecasting calculations - saving time + money
2. Time saved by IT allows business to compare no. different strategies, improving quality of planning the business
3. Organisations are able to link their sales records to other databases - sales registered so any changes in trends or patterns can be quickly detected
4. IT allows firms to improve internal + external communications - improving efficiency
5. Growing use of loyalty cards allow firms to accumulate information on buying habits
6. Internet or intranet allows more data to be stored cheaply