Market Analysis Flashcards
Market Analysis
Collecting and interpreting data about customers and the market so that businesses adopt a relevant marketing strategy.
Quantitative data
Numerical information that can be statistically analysed. E.g. what is the average weekly spend of customers?
Qualitative data
Decisions based on emotions, feelings opinions and motivations. E.g. what about a brand that motivates you to make a purchase?
Calculate Price elasticity of demand
(PED)
%change in quantity demanded / %change in price
Price elastic products
Luxury products (cars, holidays)
Price inelastic products
Necessity products (water, power, petrol)
What does price elasticity of demand measure
The responsiveness of demand to a change in price
What’s Price elasticity
A change in price will cause a more than proportional change in quantity demanded.
Products are in markets with high levels of competition where products are undifferentiated.
Income elasticity of demand
(YED)
%change in quantity demanded / %change in income
Calculate % change
Difference x 100 / original
How PED affects revenue when price elastic
If prices are lowered, the revenue (profit) from each item falls. But the quantity sold increases which means total revenue increases.
How PED affects revenue when price inelastic
A rise in price means a rise in sales revenue. A fall in price leads to a fall in revenue.
Cons of market analysis
- doesn’t take into account external factors
-doesn’t consider market change - doesn’t consider competition
Pros of market analysis
Assess opportunities in the market
Predict the future
Influences on market demand
