Market analysis

Question 1

Why do businesses collect data

Answer 1

Businesses Collect data as information is a valuable resource

Question 2

Give me examples of data businesses collect

Answer 2

Costs of production
share prices
exchange rate
business news

Question 3

What is Qualitative Data

Answer 3

A non-numeric figure opinion based on

Question 4

What is Quantitative Data

Answer 4

A numeric figure

Question 5

Why do businesses make use of graphs

Answer 5

Businesses may make use of graphs, tables, charts as this makes data more concise and easier to understand and easier to identify trends and data can be presented internally and externally

Question 6

Define and evaluate Pie Charts

Answer 6

Pie Charts: Shows the total amount of data collected is represented in a circle

Advantages – Easy to read, Pie charts are simple to create

Disadvantages - Unsuitable for Time Trends, Not suitable for complex data

Question 7

Define and evaluate Histograms

Answer 7

Histogram: The chart shows the number of candidates in the sample which falls into various age ranges.

Advantages - Histograms are easy to interpret, Useful large datasets

Disadvantages – Limited use for small datasets, may lose some detailed information present in the raw data.

Question 8

Define Index Numbers + formula

Answer 8

Index numbers, are statistical measures designed to represent the relative change in a variable or a group overtime

Index =Current value/Base period x 100

Question 9

How do you calculate Percentage Change

Answer 9

Difference in change/original x100

Question 10

What is PED

Answer 10

Price Elasticity of Demand, Measures the responsiveness of demand to a change in price

Question 11

What is the Formula for PED

Answer 11

Percentage change in quantity demanded/Percentage change in price

Question 12

Describe “Price Elastic”

Answer 12

Number is greater than 1

This means that a change in price will cause a more than proportional change in the quantity demanded. the level of demand is sensitive to a change in price.

If the price goes up, the demand falls more dramatically vice versa

shallow line on graph.

Question 13

Give types of elastic goods

Answer 13

Goods that have lots of substitutes and are in a very competitive market, such as bread, cereals and chocolate bars.

Luxury goods, goods that can be done without e.g., sport cars, exotic holidays and organic bread, Expensive goods that are a big percentage of income, such as sports cars

Question 14

Describe “Inelastic”

Answer 14

Number is less than 1

If a good has inelastic price elasticity of demand, then a change in price causes a less than proportional change in the quantity demanded.

If the price goes up, the demand falls just a little.

If the price goes down, the demand increases just a little.

Steep line on graph

Question 15

Give the Type of Inelastic goods

Answer 15

Necessities, such as water, power, petrol and basic foods.

Addictive goods, such as cigarettes.

The stronger the branding, the fewer alternatives (substitutes) are acceptable to customers. Good branding can therefore make a product more inelastic

Question 16

Give the Factors that affect PED

Answer 16

Time - PED tends to fall the longer the time period.

Competition for the product

Branding – The stronger the branding the less substitutes

Question 17

Define YED

Answer 17

Income Elasticity of Demand Measures the responsiveness of demand to a change in income

Formula

Percentage change in quantity demanded / Percentage change in income

Question 18

What are the 3 types of YED goods

Answer 18

Luxury goods

Normal goods

Inferior goods

Question 19

Define Inferior goods

Answer 19

Inferior - These are cheap substitutes of products people prefer to buy when their income is reduced (such as value line baked beans): negative income elasticity.

Question 20

Define Normal goods

Answer 20

Normal goods – as real incomes increase, the demand for normal goods will also increase positive income elasticity that is less than 1. Examples are matches, lemonade, newspapers.

Question 21

Define Luxury goods

Answer 21

Luxury goods – the demand for luxury goods will grow at a faster rate than the increase in real income that created the change in demand: positive income elasticity that is greater than 1. Examples are holidays abroad, health club membership, sports cars.

Question 22

Define Sales Forecasting

Answer 22

Projection of achievable sales revenue, based on historical sales data

Question 23

Why is Sales forecasting Useful

Answer 23

Resource allocation - By predicting future sales, companies can plan for the appropriate levels of inventory

Production Planning - This ensures that the right amount of goods is produced to meet anticipated demand

Risk management - Sales forecasting helps businesses identify potential risks and uncertainties. By recognizing factors that may impact sales

Question 24

What factors affect the reliability of the sales forecast

Answer 24

bias, market conditions, external factors, economic conditions and accuracy of forecasting methods

Question 25

How do you calculate the 3 point moving average

Answer 25

Add up the first 3 numbers in the list and divide your answer by 3, your first 3 point moving average, then

Add up the next number in the list and divide your answer by 3.

Question 26

Define Extrapolation

Answer 26

Extrapolation is a statistical and mathematical technique that involves estimating or predicting values beyond the range of known or observed data.

Question 27

Why is time series analysis useful

Answer 27

Trend Identification - Time series analysis helps identify trends in historical data.

Seasonal Patterns - Time series analysis can uncover recurring patterns or seasonality in data.

Anomaly detection - Time series analysis can help identify anomalies.

Question 28

Define Intuition

Answer 28

Intuition means when you predict sales without giving it much data backup. (gut feeling).

Question 29

Define Brainstorming

Answer 29

Brainstorming is when there is a group of individuals who generates a wide range of ideas, solutions, or alternatives to address a specific problem or make a decision.

Question 30

Define the Delphi Method

Answer 30

This uses expert opinion to predict the future, on the basis that better predictions are made by human experts

Question 31

Evaluate Brainstorming

Answer 31

Adv
Low cost
Very inclusive
Quick way of decision making

Disadv
Some People are too dominant and wont let people speak
Hard to think environment
Focused more on quantity

Question 32

Evaluate the Delphi Method

Answer 32

Adv
Removes Bias
Easily Refineable
Very flexible

Disadv
Expensive
Time Consuming
Risk of unreliability

Question 33

Evaluate moving averages

Answer 33

Advantages:
* Helps the business to plan.
* Can help with production planning
* Improves HR, getting correct amount of staff

Disadvantages:
* It can only be useful when sales have been stable with no major changes
* It is only as accurate as the information collected.
* Does not account for qualitative issues.

Question 34

Define random factor analysis

Answer 34

This method of analysis attempts to explain how unusual or extreme sales figures occur.