Market Analysis

Question 1

What is market analysis

Answer 1

Collecting and interpreting data about customers and the market so that businesses adopt a relevant marketing strategy

Question 2

Why do businesses carry out market research

Answer 2

To identify, anticipate and fulfill existing and potential customer needs and wants

Question 3

Why do some companies spend millions on market research and others spend nothing

Answer 3

Depends on the nature of the product and the market in which the business operates

Question 4

2 types of data

Answer 4

Quantitive and qualitative

Question 5

What is quantative data

Answer 5

Numerical information that can be analysied

Question 6

What is qualitative data

Answer 6

Information about decisions based on emotions, feelings and opinions

Question 7

How does quantitative data help a business

Answer 7

answers questions such as
1 does a market exist and what is the size
2 what are the demographics for the target market
3 what segments exist in the target market
4 are segments large enough to be worthwhile targeting
5 what is the level of brand awareness in the target markets
6 what are customers buying habits
In what ways is the target market evolving

Question 8

How does qualitative data help a business

Answer 8

1 Answers questions such as exploring customers motivations for purchasing a product
2 What customer views are on competitor products
3 the impact of a visual marketing campaign
4 how attitudes of existing and potential customers change in response to a marketing strategy

Question 9

What must happen before data analysis can take place

Answer 9

Data collection

Question 10

What happens if a business raises the price or lowers the price of a product

Answer 10

Demand generally falls if price is higher or demand rises if it falls is it is cheaper

Question 11

What is elasticity of demand

Answer 11

By how much demand will rise or fall as a result of the increase or deduction in prices - this will effect revenue

Question 12

What is PED and YED

Answer 12

Price elasticity of demand
Income elasticity of demand

Question 13

Hat is the formula for PED

Answer 13

%in quantity demand/%
change in price
Eg business increases product price by 5p sales fall from 450,000 to 375,000 what is PED
Step 1
-75,000is the difference so -75000 as a % of the original figure of 450,000
-75,000/450,000 X 100/1 = -16.67% ( this is the % in the quantity demanded
Step 2
Calculate % change in price
5/40x100/1= 12.5
Step 3 formula at the top
% in quantity demand/% change in price
-16.7%/12.5% = -1.33

Question 14

When is the price elasticity of demand said to be elastic
When is the price elasticity demand said to be inelastic

Answer 14

If the result is greater than 1
If the result is less than 1

Question 15

What are the 3 categories of price elasticity of demand values

Answer 15

1 price elastic - greater than 1- price goes up and demand falls dramatically or price goes down and demand rises dramatically - usually happens when near perfect marketing conditions - when people wont pay a higher price when they can
get near identical for same price
2 price inelastic - less than 1 - price goes up demand falls a little or price goes down and demand increases a little- usually occurs when competition is low and there are few substitute goods
3 unitary elastic - number is equal to 1 when a change in price causes a proportional change in quantity for demand

Question 16

Give examples of products with price inelastic

Answer 16

Necessities such as water, power, petrol, basic food and addictive goods such as cigarettes

Question 17

Give examples of goods with price elastic

Answer 17

Goods with lots of substitutes on the market bread,
Luxury goods that can be done with out - cars holidays

Question 18

What do businesses use PED and YED for

Answer 18

To calculate how much demand will change if the is a change in price or income. As it can lead to a change in revenue
2 helps business to forcast sales and set prices
3 knowing the YED of a product helps a business to respond to changing economic situation and plan ahead.