mr sims - topic 3; market analysis Flashcards
Businesses need to understand their market
1) before selling a product - need to understand the market that they are operating in
2) need to work out if they are working local, national, international, online or physically and who is their target audience
What are the different ways that a market can be classified
1) geography- local national international
2) nature the of the product if it’s agricultural or technological
3) seasonality- If the product is seasonal or is needed all year round
4) development level - is it growing or saturated
5) the products destination- is it through trade? Private consumers
What is market analysis and it’s formula
Businesses need to know if the market is growing/ is demand increasing or shrinking/ demand is decreasing
Formula for market growth
Market growth % = new market size - old market size/ old market size x 100
What is marketing share and it’s formula
Is the percentage of sales in a market made by one from or by one brand
Formula is
Market share % = sales / total market size x100
Important to look at trends in market share as well as trends on sales revenue. Letting your market share go down is not good - means competitors are gaining an advantage over you
What is sales growth and it’s formula
Marketing department always monitor the companys sales growth
Sales growth - is the number of sales going up or down
The formula - sales growth % = sales from this year - sales from last year/ sales from lasts year x 100
If sales growth is positive = gaining sales
If sales growth is negative = losing sales
Why is marketing research done
1) spot any opportunities - seeing if customers prefer a certain thing businesses can use this to create a USP or predict what people in the future or can help them spot the gaps in the market that they can get into or declining markets to get out of
2) helps them to decide what to do next - can do market research before launching a products to see if its wanted
3) helps them see if their plans are working - keeping an eye on sales figures - businesses will notice if their marketing strategy is having the right effect
4) a bad market research can lead to a bad decision so businesses need to plan carefully to made sure they beg the maximum benefit from market research
Market research can be quantitative or qualitative
Quantitative: produces numerical statistics a method that produces this is questionnaires - they are closed questions because they have fixed, predetermined answers
Qualitative: produces a more in depth detail data - often about feelings and motivations of consumers a method that produces this is unstructured interviews - open questions because their are not fixed and not predetermined
What is primary research
Business gathers new data
1) examples of primary data - questionnaires, structured interviews and focus groups
2) some businesses to test marketing e.g. launch one product in one part of the country to measure sales and customer response before launching it to the entire country
3) primary research uses sampling to make predictions about the whole market based on a sample
4) primary data is needed to find out what consumers think of a new product can’t use secondary data because there isn’t data on the product
5) primary data is specific to the purpose its needed for good for niche market - secondary data might be too broad to be useful for a certain topic
6) primary data is exclusive to the business who research it - competitors can’t benefit from it
7) BUT primary research is labour intensive, expensive and slow
What is secondary data
Research is done analysing data that is already available
1) internal sources- information from loyalty cards, feedback from company sales and analysis of company sales reports, financial accounts and stock records
2) external sources include government publications like the social trends report, marketing agency reports, pressure groups and trade magazines
3) secondary data is much easier and faster and cheaper to get a hold that primary data
4) secondary data is gathered for a different purpose -unsuitable, may have errors and be out of date
market research needs a representative sample
1) market researchers survey sample of people rather than the whole market - keeps costs down and saves them time and resources
2) sample should try to represent their market - must have similar proportions pf people e.g. age
3) big sample = better chance of representative
4) size of the sam[le may depend on how many people a company can afford. e.g if there is a little amount of cash - research is limited - risk that the information is inaccurate increases
5) size of the sample and sampling method is also affected by the type of product or business, risk involved and the target market
what are the three main types of sample
1) simple random sample - names are picked randomly from a list
2) stratified sample - the population is divided into groups and people are selected randomly from each group. the number of people picked from each group os proportional to the size of the group
3) quota sample - people are picked who fit into a category, businesses use quota sampling to get opinions from the people the product is targeted at
