Understanding markets and customers Flashcards
Market share formula
(Sales of one product/Total market sales of that product) x 100
Market growth meaning
Industry grows in term of either volume or value
Sales growth meaning
Business increases its sales in terms of volume or value
What is market research?
The process of collecting and processing information about the market that a business operates in. Gathers info on:
Demand - Know customers wants and needs so can improve product, spot market opportunities and stay competitive
Competition - Help business iniderstand major threats in the market and then prepare the busienss to deal with these threats
Target market - Insights into customers wants and needs and how they are changing over time
Market mapping
Once businesses have segmented the market, they can use market mapping to identify a gap in the market by looking at what competitors offer.
Competitors products mapped against different variables based on the features that they offer.
E.g. products could be mapped based on price and quality.
State methods of market research
Sampling
Technology
Sampling
When a business is carrying out market research, sampling may be used to reduce the costs associated with market research.
Sampling occurs when a business selects a sample of the population to save collecting data from everybody in that population.
+ Reduces costs, business can choose a cross-section of the population instead of collecting data from everybody
- May not accurately reflect the full target market if the sample is not chosen properly
How can technology be used to carry out market research?
Completing calculations and creating graphs and charts which can be used by managers and leaders
What does PED measure?
Responsiveness of quantity demanded to a change in price
Businesses can use price elasticity of demand to understand how the quantity demanded by customers will change in response to price
PED formula
(% change in quantity demanded) / (% change in price)
The larger the PED coefficient …
The greater the responsiveness of quantity demanded to a change in price
How can businesses use PED/YED?
Forecast and predict the impact of changes in price and income on the quantity of the business’ goods demanded by consumers.
Using elasticity of demand allows marketing managers to act, such as advertising, to target customers if they think quantity demanded is likely to decrease.
