M ARKETING S TRATEGIES A NALYSING M ARKETS AND M ARKETING BUSS3.8 Analysing Markets and Marketing

A NALYSING M ARKETS AND M ARKETING I N THIS TOPIC YOU WILL LEARN ABOUT : Reasons for, and the value of, market analysis Methods of analysing trends The use of information technology in analysing markets Difficulties in analysing marketing data BUSS3.8 Analysing Markets and Marketing

M ARKET A NALYSIS Market Analysis Consumer trends Sales data Market size Actions of Competitors Internal data Customer opinion Social factors BUSS3.8 Analysing Markets and Marketing

R EASONS AND V ALUE OF MARKET ANALYSIS Devising strategy Understanding the market/Keep up to date Identify sales patterns Review of competitors’ actions BUSS3.8 Analysing Markets and Marketing What trends can be identified in consumers’ behaviour? What factors have influenced these trends? How has Asda responded to these trends?

A NALYSING MARKETS - C ORRELATION Identifying a relationship between 2 variables E.g. Marketing budget and sales Correlation can be: Positive the 2 variables move in the same direction e.g. As temperature goes up ice cream sales go up Negative the 2 variables move in opposite directions e.g. As road tax prices go up the sales of new 4 x 4s goes down Zero There is no relationship between the factors e.g. Rain fall and text books BUSS3.8 Analysing Markets and Marketing

A NALYSING MARKETS - C ORRELATION Correlation can be expressed on a spectrum from -1 to +1. It can also be shown on a graph by plotting the coordinates and then drawing a line of best fit. BUSS3.8 Analysing Markets and Marketing Strong negative Zero Strong positive NegativePositive

M ETHODS OF ANALYSING TRENDS – M OVING A VERAGES One of the key reasons for market analysis is to identify significant trends and sales patterns Moving averages Shows whether a trend is significant by smoothing out fluctuations in data Allows for better identification of an overall trend Sufficient data is needed to give validity to the trend identified BUSS3.8 Analysing Markets and Marketing Before looking at how to calculate moving averages first check your understanding of averages. Sales in £m for 6 months are £2, £2.5, £3, £3, £1.5 and £4 Average is £2.67m Add all the numbers up and divide by 6

C ALCULATING MOVING AVERAGES Year / Quarter Sales £m 4 period Moving average 2009/Q /Q /Q /Q /Q /Q /Q /Q411 BUSS3.8 Analysing Markets and Marketing = 45 45/4 = = 46 46/4 = 11.5 Show how this figure was calculated Calculate the next two moving averages Plot a graph to show both the quarter figures and the moving average figures

M ETHODS OF ANALYSING TRENDS – E XTRAPOLATION Using past data to extend an identified trend into the future A general slow upward trend has been identified and from this yr 6 and 7 have been extrapolated BUSS3.8 Analysing Markets and Marketing

M ETHODS OF ANALYSING TRENDS – E XTRAPOLATION A useful technique when trends can clearly be identified and The market is relatively stable However The past is not always a good indication of the future Conditions and trends can soon change Competitors’ actions Consumer tastes Market conditions BUSS3.8 Analysing Markets and Marketing

D IFFICULTIES IN ANALYSING MARKETING DATA May slow down the decision making process Hunch v. Scientific Loss of first mover advantage Opportunity cost Time and financial cost - Training May quickly become out of date Past not always a fair indication of the future Competitors’ reactions BUSS3.8 Analysing Markets and Marketing

T EST M ARKETS – TO INFORM SALES FORECASTS Uses a geographical area as representative of the whole market Can collect data and extrapolate to the whole market Area chosen must be fairly representative of the population as a whole Danger – competitors become aware of actions before full scale launch BUSS3.8 Analysing Markets and Marketing