1. 3.2.2 U NDERSTANDING MARKETS AND CUSTOMERS – M ARKETING DATA AQA Business 3 D ECISION MAKING TO IMPROVE MARKETING PERFORMANCE Is there a relationship between the following variables: Amount of effort you put in and homework grades? The cost of a gift and the pleasure of the recipient? Hours sleeping and ability to concentrate? Advertising expenditure and sales? Your teacher’s car and the time it takes you to get to college? How would you describe each relationship? How strong are the relationships?

2. 3.2.2 U NDERSTANDING MARKETS AND CUSTOMERS  In this topic you will learn about  The interpretation of marketing data  The value of technology in gathering and analysing data for marketing decision making

3. T HE INTERPRETATION OF MARKETING DATA  Inform decision making  Devising strategy  Understanding the market  Identify sales patterns  Realistic target setting  Keeping up to date with market changes  Review of competitors’ actions  Evaluation of past actions

4. 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. average rain fall and sales of text books

5. C ORRELATION  The strength of 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 -1 0 +1 Strong negative Zero Strong positive NegativePositive

6. I N PAIRS  Plot each of the following combinations of variables on the spectrum above. Be prepared to justify your decision a. Price of Coca Cola and sales of Tesco own brand cola b. Advertising expenditure by Toyota and sales of the Toyota Prius c. The launch of a new iPhone and profit margins at SuperDry d. Fuel prices and price of used cars -1 0 +1 Strong negative Zero Strong positive

7. M ULTIPLE CHOICE QUESTION  What is the most likely correlation between an increase in the selling price of a games console and the sales volume of the games that go with it? a) +1.7 b) +0.4 c) -1.7 d) -0.4 Justify your answer.

8. C ONFIDENCE LEVELS AND INTERVALS  When you sit an exam how confident do you feel about the results?  Are you confident you will achieve a specific grade e.g. a B grade?  Are you confident your grade will fall within certain parameters e.g. between an A and a C grade?

9. C ONFIDENCE L EVELS  Confidence levels reflect the degree of certainty with which a business believes a stated outcome will happen  e.g. 90% confident that research findings are accurate and therefore 1 out of 3 customers will buy the new product  Confidence levels will be affected by factors such as the sampling technique, research method and expertise of the person carrying out and analysing the research

10. C ONFIDENCE INTERVALS  Sampling will never give a 100% accurate picture of the whole population  There will be sampling error  The likely size or significance of this sampling error determines the confidence interval  Confidence intervals are the parameters within which a confidence level applies  This means the range of values within which the business is confident that the research results will be true  e.g. 95% confident that customers will be willing to pay between £1.00 and £1.60

11. C ONFIDENCE INTERVALS  Assume 2 researchers carry out research into how much a customer is willing to pay for a new soft drink  Each researcher randomly selects 10 people as representative of the population, the soft drink consumer  The results of both surveys is shown below: Researcher AResearcher B 50p55p 50p85p 75p95p 80p110p 80p75p 90p50p 55p40p 60p65p 60p 75p120p What conclusion would researcher A make? (50 + 50 + 75 + 80 + 80 + 90 + 55 + 60 + 65 + 75)/10 = 68 The mean (average) price a customer would be willing to pay is 68p. Researcher A might say that a consumer would be willing to pay 68p. But with what degree of confidence can they say this? If we put the answers in order 40 50 55 60 65 75 75 80 80 90 and took off the lowest 10% and the highest 10% i.e. the top and bottom answer they could now say they are 80% confident the consumer will pay between 50p and 80p (the confidence interval).

12. C ONFIDENCE INTERVALS Researcher AResearcher B 50p55p 50p85p 75p95p 80p110p 80p75p 90p50p 55p40p 60p65p 60p 75p120p According to researcher B what is the mean (average) price a customer would be willing to pay? Within what confidence interval would they have a 60% confidence level?

13. 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

14. 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

15. T HE VALUE OF TECHNOLOGY Discuss the usefulness of social media in gathering and analysing data for marketing decisions.

16. T HE VALUE OF TECHNOLOGY  Gather and analyse large volumes of data quickly and accurately  Track and interpret consumer spending habits  Collect consumer opinions from around the world  Encourage consumer feedback through social media and review sites  Enable two way communication What is the role of big data in retailing?

17. 3.2.2 U NDERSTANDING MARKETS AND CUSTOMERS  In this topic you have learnt about  The interpretation of marketing data  The value of technology in gathering and analysing data for marketing decision making