Marketing: Market research and analysis finds out what customers need and want. It also tries to anticipate what they’ll want in the future so the business gets an advantage over its competition.
Product-led marketing: Businesses start by finding out what they can produce. They put the product ahead of customer needs or budget constraints.
Market-led marketing: Businesses start by finding out what the customer wants. More likely to succeed than a product-led approach, but chases customer needs even when the firm doesn’t have the right resources to meet them.
Asset-led marketing: Combines consumer wants with the strengths and assets of the business. Has strengths of market-led approach without weaknesses.
Market size: Total of all the sales within the market. Measured either by volume of sales (number of units sold) or the value of sales (the total sales revenue).
Market share: The percentage of sales in a market that is made by one firm, or by one brand. Market share = sales ÷ total market size x 100%
Market Analysis and Buyer Behaviour
Market analysis: Tells firms about the size of the market and the customers within the market. Firms also like to know why customers within the market buy what they buy.
Market segmentation: Different groups of customers have different needs. Dividing the market into segments allows a firm to focus on the needs of specific groups within a target market. A market can be segmented in many ways e.g. Income, age, gender or geographical region.
Market aggregation: Tries to appeal to everyone, by marketing a product with general appeal, that everyone will hopefully like. The opposite to market segmentation.
Buyer stages: Purchasers go through several stages when they buy something 1) recognising the need, 2) finding information, 3) considering alternatives, 4) buying the product, and 5) evaluating the purchase.
Qualitative techniques: Involve human judgement rather than maths and calculation. Useful when there’s not much data to go on, and when the time-frame being investigated is long.
Quantitative techniques: Use maths and correlation to figure out a cause and effect relationship. Using mathematical models managers can establish a statistical relationship between variables and forecast how changes in one variable affect another.
Correlation: Is a measure of how closely two variables are related, for example the pay of employees and their absenteeism. Correlation can be strong, weak or non-apparent.
Extrapolation: Used to predict the future. Draw a line of best fit on the graph to show the trend, and keep the line going to project the trend into the future.
Time series analysis: Used to reveal underlying patterns by recording and plotting data over time, for example the recording of sales over a year.
Trends: Long-term movement of a variable, for example the sales of a particular product over a number of years. Trends may be upward, constant or downward, but there are usually fluctuations around the trend.
Seasonal fluctuations: Repeat on a daily, weekly or yearly basis, e.g. the use of electricity over a 24-hour period, or the sale of ice lollies over a year.
Cyclical fluctuations: Regular repetitions over a medium term project, often many years. the business cycle of boom and bust has a cyclical pattern.
Moving average: One which is recalculated as new information comes in, to give you up to date information. E.g. the inflation rate, which is an average of the previous twelve months’ price rises, is updated every month.