Business Studies A2

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  • Created on: 22-05-17 22:57

i.                   Market Analysis


Businesses use methods of market analysis to find out what is happening in the market. These tools allow them to develop marketing strategies which exploit opportunities.


Key Terms

·Market size:  the total number of sales in £ (value) or quantity (volume) in a market

·Market share: the % of a market an individual business has

·Market growth: the % increase in the size of the market on an annual basis

·Market segment: a section of consumers in the market which share similar characteristics

Market Size

·This helps businesses decide the potential profitability in a market

·Larger markets tend to have more opportunities to make a profit

·When a business is considering entering a new market they will be interested in market size and the fierceness of competition

Market Share

·Market share figures allow a business to compare themselves to their competitors

·If the market is dominated by a number of large companies e.g., Supermarkets such as Tesco, Asda, Sainsbury’s it is less attractive for new firms to aim at the entire market

·The distribution of market share in a market is influenced by the type of market that the business is operating in (monopoly – perfect competition)

Market Growth

·This figure is crucial for a business

·Many attractive markets are relatively small and fast growing therefore offering the potential of high profits

·Markets that are growing at a rapid rate tend to attract lots of new businesses

·Markets tend to grow the fastest at the beginning of the product life cycle

Market Decline

·Sometimes markets suffer negative growth

·This often leads to companies leaving the market

·Some businesses may be able to exploit opportunities and segments using their own USPs when the market is entering into decline

Competitor Analysis

·Businesses need to have a good idea about their competitors to enable them to develop valid and successful marketing strategies

·Alongside market share a business often benchmarks their current / potential competitors in order to gain a greater understanding of their offering

Segmentation Analysis

Market segmentation is the process of splitting up the market into different segments or chunks which share the same characteristics

Characteristics that businesses segment by can include:


·Socio economic group





Segmentation analysis allows a business to tailor their marketing strategy to meet the needs of different customers

Some market segments are more attractive than others as they may display lower levels of competition, faster market growth or more opportunities to make profits


·Sampling refers to the methods used to select consumers to participate in market research

·Random sample – all of the population have an equal chance of being selected often done using a computer

·Quota sample – candidates are chosen based on their characteristics

ii.                Marketing Mix


The marketing mix or the 4P’s are the key


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