Moving Averages

A moving average allows us to smooth out a series of data, so that the underlying movement over a certain amount of time can be seen.

ü      Useful for forecasting the future

ü      Helps to set budgets

ü      Helpful in regard to cash flow

ü      Estimate future capacity needs

§         Can’t predict the future

Should be treated with caution:

Ask who is providing the data and why, and if it is reliable or not?

Test Marketing

A test market is a geographic region, or demographic group, used to determine the success of a product in the mass market before an official release.

ü      You can receive solid forecasts of revenue received and sales volume

ü      Valuable information gained to revise and refine any aspect of the launch

There are things to consider:

§         MANUFACTURING: Are you able to jump from pilot to full-scale production easily?

§         RETAILERS: Are retailers going to stick to promises and support the launch?

§         CUSTOMERS: Will they buy and use the product as expected?

§         CANNIBALISATION: Impact on your other products – how will this product effect another product in your range?

Should you test the market?

-          Will you receive useful information? (i.e: expected sales & volume sold)

-          Can be unsuccessful, but can save money in the long run

-          Competitors may become aware of your product

-          Test markets are false conditions and may not represent the true conditions

-          Gives you a mostly accurate result

-          However, you are only testing in one demographic

-          Can learn from your mistakes

Marketing

Asset led:                   A company uses its strengths or assets as the key element of marketing.

Market led:                Businesses conduct regular market research in order to analyse consumer’s needs, and ensure that these are filled.

Product led:              When a company focuses on a particular product, they can use their reputation to release other elements to the business.

Is asset-led riskier than market led?

They both have risks associated with them, but if you are a large company with a good reputation, asset led would be most sensible, and if you are a smaller company, market-led with in-depth market research would be sensible.

Price Elasticity of Demand

% change in sales                                 difference    x 100

% change in price                                   original

Reasons for HIGH price elasticity (Price elastic)

ü      If there are substitutes available

ü      If it is a high proportion of your income (expensive)

Reasons for LOW price elasticity (Price inelastic)

ü      If it is a low proportion of your…