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Market Analysis

Market Analysis

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Market Analysis

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  1. Market Analysis

  2. Contents • Market size • Market share • Market share • Market growth • Competitor analysis • Market segmentation • Market research • Sampling methods

  3. 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

  4. 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

  5. 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

  6. 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)

  7. 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

  8. Market growth / 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

  9. 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

  10. 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: • Age - Socio economic group • Gender - Culture • Ethnicity - Lifestyle

  11. Segmentation Analysis • 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

  12. Market Research • Market research is the process of collecting, collating and analysing data about the market • Primary or field research is research that is done first hand e.g. questionnaires, surveys • Secondary or desk research uses existing sources of information e.g. books, journals

  13. Advantages Fitness for purpose Allows to target right segments Can explain difficult problems / concepts Disadvantages Can be time consuming Expensive Some forms have low response rates Primary research

  14. Postal surveys – these have a high sample size but low response rate, relatively cheap Telephone surveys – more expensive, higher response rate, can explain questions Interviews – smaller sample size, higher response rate, may be interviewer bias Focus groups – provide in-depth analysis, small sample size Primary research methods

  15. Advantages Quick and easy Relatively cheap Disadvantages May be out of date May not be relevant Secondary research

  16. Census – provides information on all the households in the UK, updated every 10 years Internet – can provide a wealth of information however need to check validity of data Government statistics Books and journals Company reports MINTEL reports – these are often a good source of market information Secondary research methods

  17. Sampling • 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

  18. Summary • Market size – volume / sales in the market • Market share - % of the market a business has • Market growth – the rate of increase in the size of the market • Competitor analysis – look at statistics on competitors in the market • Segmentation – splitting up the market into different groups based on their characteristics • Market research – finding out about the market: • Primary – 1st hand e.g. surveys • Secondary – 2nd hand e.g. internet • Sampling – method of selection of candidates for market research