Data and Market Analysis

Question 1

What is market analysis?

Answer 1

gathering data and tracking trends related to the company, competitors, conditions, and consumers, in order to adopt an appropriate marketing strategy.

Question 2

What is qualitative data?

Answer 2

Qualitative data, on the other hand, is information about decisions based on emotions, feelings, opinions and motivations. An example of a question that leads to qualitative data is ‘What is it about a brand that motivates you to make a purchase?’

Question 3

What is quantitative data?

Answer 3

Quantitative data is based on numerical information that can be statistically analysed. This information is from the results to questions such as ‘What is the average weekly spend of our customers?’

Question 4

What do elasticity formulas allow us to do?

Answer 4

to work out how much the increase/decrease will be, which is used to inform pricing and marketing decisions, to maximise revenue.

Question 5

What is PED?

Answer 5

measures the responsiveness of quantity demanded to a change in price

Question 6

PED formula?

Answer 6

% change in quantity demanded / % change in price

Question 7

What affects PED?

Answer 7

Level of competition, subtitutes, luxury/necessity.

Question 8

How can businesses become more price elastic?

Answer 8

restrict competition, encourage customer loyalty and brand value.

Question 9

What does it mean to be price elastic?

Answer 9

-More than 1.
-This means that a change in price will cause a more than proportional change in the quantity demanded.
-The level of demand is sensitive to a change in price.
-Less steep graph.

Question 10

What does it mean to be price inelastic?

Answer 10

-Less than 1.
-This means that a change in price will cause a less than proportional change in the quantity demanded.
-The level of demand is not sensitive to a change in price.
-Steep graph.

Question 11

What is unitary elasticity?

Answer 11

-1.
-This means that a change in price will cause an equal and proportional change in the quantity demanded.

Question 12

What are elastic markets?

Answer 12

markets that are approaching perfect competition are elastic, such as monopolistic competition. Luxury goods are also elastic markets.

Question 13

What are inelastic markets?

Answer 13

markets with high brand loyalty such as oligopolies, and where there is little competition such as monopolies. Necessary goods are inelastic markets.

Question 14

What is YED?

Answer 14

Income elasticity of demand (YED) is the measure of the responsiveness of the quantity demanded of a g/s as a result of a change in the income of the consumers demanding the good.

Question 15

YED formula?

Answer 15

% change in quantity demanded / % change in income

Question 16

What is YED used for?

Answer 16

Used to plan production capacity, stock levels, workforce and sales forecasting.

Question 17

What doe sit mean to be income elastic?

Answer 17

-More than 1 (positive and high).
-This means that a change in income causes a more than proportional change in the quantity demanded.
-Luxury goods.

Question 18

What does it mean to be income inelastic?

Answer 18

-Between 0 and 1 (positive and low).
-This means that a change in income causes a less than proportional change in the quantity demanded.
-Normal goods.

Question 19

What does it mean to have negative income elasticity?

Answer 19

-Less than 0 (any negative number).
-This means that if income rises then demand falls, and vice versa.
-Inferior goods.

Question 20

What effect does elastic PED have on revenue?

Answer 20

If demand is price elastic and prices are lowered, the revenue from each item sold falls, but the quantity sold increases more than proportionately which means that total revenue increases. Likewise, if prices are increased then demand will fall more than proportionately to the change in price, leading to a fall in revenue.

Question 21

What affect does inelastic PED have on revenue?

Answer 21

If demand is price inelastic, a rise in price will lead to a rise in sales revenue. Likewise, a fall in price will lead to a fall in sales revenue. This means that although sales have increased, the fall in revenue from each item sold results in total revenue falling.

Question 22

What effect does unitary elasticity have on revenue?

Answer 22

If demand is unitary elastic, any change in price will lead to a proportional change in demand, meaning revenue will demand the same. From a business point of view, it makes sense to cut prices if increased output reduces costs (economies of scale) as this will lead to an increase in profits. Furthermore, more units sold could lead to market share increasing.

Question 23

What is data?

Answer 23

Facts and statistics collected together for reference or analysis

Question 24

What are the common types of data for businesses?

Answer 24

daily sales against targets, daily output and faults, machine hours, sales by region, profit levels and annual growth.

Question 25

Pie charts?

Answer 25

A circular chart split into sections that represent percentages of data in different categories. -Provides a very visual representation. -Overall picture but not detailed. -Not effective for showing increases/decreases overtime, or to show causal relationships between decisions and outcomes.

Question 26

Bar charts?

Answer 26

Categories using rectangular bars, with the height of the bar representing the frequency for the category. These bars can be presented vertically or horizontally. -Clear format, can summarise large amounts of data simply and used to show key financial data. -Can oversimplify data and data can be manipulated to show false patterns.

Question 27

Histograms?

Answer 27

Show continuous data and there are no gaps between the bars. Area of the bar is proportional to frequency. -It shows the shape of the distribution for a large set of data. Excellent when displaying data which has chronological categories or numerical groupings. Helps depict large differences in shape or symmetry of the data collected. -They cannot be used for exact values as the data is grouped into intervals. The effectiveness of data decreases when the range of data is too wide. The data is perhaps less meaningful if the groups are very large.

Question 28

Line graphs?

Answer 28

Are used to compare two variables. The x-axis represents a continuous variable (e.g. time) and the y-axis represents the second variable (e.g. quantity or value). A line graph is plotted as a series of points and then joined to produce a continuous line. The line graph shows the relationship between the two variables. -Many economic and financial data sets are published using line graphs.

Question 29

Maps?

Answer 29

Present data visually. They are not always suitable to use, but for large businesses with multiple locations, they can be useful to see factors that affect locations.

Question 30

What are index numbers?

Answer 30

Are used to make numerical data easier to understand. The index starts in a given year which is the base year, and this is given an index number of 100. In the subsequent years, percentage increases push the index number above 100 and decreases push it below. They are always compared to the base year.

Question 31

What are index numbers used for?

Answer 31

Consumer income, price changes and economic output.

Question 32

Evaluating index numbers?

Answer 32

-Allows data to be standardised to make it comparable. -However, it focuses on changes in data, not their values.