Market AnalysisMarket Analysis

ContentsContents

Market sizeMarket size Market shareMarket share Market shareMarket share Market growthMarket growth Competitor analysisCompetitor analysis Market segmentationMarket segmentation Market researchMarket research Sampling methods Sampling methods

Key termsKey terms

Market size – the total number of sales Market size – the total number of sales in £ (value) or quantity (volume) in a in £ (value) or quantity (volume) in a marketmarket

Market share – the % of a market an Market share – the % of a market an individual business hasindividual business has

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

Market segment – a section of Market segment – a section of consumers in the market which share consumers in the market which share similar characteristicssimilar characteristics

Market analysisMarket analysis

Businesses use methods of market Businesses use methods of market analysis to find out what is analysis to find out what is happening in the markethappening in the market

These tools allow them to develop These tools allow them to develop marketing strategies which exploit marketing strategies which exploit opportunities opportunities

Market sizeMarket size

This helps businesses decide the This helps businesses decide the potential profitability in a marketpotential profitability in a market

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

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

Market shareMarket share

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

If the market is dominated by a number of If the market is dominated by a number of large companies e.g., Supermarkets such large companies e.g., Supermarkets such as tesco, asda, Sainsbury's it is less as tesco, asda, Sainsbury's it is less attractive for new firms to aim at the attractive for new firms to aim at the entire marketentire market

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

Market growthMarket growth

This figure is crucial for a businessThis figure is crucial for a business Many attractive markets are relatively Many attractive markets are relatively

small and fast growing therefore small and fast growing therefore offering the potential of high profitsoffering the potential of high profits

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

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

Market growth / declineMarket growth / decline

Sometimes markets suffer negative Sometimes markets suffer negative growth growth

This often leads to companies This often leads to companies leaving the market leaving the market

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

Competitor AnalysisCompetitor Analysis

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

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

Segmentation AnalysisSegmentation Analysis

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

Characteristics that businesses Characteristics that businesses segment by can include: segment by can include: – AgeAge - Socio economic group - Socio economic group – GenderGender - Culture - Culture – Ethnicity Ethnicity - Lifestyle - Lifestyle

Segmentation AnalysisSegmentation Analysis

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

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

Market ResearchMarket Research

Market research is the process of Market research is the process of collecting, collating and analysing collecting, collating and analysing data about the marketdata about the market

Primary or field research is research Primary or field research is research that is done first hand e.g. that is done first hand e.g. questionnaires, surveysquestionnaires, surveys

Secondary or desk research uses Secondary or desk research uses existing sources of information e.g. existing sources of information e.g. books, journals books, journals

Primary researchPrimary research

AdvantagesAdvantages Fitness for purpose Fitness for purpose Allows to target Allows to target

right segmentsright segments Can explain Can explain

difficult problems / difficult problems / conceptsconcepts

DisadvantagesDisadvantages Can be time Can be time

consumingconsuming ExpensiveExpensive Some forms have Some forms have

low response rates low response rates

Primary research methodsPrimary research methods

Postal surveys – Postal surveys – these have a high these have a high sample size but low sample size but low response rate, response rate, relatively cheaprelatively cheap

Telephone surveys Telephone surveys – more expensive, – more expensive, higher response higher response rate, can explain rate, can explain questions questions

Interviews – Interviews – smaller sample smaller sample size, higher size, higher response rate, may response rate, may be interviewer biasbe interviewer bias

Focus groups – Focus groups – provide in-depth provide in-depth analysis, small analysis, small sample size sample size

Secondary researchSecondary research

AdvantagesAdvantages Quick and easyQuick and easy Relatively cheapRelatively cheap

DisadvantagesDisadvantages May be out of dateMay be out of date May not be May not be

relevantrelevant

Secondary research Secondary research methodsmethods

Census – provides Census – provides information on all information on all the households in the households in the UK, updated the UK, updated every 10 yearsevery 10 years

Internet – can Internet – can provide a wealth of provide a wealth of information information however need to however need to check validity of check validity of datadata

Government Government statisticsstatistics

Books and journalsBooks and journals Company reportsCompany reports MINTEL reports – MINTEL reports –

these are often a these are often a good source of good source of market information market information

SamplingSampling

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

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

Quota sample – candidates are Quota sample – candidates are chosen based on their characteristics chosen based on their characteristics

SummarySummary Market size – volume / sales in the marketMarket size – volume / sales in the market Market share - % of the market a business hasMarket share - % of the market a business has Market growth – the rate of increase in the size of Market growth – the rate of increase in the size of

the marketthe market Competitor analysis – look at statistics on Competitor analysis – look at statistics on

competitors in the marketcompetitors in the market Segmentation – splitting up the market into Segmentation – splitting up the market into

different groups based on their characteristicsdifferent groups based on their characteristics Market research – finding out about the market:Market research – finding out about the market:

– Primary – 1Primary – 1stst hand e.g. surveys hand e.g. surveys– Secondary – 2Secondary – 2ndnd hand e.g. internet hand e.g. internet

Sampling – method of selection of candidates for Sampling – method of selection of candidates for market research market research