17 Analysing Markets and Marketing 2

7/31/2019 17 Analysing Markets and Marketing 2

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Resources

Student notes

Tables

Wollinski p133-135 Eidos Lara Croft article

Graph paper

Calculators


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Analysing Markets


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Tomb Raider

1. How much was wiped off projected sales?

2. How many copies have been sold?

3. What are some of the reasons cited?

4. Why did Eidos revise its sales assumptions for Underworld

and other video games?

5. What are the consequences for the business of getting

the sales forecast wrong?
http://www.guardian.co.uk/business/2009/jan/09/travelleisure-games/print


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What the spec says

Analysing Markets andMarketing reasons for, and the

value of, marketanalysis

methods of analysingtrends

the use of informationtechnology in analysing

markets difficulties in analysing

marketing data

Reasons for analysing marketsshould include: gathering evidence for

devising a new strategy,

identifying significant patternsin sales.

Candidates should be familiarwith moving averages, testmarkets and extrapolation asmethods of measuring andforecasting sales.

Candidates should understandhow correlation can be used inanalysing markets.


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Objectives

Explain the role of analysing markets

in sales forecasting

Outline four quantitative methods ofmarket of analysing market trends

Consider benefits and drawbacks of

different methods


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Sales forecasting

What do you need to know to forecast accurately?

Why is it important to get it right?

What things can impact your sales forecast?

How can make your forecast as accurate as

possible?

How might forecasting impact other areas of the

business?
http://www.youtube.com/watch?v=glAPU9yjOMI


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Main approaches

Test Markets

Moving averages

Extrapolation

Correlation


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Test Marketing

Launching a product in a limitedpart of the market, usually ageographical area

Used to predict sales on theassumption that the results will berepeated across the whole country

Relatively accurate predictor ofpopularity

Not nearly as expensive as anational launch


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New, New Coke?

Coca-Cola trials sweet, fizzy, milky 'vibrancy'drink in three US cities

Soft drinks giant launches new Vio drink in NewYorkbut no word yet on whether it will reach theUK

It may not quite sound the real thing butconsumers are being asked to decide whether milkgoes better with sparkling water, cane sugar andfruit flavouring.

Coca-Colais trialling a new carbonated "vibrancy"drink and it will depend on Americans' tastebuds

whether other countries experience what thecompany claims is "a refreshing sensoryexperience".

The soft drinks giant has so far launched its newVio products only in New York, but milk-basedproducts are popular in Asian markets such asHong Kong and Japan.

The launch of Vio in the US is an excitingdevelopment for consumers there," said aspokesperson for Coca-Cola GB. "We are

constantly listening to consumers to ensure weprovide them with innovative new beverages thatmeet their preferences and needs. However we

currently have no plans to launch Vio in any

country in Europe."
http://www.coca-cola.com/index.jsphttp://www.coca-cola.com/index.jsphttp://www.guardian.co.uk/business/cocacolahttp://www.guardian.co.uk/business/2009/jul/27/coca-cola-carbonated-milk-drinkhttp://www.guardian.co.uk/business/cocacolahttp://www.coca-cola.com/index.jsp


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Test Marketing dangers

Copy cat moves by competitors Reduces lead time

Market move fast and delaying thenational launch may mean missing theboat

Novelty value people buy it once

Loads of effort on test marketing (special

deals etc.) not followed through in real life

BOGOF!


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Got it?

Now for something completelydifferent.

You need

Graph paper

Pencil

Ruler

Table


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Moving averages

Plot the graph of data

Reflection what can we interpret forthis data

Smooth the data moving averages

What can interpret?

Plot the moving average data Review moving averages as a model pros and cons


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Sales Data

Sales000

3 month movingaverage

January 9

February 12

March 15

April 15

May 18

June 21

July 9

August 18

September 21

October 24


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Sales Data

Sales000


January 9

February 12

March 15

April 15

May 18

June 21

July 9

August 18

September 21

October 24

Task 1

Plot the data ongraph paper

sa

les

months

What can weinterpret fromthis data? Canyou see a trend?


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Calculate the moving average

This looks at several periods at atime and averages out the data


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Sales Data

Sales000


January 9

February 12

March 15

April 15

May 18

June 21

July 9

August 18

September 21

October 24

E.g.

(Jan+Feb+Mar)/3Then(Feb+Mar+Apr)/3

Write this in thecentre of your table

and the value in thefar right column


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Sales Data

Sales000


January 9

February 12 (9+12+15)/3 12

March 15 (12+15+15)/3 14

April 15 (15+15+18)/3 16

May 18 (15+18+21)3 18

June 21 (18+21+19)/3 16

July 9 (21+9+18)/3 16

August 18 (9+18+21)/3 16September 21 (18+21+24)/3 21

October 24 (21+24+12)/3 19

November 12 (24+12+24)/3 20

December 24

Now replot a new graph nextto your previous one

What can weinterpret fromthis data? Canyou see a trend?


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Calculate the moving average

This looks at several periods at atime and averages out the data

Hi/Lo figures are smoothedby theaveraging process

The underlying trend is clearer


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Examiners note

Unlikely you would be asked to do

this in an exam

The data might be provided that

show a trend and/or seasonal

variations that have already been

calculated

Or you may be required tointerpret a graph


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Extrapolation

Identify the trend andproject forwards

Only likely to beeffective if market

conditions continue todevelop in the futureas they have done inthe past

Risky in markets

where technology isdeveloping rapidly

sa

les

months

xx

xx

xx x

xx

x

x

Present Future

trend

Extrapolatedtrend

Kodak and digital camerasCD manufacturers and MP3 players

Beef and BSE


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Correlation

Attempts to identify whether there isany correlation between differentvariables and the level of sales

What would influence you to buy?


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Correlation

Ifmarketers can identify the keyfactors that determine thedemand for their goods, and theycan estimate what is happeningto these factors, they can

estimate total market sales andtheir likely sales

Positive correlation means adirect link, e.g. advertising

Negative means inverserelationship, e.g. price increase

sa

les

advertising

pr

ice

sales

N.B. Correlationidentifies apparent link

but does not showcause and effect
http://www.google.co.uk/trends?q=bp&ctab=0&geo=all&date=all&sort=0


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Time for a breather

Analysing Markets andMarketing reasons for, and the

value of, marketanalysis methods of analysing

trends the use of information

technology in analysing

markets difficulties in analysing

marketing data

Reasons for analysing marketsshould include: gathering evidence for

devising a new strategy,

identifying significant patternsin sales.

Candidates should be familiarwith moving averages, testmarkets and extrapolation asmethods of measuring and

forecasting sales.

Candidates should understandhow correlation can be used inanalysing markets.


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Objectives

Explain the role of analysing markets

in sales forecasting

Outline four quantitative methods ofmarket of analysing market trends

Consider benefits and drawbacks of

different methods


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The use of IT in analysingmarkets

Forecasting can be done much more quickly andregularly

Can multiply the number of strategies andcompare to see which is best

Can link databases and sales records to spotcorrelations and patterns

Knowledge Management

Loyalty cards
http://www.accsys-corp.com/Knowledge_Work_Resources/KM_Market_Map/knowledge_management_market_map.gif


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Homework

Read Case Study: Unilever Ice Cream

Complete Practice Exercise 4 Qs1-9


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The Hot Seat! You have 3 mins to think of a

question based on todays material

In the meantime the hot seatselector will pick 3 individuals to sit

in the hot seat to answer thequestions you put to them!
http://classtools.net/education-games-php/fruit_machine/

Documents

17 Analysing Markets and Marketing 2