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Marketing Analysis Suite

Strategic Market Overview

Marketing Analysis Foundation

Marketing analysis is essential for businesses to understand their market environment and make informed decisions about strategies. It involves examining various elements that affect customer behaviour, demand, and how a business can plan effectively. This section covers elasticity, product development, and sales forecasting—each playing a crucial role in shaping marketing strategies.

Elasticity Key Glossary

Elasticity measures the responsiveness of demand or supply to changes in another factor.

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PED (Price)

Sensitivity of demand to price change.
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YED (Income)

Sensitivity of demand to consumer income change.
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Promotional

Effectiveness of promotional activities.

Price Elasticity of Demand (PED)

PED = % change in quantity demanded / % change in price
This refers to how sensitive the quantity demanded of a product is to a change in its price.

Elastic vs. Inelastic Demand

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Elastic Demand (PED > 1)Consumers are very responsive to price changes (e.g., luxury goods).
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Inelastic Demand (PED < 1)Consumers are less responsive to price changes (e.g., essential goods).

Income Elasticity of Demand (YED)

YED = % change in quantity demanded / % change in income
Measures how demand changes in response to a change in consumer income.

Classifying Goods by YED

Understanding YED helps businesses adjust product ranges as economic conditions change.

1

Luxury Good

YED > 1: Demand increases more than income.
2

Necessity Good

0 < YED < 1: Demand increases, but less than income.
3

Inferior Good

YED < 0: Demand falls as income rises.

Promotional Elasticity Formula

Promotional Elasticity = % change in quantity demanded / % change in promotional expenditure
This assesses the effectiveness of promotional activities in increasing the quantity demanded.

The Limitations of Elasticity

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Is elasticity always an exact measurement for pricing?
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No. Calculations are estimates based on past data, and markets can change unpredictably (Time factor).
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What about factors outside of price/income?
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Demand changes are affected by many factors simultaneously (consumer tastes, competitor actions), not just one variable.

Process of Product Development

The process of designing, creating, and bringing new products to market or improving existing ones.

1

Idea Generation

Collecting new product ideas from internal/external sources.
2

Screening

Filtering out ideas that are not feasible or profitable.
3

Concept Development & Testing

Testing developed product concepts with potential customers.
4

Business Analysis

Estimating costs, sales, and profitability.
5

Commercialisation

Full scale production and marketing of the product.

R&D for Competitive Advantage

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Importance of Research and Development (R&D): R&D is the systematic activity that creates new knowledge, products, or processes. It is critical for product development as it drives innovation and helps businesses maintain competitive advantage.

Critical Need to Forecast Sales

Sales forecasting predicts future sales volumes, allowing efficient planning across the business.

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Resource Planning

Workforce, materials, and production schedules are aligned.
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Financial Planning

Assists in cash flows, budgets, and investment decisions.
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Operational Guidance

Avoids overproduction or stockouts, preventing unnecessary costs.

Time Series Analysis: Moving Average

The four-period centred moving average smooths out fluctuations to show underlying trends.

Step Description
1. Collect Data Take sales figures from four consecutive periods.
2. Sum Data Calculate the total sum of the four periods.
3. Average Divide the sum by 4.
4. Centering This average represents the moving average for the middle two periods.

Qualitative Forecasting Methods

Used when historical data is unavailable or unreliable, relying on expert judgment and insights.

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Expert Opinion

Relies on the judgment of industry specialists.
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Market Research

Surveys of customer buying intentions.
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Delphi Method

Structured technique for gathering consensus among experts.

Impact and Limitations of Forecasting

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Accurate ForecastingSupports decisions on stock levels, workforce recruitment, and capacity expansion, improving profitability.
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LimitationsUncertainty due to unexpected market changes; poor or insufficient data reduces reliability; external factors impact actual sales.
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Marketing & Sales Deck
Term
Marketing Analysis

What is marketing analysis?

Answer
Definition

The process of examining market environment factors to make informed business decisions.

Term
Price Elasticity of Demand (PED)

What does price elasticity of demand (PED) measure?

Answer
Definition

How sensitive quantity demanded is to changes in price.

Term
Calculating PED

How do you calculate PED?

Answer
Formula

PED = % change in quantity demanded ÷ % change in price.

Term
PED Greater than 1

What does a PED greater than 1 indicate?

Answer
Interpretation

Demand is elastic; consumers are sensitive to price changes.

Term
Income Elasticity of Demand (YED)

What is income elasticity of demand (YED)?

Answer
Definition

It measures how demand changes in response to changes in consumer income.

Term
YED Negative Value

What type of good has a YED value less than 0?

Answer
Type of Good

An inferior good, where demand falls as income rises.

Term
Promotional Elasticity of Demand

What is promotional elasticity of demand?

Answer
Definition

The responsiveness of demand to changes in promotional expenditure.

Term
Limitation of Elasticity Concepts

Name one limitation of elasticity concepts.

Answer
Limitation

Elasticity is an estimate based on past data and may not predict future changes accurately.

Term
Product Development

What is product development?

Answer
Definition

The process of designing, developing, and launching new or improved products.

Term
Sources of New Product Ideas

List one source of new product ideas.

Answer
Examples

Internal R&D, customer feedback, competitor analysis, suppliers, or market trends.

Term
Importance of R&D

Why is R&D important?

Answer
Reason

It drives innovation and helps businesses maintain a competitive edge.

Term
Sales Forecasting

What is sales forecasting?

Answer
Definition

Predicting future sales volumes to aid planning and decision-making.

Term
Moving Average Method

What is the moving average method in sales forecasting?

Answer
Definition

A technique that averages sales over a specific period to identify trends.

Term
Qualitative Sales Forecasting

Why use qualitative sales forecasting?

Answer
Use Case

When historical data is unavailable, relying on expert judgment and market insights.

Term
Impact of Accurate Sales Forecasting

Name one impact of accurate sales forecasting.

Answer
Impact

Improved resource allocation and financial planning.

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📊 Marketing Analysis Quiz

1. What does a PED value less than 1 indicate?

A PED less than 1 means consumers are less responsive to price changes.

2. Which of the following is NOT a source of new product ideas?

Product ideas come from structured sources, not random guessing.

3. The formula for Income Elasticity of Demand (YED) is:

YED measures demand responsiveness to income changes.

4. Which sales forecasting method uses past sales data to identify trends?

The moving average smooths past sales data to forecast future trends.

5. What is a key limitation of sales forecasting?

Market variability can cause forecasts to be inaccurate.

📊 Results

  • Notes and Quiz
  • Business
  • AS & A Level
  • Marketing
  • CAIE