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Market Analysis
Analysis of any market requires a certain degree of market knowledge in order for the correct decision to be made. Firstly, it must be found out whether or not the market is growing in terms of sales numbers/value. A declining will not be enticing for a company whereas a rapidly growing one may offer better prospects. Also, the percentage of the market share that the company already has must be worked out and thus the power of the company in that market can be taken into consideration. This is also true for working out what other businesses will be the biggest competitors.
Furthermore the target market and customer profile must be defined. If the target market is young people then the advertising and pricing may have to be altered to fit into the purchasing capacity of the consumers being targeted. Prospects for expansion must also be analysed. In this case it must be decided whether the market is saturated with products or whether there might be scope for introducing new products.
A SWOT analysis of the market may be carried out. The company will be able to identify what its strengths within the market are (it might have first mover advantage or a USP). Weaknesses could be a declining or saturated market or a very strong competitor (who has a monopoly of the market) or even merger between two large competitors which would give them a huge advantage of the company concerned. Opportunities would be gaps in the market whereby new products could be introduced or the possibility to take over another company and increase market share. Threats to a business would be other companies, too many debts or a very trend orientated market where the demand for a product can vary hugely in a short time.
Decision Making on Marketing Objectives
In order to decide what to do in a market clear objectives must be set out. Objectives should be SMART (Specific Measurable Attainable Realistic Time based). Furthermore considerations with regard to the implications of any decisions should be considered. If the objective is to increase output then extra capacity may have to be introduced or more staff hired etc. Also the best strategy for marketing and expansion should be identified.
There are 3 main strategies with regard to marketing:
Market Orientation
This is where the company researches the market and then products a product that is desired by the customers. It does not come up with a product from scratch.
Asset Led Marketing
This is the best strategy. In this way a market is researched and the wants of the consumer analysed. However, the business will create an idea of what they want to produce and adept it to fit the desires of consumers. The product is designed to utilise the best assets that the company has (e.g. the strengths/skills/finances within the company)
Product orientation
Old fashioned idea of marketing. In this way a product is designed and then the company attempts to sell it. No market research is done it is just assumed that the product will be desired. Best examples are the “electric bicycle” of the 1950’s and Henry Ford with his famous quote with regard to the colour of his original Ford Model T “They can have any colour as long as its black”,
In order to achieve objectives different strategies with regard to marketing may have to be utilised. If the objective was to increase market share then advertising would have to be increased. Alternatively the product could be upgraded and become a leading product thereby increasing its desirability and therefore increasing sales and market share. However, if the objective was to increase the number of new products produced by the business then more R+D would have to be carried out and maybe new technology introduced in order to develop new products. Finally, if the Objective was to Orientate towards younger people then the style, type and timing of any advertising may have to be changed so that it can be seen by the younger people. Furthermore the image of the product might need to be altered through the advertising so that it becomes more desirable to a younger audience.
There are 4 main keys to success in analysing markets and making the correct decisions:
- Exploit the assets of the business and use them to your advantage even if it means drastic changes to the type of product produced. The highest quality product possible should then be produced.
- Use asset lead marketing because it addresses the public's needs whilst also catering to the strengths and orientation of the business.
- Beware of consumer psychology. Ensure the adverts do not offend minorities or social groups, treat customers well in customer relations etc. and respect customers.
- Use integrated marketing. All departments of the business have an impact on marketing and therefore it is important that financial constraints are taken into consideration, that production facilities ensure high quality goods that are then easier to sell.
Also See
Read these other AQA A2 Business Studies Unit 4 revision notes:
Comments
These notes are aimed at people studying for AQA A2 Business Studies Unit 4, but will also be suitable for other courses and exam boards.
Originally submitted by eksman on TSR Forums.
