A2 Business Studies Resources

1. Do Now
Questions: Answers:
1.What is market analysis? 1.Detailed examination of the
features of a market.
2.What might be analysed?
2.Size, value, growth,
segments, competition.
3.Why is it so important to
businesses? 3.Predict future trends,
identify patterns in sales,
gather evidence for devising
new strategies.

2. Analysing Markets and
Marketing

3. Learning Objectives
By the end of the lesson you should be able to:
1.Explain the reasons for market analysis.
2.To identify and use different methods for analysing
markets.
3.Assess how businesses use their own marketing data
to analyse markets.

4. What methods can a business use
to predict what is going to
happen in the future?

5. Moving Averages
Fig 1. Graph show wild fluctuations Fig 2. The same graph showing the
underlying trend

6. Moving Averages
∗ Data covering a period of time may be subject to underlying
trend:
Sunday, 6 April 2008
∗ The trend itself
∗ Cyclical fluctuations
∗ Random fluctuations

7. Moving Averages
∗ What do they help businesses find?
∗ Underlying trend
∗ Predict future trends
∗ Moving averages smooth out data
∗ Moving averages plot the trend of
sales on a weekly, monthly or
quarterly basis.

8. Example Annual sales of Clippity Clocks Ltd —
clock manufacturer
Year Clock sales Three-year Three-year
(£000’s) moving total moving average
2000 1,500 — —
2001 1,550 4,550 ÷ 3 = 1,517
2002 1,500 4,700 ÷ 3 = 1,567
2003 1,650 4,725 ÷ 3 = 1,575
2004 1,575 4,820 ÷ 3 = 1,607
2005 1,595 4,870 ÷ 3 = 1,623
2006 1,700 5,100 ÷ 3 = 1,700
2007 1,805 5,270 ÷ 3 = 1,757
2008 1,765 5,470 ÷ 3 = 1,823
2009 1,900 5,545 ÷ 3 = 1,848
2010 1,880 —

9. Annual sales of Crazy Eyes - Answers
Year Sales Three-year moving total Three-year
(£000’s moving average
)
2001 400 - -
2002 600 1,700 ÷ 3 566.66
2003 700 1,950 ÷ 3 650.00
Complete Question 1 on the moving averages
2004 650 2,050 ÷ 3
worksheet. 683.33
2005 700 2,200 ÷ 3 733.33
2006 850 2,500 ÷ 3 833.33
2007 950 3,000 ÷ 3 1,000.00
2008 1200 3,050 ÷ 3 1,016.66
2009 900 3,300 ÷ 3 1,100.00
2010 1200 —

10. Extrapolation
∗ What is extrapolation? ∗ Benefits:
∗ Using past and present data ∗ Help with marketing and
t0 make a prediction of future distribution strategies, help set
trends. sales targets, budgets,
∗ If businesses assume that this workforce and production
trend will continue, future planning.
sales figures can be
predicted. ∗ Drawbacks:
∗ In high-technology, fast paced
or dynamic markets –
∗ What are the benefits/ extrapolation is less useful or
drawbacks? misleading.

11. The following data show the average daily sunshine (hours) over the past 6
years and the amount spent on sun cream (£) during the same period.
Plot this data on a scatter graph
What do you notice?
Year 00 01 02 03 04 05
Average daily sunshine 3.96 4.15 3.75 4.00 4.80 4.75
(hours) (x)
Sales of sun cream (£m) 32 37 32 33 40 40
(y)

12. Correlation
A statistical
technique used to
establish the
strength of the
relationship
between two
variables.

13. Positive Correlation
x
x
x
Sales of Blu-ray discs
x x
x x
x
x
Sales of Blu-ray players

14. Negative Correlation
x
x x
Sales of Tesco Value products
x x
x
x x
x
Average household income

15. Zero Correlation
x
x x
Sales of luxury cars
x
x
x
x
x
x x
x
x x
Sales of stamps

16. Correlation
Skiwear Advertising and Sales
Correlation between skiwear advertising and sales

17. Positive or Negative?
What correlation would you expect from the following?
1.Baked bean sales and sofa sales
2.Unemployment and sofa sales
3.House sales and sofa sales

18. Correlation
∗ What are the Pros and Cons to correlation?
Pros Cons
Identify relationship Shows link not cause
between variables and effect
Inform decisions e.g. Strong correlation may
marketing expenditure be caused by other
factors

19. Test Marketing
Using own
marketing
data
∗ What is test marketing?
∗ A firm will replicate the elements
of product launch including
promotion, distribution and
price, to a geographic region or
demographic group to judge the
viability of the product in the
market before a full scale launch.
∗ Can you think of any possible
drawbacks to this method?

20. Primary Research
Using own
marketing
data
∗ How would primary research be
used?
∗ Could be used in decision-
making.
∗ Determine future marketing
campaigns.
∗ Why might marketing data be
incorrect or misleading?

21. The use of information technology in
analysing markets
∗ How can firms use IT to collect and
analyse data?
Benefits:
∗ Businesses can now collect data Information processed
through store cards, online quickly, build an electronic
questionnaires or blogs. database, profile of
customers.
∗ Write down one benefit and one
drawback to collecting and analysing Drawbacks:
data in this way. Information overload can slow
down the decision making
process, quick access to
information may cause decision-
makers to over react.

22. A blooming business
∗ Complete the case
study based on a
blooming business
(AQA P63).

23. What can you remember?
Draw a correlation diagram to
show a positive correlation.

24. What can you remember?
What is a drawback of test
marketing?

25. What can you remember?
Draw a correlation diagram to
show a negative correlation.

26. What can you remember?
What is meant by extrapolation?

27. What can you remember?
What is the purpose of
calculating moving averages?

28. What can you remember?
What is a benefit of using IT to
analyse markets?

29. Learning Objectives
By the end of the lesson you should be able to:
1.Explain the reasons for market analysis.
2.To identify and use different methods for analysing
markets.
3.Assess how businesses use their own marketing data
to analyse markets.