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BSBMKG507 Interpret market trends and

developments Learner Guide

Table of Contents Unit of Competency ................................................................................................................... 3

Application ......................................................................................................................... 3

Performance Criteria.......................................................................................................... 4

Foundation Skills ................................................................................................................ 5

I n t r o d u c t i o n ........................................................................................................................... 6

Interpret Trends and Market D e ve l op m e nt s ............................................................... 9

Notes ....................................................................................................................................... 45

Key P o i n t s E l e m e n t 1 ........................................................................................................ 46

P e r f o r m a n c e C r i t e r i a E l e m e n t 2 .................................................................................... 48

Analyse Qualitative Results ............................................................................................ 48

Activity Two .............................................................................................................................. 62

Key P o i n t s E l e m e n t 2 ........................................................................................................ 62

P e r f o r m a n c e C r i t e r i a E l e m e n t 3 .................................................................................... 65

Report on Market D a t a ............................................................................................. 66

Notes ........................................................................................................................................ 84

.................................................................................................................................................. 84

Activity Three ........................................................................................................................... 85

Key P o i n t s E l e m e n t 3 ....................................................................................................... 86

Required Knowledge ....................................................................................................... 90

Unit of Competency

Application

This unit describes the skills and knowledge required to conduct an analysis of market data

in order to determine organisational and competitor business performance and to prepare

market and business forecasts. The information assists in developing an organisation’s

marketing plan and to determine the current or potential future success of marketing

strategies.

This unit applies to marketing professionals who use statistical techniques to analyse

organisational and competitor marketing performance and to interpret new and emerging

trends when forecasting future business needs.

No licensing, legislative or certification requirements apply to this unit at the time of

publication.

Unit Sector Business Development – Marketing

Performance Criteria

Element

Elements describe the

essential outcomes.

Performance Criteria

Performance criteria describe the performance needed to

demonstrate achievement of the element.

1. Interpret trends and market developments

1.1 Use statistical analysis of market data to interpret market trends and developments

1.2 Analyse market trends and developments for their potential impact on the business

1.3 Use measures of central tendency or dispersion and correlations between sets of data for quantitative interpretation of comparative market data

1.4 Perform qualitative analysis of comparative market information as a basis for reviewing business performance

1.5 Analyse the market performance of existing and potential competitors and their products or services to identify potential opportunities or threats

2. Analyse qualitative

results 2.1 Analyse performance data from all areas of the

business to determine success of marketing activities 2.2 Identify over-performing and under-performing

products and services to be considered for redevelopment or withdrawal

2.3 Forecast existing and emerging market needs based on information available using forecasting techniques

3. Report on market

data 3.1 Prepare, plot and interpret data for visual presentation 3.2 Assess visual presentation for potential problems, and

take any necessary corrective action 3.3 Report on analysis of market data to meet

organisational requirements in terms of content, format, level of detail and scheduling

Foundation Skills

This section describes language, literacy, numeracy and employment skills incorporated in

the performance criteria that are required for competent performance.

Skill Performance Criteria

Description

Reading 1.2, 1.5, 2.1, 2.3  Researches, evaluates, analyses and interprets market information from a range of sources, and interprets requirements

Writing 3.1, 3.2, 3.3  Prepares reports containing complex ideas and

concepts and writes in a range of styles to suit different audiences

Numeracy 1.1-1.5, 2.1, 2.3  Collects, organises and analyses data to draw

conclusions or make forecasts about trends and probability

 Uses specialised statistical analysis techniques

Oral

communication

3.1, 3.3  Presents information to a range of audiences using appropriate vocabulary and non-verbal features

Interact with

others

3.1, 3.3  Demonstrates sophisticated control over oral, visual and/or written formats, drawing on a range of communication practices to present findings

Get the work

done

1.1, 1.2, 1.4, 1.5, 2.1,

2.2, 2.3, 3.1, 3.2, 3.3

 Develops plans and uses effective organisational and time management skills to complete tasks with an awareness of how they may contribute to longer term operational and strategic goals

 Applies systematic and analytical decision making processes in complex and non-routine situations

 Uses digital technologies and systems to enter and analyse data and to present information

This unit of competency is about being able to use the skills and knowledge required

to interpret market trends and developments. This will assist you in gaining the Unit of

Competency BSBMKG507 Interpret Market Trends and Developments.

I n t r o d u c t i o n

“Knowledge is of no value unless you put it into practice.” Anton Chekhov

This manual is broken up into three Elements. They are:

1. Interpret Trends and Market Developments

2. Analyse Qualitative Results

3. Report on Market Data.

At the conclusion of this training you will be asked to complete an Assessment Pack

for this unit of competency. The information contained in this resource will assist you

to complete this task.

On competent completion of the assessment you will have demonstrated your ability

to coordinate and review the promotion of an organisation’s products and services.

E L E M E N T 1 :

I n t e r p r e t T r e n d s a n d M a r k e t D e v e l o p m e n t s

P e r f o r m a n c e C r i t e r i a E l e m e n t 1

1.1 Use statistical analysis of market data to interpret market trends and developments

1.2 Analyse market trends and developments for their potential impact on the business

1.3 Use measures of central tendency or dispersion and correlations between sets of data for quantitative interpretation of

comparative market data

1.4 Perform qualitative analysis of comparative market information as a basis for reviewing business performance

1.5 Analyse the market performance of existing and potential competitors and their products or services to identify potential

opportunities or threats.

Interpret Trends and Market D evel o p men t s

Use Statistical Analysis of Market Data to Interpret Market Trends and Developments

Use Measures of Central Tendency or Dispersion and Correlations between Sets of Data for Quantitative Interpretation of Comparative Market Data

In this unit, we will be examining the processes involved in the interpretation of

market data in order to gain competitive advantage. Let’s begin with an examination

of statistical methods that can be used to analyse market data for trends and overall

market developments.

Data Marketers need data if they are to predict and read trends. Data can come from many

sources.

The level of the data you obtain may vary from competitor to competitor depending

on just how active they are in the market and how large the competition organisations

actually are. So, what sorts of data can you actually obtain to assist you in creating an

effective competitive analysis? There are generally two main sources of information

that any organisation can obtain about its competitors: Primary and Secondary data.

• Primary Data

Primary data is data that you obtain ‘first hand’. That is, it is data that you have actually

gathered yourself. This type of data may include an analysis of your competitor’s pricing

structure, anecdotes supplied by staff, having discussions or conducting research with

your suppliers and customers. It is essentially making data yourself, rather then using

data that has already been created. Of course, as you can imagine, this is the most

expensive and time consuming form of data gathering, as you are actually going

through the entire process yourself.

• Secondary Data

Secondary data is sometimes also referred to as recorded data. It is data and

information that is already available in your organisation, or through external sources.

Because of this, you do not actually need to create the data yourself; rather you have

the data ready for analysis. Information such as industry market reports, annual reports

and organisational brochures are all good sources of external secondary data.

Internally previous market analysis and previous market research reports may provide

the basis for projections in to the future and thus can be considered as internal

secondary data sources.

There are a range of information sources that are available to you for conducting your

competitive analysis:

• Primary Data

○ Market Research commissioned by the organisation

○ Anecdotal discussions

○ Analysis conducted by the organisation into price, promotion and distribution

strategies of the competitors.

• Secondary Data

○ Annual Reports

○ Price lists

○ Advertising

○ Press releases

○ Tender documents

○ Patent applications

○ Government reports

○ Industry board reports

○ Market analysis.

In the main, primary data is the freshest and most useful; however, it is also the most

expensive and difficult to produce. It also takes time to create, so cannot be used

for on-the-fly analysis. In many ways, a competitive analysis is like a recipe. Each

individual piece of information that you have is not particularly useful. A price list, in

isolation, does not tell you much about an organisation’s overall marketing strategy

- much like baking powder on its own is not a useful thing to have in the kitchen.

However, combine the pricelist with advertising, anecdotes and primary research into

reactions to pricing, and you can gauge much better exactly what it is the competitor

is doing (similarly baking powder, flour, sugar, baking soda, eggs and milk are a good

start to a delicious cake batter).

The analysis of your competition is generally more qualitative in nature than an analysis

of your organisation as a whole. This is because much of the information that you

want to obtain about the competition is best obtained in this manner. Once you have

gathered all the information you need to conduct a competitive analysis, it is important

that you spend time summarising the data. This will help to obtain a complete picture

of what is happening in the market and where you can find opportunities for your

organisation to thrive and threats which may impact your business’ ability to survive.

Statistical Analysis

One of the more difficult aspects of market analysis is the statistical analysis of data

that you have obtained about the market. We will begin by looking at the various

statistical measures that you can use in your work, before we move on to look at

specific examples applying these tools to market data.

Basically there are three comparisons that marketers make:

1. Comparison of Data

Here the highs and lows of data are identified. An example would be to compare who is the

best salesperson.

2. Transition of Data

This is applied to time-based data to understand the trend of change. An example

would be to understand whether the website traffic has been going up or down in the

last 30 days.

3. Composition of Data

These are used to understand how a data value breaks down into its constituents. An

example could be to break down the website traffic into search, direct, referrals and

campaigns.

Market Trends and Developments

Identifying the market trends that will impact on your organisation enables you to gain

a competitive advantage by determining future opportunities before your competitors,

protect your business against possible threats and identify how you can better meet

the needs of your customers now and in the future.

A trend is any significant change to your market, both positive and negative, that your

organisation needs to respond to. For example, a trend in the food market may be a

move to low Glycaemic Index (GI) products due to an increase in health consciousness

amongst consumers. A trend in the accountancy market may be a move to clients

wanting additional services such as management consultancy.

The impact of specific trends will vary considerably by market or industry, so it is important

to only identify the trends, which will have an impact on your future business performance.

The most commonly used sets of data include:

• Geodemographic segmentations available from proprietary suppliers such as:

○ Acorn – UK based firm (http://www.acorn.caci.co.uk/)

○ Mosaic – Australian based firm (http://www.experian.com.au/)

○ Prizm – Operated by Nielsen in Australia (http://www.nielsen.com/au/en.html)

• Segmentation by customer lists such as:

http://www.acorn.caci.co.uk/)

http://www.experian.com.au/)

http://www.nielsen.com/au/en.html)

○ Average order value by units or dollars

○ Geography

○ Lifetime value by units, dollars and transactions

○ Recency and frequency or response/purchase.

• Segmentation of the prospect list by:

○ Demographic match with customers

○ Geographic match with customers

○ Psychographic match with customers.

Analysis may be made of:

• Conversion Rates of Leads to Sales This measure is perhaps one of the most simple to define. You are looking at the

percentage of sales leads that your organisation is able to convert into sales. How

many people who walk into your store actually buy something? How many people that

visit your website buy a product? How many people that see your ad buy something?

It is more generally defined as being the number of people who visit (your website or

store, or telephone number etc.) who actually do a predefined marketing action (such

as purchase, request information etc.)

Let’s assume that you have 100,000 visitors to your website and you have 4,563 sales during

that same month. The conversion rate of leads to sales can then be calculated as:

No. who take action / No. of people who visit * 100/1 = Conversion rate of leads to

sales

4,593 / 100,000 * 100/1 = 4.59% Conversion rate is quite a difficult thing to interpret. However, by tracking the

conversion rate over time, you can obtain a good view of what your average conversion

rate is and use this as the basis of a comparison to your competitors or for looking at

how effective your marketing efforts are. Conversion rates for websites are quite low,

and a good conversion rate may be as low as 2%.

• Measures of Central Tendency In statistics, a central tendency (or, more commonly, a measure of central tendency) is

a central or typical value for a probability distribution. It may also be called a centre or

location of the distribution. Colloquially, measures of central tendency are often called

averages.

A probability distribution assigns a probability to each measurable subset of the

possible outcomes of a random experiment, survey or procedure of statistical

inference. Examples are found in experiments whose sample space is non- numerical,

where the distribution would be a categorical distribution; experiments whose sample

space is encoded by discrete random variables, where the distribution can be

specified by a probability mass function; and experiments with sample spaces encoded

by continuous random variables, where the distribution can be specified by a

probability density function.

They include the mean, mode and median. They can be easily calculated and are readily

interpretable.

○ Average Order Value Average Order Value (AOV) is the average dollar amount spent per order over a certain

period of time. This high-level metric is calculated by dividing the total revenue

generated by the number of orders taken. Note that the same customer could have

multiple transactions, and that AOV is determined using sales per order, not sales per

customer.

AOV does not tell you how much profit you are making or your profit margin, but it

can be a useful way to determine what revenue can be expected from a certain

number of visits. And because many transaction expenses (such as administration costs

and site hosting) remain the same whether a customer spends $3 or $300, raising your

AOV can raise your profitability.

Because AOV is a key performance indicator, it’s generally monitored closely. Any dip in your

online store’s AOV should spark action. Likewise, when AOV rises, it can be worth

investigating what prompted the increase-whether it is a recent promotion or new product

line. Trying to replicate those efforts could be helpful in boosting revenue.

Your AOV can also help you figure out how customers with high-value orders are finding

your site. Start by calculating your site’s overall AOV, which establishes a baseline. You

can then calculate the AOV of customers who came to your website through email

promotions, keyword searches and advertising campaigns. If the AOV of a campaign is

higher than your baseline AOV, it may be worth investing additional dollars. On the flip

side, if the AOV of a particular tactic is low, it might signal it’s time to move your

marketing dollars elsewhere.

Let’s look at a simple example of data from a supermarket, being ten sales obtained during a

short period of time:

$12.65, $134.53, $27.54, $54.90, $3.87, $55.50, $98.99, $108.78, $44.89,

$65.00 To obtain the Average Order Value here, you need to add up all the data and then divide

it by 10 (the number in the sample):

Total / Number in Sample = Average Order Value 606.65 / 10 = $60.65

In this case, we have an Average Order Value of $60.65. In this particular case, you

can see that, on average, customers spent $60.65 per sale during this period. Because

of the huge range of figures obtained (ranging from $3.87 to $134.53) it is important

that you use large sample sizes, to ensure that the figures obtained are actually

representative of average sale value.

○ Average Response Rate Average Response Rate (ARR) is calculated in a very similar way to Average Order Value

- in that it measures the central tendency of the data. In this case, it is attempting to

calculate the average response rate to your campaigns - how many people respond

to the advertising by buying, visiting a website, calling your organisation. In this case,

you are calculating the average of your conversion rates over time. By calculating this,

you have an excellent measure against which to compare future values of the

conversion rate.

So, let’s look at an example, where six previous advertising campaigns have been run and the

conversion rates calculated as follows:

4.5%, 7.3%, 3.3%, 5.4%, 6.1%, 5.5% To obtain the Average Response Rate, you need to add up all the data and then divide

it by 6 (the number in the sample):

Total / Number in Sample = Average Response Rate 32.1 / 6 = 5.35%

So, in doing this, we can compare how well future campaigns compare to the average.

Let’s assume the example used above (in the section on conversion rate) is used as a

comparison. In this example, we can see that campaign had a lower response rate

(4.59%) than the average of the past six campaigns. We can also add this into the

average now, since it is a new campaign:

Total / Number in Sample = Average Response Rate 36.7 / 7 = 5.24%

So, even when the new campaign is accounted for in the average, it is still less effective at

gaining a response than the average.

• Measures of Dispersion As noted previously, there are problems with measures of central tendency. Without

knowledge of dispersion (how spread the data is) they can become extremely

misleading. Take for example the wide range in our supermarket example; this is likely

to skew the data to be lower than it normally would be. This is why measures of

dispersion are so useful. The best way to measure dispersion is through the use of the

Standard Deviation (SD). We will use this method to measure dispersion in the data

listed above.

You begin by obtaining the mean of the data that you have obtained - in this case we

have already calculated the mean of the data in our Average Order Value as

$60.65. We now need to subtract the average from each item in the list in order to

obtain a list of deviations:

$12.65, $134.53, $27.54, $54.90, $3.87, $55.50, $98.99, $108.78, $44.89, $65.00 Subtract 60.65 from each of these values: -$48.00, $73.88, -$33.11, -$5.75, -$56.78, -$5.15, 38.34, $48.13, -$15.76, $4.35

Now, because some of these figures are negative, we need to square each of these

numbers:

2304.0000, 5458.2544, 1096.2721, 33.0625, 3223.9684, 26.5225, 1469.9556,

2316.4969, 248.3776, 18.9225 Next, we sum all of the figures obtained and divide the sum by 1 less than the number of

items in the list:

Sum = 16195.8325 / 9 = 1799.536944 Now, to obtain the Standard Deviation, we simply find the square root of this number:

SD = SQRT 1799.536944 SD = 42.42

We have now calculated the Standard Deviation of this data to be 42.42. We know that

this is a measure of dispersion, but what does it actually mean? Generally speaking, the

higher the standard deviation is, the more dispersed the data will be. We can say, in

the majority of cases that 68% of all values will fall within plus or minus standard

deviation of the mean.

• Nature and Degree of Relationship Between Variables It is very important to understand relationship between variables to draw the right

conclusion from a statistical analysis. The relationship between variables determines

how the right conclusions are reached. Without an understanding of this, you can fall

into many pitfalls that accompany statistical analysis and infer wrong results from your

data.

There are several different kinds of relationships between variables. Before drawing a

conclusion, you should first understand how one variable changes with the other. This

means you need to establish how the variables are related - is the relationship linear or

quadratic or inverse or logarithmic or something else?

Correlation can tell you something about the relationship between variables. It is used to

understand:

1. Whether the relationship is positive or negative

2. The strength of relationship.

Correlation is a powerful tool that provides these vital pieces of information.

In the case of family income and family expenditure, it is easy to see that they both

rise or fall together in the same direction. This is called positive correlation.

In case of price and demand, change occurs in the opposite direction so that increase in one

is accompanied by decrease in the other. This is called negative correlation.

Statistical correlation is measured by what is called coefficient of correlation (r). Its

numerical value ranges from +1.0 to -1.0. It gives us an indication of the strength of

relationship.

Unfortunately, the calculation of Correlation by hand is quite complicated, so we will

examine how it is calculated using Excel.

Let’s assume we have the following data:

Sales (Millions) Advertising Spend ($000) Year

$4.60 $611 1999

$5.10 $367 2000

$3.40 $321 2001

$6.80 $656 2002

$6.10 $672 2003

$5.90 $423 2004

$5.60 $450 2005

Here, we are going to calculate the correlation between the amount spent on

advertising and the amount of sales in the year. We would expect to find a positive

relationship - the higher the advertising spend, the higher we would + expect sales to

be.

To calculate correlation we use the Excel formula:\ =CORREL(ARRAY1,ARRAY2) Array 1 and 2 are defined as the two separate data sets. In this case one is sales and the other

advertising spend. We end up with the formula:

=CORREL(B3:B9,D3:D9) and a correlation between the variables of 0.622 When analysing correlation, anything between 0 and 1 is a positive relation and

anything between 0 and -1 is a negative relationship. The closer a correlation is to

1, the stronger the relationship. In this case we have a moderately strong positive

relation, so it can be concluded that increased advertising spend, in the case of this

data, has resulted in increased sales.

Correlation is only appropriate for examining the relationship between meaningful

quantifiable data (e.g. air pressure, temperature) rather than categorical data such as

gender, favourite colour etc.

• Net Response Rate Response curves are a useful means of tracking the response to a given marketing

campaign over time. On one axis, you should put weeks or months or days of the

campaign running. On the other could be cumulative sales. You then plot, on a day-

by-day basis the actual cumulative sales for the period the campaign is running. To

further enhance this tool, you can add cumulated forecasted sales. By comparing

these two factors, you can compare actual sales for the campaign against the forecast

sales. Also useful is the examination of the shape of the plot. Where are sales rising

most quickly, where do cumulative sales begin to drop off? How well do the shapes of

the two curves (forecast and actual) compare to each other?

• Normal Distribution Probability Curve

The graph of the normal distribution depends on two factors - the mean and the

standard deviation. The mean of the distribution determines the location of the centre

of the graph, and the standard deviation determines the height and width of the

graph. When the standard deviation is large, the curve is short and wide; when the

standard deviation is small, the curve is tall and narrow. All normal distributions look

like a symmetric, bell-shaped curve, as shown below.

The curve on the left is shorter and wider than the curve on the right, because the curve on

the left has a bigger standard deviation.

The normal distribution is a continuous probability distribution. This has several implications

for probability:

○ The total area under the normal curve is equal to 1.

○ The probability that a normal random variable X equals any particular value is 0.

○ The probability that X is greater than a equals the area under the normal curve bounded

by a and plus infinity (as indicated by the non-shaded area in the figure below).

○ The probability that X is less than a equals the area under the normal curve bounded by

a and minus infinity (as indicated by the shaded area in the figure below).

Additionally, every normal curve (regardless of its mean or standard deviation)

conforms to the following ‘rule.’

○ About 68% of the area under the curve falls within 1 standard deviation of the mean.

○ About 95% of the area under the curve falls within 2 standard deviations of the mean.

○ About 99.7% of the area under the curve falls within 3 standard deviations of the

mean.

Collectively, these points are known as the empirical rule or the 68-95-99.7 rule. Clearly, given

a normal distribution, most outcomes will be within 3 standard deviations of the mean.

• Sampling A key to any form of statistical analysis is how that data was obtained, and more

importantly from whom. Sampling refers to the methods used to choose where data

came from. It is most important to use in the creation of research data, where you

need to ensure that you eliminate any potential for bias in the data obtained. The

sample you use to gather market data should be random, in order to ensure that you

have a representative sample of data from your customers.

• Time Series Analysis such as:

○ Response Curves Response curves are a useful means of tracking the response to a given marketing

campaign over time. On one axis, you should put weeks or months or days of the

campaign running. On the other are cumulative sales. You then plot, on a day-by-day

basis the actual cumulative sales for the period the campaign is running. To further

enhance this tool, you can add cumulated forecasted sales. By comparing these two

factors, you can compare actual sales for the campaign against the forecast sales. Also

useful is the examination of the shape of the plot. Where are sales rising most quickly,

where do cumulative sales begin to drop off? How well do the shapes of the two curves

(forecast and actual) compare to each other?

○ Recency or Frequency Grids (RFM) A Recency / Frequency grid attempts to tell you the way in which your customers are

behaving. It attempts to divide an organisation’s customers into groups according to

the purchasing behaviours - each item on the grid represents a different group of

consumers who have their own distinctive behaviours that they display. There are

three major attributes that are used to divide up customers using this technique:

Recency (R): This is a measure of how long it has been since a customer last did business

with an organisation.

Frequency (F): This is a measure of how often a consumer will visit a business (either in

person, on the phone or via a website).

Monetary (M): As you might imagine, this measures how much money they may

spend.

Each of these attributes is then divided into 3-5 distinct sections. For example: Recency - of last purchase: Last day (1), Last week (2), Last Month (3), Last Year (4), Less

than once a year (5)

Frequency during last year 0-2 (1), 3-5 (2), 5-10(3), 10-20 (4), 20+ (5) Monetary spend per purchase $0-$25 (1), $25-$75 (2), $75-$125 (3), $125-

$250 (4), $250+ (5) Now, we are able to divide customers into various grid groupings. For example (using the

order RFM):

425 - Customer spends more than $250 during each purchase, does business 3-5 times

per year and last purchased during the last year.

413 - Customers who spend $125-$250 in a single purchase, only visit 1-2 times during

a year, and last did business during the previous month.

Monetary spend per purchase $0-$25 (1), $25-$75 (2), $75-$125 (3), $125-

$250 (4), $250+ (5) Now, we are able to divide customers into various grid groupings. For example (using the

order RFM):

425 - Customer spends more than $250 during each purchase, does business 3-5 times

per year and last purchased during the last year.

413 - Customers who spend $125-$250 in a single purchase, only visit 1-2 times during

a year, and last did business during the previous month.

As you can see, you are building up quite a strong picture of consumers. There are in

fact 125 different customer groupings using this grid. This technique is very useful when

you are able to obtain solid data that outlines exactly how many of your customers fit

into each grid block.

Once you know the size of each grid, you can, in fact, tailor marketing efforts to those

largest grid blocks. Also, from a trend point of view, looking at this data can help you

gain an overview of exactly how your customers shop with you, and where the trend

seems to be changing.

○ Lifetime Value of Customers (LVC) Calculating how much a customer is worth to your organisation can be quite a difficult

task, but it is one that is quite important to work out. The lifetime value of a customer

is quite easy to actually calculate, however gathering the right evidence and

information and data can be the difficult part.

Put simply, the calculation for Lifetime Value of a Customer is found by multiplying:

Average Sale * Average number of times a customer reorders. As you can see a very simple process. We have already established the way in which

to calculate average sales, and you should be able to ascertain an average number of

times a customer reorders during a year using data from other analysis (such as your

RFM grid).

Another alternative method for working out the average times a customer reorders is to

divide the number of sales you have had by the number of customers you have had.

The number of sales you have had should be easy enough to calculate; however the

number of customers may be more problematic to calculate.

So, let’s work out the Lifetime Value of a Customer for an organisation that has 3,411

customers, has made 15,650 sales at an average of $219.

Using this data: Number of times a customer reorders = 15,650 / 3,411 = 4.6 Lifetime Value of Customer =

4.6 * 219 = $1005

We now know that right now, the lifetime value of your customer is, on average,

$1005 In this case, you could say that if your cost to gain a new customer is less than

$1005 you have a profitable relationship with that customer. If it costs you more than

this value, that customer is, in fact, not profitable to your organisation.

○ Net Present Value of Customers (NPV) NPV is not only a standard financial metric used for appraising long-term projects, but

it is also a key metric in determining Return on Marketing Investment (ROMI). It is

important for marketers to have an understanding of NPV and be able to calculate

it in order to justify a new campaign to organisational executives and the finance

department. Calculating NPV is also a good standard practice for marketing

departments to evaluate whether or not each campaign is a good investment.

Net Present Value is the present value of a campaign or initiative minus the costs. NPV

compares the present value of money today to the value of money in the future. The

consideration of the time value of money is what makes NPV different from traditional

ROI. Cash in the future is worth less than cash today, because cash today can be invested

to produce more value in the future. Future cash values must be discounted to

determine their present rate. ‘r’ represents the rate of return.

Today Future $1

1 + r = $1 The Present Value (PV) of money is the sum of future cash benefits discounted to today.

The net present value subtracts all costs associated with the campaign, both fixed and

variable.

NPV = (start-up marketing cost) + profit in time period 1 + profit in time period 2 + profit in time period 3

1 + r (1 + r)2 (1 + r)3 In this formula, the present value of the profit is computed for each time period

involved in the campaign. Years or months are most commonly used. “r” represents the

rate of return. It is determined by industry and usually ranges from 8% – 15%.

NPV is used to determine whether or not a campaign or initiative is beneficial to the

organisation. A general rule of thumb is that if NPV > 0 the campaign is worthy of

investment because the average benefits outweigh the costs. When NPV < 0, however,

the costs outweigh the average benefits and the campaign needs to be redesigned.

NPV allows marketers to compare ROMI of campaigns with different budgets and time

periods. It can also be used to calculate the anticipated change in share price for an

organisation based on an individual campaign.

Market trends and development can include:

• Changes in Technology Perhaps even more important than keeping up to date with current marketing trends

is keeping up with the future of digital marketing. If you and your organisation can

forecast the future now, you’ll have an easier time assimilating when it happens. For

example, when wearable technology was first introduced, it didn’t seem like they would

be successful. Now, however, it seems that they are one of the most important

commodities to watch in digital marketing.

As the technology continues to progress, it’s extremely important for digital marketers

to be prepared to market towards wearable technology, which will require even more

optimisation and quick thinking than the shift to mobile devices.

Because technology will soon reach around the globe, it’s integral for you to have a

solid understanding of different cultures. This goes beyond learning to speak the

language. It encompasses a need to understand, maybe even live among a variety of

cultures and learn their customs, religions, social views, economics, and more.

Once you understand the culture, you’ll be able to craft a marketing plan for each

audience. Don’t wait to start learning about this one. Global reach will happen, and

the time to act is now if you want to be ahead of the game when it comes to marketing.

• Changes in Supplier Prices Supply and demand for products, currencies and other investments creates a

push-pull dynamic in prices. Prices and rates change as supply or demand changes. If

something is in demand and supply begins to shrink, prices will rise. If supply increases

beyond current demand, prices will fall. If supply is relatively stable, prices can

fluctuate higher and lower as demand increases or decreases.

With these factors causing both short and long-term fluctuations in the market, it

is important to understand how all these elements come together to create trends.

While these major factors are categorically different, they are closely linked to one

another. Government mandates impact international transactions, which play a role in

speculation, and supply and demand plays a role in each of these other factors.

• Demographic Trends While demographic change occurs slowly, marketers can begin to see indicators of

potential change by identifying small trends that may suggest a larger shift over time.

By paying close attention to these trends organisations can prepare their long-term

marketing strategy to be ready when the shift becomes more apparent.

To illustrate how a marketer may respond, let’s consider the demographic

characteristic birth rate. In some countries the overall birth rate is declining while the

average age of the population is growing (i.e., people living longer). For an organisation

targeting the youth market with sporting products this trend may suggest that in

coming years they will see shrinkage in demand for their products within the youth

market as the population of this market declines. On the other hand demographic data

may signal to the organisation that another market (i.e., older market), which they may

not have previously targeted, may hold potential for new products. If it is predicted

that the shift will occur over several years the marketer can slowly move into the

new market by offering products geared toward older adults.

• Ecological and Environmental Trends Trends in the market can be identified by understanding the pattern of growth or

decline in sales resulting from changes in environmental factors such as; seasonality,

population, social, technology, economic cycles and political climate.

The environmental sector is highly complex, being comprised of a diverse set of

activities. These activities range from high-growth segments such as carbon emissions

reductions markets, to regulated growth markets such as waste management, to

declining employment markets in the natural resource industries.

Emerging areas of the environmental sector, namely carbon & climate change mitigation and

investments in energy efficiency and renewable energy resources will drive the greatest

future growth for the environmental sector and should be incorporated into future definitions

and models of the environmental sector.

Over the last decade there has been a gradual trend toward pollution prevention

activities as a replacement for pollution abatement and control activities. This trend

has, for instance, resulted in a difference in the type of capital expenditures firms made

for environmental protection. As this trend continues to evolve, it is blurring the

distinction between the environmental sector and traditional industries.

• Economic Trends (Local, Regional, National, International) In order for an economic indicator to have predictive value for investors, it must be

current, it must be forward-looking and it must discount current values according to

future expectations. Meaningful statistics about the direction of the economy start

with the major market indexes and the information they provide about:

○ Stock and stock futures markets

○ Bond and mortgage interest rates, and the yield curve

○ Foreign exchange rates

○ Commodity prices, especially gold, grains, oil and metals. Although these measures are crucial to investors, they aren’t generally regarded as

economic indicators per se. This is because they don’t look very far into the future - a

few weeks or months at most.

In Australia, the Australian Bureau of Statistics (ABS) refers to:

○ National Accounts

○ International Accounts

○ Consumption and Investment

○ Production

○ Prices

○ Labour Force and Demography

○ Incomes

○ Housing Finance. You can access the Key Economic Indicators at http://www.abs.gov.au/

• Government Activities e.g. Interest Rates, Deregulation Global business is more complex and problematic than those which are only domestic in their

focus. The main methods for business to expand globally include exporting, relocating

production, joint ventures and foreign direct investment.

Any global venture will have Specific Financial Influences:

1. Currency Fluctuations

Foreign exchange dealers (often associated with a bank) facilitate foreign currency dealings –

usually involving $US. Often the spot rate (when the transaction actually occurs) may be

different from the rate when the contract was made.

2. Economic Outlook

Australian business is affected by global markets. The overall global economic outlook

affects the level of economic activity, government policy, interest rates etc. This will

impact on all domestic business although some more than others. The Global Financial

Crisis (GFC) for example had a profound effect on business activity and opportunity

throughout Australia.

3. Interest Rates

Affect costs of borrowing overseas (OS) funds / affect foreign investment.

4. Availability of Funds

Australian financial institutions borrow overseas and large corporations can directly source

funds from global markets. A tightening of the availability of funds will impact on domestic

business directly or indirectly.

• Industrial Trends Industry trends are patterns or trends that occur within a specific industry. These trends

may relate to price, cost, consumer purchasing, marketing, manufacturing, sales

methodology or any number of other areas. Trends occur within every industry and can

provide organisations with important data to help them remain competitive in the

marketplace.

http://www.abs.gov.au/

Analysis of industry trends can be very valuable to manufacturers and retailers.

Understanding how consumers purchase products can help organisations make decisions

regarding allocation of funds and labour.

Watching industry trends can also help businesses stay competitive. For example,

several years ago, video rental stores began phasing out VCR tapes in favour of

DVDs. The industry trend was toward the newer media. Stores in this industry had to

make a decision: They could either follow the trend or continue to compete for the

business of consumers who wanted to rent DVDs or they could fight the trend and

position themselves as one of the few locations where consumers could continue to

access VCR tapes. Of course digital downloading of television shows and movies has

not largely replaced the video stores.

Industry trends can be influenced by a number of factors. A trend toward increased

safety standards in automobiles might be tied to government legislation, for example.

Likewise, a trend toward shorter hemlines in women’s fashion may be the result of the

popularity of a celebrity who is known to wear short skirts. Also, a trend toward use

of sustainable materials in a manufacturing sector may be the result of both public

demand and a decrease in the availability or affordability of non-sustainable materials.

• Penetration of New Technologies Forecasting market penetration is an essential step in the development, assessment,

and commercialisation of new technologies. Among the many forecasting approaches

available are the economic cost model and the diffusion model. Separately, each of

these approaches has been used in many applications of market penetration

forecasting. This wide variety of forecasting methods gives analysts several options

from which to choose the best fit for their needs and resources. In some instances,

the best prediction tool is a combination of methods.

• Social And Cultural Factors Cultural Factors are some of the strongest influences of consumer buyer behaviour.

Cultural Factors are the set of basic values, perceptions, wants and behaviours that

are ‘learned’ by a consumer from their families and other important social institutions.

‘Culture’ is the most basic source of a consumer’s wants and behaviour. It lives at the

foundation of a consumer’s world view.

Culture is mostly a learned behaviour, being constructed by the society a consumer

grows up in. That society ‘teaches’ the consumer basic values, perceptions, wants and

behaviours. What a consumer is ‘taught’ can vary greatly in different parts of the world.

For example, in Australia a child will learn such values as democracy, freedom, working

hard, making your own success, and family values. Children in many Asian countries

will learn such values as social harmony, concern with social and economic well-being

instead of civil and human rights, loyalty towards authority and the well-being of the

family over the well-being of self.

Marketers need to always try to notice cultural shifts in order to discover new products

that might be desired by consumers in other cultures and subcultures. Recent trends

that have developed over the past decade are the growth of health and fitness over

junk and processed food products, and the personal entertainment market which has

grown as group and family entertainment in the living room has decreased (think

tablets and Netflix). It is the marketers’ responsibility to keep an eye on your customer

segments, their cultures, subcultures and any new trends that affect them or may bring

new groups of customers to your products.

When identifying your market trends, it is helpful to also look at overseas information

and see which trends are occurring in an equivalent market to yours. Trends may occur

a year or so ahead in an overseas country and knowing about them now enables you

to plan for the future. If you don’t have access to overseas information, the internet is

a great place to start. The internet also enables you to set up web alerts so that when

something relating to your market occurs you will receive up to the minute information.

Profiling your customer and looking at what their needs and wants are now and how

they are likely to change can also identify market trends. Conducting a survey with

your existing customers that specifically covers these issues will enable you to start

identifying movement in your market.

Analyse Market Trends and Developments for their Potential Impact on the Business Every business plan should include market analysis. This is one of the first and most

important reasons to do a business plan. And you should renew your market analysis

at least every year. Markets change and a business needs to watch for changes in its

market.

The market you need to look at is your potential market, not the actual market served,

the one that’s limited to your existing customers. Your target market is much wider

than just the people you already reach. It’s the people you might someday reach, or

people you could reach, that you need to be concerned about.

For example, the market of a local movie theatre or restaurant includes not just the

people who regularly go there but everybody who lives within driving distance. The

market for a landscaping business includes all the homes and commercial properties

within a logical reach. The market for downloadable e-books over the internet includes

everyone connected to the web. The market for personal computers includes homes,

schools, businesses and government organisations.

• Getting the Information

The information sources that will help you conduct a market analysis are different for

every business plan. For example, you might need local information you can get from

your local chamber of commerce. Or you might be able to find your market information

at http://www.business.gov.au, which is a good source for information. You might also

need to find other government statistics, or other commercial statistics, so you may be

conducting some internet searches to track down the information.

Not all the information you need is going to be publicly available, and you may have to

settle for educated estimates. Sometimes you’ll have to extrapolate information from

different sources to get the information you’re seeking. Good market research can

come from telephone directories, catalogues, industry association statistical

compilations, real estate information and density maps.

• Segmentation Always try to divide your target market into useful slices or segments. Dividing the

market into smaller segments helps the organisation address the more specific market

needs, media, pricing patterns and decision criteria in each of their different market

http://www.business.gov.au/

segments.

Segmentation helps you target specific people with specific messages and helps you

focus on user needs. Families might need quick, consistent service while students might

need late-night service. Families read the newspaper; students read posters on

bookstore walls. Knowing your market segments will help you make smart decisions

when it comes to providing the products and services that will work best for them and

for communicating with them.

• Market Size and Growth You need to be able to measure and quantify your market. For example, if local

homeowners are part of your target market, then you should be able to count them.

You need to know whether you have 500 people in your market, or 200,000, or 2 billion.

Be able to show what the total market is for your business.

When it comes to market growth, you need to think about percentage change as a

market forecast. Is the number of homeowners in your target market increasing or

decreasing and by how much per year? How many older workers retire every year, and

how is this changing? How many people eat in restaurants in your market area, and

how is this behaviour changing? Market forecasts start with the total numbers of

possible purchasers in each market segment, then project percentage change over the

next three to five years.

• Market Trends You need to understand what’s going on with your market. What marketing trends and

fashions do you see having an influence on your market segments? If you’re selling cars,

for example, is there a trend that shows people responding to higher gasoline prices or

more environmental concerns? In computers, is there a trend toward more power and

lower prices? How does the increase in TV recorder equipment affect your market? The

questions that affect target markets will be different for every business, and these are

just examples. What’s important is that as you create your business plan, you become

aware of the market trends that affect your specific market.

Perform Qualitative Analysis of Comparative Market Information as a Basis for Reviewing

Business Performance

Qualitative analysis uses subjective judgment based on unquantifiable information,

such as management expertise, industry cycles, strength of research and development,

and labour relations. Qualitative analysis contrasts with quantitative analysis, which

focuses on numbers that can be found on reports such as balance sheets. The two

techniques, however, will often be used together in order to examine an organisation’s

operations.

Qualitative analysis deals with intangible, inexact concerns that belong to the social

and experiential realm rather than the mathematical one. This approach depends

on the kind of intelligence that machines (currently) lack, since things like positive

associations with a brand, management trustworthiness, customer satisfaction,

competitive advantage and cultural shifts are difficult, arguably impossible, to capture

with numerical inputs.

Comparative market analysis is an examination of the prices at which similar items

in the same area recently sold. Real estate agents perform a comparative market

analysis for their clients to help them determine a price to list when selling a home

or a price to offer when buying a home. Since no two properties are identical, agents

make adjustments for the differences between the sold properties and the one that is

about to be purchased or listed to determine a fair offer or sale price. Essentially, a

comparative market analysis is a less-sophisticated version of a formal, professional

appraisal.

Comparative market information may include:

• Best practice information

• Books and articles, including:

○ Academic

○ Business

○ General

○ Industry.

• Brochures

• Direct mail packages

• Documentaries and interviews on broadcast media

• Inter-firm comparison data

• International benchmarking

• Internet

• Public or proprietary research

• Speeches.

Analyse the Market Performance of Existing and Potential Competitors and their Products or Services to Identify Potential Opportunities or Threats

Businesses do not exist in isolation. They work within a framework of competitors, who

all have a significant influence on how you run your business. So, when establishing

your market position, an analysis of your competitors is crucial.

But why do you actually need to look at what your competition is doing? When conducting your marketing planning and strategic development, there are a number of

roles that competitive analysis can play. These include:

• Providing strategies for achieving competitive advantage for your business

• Understanding what your competitors are doing well and where they aren’t doing so

well

• Looking at what the competitors did in the past, what they are doing now and what

they will do in the future

• Examining what your returns on your investment in marketing may be (based on what

the competition is doing).

The strategic importance of analysing and understanding your competition can not be

underestimated. They provide an excellent snapshot of your market and what you can

do to exploit their weaknesses.

When attempting to examine your competition, it is important that you have a solid

understanding of exactly who your competition are, as well as information such as:

• Are they a major threat to our business?

• What are their strengths and weaknesses?

• What marketing activities do they undertake and are these successful?

• What is their profile in the market?

• What are their objectives?

• Is their cost structure similar to ours?

• What are the market shares of our main competitors?

• How are they structured?

• What is their distribution system?

• What is their advertising strategy and position profile?

• How satisfied are their customers?

• What new products do they have planned?

• How effective are their marketing and promotion?

Information such as these can be gained both qualitatively and quantitatively. The

level of the data you obtain may vary from competitor to competitor depending on

just how active they are in the market and how large the competition organisations

actually are.

A multitude of software programs designed for use with quantitative data is available

today. Quantitative research, predominantly statistical analysis, is still common

in the social sciences and such software is frequently used among social science

researchers.

A useful statistical software tool can generate tabulated reports, charts, and plots of

distributions and trends, as well as generate descriptive statistics and more complex

statistical analyses. Lastly, a user interface that makes it very easy and intuitive for

all levels of users is a must.

There are many software programs available for quantitative and qualitative analysis.

It is important to realise that the software programs are mostly just sorting

mechanisms

- they do not analyse. You still need to engage with your data. Some of these programs are free and others must be purchased. ATLASti, NVIVO, MAXQDA,

NUDist, ANTHTOPAC are some of the software.

Competitive Analysis

The competitive analysis is a statement of the business strategy and how it relates to

the competition. The purpose of the competitive analysis is to determine the strengths

and weaknesses of the competitors within your market, strategies that will provide

you with a distinct advantage, the barriers that can be developed in order to prevent

competition from entering your market and any weaknesses that can be exploited

within the product development cycle.

The first step in a competitor analysis is to identify the current and potential competition.

There are essentially two ways you can identify competitors. The first is to look at the market

from the customer’s viewpoint and group all your competitors by the degree to which they

contend for the buyer’s dollar. The second method is to group competitors according to their

various competitive strategies so you understand what motivates them.

Performance of existing and potential competitors may include comparisons about:

• Corporate share price

• Market share

• Number of customers

• Profitability

• Sales in units or dollars. Once you have grouped your competitors, you can start to analyse their strategies

and identify the areas where they are most vulnerable. This can be done through an

examination of your competitors’ weaknesses and strengths. A competitor’s strengths

and weaknesses are usually based on the presence and absence of key assets and skills

needed to compete in the market.

To determine just what constitutes a key asset or skill within an industry concentrate

your efforts in four areas:

1. The reasons behind successful as well as unsuccessful firms

2. Prime customer motivators

3. Major component costs

4. Industry mobility barriers. The performance of an organisation within a market is directly related to the possession

of key assets and skills. Therefore, an analysis of strong performers should reveal the

causes behind such a successful track record. This analysis, in conjunction with an

examination of unsuccessful organisations and the reasons behind their failure, should

provide a good idea of just what key assets and skills are needed to be successful within

a given industry and market segment.

For instance, in the personal-computer operating-system software market, Microsoft

reigns supreme with DOS and Windows. It has been able to establish its dominance in

this industry because of superior marketing and research as well strategic partnerships

with a large majority of the hardware vendors that produce personal computers. This

has allowed DOS and Windows to become the operating environment, maybe not of

choice, but of necessity for the majority of personal computers on the market.

Microsoft’s primary competitors, Apple and IBM, both have competing operating

systems with a great deal of marketing to accompany them; however, both suffer from

weaknesses that Microsoft has been able to exploit. Apple’s operating system for

its Macintosh line of computers, while superior in many ways to DOS and Windows,

is limited to the Macintosh personal computers; therefore, it doesn’t run many of

the popular business applications that are readily available to DOS and Windows.

To an extent, IBM’s OS/2 operating system suffers from the same problem. While

it will run on all of the personal computers DOS and Windows can run on and even

handle Windows applications, the number of programs produced for OS/2 in its native

environment is very small. This is the type of detailed analysis you need in analysing

an industry.

Through your competitor analysis you will also have to create a marketing strategy

that will generate an asset or skill competitors do not have, which will provide you

with a distinct and enduring competitive advantage. Since competitive advantages

are developed from key assets and skills, you should sit down and put together

a competitive strength grid. This is a scale that lists all your major competitors or

strategic groups based upon their applicable assets and skills and how your own

organisation fits on this scale.

To put together a competitive strength grid, list all the key assets and skills down

the left margin of a piece of paper. Along the top, write down two column headers:

‘weakness’ and ‘strength.’ In each asset or skill category, place all the competitors

that have weaknesses in that particular category under the weakness column, and all

those that have strengths in that specific category in the strength column. After you’ve

finished, you’ll be able to determine just where you stand in relation to the other firms

competing in your industry.

Once you’ve established the key assets and skills necessary to succeed in this business

and have defined your distinct competitive advantage, you need to communicate them

in a strategic form that will attract market share as well as defend it. Competitive

strategies usually fall into these five areas:

• Product

• Distribution

• Pricing

• Promotion

• Advertising.

Strategies primarily revolve around establishing the point of entry in the product

lifecycle and an endurable competitive advantage. This involves defining the elements

that will set your product or service apart from your competitors or strategic groups.

You need to establish this competitive advantage clearly so it is understood not only

how you will accomplish your goals, but why your strategy will work.

Opportunities Your analysis may produce opportunities or threats as a result. The opportunities may

include:

• Alliances

Coming together of two or more firms to create a unique organisational entity (such

as a joint venture), in which each firm retains its individual identity and internal control.

The purpose of an alliance is to:

1. Achieve joint strategic goals

2. Reduce risk while increasing rewards

3. Leverage resources.

Since an alliance in neither an acquisition nor a merger, it requires new control

methods and new management skills.

• Cooperative Ventures When two or more grantors combined participate in a grant project, it is a cooperative

venture. This participation can be in the form of sharing financial or technical resources.

• Exports To send goods or services across national borders for the purpose of selling and

realising foreign exchange.

• Extending, expanding or otherwise changing an existing business through:

○ Increasing customer numbers

○ Increasing average order value

○ Increasing lifetime value of the customer

○ Reducing costs of marketing

○ Improving current products/services

○ Developing new distribution channels.

• Franchising Franchising is a business relationship in which the franchisor (the owner of the business

providing the product or service) assigns to independent people (the franchisees) the

right to market and distribute the franchisor’s goods or service, and to use the business

name for a fixed period of time.

• Joint Venture (JV)

A business arrangement in which two or more parties agree to pool their resources for

the purpose of accomplishing a specific task. This task can be a new project or any

other business activity. In a Joint Venture (JV), each of the participants is responsible

for profits, losses and costs associated with it. However, the venture is its own entity,

separate and apart from the participants’ other business interests.

• Strategic Alliances An arrangement between two organisations that have decided to share resources to

undertake a specific, mutually beneficial project. A strategic alliance is less involved

and less permanent than a joint venture, in which two organisations typically pool

resources to create a separate business entity. In a Strategic Alliance, each organisation

maintains its autonomy while gaining a new opportunity. A Strategic Alliance could help

an organisation develop a more effective process, expand into a new market or develop

an advantage over a competitor, among other possibilities.

• New Products or Services for Existing and New Markets New market opportunities spring from a range of possible sources and vary in their

size, importance and risk. The list of places to look includes the following:

○ Different uses for an established imaging or document technology

○ Alternate or improved imaging or document technology

○ Alternate offerings of service models, supplies, and other annuities

○ New geographic regions

○ New demographic or vertical industry segments.

• Potential for Greater Penetration of Existing Markets with Existing Products or

Services.

Market penetration occurs when an organisation enters/penetrates a market with

current products. The best way to achieve this is by gaining competitors’ customers

(part of their market share). Other ways include attracting non-users of your product

or convincing current clients to use more of your product/service, with advertising or

other promotions. Market penetration is the least risky way for an organisation to

grow.

Threats

Threats may include:

• New Competitor Entering the Market When new firms enter markets in search of economic profits, existing firms are forced to

compete by lowering their prices and making do with fewer customers. This eats into the

economic profits of all firms in the market AOV.

It’s only after these profits have been almost completely devoured that the process of

entry stops.

• New Products or Services Being Launched by Existing Competitors As the product’s popularity grows, sales will increase and your unit costs will go down. But

competitors will emerge to grab a share of the profits to be made. Your marketing objective

will now be to maintain and increase your market share - for example, by improving your offer

and making it more widely available.

• Increased Number of Inactive Customers Resulting in Reduced Average Lifetime

There’s little point in dedicating massive resources to generating new customers when 25-

60% of your dormant customers will be receptive to your attempts to regenerate their

business if you approach them the right way, with the right offer. Reactivating customers who

already know you and your product is one of the easiest, quickest ways to increase your

revenues. Re-contacting and reminding them of your existence, finding out why they’re no

longer buying, overcoming their objections and demonstrating that you still value and respect

them will usually result in a tremendous bounty of sales and drastically increased revenues in

a matter of days… and will lead to some of your best and most loyal customers.

• Reduced Average Order Value Resulting in Reduced Average Lifetime Value If there’s a drop in Revenue per Visitor (RPV,) it could be due to:

○ A sudden increase in visitors without any buying intent (drop in conversion rate): Check

if there has been any recent marketing activity that brought a lot of unqualified visitors

with low buying intent. Use segmentation to understand what channels are bringing

the right traffic.

○ Customers are buying less of high-value goods and more of low-value goods (drop in

AOV): Consider using a recommendation engine.

Activity One

1a You have decided to investigate which brand of products that your customers prefer. There are six brands available for sale. The data you obtained by surveying 300 people is presented below. Can you be confident that Brand D is the most preferred brand in the market?

Brand Preference by Customers

A 40

B 51

C 49

D 55

E 52

F 53

Total 300

You will need to access the Normal Distribution Calculator for the next two questions. You

will find one at http://stattrek.com/online-calculator/normal.aspx

1b An average light bulb manufactured by the Acme Corporation lasts 300 days with

a standard deviation of 50 days. Assuming that bulb life is normally distributed, what is

the probability that an Acme light bulb will last at most 365 days.

1c Suppose scores on an IQ test are normally distributed. If the test has a mean of

100 and a standard deviation of 10, what is the probability that a person who takes the

test will score between 90 and 110?

http://stattrek.com/online-calculator/normal.aspx

Notes

Key P o i n t s E l e m e n t 1

E l e m e n t 1 – ‘True’ or ‘ F a l s e ’ Q u i z

True False

Q A measure of central tendency is the Mean.

Q Correlation attempts to determine statistical significance.

Q The lifetime value of a customer can not be estimated easily.

Q An RFM grid attempts to measure response rates.

Q Standard Deviation is a measure of dispersion.

Q RFM analysis attempts to group customers with similar purchase habits.

Q PRIZM is a statistical method for analysing correlation.

• Statistical methods can be used to analyse market data in order to find market

trends and developments which may impact on a business

• Once market trends have been identified, you must assess each to determine how

much of an impact they are likely to have on a business

• Measures of central tendency, dispersion and correlation can be used to compare

different sets of market data

• Qualitative analysis is appropriate for comparing competing businesses as a basis

for reviewing business performance

• Opportunities and threats posed by your competition are an important

consideration in any market analysis.

Q Technology continually changes.

Q The exchange rate is a business trend that importers need to

carefully monitor.

Q All businesses face the same market trends.

E L E M E N T 2 :

A n a l y s e Q u a l i t a t i v e R e s u l t s

P e r f o r m a n c e C r i t e r i a E l e m e n t 2

Analyse Qualitative Results

2.1 Analyse performance data from all areas of the business to determine success of marketing activities

2.2 Identify over performing and under performing products and services to be considered for redevelopment or withdrawal

2.3 Forecast existing and emerging market needs based on information available using forecasting techniques.

Analyse Performance Data from all Areas of the Business to Determine Success of Marketing

Activities In the previous section we spent a lot of time examining quantitative analysis of

market data. This involved a lot of number crunching and statistical analysis. We now

move on to analysing qualitative results. Qualitative data is different than quantitative

analysis in that it attempts to gather an understanding of human behaviour and why

people do something - rather than simply examining what people do. We will begin this

section with an examination of the tools used to gather qualitative information about

a business before we look at analysing the data and finally look at forecasting trends.

Gathering Qualitative Data

Unlike quantitative research methods, which are all about gathering data in

quantities; qualitative research tries for quality - gathering in-depth information from

a small sample. Examining your market from a qualitative perspective often involves

interviewing your subjects and asking them to project their opinions and ideas. The

key methods used in Qualitative research are:

• Focus Groups

• In-Depth Interviewing

• Projection

• Observation.

Focus Groups Focus groups are a commonly used market research technique for gathering the

opinions and ideas of the customer. This is particularly useful for identifying trends in

a given market.

The focus group interview usually brings together 8-12 interviewees or participants for

1-2 hours of discussion. This discussion is generally led by an experienced moderator,

who will guide the conversation, where necessary; but more often than not simply

helps facilitate the flow of information. The moderator is generally given a list of topics

that they try to get through during the 1-2 hour session - and the entire thing is then

recorded on to video for further analysis by the researchers.

I am sure that on television you have seen a comedy program that makes use of focus

group interviews - where the main character suggests crazy ideas that for some

reason get taken up by the company. Picture what these rooms look like. The

participants are generally seated around a long table, the moderator at one end, large

glass windows (actually 1 way glass) are set up on one wall to allow researchers to

watch, but participants are unable to see through. This is exactly the situation that

most focus groups are run under.

Focus group participants are often sought through telephone interviews, research

panels or by simply approaching people at the shopping mall. The key advantage

of this method is that (while it takes 1-2 hours of everyone’s time) it is actually a

quick and inexpensive method of gaining consumer opinions, as the whole interview

process is over in 2 hours. Imagine telephone interviewing 500 people, it is expensive

and time-consuming. In order to facilitate people actually coming to a focus group,

they generally receive a small fee for their time.

A key advantage of using the focus group method of research is that it provokes

interesting responses as ideas bounce around the room. One person may mention

one thing, which sets off another thinking about that idea. However, the nature of

focus groups also brings up one of its major problems - ‘groupthink’. Group dynamic

theory suggests that when a group of individuals gets together, you may have the

group conforming to and agreeing with what others are saying. This may reduce the

amount of information that you receive using this technique.

In-Depth Interviews Where a focus group brings together a group of individuals to gain their opinions on

the market as a whole, in-depth interviews spend between 40 and 60 minutes with one

individual, asking their opinions on a very detailed basis. This method of gathering

qualitative data is very useful when you are aiming to get an in-depth understanding

of the personal opinions and values of your customers. In terms of market analysis,

this is very useful in establishing the future needs of your customers and looking for

trends in the market as a whole.

Using this interview technique requires a highly experienced interviewer; the interview

itself is only loosely structured. The interviewer may be given a list of topics that the

organisation would like covered and this will be used by the interviewer to guide their

discussion and determine what needs to be asked and what does not. This lack of

a structure can make interpreting the data extremely difficult, as each interview may

raise different questions, eliciting slightly different responses.

Another issue that can sometimes arise when using in-depth interviews is the problem

of interviewer bias. The interviewer is given free reign over the actual conduct of the

interview, and of course this can mean that the way in which the interviewer asks

questions, or decides what to follow up on, and what not to follow up on, can make

the responses given by interviewees different. Therefore, there needs to be careful

monitoring of the interview process to ensure that bias does not occur. All in-depth

interviews are recorded, so listening to the recordings can help reveal any such bias.

A problem with the in-depth interview is that, as you can imagine, interviewing 10

respondents for 1 hour each is very time consuming, and this of course leads to the

issue of expense. The interviewer is also very expensive, as you must pay them for a

longer time and their experience tends to make them more expensive to hire.

However, the group pressures to conform are eliminated. The only difficulty is the

interviewee’s feelings of pressure towards answering towards the expectations of what

they feel that the interviewer wants to hear. A good point of the technique, however,

is that the interviewer is able to explore areas that they feel are of interest to the

organisation. They can follow-up, ask more questions or spend less time on a subject

- leaving much of the agenda up to the interviewer. Projection

A lesser used method of gathering qualitative data is the use of projective techniques.

This is where the interviewee is provided with some form of stimulus and from that

is asked to provide their beliefs, opinions or attitudes. These techniques are less

common than the previous ones, although they may actually form a major part of those

techniques. For example, a portion of the in-depth interview may actually be based

on projective techniques. Let’s look at some of the most common techniques and how

they can be used:

• Sentence Completion: This technique is used by providing a candidate with the

beginning of a sentence and then asking them to complete it. It is open-ended in that it

facilitates creative thinking. You may ask a question such as: When I think of XYZ

Company, I think of X, or If XYZ Brand was a car, it would be a X.

• Word Association: This is a very common psychological technique, which has limited

use in qualitative market analysis. However, you might, for example, give the candidate

a list of words and then ask them to state the first word that comes to mind after

hearing that word. You may have a list of 10 words, 3 of which are your test words -

effectively disguising the research. So, you may want to know people’s opinions of a

trend such as Environmental issues on business. So you may ask you customers to

associate words such as Carbon Footprint, Emissions Trading and Greenhouse Effect,

along with filler words such as Business, Cat, Management, Telephone, E-commerce.

By hiding the word, you can then look at what people think of those test words - which

is particularly useful in learning what your customers think of a trend.

• Story completion: This technique involves starting a story and asking them to finish it.

So, you may make up a story about a customer coming to your store and buying a

certain product, and then asking for the story to be completed. The information given

in the story, or the themes associated with the story, may be useful in determining

people’s opinions.

The difficulty with projective techniques is that you must find a way of analysing the

data, which can, in some cases, be quite difficult. Generally, it is done by thematic

analysis. Looking for themes in responses and using those to code the responses.

Observation

The final qualitative information gathering technique is observation. Observation

involves the researcher actually watching the respondent performing a given task.

In market analysis, this is of limited use, but it can be useful in determining how

customers shop. You may set up an experiment, where you watch the respondents

doing something and using that data to draw conclusions.

Analysing Qualitative Data

Unlike quantitative data, statistical methods are generally not used in the analysis of

qualitative data, rather the data is collected, summarised (in charts and tables)

and the researcher examines these charts and tables and attempts to draw meaning from

them. This means that in some regards analysis is much easier for those

researchers who are less mathematically gifted. Qualitative information and data is generally gathered and then interpreted using

the impressions and opinions of the researcher. That is, the researcher begins by

examining the data and forming an impression or idea on what the data is showing.

This is then used to report findings. This process generally begins with a process known

as coding.

Coding is the process of taking qualitative data and finding demarcations within it.

These demarcations or segments are labelled with a code. For example, you may have

a set of information describing people’s opinions of your brand. People may use 40

or 50 different words to describe your brand. However, for the most part, they will be

using different words to describe the same things. So, by summarising their responses

into thematic groups you will have less data to analyse.

The next step in analysing qualitative data is noticing trends within the responses.

Once you have coded your data, you can summarise the data into various forms - such

as graphs and tables. You may produce a bar chart summarising the number of

responses to various categories of response to a question such as ‘how do you feel

about Brand XYZ’. You can then use this graphical representation to draw conclusions

about the data.

As you can see, the degree to which you can analyse the data will be strongly influenced

by the coding that you have created. The better the coding, the more useful your

summaries will be.

In the next section, we will be providing instructions for all the common forms of data

presentation, which are so important to effective qualitative data analysis.

Analyse Performance Data from all Areas of the Business to Determine Success of Marketing Activities

Trend forecasting is a complicated but useful way to look at past sales or market

growth, determine possible trends from that data and use the information to

extrapolate what could happen in the future. Marketing experts typically utilise trend

forecasting to help determine potential future sales growth. Many areas of a business

can use forecasting, and examining the concept as it relates to sales can help you gain

an understanding of this tool.

• Time Series and Trends

Trend forecasting is quantitative forecasting, meaning its forecasting is based on tangible,

concrete numbers from the past. It uses time series data, which is data where the numerical

value is known over different points in time. Typically, this numerical data is plotted on a

graph, with the horizontal x-axis being used to plot time, such as the year, and the y-data

being used to plot the information you are trying to predict, such as sales amounts or number

of people. There are several different types of patterns that tend to appear on a time-series

graph.

• Constant Pattern When looking at sales numbers, for example, a constant trend is seen when there is

no net increase or decrease in sales over time. The sales may increase or decrease at

specific dates, but the overall average stays the same. However, even if the average

results are the same within a year, there still can be seasonal changes. For example,

sales levels may be consistently greater in the summer and lower in the winter,

although the average is the same in the entire year.

• Linear Patterns A linear pattern is a steady decrease or increase in numbers over time. On a graph, this

appears as a straight line angled diagonally up or down. If someone looked at sales of

VCRs, for example, they might see a diagonal line angled downward, indicating that

sales of VCRs are decreasing steadily over time.

• Exponential Patterns An exponential pattern is simpler than it may sound. Rather than a slow, steady increase

over time, an exponential pattern indicates that data is rising at an increasing rate over

time. Instead of a straight line pointing diagonally up, this graph shows a curved line

where the last point in later years is higher than the first year, if the rate is increasing.

An exponential trend for sales might indicate that sales were very slow in early years,

but the product has been growing increasingly popular with each year as more people

are interested in purchasing it.

• More Complicated Patterns Trend forecasting also may deal with patterns that are much more complicated than

constant, linear or exponential graphs. For example, a damped trend may show there

was an overall increase in sales for a number of years and then the sales suddenly

stopped. A polynomial trend might show a gradual increase, then stagnation in sales over

time and then a decrease in sales.

• Forecasting Using Patterns By looking at data over a number of years and finding patterns, you can use this

information to extrapolate future patterns. A trend means that the same series of

events is happening over and over. For example, if there is a trend of constant sales

each year with a decrease of sales in winter that is offset by an increase in the summer,

a person might extrapolate this to predict that sales will continue to be low in the

winter. A store manager might use this information to offer additional products in the

winter to help hedge against a drop in sales that time of year. However, forecasting isn’t

done quickly by just looking at a graph. Forecasters may translate the patterns of a

graph into a formula to better predict what will happen in the future. They also may use

spreadsheet software, which typically comes with built-in trend forecasting tools.

Cautions Trend forecasting is scientific, but it is also uncertain. The longer into the future a

forecast is applied, the more uncertain the results become. Unexpected events can

happen that will disrupt a steady pattern. The more complicated a pattern appears to

be, the more uncertain a trend forecast is.

Identify Over-Performing and Under Performing Products and Services to be considered for Redevelopment or Withdrawal

Underperformance shows itself in the form of a negative deviation between what

you planned or could have achieved and your actual accomplishments. You could

also become aware of underperformance through the actions/reactions of your

stakeholders.

Signs of Performance Problems

• Deviations from planned outputs, outcomes and impacts

• Costs deviations from budget

• Frequent shortage of cash

• Customer complaints about products and services

• Negative feedback from donors, grant makers or beneficiaries

• High consumption of resources

• Frequent downtime of key manufacturing or office infrastructure. Performance problems can be caused by:

• Top management (e.g. due to lack of leadership)

• Administrative functions (e.g. financial management, fundraising)

• Programs/ projects leaders and teams

• Individual employees

• Influences from outside (e.g. energy supply, poor infrastructure).

How to Identify Underperformance Organisations could conduct a number of activities if they want to identify

underperformance. Important activities would be:

1. Monitoring Programs, Projects and Processes

Monitoring is an on-going process of recording, collecting and reporting data that

serves a number of purposes. One of them is to identify a performance problem as early

as possible. The data will indicate at an early stage where in the organisation a

performance problem exists, whether it is in the form of:

• High consumption of inputs used (e.g. energy, hours of labour) compared to standard

consumption

• Lower outputs of productions processes compared to what you planned to achieve

• Lower number of services delivered to beneficiaries than planned

• Delays in implementing elements of an action plan or a project

• Failure to achieve a minimum value required (e.g. process availability > 80

%). The data gathered will either force you to take immediate action or will initiate a

data analysis to confirm that a performance problem exists that has to be addressed.

2. Assessing Performance

A performance assessment will require more data and information than you will

normally gather during monitoring. It is a non-routine activity that you might conduct,

for example, as part of the situation analysis, during a project or when a project has

been finished. The assessment will look in detail at data of mission-driven programs

and projects, data of processes or the ability of an organisation to perform. The

assessment will identify:

• Deviations in the implementation phase of programs, projects and other activities

• Deviations in output, outcome and impact from the intended results after a major

activity has been finished

• Deviations from good practice or target values for processes.

3. Benchmarking

Benchmarking is a process that involves comparing your organisation´s performance

to that of another one. It will help you to identify performance gaps between

organisations that use ‘good practices’ or are even leaders in a field.

4. Analysing Performance Related Data and Information

Data and information analysis is a process that you will encounter as an extension of a

monitoring process as well as an activity during a performance assessment or

benchmarking process. The analysis will show trends and patterns in previously

unsorted, often large amounts of data and information. Some of these trends and

patterns will point to a performance problem. Ideally, you identify possible causes for

underperformance before they lead to a problem and become visible in different ways.

Forecast Existing and Emerging Market Needs based on Information Available using Forecasting Techniques

A forecast is a projection into the future that is based on evidence of past results, or

on other appropriate information (e.g. what is happening in a similar market).

A survey carried out in 2000 revealed that online sales of music and videos and

associated software are on course to account for 20% of the total market within five

years. In order to create such a forecast it is necessary to look at figures for previous

years e.g. 1998, 1999, and then 2000 to work out what the trend was. Using these trend

figures it is then possible to forecast into the future. Forecasting is very important in

marketing because it helps to give clear indications of what future demand for goods

and services are likely to be.

Marketing involves anticipating customer needs and requirements. Forecasts then

make it possible to respond to these changes.

Typical forecasts that help marketing are:

• Delphi Techniques The Delphi Technique is an excellent forecasting method in that it allows you to gain

the opinions of experts in order to gain opinions on what is going to happen in the

future. The Delphi technique makes use of questionnaires, summaries and feedback

from responses.

The technique begins with a survey that is provided in order to focus on a particular

issue, along with a group of individuals who are selected as being useful for gathering

information from. Once each respondent returns the survey, the responses are

summarised. As well, a summary of any feedback is given and a second questionnaire

is produced and mailed. This process is repeated until sufficient data is obtained, and a

final summary is produced.

• Model Building Building forecast models involves attempting to use theoretical underpinnings in a

response to a practical situation. In this case, you are attempting to use formula and

the like to build a model of what happens in the real world. That model can then be

used to test scenarios to see what the outcome would be.

• Projection A projection presents an entities expected financial position given one or more

hypothetical assumptions. It is sometimes used to present one or more hypothetical

courses of actions for evaluation. It often answers the ‘what if’ question. A projection

like a forecast may contain a range of results based on the hypothetical course of

actions. Projections are quite useful where management wants to test how a

hypothetical course of action such as changing the product mix of sales or changing

price levels might impact results of operations or financial condition.

• Surveys of Intentions This is the most direct method of estimating demand. In the short-run customers are

asked what they are planning to buy for the forthcoming time period – usually a year.

This is very useful when bulk of the sales is to industrial producers. Here the burden of

forecasting is shifted to the consumer. In this method, customers may tend to

exaggerate their requirements. Customers are numerous, making the method too

laborious, impracticable and costly. This method does not expose and measure the

variables under the management’s control.

• Scenario Planning Scenario planning is a structured way for organisations to think about the future. A

group of executives sets out to develop a small number of scenarios—stories about how

the future might unfold and how this might affect an issue that confronts them.

Top-Down Forecasting Bottom-Up Forecasting The Bottom-Up Assessment Sales, and the revenues that they generate, are subjected to some fundamental

limitations. Depending on the type of business these may include hours in the day,

capacity of a machine or plant to produce widgets, or numbers of sales people making

customer calls, to name a few. Beyond these physical limitations the firm is also bound,

in most cases, by pricing constraints imposed by competitors for comparable products

and services. Think of this collection of limits as the supply side of the forecast.

The Top-Down Analysis This is the demand side of the forecasting process. A business can only sell as much of

a product or service as there exists demand for regardless of its capacity to create same.

A credible forecast will rely on an objective, quantitative analysis of current and

projected demand in a targeted market, whether defined by customer type, geography

or other attribute important to the firm.

Each of these components of the forecast is necessary, but not sufficient, to establishing

a credible projection. When combined, however, they can serve as an effective yin

and yang offering a holistic solution to the forecasting conundrum.

Putting the Two Approaches Together Let’s use a hypothetical start-up business to demonstrate how sales and revenues

might be projected using this tandem approach.

George is thinking about opening a barber shop. He wants to estimate his revenue

potential. Using the Bottom-Up method George has determined that he will be open

eight hours a day six days a week. He also knows that an average cut requires about

45 minutes. Based on his research on prices charged by other barbers in his area he

will need to price a standard cut at no more than $20.

George’s maximum “unit sales” per week is 64 and his maximum revenue opportunity is,

therefore, $1,280. As a practical matter, George knows that he will not be operating at

maximum capacity each and every week. He estimates that he can generate sufficient traffic

to be busy 75% of the time. His weekly revenue opportunity is forecast at $960.

To test the reasonableness of this revenue estimate George next researched market

demographics and spending patterns of households in his town. Additionally, he

identified the number of barber shops in a 5-km radius of his favoured location. His

research revealed that households in this area spent $1,000,000 on haircuts last year

at ten different shops. If he hits his revenue target he would command just under

5% of the available market and would operate a shop about one-half the size of

competitors. Armed with these findings George concluded that his revenue projection

was reasonable and decided to press forward with his venture.

Imagine, however, if the local market for haircuts was only $250,000 with ten

competitors. George would need to capture 20% of the market to achieve his revenue

goal and generate twice the revenue of the average existing shop in his area. These are

significantly more daunting hurdles than those in the previous scenario and may cause

George to think twice about starting his business – or an outside lender or investor

about committing capital to the venture.

Activity Two

What is the difference between qualitative and quantitative data in terms of how

data is collected and how it is analysed?

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Key P o i n t s E l e m e n t 2

E l e m e n t 2 – ‘True’ or ‘ F a l s e ’ Q u i z

True False

Q Qualitative data collection is looking for quantity of information.

Q Focus groups can last up to 2 hours.

Q In-depth interviews are conducted on a 1-to-1 basis.

Q Focus groups should consist of between 8 and 30 people.

Q Focus groups obtain more in-depth information than interviews.

Q Data coding involves attempting to summarise qualitative

results into quantitative terms.

Q Focus groups and interviews can be conducted by anyone.

Q Forecasting is attempting to guess what will happen in the future.

Q Delphi processes involves questionnaires.

Q Delphi requires subject matter experts.

• Qualitative data gathering attempts to use in-depth research gathering techniques

to gather quality information from a small sample

• Qualitative techniques attempt to gain an understanding of consumer opinions

• Qualitative techniques include focus groups, in-depth interviews and projection

• Analysing qualitative data involves coding responses and summarising the data to

look for trends.

E L E M E N T 3 :

R e p o r t o n M a r k e t D a t a

P e r f o r m a n c e C r i t e r i a E l e m e n t 3

3.1 Prepare, plot and interpret data for visual presentation

3.2 Assess visual presentation for potential problems, and take any necessary corrective action

3.3 Report on analysis of market data to meet organisational requirements in terms of content, format, level of detail and

scheduling.

Report on Market D a t a

Prepare, Plot and Interpret Data for Visual Presentation

Assess Visual Presentation for Potential Problems, and Take Any Necessary Corrective Action

A crucial part of reporting is how you present your information to the reader. It needs

to be presented in such a way that the reader is easily able to establish the results

of your analysis. In order to do this, it is important to know the difference between

different types of charts and how to use them. In this section, we will look at this and

how to make your charts as effective as possible.

Charts Column Charts Column charts are the most common form of chart, and are generally used because

they are so simple to create and to understand. Column (or bar) charts are used to

compare values, for example they would be used to display how many consumers

rated the organisation Good, Average or Poor, where each bar is used to represent

the value and the height of the bar is used to represent totals.

Pie Charts

Opinions of XYZ Company

A pie chart is a graphical representation of proportions. For example, each slice of

the pie represents a percentage of the whole. An example, may be breaking up the

market into the market share per brand (where the market is 100% and each brand is

a proportion of this total).

Line Charts

Share of Widget Market

Line charts are used exclusively to represent change over a time series. In other words,

they show trends over time. You may use a line chart to plot sales over the last five

years, for example. You can easily note the trend in sales by looking at the slope of

the line. Line charts are also useful in that they allow for multiple lines. So, in our

example, one line may represent sales, a second may represent profit - so you can

compare trends in both attributes together.

Scatter Charts

A scatter chart is a specialised form of chart that is used to display two sets of data

on a single graph. These two attributes may be completely different; however, they

can be used to draw inferences about the relationship between two variables. So,

for example, you could plot our data set on advertising expenditure versus sales

on a scatter plot and look at the shape of the plot to determine whether there is a

relationship between the two variables.

Area Charts

Sales versus Advertising Spread

If a scatter plot tries to draw conclusions from data, an area chart attempts to

emphasise differences between them. Generally speaking, they are like a filled in

Line Chart, where one variable is larger than the other and the smaller data set is then

overlaid on top of the larger one, so comparisons can be made.

You do not have to start an axis at 0. In some cases, it makes sense to break the scale

and start at another value. Look, for example at our scatter plot, there is a lot of blank

area at the bottom of the chart and the left hand side. By starting the X axis at 3 and

the Y axis at 250, you will get a much better looking chart; just ensure that the scale

break is obvious to the reader. Look at our revised chart below.

• Use a chart of a decent size in your reports, the reader needs to see all the detail in

the chart to interpret it correctly.

• Less is more. Remove items that you feel might be distracting. Again, looking at our

chart above, you could remove the gridlines, to make the data clearer.

• In a Pie chart, order your data from largest to smallest.

• Try to avoid a legend if possible, use data labels instead.

Tables Another way that you can represent numerical data in your report is through the use of

tables. Let’s look at ways to increase the effectiveness of the tables that you create:

• Only use tables where the data presented cannot easily be put into words.

• Tables should be numbered in the order they appear, using the format “Fig 1: Name

of Table”.

• Tables should be as simple as possible, only include summary data. Highly complex

tables should be included as an appendix.

• Ensure tabulated data is formatted according to organisational style. Figure 1 – Beverages

Product Name Product ID Quantity Per Unit Unit Price $

Black tea

BT346

10 boxes X 20 bags

18.00

White tea WT295 10 boxes X 20 bags 18.00

Chai CH504 10 boxes X 20 bags 24.00

Curves The value curve is a tool for strategic managers to see visually how their strategy works

in relation to close competitors. So to draw your own value curve you should brainstorm

the factors of competition and list them along the horizontal axis. Then mark along

the vertical axis the extent to which the business invests in each factor of competition.

Then map your own business and the business of your close competitors or some other

nominated item to be measured.

Graphs Graphs are a two-dimensional drawing showing a relationship (usually between

two set of numbers) by means of a line, curve, a series of bars, or other symbols.

Typically, an independent variable is represented on the horizontal line (X-axis) and a

dependent variable on the vertical line (Y-axis). The perpendicular axis intersect at a

point called origin, and are calibrated in the units of the quantities represented. Though

a graph usually has four quadrants representing the positive and negative values of

the variables, usually only the north-east quadrant is shown when the negative values

do not exist or are of no interest. Often used interchangeably with the term ‘chart’.

Spreadsheets A spreadsheet shows accounting or other data in rows and columns; a spreadsheet

is also a computer application program that simulates a physical spreadsheet by

capturing, displaying, and manipulating data arranged in rows and columns. The

spreadsheet is one of the most popular uses of the computer.

In a spreadsheet, spaces that hold items of data are called cells. Each cell is labelled

according to its placement (for example, A1, A2, A3...) and may have an absolute or

relative reference to the cells around it. A spreadsheet is generally designed to hold

numerical data and short text strings. Spreadsheets usually provide the ability to

portray data relationships graphically. Spreadsheets generally do not offer the ability

to structure and label data items as fully as a database and usually do not offer the

ability to query the database. In general, a spreadsheet is a much simpler program

than a database program.

These are all a graphical representations of data. They can make data easier to understand

and be more quickly interpreted. All can be computer generated by using different programs.

Many can be created on Microsoft Excel.

There are a great many marketing programs available and most marketers would

have access to at least one. Statistically, the most popular are reputed to be Eloqua,

Infusionsoft and Hubspot. A Google search will provide you with details.

Once you have the results of your analysis, carefully consider the display before completing

“Anyone who stops learning is old, whether at twenty

or eighty.”

Henry Ford

the reporting.

Report on Analysis of Market Data to Meet Organisational Requirements in terms of Content, Format, Level of Detail and Scheduling Content

Finally you are ready to share your findings. To begin, you need to understand what

you are actually trying to achieve or convey.

Reporting is the structuring of information in such a way that it can be used to measure

and monitor business performance. It’s the process of converting data into

information.

Reporting can supply answers to questions like: What happened – and when? How

often and how much? Where exactly is the problem located? And how can I find the

solution? Based on a pre-determined query (how many of article Y did we sell in Q1?),

the specific answer can be delivered by analysing and revealing the necessary

information from the transactions database. It is about specific answers to specific

questions.

Business analytics solutions look a step further, helping you use business data to uncover

opportunities in the market and to manage risk associated with business activities. It’s the

process of converting information into knowledge.

Analytics can supply answers to questions like: Why did this happen? Which

opportunities am I missing? What is the impact on my business if this trend continues?

How can we do things better? It’s a more dynamic system that’s capable of combining

information from across the whole system to explore answers to more complex,

strategic questions. Rather than creating one report to deliver a specific answer,

analytics allows different data sources to be ‘sliced and diced’ at will, allowing a more

ad hoc, deeper exploration of the company data.

Reporting tools are generally used to validate an apparent trend or deviation in the

market in a one question, one answer format (did sales of X decrease from March to

April in the same way as last year?). Analytics give you the opportunity to research a

trend and respond directly to unexpected changes in market conditions (Why did sales

decline from March to April last year? Were there relevant issues in the supply chain/

warehouse/personnel/cash flow that could have had effect?). An analytics solution will

support the locating, combing and reviewing of any/all relevant information on the fly.

• Management

Reporting tools tend to deliver static results. Managers need to fully understand the

context and know in which way the results in the report need to be interpreted.

Analytics go a step further, providing explanations and understanding around the

results that a report can uncover. As such, analytics promote managers to take smart

action based on what they discover. They give insight into why things stand as they

do and point to possible solutions. Whereas traditional reporting may often lead to

more questions, analytics can reveal the answers needed to overcome challenges or

capitalise on opportunities.

• Key Performance Indicator (KPI) Reporting tools reveal whether a specific KPI is going to be met or not. Analytics can

reveal how a business can ensure a specific KPI is realised, or explain why one hasn’t

been, based on exploration of all relevant information.

• Setup Reporting tools often require a lot manual work, can be difficult to maintain and can

be inflexible. Analytics tools tend to be far easier to configure and offer far greater

flexibility in what you’re able to do with the information. In many cases, analytics will

offer real time information, able to deliver the insight needed in a fraction of the time

it takes to design and realise a traditional report.

• Data Source Reporting tools usually report on one or more databases, whereas analytics tools can be

configured to use a wide variety of data sources.

Reporting can give you information on what the stock level of a particular article in the

warehouse is or was. Business analytics can offer you advice on what the optimum

stock level should be based on historical sales trends and forecasting.

Reporting can reveal how much of a product has been sold. Analytics can combine

historical information for that product line, and relevant others, to calculate the

likelihood a particular volume will be sold within a particular period.

Reporting and analytics systems are both important tools, with reporting focusing on

the conversion of data into information. Analytics goes a step further, combining and

manipulating this information to give actionable insight and knowledge into the how

and why around performance, directly supporting better strategic decision making in

a more business relevant timeframe.

Format

An analytical report will be an extension of your informational report. It should:

1. Describe the problem.

2. Analyse the data by comparing at least four important criteria (features). Cost cannot be one of the features used for comparison. Each of the criteria analysed must potentially meet the needs of the person requesting the report and must fall within the limitations set by them.

3. Recommend the best solution and persuade the reader to accept your

recommendations.

Outline Organise and sequence your report according to the outline below.

1. Title Page

This page gives:

• The title of the report

• The authors’ names and id numbers

• The course name and number, the department, and university

• The date of submission. The title of the report should indicate exactly what the report is about. The reader

should know not only the general topic, but also the aspect of the topic contained in

the report.

2. Letter/Memo of Transmittal:

• Include a letter or memo of transmittal to the person who requested this report. Use

a letter if you are an outside consulting firm. Use a memo if you are employees of the

organisation that asked you to prepare this report.

• Always use proper letter or memo formatting (introduction, body, closing).

• In the opening, BRIEFLY explain the task for which you were hired.

• In the body, BRIEFLY mention the type of technology that you researched, your

method of research, and how your report is organised.

• In the closing, wish the reader well and offer help for future projects.

3. Table of Contents:

• Right-align your table and use dot leaders.

• Include a List of Figures, Charts and Tables.

4. Executive Summary (one page maximum)

To briefly summarise your report, first state the purpose of the report and the

limitations you were to work within. Briefly describe your research process. Explain how

you narrowed the field to the top three or more. List the top data that you analysed

and the criteria by which you compared them. Finally, broadly and briefly summarise

your conclusions and list your specific recommendations.

5. Introduction:

• Include the detailed information from sections one through eight of your Work Plan,

but remember that this is an analytical report, not an informational one, so adjust your

wording to reflect that.

• Also specify any limitations you were to remain within, such as budget, training, ease

of use, speed, location, type of equipment.

• Use proper section titles and first-, second-, and third-level headings.

• Define jargon and any abbreviations the first time you use them.

• Transition smoothly between paragraphs within the Introduction and also from the

Introduction to the body of your report.

6. Results of the Study (body)

Compare at least four important criteria (features) individually. Cost cannot be one of

the comparison features. Select only one product per manufacturer.

• Describe criteria #1.

• Use identical headings and in the identical sequence for EACH product that you

evaluate.

• Transition smoothly from one alternative to the next.

• Define key terms and jargon the first time you use them.

• In your discussion of each alternative, include at least one chart (bar, line, or pie, but

NOT a table). For example, in your discussion of “A” you might show how it compares

to B and C in loss. Later, in your discussion of product “B” you might show how B

compares to A and C in seasonal sales. And do similarly within your discussion of Product

• Print all charts in colour unless the report is to be photocopied. Much of the detail may

be lost in grayscale. Discuss this with your requester to ascertain their preferences.

• Transition smoothly to the Conclusions section.

7. Conclusions:

• Draw conclusions based on your criteria and make it easy for your requester to

understand what all this data means. For example, you might conclude that Microsoft

PowerPoint is the fastest; Infusionsoft is the most expensive; Eloqua is the most

comprehensive.

• Include an at-a-glance Costs/Benefits Analysis table comparing all alternatives by the

evaluation criteria (features) that you selected and by cost.

• Regardless of what system you use to rank certain features, whether you use a

Poor/Fair/Good/Excellent system or a 1-10 for example, you must include an

explanation of the values that you assigned to each ranking.

• Transition smoothly to the Recommendations section.

8. Recommendations:

• Recommend the best.

• Number each recommendation.

• Begin each recommendation with an action verb, such as ‘Buy’, ‘Install’, or ‘Implement.’

• List all items that the organisation will need to purchase in order to successfully

implement the recommended alternative.

• List professional publications, organisations, and online resources that the

requester might investigate for further information about this specific communication

technology.

• You may also recommend additional data or initiatives that might improve the

requester’s performance.

Sell! Sell! Sell! Persuade the readers to follow your recommendations. Convince them

of the benefits, that your research was thorough, that your conclusions are sound,

and that the recommendations will best meet their needs. Then conclude the report

with a closing paragraph in which you thank the requester and offer your services for

any future research needs.

9. Appendix

Include copies of all sample surveys or questionnaires that you used as well as any product

literature that you received. DO NOT include printouts of webpages.

Final Details

• Length and Structure

○ The core of your report (Introduction through Recommendations) should be no more

than 12 pages single-spaced.

○ Use lower case Roman numerals as page numbers for the Table of Contents and the

Executive Summary. Then switch to standard page numbers (1,2,3,...) starting with

the Introduction and continuing through the Works Cited page (or through the

Appendix if one is included). In MS-Word, choose INSERT>BREAK>NEXT PAGE>OK

before switching to the standard page numbers.

○ Set your page margins to 2.54 cm on top, bottom and sides.

○ Be concise. Remove opening fillers and avoid redundancies. Use proper grammar,

punctuation and spelling throughout.

○ Print all charts and graphs in colour unless otherwise agreed.

○ Enclose your report in a vinyl or heavy paper cover that can be easily unbound for

copying.

• Documentation

○ Do not use direct quotes.

○ This report is to be in your own words, so paraphrase direct quotes, i.e. use your own

words to explain what someone else said.

○ When listing product specifications or requirements, you may mention the source at

the beginning of your paragraph. For example, you might begin the paragraph by

saying: Here are the specifications and hardware requirements for Eloqua on its

website. Then list the specifications, followed by the web page title and date in

parentheses.

○ Do not merely copy and paste text into your report directly from other sources.

Notes

Activity Three

You are presented with the following graph. What conclusion would you draw from it?

How does your conclusion based on the graph compare to a statistical analysis? Use

the data in the table below for your statistical analysis.

Year Market Share Advertising Spend

1999 12% $611

2000 9% $367

2001 11% $321

2002 14% $656

2003 11% $672

2004 10% $423

2005 8% $450

Activity Four

How would you improve this chart?

This graph is depicting market share of operating systems visiting a company website.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Key P o i n t s E l e m e n t 3

E l e m e n t 3 – ‘True’ or ‘ F a l s e ’ Q u i z

True False

Q A report should be structured in a specific order.

Q The format of the title page is irrelevant.

Q The results section will include tables and charts.

Q Appendices should only be used to include highly detailed charts.

Q Pie charts are used to display count data.

Q Gridlines should be kept to a minimum.

• Reports should follow a strict order, in order to guide the reader through the report

• The results should present evidence used to draw valid conclusions from the data

• The Discussion section should tie the results together and assist in drawing

conclusions

• The Conclusions section should outline the findings of the report

• The Recommendations section should provide an action plan for the reader to

• Various types of chart can be used, and the type selected should be related to the

type of data being presented:

○ Line Chart – Comparing time series

○ Bar Chart - Displaying counts

○ Scatter Plots – Displaying relationships between two variables

○ Pie Charts – Displaying proportions.

• Tables should be as simple as possible.

Q Area charts are similar to line charts.

Q Line charts are not useful for displaying a time series of data.

R e q u i r e d K n o w l e d g e

Required Knowledge

Legislation Legislation is the act of making or enacting laws. When people talk about ‘the

legislation’, they mean a law or a body of laws. The legislation in a state or territory

are the laws enacted specifically to control and administer the state or territory.

Regulations Regulations are the way that the legislation is applied. They are generally very specific

in nature, and are also referred to as ‘rules’ or ‘administrative law’. These are

administrative ‘rules’ that describe rights and allocate responsibilities. They can take

many forms such as being legal restrictions established by a government authority,

a self-regulating mechanism for an industry such as a trade association, social

regulations such as ‘norms’, co-regulation or market regulation. They are actions of

conduct imposing sanctions such as a fine.

Marketing is impacted by legislation. You need to be aware of your rights and responsibilities

in relation to:

• Competition and Consumer Act 2010 (CCA)

CCA is the main legislation that ensures fair trading in the marketplace. It deals with

almost every aspect of your business including advertising, price setting and

transactions with other businesses or consumers. It also covers unfair market practices,

industry codes of practice, mergers and acquisitions of companies, product safety,

collective bargaining, product labelling, price monitoring, and the regulation of

industries such as telecommunications, gas, electricity and airports.

http://www.business.gov.au/

• Privacy Act The Federal Privacy Act 1988 sets rules for businesses handling personal information.

It also allows individuals to make a complaint if personal information is mishandled.

http://www.business.gov.au/

The privacy act only applies to certain businesses, so if you are unsure about your

rights and obligations, you should seek independent, professional legal advice.

• Australian Consumer Law (ACL) On 1 January 2011, all Australian Governments implemented a single, national

consumer protection and fair trading law. The Australian Consumer Law (ACL) brought

in major change for Queensland business and consumers. The new law applies to all

sectors of the economy and to all Australian consumers and businesses.

http://consumerlaw.gov.au/

• Copyright Legislation Copyright law in Australia is set out in the Copyright Act 1968 (Cth). This is federal

legislation, and applies throughout Australia. Copyright is a type of legal protection for

people who express ideas and information in certain forms. The most common forms

are: writing, visual images, music and moving images. Copyright protects the form or

way an idea or information is expressed, not the idea or information itself.

Further information may be obtained at http://www.copyright.org.au/ Codes of Practice and Social Issues A code of practice is a set of written rules that explain how people working in a

particular profession should behave.

Marketing codes of practice, as defined by the ADMA (Association for data-driven

marketing & advertising), are a set of standards of conduct for marketers to minimise

the risk of breaking legislation laws and to promote a culture of best practice. The

codes of practice are based on common sense, and deal with fairness and honesty.

Marketing codes of practice are guidelines put in place to ensure businesses and

consumers have access to adequate product and service information, to allow them

to make informed choices. An example of this are generally accepted behaviours in a

cricket match, like showing good sportsmanship by shaking hands with the opposing

http://consumerlaw.gov.au/

http://www.copyright.org.au/

team after a match, even though it’s not in the set of rules.

Complying with Marketing Codes of Practice promotes good ethics culture between

businesses and consumers, in turn creating confidence between both parties. It

ensures that both businesses and consumers are able to access adequate information

on offered products or services, allowing informed choices to be made. It also

minimises the risk of businesses breaching the Australian Consumer Laws (ACL), Privacy

Act 1988, Spam Act 2003 and the state’s fair trading legislation.

The principal structure for Marketing Codes of Practice comes under four different categories.

These are; marketing claims, fair conduct which pertains to telemarketing, e-marketing and

mobile marketing. Then there is respecting consumer preference and finally, enforcement.

There are different associations that have Marketing Codes of Practice in Australia.

Two of these are;

• The ADMA (Association for data-driven marketing and advertising) http://www.

adma.com.au/

• The ACMA (Australian Communications Media Authority.) http://www.acma.gov. au/

These codes all follow the basic principal of providing guidelines of ethical marketing

and minimising the risk of breaching legislation.

Commercial Radio Australia Commercial Radio Australia Ltd is the national industry body representing Australia’s

commercial radio broadcasters. Today Commercial Radio Australia Ltd has 260

members, representing 99% of commercial radio licensees on air. In recent times

there has been a consolidation of radio station ownership. Commercial member radio

stations are now owned by over 30 operators, with 80% of the stations formed into 12

networks.

Commercial Radio Australia pursues a range of issues on behalf of its member stations.

http://www/

http://www.acma.gov/

The staff of Commercial Radio Australia specialise in areas such as industrial relations,

human resources, marketing, industry events management, industry regulation,

advertising advice, audience surveys and research and digital radio.

http://www.commercialradio.com.au Free TV Australia The Commercial Television Code of Practice covers matters prescribed in Section 123

of the Broadcasting Services Act and other matters relating to program content that

are of concern to the community including:

• Program classifications

• Accuracy, fairness and respect for privacy in news and current affairs

• Advertising time on television

• Placement of commercials and programs promotions

• Complaints handling.

The Commercial Television Industry Code of Practice (2010) was registered by the Australian

Communications and Media Authority (ACMA) and came into effect from 1 January 2010.

http://www.freetv.com.au/ Social Responsibility Social responsibility is an ethical framework which suggests that an entity, be it an

organisation or individual, has an obligation to act for the benefit of society at large.

Social responsibility is a duty every individual has to perform so as to maintain a balance

between the economy and the ecosystems.

Societal Expectations We live within a structure of social expectations, of belief, awareness and apprehension

of how others will react to our behaviour, respond to our acts, play their roles in this

human theatre. As we behave toward others, we not only perceive them as distances

http://www.commercialradio.com.au/

http://www.freetv.com.au/

vis a vis ourselves but we also apprehend how our behaviour will affect them and what

we can expect in return. These expectations clearly modify our dispositions, but how

this relation manifests itself, how it finally issues in social behaviour requires a more

detailed analysis of social behaviour.

Ethics in Media Ethics is a system of moral principles that helps us determine right from wrong,

good from bad. Ethical principles refer to the values of openness, honesty, integrity,

impartiality, accountability, tolerance, respect for people, fairness and personal

responsibility.

Many organisations have implemented Codes of Ethics which outline the ethical principles,

values and behaviours expected of staff in that institution, government department,

university or profession.

In 2000, The Communications Council introduced a Code of Ethics based on the

voluntary regulation of the advertising industry. This was a world-first in the advertising

industry, developed by the industry, for the industry and not imposed from outside

the industry. It is a combination of broad principles that set voluntary standards of

behaviour for those that work in the advertising or marketing communications. The

Code:

• Defines ethics as a system of moral principles that allows people to determine right

from wrong, good from bad behaviour in their daily life or in a situation where there

is a conflict of interest

• Explains why the advertising industry needs a code of ethics

• Sets out how to behave in situations where there are ethical dilemmas

• Identifies ten basic principles as part of its voluntary code which it believes is ‘doing

the right thing’.

It is important that businesses are in tune with the wishes of the society they serve

or they run the risk of tarnishing their image, and alienating their shareholders,

stakeholders and customers. This would be bad for business, reducing growth and

potentially affecting profit.

In this unit of competency, we have attempted to examine the processes involved in

researching and interpreting market trends and developments. Much of this unit has

“The world rewards those

who take responsibility for their own success.”

Curt Gerrish

S u m m a r y “Though no one can go back and make a new start, anyone can start from now and make a new ending.” Carl Bard

provided you with the underpinning details involved in the process of gathering the

data that you need in order to actually begin analysing trends. As you can imagine,

trying to predict what is going to occur in the future is not an easy task, rather it

requires careful research and analysis in order to predict what your business needs

to do to survive.

We started with an examination of quantitative research into market structure and

trends. This was quite heavily mathematically based and required some statistical

knowledge. We then moved on to examine qualitative research techniques, where

quality information was obtained from a small sample. We concluded this manual

with an examination of summarising techniques. Here we were looking at how the

information you have should be reported for others to view.

Overall, analysing market trends is quite a difficult task; however the business intelligence

that you gain is very important to the continued survival of businesses in modern times.

These are some books that we feel may be of assistance to you in completing the

Assessment for this unit of competency. Your local library may hold these publications.

Kotler & Armstrong (2008) Principles of Marketing Malhotra (2009) Basic Marketing

Research Grewal & Levy (2009) Marketing

This section lists all sources that have been referred to in the creation of this manual.

You may like to refer to these books and websites in your research for your final

assessment.

B i b l i o g r a p h y