The marketing mix - OCRInterpretation of market data

Market data refers to information that a business needs to know about the characteristics of a particular market. In order to make decisions, a business will need information about:

• changes in demand
• target market and market share
• the impact of changes made to a product, and the effect of promotional activity

Changes in demand

A successful marketing campaign will lead to an increase in demand for the products involved. By looking at sales figures, a business will be able to identify whether sales have increased because of the marketing activity. However, many factors can affect the level of demand for a product. So as well as sales figures, a business should consider whether there are any economic factors that could have also affected the level of demand.

For example, a business may have reduced the price of a product as part of a marketing campaign which led to a higher than expected increase in demand for the product. If this coincided with an increase in unemployment at the same time, then some customers may have switched to the cheaper product because they have less income, rather than because they were aware of the marketing campaign.

Target market and market share

The target market is the group of customers that a business expects to buy their products or services. It is important for businesses to be aware of any demographic factors that might influence the behavior of customers in their target market, as they will need to react to them. This might include changes in population size, changes in migration and changes in population structure.

For example, an ageing population will influence the decisions made by a business that produces products aimed at younger people, since they may expect sales to fall if they do not make changes.

Market share is the proportion of total sales in a market made by one business. It is an important piece of marketing data, as many businesses will use it as an indication of how well they are doing compared to their competitors. It is calculated using the following formula:

For example, a business sold £100,000 of a product last year, in a market where sales were worth £1,000,000. The business therefore had a market share of:

When making decisions it is important for a business to know what is happening to the overall size of the market, as well as the market share that they have.

The impact of changes made to a product, and the effect of promotional activity

Whenever a business makes changes to the marketing mix of a product, it is important to understand the impact that it may have. By using sales data alongside market research data a business can assess where a product is in its life cycle, and make any necessary changes to the product in an effort to improve or maintain sales.

If a business is planning to promote a product, it will need to ensure that production levels can cope with any anticipated increase in sales. It would not be sensible to spend millions on a successful marketing campaign if the business is unable to meet the increased demand for the product.