Interpreting Market Data

Reading the market

Collecting research is only half the job. A business then has to read the data and decide what to do. Two figures matter most. Market size is how big the whole market is, measured by its total sales or value. Market share is the slice one business holds, written as a per cent of that whole. If a firm sells fifty of every hundred units bought, its market share is fifty per cent. Data is usually set out in tables of exact figures or in charts that show a trend at a glance. Reading these precisely, comparing the numbers and spotting whether a line rises or falls lets a firm make good decisions. This module shows how to interpret market data.

Market data words

Learn these before you read any chart, and keep the difference between the whole market and one firm in mind.

Market size against market share

These two are easy to mix up, so it helps to set the whole market beside one firm within it.

How to read data for a decision

Do not just glance at a chart. Work it in order. Read the exact figures off the table or the axis first. Compare them, so you can see which is larger and by how much. Then look for the shape over time, whether the line climbs, dips or holds steady. Only then decide what the business should do, and back the decision with the numbers you read. A precise value beats a vague impression every time.

Match the term to what it tells you

What does this show?

A chart shows a firm market share climbing from 10 per cent to 25 per cent over three years. What does this best suggest?

• The firm is competing better and winning more of the market.
• The firm is losing customers each year.
• The whole market must be getting smaller.
• The data tells us nothing at all.

Uses of market data

Select the TWO good uses of market data.

• Seeing which product is selling best
• Deciding where the firm should invest
• Guaranteeing the firm can never fail
• Removing the need to make any decision

Work out the market share

A firm sells 200 units in a market where 1000 units are sold in total. Divide its sales by the total and multiply by 100 to find its market share, as a value in per cent.

Order using the data

Put the steps of turning market data into a decision in order, earliest first.

• Collect the market data
• Set it out in a table or chart
• Read and compare the figures
• Make a decision from what it shows

Complete the facts

The total sales or value of a whole market is the market _____. The portion of that market held by one firm is its market _____. The general direction data moves in over time is the _____. Exact figures set out in rows and columns form a data _____.

Plot the sales trend

A firm records its monthly sales in thousands of pounds. Months 1 and 2 are given at 20 and 25. If the steady rise of 5 each month continues, plot months 3, 4 and 5 at 30, 35 and 40.

Spot the true data facts

Tap the TWO statements that are true about interpreting market data.

• Market size measures the whole market
• Market share is one firm portion as a per cent
• Market size and market share mean the same thing
• A vague guess is better than reading exact figures

Use the data

Read each case and choose the best response, with a reason.

• A table shows product A sold 400 units and product B sold 250. The firm can only keep promoting one. Which does the data support?
• A firm holds a small share of a very large market. What does the market size figure tell it?
• A student writes that sales just went up, without giving any figures. How could the answer be improved?

Interpret the market data

A drinks firm has a table of its sales and a chart of its market share over three years. Explain how it should interpret this data to make decisions.

• Explain the difference between market size and market share
• Explain how to read exact figures from a table
• Explain how a rising or falling trend on a chart is read
• Explain how the firm could use the data to make a decision
• Finish with a judgement on why precise reading beats a rough impression