What Is Data Analysis?

Data analysis is examining financial or market research information.

All companies work with data on a continual basis. Data can include anything from financial and accounting information to detailed information about customers. Most data are maintained in a computer database and used as needed by management employees and analysts. Because various data are complex and often involve multiple columns of information, managers can usually segment or poll data in whatever format they need to conduct a data analysis.

Significance

Financial analysts perform data analysis to study a company's sales, expenses and profit margins. Since financial data are often kept on a weekly, monthly or annual basis, financial analysts often compare the present year's sales and profits against previous years to determine the health of a company. Additionally, businesses such as restaurants need data analysis for determining labor costs or food costs, which can help the management team be more efficient.

Identification

Marketing research analysts and managers frequently conduct surveys to measure a customer's satisfaction level or purchase intent for new and existing products, as outlined by Quality Digest. When the surveys are completed, these professionals use data analysis to determine how satisfied customers are with the quality, price and various features of the products they purchased. The data analysis is also used to determine how likely customers would be to purchase a company's products in the future. Some companies use data analysis to measure certain attribute ratings such as their service performance versus competitive service ratings. Data analysis can also be used to determine a company's brand and advertising awareness among consumers.

Function

The primary function of any data analysis is to study a company's strengths and weaknesses, then develop marketing strategies to overcome certain issues or capitalize on key strengths. For example, if a company's customer service department scores a relatively low rating versus other competitors, certain customer data can be used to further probe into the issue. Many customer surveys include open-ended responses where the customer may elaborate on why he feels a company's customer service is bad. If the same issues keep popping up with multiple customers, the customer service manager or director can use these data to correct various problems.

Considerations

A data analysis can also be used to determine preferences among certain demographic groups, which can include people of different age, income, education or even ethnic backgrounds. For example, survey data may reveal that people in the 35 to 54 age range with incomes over $50,000 vastly prefer a new radio station over other demographic groups. Consequently, if 35- to 54-year-old people who make over $50,000 were the intended target audience of the radio station, the data analysis ultimately helped them confirm that fact.

Prevention/Solution

Companies may use data analysis to help them combat certain actions their competitors take in the marketplace. For example, if a company discovers that a competitor has lowered its price and, consequently, gained market share with the lower price, an analysis of available data may apprise the company of the situation. The company can then initiate its own pricing strategy to combat the competitor and prevent further losses in market share.

References

• V-A Interactive: Conduct A Market Analysis
• Price Waterhouse Coopers: Business Data Analysis
• Bplans: How To Perform SWOT Analysis
• Quality Digest: Designing Customer Surveys That Work