CHAPTER. Market Research. Section 7.1 What Is Market Research? Section 7.2 What Is Your Competitive Advantage?
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1 CHAPTER Market Research Section 7.1 What Is Market Research? Section 7.2 What Is Your Competitive Advantage?
2 SECTION What Is Market Research? OBJECTIVES Explain why market research is important Consider important factors when targeting a market Identify market research methods 2
3 Why Is Market Research Important? Market research is an organized way to gather and analyze information needed to make business decisions. A market is a group of potential customers people or businesses who are willing and able to purchase a particular product or service. Business Environment. The business environment refers to any social, economic, or political factors that could impact your business. Customers. These can be individual consumers or businesses. Competition. Competitors offer a product or service similar to yours or one that fills the same customer need or want. 3
4 Targeting Your Market The limited number of customers who are most likely to buy the product or service represents your target market. One of the goals of market research is to develop a customer profile, which is a detailed description of your target market s characteristics. Consumers. A company who sells to individuals is sometimes referred to as a business-to-consumer (B2C) company. Businesses. A company who sells to other companies is sometimes called a business-to-business (B2B) company. 4
5 Targeting Your Market A market segment is a grouping of consumers or businesses within a particular market that has one or more things in common. Demographics are objective social and economic facts about people. Basing market segments on where consumers live or where businesses are located is called geographics. Psychological characteristics of consumers, such as attitudes, opinions, beliefs, interests, personality, lifestyle, political affiliation, and personal preferences, are called psychographics. 5
6 Market Research Methods The two basic types of market research are derived from secondary data and primary data: Secondary Data. Existing information that was previously gathered for a purpose other than the study at hand is secondary data. Examining existing secondary data is useful for doing general, exploratory researchto learn more about your area of interest. Sources include: Government Trade Groups and Journals Business Magazines and Reports Local Community Resources 6
7 Market Research Methods Primary Data. New information that is collected for a particular purpose is primary data. Once you have a better sense of your target market, you can begin to gather data directly from that potential group of customers. Some common ways to obtain such primary data are: Interviews/Surveys Focus Groups Observations 7
8 SECTION What Is Your Competitive Advantage? OBJECTIVES Learn how to identify competitors Determine your competitive advantage Identify the steps in researching a market 8
9 Identifying Your Competition Another critical area of market research involves identifying your competitors. The data you collect about your competitors is called competitive intelligence. Your competitive intelligence will be of two types: Direct competitors. A business in your market that sells a product or service similar to yours is your direct competitor. Indirect competitors. A business that sells a different product or service from yours but fills the same customer need or want is your indirect competitor. 9
10 Direct Competition McDonald s and Burger King Fast-food industry, because they sell a similar line of products. 10
11 Indirect Competitor Taco Bell is in the fast-food industry, but it is an indirect competitor to McDonald s and Burger King. Taco Bell sells fast-food products but not hamburgers. On a broader level non-fast-food restaurants could also be considered indirect competition because the food they sell fills the same basic need. 11
12 Determining Your Competitive Advantage A competitive advantage is something that puts your business ahead of the competition. Competitive intelligence enables you to compare your competitors strengths and weaknesses with your potential business. A competitive matrix is a grid that compares characteristics of your business with those of your direct competitors. A differentiator is a unique characteristic that distinguishes your business from others. Competitive advantages rarely last forever, thus market research is an ongoing process. Expand your SWOT analysis to include competitor data. 12
13 13
14 Steps in Researching a Market 1. Identify Research Objectives. Before you actually start gathering data, list the objectives you wantyour research to accomplish. 2. Determine Methods and Sources. Based on your objectives, decide which research methods will best help you achieve your goals 3. Gather the Data. Make adjustments to your research plan depending on what you learn as you collect the data. 4. Organize the Data. Organize the information as you gather it. 5. Analyze the Data. Analyze your data by comparing competitor s characteristics, identifying potential differentiators, and creating an expanded SWOT analysis that compares the strengths and weaknesses of your business to those of your competitors. 6. Draw Conclusions. Using the data you analyzed in Step 5, decide whether to proceed with your business idea, alter it, or stop completely. 14
CHAPTER. Market Research. Research? Section What Is Your Competitive Advantage?
CHAPTER Market Research Section Research? What Is Market Section What Is Your Competitive Advantage? SECTION What Is Market Research? OBJECTIVES Explain why market research is important Consider important
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