Chapter 6 IDENTIFY AND MEET A MARKET NEED

Chapter 6 IDENTIFY AND MEET A MARKET NEED LESSONS 6. 1 The Value of Market Research 6. 2 How to Perform Market Research 6. 3 Identify Your Competition ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 2 Lesson 6. 1 THE VALUE OF MARKET RESEARCH GOALS n Identify a target market by understanding your customers. n Research your market using primary and secondary data. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 3 WHAT IS A TARGET MARKET? n The target market is the individuals or companies that are interested in a particular product or service and are willing and able to pay for it. n The marketing concept uses the needs of customers as the primary focus during the planning, production, distribution, and promotion of a product or service. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 4 UNDERSTAND YOUR CUSTOMER n Customers are the people who buy the products and services companies offer. n Customers buy goods and services to satisfy economic wants and needs. n An economic want is an unfilled desire of a customer. n An economic need is anything that is required to live. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

DEMOGRAPHICS AND PSYCHOGRAPHICS Chapter 6 Slide 5 n Demographics are data that describe a group of people in terms of their age, marital status, family size, ethnicity, gender, profession, education, and income. n Psychographics are data that describe a group of people in terms of their tastes, opinions, personality traits, and lifestyle habits. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 6 IDENTIFY YOUR TARGET MARKET 1. Who are my customers: individuals or companies? 2. If customers are individuals: How old are they? How much money do they earn? Where do they live? How do they spend their time and money? 3. If customers are companies: What industries are they in? Where are those industries located? ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 7 continued IDENTIFY YOUR TARGET MARKET 4. What needs or wants will my product or service satisfy? 5. How many potential customers live in the area in which I want to operate? 6. Where do these potential customers currently buy the products or services I want to sell them? 7. What price are they willing to pay for my products or services? 8. What can I do for my customers that other companies are not already doing for them? ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 8 Determining your Target Market n Why is it important to determine who your target market is? n Unless you understand who your target market is and what types of products or services they are looking for, you will probably not be able to satisfy their wants and needs. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

THE IMPORTANCE OF A CUSTOMER PROFILE Chapter 6 Slide 9 n A customer profile is a description of the characteristics of the person or company that is likely to purchase a product or service. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

THE IMPORTANCE OF A CUSTOMER PROFILE Chapter 6 Slide 10 n The importance of a customer profile will help you understand how to meet customer demand. Understanding your competition will help you identify unmet needs. n Disadvantage of market segmentation n You might market to a group who is not interested in the product or might overlook a segment that would be very interested in the product. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 11 MARKET SEGMENTS n Groups of customers within a large market who share common characteristics are known as market segments. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 12 Mass Marketing n Advantages of Mass Marketing n Easy to prepare advertisements for and reaches many people n Disadvantages of Mass Marketing n Does not target specific needs of customers n Is not suitable for all products n Has nothing to make product stand out from the competition ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 13 UNDERSTAND THE COMPETITION n Knowing about your competition will help you define your target market. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 14 MARKET RESEARCH n Market research is a system for collecting, recording, and analyzing information about customers, competitors, goods, and services. n Market researchers collect primary and secondary data. n If conducted properly, market research will help entrepreneurs understand their target markets and thus, satisfy the wants and needs of the customers. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 15 Limitations of Market Research n Can be costly n Time consuming n Must be carefully analyzed so that incorrect decisions are not made ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 16 SECONDARY DATA n Secondary data is data found in already published sources. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 17 PLACES TO FIND SECONDARY DATA n Publications issued by government and community organizations, such as the U. S. Census Bureau, the Small Business Administration, and Chamber of Commerce n Books about specific industries n Information on web sites for government and businesses n Books about other entrepreneurs who set up similar businesses n Specialized magazines and journals devoted to particular fields n Newspaper articles and statistics ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 18 Secondary Sources n Information you can find using secondary sources include information on: n Demographics n Economic trends n Industry forecasts ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 19 PRIMARY DATA n Primary data is information collected for the very first time to fit a specific purpose. n Questionnaire or survey n Observation n Focus groups n Disadvantage of primary data n Time consuming n Expensive ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Difference between Primary and Secondary market research data Chapter 6 Slide 20 n Secondary data is found in published sources n Primary data is information that is collected for the first time to fit a specific purpose ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 21 Chapter 6. 1 Assignment n Notes – Answers for assignments are throughout the notes, make sure you read them. n Checkpoint pg 132 n Checkpoint pg 133 n Checkpoint pg 135 n Checkpoint pg 137 n Thinking Critically #1 -5 pg 137 ALL DUE AT THE END OF CLASS, THIS IS A TEST GRADE!!!!! Answer in complete sentences ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Lesson 6. 2 HOW TO PERFORM MARKET RESEARCH GOALS Chapter 6 Slide 22 n Identify the five steps involved in primary data market research. n Design a questionnaire. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

FIVE STEPS OF PRIMARY MARKET RESEARCH Chapter 6 Slide 23 n Steps involved in conducting a market research include: n Define Question – know what you want and find out n Select Method – survey, observation or focus groups n Collect Data – gather needed information n Analyze Data n Draw Conclusions – a plan of action ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 24 Primary Date n Three ways to collect primary data include: n Survey n Observation n Focus group n Primary data becomes secondary data when it is published. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 25 DESIGN A SURVEY n Length of questionnaire n Questions n Clear n Easy to answer n Only important questions n It is important to define the question you want your market research to answer other wise you might conduct research on the wrong issue. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 26 Questionnaire A good questionnaire is: n Clear n Relevant questions that are easy to answer n People are more inclined to answer short questionnaires because they don’t take much time. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 27 Chapter 6. 2 Assignment n Notes – Answers for assignments are throughout the notes, make sure you read them. n Checkpoint pg 139 n Checkpoint pg 141 n Checkpoint pg 142 n Thinking Critically #1 -3 pg 142 ALL DUE AT THE END OF CLASS, THIS IS A TEST GRADE!!!!! Answer in complete sentences ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 28 Lesson 6. 3 IDENTIFY YOUR COMPETITION GOALS n Determine your direct and indirect competition. n Analyze the strengths and weaknesses of competitors. n Establish strategies for maintaining customer loyalty. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

DIRECT AND INDIRECT COMPETITION Chapter 6 Slide 29 n Direct competition is competition from a business that makes most of its money selling the same or similar products or services as another business. n Indirect competition is competition from a business that makes only a small amount of money selling the same or similar products or services as another business. n Find your direct competition n Find your indirect competition ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

DIRECT AND INDIRECT COMPETITION Chapter 6 Slide 30 n Why should Entrepreneurs analyze both direct and indirect competitors? n Both direct and indirect might take customers from them. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

COMPETING WITH LARGE BUSINESSES Chapter 6 Slide 31 n Large retailers usually are able to keep larger quantities of products in stock. n Large retail chains don’t rely on one single product line. n Large companies usually have more resources to devote to advertising. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 32 Retail Businesses n Ways you could attract customers to retail businesses may include: n Extended hours n Birthday cards n Frequent buyer programs n Personal Notes n Thank you cards n Store Specific credit cards n Coupons n Layaway program ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 33 STUDY INDIVIDUAL COMPETITORS n Price n Location n Facility n Strengths n Weaknesses n Strategy ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 34 Analyzing Competitors n Purpose n To figure out how to get customers to buy from your business n Why can customer feedback be considered a type of market research? n It is a valuable type of market research because it is coming from customers who care enough about your company and product to communicate with you. ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

STRATEGIES FOR MAINTAINING CUSTOMER LOYALTY Chapter 6 Slide 35 n Listen and respond to feedback n Other strategies for maintaining loyalty n Superior service n More convenient hours than other businesses n Easy return policies n Store-specific credit cards n Personal notes or cards n Frequent buyer programs ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 6 Slide 36 Chapter 6. 3 Assignment n Notes – Answers for assignments are throughout the notes, make sure you read them. n Checkpoint pg 144 n Checkpoint pg 145 n Checkpoint pg 147 n Thinking Critically #1 -3 pg 147 ALL DUE AT THE END OF CLASS, THIS IS A TEST GRADE!!!!! Answer in complete sentences ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING