Doing Market Research Chapter 6, Section 1

Market Analysis Markets for products and services are found within and across industries Industry: collection of businesses that are categorized by a specific business activity, such as transportation, electronics or food services. Value chains: support a common line of products or services that satisfy market demands Located within an industry Include: raw material producers, manufacturers, suppliers, distributors, retailers, & anyone who deals with other businesses in the industry

Market Analysis Market: customers for a particular product or service. Examine the market from two different perspectives Identify prospective customers and determine their buying habits Analyze the industry & assess the chances for success within it

Industry Factors useful in understanding the nature of an industry Carrying Capacity: the way to understand the industry’s ability to support new growth. Uncertainty: the degree of stability or instability in an industry Complexity: the number and diversity of contacts with which you must deal to do business Often global, very competitive, and costly to enter Stage of Life Cycle: include birth, growth, maturity, and decline. Knowing the stage of the industry will allow for a business strategy that is compatible with that life cycle

Target Market & Customer Target Market: a specific group of customers whom a business wishes to reach Market Segmentation: the process of grouping a market into smaller subgroups defined by specific characteristics. Market Segments: subgroups of buyers who have similar characteristics Allows businesses to customize product offerings and create market strategies to specific groups

Ways of Segmenting Geographics: based on where they live. Demographics: personal characteristics of a population. (age, gender, family size, family life cycle, income, occupation, education) Psychographics: based on social and psychological characteristics. (personality, values, opinions, beliefs, motivations, attitudes, lifestyle elements) Buying Characteristics: knowledge & experiences with the actual good or service. How and how often customers buy.

Guidelines For Segmenting Should be measurable How many potential buyers Should be large enough for a potential profit Should be reachable Get information and availability about the product to interested buyers Deliver the product to the customer. (mail & stores) Should be responsive Some indication that people are willing to buy the product or service

Conducting Market Research Market Research: collection and analysis of information aimed at understanding the behavior of customers in a certain market. Identify the focus of the research Select the type of research Exploratory: used when very little is known about the subject Descriptive: done when you want to determine status. Creating customer profiles Historical: studying the past

Conducting Market Research 3. Start the research process Identify your information needs Obtain secondary resources Secondary data: information already collected by someone else Keep questions in mind: What are the demographics of the customers What are the psychographics of the customers How large is the market Is the market growing Is the market affected by geography How can you reach your market How do your competitors reach the market What market strategies have been successful within these customers

Conducting Market Research Collect Primary Data: information you collect yourself. Common methods: interviews, observation, surveys Questions to keep in mind What are the demographics Would potential customers purchase your product or service? Why or Why not? How much would customers purchase When would customers purchase How would customers like to fine the product or service What is it that customers like about your competitors’ product and services

Conducting Market Research Organize the Data Categorize data based on questions Create charts & graphs Analyze the Data Ask yourself basic questions Is there a market for the product or service How big is the market Will the industry support such a business What do substitute products/services reveal about demand for the product/service What do customers, end users, and intermediaries predict the demand will be