BP – Market Research Lim Sei cK

Introduction The entrepreneur has come up with what he/she believes is a good business idea. BUT, how does the entrepreneur check that the business idea actually meets customer needs and has the potential to become a viable business? The answer is to do some market research.

Market Research – What is it? To undertake marketing effectively, businesses need information. Information about customer wants, market demand, competitors, distribution channels etc. Market research is the process of systematically gathering and recording information about the market for a product or service.

Focus on the fundamental issues, such as: Looking at the market - how big is the market? What type of consumers are we aiming to attract? What is the spending pattern of the target consumers? Competitors - who are the key competitors? How can we differentiate our product from theirs? What prices do they charge? Price - we may need to test how sensitive consumers are to price changes (how elastic is the price?). Promotions - if you are proposing any promotions or other advertising then it may be worth research to see what the reaction of consumers

Research methods Primary research (field research) Questionnaires, Focus group, Web-based surveys, Customer interviews Secondary research (desk research) Published statistics, existing market research information, Sales figures from competitors, Internet

Market research – Primary research Observation Watching how consumers behave provides many insights, but can leave questions unanswered. Observation works well in retail markets; sit outside a shop and watch how many people walk by, look at the window display etc.

Market research – Primary research Online surveys Increasingly popular and relatively low cost, online surveys are widely used by small businesses as a way of capturing the views of existing and potential customers

Market research – Primary research Face-to-face surveys Personal interviews conducted face-to-face. A costly, but good way to get detailed insights from an individual

Market research – Primary research Focus groups Groups of potential customers are brought together to discuss their feelings about a product or market. Focus groups are a good way of getting detailed information about customer tastes and preferences

Four Steps In Market Research Step One: Defining the Purpose or Objectives Step Two: Gathering Data from Secondary Sources Step Three: Gathering Information from Primary Sources Step Four: Analyzing and Interpreting the Results

(a) Defining the purpose or objectives Make a list of the information that will be needed to prepare the marketing plan. EG: You may think there is a market for your product but is not sure who the customers will be So ask people what they think of the product or service and if they would buy it & background demographics ▫ How much potential customers would be willing to pay for the product or service ▫ Where the potential customers would prefer to purchase the product or service

(b) Gathering data from secondary sources  Newspaper articles  Libraries  Government agencies  Internet

(c ) Gathering information from primary sources Data collection procedures Observation: Record customers buying behaviors Interviewing: Telephone / Mail / Personal Focus groups: potential customers Questionnaire: Sample questionnaire

(d) Analyzing and interpreting the results Results should be evaluated and interpreted in response to the research objectives Data can be cross-tabulated in order to provide more focused results. ▫ Example: Entrepreneur compare results of questionnaires by different Age, Occupation, Location- fine tuning can provide valuable insights particularly regarding the segmentation of the market

Discussion Qs Based on your analysis: Analysis of Industry / Customers / Competitors, You are going to conduct a market research as part of your Business Project module. How do you intend to “test” the market? What are the methods? What does the result mean to you? NOTE: You need to produce at least 50 responses!