Market Research

This chapter will enable you to: 1.Describe the different types of market research 2.Develop an effective market survey for your company. 3.Use market research to understand your customers’ needs. 4.Analyze your industry

What is market research? Your market consists of the potential customers for your product or service. –M–Market Research is how you find out who these customers are and what they need. –M–Market Research helps entrepreneurs figure out how to market their product or services…or to improve existing products or services

Target Markets Find out everything about your target market: –W–What they eat, drink, listen to, watch on TV, how much do they sleep, where do they shop, movies they like, how much they make, how much they spend, etc… –R–Remember just don’t get too creepy

Facts about groups of people are called demographics. Where can you find such information? –Internet research –Magazine articles – statistics on the size of the target market –Business Library- Business section sometimes has info

Types of Market Research (4) 1.Surveys – sets of questions that you ask consumers Either in interviews or questionnaires. Market surveys should ask about: Product use and frequency of purchase Places where they purchase (competition) Business name, logo

Cont’d Market surveys should also gather info about future customers. Include: –Interests and hobbies –Reading and television-watching habits –Educational backgrounds –Age –Annual income –Gender –Etc…

2. General Research Check library resources, city agencies, city hall for info about businesses. If you want to open a surf shop you should find out how many other stores are around. Check to see what products are selling and what products are not. Check to see how much business they are actually doing

3.Statistical Research –M–Market research companies are paid by other companies to gather demographic information. The federal government can also provide info about demographics. Age Annual Income Ethnic or religious background Gender Zip Codes Interests Occupations Dwelling place (house /apartment)

4.Industry Research Sometimes you will need to do some research on an industry. If you want to start a record label, you will want to know how the industry is doing. Is it growing? Are people buying more CD’s this year? Who are the major consumers of CD’s? Which age group buys the most? What kind of music is selling?

Research Your Market Before You Open Your Business! Large corporations spend a great deal of money on market research before they introduce a product or service. Chrysler spent millions before producing the mini-van. It was worth it, because it was going to cost tens of millions to manufacture it.

Who is in your market segment? A market segment is composed of consumers who have similar responses to a certain type of marketing. –I–In cosmetics…one segment responds positively to luxurious products. Another segment responds to products that claim to make customers look younger. Another wants low prices. –A–A company that recognizes these segments and chooses one or two to market to will be more successful than one who tries to sell to every single woman in the country.

Once you have chosen your market segment, you can design a survey and begin market research. Here are a few questions you can adapt to your own product or service. –Would you buy this product/service? –How much would you be willing to pay for it? –Where would you buy it? –How would you improve it? –Who are my closest competitors? –Is my product/service worse or better than those of my competitors?

Market research can avoid costly mistakes Lets say you created a design and silkscreened it on5 dozen white shirts. After 6 weeks you only sold 6. People tell you they would have bought a shirt if: –T–They came in red or blue –Y–You had them in different sizes –Y–You had them in different styles –T–The shirts had different designs –T–The price was lower –T–They had known you were selling at the flea market –Y–You had sold them at school during lunchtime

With a little market research you could have determined your customers’ needs and wishes regarding the Four P’s before you made the shirts –And you could probably have sold many more t-shirts

Very Good Advice Always listen to the people who bought your product (or used your service) but did not like it. They have valuable feedback!

Fun fact Colgate Market Research