Entrepreneurship and Small Business Management Chapter 6 Exploring Your Market

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 2 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Ch. 6 Performance Objectives Explain how marketing differs from selling. Understand how market research prepares you for success. Choose your market segment and research it. Position your product or service within your market.

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 3 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Marketing Identifies your customers and their needs/wants Develops and uses strategies for getting your product or service to customers Generates interest by communicating your competitive advantage to customers Drives all business decisions

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 4 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Market Research May be conducted at various levels: Industry Market segment Individual consumer Two main types: Primary—research conducted directly on a subject or subjects Secondary—research carried out indirectly, through other existing resources

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 5 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Primary Research Methods Personal interviews Telephone surveys Written surveys Focus groups (guided group discussion) Observation Tracking

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 6 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Secondary Research Methods Online searches Public and proprietary database searches Data published by industry associations, chambers of commerce, and public agencies Review of books and records Competitor Web sites

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 7 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Customer Research Who are your potential customers? Where can you reach them? What do they want and need? How do they behave? What is the size of your potential market?

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 8 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Industry Research What is the industry size in units and dollars? What is the industry’s geographic range? Is it a “niche” or a mass market industry? What does industry profitability look like? What trends are occurring in the industry? What is the structure of the industry? What are competitors doing in the industry?

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 9 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Customer Decision-Making Awareness of a need or want Information search Evaluation of alternatives Decision to purchase Evaluation of purchase

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 10 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Owning Customer Perception Features create benefits Feature—a fact about a product or service Benefit—what the feature can do to meet a customer’s needs How needs, want, and demands differ Meeting a need is solving a problem Wants—needs with individual preferences Demands—wants backed by buying power

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 11 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Choosing a Market Segment A market segment is a group of consumers or businesses who have a similar response to a particular type of product or service. It is difficult to target very different market segments simultaneously. A company that concentrates on one market segment will likely do better than a company that tries to sell to everyone.

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 12 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Market Segmentation Methods Geographic—dividing according to location Demographic—dividing according to age, gender, income, and/or education Psychographic—dividing by psychological differences (such as opinions or lifestyles) Behavioral—dividing the market based on observed purchasing behaviors

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 13 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Product Life Cycle (PLC) Stages 1.Introduction 2.Growth 3.Maturity 4.Decline Where is your product/service in the PLC? Is your market saturated?

© 2012 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 14 Entrepreneurship and Small Business Management, 1/e By Steve Mariotti and Caroline Glackin Market Positioning Distinguish your product/service from others offered to your market segment. Clearly communicate your competitive advantage. Write a positioning statement. Sample format: [Your business name/brand] is the [competitive industry/category] that [provides these benefits, or points of difference] to [audience/target market].