Market Research The Purpose of Market Research is to help you, the entrepreneur, change yourself from thinking about what you want to thinking about what the customer wants

Activity Hershey’s Case Study

Results Part I:

Hershey’s Case Study Based on the results of the market research, Hershey’s has decided to invest in your team to start a chocolate bar company that markets to youth ages You must: 1.Create a new chocolate bar 2.Design a brand name, logo and slogan 3.Develop a marketing strategy using the 4Ps of marketing 4.Create a commercial advertisement for the new bar 5.Prepare to present work and perform your commercial to the board of directors Part II:

Types of Market Research Primary – Surveys – Interviews – Focus groups – Observations – Trial and sampling Secondary research – Library, Internet, Bloomberg

Types of Market Research Primary – Surveys – Interviews – Focus groups – Observations – Trial and sampling Secondary research – Library, Internet, Bloomberg

Market Research Complete market research includes the following analysis: – Consumer – Market – Competitive – Industry – Organization and environment (SWOT)

Market Research Enables a business to collect information that can help form its 4 P’s: Product – features, benefits relevant to consumers Price – attractive (competitive or exclusive) pricing Place – convenient purchasing location(s) Promotion – incentive to buy from you instead of your competitors

Market Research Activity Pizza Shop Market Research: Results 1 st Rank: Taste 2 nd Rank: Cleanliness 3 rd Rank: Price Being known for providing these things can be your competitive advantage – what you’ll do to stand-out from your competition

Customer Oriented Pricing A method of judging what price to set for your product by focusing more on the customers’ point of view. Different from calculating price based on the costs of making the product (cost pricing) different from just copying the price of other competitors. (the “going price” or market price).

When… When Price is not the most important…

Then what…? When Price is not the most important You can charge at least 10-15% more than the nearest similar businesses – if you deliver the most important criteria better than the other businesses! Control expenses carefully so you can make profit while selling at your price. always deliver the most important criteria to the customer.

Defining Your Competitive Advantage Three components of mission statement – Mission Statement: States goal of business – Strategy: How you intend to outperform your competition – Tactics: The ways you will use to carry out your strategy

The Mission Statement Ex.: Our mission is to design quality t-shirts at reasonable prices for local bands to sell.

Ex.: Our mission is to design quality t-shirts at reasonable prices for local bands to sell. Strategy: my competition in town requires a minimum order of 500 t-shirts. We will outperform them by requiring a minimum order of only 50 t-shirts at the same per-unit price. The Mission Statement

Ex.: Our mission is to design quality t-shirts at reasonable prices for local bands to sell. Strategy: my competition in town requires a minimum order of 500 t-shirts. We will outperform them by requiring a minimum order of only 50 t-shirts at the same unit price. Tactics: We will post flyers at shows, run ads on local college radio stations, make t-shirts on the weekend when it’s cheaper to rent the equipment The Mission Statement

Competitive Advantage Creates a moat around a business such that it can keep competitors at bay and reap extraordinary growth and profits Whitney Tilson, 2000 The way an enterprise determines its positioning in the market in relation to its competitors

Brand At the end of the day, you’re seeking to build a brand! Definition: a name (sometimes along with a symbol or trademark) that distinguishes a business from its competition, making it instantly recognizable to the consumer. Important because consumers have choice

Brand Definition: “…a constant promise to our customers.” -Microsoft Executive

The Brand Pyramid The Dobney Corporation

The Brand Pyramid All basketball sneakers have certain characteristics The Dobney Corporation

The Brand Pyramid Trucks made by Ford have a certain level of reliability The Dobney Corporation

The Brand Pyramid Eat Snickers when you’re hungry, drink Coke when you’re thirsty The Dobney Corporation

The Brand Pyramid I read the WSJ or I wear Dolce & Gabbana or I shop at Whole Foods Market The Dobney Corporation

The Brand Pyramid I am the type of person who shops at Whole Foods Market, drives a Toyota Prius, wears SeaSalt organic cottons The Dobney Corporation

“If all our buildings were destroyed, world-wide, we could borrow $100,000,000,000 and rebuild everything on the strength of the Coke brand.” - CEO of Coke in an interview with Fortune Magazine

Best Global Brands – 2007 (source: InterBrand)

Critical to Planning Key areas to analyze are: – Consumer – Market – Competitive – Industry – Organization and environment (SWOT)

Critical to Planning Key areas to analyze are: – Consumer – Market – Competitive – Industry – Organization and environment (SWOT)

Market Analysis What defined market am I trying to reach? What specific companies are servicing this market? – Are there other companies servicing this market with a similar product? – Are they successful? – What is their market share? Who has the power? Suppliers? Or Buyers? What is the size of the market – Is it a growing market? Is it saturated? – Is the industry stable, volatile or trendy?

Market Analysis (cont.) What do customers expect from this type of product or service? What core functionalities must the product or service have? What are customers willing to pay for this type of product or service? How can I reach this market? – How do my competitors reach the market? What are the business models of my competitors? What is my competitive advantage?

Competitive Analysis Analyze key variables – Product mix – Service offerings – Pricing – Brand: perception of quality – Packaging – Distribution