Market Analysis Glencoe Entrepreneurship: Building a Business Doing Market Research Industry and Market Analysis 6.1 Section 6.2 Section 6 6

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Define areas of analysis for industry and market research. Describe how to conduct effective market research. Section Objectives

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis To ensure success, entrepreneurs need to understand the industry and the market. They should define areas of analysis and conduct effective industry and market research. The Main Idea

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Content Vocabulary industry value chains carrying capacity complexity market target market market segmentation market segments geographics psychographics industrial markets market research exploratory research focus group descriptive research historical research secondary data primary data

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Defining Areas of Analysis In order to satisfy current customers or attract new ones, an entrepreneur must conduct market analysis. The entrepreneur will want to understand the nature of the industry he or she is analyzing. industry a collection of businesses with a common line of products or services

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Thorough market analysis requires: Identifying prospective customers and determining their buying habits Analyzing your industry and assessing your chances for success within it Defining Areas of Analysis

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis There are four factors that are useful in understanding the nature of an industry: carrying capacity uncertainty complexity stage of life cycle Industry

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Industry You will want to find an industry that has carrying capacity so that your new business can expand and prosper. carrying capacity the ability of industry to support new growth

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Uncertainty is the degree of stability or instability in an industry. Many high-tech ventures are in industries with uncertain climates. Industry

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Complexity Some businesses must learn to deal with complexity in many industries. Firms that operate in complex industries have more suppliers, customers, and competitors than firms in other industries. complexity the number and diversity of contacts with which a business must deal

Stage of Life Cycle 11 There are four stages to the life cycle of an industry Birth Growth Maturity Decline

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer After first identifying your market, you will then need to select a target market to be the focus of your company’s efforts. market a group of people or companies who have a demand for a product or service and are willing and able to buy it target market a specific group of customers whom a business wishes to reach

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer Consumer market segmentation is based on geographics, demographics, psychographics, and buying characteristics. A business can select and serve multiple market segments. market segmentation the process of grouping a market into smaller subgroups defined by specific characteristics market segments subgroups of buyers with similar characteristics, segmented by geographics, demographics, psychographics, and buying characteristics

Target Market and Customer 14 Market Segmentation demographics geographics psychographics buying characteristics

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer Information about the geographics of the target market can help an entrepreneur decide on a geographic area to focus marketing efforts. geographics the study of the market based on where customers live, including region, state, country, city, and/or area

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer An entrepreneur can study psychographics to learn about target customers’ feelings. psychographics the study of consumers based on social and psychological characteristics, including personalities, values, opinions, beliefs, motivations, attitudes, and lifestyle elements

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer Businesses that cater to industrial markets must consider customers’ individual situations. industrial markets customers who buy goods or services for business use

Target Market and Customer 18 The target market for your product or service should be: Measurable Large enough to be profitable Reachable Responsive

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Conducting Market Research Once you know the areas of the market that you need to analyze, you are ready to begin market research. The marketing research process can be used to identify potential markets, analyze demand, and forecast sales. market research the collection and analysis of information aimed at understanding the behavior of consumers in a certain market

Select the Type of Market Research 20 There are three types of market research exploratory research descriptive research historical research

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Select the Type of Market Research A good way to start exploratory research is to read government or industry publications. exploratory research the initial collection and analysis of information used when very little is known about a subject; it forms a foundation for later research

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Select the Type of Market Research Another way to gather information is to form a focus group. focus group a group of people whose opinions are studied to determine the opinions that can be expected from a larger population

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Select the Type of Market Research Descriptive research can be gathered through questionnaires, interviews, or observation. descriptive research the collection of information to determine the status of something, such as in developing a customer profile

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Select the Type of Market Research You can use historical research to forecast your business’s future potential. historical research the study of the past to explain present circumstances and predict future trends

Identify your information needs. Start the Research Process 25 The Five Steps of an Effective Research Plan Obtain secondary resources. Collect primary data. Organize the data. Analyze the data.

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Start the Research Process Research secondary data before researching primary sources because it is easily obtained and inexpensive. secondary data information that has already been collected by someone else

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Start the Research Process The most common methods of gathering primary data about customers are: observation interviews surveys primary data information that is collected for the first time, is current, and relates directly to the collector’s study

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis After You Read 1.Define areas of analysis for industry and market research. Areas of analysis for industry research include carrying capacity, uncertainty, complexity, and stage of life cycle. Areas of analysis for market research include identifying the target market through market segmentation and conducting target marketing.

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis After You Read 2.Discuss how to conduct effective market research. First, identify the focus of the research. Next, select the type of market research—exploratory, descriptive, or historical. Finally, start the research process by identifying your information needs, obtaining secondary resources, collecting primary data, organizing the data, and analyzing the data.

Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Quiz 1.What are two examples of buying characteristics ? 2.What are four guidelines to use when segmenting the target market? 3.Explain the term carrying capacity and why it is important in market research?

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Explain how to research an industry. Identify a customer profile and customer needs analysis. Section Objectives

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Studying a company’s industry and market helps an entrepreneur create a product or service that people want. It also helps the entrepreneur develop a customer profile, estimate demand, and increase the chances for success. The Main Idea

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Content Vocabulary barriers to entry economies of scale brand loyalty mass marketing market share niche market positioning competitive advantage customer profile customer needs analysis

Look Researching the Industry 34 Understand Study Analyze Look at trends and patterns of change. Understand industry forces that affect your business. Study industry demographics. Analyze the competition.

Industry Forces That Affect Your Business 35 barriers to entry threats from substitute products sources of supply buyers’ ability to bargain technology

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Industry Forces That Affect Your Business In established businesses, the dominant businesses have advantages that are barriers to entry to smaller, new ventures. barriers to entry conditions or circumstances that make it difficult or costly for outside firms to enter a market to compete with established firm or firms

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Industry Forces That Affect Your Business Established businesses have achieved economies of scale in production, marketing, and distribution. economies of scale situations where the cost of producing one unit of a good or service decreases as the volume of production increases; the decrease of production costs relative to the price of goods and services

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Industry Forces That Affect Your Business Customers with brand loyalty do not easily switch to a new company that enters the industry. brand loyalty the tendency to buy a particular brand of a product

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Issues in Entrepreneurship In the past, businesses used mass marketing to sell products with universal appeal and few features to differentiate them from competitors’ products. mass marketing the attempt to reach all customers with a single marketing plan

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis The Competition Usually, competing products are already established in the market. To succeed, you must be able to capture market share by differentiating your business. market share a portion of the total sales generated by all competing companies in a given market

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis The Competition Many entrepreneurial companies succeed by studying the competition to define a niche in the market. niche a small, specialized segment of the market based on customer needs discovered in market research

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis The Competition An entrepreneur who wishes to capture market share can use market positioning. market positioning the act of identifying a specific market niche for a product

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis The Competition You can create a competitive grid to help define your competitive advantage. competitive advantage a feature that makes a product more desirable than its competitors

Create Evaluate Forecast Researching the Target Customer 44 Create a customer profile. Evaluate customers’ needs. Conduct research to forecast demand.

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Creating a Customer Profile Creating a customer profile is the first step in targeting your marketing efforts. customer profile a complete picture of a venture’s prospective customers, including geographic, demographic, and psychographic data

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Evaluating Customers’ Needs In order to provide what the customer wants, you should prepare a customer needs analysis. customer needs analysis a study that pinpoints the features and benefits of goods or services that customers value

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis Several methods can be used to forecast demand: Use historical analogy. Interview prospective customers and intermediaries. Go into limited production. Forecasting Demand

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis After You Read 1.Explain how to research an industry. To research an industry, look at trends and patterns of change, industry forces that affect your business, industry demographics, and the competition.

Industry and Market Analysis Glencoe Entrepreneurship: Building a Business SECTION 6.2 Chapter 6 Market Analysis After You Read 2.Describe a customer profile and customer needs analysis. A customer profile is a complete picture of a venture’s prospective customers. It includes geographic, demographic, and psychographic data. A customer needs analysis pinpoints the features and benefits of your goods or services that customers value so you can provide them with what they want.

Market Analysis Glencoe Entrepreneurship: Building a Business Doing Market Research Industry and Market Analysis 6.1 Section 6.2 Section 6 6 End of Chapter 6 Market Analysis