1. Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Defining Areas of 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

2. Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Industry – four factors effect the nature of the industry carrying capacity the ability of industry to support new growth uncertainty the degree of stability or instability in a given industry complexity the number and diversity of contacts with which a business must deal 1 2 3 4 Birth Growth Maturity Decline industry life cycle the current stage of an industry

3. 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

4. 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

5. Target Market and Customer 5 Market Segmentation demographics geographics psychographics buying characteristics

6. Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Target Market and Customer geographics the study of the market based on where customers live, including region, state, country, city, and/or area psychographics the study of consumers based on social and psychological characteristics, including personalities, values, opinions, beliefs, motivations, attitudes, and lifestyle elements industrial markets customers who buy goods or services for business use

7. Target Market and Customer 7 The target market for your product or service should be: Measurable Large enough to be profitable Reachable Responsive 1 2 3 4

8. Select the Type of Market Research 8 There are three types of market research exploratory research descriptive research historical research market research the collection and analysis of information aimed at understanding the behavior of consumers in a certain market

9. Glencoe Entrepreneurship: Building a Business Doing Market Research SECTION SECTION 6.1 Chapter 6 Market Analysis Select the Type of Market Research 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 focus group a group of people whose opinions are studied to determine the opinions that can be expected from a larger population descriptive research the collection of information to determine the status of something, such as in developing a customer profile historical research the study of the past to explain present circumstances and predict future trends

10. Identify your information needs. Start the Research Process 10 The Five Steps of an Effective Research Plan 1 2 3 4 5 Obtain secondary resources. Collect primary data. Organize the data. Analyze the data.

11. 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

12. 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

13. Time for a break

14. Look Researching the Industry 14 Understand Study Analyze Look at trends and patterns of change. Understand industry forces that affect your business. Study industry demographics. Analyze the competition.

15. Industry Forces That Affect Your Business 15 barriers to entry threats from substitute products sources of supply buyers’ ability to bargain technology

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. Create Evaluate Forecast Researching the Target Customer 24 Create a customer profile. Evaluate customers’ needs. Conduct research to forecast demand.

25. 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

26. 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

27. 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