MARKETING RESEARCH ILWYN F.

GASCAL, MBA
SEGMENTATION, TARGETING AND ENTREPRENEURSHIP

POSITIONING
LEARNING OBJECTIVES
Discuss what is marketing and its importance to a business.
Explain the role of market research.
Identify the six steps involved in market research.
Identify a target market by analyzing the needs of customers.
Explain how market segmentation can help an entrepreneur analyze a target market.
WHAT IS MARKETING?
Marketing is defined as an exchange between a firm and its customers.
WHAT WE CAN MARKET
THE MARKETING MANAGEMENT FRAMEWORK
The 5Cs, STP and the 4Ps constitute the marketing management framework
THE 5 CS OF SITUATIONAL ANALYSIS
Company
 The firm’s capabilities, resources, etc.
 What does it do well?
 What doesn’t it do well? etc.
Customer
 The firm’s current and potential customers
 What are current customers’ preferences, buying trends, etc.?
 What are potential customers’ preferences? Should they be targeted?
Competitor
 The companies/people firm works against and how they compare to the firm in terms of
resources, capabilities, customer preferences, reaction patterns, etc.
THE 5 CS OF SITUATIONAL ANALYSIS
Collaborators
 The companies/people firm works with
 Are these relationships strong? Can these relationships be improved or leveraged?
Context
 The macro-environmental forces facing firm
 What is going on politically or legally that might affect the firm?
 What is going on with the economy that might affect the firm?
 What trends are occurring in society that might affect the firm?
 What technological innovations might affect the firm?
 STP
Segmenting
 Grouping customers with similar needs
Targeting
 Pursuing segment who makes the most
sense for the firm
Positioning
 Communicating product’s benefits clearly
to the intended target
 Developed through the 4Ps
 4PS OF THE MARKETING MIX
Product
 What should constitute your product mix? What
features and benefits should comprise each product?
Price
 How much should you charge given your costs,
competitive pricing and customer demand?
Place
 How will you get the product into the customers’
hands? Will you go direct to customers or use
channel partners?
Promotion
 What communications mix will you use to
communicate with your targets? What message will
you use?
ROLE OF MARKET RESEARCH
For your business to succeed, you need to find out who your customers are,
what they want or need, and how much they are willing to pay for your
product or service. To college this information about your customers, you will
perform market research.
Market research is a system for collecting, recording, and analyzing
information about customers, competitors, goods, and services. You will draw
on secondary data and primary data as you gather your information. Both
types will help you identify ways to meet customer needs.
SECONDARY DATA
Entrepreneurs usually begin research of their target market by using secondary data.
Secondary data is data found in already published sources. Information on
population, family size, household income, economic trends, industry forecasts, and
other information can be found in secondary data resources. Places to find secondary
data include:
1. Publications issued by government and community organizations, such as the PSA,
DTI, and the PIA
2. Books about specific industries
3. Information on websites for government and businesses
4. Books about other entrepreneurs who set up similar businesses
5. Specialized magazines and journals devoted to particular fields
6. Newspaper articles and statistics
 PRIMARY DATA
Most market researchers also collect primary data. Primary data is information collected for
the very first time to fi t a specific purpose. A researcher collects primary data to help
identify and understand the target market. There are a few ways to collect primary data,
such as through surveys, observation, and focus groups.
While primary data can provide the most up-to-date and useful information, it can be time-
consuming and more expensive to gather than secondary data. You will need to determine
how much secondary and primary market research data you need to collect.
The three common methodologies in gathering primary data are:
Survey
Observation
Focus Group Discussion (FGD)
 SURVEY
The most common type of primary market research is a questionnaire or survey. A survey is a
list of questions to ask your customers to find out demographic and psychographic
information. A survey can be conducted by mail, over the phone, on the Internet, or in person.
In planning survey, there are three important concerns that one has to look into:
1. Sampling technique
2. Getting the sample size
3. Designing the questionnaire
Of these three concerns, designing the questionnaire proves to be the most sensitive phase.
 QUESTIONNAIRE DESIGN
There are some basic rules that have to be followed in question
formulation. These are:
 The questions, in their totality, should be able to elicit all the
necessary information required in the research.
 Each question should be clear and definite.
 Each question should cover one topic at a time.
 Each question should be presented in a neutral manner.
 Each question should be translated into the dialect that the
target respondents are familiar.
 Ethics should be considered when conducting surveys.

Before conducting the actual survey, the questionnaire

undergoes validity and reliability testing (Cronbach’s alpha).
SAMPLING TECHNIQUES
Sampling techniques are classified into probability and non-probability sampling.
Probability sampling is where the respondents are randomly selected from a
population such as in a lottery method. Some types of probability sampling are
Simple Random Sampling (SRS), Stratified Sampling, and Cluster Sampling
Non-probability sampling, on the other hand, refers to the technique that is resorted
to “when it is difficult to estimate the population of the study because they are mobile
or transitory in a given location.” Hence, this renders the characteristics or profile of a
group that is difficult to generalize. Some of the different types of non-probability
sampling are Convenience Sampling, Purposive Sampling, Quota Sampling, and
Snowball sampling.

DETERMINING THE SAMPLE SIZE
Use Slovin’s formula to find out what sample of a
population of 1,000 people you need to take for a
survey on their soda preferences.
Step 1: Figure out what you want your confidence
level to be. For example, you might want a
confidence level of 95 percent (which will give you a
margin of error of 0.05), or you might need better
accuracy at the 98 percent confidence level (which
produces a margin of error of 0.02).
Step 2. Plug your data into the formula. In this
example, we’ll use a 95 percent confidence level
with a population size of 1,000.
n = N / (1 + N e2) =
1,000 / (1 + 1000 * 0.05 2) = 285.714286
Step 3: Round your answer to a whole number
(because you can’t sample a fraction of a person or
thing!)
285.714286 = 286
 OBSERVATION
Market research can also involve observation. If you are considering opening a juice bar in a
shopping mall, you might want to see how many customers you could attract. You could go to the
mall and count the number of people purchasing drinks at various food outlets. An entrepreneur
interested in starting a motorcycle shop might count the number of motorcycles going through a
busy intersection.

FOCUS GROUPS
Another way in which you could find out about the market is by conducting focus groups, which are in-
depth interviews with small numbers of people. Groups of target customers are interviewed to gain
valuable ideas on products or services. You can ask the same kinds of questions in a focus group that you
would in a survey or questionnaire. The benefit of focus groups is that they allow for more in-depth
discussion about a topic than a questionnaire does. Focus groups usually are led by a moderator who asks
questions about buying habits, likes and dislikes, and interest in particular products and services. The focus
group session is recorded so that the comments can be reviewed carefully after the session ends.
 SIX STEPS OF MARKET RESEARCH
1. Define the Question (Developing the
research objectives)
In the first step in the market research
process, you should define exactly what
you need to know. Entrepreneurs have
many concerns and questions about the
businesses they are planning. By
determining what they need to know, they
are defining the question that will be the
focus of their research.
SIX STEPS OF MARKET RESEARCH
2. Determine the Data Needed
Once you have defined the market research question, you are ready to determine what
data you need to collect to provide the answer to your question. Entrepreneurs need to be
sure that the data they collect will be helpful. By identifying the data needed, the data
collection process will be more efficient.
3. Collect the Data ( Determining your sample, Choosing the methodology)
Before you begin collecting data, you need to decide how you will gather the data. The
method you use will depend on what type of information you want to gather. If you use
observation, you need to determine where and when to get the best information. With a
focus group, you should think about what kinds of individuals to include and what questions
to ask. If you choose a survey, think carefully about how long it should be, what questions it
should include, how it should be administered, and how many people you should survey. For
surveys, pre-testing is done after creating the questionnaire.
SIX STEPS OF MARKET RESEARCH
4. Analyze the Data
Once you have collected all your data, you need to analyze and interpret the
information. The analysis should be in an organized format that it is meaningful and
easy to study.
5. Take Action
Once you have analyzed and interpreted your data, you will need to determine how
to use the data to make a decision. This is when you will develop a plan of action
based on the information you found in your market research.
6. Evaluate the Results
It is not enough just to develop a plan of action. Entrepreneurs must regularly
evaluate the effectiveness of the actions they take as a result of the plan to
determine if any changes are needed.
HOW TO PRESENT RESEARCH RESULTS
FREQUENCY DISTRIBUTION TABLE HISTOGRAM
HOW TO PRESENT MARKET RESEARCH RESULTS
FREQUENCY POLYGON PIE CHART
 TARGET MARKET
As an entrepreneur, you will need to estimate the demand for your products or services by identifying your primary
customers. The target market includes the individuals or companies that are interested in a particular product or service
and are willing and able to pay for it. Identifying your target market helps you reach the people to whom you most
want to sell. Target customers are the customers you would most like to attract. A car dealer selling moderately priced
minivans would target middle-class families with children. A car dealer that offers expensive sports cars might target
single people with high incomes.
To identify the target market for your product or service, you will need to answer the following questions.
1. Who are my customers: individuals or companies?
2. If my customers are individuals, how old are they? How much money do they earn? Where do they live? How do they
spend their time and money?
3. If my customers are companies, what industries are they in? Where are those industries located?
4. What needs or wants will my product or service satisfy?
5. How many potential customers live in the area in which I want to operate?
6. Where do these potential customers currently buy the products or services I want to sell them?
7. What price are they willing to pay for my products or services?
8. What can I do for my customers that other companies are not already doing for them?
 MARKET SEGMENTS
To further define your target market, you need to identify market segments. Market segments are
groups of customers who share common characteristics. Segmenting, or dividing your target market
into several small groups, can help you develop a product or service that will meet customer needs.
Market research can be used to identify market segments.
The process of market segmentation is important
because most products and services only appeal
to a small portion of the population. The leisure
services market is a large market that includes
many segments, such as outdoor adventurers,
people who vacation frequently, and couples
who eat at restaurants. Targeting the entire
leisure market would not make sense. You would
never be able to meet the needs of the entire
market.
CUSTOMER PROFILING
Creating a customer profile can be very
useful in market segmentation.
A customer profile is a description of the
characteristics of the person or company
that is likely to purchase a product or
service. A customer profile can help you
meet customer demand. Customers may
be profiled based on many types of
data, including demographics,
psychographics, use-based data, and
geographic data.
DEMOGRAPHICS
Data that describe a group of people in terms of their age, marital status, family size, ethnicity,
gender, profession, education, and income are called demographics. An example of a market
segment based on demographic data is women business owners between the ages of 25 and
40 who earn at least $50,000 per year.
In demographic segmentation, we categorize customers into the following:
 Age (Baby Boomers, Generation X, Generation Y/ Millennials, Generation Z, Teenagers)
 Family Life Cycle (Single, Married, Widowed, etc.)
 Income classes (Classes A-E)
 Social classes / Reference groups
 Ethnic backgrounds (African Americans, Hispanics, Asians)
 Religious beliefs
 Occupations
PSYCHOGRAPHICS
Data that describe a group of people in
terms of their tastes, opinions, attitudes,
personality traits, and lifestyle habits are
called psychographics. An example of a
market segment based on psychographic
data is people who prefer to live in a
downtown setting and whose musical
preference is jazz.
BEHAVIORAL / USE-BASED DATA
Data that help you determine how often potential customers use a particular service
are called use-based data. If you were starting a travel agency, you would want to
know how often potential customers travel.

GEOGRAPHIC
Data that help you determine where your potential customers live and how far they
will travel to do business are called geographic data. If you were thinking of opening
a coffee shop, it would be important for you to know that people are not willing to
drive more than one mile for coffee.