Know Your Customers

After the general scan and research performed during the course of preparation for the value
proposition and the unique selling proposition, it is now time to dig deep and understand the target
customers through marketing research. Marketing research is a comprehensive process of understanding
the customers' intricacies and the industry they revolve in. Marketing research is one of the most critical
tasks of an entrepreneur. Therefore, no budding entrepreneur should establish a business without
undergoing the marketing research process or else the business will surely fail. The result of marketing
research is the entrepreneur 's major investment in a business, as it will lead him or her to the most
effective strategies to employ. Marketing research aims to scrutinize the target market, their specific
requirements, and the market size where the business operates.

Market Size

Market size is simply the size the arena where the entrepreneur's business will play. It is the
approximation of the number of buyers and sellers in a particular market. The entrepreneur is required
to determine the market size first to gauge the vastness or tininess of the market where he or she
intends to join. The only way to do this is to conduct a strategic marketing research from reliable sources
using dependable methods.

The first step is to estimate the potential market—the approximate number of customers that will buy
the product or avail the service. Usually, this is what you call the market space or the market universe
because this is the total market. For example, rice, the staple food of Filipinos, virtually covers the whole
country in terms of market size because majority Of Filipinos eat rice.

The second step is to eliminate the customers who are probably unlikely to buy the product or avail the
service. Using the rice retailing business again, the entrepreneur can already eliminate socioeconomic
classes A, B, and C because most of these customers buy rice in bulk (sacks) or are given freely by some
employers. They are also not the major consumers of rice.

The last step is for the entrepreneur to estimate the market share, which is the plotting and calculation
of the competitors' market share to determine the remaining portion for the new venture. The
entrepreneur should first assess the market situation via surveys, customer reviews, or any other data-
gathering methods. From there, he or she will be able to calculate the number of potential customers
that will buy the product or service offered. This will be the basis to decide whether the business is
worth the capital that will be used. Continuing with the rice retail business, because the entrepreneur
already identified socioeconomic classes D and E to be the market size, he or she should plot the number
of rice retail businesses within the vicinity and calculate the market share of each. The remaining portion
can be the potential market share of the rice retailer and can also be increased by those who will switch
depending on the effects of the entrepreneur's marketing strategies.

Market share computation illustration: Mr. Alvin Antonio, a budding entrepreneur, wants to establish a
rice retailing business in his area in Barangay San Isidro. He wants to know if this business is worth his
capital and effort. He dug deep and found out that there are approximately