Entreprenuership CH 4

CHAPTER OVERVIEW
Chapter 4 discusses the im-

CHAPTER 4
portance of knowing your
target market and identify-
ing and meeting a need in
that market better than the
competition.
4.1 Explains how to iden-
tify your target market
by analyzing the needs of
customers and how market
segmentation can help you
analyze a target market.
4.2 Explains the role of
market research, identifies
six steps involved in market
research, and explains the
role technology plays in
marketing research.
se from Shutterstock.com
4.3 Explains the impor-

tance of understanding your
competition, discusses types
of competition, explains
how to prepare a competi-
2010/ Used under licen
tive analysis, and describes

strategies for maintaining
customer loyalty.
TEACHING RESOURCES
ExamView® CD, Ch. 4
©Lucarelli Temistocle,
Video
Video Segment, Ch. 4
Workbook, Ch. 4
Instructor’s Resource CD
Activities, Ch. 4
Activities Answers, Ch. 4
Business Plan Template
Chapter Tests, Ch. 4
Lesson Plans, Ch. 4
PowerPoint Slides, Ch. 4
Video Discussion Guide,
Identify and Meet
Ch. 4
Workbook, Instructor’s
Edition
www.cengage.com/school/
a Market Need
entrepreneurship/ideas
Activities, Ch. 4
Crossword Puzzle, Ch. 4
Flashcards, Ch. 4 ket
Net Bookmark, Ch. 4 4.1 Identify Your Mar
ket
4.2 Research the Mar
petit ion
4.3 Know Your Com
* www.cengage.com/school/entrepreneurship/ideas
94
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on
IDEAS IN ACTION
s ac in Discuss with students the
ti
ea
importance of knowing
id
Find Your Target Market your market and being

sure there is a market for
your product or service. Ask
students if they agree with
Ben Cathers started his first business, an online adver- Ben’s advice that entrepre-
tising and marketing firm, when he was 12 years old. neurs should target their
Seven years and two business ventures later, Ben se- own age market.
cured a book deal. To what does the now 25-year-old Discuss Ben’s belief that
ers
owe his early success? Researching and fully under- business failures are great
Photo courtesy of Ben Cath

standing his target market—teenagers. learning experiences. Ask
Like many teens, Ben passed downtime playing students if they agree with
video games and spending time on the computer. His this.
interest in computers led to his first money-making Ask students why they think
plan of building and hosting websites. Ben spoke to Ben has been so success-
ful. Obtain a copy of Ben’s
business owners and did ample research to learn how Ben Cathers, author of
book, Conversations with
to make money through web advertising. This first Conversations with Teen Teen Entrepreneurs, and
business taught Ben many lessons of entrepreneurship, Entrepreneurs share some of Ben’s advice
much of which he shared in his book. with students.
Ben’s book, Conversations with Teen Entrepreneurs, came about after What Do You Know?
years of speaking with fellow teens while doing research for his startups. Answers
The book covers many topics but focuses on teens starting businesses and 1. By conducting research,
the hardships and successes that go along with entrepreneurship. He urges you will know what the
teen entrepreneurs to get out and talk to as many people as possible. Ben market needs.
also recommends new entrepreneurs target their own age market. “It is 2. Both show clients and po-
easier to recognize needs when you are living in that market, and if you tential employers that you
are well-versed on particular
don’t have an understanding of the market, how can you convince a client
topics.
you know what you are doing?” Ben said.
After Ben graduated from Boston University School of Management, he 3. It gives you the necessary
drive to have a long career
moved to New York City to be a social media consultant and to create his
and shows clients that you
fourth startup business. Ben also writes a blog covering entrepreneurship, are passionate about their
social media, and a multitude of other topics. He said blogging is a cheap fo- business or product.
rum for teens wanting to start a business or land a new job. When meeting
with potential clients or a future employer, teens can reference blog posts
that could give them a leg up.
Ben writes his blog because he has a passion for business and entrepre-
neurship. Ben encourages teens to start businesses early because even small
failures can be beneficial. He believes these failures are great learning ex-
periences for teens because it is easier to bounce back and start over when
there are fewer financial obligations to worry about. Ben also advises that
while entrepreneurship offers many freedoms, it often means working long
hours. Passion and drive are necessary to succeed.
1. Why is it important to research your target market

w ou t
no y a
k do wh
before starting a business?

?
2. How can teen entrepreneurs use social media

and networking to their advantage?
3. Why is passion such an important trait for
successful entrepreneurs to have?
95
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IDENTIFY YOUR MARKET
42.1 Goals Vocabulary
• Identify a target market by analyzing • target market • psychographics
the needs of customers. • market segments • use-based data
• Explain how market segmentation • customer profile • geographic data
can help an entrepreneur analyze a • demographics
target market.
focus
on small
Who is your customer?
business Roseanne and John had their own restaurant in Los Angeles,
California, when their daughter was born. Deciding that
SCHEDULE they wanted a different lifestyle for their family, they began
Block 45 minutes to think about relocating and starting a new restaurant
Regular 1 class period
in a small-town setting. They talked about the kind of
FOCUS ON SMALL restaurant they wanted to open. They decided that they
BUSINESS would target middle- to upper-middle-class families who
Ask students if they think
had a love for good food, were willing to drive up to
business owners should
30 miles to get it, and were willing to pay $10 to $15 per
Photodisc/Getty Images
use the “field of dreams”
philosophy—if you build it, meal.
they will come—or if there
is more to the decision- Work as a Team Roseanne and John put a great
making process regarding amount of thought into the type of customer they
customers.
wanted to attract before they began to look for a Think about the type
Work as a Team location. Why is this important? of customer you want
In small groups, have stu- to attract.
dents discuss Roseanne and
John’s process for identify-
ing their target customer. It
is a good idea to have the
target customer in mind
when choosing a location Target Market
to ensure it is accessible Entrepreneurs with exciting new ideas are sometimes so focused
and appealing to target
customers.
on their products or services that they forget about the customer.
Coming up with a good idea for a business is not enough to guar-
TEACH
Ask students to explain the
antee success. Customers are the people or organizations who buy
danger of being too focused the products and services companies offer. Before establishing your
on the product or idea. Dis- new enterprise, you will have to determine who your primary cus-
cuss that while the product tomers are and whether these customers will be willing to buy your
or service offered is an im-
portant consideration, it is product or service. Market research is the key to finding out this
also important to determine information. Understanding people’s wants and needs will allow
who your main customers you to identify business opportunities. The more you know about
are and whether they are
your customers, the better you will be at giving them what they
willing to buy your product
or service. Market research need and want.
is used to determine this.
96 Chapter 4 Identify and Meet a Market Need
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As an entrepreneur, you will need to estimate demand for your
UR
DEVELOP YO
products or services by identifying your target customers. The target
market includes the individuals or companies that are interested in ILLS
a particular product or service and are willing and able to pay for it. READING SK
Identifying your target market helps you reach the people who de-
As you read this chapter,
sire your products and services. Target customers are the customers develop questions for
you would most like to attract. A car dealer selling moderately priced each section that you
minivans would target middle-class families with children. A car dealer can use as a study guide
offering expensive sports cars might target single people with higher for the chapter.
incomes.
Identify Your Target Market

To identify the target market for your product or service, you will
need to answer the following questions:
1. Who is my potential market?
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 compa-
BananaStock/Jupiter Images
nies, what industries are they

in? Where are those industries
located?
4. What needs or wants will my
product or service satisfy?
Why should a clothing store identify its target customers?
5. How many potential customers
live in the area in which I want to operate? DEVELOP YOUR
READING SKILLS
6. What is the demand for my products or services? Discuss with students how
7. Where do these potential customers currently buy the products preparing questions while
or services I want to sell them? the material is fresh in their
minds will help them review
8 What price are they willing to pay for my products or services?
and remember important
9. What can I do for my customers that other companies are not al- points of the chapter later.
ready doing for them?
TEACH
As an entrepreneur, you should put yourself in your customers’ Discuss the nine questions
for identifying your target
shoes before you start your business. Afterwards, you should think market. Stress the impor-
about your customers’ needs and viewpoints every day. By continu- tance of giving careful con-
ally evaluating your market, you will be ready to respond to changes sideration to each one.
in communities, consumer tastes and buying habits, and competitors’ Photo Caption Answer
offerings. The store must make sure
it is offering the types of
clothing its customers want
and can afford.
CHECKPOINT ONGOING ASSESSMENT
Checkpoint Answer
What questions should you ask when identifying your target
Answers should include the
market? nine questions listed in this
lesson.
4.1 Identify Your Market 97
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TEACHING STRATEGIES
Print Learners
Market Segments
Provide a handout with the Groups of customers within a large market who share common char-
nine questions used to iden- acteristics are known as market segments. Market research can be
tify a target market to be used by a business to identify market segments. Segmenting, or divid-
used by students for taking
notes about their business
ing your target market into several small groups, can help you develop
idea. a product or service that will meet specific customer needs and wants.
Limited English Proficiency The process of market segmentation is important because most
(LEP) Students products and services appeal to only a small portion of the population.
Ask LEP students to restate The leisure services market is a large market that includes many seg-
the nine questions for iden-
ments, such as outdoor adventurers, people who vacation frequently,
tifying the target market in
their own words. couples who eat at restaurants, and more. Targeting the entire leisure
market would not make sense. You would never be able to meet the
TEACH
Explain that markets are needs of the entire market. Even the restaurant segment of the leisure
often so large it is impos- services market has sub-segments. Some people eat fast food on a reg-
sible to please everyone in ular basis while others like a sit-down meal at a nice restaurant. Some
the market. Segmenting
a target market helps you
people like Italian food while others prefer seafood or Chinese food.
develop a product or service Businesses can make decisions based on the information gathered
that will meet specific cus- about market segments. However, if the data are not analyzed cor-
tomer needs. rectly, the product may not meet the needs of the customers, or the
business might ignore a segment of the market that would be very in-
terested in the product.
Customer Profile
SAMPLE CUSTOMER PROFILE FOR A market segment is made up of people with com-
A SPORTING GOODS STORE mon characteristics. The more you learn about
● Individual 23 to 52 years of age them, the better strategy you can develop for reach-
ing them. A very useful part of analyzing your data
● Participates in sports is the creation of a customer profile. A customer
● Wants good-quality sports equipment profile is a description of the characteristics of
the person or company that is likely to purchase a
● Looks for good prices product or service. A customer profile can help you
● Lives in city of Blanchester understand what you need to do to meet customer
demand. Customers may be profiled based on many
● Average household income:
types of data, including demographics, psycho-
$42,000 per year graphics, use-based data, and geographic data.
By analyzing these types of data, you will be
Refer to the sample cus- able to develop a marketing strategy that identifies those customers you
tomer profile. Ask what can serve more effectively than your competitors can. The data can help
other details might be in-
cluded in a customer profile. you determine the size of your market and how many people would be
What might the customer willing and able to purchase your product or service. You can design
profile for a cleaning ser- your products and services, set prices, and direct promotional efforts
vice be like? Discuss how
students could verify their
toward those customers.
assumptions. Point out that
a customer profile can help DEMOGRAPHICS Data that describe a group of people in terms
you understand what you of age, marital status, family size, ethnicity, gender, profession,
need to do to meet cus- education, and income are called demographics. Women business
tomer demand.
owners between the ages of 25 and 40 who earn at least $50,000
per year would be an example of a market segment based on demo-
graphic data.
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PSYCHOGRAPHICS Data that describe a group of people in terms TEACH
Discuss the many types of
of their tastes, opinions, personality traits, and lifestyle habits are
data that may be used in cus-
called psychographics. People who prefer to live in a downtown set- tomer profiles. Ask students
ting and whose musical preference is jazz would be an example of a to provide examples of de-
market segment based on psychographic data. mographic data: age, marital
status, family size, ethnicity,
gender, profession, education,
USE-BASED DATA Data that help you determine how often poten- and income. Explain that psy-
tial customers use a particular service are called use-based data. If you chographics describe a group
were starting a travel agency, you would want to know how often your of people in terms of their
tastes, opinions, personality
potential customers travel.
traits, and lifestyle habits. Ask
students to think of service
GEOGRAPHIC DATA Data that help you determine where your businesses and the type of
potential customers live and how far they will travel to do business use-based data they would
with you are called geographic data. If you were thinking of opening need. Explain that geographic
data helps you determine
a coffee shop, it would be important for you to know that people are where potential customers
not willing to drive more than one mile for coffee. live and how far they will
travel to your business.
what went
w
PRICE WAR
ro
U-Corp was the first company in performance. A-Corp spent heavily
n
the computer industry to offer on advertising and ran frequent
removable hard disk drives for reduced-price promotions. As a
g?
personal computers. For years, result, A-Corp took a large amount
U-Corp had a unique position in of business from U-Corp. U-Corp
the industry and had little direct decided to try to take back the WHAT WENT
competition. Eventually, the market it had lost to A-Corp and WRONG?
company was making $300 million in launched a multimillion-dollar Discuss how important it
annual revenue. marketing campaign aimed at its is to monitor the competi-
tion and changes in the
U-Corp’s first competition target market.
marketplace.
came from A-Corp, which offered The two companies went head to
a product similar in price and head, selling disk drives at lower and Think Critically Answers
lower prices. However, consumers do 1. A-Corp’s heavy ad-
not generally need to buy multiple vertising and low prices
hard drives because of their large quickly led to it becoming
the market leader in con-
storage capacity. Only one company
sumers’ minds.
could win, and it was A-Corp. In less
than two years, U-Corp suffered 2. Each company failed
losses, and A-Corp bought it out. to realize there would be
fewer repeat customers
because they typically
THINK CRITICALLY needed only one hard
1. What was U-Corp’s major dis- drive.
advantage in competing with 3. Answers may vary.
A-Corp? U-Corp should have dif-

2. What did each company fail to ferentiated its product in
realize about its customers? the minds of consumers.
3. How might the price war for re- ONGOING

movable hard drives have been ASSESSMENT
Consider other strategies before engaging Checkpoint Answer
avoided?
in a price war. Demographics, psycho-
graphics, use-based data,
and geographic data
4.1 Identify Your Market 99
96894_04_ch04_p094-123.indd 99 12/2/10 7:50:11 AM

ASSESS
Think About It Answers
1. Unless you understand
who your target market is
CHECKPOINT
and what types of products Name four types of customer data that may be analyzed in
or services these consum- developing a customer profile.
ers are looking for, you will
not be able to satisfy their
wants and needs.
2. Most markets are so large
that it is important to seg-
ment them to
focus on meeting
4.1 ASSESSMENT
specific customer
needs. THINK ABOUT IT
3. Answers will
vary and may in- 1. Why is it so important to identify your target market?
clude the number
2. How are market segments useful to an entrepreneur?
of golfers in the
area, their ages, 3. You are thinking about offering golf lessons in your town. What types of data (demo-
income levels, and graphics, psychographics, use-based, or geographic) would you collect to create a cus-
amount of leisure
time.
tomer profile?
Make Academic
Connections Answers MAKE ACADEMIC CONNECTIONS
4. 50 1 45 1 48 1
26 1 47 1 55 5 271 cars 4. MATH Marcel wants to open a car wash after graduating from high school. For
washed; 271 4 6 days 5 several days, he observed the cars being washed at a local car wash and recorded the
45 cars per day; 5 days 3
information below.
45 cars 3 52 weeks 5
11,700 cars per year Day 1 Day 2 Day 3 Day 4 Day 5 Day 6
5. Answers will vary. 50 cars 45 cars 48 cars 26 cars 47 cars 55 cars
6. Answers will vary. What is the average number of cars washed each day? If the car wash were open only
7. Answers will vary. five days a week, how many cars might be washed per year? (Hint: There are 52 weeks
in a year.)
Teamwork Answers
Answers will vary. 5. GEOGRAPHY Think of a business you would like to open. Obtain a map of the area
RETEACH where you would like to locate the business. Mark the areas on the map that represent
Name several examples the farthest distance you believe customers would be willing to travel to do business
of customer data and ask with you. Draw a circle that encompasses the points where your customers live.
students to classify each
as demographic, psycho- 6. COMMUNICATION Interview a business owner. Ask the owner the nine questions
graphic, use-based, or listed in the lesson about identifying a business’s target market. Write a report based on
geographic. what you find out about the owner’s target market.
ENRICH
7. MARKETING Think about a television station or network that has a particular focus
Have students choose a
business in the area and (example: the Food Network or the History Channel). Identify several characteristics of
write a customer profile a market segment that enjoys the shows broadcast on the station or network. Use the
for the type of customer characteristics to create a customer profile for the television network.
they think the business is
trying to reach.
CLOSE
Name several general
Teamwork
industries, such as cloth- Working with team members, look through magazines and newspapers for an advertise-
ing, restaurant, and auto- ment of a new product. Based on the type of publication and the material contained in the
mobile. Ask students for advertisement, answer the nine questions listed in the lesson about identifying a target
examples of their market market. Can you determine who the target market is for the product?
segments.
96894_04_ch04_p094-123.indd 100 12/2/10 7:50:14 AM

RESEARCH THE MARKET
Goals Vocabulary
4.2
• Explain the role of market • market research • secondary data
research. • primary data • customer relationship
• Identify the six steps involved in • survey management
market research. • focus group
• Explain the role technology
plays in marketing research.
Get to know your market. focus

on small
Roseanne and John decided that they would like to locate business
their business in South Carolina close to the areas where SCHEDULE
they grew up. They knew that it would be important for Block 45 minutes
©konstantynov, 2010/Used under license from

them to research the market in that area to be sure that Regular 1 class period
there was a market for the type of restaurant they FOCUS ON SMALL
wanted to open. They decided to interview groups BUSINESS
of potential customers to gather their thoughts Ask students if they think it
and opinions. They also developed a survey and is important to research the
Shutterstock.com
market for a business before
hired some local high school students to call
deciding to open it. Ask
residents in the community to collect more data. them to name a business
Finally, they explored how they could utilize in the area that has closed
technology to conduct market research. recently. Do they think the
Interviews are just one way to
business closed because
gather market research. there was not a sufficient
Work as a Team Do you think that
market for the good or ser-
Roseanne and John are using good methods to gather data? Can you
vice it was providing?
suggest any other ways they can find out what their potential customers
think about the business idea? Work as a Team
In small groups, let students
discuss whether Roseanne
and John are using effec-
tive research methods. Have
them brainstorm a list of
Role of Market Research other possible methods and
For your business to succeed, you need to identify potential markets, have each team share its top
three choices with the class.
analyze demand, and determine how much customers are willing
to pay for your products or services. To collect this information, TEACH
Discuss the temptation to
you will perform market research. Market research is a system for
act on hunches instead of
collecting, recording, and analyzing information about customers, spending time and money on
competitors, products, and services. Based on the findings of market market research. Stress that
research, a business will be able to determine which marketing strat- investors and lenders will
want to see solid data to back
egies will be most effective and most profitable. Spreadsheets and up marketing strategies con-
databases are used for collecting and analyzing market research data. tained in the business plan.
Market research has its limits because it can be very expensive and Ask students to explain the
time-consuming, but it is worthwhile when major decisions must be difference between primary
made. You will draw on primary data and secondary data to help you data and secondary data and
to provide examples of each.
4.2 Research the Market 101
96894_04_ch04_p094-123.indd 101 12/2/10 7:50:15 AM

FAMOUS identify ways in which you can meet customer needs. Market research
ENTREPRENEUR
can also help you forecast sales and make other business decisions.
Ask students if they had
previously thought of
Thomas Edison as an entre- Primary Data
preneur. In what ways did he
Most market researchers collect primary data. Information collected
show entrepreneurial char-
acteristics at an early age? for the very first time to fit a specific purpose is primary data. A re-
Think Critically Answer
searcher collects primary data to help identify and understand the tar-
As a true entrepreneur, Edi- get market. There are a few different ways to collect primary data.
son wanted his inventions to
have practical uses for con- SURVEY The most common type of primary market research is a
sumers. Many inventors fo- questionnaire, or survey. A survey is a list of questions you would like
cus on personal interests or
unique and different prod- to ask your customers to find out demographic and psychographic in-
ucts that do not have practi- formation. A survey can be conducted by mail, over the phone, on the
cal applications. Although Internet, or in person.
they may be talented, some
inventors may not have
Creating a good survey is important. Surveys should be kept to
good business skills. a page in length when read over the phone or mailed to respondents.
Photo Caption Answer
Longer surveys can be used if an interview is face to face. Questions
Entrepreneurs develop should be clear and easy to answer, and only the most important ques-
products that can make our tions should be asked.
lives better in some way.
entrepreneur
Brady-Handy Photograph Collection (Library of Congress)

famous
THOMAS A. EDISON Could you do your

homework at night if there was no light?
Thanks to Thomas Edison, you can do your
homework late at night! Thomas Edison is
considered to be the greatest inventor in
American history.
Edison showed entrepreneurial How do entrepreneurs cha
nge the way we live?
characteristics at an early age. At the age of 12,
he talked his parents into letting him go to
work selling newspapers, snacks, and candy on everything, he learned to invent only those
the local railroad. Then he started an entirely things that people wanted. As one of the original
separate business selling fruits and vegetables. founders of the General Electric Company, he
When Edison was 14, the pre-Civil War tried to develop products that would work
debates between Lincoln and Douglas under ordinary conditions, would not easily
were taking place. He used his access to the malfunction, and could be repaired easily. Known
associated news releases that were being as “The Wizard of Menlo Park,” which was the
teletyped into the railroad station each day home of Edison’s research laboratory, Thomas
and published them in his own newspaper. Edison truly changed the world we live in!
Focusing on newsworthy “scoops,” he quickly
had more than 300 commuters subscribing to THINK CRITICALLY
his paper, The Weekly Herald. Why do you think it was important for Thomas
Edison turned on the lights for all of us Edison to invent items that people wanted?
with his invention of the electric light bulb in Do you think all inventors can become
1879. As a young inventor with a curiosity about successful entrepreneurs?
96894_04_ch04_p094-123.indd 102 12/2/10 7:50:22 AM

?
OBSERVATION Market research can also involve observation.
If you are considering opening a juice bar in a shopping mall, you
did you
might want to see how many customers you could attract. You could KNOW
go to the mall and count the number of people purchasing drinks at Many retail stores collect
various food outlets. An entrepreneur interested in starting a motor- primary data through the
cycle repair shop might count the number of motorcycles at a busy use of scanners. The sales-
intersection. person scans the universal
product code (UPC) on
FOCUS GROUPS Another way to find out about the market is by each item purchased. The
conducting interviews with small groups of people. A focus group is storeowner can then deter-
an in-depth interview with a group of target customers who provide mine the best- and worst-
valuable ideas on products or services. You can ask the same kinds selling items and adjust
of questions in a focus group that you would ask in a survey, but inventory accordingly.
the group setting allows for more discussion and interaction. Focus
groups usually are led by a moderator, who asks questions about buy- DID YOU KNOW?
ing habits, likes and dislikes, and interest in particular products and Ask students if they realized
they were providing market
services. The focus group session is recorded so that the comments research data with every
can be reviewed carefully after the session. point-of-sale purchase. Dis-
cuss how shopper cards can
DISADVANTAGES OF PRIMARY DATA While primary data can trace purchases to specific
customer demographics.
provide the most up-to-date and useful information, collecting it
can be time-consuming and more expensive than gathering sec- TEACH
Ask students if they have
ondary data. As an entrepreneur, you will need to determine how
ever participated in a sur-
much primary and secondary market research data you need to vey. What kinds of questions
collect. were asked? Surveys usually
ask for demographic and
psychographic information.
Secondary Data
©Francesco Ridolfi, 2010/Used under license from

Discuss the examples pro-
Entrepreneurs also research their target markets vided of observation. Ask in
by using secondary data. Secondary data are what other situations this
found in already-published sources. Data on method might prove useful.
population, family size, household Explain that a focus group is
income, economic trends, industry an interview with potential
Shutterstock.com
forecasts, and other information customers. Questions can be

open-ended, and follow-up
can be found in secondary data questions can lead to in-
resources. Places to find secondary depth discussions.
data include the following: Why is secondary data an important Primary research can
part of market research? be time-consuming and
1. Publications issued by govern- expensive. It may be
ment and community organizations, such as the U.S. Census possible to find needed in-
Bureau, the Small Business Administration, and the Chamber of formation from sources of
Commerce secondary data. Brainstorm
with students the kinds of
2. Books about specific industries information that can be
3. Information on websites for government and businesses found as secondary data.
4. Books about other entrepreneurs who set up similar businesses Photo Caption Answer
5. Trade magazines and journals Secondary data already exist,
6. Newspaper articles and statistics saving researchers both time
and money. Secondary data
Kisha Nichols wanted to expand her family-owned chain of retail can provide valuable infor-
shoe stores. She decided to perform some secondary data research. mation to help entrepre-
neurs in the decision-making
She visited the local Chamber of Commerce website, which provided process.
96894_04_ch04_p094-123.indd 103 12/2/10 7:50:23 AM

ONGOING ASSESSMENT her with population demographics for her city and county and
Checkpoint Answer
industry forecasts for local communities. This information allowed
Primary and secondary data
are collected through mar- Kisha to identify the largest markets as well as any growing markets.
ket research. Magazines provided information on the average income of retail shoe
TEACH store owners in her state. Newspaper articles gave Kisha psychographic
Direct students to the il- data on the lifestyles of people in her area. Most of them worked in
lustration as you name each professional office settings, which meant they had a need for comfort-
step in market research.
able dress shoes. The secondary data gave Kisha a good idea of which
Discuss the first step, point- community might provide the best prospects.
ing out the importance of
knowing exactly what you
are trying to find out before
beginning market research.
Discuss how to decide what
CHECKPOINT
data is needed. It is a waste What types of data can be collected through market research?
of time and money to col-
lect data that is not useful
to the entrepreneur.
Discuss how data can be Six Steps of Market Research
collected. Review the Collecting primary data can be time-consuming and expensive, but
three kinds of market re-
search and their different it is extremely valuable. It will tell you exactly what you want to
advantages. know and uncover information you may not find through secondary
TEACHING STRATEGIES sources. Conducting primary market research involves six steps.
Auditory Learners
Write the six steps of mar- 1. Define the Question
ket research on the board.
Have students read them In the first step in the market research process, you need to define
aloud from the board and exactly what you need to know. Entrepreneurs have many concerns
summarize each one as it is and questions about the businesses they are planning. By determining
discussed.
what they need to know, they are defining the question that will be
the focus of their research.
Maggie Blandin is thinking about starting a dog-walking service.
Before she invests in her business, Maggie needs to determine who
would be most likely to use her service (her target customers).
Market Research 2. Determine the Data Needed

Once you have defined the market research
Step 1 Define the Question question, you are ready to determine what data
you need to collect to provide the answer to your
Step 2 Determine the Data Needed question. Entrepreneurs need to be sure that the
data they collect will be helpful.
It would not be helpful for Maggie to know
Step 3 Collect the Data how many families live in the area where she
wants to open her business. She needs to know
Step 4 Analyze the Data how many people living in the area are dog
owners who lack the time to walk their dogs.
Step 5 Take Action
3. Collect the Data
Before you begin collecting data, you need to
Step 6 Evaluate the Results decide how you will go about gathering the data.
Should you use a survey? Should you use an
96894_04_ch04_p094-123.indd 104 12/2/10 7:50:30 AM

observation method? Is a focus group appro-
priate? The method you use will depend on
what type of information you want to gather.
For example, you can find out people’s opin-
ions in a survey or focus group but not by ob- Groups of customers within a large market
who share common characteristics are known
servation. You should perform some secondary
as market segments. Access www.cengage.
market research first to familiarize yourself with
com/school/entrepreneurship/ideas and click on
your market. Demographic and psychographic
the link for Chapter 4. The You Are Where You
data, as well as information on economic trends
Live feature describes every U.S. neighborhood
and industry forecasts, will help you determine in terms of lifestyle types. Click on the ZIP
what kind of primary data research to perform. Code Look-Up tab and choose the PRIZM NE
You can then choose the best research method system. Enter your own ZIP code. What results
for the information you want to gather. did you find? In which lifestyle type (if any) do
If you use observation to do your re- you think you and your family fit? Now choose
search, you need to determine where and the ConneXions system. Do the results differ
when to get the best information. If a focus from those found under the PRIZM NE system?
group is needed, you should think about Explain. Which system do you think more accu-
what kinds of individuals to include and what rately describes your neighborhood?
questions to ask them. If you choose a sur-
vey, think carefully about how long it should www.cengage.com/school/entrepreneurship/ideas
be, what questions it should include, how it
should be administered, and how many people you should survey.
NET BOOKMARK
Maggie decides that a survey is the best way for her to find an- This activity will introduce
swers about customer preferences for a dog-walking service. Through students to valuable on-
her secondary data research, Maggie learned that 60 percent of the line resources of market
households in her area own one or more dogs and that the average research data. Encourage
students to bookmark the
annual household income is $75,000. Most households have one or two systems for future use.
more adults working in a professional field. She also found that dog Answers will vary.
ownership is on the rise in her area. Using this information, Maggie TEACH
put together the survey shown on the next page, asking about the life- Discuss the questions on the
styles, opinions, and choices of dog owners. survey on page 106. Point
out that surveys should be
short and should only re-
4. Analyze the Data quest information that will
Once you have collected all your primary and secondary data, you will be useful for the purpose of
need to analyze and interpret the information thoroughly. The data the research.
may be used not only to find out about your potential customers but Explain the fourth step in
also to forecast sales. The analysis should be in a written format so you market research: analyzing
data. Point out that data is
can refer to it later. useless if it is not studied.
Through her secondary data research, Maggie found that 2,500 dogs Data can be used to learn
live in her area. From her primary data research, she found that 30 per- about potential customers
and to forecast sales.
cent of dog owners in her area would pay $20 to have their dogs walked
for 30 minutes. Many would pay to have them walked two or three Explain that in the fifth
step of market research,
times a week. Maggie determines that she could easily have 750 dogs the entrepreneur deter-
to walk each week. mines how to use the data
that has been collected and
takes some kind of action.
5. Take Action Ask students to reiterate
Once you have analyzed and interpreted your data, you will need to de- how Maggie used market
termine how to use the data to make a decision. You will develop a plan research and the actions
of action based on the information you found in your market research. she took as a result.
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M ARKET R ESEARCH S URVEY
Thank you for participating in this market research survey. We appreciate your
assistance in helping us identify the needs of pet owners in our community.
P L E A S E C H E C K T H E B O X T H AT B E S T D E S C R I B E S Y O U R S I T U AT I O N .
Age: UNDER 18 19–30 31–40 41–50 51–65 OVER 65
Gender: MALE FEMALE
Number of pets: 0 1 2 3 4 OR MORE
Kinds of pets: DOG CAT FISH BIRD OTHER (PLEASE SPECIFY )
IF YOU OWN A DOG, PLEASE ANSWER ALL OF THE FOLLOWING QUESTIONS.
How often do you walk your dog?

EVERY DAY A FEW TIMES A WEEK ONLY ON THE WEEKENDS NEVER
Would you be willing to pay someone you trusted to take your dog for walks?
YES POSSIBLY NO
If you would be willing to pay someone to walk your dog, how many times a week would you
utilize this service?
EVERY DAY 2–3 TIMES A WEEK ONLY ON THE WEEKENDS
How much would you be willing to pay to have your dog(s) walked for 30 minutes?
$10 $15 $20 $25 I WOULD NOT PAY TO HAVE MY DOG WALKED
How often do you travel out of town?
ONCE A YEAR 2–3 TIMES A YEAR SEVERAL TIMES A YEAR NEVER
Who takes care of your dog when you are out of town?
KENNEL FRIEND NEIGHBOR OTHER
Would you be interested in having someone you trust take care of your pets while you are away?
YES POSSIBLY NO
96894_04_ch04_p094-123.indd 106 12/2/10 7:50:31 AM

TEACH
Emphasize the importance
of evaluation to entrepre-
©Bocos Benedict, 2010/Used under license from Shutterstock.com

neurs. They must constantly
evaluate the results of ac-
tions taken and adjust plans
as needed.
Actions taken by entrepre-
neurs must be evaluated to
measure their effectiveness.
If expectations are not be-
ing met, the plan of action
should be revised.
ONGOING ASSESSMENT
Checkpoint Answer
Define the question, de-
Why should entrepreneurs evaluate the actions they take? termine the data needed,
collect the data, analyze the
Maggie Blandin’s market research has helped her conclude that her data, take action, and evalu-
idea for a dog-walking service is profitable. From her market research, ate the results.
she has created a target customer profile of people aged 31 to 50 who TEACH
travel often, work long hours, and earn $50,000 to $100,000 a year. Explain that CRM is a new
She also knows the amount of money her target customers are willing marketing trend that fo-
cuses on the relationship
to pay for her service and how much income she can expect to make.
with the customer as an
In her first effort to get customers, Maggie plans to create a flyer individual instead of as part
aimed at her target market, which she will distribute in neighborhoods of a group. Technology
and veterinarian offices. She also plans to distribute the flyer downtown is used to track customer
interactions.
and in other business areas where many of her target customers work.
6. Evaluate the Results

Evaluation is the last step in the market research process. It is not
enough just to develop a plan of action. Entrepreneurs must regularly
evaluate the actions they take as a result of the plan.
Once Maggie has developed and distributed the flyer, she will
need to evaluate the results. If she feels that she is getting a good re-
sponse from her target market, she can assume that her plan of action
is effective. However, if she is not getting a good response, then she
will need to revise her plan of action.
CHECKPOINT
What are the six steps of market research?
Technology-Driven Marketing
Customer relationship management (CRM) is the goal of a new
marketing trend that focuses on understanding customers as individu-
als instead of as part of a group. It is a business strategy designed to
increase profitability and customer satisfaction. CRM uses technology
to track customer interactions and to organize business processes in a
way that will produce customer-satisfying behaviors.
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TEACH Interactions with Customers
Point out that an important
part of CRM is to identify In a CRM system, companies identify customer relationships, includ-
customer relationships, ing information on who customers are, where they are located, and
including who customers what products and services they buy. This is done by collecting data
are, where they are located,
on all types of interactions a customer has with the company. These
what products and services
they buy, and their product can include phone, web-based, or salesperson contacts. Other touch
and service expectations. points where a customer might have contact with the company include
Explain that many compa- a product or service registration, a request for product information,
nies are using the Web as a the return of a completed warranty card, or a customer talking with
touch point with customers. delivery personnel and product installers.
Discuss how EDI is used to
transmit data from the cus-
Many companies are now using websites as a touch point for cus-
tomer to the company. Ask tomers to communicate with them. On the Web, companies provide
students to name some ad- forms that customers can complete to purchase products, make reser-
vantages of EDI—the infor- vations, enter product and service preferences, and provide customer
mation does not have to be
rekeyed, improving accuracy feedback. This information is transmitted through electronic data
and saving time and money. interchange (EDI), which is the movement of data between locations
Explain that customer data in a structured, computer-retrievable format. The information is then
is collected and stored in used to define market segments, adjust marketing strategies, develop
a data warehouse, mak- new products, and improve customer relationships.
ing the data available to
all who have access to the
database. Customer Database
Discuss how data mining Large amounts of data can be obtained from the interactions between
is used to identify custom- a company and its customers. A business must decide what types of
ers and develop marketing data it wants to acquire and how it can use the data to enhance cus-
strategies. By identifying
patterns, marketers can
tomer relationships. Data collected can include customer contact in-
develop more accurate cus- formation and data pertaining to the customer’s current relationship
tomer profiles. with the company—past purchase history, quantity and frequency of
Photo Caption Answer purchases, average amount spent on purchases, and reactions to pro-
Technology can be used by motional activities.
a business to track its in-
The data are stored in a data warehouse, which is a large com-
teractions with customers.
Data collected from these puterized database containing all of the information collected in the
interactions can be stored in CRM process. Data stored in the data warehouse by one department
a database that is accessible within the company are available to other departments or to anyone
to marketers. Marketers
can use this data to develop
else who has access to the database.
marketing strategies.
ONGOING ASSESSMENT
Checkpoint Answer
©Dean Mitchell, 2010/Used under license from Shutterstock.com
The goal of CRM is to in-

crease profitability and cus-
tomer satisfaction.
How can technology be used in the market research process?
96894_04_ch04_p094-123.indd 108 12/2/10 7:50:38 AM

Data mining is used to find hidden patterns and relationships in ASSESS
the customer data stored in the data warehouse. The value of data
1. If conducted properly,
mining is the ability of a company to transform individual bits of data market research will help
into usable information that marketers need to develop successful entrepreneurs understand
marketing strategies. Using data mining, marketers can search the data their target markets and,
thus, satisfy the wants and
warehouse to find relevant data, categorize significant characteristics, needs of customers.
and develop customer profiles. Once the most profitable customers
2. It can be costly and time-
and prospects are identified, marketing strategies that will appeal to consuming, and it must be
them are created. carefully analyzed so that
incorrect decisions are not
made.
CHECKPOINT 3. Secondary data are found

in published sources. Primary
data are collected for the first
What is the goal of CRM? time to fit a specific purpose.
4. If not well defined, you
will waste time and energy
gathering data that you
don’t need.
4.2 ASSESSMENT 5. Data mining is used to

find patterns and relation-
ships in customer data to
identify profitable custom-
THINK ABOUT IT ers and prospects.
1. Why do entrepreneurs need to conduct market research? Make Academic

Connections Answers
2. What are the limitations of market research? 6. Answers will vary.
3. What is the difference between primary and secondary data? 7. See the IRCD or the
website for teaching
4. Why is it important to define the question you want your market research to answer? suggestions.
5. How is data mining used? 8. Answers will vary. Some
possible answers could in-
clude customer surveys, feed-
MAKE ACADEMIC CONNECTIONS back forms, and so forth.
Teamwork Answers
6. MANAGEMENT Your family-owned business processes and sells orange juice Answers will vary.
to food distributors. In order to grow, the business needs to expand its product line.
RETEACH
Describe how you would apply the six market research steps to help determine an List the six market research
additional product your business could offer. steps out of order. Ask stu-
dents to place
7. PROBLEM SOLVING It is important to evaluate the effectiveness of a survey. them in order
Access www.cengage.com/school/entrepreneurship/ideas. Click on Activities and open and describe
the file Market Research Evaluation. Print a copy and complete the activity. what is done in
each step.
8. TECHNOLOGY Choose a company that you are familiar with. On the Internet,
ENRICH
research the company’s website and make a list of the different ways the company col-
Have students interview a
lects customer data through its website. market research analyst and
find out how the analyst
conducts market research for
Teamwork new products or companies.
Working with team members, come up with a new product that you think will be very use- CLOSE
Name several market re-
ful for students in your school. Develop a survey for potential consumers of this product
search tools and resources
to gauge their interest. Have students from your school complete the survey. Tabulate the and ask students to associ-
results and determine if the product is a good idea. ate them as useful for pri-
mary or secondary research.
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KNOW YOUR COMPETITION
42.13 Goals Vocabulary
• Explain the importance of knowing and understand- • direct competition
ing your competition. • indirect competition
• Prepare a competitive analysis. • competitive analysis
• Describe strategies for maintaining customer loyalty.
focus
on small
Who is your competition?
business Roseanne and John needed to find out who their

competition would be for their new restaurant.
SCHEDULE They drove 30 minutes in all directions from
Block 45 minutes the location they chose for their restaurant
Regular 1 class period
©rox77, 2010/Used under license from Shutterstock.com

and made a list of all the restaurants they
FOCUS ON SMALL saw on their trips. They also obtained
BUSINESS menus of the restaurants to see what type
Ask students to name a
of food they offered. They even ate at
business in the area and
then name all of its com- several of the restaurants and observed
petitors. Ask them how they the restaurants’ strengths and weaknesses.
think the business competes Roseanne and John determined that their
with all of its competitors. restaurant would offer a different type of
Work as a Team food from any of their competition and
Instruct teams to brainstorm that the customers in their target market
general ways in which res- would be willing to try a new restaurant.
taurants can differentiate It is beneficial to check out the
themselves, such as through
competition in person.
atmosphere, theming, Work as a Team Roseanne and
unique menu, secret recipes, John have determined that there is a market for their restaurant. How
service, and price. The best
can they differentiate their restaurant from competing restaurants? How
customer loyalty strategy
for a restaurant is consistent can they keep customers coming back?
quality and service.
TEACH
Emphasize that the U.S.
economic system is based
on competition. Stress the Impact of Competition
importance of monitoring The U.S. economic system is based on private property, freedom of
changing market condi- choice, profit, and competition. Because consumers are free to buy
tions and knowing what the
competition is doing. Refer
whatever they want from whomever they want, companies compete
to the personal computer for their business. Most new businesses face competitors—compa-
example. nies offering similar or identical products and services to the same
Discuss the importance of group of target customers. As the owner of a new business, you
finding a market segment will have to persuade customers to buy from you instead of from
whose needs are not being your competitors. You must always watch the competition and be
met by competitors and fill-
ing that need.
96894_04_ch04_p094-123.indd 110 12/2/10 7:50:59 AM

sure that you are offering products
that are of equal or better quality
at the same or lower prices.
©Rovenko Design, 2010/Used under license from Shutterstock.com

When personal computers
first came on the market, Apple
computers were the biggest sell-
ers. Then IBM developed a per-
sonal computer, and soon there
were many other manufacturers
of personal computers. Today,
customers have many choices for
personal computers. All of the
computer manufacturers work hard
to persuade customers to buy their
product.
How can similar businesses compete for customers?
Understand the Competition TEACHING STRATEGIES

Kinesthetic Learners
Knowing about your competition will also help you define your target
Have students choose a
market. Businesses typically enter into areas where there is competi- business and find an adver-
tion. To survive, they have to identify some special customer need tisement for that business.
or want that is not being met. Customers may be happy with the Then find advertisements
for competitors of the busi-
products or services, but they may be unhappy with the prices. Cus- ness and make a collage
tomers might be dissatisfied with the quality of a product or service of all the advertisements,
and would be willing to pay more for better quality. In either case, a pointing out the similarities
customer need is going unmet by a competitor, indicating a possible and differences in the ads.
opportunity for an entrepreneur. TEACH
Explain that there are two
types of competition—direct
Know the Types of Competition and indirect.
Competitors may be categorized as either direct or indirect competi- Explain that direct competi-
tion. You will need to find ways to identify and differentiate yourself tion includes a business that
from both types of competition. makes most of its money sell-
ing the same or similar prod-
ucts or services as another
DIRECT COMPETITION A business that makes most of its money
business. Discuss that because
selling the same or similar products or services to the same market of e-commerce, competitors
as other businesses is direct competition. Secondary data resources may be physically located
can give you information on your direct competition. Your direct far away. Name a business in
your area and have students
competitors may be in the same geographic area as your business. suggest its direct competitors,
The telephone directory or an Internet search will help you find the both local and distant.
number and locations of competing businesses. Your local Chamber of Describe the use of second-
Commerce will also have information on competitors in your business ary data resources to iden-
field. Observation methods can help you learn more about your direct tify your direct competition.
competitors. If you start a retail business, you can visit all of the malls, Photo Caption Answer
shopping centers, and retail outlets in your area. A business that offers prod-
ucts or services that are simi-
For some businesses, direct competitors may be located far
lar to those offered by other
away. Carmen Quinterro publishes a travel newsletter about Ire- businesses must identify some
land. Carmen’s target customers live all over the United States. Her special customer need or
competitors include five other newsletters about Ireland as well as want that is not being met.
For example, a restaurant
several travel websites. Although Carmen’s competitors are located far may offer a unique menu and
from her, they compete for the same target customers. better prices and service.
4.3 Know Your Competition 111
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INDIRECT COMPETITION A busi-
ness that makes only a small amount of
money selling the same or similar products
and services to the same market as other
businesses is indirect competition. Lo-
cating your indirect competition is more
difficult than finding direct competitors.
You should first think of all of the possible
businesses that can compete with you indi-
rectly. A large department store may stock
some of the most popular products carried
by a privately owned specialty shop. The
department store offers many other lines
of merchandise as well. It makes only a
small amount of money on the same items
that the specialty shop offers. This makes
the department store an indirect competi-
tor to the specialty shop.
Why do businesses need to be concerned about indirect competition? LARGE RETAILERS When a large
TEACH
retailer enters a community, it can be
Explain that indirect com- a source of direct and indirect competition for many other busi-
petition includes a business nesses. Large retailers like Walmart bring lower prices and jobs to a
that makes only a small community, but many small businesses find it difficult to compete
amount of money selling
the same or similar prod- with them. Some of the smaller, locally owned retailers often are
ucts or services as another forced out of business. Some of the reasons that it is difficult for
business. entrepreneurs to compete with large retailers include the following:
Discuss the difficulties in lo-
cating indirect competition.
1. Large retailers usually are able to keep larger quantities of
Refer back to your example products in stock. They can purchase inventory in bigger quan-
for direct competition and tities because they have more revenue and larger storage areas.
ask students to brainstorm Bigger orders result in volume discounts, and the savings can be
possible indirect competi-
tors for the business.
passed to consumers in the form of lower prices.
2. Large retail chains do not rely on a single product line. If
Explain how large retailers
provide indirect competition one product line does poorly, a large retail store does not go out
for many small businesses. of business because it has other successful product lines. Small
Review the three reasons businesses have risks associated with having only one product line.
it is difficult for small busi-
If its product falls out of favor with consumers, it has no other
nesses to compete.
product lines to make up the difference.
Although an indirect com-
3. Large companies usually have more resources to devote to
petitor makes only a small advertising. A larger company makes more revenue and can hire
amount of money selling advertising professionals to create effective advertising to attract
the same product or ser- more customers.
vice, it can still take away
customers.
ONGOING ASSESSMENT
Checkpoint Answer
Understanding your compe-
CHECKPOINT
tition helps you define your Why is it important to understand the competition your business
target market and find un- faces?
met customer needs.
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TEACH
Competitive Analysis Explain that a competitive
Identifying and examining the characteristics of a competing firm is analysis involves identifying
called a competitive analysis. Analyzing the strengths and weaknesses and examining the char-
of your competition will help you identify opportunities and threats acteristics of a competing
firm. Emphasize that its pur-
against your business. Follow these steps to begin your competitive pose is to figure out what
analysis: you can do that is different
from competitors to win
1. Make a list of your competitors. Using the Internet and The over customers.
Yellow Pages and driving through the area in which you plan to
Introduce the steps in a
locate your business are good ways to identify your competition. competitive analysis. Explain
You can also talk to potential customers to find out with whom that the first step in a com-
they are currently doing business. Review trade magazines and petitive analysis is to make
a list of your competitors.
newspapers to see who is advertising the product or service you Review the ways to locate
plan to offer. competitors.
2. Summarize the products and prices offered by your com- Discuss the importance of
petitors. Investigate the products or services your competition investigating the products
offers for sale. How are they different from yours? Examine the or services offered by the
price ranges of your competitors and determine how they com- competition and compar-
ing their prices to what you
pare to what you plan to charge. Are your prices higher or lower? plan to charge.
3. List each competitor’s strengths and weaknesses. What
Emphasize the importance
does the competitor do that no one else does, or what does it do of looking at both strengths
better than everyone else? Where are your competitors located? and weaknesses of competi-
Determine if their location is better, worse, or about the same as tors and how you can com-
pete with both.
the planned location for your business. Compare your competi-
tors’ facilities to the planned facility for your business. Are their Discuss how to obtain an-
nual reports of competitors
facilities better, worse, or about the same as yours? What attracts and how looking at their
customers to your competitors’ facilities? strategies and objectives can
4. Find out the strategies and objectives of your competitors. help you compete. Explain
A copy of each competitor’s annual report would have this infor- how looking at competitors’
websites and their adver-
mation. In addition, looking at competitors’ websites or advertis- tising can also offer clues
ing can give you clues about their strategies and objectives. about their strategies and
5. Determine the opportunities in the market. Look at your com- objectives.
petitors’ weaknesses. How can you use these weaknesses to your Discuss how a competitor’s
advantage? Also, determine if there is an increase in demand for weaknesses can lead to
opportunities for an entre-
the product or service you plan to offer. What are the industry preneur. Also, discuss how
forecasts? If demand is predicted to increase, more opportunities an increase in demand for a
exist for those wanting to enter the market. product or service can lead
6. Identify threats to your business from the competition. What to opportunities.
would make a customer choose the competition over you? Ex- Review the competitive
amine your competitors’ strengths. How will you compete with analysis that Interjit Singh
completed.
these strengths?
ONGOING ASSESSMENT
Interjit Singh wants to start a premier car wash in an expensive Checkpoint Answer
suburb of Washington, D.C. He does a competitive analysis as shown The purpose of the competi-
tive analysis is to help you
on the next page. He researches his direct and indirect competition. figure out what you can do
He finds that Royal Hand Wash is able to charge twice the price of that is different from com-
the other competitors even though its location is not the best. Royal petitors to get customers to
Hand Wash guarantees nonscratch car washes and waxes done by buy from your business.
hand, not machines. Because Interjit’s business will also offer car
washes, waxes, and detailing done by hand, Royal Hand Wash is the
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ANALYSIS OF COMPETITORS
Competitor Price Location Facility Strength Weakness Strategy
Standard Gas $6.00 Excellent Good Excellent Car wash Target a different
location not easily market
accessible
Lakeland Car $5.50 Fair Good Low price Location Target a different
Wash market
Ray’s Car Wash $5.00 Good Fair Low price Facility Target a different
market
Royal Hand $11.50 Fair Excellent Excellent facility Location, high Offer lower prices,
Wash price better service, more
convenient location
TEACH
Stress the importance of
direct competition. All other car wash businesses, including gas sta-
building customer loyalty.
Repeat customers are the tions with automatic car wash machines, are his indirect competition.
foundation of successful Interjit considers Royal Hand Wash’s location and prices to be two of
businesses. its biggest weaknesses, which open up opportunities for Interjit. He
Discuss the importance plans to capitalize on these opportunities by choosing a prime location
of gathering customer for his car wash and charging lower prices. The biggest threat posed
feedback and responding
to it. Describe different
by Royal Hand Wash is its excellent facility. Interjit believes that hav-
ways of obtaining customer ing a convenient location and offering better service will stamp out
feedback: follow-up calls, this threat.
feedback or suggestion
boxes, surveys, and listening
to comments. Ask students
to share any experiences
they have had in giving cus- CHECKPOINT
tomer feedback.
What is the purpose of a competitive analysis?
The customer feedback col-
lected on a survey can indi-
cate what a business needs
to do to satisfy customers
Maintain Customer Loyalty
and keep them coming Getting customers to buy your products and services instead of
back. your competitors’ is only one step in running a successful business.
Once you get the customers, you must
make sure they remain loyal to you and
keep coming back.
©JohnKwan, 2010/Used under license from Shutterstock.com
Listen and Respond to Feedback

To retain customers, you will need to contin-
ually ask customers for their opinions about
your business and respond to their feedback.
Businesses that ignore customer concerns will
not stay in business long. Businesses stay in
touch with their customers’ needs in different
ways. Some businesses may call customers af-
ter sales are made to ensure they are satisfied
How can a business use surveys to help maintain customer
with their purchase. Many companies have a
loyalty?
96894_04_ch04_p094-123.indd 114 12/2/10 7:51:12 AM

customer feedback box where customers can put complaints or posi- TEACH
Discuss the example of
tive comments about the business. You can also design a survey for
Jason Rose’s business and
your customers to complete. how it demonstrates what
Jason Rose’s business, the Metropolitan Athletic Club, closed be- happens when feedback is
cause of his failure to respond to customer feedback. Club members ignored.
had repeatedly complained about the lack of cleanliness in the locker Discuss other strategies
rooms and the lack of available weight machines during peak hours. for maintaining customer
loyalty. For each strategy,
Jason ignored his customers’ complaints, believing that the excellent challenge students to name
location and low monthly membership fee would ensure his success. a business in your area that
Jason learned from his mistake. When he opened his next athletic uses that strategy.
club, he immediately tried to find out what customers wanted by TEACHING STRATEGIES
conducting a market research study. His study revealed, among other Kinesthetic Learners
things, that he should offer more aerobics classes and put high-speed Have students collect ex-
amples of customer loyalty
hair dryers in the locker rooms. Due to his focus on customer satisfac- plans and prepare a display
tion, Jason’s club is doing very well and attracting new members all showing the examples they
the time. collected.
BE YOUR OWN BOSS
Other Strategies for Maintaining Loyalty Suggested frequent-buyer
programs will vary but
To maintain customer loyalty, businesses use many strategies. The may include buying three
main purpose of these strategies is to keep customers happy so that ice creams and getting the
they will return to the business. The strategies also give the business fourth half price or buying
five ice creams and getting
a means for gathering data about their customers and their shopping the sixth free. Students can
and spending habits that can help in future decision making. Some of use desktop publishing skills
the most basic customer loyalty strategies businesses use include the to design the flyer and the
following: frequent-buyer card.
ONGOING ASSESSMENT
• Superior service Checkpoint Answer
• More convenient hours than other businesses Answers will vary and may
• Easy return policies include listening and re-
• Store-specific credit cards sponding to customer feed-
back, giving good service,
• Personal notes or cards for birthdays or as a way to say thanks for having convenient hours,
the business and so forth.
• Frequent-buyer programs
Frequent-buyer programs have become
popular among businesses. Customers must
join by filling out a registration form that asks BE YOUR OWN B SS
for personal information, such as your name, You opened The Sweet Shop, a candy and ice
address, phone number, and e-mail address. cream store, on the grounds of a beach resort
Customers are then given a card, which they hotel. You get a steady stream of new custom-
can use each time they make a purchase. The ers because guests from the hotel visit your
shop. However, you want to attract local resi-
cashier scans the magnetic strip or barcode on dents from the community to your business to
the card to keep a running total of the pur- help grow a customer base year round. You
chases made by the customer. Rewards are decide that a frequent-buyer program is one
given to the customer based on the frequency way to get customers to visit and return to your
of purchases. The rewards help attract custom- business. What type of frequent-buyer program
would be good for The Sweet Shop? Design a
ers to the business. In addition, the business
flyer that would introduce the program to cus-
can collect information electronically about the tomers. Also, design a card that you would give
buying habits of its customers, helping it know customers to identify them as frequent buyers.
what items to stock.
96894_04_ch04_p094-123.indd 115 12/2/10 7:51:19 AM

ASSESS Kathleen McGuire, the owner of Flower Markets, encourages shop-
pers to buy all of their flowers from her garden store by issuing them a
1. Both direct and indi-
rect competitors can take frequent-buyer card with a magnetic strip that stores customers’ infor-
customers away from a mation on it. Every time a customer makes a purchase, she scans the
business. card to record the purchase. When customers have made purchases to-
2. It makes you take a taling $200, she offers them a 25 percent discount on their next order.
good look at your competi- Kathleen also uses the purchasing data she collects from the cards to
tion and determine their
strengths and weaknesses so
notify customers about sales on items they frequently purchase.
that you can identify oppor-
tunities and threats.
3. Customer feedback is
valuable market research
CHECKPOINT
because it provides opinions What are some strategies for maintaining customer loyalty?
from product users.
Make Academic
Connections Answers
4. Answers will vary and
may include using frequent-
buyer cards and sending
birthday cards with special
discounts to clients.
5. Answers will
4.3 ASSESSMENT
vary. Surveys
will help iden-
tify strengths THINK ABOUT IT
and weaknesses,
which can be com- 1. Why should entrepreneurs analyze both direct and indirect competitors?
pared to those of
competitors.
2. Why is a competitive analysis important to an entrepreneur?
6. See the IRCD for 3. Why is customer feedback considered a type of market research? Is this type of market
the bar graph. research more or less valuable than other types of research you collect? Explain your
Teamwork Answers answer.
See the IRCD or the
website for teach-
ing suggestions. MAKE ACADEMIC CONNECTIONS
RETEACH 4. MARKETING Devise a plan to maintain customer loyalty for a hair salon. Create an
Ask students to select a
advertisement to let your customers know about this plan.
business and then provide
examples of direct and in- 5. COMMUNICATION Shontel Washington just started a website design company.
direct competition.
She would like feedback from the people who have used her services. Develop a short
ENRICH survey that would help Shontel learn more about her customers’ feelings toward her
Invite an entrepreneur business. How can she use the data collected to beat her competition?
from your area to come in
and discuss the business’s 6. TECHNOLOGY Using the car wash data shown on page 114, enter the prices into
success with frequent- a spreadsheet. Use the spreadsheet to create a bar graph that will help Interjit Singh
buyer programs and the analyze the data.
business’s “competitive
edge.”
CLOSE
Ask students to
Teamwork
analyze a Working with team members, choose a successful business in your area. Then choose three
business’s competing businesses. Access www.cengage.com/school/entrepreneurship/ideas. Click on
chances of success Activities and open the file Competitive Analysis. Print a copy and complete the activity by
if it did not
analyzing each business using the six steps listed in this lesson.
respond to its competition?
96894_04_ch04_p094-123.indd 116 12/2/10 7:51:19 AM

2 1 s t C E
RY
N T U RY 21st CENTU
Sharpen Your R I A L S K I L L S
U
ENTREPRENE
Use Spreadsheets to Analyze Data SHARPEN YOUR
Spreadsheets are a powerful tool for community. She wants to determine 21ST CENTURY
analyzing, sharing, and managing the age of her target market. She ENTREPRENEURIAL
SKILLS
numerical data. Entrepreneurs can surveys 25 people in each of the fol-
Review with students the
use spreadsheets to analyze market lowing age groups: 18–25, 26–30, many uses of spreadsheets
research, prepare budgets, measure 31–35, and 36–40. She enters her in business.
performance, and create financial survey results into a spreadsheet and
Show students examples of
statements. One of the most valuable creates the pie chart shown below. graphs and bar charts and
uses of spreadsheets is creating charts The pie chart clearly shows that con- explain how these can be
and graphs. Charts and graphs can sumers in the 18–25 age group are used to analyze data.
improve decision making by present- more likely to buy coffee on their Review the example of
ing data in an easy-to-read, under- way to work. Gena’s coffee shop. Demon-
standable format. Line graphs, bar strate entering the data into
charts, and pie charts are among the Try It Out a spreadsheet and generat-
ing the pie chart. Discuss
most commonly used visual aids. Maggie Blandin conducted research the significance of the data.
Spreadsheets are especially for her dog-walking business by sur- How will it affect Gena’s
useful in analyzing market research veying 2,500 dog owners. She asked strategy?
results. Gena has decided that she what price owners would be willing Try It Out
wants to open a coffee shop in her to pay for a dog-walking service. She Students should use spread-
collected the following data: sheet software to complete
this exercise. See the IRCD
Consumers Who Buy Coffee Number for the pie chart.
on the Way to Work of People Price
500 $10
250 $15
750 $20
500 $25
500 $ 0 (not interested)
Enter the data into a spread-
sheet and create a pie chart to help
Maggie determine the price she
should charge for her dog-walking
service. Experiment with the differ-
ent kinds of charts and graphs you
can create.
18–25 26–30 31–35 36–40
Sharpen Your 21st Century Entrepreneurial Skills 117
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4 CHAPTER ASSESSMENT
SUMMARY
4.1 Identify Your Market
1. Before starting a new business, you must determine who your tar-
get market is and whether your target customers will be willing to
ASSESS buy your product or service. Market research is key to finding out
Assess students’ understand- this information.
ing of the vocabulary terms
using a game format, such 2. You should develop a customer profile and decide which
as Jeopardy or Pictionary. segment(s) of the market to target. Markets may be segmented
Require all students to based on many factors, including demographics, psychographics,
participate.
use-based data, and geographic data.
RETEACH
Restate the goals at the 4.2 Research the Market
beginning of each les-
son as questions for class 3. Market research is important because it helps you learn about
discussion. your customers and your competition. Primary data are collected
ENRICH for the very first time to fit a specific purpose. Secondary data are
Have students research a found in already-published sources.
company that they feel 4. The six steps of market research are: (1) define the question,
does a good job marketing
its product or service. Have
(2) determine the data needed, (3) collect the data, (4) analyze
them prepare a presenta- the data, (5) take action, and (6) evaluate results.
tion for the class explaining 5. Customer relationship management (CRM) focuses on under-
how the company success- standing customers as individuals instead of as a group. CRM
fully makes its product or
service stand out from its
uses technology to track customer interactions.
competitors’ products or
services. 4.3 Know Your Competition
WHAT DO YOU KNOW 6. All businesses have both direct and indirect competition. Direct
NOW? competition comes from a business that makes most of its money
Have students complete selling the same or similar products and services to the same mar-
the activity by reviewing
Ideas in Action at the begin-
ket. Indirect competition comes from a business that makes only
ning of the chapter. Have a small amount of money selling the same or similar products to
volunteers share how their the same market.
responses have changed. 7. Creating a competitive analysis involves the following steps:
(1) make a list of competitors, (2) summarize products and prices
offered by competitors, (3) list each competitor’s strengths and
weaknesses, (4) find out strategies and objectives of competitors,
(5) determine the opportunities in the market, and (6) identify
threats to your business from the competition.
8. There are many ways to maintain customer loyalty. You should
ask for and respond to customer feedback. Offering superior ser-
vice and frequent-buyer programs also promotes customer loyalty.
nono ou t
k do wy ha
Read Ideas in Action on page 95 again. Then answer the

ww
questions a second time. Have your responses changed?

?
If so, how have they changed?
96894_04_ch04_p094-123.indd 118 12/2/10 7:51:21 AM

VOCABULARY BUILDER
a. competitive analysis
Match each statement with the term that best defines it. Some terms
may not be used. b. customer profile
1. A description of the characteristics of the person or company that c. customer relationship
is likely to purchase a product or service management
2. Data that describe a group of people in terms of their age, marital d. demographics
status, family size, ethnicity, gender, profession, education, and e. direct competition
income f. focus group
3. An in-depth interview with a group of target customers who pro- g. geographic data
vide valuable ideas on products or services h. indirect competition
4. Information collected for the first time to fit a specific purpose i. market research
5. Marketing trend that focuses on understanding customers as indi- j. market segments
viduals instead of as part of a group k. primary data
6. Data that describe a group of people in terms of their tastes, l. psychographics
opinions, personality traits, and lifestyle habits m. secondary data
7. Data found in already-published sources n. survey
8. A business that makes most of its money selling the same or simi- o. target market
lar products or services to the same market as other businesses
p. use-based data
REVIEW YOUR KNOWLEDGE

9. Which of the following is not a reason that entrepreneurs need to Vocabulary Builder Answers
know who their customers are? 1. b
a. customers are a business’s most important asset 2. d
b. companies cannot remain in business without customers
3. f
c. customers have no influence on products or services offered
4. k
d. knowing who your customers are can help you estimate de-
mand for products and services 5. c
10. To identify your target market, you need to know 6. l
a. who your customers are 7. m
b. how old your customers are 8. e
c. where your potential customers currently shop
Review Your Knowledge
d. all of the above Answers
11. Data that help you determine where your potential customers live 9. c
and how far they will travel to do business with you are 10. d
a. demographics c. use-based data
11. d
b. psychographics d. geographic data
12. b
12. Which of the following is not an example of primary data?
a. a survey 13. a
b. statistics from a government website 14. True
c. observation of customer behavior
d. all of the above are examples of primary data
13. Sources of secondary data include all of the following except
a. customer feedback from a survey
b. publications issued by government and community
organizations
c. trade magazines and websites
d. newspaper articles
14. True or False Two disadvantages of collecting primary data are
the costs and time involved.
Chapter Assessment 119
96894_04_ch04_p094-123.indd 119 12/2/10 7:51:21 AM

15. d 15. It is difficult for small businesses to compete with large retailers
16. b because
17. False a. large retailers are able to order and stock products in larger
18. a
quantities
b. large retail chains don’t rely on a single product line
19. c
c. large companies have more resources to devote to advertising
20. False d. all of the above
Apply What You Learned 16. Which of the following is not a step involved when preparing a
Answers competitive analysis?
21. Answers will vary. Stu-
dents’ questions should
a. make a list of all competitors
focus on target market, b. create a customer profile
market research, competi- c. list your competitors’ strengths and weaknesses
tion, and customer loyalty. d. summarize products and prices offered by competitors
22. Answers will vary. Sur- 17. True or False Businesses do not need to identify their target
veys should be short and
market in order to succeed.
include questions about the
students’ classes, assign- 18. Which of the following is not a good way to get customer
ments, and ability to pay. feedback?
Surveys could be conducted a. check with your competition
over the phone, in person,
as a handout to students, or
b. call customers the day after they make a purchase
even online. c. use a customer feedback box
Make Academic
d. have customers complete a survey after shopping with you
Connections Answers 19. Which of the following is a strategy for maintaining customer
23. 0.75 3 5,000 5 3,750 loyalty?
(3/4 of population); a. keeping standard business hours
0.50 3 $7.00 5 $3.50 (50%
savings); $7.00 2 $3.50 5 b. adhering to strict return policies
$3.50 3 3,750 3 52 weeks 5 c. offering superior service
$682,500 revenue per year d. none of the above
20. True or False Longer surveys are always better because you can
collect more information.
APPLY WHAT YOU LEARNED

21. Set up an interview with a local entrepreneur to find out how he
or she identified the target market, what kind of market research
was conducted and whether any of it was technology-driven, what
kind of competition the business faces, and how customer loyalty
is maintained. Before conducting the interview, compile a list of
questions to ask. Present your findings to the class.
22. You want to start a computer service company that keys and prints
professional-looking term papers and resumes for students in your
school. Design a survey to help you determine if there is a market
for your company. Determine the best way to administer the survey.
MAKE ACADEMIC CONNECTIONS

23. MATH You have collected primary data that indicates three-
quarters of the people in your town would switch dry cleaners if
they could save 50 percent on their dry cleaning. If the average
resident in your town spends $7 a week on dry cleaning and the
town has 5,000 residents, how much revenue could you expect to
earn per year by opening a discount dry cleaner?
96894_04_ch04_p094-123.indd 120 12/2/10 7:51:21 AM

24. MANAGEMENT Maggie Blandin, who wants to open a dog- 24. Answers will vary de-
pending on your locality.
walking business in your town or city, has asked for your help in
collecting data. Call your local Chamber of Commerce to gather 25. Answers will vary per
businesses chosen.
demographics and psychographics for your community. Also ask
for statistics on dog ownership in your area. WHAT WOULD YOU DO?
Ask students what they
25. RESEARCH Use the Internet to find the names of four compa- would do. Would they be
nies that might be able to help you conduct market research. Record tempted to keep the infor-
information such as how long the company has been in business and mation and use it to their
what kinds of market research the business does. Summarize your advantage? What would
they want someone to do
findings and compare them with the findings of other students. if they misplaced important
documents?
BUILD YOUR BUSINESS
W h a t Wo u ld Y O U D o ? PLAN PROJECT
Students will use what they
learned in the chapter to be-
gin developing the market-
ing section of their business
You are having a luncheon was left in one of the chairs at plan for the business idea
meeting with one of your their table. You go to the table, they selected in Chapter 1.
suppliers at a local restaurant. pick up the portfolio, and see that
1. Answers will vary, but stu-
Across the restaurant, you see it is your competitor’s marketing dents should state their tar-
the owner of a business that is strategy for the upcoming year. get market and the sources
your main competitor having What would you do? Would you that were used.
lunch with someone you do not consider it your lucky day and 2. Answers will vary.
recognize. They finish eating, pay read the business’s strategy, or
3. Answers will vary. Surveys
their check, and leave while you would you turn it in to someone should be short and di-
are still at your table. After they at the restaurant? Why did you rected to a specific purpose.
leave, you notice that a portfolio choose the action you did? Results from the surveys
should be tabulated and an
action plan written.
4. Answers will vary. Some
areas students might ad-
build your dress include prices, adver-
BUSINESS PLAN PROJECT tising, customer service, and
so forth.
This activity will help you develop the business plan for your business 5. Answers will vary. Strate-
idea. gies may include frequent-
buyer programs, exceptional
1. Identify the target market for your business. Use secondary data service, and so forth.
sources to help you assess demand for your product or service.
CLOSE
2. Using the secondary data, develop a customer profile for your Ask one or more students to
business. Which market segment of your industry are you describe some of the choices
targeting? Be specific. they made in completing
3. Conduct primary data research for your business using the steps the Build Your Business Plan
outlined in Lesson 4.2. Develop a survey that will give you the Project.
information you need. Ask at least 30 people in your target market
to complete the survey. Analyze your results and determine what
course of action you will take.
4. Determine who your competitors are, both direct and indirect.
Access www.cengage.com/school/entrepreneurship/ideas. Click on
Activities and open the file Competitive Analysis. Use the chart to
prepare a competitive analysis for your business. Be sure to address
strengths, weaknesses, opportunities, and threats.
5. Describe your strategies for maintaining customer loyalty. Give
reasons why you think each will work.
Chapter Assessment 121
96894_04_ch04_p094-123.indd 121 12/2/10 7:51:21 AM

“My little sister decided to start a • To keep up with technology
Planning a babysitting service. To tailor her changes, continuing educa-
business to meet client needs, she tion is necessary.
Career in asked neighbors with children to • A blend of quantitative and
complete an online survey regard- qualitative coursework is
MARKETING ing their child care needs. The helpful.
RESEARCH
results she compiled from the free
online survey helped her put to- What’s it like to work in Market-
ing Research? Sales at a local gift
gether a service and fee schedule.
How do organizations de- shop have been lagging, and the
termine what services to offer? owner has contracted with Tess, a
How do manufacturers determine self-employed electronic market-
which product features are the ing survey writer, to create a mar-
most important to include in a keting research study. The store
product? is an independent store with a
Marketing research helps limited budget, so Tess decides to
companies and organizations de- use one of the free online survey
PLANNING A CAREER
cide how to best meet the needs services to gather data from exist-
IN MARKETING
RESEARCH of their clients. Marketing re- ing customers. The store’s mailing
Market research is a grow- list will be used to send customers
search surveys provide a targeted,
ing career field. Discuss concise method to collect and an electronic invitation to partici-
some of the reasons why a
business might conduct mar-
analyze marketing data. pate in the survey. As an incentive
ket research. For example, for participating in the survey, cus-
businesses might be trying Employment Outlook tomers will be offered a 5 percent
to determine what services • Faster than average job discount on their next purchase.
to offer, which product fea-
tures are most important,
growth is anticipated. During the afternoon, Tess
or what price customers • Globalization, an increasingly works on preparing a summary
will pay. competitive marketplace, and report for a restaurant chain. The
Provide examples of quan- better educated consumers all restaurant wanted to obtain feed-
titative and qualitative contribute to the increased back on its service, the environ-
coursework. Explain why need for marketing research.
each is important in the
ment, and the food quality while
market research field. • Outsourcing will create op- all were still fresh on customers’
portunities at consulting and minds. So Tess used a survey ser-
Ask students what other
skills might be important for marketing research firms. vice that collected data via cell
market researchers. phones. Upon receiving their res-
What About You? Job Titles taurant bills, clients who had cell
Answers will vary. Be sure • Market Research Analyst phones were instructed how to log
students understand the • Mobile Video Research on to a website where they could
need for good technol-
ogy and math skills for this
Manager answer a brief online survey about
career. • Questionnaire Development their dining experience. Custom-
Manager ers can look forward to receiving a
• Market Research Coordinator free dessert upon their next visit as
• Marketing Communications a reward for survey participation.
Specialist
What about you? Would you
Needed Education/Skills like to help a variety of businesses
• A Bachelor’s degree is re- improve their understanding of
quired. Advancement may customer preferences by develop-
require a Master’s degree or ing marketing research surveys?
a Ph.D.
96894_04_ch04_p094-123.indd 122 12/2/10 7:51:21 AM

E-Business
E-business
To succeed in today’s global market, businesses must have the abil-

ity to sell products and services to consumers via the Internet. The
E-Business event demonstrates proficiency in the creation and design
E-BUSINESS
of web commerce sites. The event has two parts: a project and a per-
The E-Business activity pro-
formance component. Each year a national topic is selected by FBLA- vides an opportunity for
PBL, Inc., for which participants in the event must prepare their students to use technology
websites. You can find the current topic on the FBLA website. skills to create a website
based on an assigned topic.
The guidelines for the pre-
Performance Competencies sentation are in accordance
• Develop the presentation logically and systematically with the E-Business event of
• Communicate the design process effectively Future Business Leaders of
America. This activity allows
• Present the tips, techniques, and tools used students to become more
• Demonstrate the ability to make a businesslike presentation familiar with an FBLA com-
• Show self-confidence apparent through knowledge of content and petitive event.
articulation of ideas Give It a Try
Students should create a
Go to the FBLA website for more detailed information. website that meets the
GIVE IT A TRY specified project competen-
cies and then present and
Using the current national topic for the E-Business event, develop a demonstrate it to the class.
website that meets the following project competencies: Emphasize the importance
of adhering to the five-
• Document addresses topic and is appropriate for the audience minute time limit. Allow
• Graphics, text treatment, and special effects show creativity and time for the class to
cohesiveness of design ask questions after the
presentation.
• Selection of fonts and type sizes is appropriate
• Overall layout and design is creative and appealing
• Final product indicates a clear thought process and an intended,
planned direction with formulation and execution of a firm idea
• Required information is effectively communicated
Prepare a five-minute presentation that will demonstrate and ex-
plain your E-Business website. Make the presentation to your class.
Topics to discuss during your presentation should include the follow-
ing: development of the topic, development and design process, use
and implementation of innovative technology, use and development of
media elements, and copyright issues with pictures, music, and other
items. Be prepared to answer questions about your website after your
presentation.
www.fbla-pbl.org
123
96894_04_ch04_p094-123.indd 123 12/2/10 7:51:21 AM

Entreprenuership CH 4

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Entreprenuership CH 4

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CHAPTER OVERVIEW

Chapter 4 discusses the im-

4.3 Explains the impor-

tive analysis, and describes

96894_04_ch04_p094-123.indd 94 12/2/10 7:49:35 AM

Find Your Target Market your market and being

Photo courtesy of Ben Cath

1. Why is it important to research your target market

before starting a business?

2. How can teen entrepreneurs use social media

96894_04_ch04_p094-123.indd 95 12/2/10 7:49:43 AM

96 Chapter 4 Identify and Meet a Market Need

96894_04_ch04_p094-123.indd 96 12/2/10 7:49:46 AM

Identify Your Target Market

nies, what industries are they

4.1 Identify Your Market 97

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98 Chapter 4 Identify and Meet a Market Need

96894_04_ch04_p094-123.indd 98 12/2/10 7:50:11 AM

A-Corp? U-Corp should have dif-

3. How might the price war for re- ONGOING

4.1 Identify Your Market 99

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100 Chapter 4 Identify and Meet a Market Need

96894_04_ch04_p094-123.indd 100 12/2/10 7:50:14 AM

Get to know your market. focus

©konstantynov, 2010/Used under license from

4.2 Research the Market 101

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Brady-Handy Photograph Collection (Library of Congress)

THOMAS A. EDISON Could you do your

102 Chapter 4 Identify and Meet a Market Need

96894_04_ch04_p094-123.indd 102 12/2/10 7:50:22 AM

©Francesco Ridolfi, 2010/Used under license from

forecasts, and other information customers. Questions can be

4.2 Research the Market 103

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Market Research 2. Determine the Data Needed

104 Chapter 4 Identify and Meet a Market Need

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4.2 Research the Market 105

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Age: UNDER 18 19–30 31–40 41–50 51–65 OVER 65

Gender: MALE FEMALE

Number of pets: 0 1 2 3 4 OR MORE

Kinds of pets: DOG CAT FISH BIRD OTHER (PLEASE SPECIFY )

IF YOU OWN A DOG, PLEASE ANSWER ALL OF THE FOLLOWING QUESTIONS.

How often do you walk your dog?

How often do you travel out of town?

ONCE A YEAR 2–3 TIMES A YEAR SEVERAL TIMES A YEAR NEVER

KENNEL FRIEND NEIGHBOR OTHER

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©Bocos Benedict, 2010/Used under license from Shutterstock.com

6. Evaluate the Results

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The goal of CRM is to in-

How can technology be used in the market research process?

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CHECKPOINT 3. Secondary data are found