You are on page 1of 53

Marketing Research for

Entrepreneurs

JERRY R. MITCHELL

Market Research: The Key to Defining


Your Focus

JERRY R. MITCHELL

Market information known to you.


Own Costs
Competition
Market Demand
Market Price

JERRY R. MITCHELL

Market information unknown to you.


Consumer Response
The Incumbents Reaction to your
offering
The Emergence of New Competitors
The Economy
Random Factors
JERRY R. MITCHELL

I believe there are four key steps for


successful marketing:
Understanding the customer
Making value for your customer
Communicating your value to your target
market
Making it easy for the customer to buy.
JERRY R. MITCHELL

What is marketing research?


. According to the American Marketing
Association, marketing research is the
systematic gathering, recording, and
analyzing of data about problems
relating to the marketing of goods and
services.

JERRY R. MITCHELL

Every small business owner-manager must


ask the following questions to devise
effective marketing strategies:

JERRY R. MITCHELL

Who are my customers and potential


customers?
What kind of people are they?
Where do they live?
Can and will they buy?
Am I offering the kinds of goods or
services they want - at the best place, at
the best time and in the right amounts?
JERRY R. MITCHELL

Are my prices consistent with what buyers


view as the product's value?
Are my promotional programs working?
What do customers think of my business?
How does my business compare with my
competitors?

JERRY R. MITCHELL

What is the purpose of marketing


research?
Marketing research focuses and organizes
marketing information. It ensures that such
information is timely and permits
entrepreneurs to:

JERRY R. MITCHELL

10

Reduce business risks


Spot current and upcoming problems in
the current market
Identify sales opportunities
Develop plans of action

JERRY R. MITCHELL

11

What are some common


misconceptions about marketing
research?
Many entrepreneurs think that marketing
research should only be done by a small
business when they are making a profit.

JERRY R. MITCHELL

12

Sometimes managers believe that unless


research provides a complete description
of a situation it is of no value.

JERRY R. MITCHELL

13

The misconception that marketing


research requires big dollars keeps many
entrepreneurs from doing research..
Marketing research can be done at many
different levels both big and small. Many
research projects can and are being done
for $1000 or less.

JERRY R. MITCHELL

14

Another misconception is that you can not


do research unless you are a
sophisticated researcher. You don't need
an MBA. in marketing or statistics to do
marketing research. Marketing research is
mostly just hard work. Consult a good
marketing consultant for advice and dig in
and do it.
JERRY R. MITCHELL

15

Is marketing research worth the


expense?
A recent survey of small business
managers revealed that 84 percent of
those having conducted formal marketing
research projects in the past three years
felt that the information obtained was
worth the money spent
JERRY R. MITCHELL

16

Overall, 65 percent said that they were


able to incorporate the research findings
into their decision making process. Only 7
percent reported that they were not able to
implement the results

JERRY R. MITCHELL

17

Consequently, I believe that when small


businesses do engage in marketing
research the benefits usually exceeds the
costs.

JERRY R. MITCHELL

18

How large should your marketing research


budget be?
As a rule companies have marketing research
budgets that range anywhere from .02 to 1
percent of company sales. Many companies
spend 50 percent or more of the marketing
research budget buying research from
consulting firms. For new companies they must
learn to do most of it themselves.
JERRY R. MITCHELL

19

What topics do small business managers


and entrepreneurs address through
marketing research studies?

JERRY R. MITCHELL

20

What is your target market?


How big is it?
Who buys your product?
Why do they need it?
Who pays for it?
Who uses it?

JERRY R. MITCHELL

21

How do the users fix the business problem


you're addressing today?
How much are they willing to pay?
Why would they buy from you?
What business problems are more
important to them than this one?

JERRY R. MITCHELL

22

What are the two basic types of


marketing research?

JERRY R. MITCHELL

23

The two basic types of marketing research


are quantitative and qualitative.
Quantitative research answers questions
that start with "how many" or "how much".
Qualitative research addresses issues that
deal with "why" or "how Quantitative
research usually involves surveys while
qualitative studies rely on observation or
unstructured conversations with
customers.
JERRY R. MITCHELL

24

Where can I get help for marketing research


projects?
When researching your business idea, it is
important to do as thorough a search for
information as is possible. It is also
recommended to do as much of it as you can on
your own.
This will help you know the market for your idea
better, and can help to keep the costs down at
the start.
JERRY R. MITCHELL

25

Some Places to start your research.


Factiva
LexisNexis
Business Source Premier
ProQuest Direct
Thomson Research

JERRY R. MITCHELL

26

Factiva is an online database designed to


allow access to business and financial
information. This service covers publicly
and privately held companies, industries,
the stock market and the economy.
Coverage is domestic and international.
Current stock quotes, full-text newspaper,
wire, and magazine articles, and company
profiles can be located via a user-friendly
web interface.
JERRY R. MITCHELL

27

LexisNexis provides access to full-text


articles from thousands of newspapers
and magazines worldwide. Full-text SEC
filings are available. Many local and most
national & international newspapers are
included. Extensive coverage of the
accounting, tax, and legal literature

JERRY R. MITCHELL

28

Business Source Premier The Business Source


Premier database is a comprehensive, business
periodical database that includes scholarly journals and
business periodicals covering topics such as
management, economics, finance, accounting,
international business and much more. It contains content
from full text sources ranging from general business
periodicals such as Business Week, Forbes, Fortune,
American Banker, etc. to academic journals such as
Harvard Business Review, Journal of Management,
Academy of Management Review, Review of Economics
& Statistics, etc. It provides cumulative indexing and
abstracts for 4362 business journals (3228 peerreviewed) and cumulative full text for 3428 journals (2568
peer-reviewed).
JERRY R. MITCHELL

29

This database also includes Country Monitor


and Industry Yearbook Reports from WEFA, 35
country reports from the Economist Intelligence
Unit (EIU) and Wall Street Words. The peerreviewed full text content in Business Source
Premier is unmatched, and full text back files are
available for many journals back to 1990.
Additionally, Business Source Premier includes
embedded images for many of the full text
journals.
JERRY R. MITCHELL

30

ProQuest Direct is a web-based service .


ProQuest Direct indexes articles from over
1,000 business and general publications.
This database covers a range of subjects
from company information to marketing
and management trends.

JERRY R. MITCHELL

31

Thomson Research provides web-based


access to complete SEC filings for U.S.
and international companies. Real-time
and historical EDGAR filings. Full-text
articles and summaries from the trade
press, newspapers, wire stories and
newsletters worldwide.

JERRY R. MITCHELL

32

Journals/Newspapers Business
Internet Index
In the white paper you will find a detailed
list of places I use.

JERRY R. MITCHELL

33

Review
Market Analysis
Who is your customer?
Knowledge of the customer enables you to
determine the market size and what determines
their buying decision. It provides information that
will assist in choosing a location, determining
product or services to be offered, establishing
pricing and planning a selling strategy.
JERRY R. MITCHELL

34

Key issues to consider are:


Who will buy your product? Primary and secondary
target groups.
Where does the buyer live and what is their profile?
What factors influence the decision to buy?
Who is involved in the purchase decision?
How often will buyers buy?
Where do they buy, when and how much do they buy?
What are the buyer's preferences and needs?
Are customers loyal? Can long term relationships be
built?
JERRY R. MITCHELL

35

What product or service are you selling?


An important aspect of market analysis
is to ensure that the product or service
meets the market (customer) needs.
Product or service focus must be the
customer.

JERRY R. MITCHELL

36

Issues to address are:


Specifications of all your products and or services and
key features relative to what prospective buyers in your
target market are saying they need.
Comparison with competitors and how customers
perceive your product relative to others available.
What are the current trends, what stage of maturity is the
product life cycle at?
What regulations apply to your product or service?
What packaging is required?

JERRY R. MITCHELL

37

Who is your competition?


Are there competitors that exist now and
what new competitors are likely to enter
the market? How will your product or
service compare and what is the probable
reaction of your competitors once you
enter the market?

JERRY R. MITCHELL

38

Issues to consider are:


Who are your major competitors?
What share of the market do they have?
What are their strengths and weaknesses (e.g.
quality, price, service, payment terms, location,
reputation, etc.)?
How do you compare to your competitors and
how will they react to your entry into
the market?
What factors are there that could increase or
reduce your competition?
JERRY R. MITCHELL

39

What is your target market?


Accurate identification and analysis of the target
market enables you to develop an effective
overall marketing strategy. The information will
assist in determining business size (output
requirements), distribution channels, pricing,
promotion strategy and other marketing
decisions.

JERRY R. MITCHELL

40

Target market issues include:


What is the overall market size? Number
of potential customers and physical
boundaries?
Which segment of the market is the most
attractive in terms of future growth
potential, ease of entry, competition, profit
potential and overall risk?
JERRY R. MITCHELL

41

How do products generally get to the


customer?
What is the current dollar value or quantity
of product/service being sold into each
segment of the market?
What social, technical, environmental or
economic changes are taking place within
the market and how will they impact
sales?
JERRY R. MITCHELL

42

What are your distribution channels?


There may be many options for moving your
product to the customer such as direct retail,
wholesale, consignment, broker etc. The method
of distribution has important implications
affecting your pricing structure, advertising
message, cash flow, etc. You will want to choose
the distribution method best suited for your
product and where you want to be positioned in
the marketplace.
JERRY R. MITCHELL

43

Key issues are:


What methods of distribution are best suited for
your product?
What methods of distribution do your
competitors use?
What are the costs relative to market coverage?
Does your level of available capital or production
capacities restrict your choice of distribution
methods?
Are there ownership opportunities in the supply
chain?
JERRY R. MITCHELL

44

Pricing
The objective is to maximize profits while
remaining competitive in the marketplace.
Pricing can be based on either the cost price or
market price (What will the market pay?).
Regardless of the pricing method used, it is
critical to know all of your costs involved in
delivery of your product or service to avoid
possible underpricing and operating losses.
JERRY R. MITCHELL

45

If the market will not support a price level


sufficient to cover cost, it will be necessary
to investigate whether costs can be
lowered or alternatively, it may be
necessary to abandon your plans to
proceed.

JERRY R. MITCHELL

46

Issues to consider are:


What control do you have over the product
price (e.g. exclusive product, no
competition, high market demand, etc.)?
What are competitor prices and how do
they price their products?
What price and sales volume are needed
to achieve profit objectives?
JERRY R. MITCHELL

47

Can you sell your product at different


prices into different markets?
Can you maintain your prices over time
and what do you expect to happen to
competitors prices?
Are your prices quantity sensitive?

JERRY R. MITCHELL

48

Promotion and Selling


Promotion of your product or service and
development of a promotion strategy is part of
the market analysis. It is important to analyze
what are the best methods of making your
customer aware and what message will motivate
them to buy. From the promotion strategy the
advertising budget and overall sales plan are
then developed.
JERRY R. MITCHELL

49

Items to consider are:


What media of advertising and sales do
your competitors use?
What media of advertising is best suited to
reach your customer? Primary and
secondary media. (e.g. Primary newspaper and radio; Secondary - flyers
and trade shows).
JERRY R. MITCHELL

50

What sales tools and training will be


required for staff?
What image are you attempting to build
through your promotion?
Packaging?

JERRY R. MITCHELL

51

While customer service, in store display


and merchandising are not part of the
market analysis, they are an important part
of the business image and promotion
package. Ongoing attention should be
given to these areas to assure maximum
promotional benefit is achieved and that
the desired image is portrayed.

JERRY R. MITCHELL

52

Primary/Secondary Data Sources


Primary data is the information you will obtain
through your own efforts or by hiring someone
and can include observation, surveying, and
experimentation.
Secondary data consists of information which
has been gathered by someone else and is
relevant to the venture you want to establish.

JERRY R. MITCHELL

53