IDENTIFY AND MEET

A MARKET NEED
LESSONS
The Value of Market Research
How to Perform Market Research
Identify Your Competition

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

 THE VALUE OF MARKET RESEARCH

GOALS
 Identify a target market by
understanding your
customers.
 Research your market using
primary and secondary
data.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

WHAT IS A TARGET MARKET?
 The target market is the individuals or
companies that are interested in a
particular product or service and are
willing and able to pay for it.
 The marketing concept uses the needs
of customers as the primary focus during
the planning, production, distribution, and
promotion of a product or service.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

UNDERSTAND YOUR CUSTOMER
 Customers are the people who buy the
products and services companies offer.
 Customers buy goods and services to
satisfy economic wants and needs.
 An economic want is an unfilled desire of a
customer.
 An economic need is anything that is
required to live.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

DEMOGRAPHICS AND
PSYCHOGRAPHICS
 Demographics are data that describe a
group of people in terms of their age, marital
status, family size, ethnicity, gender,
profession, education, and income.
 Psychographics are data that describe a
group of people in terms of their tastes,
opinions, personality traits, and lifestyle
habits.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

IDENTIFY YOUR TARGET MARKET
1. Who are my customers: individuals or
companies?
2. If 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 customers are companies:
What industries are they in?
Where are those industries located?
ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING
continued
IDENTIFY YOUR TARGET MARKET
4. What needs or wants will my product or service
satisfy?
5. How many potential customers live in the area in
which I want to operate?
6. Where do these potential customers currently buy
the products or services I want to sell them?
7. What price are they willing to pay for my products
or services?
8. What can I do for my customers that other
companies are not already doing for them?
ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING
THE IMPORTANCE OF
A CUSTOMER PROFILE
 A customer profile is a description of
the characteristics of the person or
company that is likely to purchase a
product or service.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

MARKET SEGMENTS
 Groups of customers within a large
market who share common
characteristics are known as market
segments.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

UNDERSTAND THE COMPETITION
 Knowing about your competition will
help you define your target market.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

MARKET RESEARCH
 Market research is a system for
collecting, recording, and analyzing
information about customers,
competitors, goods, and services.
 Market researchers collect primary and
secondary data.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

SECONDARY DATA
 Secondary data is data found in
already published sources.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

PLACES TO FIND SECONDARY DATA
 Publications issued by government and community
organizations, such as the U.S. Census Bureau, the Small
Business Administration, and Chamber of Commerce
 Books about specific industries
 Information on web sites for government and businesses
 Books about other entrepreneurs who set up similar
businesses
 Specialized magazines and journals devoted to particular
fields
 Newspaper articles and statistics

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

PRIMARY DATA
 Primary data is information collected
for the very first time to fit a specific
purpose.
 Questionnaire or survey
 Observation
 Focus groups
 Disadvantage of primary data

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

 IDENTIFY YOUR COMPETITION

GOALS
 Determine your direct and
indirect competition.
 Analyze the strengths and
weaknesses of competitors.
 Establish strategies for
maintaining customer loyalty.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

DIRECT AND INDIRECT
COMPETITION
 Direct competition is competition from a
business that makes most of its money selling
the same or similar products or services as
another business.
 Indirect competition is competition from a
business that makes only a small amount of
money selling the same or similar products or
services as another business.
 Find your direct competition
 Find your indirect competition
ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING
COMPETING WITH
LARGE BUSINESSES
 Large retailers usually are able to keep
larger quantities of products in stock.
 Large retail chains don’t rely on one
single product line.
 Large companies usually have more
resources to devote to advertising.

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

STUDY INDIVIDUAL COMPETITORS
 Price
 Location
 Facility
 Strengths
 Weaknesses
 Strategy

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING