ENTREPRENEURSHIP

MARKET RESEARCH METHODOLOGIES

At the end of the lesson, the learners should be able to:

1. Identify the different market research methodologies;

2. Discuss the nature of the marketing research process.
 Market Research Methodologies

Important market information can only be obtained by conducting a good market

research. The more the entrepreneur knows about his or her relevant market, the more
customers can be properly segmented and reached, products can be positioned, brands
can be promoted, prices can be set, and locations can be pinpointed. Entrepreneurs and
investors do not want to put resources in unknown markets. Good market research
allows entrepreneurs and investors to make wiser decisions.
A. Focus Group Discussion
Focus group discussion (FGD) is one of the most common qualitative research tools. It is effective in
extracting consumer and non-consumer experiences regarding products, places, or programs. This method
can also be used for generating initial insights.
 FGD can be used to address substantive issues such as:
 Understanding consumers' perceptions, preferences, and behavior concerning a
product category;
 Obtaining impressions on new product concepts;
 Generating new ideas about older products;
 Developing creative concepts and copy material for advertisements;
 Securing price impressions; and obtaining preliminary consumer reaction to specific
marketing programs.
 Data gathering methods in FGD involve:
a) The selection and preparation of the venue and equipment;
b) The formulation of the discussion agenda; and
c) A facilitator who is very skilled in moderating and possesses the ability to draw out significant insights
from the participants.
Data analysis includes:
d) The integration of the information gathered;
e) Some observations on respondent behavior; and
f) Listing of recommendations and report writing.
 Let us go to the nine steps in conducting a focus group discussion
a) Develop the research objectives. What is the research all about?
b) Determine the participants' profile. Who are the most knowledgeable or most relevant participants?
c) Determine the appropriate token or "compensation" for the participants. Develop a participant
screener questionnaire.
d) Recruit the participants.
e) Select a good facilitator. The key qualities of a good facilitator are: kindness with firmness
involvement and encouragement complete understanding flexibility sensitivity
f) Develop a facilitator's discussion guide.
g) Arrange for the venue and logistics.
h) Analyze the results of the focus group discussion.
B. Observation Technique
Observational market research is a qualitative research method where the researcher observes their subjects in
a natural or controlled environment. This method is much like being a fly on the wall, but the fly takes notes
and analyzes them later. In observational market research, subjects are likely to behave naturally, which reveals
their true selves. They are not under much pressure. Although if they’re aware of the observation, they can act
differently.

These observations must be documented and tallied for proper analysis later on. Prior to doing the observation,
it is important for the researcher to ensure that the following conditions are met:
1. The needed information must be observable or inferable from the behavior that can be observed.
2. The subject matter contains some sensitivity that needs detached observation.
3. The behavior of interest must be repetitive, frequent, or predictable in some manner.
4. The behaviors of interest must be of a relatively short, duration.
 Advantages of Observation Research
1. It allows researcher to see what customers actually do rather than rely on what they say they do.
2. It allows the researcher to observe customers in their natural setting.
3. It does not subject the researcher to the unwillingness of customers or their inability to reply to certain questions.
4. Some information are better gathered quickly and accurately through observation.

Disadvantages of Observation Research

The researcher can only see the outside behavior of the customer, but cannot determine the inner motivation of
the customer.
1. The researcher cannot get the reasons behind the behavior.
2. The researcher can only focus on the “here and now”. It cannot cover the past nor cover the future.
3. Finally, the observation technique may border on the unethical because the respondents have not agreed to be
observed.
 Below are the guidelines in conducting observation research.
1. Determine the pre-observation research.

2. Prepare your pre-observation tips:

a) Prepare and clarify your observation points and issues.
b) Prepare your observation materials.
c) Identify the persons to be observed.
d) Position yourself strategically without being noticed.

3. Focus on what you want to observe:

e) Is it customer demographics?
f) Customer buying behavior?
g) Customer usage behavior?
h) Other customer information?
4. Observation proper:
a) Observe keenly and listen intently.
b) Be mindful of the surroundings.
c) Be alert for obvious movements.
d) Be sensitive to subtle movements.
e) Look at the customer when the customer is not looking.
f) Do not be obvious.
g) Observe and take note of other things that you feel are important.

5. Post-observation tips:
h) Review your notes.
i) Make sure that the flow is correct.
j) Tabulate what needs to be tabulated.
k) Interpret and analyze your data.
l) Make a formal report.
 C. Surveys for market research
With concise and straightforward questionnaires, you can analyze a sample group that represents your target
market. The larger the sample, the more reliable your results will be.
1. In-person surveys are one-on-one interviews typically conducted in high-traffic locations such as
shopping malls. They allow you to present people with samples of products, packaging, or advertising and
gather immediate feedback. In-person surveys can generate response rates of more than 90%, but they are
costly.
2. Telephone surveys are less expensive than in-person surveys, but costlier than mail. However, due to
consumer resistance to relentless telemarketing, convincing people to participate in phone surveys has
grown increasingly difficult. Telephone surveys generally yield response rates of 50% to 60%.
3. Mail surveys are a relatively inexpensive way to reach a broad audience. They’re much cheaper than in-
person and phone surveys, but they only generate response rates of 3% to 15%. Despite the low return,
mail surveys remain a cost-effective choice for small businesses.
4. Online surveys usually generate unpredictable response rates and unreliable data, because you have no
control over the pool of respondents. But an online survey is a simple, inexpensive way to collect
anecdotal evidence and gather customer opinions and preferences.
D. Field trials
Placing a new product in selected stores to test customer response under real-life
selling conditions can help you make product modifications, adjust prices, or
improve packaging. Small business owners should try to establish rapport with
local store owners and Web sites that can help them test their products.
 CUSTOMER PROFILING

At the end of the lesson, the learners should be able to:

1. Identify customers in different industries;

2. Create a portrait of customers to help make decisions about their
products or services offered by the businesses.
 CUSTOMER PROFILING
Customer profiling is a way to create a portrait of your customers to help
you make design decisions concerning your service. Your customers are
broken down into groups of customers sharing similar goals and
characteristics and each group is given a representative with a photo, a
name, and a description. A small group of customer profiles or ‘personas’
are then used to make key design decisions with, e.g. “which of these
features will help Mary achieve her goals most easily?”
Advantages of customer profiling
Most projects evolve from an idea, and grow through the opinions of influential
members of the project team. The trouble is that these influential members of the project
team are rarely the end user or customer. This often results in a product or service that
doesn’t quite meet customer expectations or needs, and the interaction with it might be
clumsy.

Similarly, the decision-making process can be delayed due to a clash of different

opinions, with no member of the project team able to make a definite agreement on
whether X or Y is best for this project.
Disadvantages of customer profiling
Traditional marketers often react negatively to the suggestion of customer profiling
because it does not cater for the standard demographics that are traditionally used and
taught. However, in this situation it is important to explain that profiles are not designed
to replace general marketing demographics, which are used for Macro marketing and
advertising campaigns, but are created for the specific touch point (website, kiosk,
catalogue, etc.) as a design tool for the project team to make better decisions.
Methods of Customer Profiling
1. Demographics – in demographic classification, we categorize customers into the following:
a. Age
b. Income classes
c. Social classes/Reference groups
d. Ethnic Backgrounds
e. Religious beliefs
f. Occupations
g. Domiciles
Income levels determine the purchasing power of customers. Usually, the customers are classified
according to the following income classes:
h. Class A, the high income sales
i. Class B, the upper middle income class
j. Class C, the middle income class
k. Class D, the lower middle income class
l. Class E, the low income class
Ethnic backgrounds and religious beliefs affect the cultural beliefs of people such as the food
they eat, how they save and how they spend, and their levels of conservatism or
progressiveness.
 
Social classes and reference groups often dictate what acceptable or unacceptable behavior is.
These classes or groups often include family, friends, neighbors, fellow workers, and societal
affiliations.
 
Occupations such as those of factory foremen, doctors, taxi drivers, nurses and teachers also
determine what kinds of goods and services these people would buy.
 
Domiciles or habitats, or areas of residence and environmental surroundings, oftentimes,
define and limit the choices available to customers.
Psychographics
Psychographics defines the customer’s motivations, perceptions, preferences, and
lifestyle.
 
Motivation goes to the roots of customer’s needs and wants. This can be classified
into physiological and psychological. Physiological needs and wants refer to the
customer’s personal likes and dislikes and include the satisfaction of thirst, hunger
and shelter.
 
Perception is the way a person chooses to receive or interpret information from the
external world. While motivation provides the drive for action, perception defines
exactly what that person will do.
 Techno graphics
Techno graphics classifies people according to their level of expertise in using a
product or service. For example:

a. Sports beginners might just want basic equipment.

b. Sports regulars may be looking for more sophisticated equipment.
c. Finally, sports professionals would want the best of the best for competitive purposes.
 
In techno graphics, products and services can range from general purpose items to
highly specialized, customized, and “technologized” goods.
 Application of Customer Profiling
The entrepreneurs can use or apply customer profiling in two ways.
 
a. The first way is to develop a product or service to test out in the market place.
 The customers most attracted to the product or service can then be profiled.
 After profiling, the next step is to find out how huge this market is for exploitation
purposes.

b. The second way is to profile the different types of customers in a given industry or areas
as to their needs and wants.
 From these types, the entrepreneur could them choose the customer group with the best
potentials.
 Products or services can be developed by the entrepreneur to match this chosen customer
group.
Market Segmentation

Market segmentation is the process of dividing a target market into

smaller, more defined categories. It segments customers and audiences
into groups that share similar characteristics such as demographics,
interests, needs, or location.

Market segmentation allows you to get to know your customers, identify

what is needed in your market segment, and determine how you can best
meet those needs with your product or service. This helps you design and
execute better marketing strategies from top to bottom.
Market aggregation is a marketing strategy in which marketing is done to a mass
number of people belonging to the same segment of demographics having similar kinds
of needs and wants.

In this type of marketing, certain standardized products or services are marketed to a

large number of consumers that out there want to purchase that product or service so
that they can satisfy their needs.  Hence it is also given the name ‘mass marketing’.
Choosing the dimensions for a market positioning map

Some possible dimensions for the axes of a positioning map include:

 Low price v High price
 Basic quality v High quality
 Low volume v High volume
 Necessity v Luxury
 Light v Heavy
 Simple v Complex
 Unhealthy v Healthy
 Low-tech v Hi-tech
Advantages of positioning maps
 Help spot gaps in the market
 Useful for analyzing competitors - where are their products positioned?
 Encourages use of market research
 
Disadvantages of positioning maps
 Just because there is a “gap” doesn’t mean there is demand for the product
 Not a guarantee of success
 How reliable is the market research that maps the position of existing products
based on the chosen dimensions?
 SEVEN Ps OF MARKETING

At the end of the lesson, the learners should be able to:

1. Determine the seven Ps of marketing useful in the overall business

strategy;
2. Identify the types of products that are marketed by enterprises;
 SEVEN Ps OF MARKETING
Once you've developed your marketing strategy, there is a "Seven P Formula" you
should use to continually evaluate and reevaluate your business activities. These
seven are: product, price, promotion, place, packaging, positioning and people. As
products, markets, customers and needs change rapidly, you must continually revisit
these seven Ps to make sure you're on track and achieving the maximum results
possible for you in today's marketplace.
1. Product
To begin with, develop the habit of looking at your product as though
you were an outside marketing consultant brought in to help your
company decide whether or not it's in the right business at this time. Ask
critical questions such as, "Is your current product or service, or mix of
products and services, appropriate and suitable for the market and the
customers of today?"
 There are four general types of products that are marketed by enterprises
1. Breakthrough products offer completely new performance benefits. They may double the performance at half the
cost. They may be much more convenient and easy to use. They may cater to a unique set of customer needs that
have not yet been tapped.
Common examples of breakthrough products are borne out of the biotechnology field particularly in terms of
coming up with new vaccines to protect people from certain viruses.

2. Differentiated products try to claim a new space in the mind of the customer different from the spaces occupied by
existing products. The performance benefits may be close to existing products but there would be additional benefits on
special aspects of the product.

There are many different eyeglasses available in the market today but Transitions lenses was able to differentiate
itself from the rest because the lenses they use adapt to changing light. With this feature, the wearer gets additional
protection against ultraviolet rays, glare, and eye fatigue.
3. Copycat products will not make much impression on the consumer's mind. The marketer should make up for this
lack of mental space by offering more physical space in the shelves, lower prices, easier access, promotional freebies,
and the like.
A classic Philippine example of copycat product is the Beer na Beer brand of Asia Brewery pitted against San
Miguel Pale Pilsen. Both have amber colored bottles with similarly styled white colored font printed outside the
bottle. No wonder after Beer na Beer came out of the market, San Miguel filed a law suit against Asia Brewery
for trademark infringement.

4. Niche products do not intend to compete directly with the giants. They are products with lower reach, lower
visibility, lower prices, and lower top of mind. They are content to play minor roles in specific and smaller market
segments.
2. Prices
The second P in the formula is price. Develop the habit of continually examining and
reexamining the prices of the products and services you sell to make sure they're still
appropriate to the realities of the current market. Sometimes you need to lower your
prices. At other times, it may be appropriate to raise your prices. Many companies
have found that the profitability of certain products or services doesn't justify the
amount of effort and resources that go into producing them. By raising their prices,
they may lose a percentage of their customers, but the remaining percentage
generates a profit on every sale. Could this be appropriate for you?
3. People
The third P of the marketing mix is people. Develop the habit of
thinking in terms of the people inside and outside of your
business who are responsible for every element of your sales, 
marketing strategies, and activities.
4. Place
The fourth P in the marketing mix is the place where your
product or service is actually sold. Develop the habit of
reviewing and reflecting upon the exact location where the
customer meets the salesperson. Sometimes a change in place
can lead to a rapid increase in sales.
 Initial Location Screening
In finding a good location, one needs to consider the following:
a. The number of customers residing or working in the area, and the number of
customers who frequently pass through the area.
b. The density or number of customers per unit area.
c. The access routes to alternative locations and their traffic count in those routes.
d. The buying habits of customers or where they buy, at what time and how frequent.
e. Locational features such as parking spaces, foot access, creature comforts, and the
like.
 
 In a similar way, the entrepreneur must be able to determine the price that comes
with the location because it will spell out the success or failure of the business. The
entrepreneur has to consider the following:
a. The cost of buying or renting, renovating, and operating the location.
b. Customer volume, drop-in rates (what percentage of customer traffic would stop by
the store) and sales conversion ratios (what percentage of drop-ins would actually
purchase something from the store).
c. Revenues based on the volume and mix of goods and services expected to be sold at
certain prices.
d. Profits
 SEVEN Ps OF MARKETING (continuation)

At the end of the lesson, the learners should be able to:

1. Discuss about how promotions of a certain products or services being

done.
2. Create unique of packaging of their chosen product;
5. Packaging
Develop the habit of standing back and looking at every visual element in the packaging of your product or service
through the eyes of a critical prospect. Remember, people form their first impression about you within the first 30
seconds of seeing you or some element of your company. Small improvements in the packaging or external
appearance of your product or service can often lead to completely different reactions from your customers.

Packaging refers to the way your product or service appears from the outside. Packaging also refers to your people
and how they dress and groom. It refers to your offices, your waiting rooms, your brochures, your correspondence
and every single visual element about your company. Everything counts. Everything helps or hurts. Everything
affects your customer's confidence about dealing with you.
Five Purposes of Packaging
First, packaging identifies the product, describes its features and benefits, and complies with government rules on
specifying its contents, weight, chemical composition, and potency. Packaging provides easy brand identification for
the consumers.
 
Second, packaging differentiates the product from its competitors and even from its other brand offerings. For
example, liquor brands differentiate their premium scotch and brandy offerings by packaging them in ceramic bottles.
 
Third, packaging lengthens the lifespan, physically protects, and extends the usefulness of the product. Vacuum-
packed or aseptically packaged products prolong the shelf lives of many food and beverage items. High-tech packaging
protects fragile and sensitive products like crystal sculptures, laptops, precision tools, and the like.
 
Fourth, packaging has become an environmental issue by itself. Many packages are discarded after the contents have
been taken out. This generates waste and poses environmental hazards. Recyclability and biodegradability are now a
major concern of packagers and consumers alike.
 
Fifth, the aforementioned purposes of packaging have increased the cost of packaging and, therefore, the price of the
product. To counteract this, the packaging must possess its own value proposition for the customers as well as for the
enterprise.
6. Positioning
The next P is positioning. You should develop the habit of thinking continually about how you are positioned in the
hearts and minds of your customers. How do people think and talk about you when you're not present? How do
people think and talk about your company? What positioning do you have in your market, in terms of the specific
words people use when they describe you and your offerings to others?
7. Promotion
The last habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the
ways you tell your customers about your products or services and how you then market and sell to them.
 
 MANAGING THE OPERATIONS FUNCTIONS

At the end of the lesson, the learners should be able to:

1. Explain the flow of the business operations of a certain company;

2. Create a floor layout of a small business shop.
 MANAGING THE OPERATIONS FUNCTIONS
 
Operations management is about delivering products and services to customers to
meet or surpass their expectations. It is designing developing and executing the
Enterprise Delivery system (EDS), from sourcing of the necessary input to the
transformation of these input into the final output which assure the intended outcome
of delighting the customers. The final output, which come in the form of goods or
services (or both), must carry all the features and attributes that customers are looking
for.
All operations managers must, therefore, begin with the customer's wants and desires in mind. These
wants and desires can be classified into three customer outcome expectations:

(1) quality expectations

(2) delivery expectations; and
(3) price expectations.

Thus, the customers' quality, delivery, and price (QDP) expectations are crucial to the operations
function.
EDS starts from the Input (resources mobilized), proceeds to the Throughput (or the transformation
process where input is converted into output) and produces the Output (the product). The output is then
marketed to the customers (in the case of goods) or experienced by the customers (in the case of
services). The customer satisfaction level, revenues generated, and the profits realized from the
transactions are the customer market, and financial outcomes of the EDS.
The Six Ms of Operations
The 6Ms of production – Manpower, Method, Machine, Material, Milieu and
Measurement – is a mnemonic representing the characteristic dimensions to consider
when brainstorming during “cause and effect” problem-solving sessions. Capture and
bin the issues (causes) under the 6M categories. Once documented, place the causes
according to category on a cause and effect diagram [2]. Develop improvement plans
starting with the most significant issues first. When we think in terms of categories, it
helps us separate and then rank the specific causes for various effects and problems.
The 6Ms of Production
One important tool in this methodology is an Impact Difficulty Matrix. This technique determines the potential
impact of each solution and the difficulty of implementing the solution. By ranking solutions in this way, the easiest
to do with the least amount of effort, rise to the top of the list for implementation.
 
Understanding how these factors impact the process and the establishment of
standards are key steps in strengthening production processes. The 6M factors are
used to construct cause-and-effect diagrams. Also known as a Fishbone Diagram due
to its appearance (or, an Ishikawa Diagram as named after its developer, Kaoru
Ishikawa).
Layouting
The operating work flow must translate into an appropriately-designed and executed physical layout of the
factory or service shop.
 
The space available for operations must be able to accommodate all the machinery and equipment, the
inventory of raw materials, work-in-process and finished goods, and the operating and quality control
personnel. For service shops, there should be adequate space for holding customers waiting to be served,
customers being served, and customers being processed for payment. The dimensions of the service facility
should be configured correctly to provide enough “elbow room” or human space to serve the customers
comfortably and expeditiously. The working environment should be conducive for carrying out the
operating activities with as little physical, emotional, and mental stress as possible.
Sample Layout of certain business
Production Programming and Scheduling
Operations management is responsible for Production Programming and Scheduling (PPS). It is the
proper determination of
(1) what goods or services to produce,
(2) what sizes and packaging
(3) what machinery and equipment (or production/service line
(4) how many units, and
(5) precisely when.
 
For enterprises with multiple products or services, PPS tan be a very daunting and complicated activity
operations must consider four critical factors in determining the right PPS. These are:
(1) market demand in terms of volume expectations, trends, cycles, and seasonality:
(2) capital investment and financing requirements;
(3) product line profitability and capacity utilization; and
(4) the number of products and market segments the enterprise wants to serve and their implications on the
complexity and dexterity of the production system.
Quality Control
The Quality, Delivery, and Price expectations of customers must be matched with the Quality Delivery and
Productivity measurement, monitoring and evaluation System at every stage of the Enterprise Delivery
System.
 

Before the input is accepted by the 'Transformation Process, it must conform strictly to certain QDP
specifications at this input acceptance stage. The materials and supplies used must adhere to strict technical
standards that would produce the desired output. The input must be delivered to the factory or service shop
at optimal schedules. They should also come at a reasonably low cost, arrive in sufficient quantities, and be
adequately prepared for easy convertibility into output in order to ensure high productivity.