Chapter 4 Identify and Meet a Market Need

Chapter 4 Identify and Meet a Market Need 4. 1 Identify Your Market 4. 2 Research the Market 4. 3 Know Your Competition Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Ideas in Action Serving Customers’ Needs n By continually assessing market needs, Brian Hendricks was able to start a variety of PC related companies. n Brian’s recommendations for entrepreneurs focus on the “Five P’s of Entrepreneurship”: n n n Planning Patience Persistence People Profit Chapter 4 Slide 2 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Lesson 4. 1 Identify Your Market Goals n Identify a target market by analyzing the needs of customers. n Explain how market segmentation can help an entrepreneur analyze a target market. Chapter 4 Slide 3 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Terms n n n n target market segments customer profile demographics psychographics use-based data geographic data Chapter 4 Slide 4 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Target Market n Customers are your most important asset. n target market n the individuals or companies that are interested in a particular product or service Chapter 4 Slide 5 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Identify Your Target Market n Consider the following information regarding your customers: n n n n individuals or companies? age and income? industries customers are in? needs and wants my product will satisfy? number of potential customers? competitive environment? pricing of product or service? what is unique about my offering? Chapter 4 Slide 6 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What questions should you ask when identifying your target market? Chapter 4 Slide 7 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Market Segments n market segments n groups of customers within a large market who share common characteristics n Most products and services appeal to a small portion of the population. n Segmentation helps you serve your niche efficiently. Chapter 4 Slide 8 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Customer Profile n customer profile n a description of the characteristics of the person or company that is likely to purchase a product or service Chapter 4 Slide 9 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n demographics n data that describes a group of people in terms of n n n n Chapter 4 Slide 10 age marital status family size ethnicity gender profession education income Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n psychographics n data that describe a group of people in terms of n n Chapter 4 Slide 11 tastes opinions personality traits lifestyle habits Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n use-based data n data that helps you determine how often potential customers use a particular service n geographic data n data that helps you determine n where your potential customers live n how far customers will travel to do business with you Chapter 4 Slide 12 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Name four types of customer data that may be analyzed in developing a customer profile. Chapter 4 Slide 13 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Lesson 4. 2 Research the Market Goals n Explain the role of market research. n Identify the six steps involved in market research. Chapter 4 Slide 14 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Terms n n n market research primary data survey focus group secondary data Chapter 4 Slide 15 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Role of Market Research n market research n a system for collecting, recording, and analyzing information about n n Chapter 4 Slide 16 customers competitors goods services Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Primary Data n primary data n information collected for the very first time to fit a specific purpose n survey n a list of questions you ask your customers to determine n demographic information n psychographic information Chapter 4 Slide 17 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n observation n determining information by watching customer behavior n focus group n an in-depth interview with a group of target customers n questions are similar to survey questions n group interaction allows for more in-depth discussion Chapter 4 Slide 18 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n disadvantages of primary data n expensive n time consuming Chapter 4 Slide 19 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Secondary Data n secondary data n information found in already-published sources n Secondary data can be found in: n n n government publications and websites industry specific books trade publications newspaper articles books about entrepreneurs in similar businesses Chapter 4 Slide 20 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What types of data do entrepreneurs collect through market research? Chapter 4 Slide 21 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Six Steps of Market Research n Although primary data collection is time consuming and expensive, it will tell you exactly what you want to know. n Primary data can uncover information that is often not available through secondary sources. Chapter 4 Slide 22 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Chapter 4 Slide 23 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

1. Define the Question n Determine exactly what it is you need to know. 2. Determine the Data Needed n Decide what data you need to answer the question. Chapter 4 Slide 24 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

3. Collect the Data n Conduct secondary research to help determine the primary data requirements. n Determine the most effective methodology for primary research collection. n Questionnaires should contain only the most pertinent questions. Chapter 4 Slide 25 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Chapter 4 Slide 26 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

4. Analyze the Data n Thoroughly analyze and interpret data. n Write down analysis results for future reference. 5. Take Action n Use your analysis results to develop an action plan. 6. Evaluate the Results n Entrepreneurs must perpetually reassess the effectiveness of their actions. Chapter 4 Slide 27 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What are the six steps of market research? Chapter 4 Slide 28 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Lesson 4. 3 Know Your Competition Goals n Explain the importance of understanding your competition. n Determine types of competition. n Prepare a competitive analysis. n Describe strategies for maintaining customer loyalty. Chapter 4 Slide 29 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Terms n direct competition n indirect competition n competitive analysis Chapter 4 Slide 30 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Impact of Competition n To remain competitive, you should offer products that are of equal or better quality than the competition and that sell for the same or lower prices. Chapter 4 Slide 31 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Understand the Competition n Determine the ways your competition is not meeting the needs of their customers. n The unmet needs of these customers provides you with an entrepreneurial opportunity. Chapter 4 Slide 32 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Why is it important for you to understand the competition your business faces? Chapter 4 Slide 33 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Types of Competition n direct competition n originates from a business that makes most of its income by n selling the same products or services as you n to the same market Chapter 4 Slide 34 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n indirect competition n originates from a business that makes only a small amount of money by n selling the same products or services as you n to the same market Chapter 4 Slide 35 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Large Retailers? n Reasons that large retailers can be a source of strong competition include: n they can order and stock large quantities of products n the volume discounts they obtain result in lower prices to the consumer Chapter 4 Slide 36 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n they have multiple product lines n if one product does poorly, there are other products available to generate sales n they have larger advertising budgets Chapter 4 Slide 37 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What is the difference between direct and indirect competition? Chapter 4 Slide 38 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Competitive Analysis n competitive analysis n identifying and examining the characteristics of a competing firm Chapter 4 Slide 39 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n Follow these steps to begin your competitive analysis: n Make a list of your competitors. n Summarize the products and prices offered by your competitors. n List each competitor’s strengths and weaknesses. n Find out the strategies and objectives of your competitors. n Determine the strength of the market. Chapter 4 Slide 40 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Chapter 4 Slide 41 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What is the purpose of a competitive analysis? Chapter 4 Slide 42 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

Maintaining Customer Loyalty n Listen and Respond to Feedback n Perpetually ask for and respond to customers’ needs. Chapter 4 Slide 43 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n Other strategies for Maintaining Customer Loyalty n n n superior service convenient hours easy return policies store-specific credit cards personal notes or birthday cards frequent-buyer programs Chapter 4 Slide 44 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

What are some strategies for maintaining customer loyalty? Chapter 4 Slide 45 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

PERFORMANCE INDICATORS EVALUATED n Develop a convincing multimedia presentation. n Recognize and respect copyright issues. n Develop and support a theme with a multimedia presentation. Chapter 4 Slide 46 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

n Make use of and implement innovative technology in a multimedia presentation. n Set priorities and manage time to prepare and present an effective multimedia presentation. Chapter 4 Slide 47 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

THINK CRITICALLY 1. Why must the Super Bowl use a multimedia presentation to attract new corporate sponsors? 2. What kind of music or visual images would be good for a Super Bowl multimedia presentation? Chapter 4 Slide 48 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western

3. Why must the presentation emphasize the potential return on investment for corporate sponsors of the Super Bowl? 4. What is the value of being associated as a financier of the Super Bowl? Chapter 4 Slide 49 Entrepreneurship: Ideas in Action © Cengage Learning/South-Western