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 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 2 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Vocabulary n n n n target market segments customer profile demographics psychographics use-based data geographic data Chapter 4 Slide 3 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Target Market n customers n the people or organizations who buy the products and services companies offer n target market n the individuals or companies that are interested in buying a particular product or service Chapter 4 Slide 4 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Identify Your Target Market n Consider the following information regarding your customers: n n n n n Chapter 4 Slide 5 individuals or companies? age, income, place of residence? industries customers are in? needs and wants my product will satisfy? number of potential customers in my area? demand for my product or service? who is the competition? pricing of product or service? what is unique about my offering? Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What questions should you ask when identifying your target market? Chapter 1 Slide 6 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 It is important to carefully analyze market data to meet the needs of segments of the market. Chapter 4 Slide 7 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 8 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n demographics n data that describes a group of people in terms of n n n n Chapter 4 Slide 9 age marital status family size ethnicity gender profession education income Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n psychographics n data that describe a group of people in terms of n n Chapter 4 Slide 10 tastes opinions personality traits lifestyle habits Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 11 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Name four types of customer data that may be analyzed in developing a customer profile. Chapter 1 Slide 12 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Lesson 4. 2 Research the Market Goals n Explain the role of market research. n Identify the six steps involved in market research. n Explain the role technology plays in marketing research. Chapter 4 Slide 13 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Vocabulary n n n market research primary data survey focus group secondary data customer relationship management Chapter 4 Slide 14 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Role of Market Research n market research n a system for collecting, recording, and analyzing information about n n Chapter 4 Slide 15 customers competitors products services Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 16 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 discussion Chapter 4 Slide 17 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n disadvantages of primary data n time-consuming n more expensive Chapter 4 Slide 18 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Secondary Data n secondary data n information found in already-published sources Chapter 4 Slide 19 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Secondary data can be found in: n publications issued by government and community organizations n industry specific books n government and business websites n books about entrepreneurs in similar businesses n trade publications n newspaper articles and statistics Chapter 1 Slide 20 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What types of data can be collected through market research? Chapter 1 Slide 21 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 4 Slide 23 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. Collect the Data n Decide the best way to gather data. n People’s opinions can be obtained through n n n n Chapter 4 Slide 25 focus groups surveys secondary market research demographic data psychographic data economic trends industry forecasts Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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 regularly evaluate the actions they take as a result of the plan. Chapter 4 Slide 26 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What are the six steps of market research? Chapter 1 Slide 27 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Technology-Driven Marketing n Customer relationship management n a business strategy designed to increase profitability and customer satisfaction n uses technology to track customer interactions n focuses on understanding customers as individuals instead of as part of a group Chapter 1 Slide 28 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Interactions with Customers n Companies collect data about customers through interactions that occur via n n n Chapter 1 Slide 29 phone web salespersons product registration product warranty cards Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n touch points n places where a customer might have contact with a company n discussion with delivery personnel n electronic data transfer n the movement of data between locations in a structured, computer-retrievable format Chapter 1 Slide 30 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Customer Database n data warehouse n a large computerized database containing all of the information collected in the CRM process n data mining n finds hidden patterns and relationships in the customer data stored in the data warehouse Chapter 1 Slide 31 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What is the goal of CRM? Chapter 1 Slide 32 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Lesson 4. 3 Know Your Competition Goals n Explain the importance of knowing and understanding your competition. n Prepare a competitive analysis. n Describe strategies for maintaining customer loyalty. Chapter 4 Slide 33 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Vocabulary n direct competition n indirect competition n competitive analysis Chapter 4 Slide 34 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Impact of Competition n You should always watch the competition. n Offer products that are of equal or better quality that sell for the same or lower prices. Chapter 4 Slide 35 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Understand the Competition n New businesses need to identify some special customer need or want that is not being met. Chapter 4 Slide 36 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Know the Types of Competition n direct competition n a business that makes most of its money selling the same or similar products or services to the same market as other businesses Chapter 4 Slide 37 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n indirect competition n a business that makes only a small amount of money selling the same or similar products and services to the same market as other businesses Chapter 4 Slide 38 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n large retailers n Reasons that make it difficult for entrepreneurs to compete with large retailers include: n Large retailers can keep larger quantities of products in stock. n Large chains do not rely on a single product line. n Large companies have a larger advertising budget. Chapter 4 Slide 39 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Why is it important to understand the competition your business faces? Chapter 1 Slide 40 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Competitive Analysis n competitive analysis n identifying and examining the characteristics of a competing firm Chapter 4 Slide 41 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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. Chapter 4 Slide 42 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n List each competitor’s strengths and weaknesses. n Find out the strategies and objectives of your competitors. n Determine the opportunities in the market. n Identify threats to your business from the competition. Chapter 4 Slide 43 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 4 Slide 44 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What is the purpose of a competitive analysis? Chapter 1 Slide 45 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Maintain Customer Loyalty n Listen and Respond to Feedback n Continually ask for and respond to customers’ needs. Chapter 4 Slide 46 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Other strategies for Maintaining Loyalty n n n Chapter 4 Slide 47 superior service convenient hours easy return policies store-specific credit cards personal notes or birthday cards frequent-buyer programs Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What are some strategies for maintaining customer loyalty? Chapter 1 Slide 48 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Performance Competencies n Develop the presentation logically and systematically n Communicate the design process effectively Chapter 1 Slide 49 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Present the tips, techniques, and tools used n Demonstrate the ability to make a businesslike presentation n Show self-confidence apparent through knowledge of content and articulation of ideas Chapter 4 Slide 50 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Give It A Try n Document addresses topic and is appropriate for the audience n Graphics, text treatment, and special effects show creativity and cohesiveness of design Chapter 1 Slide 51 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

n Selection of fonts and type sizes is appropriate n Overall layout and design is creative and appealing n Final product indicates a clear thought process and an intended, planned direction with formulation and execution of a firm idea n Required information is effectively communicated Chapter 4 Slide 52 Entrepreneurship: Ideas in Action 5 e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.