Entrepreneurship and Small Business Management Chapter 6 Exploring

Entrepreneurship and Small Business Management Chapter 6 Exploring Your Market

Ch. 6 Performance Objectives n n Explain how marketing differs from selling. Understand how market research prepares you for success. Choose your market segment and research it. Position your product or service within your market. Entrepreneurship and Small Business Management, 1/e 2 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Marketing n n Identifies your customers and their needs/wants Develops and uses strategies for getting your product or service to customers Generates interest by communicating your competitive advantage to customers Drives all business decisions Entrepreneurship and Small Business Management, 1/e 3 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Market Research n May be conducted at various levels: n n Industry Market segment Individual consumer Two main types: n n Primary—research conducted directly on a subject or subjects Secondary—research carried out indirectly, through other existing resources Entrepreneurship and Small Business Management, 1/e 4 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Primary Research Methods n n n Personal interviews Telephone surveys Written surveys Focus groups (guided group discussion) Observation Tracking Entrepreneurship and Small Business Management, 1/e 5 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Secondary Research Methods n n n Online searches Public and proprietary database searches Data published by industry associations, chambers of commerce, and public agencies Review of books and records Competitor Web sites Entrepreneurship and Small Business Management, 1/e 6 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Customer Research n n n Who are your potential customers? Where can you reach them? What do they want and need? How do they behave? What is the size of your potential market? Entrepreneurship and Small Business Management, 1/e 7 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Industry Research n n n n What is the industry size in units and dollars? What is the industry’s geographic range? Is it a “niche” or a mass market industry? What does industry profitability look like? What trends are occurring in the industry? What is the structure of the industry? What are competitors doing in the industry? Entrepreneurship and Small Business Management, 1/e 8 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Customer Decision-Making n Awareness of a need or want n Information search n Evaluation of alternatives n Decision to purchase n Evaluation of purchase Entrepreneurship and Small Business Management, 1/e 9 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Owning Customer Perception n Features create benefits n n n Feature—a fact about a product or service Benefit—what the feature can do to meet a customer’s needs How needs, want, and demands differ n n n Meeting a need is solving a problem Wants—needs with individual preferences Demands—wants backed by buying power Entrepreneurship and Small Business Management, 1/e 10 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Choosing a Market Segment n n n A market segment is a group of consumers or businesses who have a similar response to a particular type of product or service. It is difficult to target very different market segments simultaneously. A company that concentrates on one market segment will likely do better than a company that tries to sell to everyone. Entrepreneurship and Small Business Management, 1/e 11 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Market Segmentation Methods n n Geographic—dividing according to location Demographic—dividing according to age, gender, income, and/or education Psychographic—dividing by psychological differences (such as opinions or lifestyles) Behavioral—dividing the market based on observed purchasing behaviors Entrepreneurship and Small Business Management, 1/e 12 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Product Life Cycle (PLC) Stages 1. 2. 3. 4. Introduction Growth Maturity Decline Where is your product/service in the PLC? Is your market saturated? Entrepreneurship and Small Business Management, 1/e 13 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Market Positioning n n n Distinguish your product/service from others offered to your market segment. Clearly communicate your competitive advantage. Write a positioning statement. Sample format: [Your business name/brand] is the [competitive industry/category] that [provides these benefits, or points of difference] to [audience/target market]. Entrepreneurship and Small Business Management, 1/e 14 © 2012 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.