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
Identify Your Market
Goals
Identify a target market by analyzing
the needs of customers.
Explain how market segmentation can
help an entrepreneur analyze a target
market.
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Terms
target market
market segments
customer profile
demographics
psychographics
use-based data
geographic data
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Target Market
Customers are your most important
asset.
Target market
the individuals or companies that are
interested in a particular product or service
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Identify Your Target Market
Consider the following information regarding
your customers:
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?
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What questions should you ask
when identifying your target
market?
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Market Segments
market segments
groups of customers within a large market
who share common characteristics
Most products and services appeal to a
small portion of the population.
Segmentation helps you serve your niche
efficiently.
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Customer Profile
Customer Profile
a description of the characteristics of the
person or company that is likely to
purchase a product or service
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Demographics
data that describes a group of people in
terms of
age
marital status
family size
ethnicity
gender
profession
education
income
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Psychographics
data that describe a group of people in
terms of
tastes
opinions
personality traits
lifestyle habits
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Use-based data
data that helps you determine how often
potential customers use a particular service
Geographic data
data that helps you determine
where your potential customers live
how far customers will travel to do business with
you
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Name four types of customer data
that may be analyzed in developing
a customer profile.
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Research the Market
Goals
Explain the role of market research.
Identify the six steps involved in market
research.
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Terms
Market research
Primary data
Survey
Focus group
Secondary data
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Role of Market Research
Market research
a system for collecting, recording, and
analyzing information about
customers
competitors
goods
services
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Primary Data
Primary data
information collected for the very first time
to fit a specific purpose
Survey
a list of questions you ask your customers
to determine
demographic information
psychographic information
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Observation
determining information by watching
customer behavior
Focus group
an in-depth interview with a group of target
customers
questions are similar to survey questions
group interaction allows for more in-depth
discussion
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Disadvantages of Primary Data
expensive
time consuming
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Secondary Data
Secondary data
information found in already-published
sources
Secondary data can be found in:
government publications and websites
industry specific books
trade publications
newspaper articles
books about entrepreneurs in similar
businesses
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What types of data do
entrepreneurs collect through
market research?
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Six Steps of Market Research
Although primary data collection is time
consuming and expensive, it will tell
you exactly what you want to know.
Primary data can uncover information
that is often not available through
secondary sources.
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1. Define the Question
Determine exactly what it is you need to
know.
2. Determine the Data Needed
Decide what data you need to answer the
question.
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3. Collect the Data
Conduct secondary research to help
determine the primary data requirements.
Determine the most effective methodology
for primary research collection.
Questionnaires should contain only the
most pertinent questions.
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4. Analyze the Data
Thoroughly analyze and interpret data.
Write down analysis results for future
reference.
5. Take Action
Use your analysis results to develop an
action plan.
6. Evaluate the Results
Entrepreneurs must perpetually reassess
the effectiveness of their actions.
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What are the six steps of market
research?
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Know Your Competition
Goals
Explain the importance of
understanding your competition.
Determine types of competition.
Prepare a competitive analysis.
Describe strategies for maintaining
customer loyalty.
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Terms
direct competition
indirect competition
competitive analysis
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Impact of Competition
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.
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Understand the Competition
Determine the ways your competition is
not meeting the needs of their
customers.
The unmet needs of these customers
provides you with an entrepreneurial
opportunity.
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Why is it important for you to
understand the competition your
business faces?
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Types of Competition
direct competition
originates from a business that makes
most of its income by
selling the same products or services as you
to the same market
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indirect competition
originates from a business that makes only a
small amount of money by
selling the same products or services as you
to the same market
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Large Retailers?
Reasons that large retailers can be a
source of strong competition include:
they can order and stock large quantities
of products
the volume discounts they obtain result in lower
prices to the consumer
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they have multiple product lines
if one product does poorly, there are other
products available to generate sales
they have larger advertising budgets
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What is the difference between
direct and indirect competition?
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Competitive Analysis
competitive analysis
identifying and examining the
characteristics of a competing firm
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Follow these steps to begin your
competitive analysis:
Make a list of your competitors.
Summarize the products and prices offered
by your competitors.
List each competitor’s strengths and
weaknesses.
Find out the strategies and objectives of your
competitors.
Determine the strength of the market.
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What is the purpose of a
competitive analysis?
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Maintaining Customer Loyalty
Listen and Respond to Feedback
Perpetually ask for and respond to
customers’ needs.
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Other strategies for Maintaining
Customer Loyalty
superior service
convenient hours
easy return policies
store-specific credit cards
personal notes or birthday cards
frequent-buyer programs
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What are some strategies for
maintaining customer loyalty?
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PERFORMANCE INDICATORS
EVALUATED
Develop a convincing multimedia
presentation.
Recognize and respect copyright issues.
Develop and support a theme with a
multimedia presentation.
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Make use of and implement innovative
technology in a multimedia presentation.
Set priorities and manage time to prepare
and present an effective multimedia
presentation.
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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?
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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?
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