Presentation on theme: "The Main Idea To ensure success, entrepreneurs need to understand the industry and the market. They should define areas of analysis and conduct effective."— Presentation transcript:
1The Main IdeaTo ensure success, entrepreneurs need to understand the industry and the market.They should define areas of analysis and conduct effective industry and market research.
2Defining Areas of Analysis In order to satisfy current customers or attract new ones, an entrepreneur must conduct market analysis.The entrepreneur will want to understand the nature of the industry he or she is analyzing.industrya collection of businesses with a common line of products or services
3Defining Areas of Analysis Thorough market analysis requires:Identifying prospective customers and determining their buying habitsAnalyzing your industry and assessing your chances for success within it
4IndustryThere are four factors that are useful in understanding the nature of an industry:carrying capacityuncertaintycomplexitystage of life cycle
5Industrycarrying capacitythe ability of industry to support new growthYou will want to find an industry that has carrying capacity so that your new business can expand and prosper.Uncertainty is the degree of stability or instability in an industry.Many high-tech ventures are in industries with uncertain climates.
6ComplexitySome businesses must learn to deal with complexity in many industries.Firms that operate in complex industries have more suppliers, customers, and competitors than firms in other industries.complexitythe number and diversity of contacts with which a business must deal
7There are four stages to the life cycle of an industry. Stage of Life CycleThere are four stages to the life cycle of an industry.1Birth2Growth3Maturity4Decline7
8Target Market and Customer After first identifying your market, you will then need to select a target market to be the focus of your company’s efforts.target marketa specific group of customers whom a business wishes to reachmarketa group of people or companies who have a demand for a product or service and are willing and able to buy it
9Target Market and Customer Consumer market segmentation is based on geographics, demographics, psychographics, and buying characteristics.A business can select and serve multiple market segments.market segmentssubgroups of buyers with similar characteristics, segmented by geographics, demographics, psychographics, and buying characteristicsmarket segmentationthe process of grouping a market into smaller subgroups defined by specific characteristics
10buying characteristics Target Market and CustomerMarket Segmentationdemographicsgeographicspsychographicsbuying characteristics10
11Target Market and Customer geographicsthe study of the market based on where customers live, including region, state, country, city, and/or areaInformation about the geographics of the target market can help an entrepreneur decide on a geographic area to focus marketing efforts.
12Target Market and Customer An entrepreneur can study psychographics to learn about target customers’ feelings.psychographicsthe study of consumers based on social and psychological characteristics, including personalities, values, opinions, beliefs, motivations, attitudes, and lifestyle elements
13Target Market and Customer Businesses that cater to industrial markets must consider customers’ individual situations.industrial marketscustomers who buy goods or services for business use
14Target Market and Customer The target market for your product or service should be:1Measurable2Large enough to be profitable3Reachable4Responsive14
15Conducting Market Research Once you know the areas of the market that you need to analyze, you are ready to begin market research.The marketing research process can be used to identify potential markets, analyze demand, and forecast sales.market researchthe collection and analysis of information aimed at understanding the behavior of consumers in a certain market
16Select the Type of Market Research There are three types of market researchexploratory researchdescriptive researchhistorical research16
17Select the Type of Market Research A good way to start exploratory research is to read government or industry publications.exploratory researchthe initial collection and analysis of information used when very little is known about a subject; it forms a foundation for later researchfocus groupa group of people whose opinions are studied to determine the opinions that can be expected from a larger populationAnother way to gather information is to form a focus group.
18Select the Type of Market Research Descriptive research can be gathered through questionnaires, interviews, or observation.descriptive researchthe collection of information to determine the status of something, such as in developing a customer profile
19Select the Type of Market Research You can use historical research to forecast your business’s future potential.historical researchthe study of the past to explain present circumstances and predict future trends
20Start the Research Process The Five Steps of an Effective Research Plan5Analyze the data.4Organize the data.3Collect primary data.2Obtain secondary resources.1Identify your information needs.20
21Start the Research Process Research secondary data before researching primary sources because it is easily obtained and inexpensive.secondary datainformation that has already been collected by someone else
22Start the Research Process The most common methods of gathering primary data about customers are:observationinterviewssurveysprimary datainformation that is collected for the first time, is current, and relates directly to the collector’s study
23The Main IdeaStudying a company’s industry and market helps an entrepreneur create a product or service that people want.It also helps the entrepreneur develop a customer profile, estimate demand, and increase the chances for success.
24Researching the Industry LookLook at trends and patterns of change.Understand industry forces that affect your business.UnderstandStudy industry demographics.StudyAnalyzeAnalyze the competition.24
25Industry Forces That Affect Your Business barriers to entrythreats from substitute productssources of supplybuyers’ ability to bargaintechnology25
26Industry Forces That Affect Your Business In established businesses, the dominant businesses have advantages that are barriers to entry to smaller, new ventures.barriers to entryconditions or circumstances that make it difficult or costly for outside firms to enter a market to compete with established firm or firms
27Industry Forces That Affect Your Business Established businesses have achieved economies of scale in production, marketing, and distribution.economies of scalesituations where the cost of producing one unit of a good or service decreases as the volume of production increases; the decrease of production costs relative to the price of goods and services
28Industry Forces That Affect Your Business Customers with brand loyalty do not easily switch to a new company that enters the industry.brand loyaltythe tendency to buy a particular brand of a product
29Issues in Entrepreneurship In the past, businesses used mass marketing to sell products with universal appeal and few features to differentiate them from competitors’ products.mass marketingthe attempt to reach all customers with a single marketing plan
30The CompetitionUsually, competing products are already established in the market.To succeed, you must be able to capture market share by differentiating your business.market sharea portion of the total sales generated by all competing companies in a given market
31The CompetitionMany entrepreneurial companies succeed by studying the competition to define a niche in the market.nichea small, specialized segment of the market based on customer needs discovered in market researchAn entrepreneur who wishes to capture market share can use market positioning.market positioningthe act of identifying a specific market niche for a product
32The CompetitionYou can create a competitive grid to help define your competitive advantage.competitive advantagea feature that makes a product more desirable than its competitors
33Researching the Target Customer Create a customer profile.CreateEvaluate customers’ needs.EvaluateConduct research to forecast demand.Forecast33
34Creating a Customer Profile Creating a customer profile is the first step in targeting your marketing efforts.customer profilea complete picture of a venture’s prospective customers, including geographic, demographic, and psychographic data
35Evaluating Customers’ Needs In order to provide what the customer wants, you should prepare a customer needs analysis.customer needs analysisa study that pinpoints the features and benefits of goods or services that customers value
36Forecasting Demand Several methods can be used to forecast demand: Use historical analogy.Interview prospective customers and intermediaries.Go into limited production.