Market Research Business Planning

Market Research is used to: Provide data about customers, products, services, prices, etc. Project future sales Tell entrepreneurs what products or services are in demand Help the Entrepreneur refine and adapt their products or services Provide information on how your competitors are doing

There are three main forms of market research: Primary Research – gathering data firsthand (observation, interviews and surveys, etc.) Secondary Research – using data gathered by others (Statistics Canada). Internal Research – using a business’s own records to gather information (about sales, products, customers or complaints).

The market research section of a business plan has the following sub-sections: Customer Profile Analysis of the Competition Market Size For Your Business Plan

1. Customer Profile It is important to know who will be buying your product or service; this is referred to as your “target market”. Market Segmentation*: Where do your customers live? (i.e. area, climate, etc.) Geographics What is their demographic makeup? (i.e. their age, education, gender, etc.) What makes them “tick”? (i.e. their likes, dislikes, similar lifestyles, etc.) Psychographics Socioeconomics (i.e. occupation, income, etc.) Loyalty to certain products (i.e. Ford, Chev, etc) Consumption Patterns

Market Segment A group of people or organizations sharing one or more characteristics that cause them to have similar product and/or service needs. A true market segment meets all of the following criteria : it is distinct from other segments exhibits common needs it can be reached by a market intervention. These groups are your TARGET MARKETS

Market Niche A very specific group of consumers whose needs are not being met by what is already on the market. Examples: Gluten free products, TSN, mobile fitness, etc.

Assignment – Your Town

2. Analysis of the Competition A.) You must identify the two main competitors that you will have to compete within the area where your business will operate. For each, you must: - Describe what they offer your target market - Describe any overwhelming strengths and weaknesses held by the competition - Explain what you will do better than them

Analysis of the Competition cont.. B.) You must complete a SWOT analysis for your own company - SWOT represents Strengths, Weaknesses, Opportunities and Threats, with regard to your own company. - Strengths and Weaknesses are internal; you have control over these elements, as they exist within the company. - Opportunities and Threats are external; you do not have control over these elements, as they exist outside of the company. - See example on handout

Competition can be Direct and Indirect. Products that are similar are in direct competition for consumer dollars. Ex: You have $20, & decide you want to watch a movie, each movie, theatre, and movie rental place are competing for your $$. Indirect competition – all the other products that you could buy for $20. Competition can be an advantage and a disadvantage.

3. Market Size Market Size is the amount of money being spent (per year) for a product or service. - Market Size is always expressed using a dollar amount. - To calculate Market Size you use the following formula: (# people in target market) X ($ spent on product/service) Example: Joe is opening a shoe shine business in New York City. Joe predicts that 765 people will use his service. Per year, people spend $376 on this service. The size of Joe’s market is $287,640 That is, there is $287,640 spent on this service per year; that is, all total, people in New York City spend $287,640 on this service.

Market Share The percentage of sales you enjoy in a given market. (Your piece of the pie.)