Market Research and Product Development Freshman Seminar Introduction to Business Dr. Hays

Market Research What is it? The gathering and analysis of information on the size, location, and makeup of a market Why is it important? Helps businesses make decisions Discover wants and needs Produce and market products and services that attract customers Known as marketing concept Determining wants and needs Providing them more efficiently and effectively than competitors

Consumer Information Consumers are the people who make up the market Businesses analyze and label markets by demographics What are demographics? Facts about the population Age Gender Location Income Education Nationality

Target Marketing and Market Segmentation What is target marketing? Helps companies focus on the people most likely to buy a product or service Who would the target market be for Guitar Hero III – Legends of Rock? Market Segmentation The division of a market for a product into groups of customers who have the same needs and traits

Product Development Seven steps Generate ideas Screen ideas Develop a business plan Develop the product Test-market the product Introduce the product Evaluate customer acceptance

Generate Ideas Takes more than one person to come up with new ideas Workers brainstorm (work together) to think of new products Can work in development, market research, or outside the company Collaboration is key in this step

Screen Ideas Once list of ideas are formulated, must evaluate each idea How does idea fit company mission and strategy? Does new product compete with existing product? Consumers identify what they like or dislike about concept Responses are crucial to company moving forward with an idea

Develop Business Plan One or two ideas developed into business plan Written proposal looks at the market Estimated sales Costs Profit potential Market trends Competing products

Develop Product Prototype of products are made Used to see what new product will look like Tests how product can be made Company might experience delays in product as it is tested

Test Market the Product What does it mean to test market? Offer in limited market for limited time Goal Collect customer responses to see if product is likely to be a success Disadvantage to Testing May give competitors time to produce similar products First firm may lose competitive advantage

Introduce the Product Publicity campaign introduces product Cost of launching new product are high Company has short time to market before competitors start to develop similar products

Evaluate Customer Acceptance Marketers track customers and their responses to it Reports answer key questions Who are best customers? What new products are they buying? How often do customers buy the new product?