Part III – Developing the Entrepreneurial Plan Chapter 7 – Environmental Assessment: Preparation for a New Venture Chapter 8 – Marketing Research for New Ventures Chapter 9 – Financial Preparation for Entrepreneurial Ventures Chapter 10 – Developing an Effective Business Plan Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Chapter 8 – Marketing Research For New Ventures

Definition of a Market A market is a group of consumers (potential customers) who have purchasing power and unsatisfied needs. A new venture will survive only if a market exists for its product or service.

Marketing Research Marketing Research involves the gathering of information about a particular market, followed by analysis of that information.

Defining the Research Purpose and Objectives

Gathering Secondary DataGathering Secondary Data Gathering Primary DataGathering Primary Data

Developing an Information-Gathering Instrument Make sure each question pertains to a specific objective in line with the purpose of the study.Make sure each question pertains to a specific objective in line with the purpose of the study. Place simple questions first and difficult-to-answer questions later in the questionnaire.Place simple questions first and difficult-to-answer questions later in the questionnaire. Avoid leading and biased questions.Avoid leading and biased questions. Give concise but not complete directions in the questionnaire.Give concise but not complete directions in the questionnaire. When possible, use scaled questions rather than simple yes/no questions to measure intensity of an attitude or frequency of the experience.When possible, use scaled questions rather than simple yes/no questions to measure intensity of an attitude or frequency of the experience.

Interpreting and Reporting the Information

Inhibitors to Market Research CostCost ComplexityComplexity Strategic DecisionsStrategic Decisions IrrelevancyIrrelevancy

Developing the Marketing Concept

Marketing Philosophy Production-driven philosophyProduction-driven philosophy Sales-driven philosophySales-driven philosophy Consumer-driven philosophyConsumer-driven philosophy

Market Segmentation Market segmentation is the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest.

Consumer Behavior Five Major Classifications: 1.Convenience goods 2.Shopping goods 3.Specialty goods 4.Unsought goods 5.New products

Marketing Stages for Growing Ventures Stage 1: Entrepreneurial Marketing Stage 2: Opportunistic Marketing Stage 3: Responsive Marketing Stage 4: Diversified Marketing Marketing Strategy Market Niche Market Penetration Product- Market Develop- ment New- Business Develop- ment

Marketing Planning Marketing researchMarketing research Sales researchSales research Marketing information systemMarketing information system Sales forecastingSales forecasting Marketing plansMarketing plans EvaluationEvaluation

Telemarketing Advantages: ReceptivenessReceptiveness ImpressionsImpressions More presentationsMore presentations Unlimited geographic coverageUnlimited geographic coverage Better time managementBetter time management Immediate feedbackImmediate feedback Better controlBetter control Less piracyLess piracy Lower salary and commissionsLower salary and commissions

Telemarketing Pitfalls: Poor telephone techniques can defeat the telemarketing strategy.Poor telephone techniques can defeat the telemarketing strategy. Dissension between the field sales staff and the telephone sales personnel can arise.Dissension between the field sales staff and the telephone sales personnel can arise. Entrepreneurs must be aware of the ever- present problem of rapid turnover of telephone staff.Entrepreneurs must be aware of the ever- present problem of rapid turnover of telephone staff.

Marketing on the Internet The Internet allows the firm to increase its presence and brand equity in the marketplace.The Internet allows the firm to increase its presence and brand equity in the marketplace. The Internet allows the company to cultivate new customers.The Internet allows the company to cultivate new customers. The Internet allows Web site visitors to match their needs with the offerings of the company.The Internet allows Web site visitors to match their needs with the offerings of the company. The Internet can improve customer service by allowing customers to serve themselves.The Internet can improve customer service by allowing customers to serve themselves. The greatest potential for the future is probably in direct marketing, where catalogs can be offered online.The greatest potential for the future is probably in direct marketing, where catalogs can be offered online.

Pricing Strategies

Pricing for the Product Life Cycle Product Life-Cycle Stage Pricing Strategy Introductory Stage Unique productUnique product Skimming – deliberately setting a high price to maximize short-term profits Nonunique productNonunique product Penetration – setting prices at such a low level that products are sold at a loss Growth Stage Consumer Pricing – combining penetration and competitive pricing to gain market share; depends on consumers perceived value of product Maturity Stage Demand-Oriented Pricing – a flexible strategy that bases pricing decisions on the demand level for the product Decline Stage Loss Leader Pricing – pricing the product below cost in an attempt to attract customers to other products