Research: The Key to the Venture Concept

Your business will exist in a marketplace of customers and competitors The more you know about your marketplace the better!

Two Types of Research Primary ◦ Specific to your business/ target market ◦ Gathered directly from potential customers, employees, and suppliers ( Surveys, Interviews, Focus Groups) Secondary ◦ Compiled by a source other than you. ◦ Government Census Reports, Small Business Centers, Chamber of Commerce

Target Market The segment that the business most wants to attract. Usually has the most potential for success

Fill in the blanks… What kind of ___________ is most likely to purchase my product or service? Where does the target market __________? How much do they _________on products or services like mine? How much is their household __________? Are there enough _________in the area to support my business?

Answers What kind of person is most likely to purchase my product or service? Where does the target market live? How much do they spend on products or services like mine? How much is their household income? Are there enough customers in the area to support my business?

Consumers Everyone has unique physical features, personality, beliefs, and geographic location This allows marketers to create consumer profiles of the people most likely to purchase a specific product.

Elements of a Consumer Profile 1) Demographics – is the study of human populations and includes obvious characteristics that categorize people. Examples include age, income, gender, occupation, ethnicity, education, and family life cycle

Elements of a Consumer Profile 2) Psychographics – is a system for measuring consumers’ beliefs, opinions, interests, and lifestyles. It profiles consumers according to religious beliefs, tastes in music, lifestyle, attitudes towards health, and other psychological factors.

Elements of a Consumer Profile 3) Geographics – looks at where consumers live Marketers are interested in three main categories: urban, suburban, and rural

Elements of a Consumer Profile 4) Product Use Stats – Marketers attempt to identify heavy users of specific products.

Consumer Segments Consumers are then grouped according to similar characteristics. These segments may be based on age (ie. Youth, baby boomers, seniors), interests (music, sports) as well as many other factors.

Secondary Research Businesses can focus on more than one customer segment. For example…

Secondary Research The target market of a lawn care business might have a consumer segment consisting of high income people and a segment consisting of elderly people who can no longer do yard work.

Secondary Research Another part of secondary research is understanding your industry. ◦ Does it have seasonal patterns? ◦ Is growth predicted? An example… During a recession, the travel industry typically sees a decline in sales.

Secondary Research To do this type of research you must first determine what type of industry your business is in.

Match the business listed with their corresponding industry Agriculture, Forestry, Fishing and Hunting ConstructionManufacturing AccommodationRetail TradeFinance and Insurance Arts, Entertainment, and Recreation Educational ServicesInformation and Cultural Industries Businesses -Clothing Store-Fly-In Fishing Lodge-Theatre Production Company -Tutoring Business-Deck Design and Building-Sewing/Clothing Design Business -Investment Advice Company -Restaurant-Online News Publishing

Most entrepreneurs do their secondary research before they do their primary research

Suppose you are starting a lawn care business and you’re trying to figure out what services to offer in nearby neighbourhoods. You’d start by analyzing demographic data, such as income and spending patterns to determine which neighbourhoods are good targets for your business.

Once you have finished your secondary research, then you would go to your target neighbourhoods and ask people what services are of interest.

Consumer Profile E-Activity Visit Click on Student Centre, then E-Activities. Then choose under Chapter 2 Consumer Profiles, Demographics Follow the instructions to complete a statistical profile for the community of Ottawa.