1. 7 Market Research Section 7.1 What Is Market Research?
Section 7.2 What Is Your
Competitive Advantage?

2. What Is Market Research?
7.1
What Is Market Research?
Explain why market research is important
Consider important factors when targeting a market
Identify market research methods

3. Why Is Market Research Important?
A market is a group of potential customers—people or businesses—who are willing and able to purchase a particular product or service.
Market research is an organized way to gather and analyze information needed to make business decisions.

4. Why Is Market Research Important?
Market research typically focuses on three areas:
Business Environment
- any social, economic, political, or industry factors that could impact your business
– reveals new opportunities or threats
Customers
– individual consumers or businesses
– specific information about potential customers and defines their needs and wants
Competition
- competitors offer a product or service similar to yours or one that fills the same customer need or want
– market research helps identify who your competitors are and how they operate

5. Why Is Market Research Important?
Accurate market research can help businesses avoid costly mistakes – helps businesses:
Avoid misjudging the customers’ needs or wants
Avoid spending time and money developing a product that won’t sell
Avoid lost income/profit due to lost opportunities resulting from ignorance of your market and/or industry
Avoid entering a market with little room for growth
Thorough market research attracts potential investors and/or business partners

6. Targeting Your Market
The limited number of customers who are most likely to buy the product or service represents your target market.
One of the goals of market research is to develop a customer profile, which is a detailed description of your target market’s characteristics.
Consumers. A company who sells to individuals is sometimes referred to as a business-to-consumer (B2C) company.
Businesses. A company who sells to other companies is sometimes called a business-to-business (B2B) company.

7. Targeting Your Market
A market segment is a grouping of consumers or businesses within a particular market that has one or more things in common.
Demographics are objective social and economic facts about people.
Basing market segments on where consumers live or where businesses are located is called geographics.
Psychological characteristics of consumers, such as attitudes, opinions, beliefs, interests, personality, lifestyle, political affiliation, and personal preferences, are called psychographics.
Buying behaviors are patterns that are often influenced by a combination of market segment characteristics

8. Market Research Methods
The two basic types of market research are derived from secondary data and primary data:
Secondary Data. Existing information that was previously gathered for a purpose other than the study at hand is secondary data.
Examining existing secondary data is useful for doing general, exploratory research to learn more about your area of interest. Sources include:
Government (Bureau of Economic Analysis, Bureau of Labor Statistics, Census Bureau)
Trade Groups and Journals (American Society of Association Executives)
Business Magazines and Reports (Forbes, Fast Company, Entrepreneur)
Local Community Resources (Chamber of Commerce)

9. Market Research Methods
Primary Data. New information that is collected for a particular purpose is primary data.
Once you have a better sense of your target market, you can begin to gather data directly from that potential group of customers. Some common ways to obtain such primary data are:
Interviews/Surveys
Focus Groups
Observations

10. What Is Your Competitive Advantage?
7.2
What Is Your Competitive Advantage?
Learn how to identify competitors
Determine your competitive advantage
Identify the steps in researching a market

11. Identifying Your Competition
Another critical area of market research involves identifying your competitors. The data you collect about your competitors is called competitive intelligence.
Your competitive intelligence will be of two types:
Direct competitors. A business in your market that sells a product or service similar to yours is your direct competitor.
Indirect competitors. A business that sells a different product or service from yours but fills the same customer need or want is your indirect competitor.

12. Determining Your Competitive Advantage
A competitive advantage is something that puts your business ahead of the competition.
Competitive intelligence enables you to compare your competitors’ strengths and weaknesses with your potential business.
Consider the various places where your competitive products may be available (physical stores, internet, direct mail catalogs)
Pose as a customer – go at different times day, different days – walk through the store and gather information such as:
- What products do they carry? How are they displayed? How much do they cost?
- How does the customer service/sales staff treat the customers?
- What are the characteristics of the customers?

13. Determining Your Competitive Advantage
A competitive matrix is a grid that compares characteristics of your business with those of your direct competitors.
Factors
Your Business
CompetitorA
Competitor B
Price
Quality
Customer Service

14. Determining Your Competitive Advantage
A differentiator is a unique characteristic that distinguishes your business from others.
What product or service can your business provide that competitors don’t?
Ex: Post-It Notes
What mix of products or services can your business provide that competitors don’t?
Ex: FedEx Kinkos
What specialized selling or delivery method can give your business a competitive edge?
Ex: Amazon.com
In what unique ways can your business meet the customers’ wants or needs?
Ex: Black Entertainment Television (BET)

15. Determining Your Competitive Advantage
Expand your SWOT analysis to include competitor data.
Expanded SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Your Business
Competitor A
Competitor B

16. Steps in Researching a Market
Identify Research Objectives
Before you actually start gathering data, list the objectives you want your research to accomplish.
What problems are you trying to solve? What questions do you have?
List information you will need – consider industry, customer and competitive data
Determine Methods and Sources
Based on your objectives, decide which research methods will best help you achieve your goals
Secondary, primary or combination
Develop primary research tools – surveys/questionnaires, focus group questions
Gather the Data
Make adjustments to your research plan depending on what you learn as you collect the data.

17. Steps in Researching a Market
Organize the Data
Organize the information as you gather it.
Analyze the Data
Analyze your data by comparing competitor’s characteristics, identifying potential differentiators, and creating an expanded SWOT analysis that compares the strengths and weaknesses of your business to those of your competitors
Draw Conclusions
Using the data you analyzed in Step 5, decide whether to proceed with your business idea, alter it, or stop completely