1. 1.1.1 Understanding customer needs
Who am I?
Can you work out who these famous entrepreneurs are?
A GALA SIR RUNS
CRAB DRAINS HORN
BEHEADED ROMAN
Sir Alan Sugar
Richard Branson
Deborah Meaden
1.1.1 Understanding customer needs
Understanding customer needs

2. What would you look for when buying a new pair of jeans ?
You have 30 seconds to write down how many characteristics of a pair of jeans you look for when buying 9 8 10 11 13 12 7 5 1
End 2 3 4 6 14 26 25 24 27 28 30 29 15 23 17 16 22 18 19 21 20
Customer needs?
Quality, price, durability, style, brand name
Which is the most important? Prioritise.
Does it depend on who it is for?
Successful
Understanding customer needs

3. Understanding customer needs
A customer need is a requirement of a potential buyer that can be solved through the purchase of a product.
Can you match the needs with the product in the table below?
Need
Product
A new car
Bottle of water
Thirst
Gym membership
To watch X-Factor
Train ticket
To get fit
A bank loan
To get to work
A television
Understanding customer needs

4. Understanding customer needs
Customer needs come in a variety of forms. A visit to the cinema might include the following needs:
Choice of films available
Price of film tickets
Comfort of cinema
Facilities available nearby
Transport services to the cinema
Food and drink available
What is important to you on a cinema visit? Is it catered for?
Understanding customer needs

5. customer needs and start-up businesses
It is important that start-up businesses identify customer needs through market research.
How many new businesses do you know that have shut because they have not correctly identified customer needs?
It is not just about what the business wants to sell; it’s whether the customer will need, and therefore buy, the product
Understanding customer needs

6. Methods of primary and secondary market research
What is market research?
Market research is the collection and analysis of data and information to inform a business about its market.
Primary market research (field research) involves the collection of first hand data that did not exist before. Therefore it is original data.
Secondary market research (desk research) is research that has already been undertaken by another organisation and therefore already exists.
Understanding customer needs

7. How to collect primary and secondary market research
Primary research methods
Surveys and Questionnaires
Postal
Telephone
Face–to-face
On-line
In depth interviews
Focus Groups
Observations
- questionnaires
Many students assume questionnaires are the easiest form of research, they can be very valuable but only if well designed and conducted in the right way – read more.
Understanding customer needs

8. Methods of primary and secondary market research
Secondary research methods
There are a number of research sources available to a small business:
National and Local Government e.g. Office for National
Statistics Market Research organisations e.g. MORI, MINTEL
Professional Bodies e.g. ACCA
Trade Unions and Confederation of British Industry (CBI)
International Bodies e.g. EU, OECD
Academic Bodies e.g. Universities
Newspapers, magazines and the Internet
Secondary research will be quicker and less costly but it will not be specifically geared to the firms requirements.
Finding out about the competition could be the smartest research that a start-up business does
Understanding customer needs

9. Collecting and interpreting primary and secondary market research
Watch this video clip. How have the researchers gathered information about customer needs?
Your aim is to start-up a new business near your school/college. You have identified that customers require reasonable quality, but fast, food.
How would you collect the information required?
Video: Lip balm chimps
Understanding customer needs

10. 1.1.1. Understanding customer needs

11. Interpreting Start-up Market Research
Part of
Business plan
Informs sales
forecasting
Likely to be
small scale
Start-up
market
research
Identifies
potential
demand
Limited by
budget
Lack of
experience
Helps assess
feasibility
Understanding customer needs

12. Qualitative and quantitative research
Qualitative research is the gathering of non-statistical information that gives a company in depth insight into the reasons for human behaviour
It therefore focuses on quality
Suitable methods of collection include
Focus groups
Taste panels
Open ended questions
In depth interviews
Quantitative research is the gathering of statistical data to inform the company about people’s behaviour but does not identify the reasons
It therefore focuses on quantity
Suitable methods of collection include
Closed questions
Observations
Surveys
Understanding customer needs

13. The value of market knowledge through direct customer contact
What is a market? A market is any place that buyers and sellers will come together to exchange goods or services. There will normally be an exchange of money at a set price. How many markets can you name?
Understanding customer needs

14. The value of market knowledge through direct customer contact
Market knowledge is an understanding of the requirements of the customer being targeted.
Most start-up businesses locate in the area where they live or work. This allows them to talk directly to potential customers, allowing for:
Better understanding of customers
Easier to research target market
More accessible communication methods
Knowledge of the competition in the area
Understanding customer needs

15. 2 Minute Test
Name as many types of primary and secondary research methods as you can
End
Understanding customer needs

16. Multiple choice □ A Distributing 500 flyers to local houses
1. Which of the following would not be an appropriate method of market research for a new small business
□ A Distributing 500 flyers to local houses
□ B Undertaking a questionnaire in the town centre
□ C Interviewing potential customers
□ D Using the internet to find statistical information
2. Which one of the following is information gathered by a small business that gives them an insight into why consumers buy their product
□ A Quantitative data
□ B Added value
□ C Secondary data
□ D Qualitative data
1. A 2. D
Understanding customer needs