This chapter will enable you to:
1. Describe the different types of market
2. Develop an effective market survey for
3. Use market research to understand your
4. Analyze your industry
What is market research?
• Your market consists of the potential
customers for your product or service.
– Market Research is how you find out who
these customers are and what they need.
– Market Research helps entrepreneurs figure
out how to market their product or
services…or to improve existing products or
• Find out everything about your target
– What they eat, drink, listen to, watch on TV,
how much do they sleep, where do they shop,
movies they like, how much they make, how
much they spend, etc…
– Remember just don’t get too creepy
• Facts about groups of people are called
demographics. Where can you find such
– Internet research
– Magazine articles – statistics on the size of
the target market
– Business Library- Business section
sometimes has info
Types of Market Research (4)
1. Surveys – sets of questions that you ask
• Either in interviews or questionnaires.
Market surveys should ask about:
• Product use and frequency of purchase
• Places where they purchase (competition)
• Business name, logo
• Market surveys should also gather info
about future customers. Include:
– Interests and hobbies
– Reading and television-watching habits
– Educational backgrounds
– Annual income
2. General Research
• Check library resources, city agencies, city
hall for info about businesses.
• If you want to open a surf shop you should
find out how many other stores are around.
• Check to see what products are selling and what
products are not.
• Check to see how much business they are
3. Statistical Research
– Market research companies are paid by
other companies to gather demographic
information. The federal government can
also provide info about demographics.
• Annual Income
• Ethnic or religious background
• Zip Codes
• Dwelling place (house /apartment)
4. Industry Research
• Sometimes you will need to do some
research on an industry. If you want to start
a record label, you will want to know how the
industry is doing.
• Is it growing?
• Are people buying more CD’s this year?
• Who are the major consumers of CD’s?
• Which age group buys the most?
• What kind of music is selling?
Research Your Market Before You
Open Your Business!
Large corporations spend a great deal of
money on market research before they
introduce a product or service.
Chrysler spent millions before producing the
mini-van. It was worth it, because it was
going to cost tens of millions to
Who is in your market segment?
• A market segment is composed of consumers
who have similar responses to a certain type of
– In cosmetics…one segment responds positively to
luxurious products. Another segment responds to
products that claim to make customers look younger.
Another wants low prices.
– A company that recognizes these segments and
chooses one or two to market to will be more
successful than one who tries to sell to every single
woman in the country.
• Once you have chosen your market
segment, you can design a survey and
begin market research. Here are a few
questions you can adapt to your own
product or service.
– Would you buy this product/service?
– How much would you be willing to pay for it?
– Where would you buy it?
– How would you improve it?
– Who are my closest competitors?
– Is my product/service worse or better than
those of my competitors?
Market research can avoid costly
Lets say you created a design and silkscreened it
on5 dozen white shirts. After 6 weeks you only
sold 6. People tell you they would have bought
a shirt if:
– They came in red or blue
– You had them in different sizes
– You had them in different styles
– The shirts had different designs
– The price was lower
– They had known you were selling at the flea market
– You had sold them at school during lunchtime
• With a little market research you could
have determined your customers’ needs
and wishes regarding the Four P’s before
you made the shirts
– And you could probably have sold many more
Very Good Advice
Always listen to the people who bought your
product (or used your service) but did not
They have valuable feedback!
• Colgate Market Research