Marketing Research for Entrepreneurs by 8Rx5ebQ

VIEWS: 2 PAGES: 53

									Marketing Research for
    Entrepreneurs




       JERRY R. MITCHELL   1
• Market Research: The Key to Defining
  Your Focus




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Market information known to you.
• Own Costs
• Competition
• Market Demand
• Market Price




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Market information unknown to you.
• Consumer Response
• The Incumbent’s Reaction to your
  offering
• The Emergence of New Competitors
• The Economy
• Random Factors

              JERRY R. MITCHELL      4
I believe there are four key steps for
  successful marketing:
• Understanding the customer
• Making value for your customer
• Communicating your value to your target
  market
• Making it easy for the customer to buy.

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What is marketing research?
. According to the American Marketing
  Association, marketing research is the
  systematic gathering, recording, and
  analyzing of data about problems
  relating to the marketing of goods and
  services.


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Every small business owner-manager must
 ask the following questions to devise
 effective marketing strategies:




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   Who are my customers and potential
    customers?
   What kind of people are they?
   Where do they live?
   Can and will they buy?
   Am I offering the kinds of goods or
    services they want - at the best place, at
    the best time and in the right amounts?
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 Are my prices consistent with what buyers
  view as the product's value?
 Are my promotional programs working?
 What do customers think of my business?
 How does my business compare with my
  competitors?



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• What is the purpose of marketing
  research?

• Marketing research focuses and organizes
  marketing information. It ensures that such
  information is timely and permits
  entrepreneurs to:


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 Reduce business risks
 Spot current and upcoming problems in
  the current market
 Identify sales opportunities
 Develop plans of action




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• What are some common
  misconceptions about marketing
  research?
• Many entrepreneurs think that marketing
  research should only be done by a small
  business when they are making a profit.



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• Sometimes managers believe that unless
  research provides a complete description
  of a situation it is of no value.




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• The misconception that marketing
  research requires big dollars keeps many
  entrepreneurs from doing research..
  Marketing research can be done at many
  different levels both big and small. Many
  research projects can and are being done
  for $1000 or less.


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• Another misconception is that you can not
  do research unless you are a
  sophisticated researcher. You don't need
  an MBA. in marketing or statistics to do
  marketing research. Marketing research is
  mostly just hard work. Consult a good
  marketing consultant for advice and dig in
  and do it.

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Is marketing research worth the
  expense?
• A recent survey of small business
  managers revealed that 84 percent of
  those having conducted formal marketing
  research projects in the past three years
  felt that the information obtained was
  worth the money spent

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• Overall, 65 percent said that they were
  able to incorporate the research findings
  into their decision making process. Only 7
  percent reported that they were not able to
  implement the results




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• Consequently, I believe that when small
  businesses do engage in marketing
  research the benefits usually exceeds the
  costs.




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How large should your marketing research
  budget be?
• As a rule companies have marketing research
  budgets that range anywhere from .02 to 1
  percent of company sales. Many companies
  spend 50 percent or more of the marketing
  research budget buying research from
  consulting firms. For new companies they must
  learn to do most of it themselves.

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What topics do small business managers
 and entrepreneurs address through
 marketing research studies?




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•   What is your target market?
•   How big is it?
•   Who buys your product?
•   Why do they need it?
•   Who pays for it?
•   Who uses it?


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• How do the users fix the business problem
  you're addressing today?
• How much are they willing to pay?
• Why would they buy from you?
• What business problems are more
  important to them than this one?



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• What are the two basic types of
  marketing research?




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• The two basic types of marketing research
  are quantitative and qualitative.
  Quantitative research answers questions
  that start with "how many" or "how much".
  Qualitative research addresses issues that
  deal with "why" or "how Quantitative
  research usually involves surveys while
  qualitative studies rely on observation or
  unstructured conversations with
  customers.
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Where can I get help for marketing research
  projects?
• When researching your business idea, it is
  important to do as thorough a search for
  information as is possible. It is also
  recommended to do as much of it as you can on
  your own.
• This will help you know the market for your idea
  better, and can help to keep the costs down at
  the start.

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Some Places to start your research.
• Factiva
• LexisNexis
• Business Source Premier
• ProQuest Direct
• Thomson Research


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• Factiva is an online database designed to
  allow access to business and financial
  information. This service covers publicly
  and privately held companies, industries,
  the stock market and the economy.
  Coverage is domestic and international.
  Current stock quotes, full-text newspaper,
  wire, and magazine articles, and company
  profiles can be located via a user-friendly
  web interface.
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• LexisNexis provides access to full-text
  articles from thousands of newspapers
  and magazines worldwide. Full-text SEC
  filings are available. Many local and most
  national & international newspapers are
  included. Extensive coverage of the
  accounting, tax, and legal literature


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• Business Source Premier The Business Source
  Premier database is a comprehensive, business
  periodical database that includes scholarly journals and
  business periodicals covering topics such as
  management, economics, finance, accounting,
  international business and much more. It contains
  content from full text sources ranging from general
  business periodicals such as Business Week, Forbes,
  Fortune, American Banker, etc. to academic journals
  such as Harvard Business Review, Journal of
  Management, Academy of Management Review, Review
  of Economics & Statistics, etc. It provides cumulative
  indexing and abstracts for 4362 business journals (3228
  peer-reviewed) and cumulative full text for 3428 journals
  (2568 peer-reviewed).
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• This database also includes Country Monitor
  and Industry Yearbook Reports from WEFA, 35
  country reports from the Economist Intelligence
  Unit (EIU) and Wall Street Words. The peer-
  reviewed full text content in Business Source
  Premier is unmatched, and full text back files are
  available for many journals back to 1990.
  Additionally, Business Source Premier includes
  embedded images for many of the full text
  journals.
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• ProQuest Direct is a web-based service .
  ProQuest Direct indexes articles from over
  1,000 business and general publications.
  This database covers a range of subjects
  from company information to marketing
  and management trends.



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• Thomson Research provides web-based
  access to complete SEC filings for U.S.
  and international companies. Real-time
  and historical EDGAR filings. Full-text
  articles and summaries from the trade
  press, newspapers, wire stories and
  newsletters worldwide.


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• Journals/Newspapers Business
  Internet Index
• In the white paper you will find a detailed
  list of places I use.




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Review
• Market Analysis
• Who is your customer?
• Knowledge of the customer enables you to
  determine the market size and what determines
  their buying decision. It provides information that
  will assist in choosing a location, determining
  product or services to be offered, establishing
  pricing and planning a selling strategy.

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Key issues to consider are:
• Who will buy your product? Primary and secondary
  target groups.
• Where does the buyer live and what is their profile?
• What factors influence the decision to buy?
• Who is involved in the purchase decision?
• How often will buyers buy?
• Where do they buy, when and how much do they buy?
• What are the buyer's preferences and needs?
• Are customers loyal? Can long term relationships be
  built?

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What product or service are you selling?
• An important aspect of market analysis
  is to ensure that the product or service
  meets the market (customer) needs.
  Product or service focus must be the
  customer.



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Issues to address are:
• Specifications of all your products and or services and
   key features relative to what prospective buyers in your
   target market are saying they need.
• Comparison with competitors and how customers
   perceive your product relative to others available.
• What are the current trends, what stage of maturity is the
   product life cycle at?
• What regulations apply to your product or service?
• What packaging is required?



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Who is your competition?
• Are there competitors that exist now and
  what new competitors are likely to enter
  the market? How will your product or
  service compare and what is the probable
  reaction of your competitors once you
  enter the market?


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Issues to consider are:
• Who are your major competitors?
• What share of the market do they have?
• What are their strengths and weaknesses (e.g.
  quality, price, service, payment terms, location,
  reputation, etc.)?
• How do you compare to your competitors and
  how will they react to your entry into
  the market?
• What factors are there that could increase or
  reduce your competition?
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What is your target market?
• Accurate identification and analysis of the target
  market enables you to develop an effective
  overall marketing strategy. The information will
  assist in determining business size (output
  requirements), distribution channels, pricing,
  promotion strategy and other marketing
  decisions.


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• Target market issues include:
• What is the overall market size? Number
  of potential customers and physical
  boundaries?
• Which segment of the market is the most
  attractive in terms of future growth
  potential, ease of entry, competition, profit
  potential and overall risk?
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• How do products generally get to the
  customer?
• What is the current dollar value or quantity
  of product/service being sold into each
  segment of the market?
• What social, technical, environmental or
  economic changes are taking place within
  the market and how will they impact
  sales?
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What are your distribution channels?
• There may be many options for moving your
  product to the customer such as direct retail,
  wholesale, consignment, broker etc. The method
  of distribution has important implications
  affecting your pricing structure, advertising
  message, cash flow, etc. You will want to
  choose the distribution method best suited for
  your product and where you want to be
  positioned in the marketplace.
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Key issues are:
• What methods of distribution are best suited for
  your product?
• What methods of distribution do your
  competitors use?
• What are the costs relative to market coverage?
• Does your level of available capital or production
  capacities restrict your choice of distribution
  methods?
• Are there ownership opportunities in the supply
  chain?

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Pricing
• The objective is to maximize profits while
  remaining competitive in the marketplace.
  Pricing can be based on either the cost price or
  market price (What will the market pay?).
  Regardless of the pricing method used, it is
  critical to know all of your costs involved in
  delivery of your product or service to avoid
  possible underpricing and operating losses.

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• If the market will not support a price level
  sufficient to cover cost, it will be necessary
  to investigate whether costs can be
  lowered or alternatively, it may be
  necessary to abandon your plans to
  proceed.



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Issues to consider are:
• What control do you have over the product
  price (e.g. exclusive product, no
  competition, high market demand, etc.)?
• What are competitor prices and how do
  they price their products?
• What price and sales volume are needed
  to achieve profit objectives?
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• Can you sell your product at different
  prices into different markets?
• Can you maintain your prices over time
  and what do you expect to happen to
  competitors prices?
• Are your prices quantity sensitive?



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Promotion and Selling
• Promotion of your product or service and
  development of a promotion strategy is part of
  the market analysis. It is important to analyze
  what are the best methods of making your
  customer aware and what message will motivate
  them to buy. From the promotion strategy the
  advertising budget and overall sales plan are
  then developed.

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Items to consider are:
• What media of advertising and sales do
   your competitors use?
• What media of advertising is best suited to
   reach your customer? Primary and
   secondary media. (e.g. Primary -
   newspaper and radio; Secondary - flyers
   and trade shows).
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• What sales tools and training will be
  required for staff?
• What image are you attempting to build
  through your promotion?
• Packaging?




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• While customer service, in store display
  and merchandising are not part of the
  market analysis, they are an important part
  of the business image and promotion
  package. Ongoing attention should be
  given to these areas to assure maximum
  promotional benefit is achieved and that
  the desired image is portrayed.


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• Primary/Secondary Data Sources
• Primary data is the information you will obtain
  through your own efforts or by hiring someone
  and can include observation, surveying, and
  experimentation.
• Secondary data consists of information which
  has been gathered by someone else and is
  relevant to the venture you want to establish.


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