Chapter 6
Market Research
Market Research
Markets for products and services are
found within and across industries.
An industry- is a collection of
businesses with a common line of
products. It includes manufacturers,
suppliers, distributors, and anyone else
who is involved within the industry.
Market Research
Industries
There are four factors that are useful to
understanding the nature of an
industry.
Market Research
Industries
1.
2.
Carrying Capacity- is a way to
understand the industry’s ability to
support new growth.
Uncertainty- is the degree of
stability or instability in an industry.
An industry that is fast-changing has a
high degree of uncertainty and
therefore more risk.
Market Research
Industries
3. Complexity- is the number and
diversity of contacts with which you
must deal. Firms that operate in a
complex environment, usually have
more suppliers, customers, and
competitors than firms in other
industries. They are also more global in
nature.
Market Research
Industries
4. Stage of Life Cycle- these stages include:
1.
Birth
2.
Growth
3.
Maturity
4.
Decline.
If you know what stage the industry is in, you
can design a business strategy to be
compatible with it.
Target Market and Customer

A market- is a group of people or
companies who have a demand for a
product or service and are willing and
able to buy it.


Industrial Markets- are those
customers who buy goods or services
for business use. Industrial goods are
goods or components produced for sale
to manufacturers and used in the
production of other goods.
A Target Market –is a particular group
of people you are interested in.
Target Market and Customer

Market Segmentation- is the process
of grouping a market into smaller subgroups
defined by specific characteristics.

Market Segments- are subgroups of
buyers with similar characteristics. Once they
are identified, a business can customize its
products to meet the needs of the segment.
Target Market and Customer
There are four ways to segment a
market:
1.
Geographics- is based on where the
people live.
2.
Demographics- are the personal
characteristics of the population such
as religion, race, income, and
occupation.
Target Market and Customer
3. Psychographics- is the study of
consumers based on social and
psychological characteristics. These
include personality, values, opinions,
beliefs, and attitudes.
4. Buying Characteristics- are
knowledge of and personal experiences
with the actual goods.
Target Market and Customer
Four characteristics of a target market
segment.
1.
The market segment should be measurable.
2.
The segment should be large enough to be
profitable.
3.
The segment should be reachable.
4.
The market segment should be responsive.
Market Research

Market ResearchIs the collection and analysis of information
aimed at understanding the behavior of
consumers in a certain market.
The marketing research process can be used
to identify potential markets, analyze
demand, forecast sales, and make other
decisions.
Market Research


Identifying the focus of the research is
important so you do not waste time
gathering useless information.
Select the type of research you want to
do. These types of market researches
are called research designs.
Market Research
1.
2.
Exploratory research- is used when
very little is known about the subject.
Focus group- is a group of people
whose opinions are studied to
determine the opinions expected from
the larger population.
Market Research
3. Descriptive research- is done when
you want to determine the status of
something.
You may want to develop a customer
profile. To do so, you need to learn
the age, gender, occupation, income,
and buying habits of potential
customers.
Market Research
4. Historical research- involves
studying the past. Patterns from the
past can then be used to explain
present trends.
Starting Market Research
The following are the steps used in
starting the research process.
Starting Market Research
1.
Identify your information needsbefore you begin to collect data on your
market, you should identify the kinds of
information you need.
How will the data be used?
What data needs to be collected?
What methods of analysis will be used?
Starting Market Research
2. Obtain secondary resourcesInformation that has already been
collected by someone else. It is easily
obtained and is inexpensive. A good
place to start is the internet.
What are the demographics of the
customer?
Starting Market Research
What are the pyschographics of the customer?
How large is the market?
Is the market growing?
Is the market affected by geography?
How can you reach your market?
How do your competitors reach the market?
What market strategies have been successful
with these customers?
Starting Market Research
3. Collect primary dataThis is the data you obtain for the first
time and use specifically for your study.
What are the demographics of your
customers?
Would potential customers purchase
your product or service? Why or why
not?
Starting Market Research
How much would customers purchase?
How would customers like to find the
product or service?
What do customers like about your
competitors’ products or services.
Starting Market Research
4. Organize the dataCategorize data based on the research
question it answers. Working on each
question, note how many of your
sources supported a particular
conclusion and how many did not. Then
create charts and graphs to depict your
findings.
Starting Market Research
5. Analyze the DataNow that your information has been
organized, ask yourself these questions
to help you judge your chances of
having a successful business:
Is there a market for the product or
service?
Starting Market Research
How big is the market?
Will the industry support such a
business?
What do substitute products/services
reveal about demand for the
product/service?
What do customers, end users, and
intermediaries predict the demand will
be?