Chapter 4
Identify and Meet a
Market Need
4.1 Identify Your Market
4.2 Research the Market
4.3 Know Your Competition
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Ideas in Action
Serving Customers’ Needs
 By continually assessing market needs, Brian
Hendricks was able to start a variety of PC
related companies.
 Brian’s recommendations for entrepreneurs focus
on the “Five P’s of Entrepreneurship”:
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Planning
Patience
Persistence
People
Profit
Chapter 4
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Lesson 4.1
Identify Your Market
Goals
 Identify a target market by analyzing
the needs of customers.
 Explain how market segmentation can
help an entrepreneur analyze a target
market.
Chapter 4
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Terms
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target market
market segments
customer profile
demographics
psychographics
use-based data
geographic data
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Target Market
 Customers are your most important
asset.
 target market
 the individuals or companies that are
interested in a particular product or service
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Identify Your Target Market
 Consider the following information regarding
your customers:
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individuals or companies?
age and income?
industries customers are in?
needs and wants my product will satisfy?
number of potential customers?
competitive environment?
pricing of product or service?
what is unique about my offering?
Chapter 4
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What questions should you ask
when identifying your target
market?
Chapter 4
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Entrepreneurship: Ideas in Action
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Market Segments
 market segments
 groups of customers within a large market
who share common characteristics
 Most products and services appeal to a
small portion of the population.
 Segmentation helps you serve your niche
efficiently.
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Customer Profile
 customer profile
 a description of the characteristics of the
person or company that is likely to
purchase a product or service
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 demographics
 data that describes a group of people in
terms of
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age
marital status
family size
ethnicity
gender
profession
education
income
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 psychographics
 data that describe a group of people in
terms of
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tastes
opinions
personality traits
lifestyle habits
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 use-based data
 data that helps you determine how often
potential customers use a particular service
 geographic data
 data that helps you determine
 where your potential customers live
 how far customers will travel to do business with
you
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Name four types of customer data
that may be analyzed in developing
a customer profile.
Chapter 4
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Entrepreneurship: Ideas in Action
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Lesson 4.2
Research the Market
Goals
 Explain the role of market research.
 Identify the six steps involved in market
research.
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Terms
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market research
primary data
survey
focus group
secondary data
Chapter 4
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Role of Market Research
 market research
 a system for collecting, recording, and
analyzing information about
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customers
competitors
goods
services
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Primary Data
 primary data
 information collected for the very first time
to fit a specific purpose
 survey
 a list of questions you ask your customers
to determine
 demographic information
 psychographic information
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 observation
 determining information by watching
customer behavior
 focus group
 an in-depth interview with a group of target
customers
 questions are similar to survey questions
 group interaction allows for more in-depth
discussion
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 disadvantages of primary data
 expensive
 time consuming
Chapter 4
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Secondary Data
 secondary data
 information found in already-published
sources
 Secondary data can be found in:
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government publications and websites
industry specific books
trade publications
newspaper articles
books about entrepreneurs in similar
businesses
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What types of data do
entrepreneurs collect through
market research?
Chapter 4
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Entrepreneurship: Ideas in Action
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Six Steps of Market Research
 Although primary data collection is time
consuming and expensive, it will tell
you exactly what you want to know.
 Primary data can uncover information
that is often not available through
secondary sources.
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Chapter 4
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Entrepreneurship: Ideas in Action
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1. Define the Question
 Determine exactly what it is you need to
know.
2. Determine the Data Needed
 Decide what data you need to answer the
question.
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3. Collect the Data
 Conduct secondary research to help
determine the primary data requirements.
 Determine the most effective methodology
for primary research collection.
 Questionnaires should contain only the
most pertinent questions.
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Chapter 4
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4. Analyze the Data
 Thoroughly analyze and interpret data.
 Write down analysis results for future
reference.
5. Take Action
 Use your analysis results to develop an
action plan.
6. Evaluate the Results
 Entrepreneurs must perpetually reassess
the effectiveness of their actions.
Chapter 4
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What are the six steps of market
research?
Chapter 4
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Entrepreneurship: Ideas in Action
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Lesson 4.3
Know Your Competition
Goals
 Explain the importance of
understanding your competition.
 Determine types of competition.
 Prepare a competitive analysis.
 Describe strategies for maintaining
customer loyalty.
Chapter 4
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Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
Terms
 direct competition
 indirect competition
 competitive analysis
Chapter 4
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Entrepreneurship: Ideas in Action
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Impact of Competition
 To remain competitive, you should offer
products that are of equal or better
quality than the competition and that
sell for the same or lower prices.
Chapter 4
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Understand the Competition
 Determine the ways your competition is
not meeting the needs of their
customers.
 The unmet needs of these customers
provides you with an entrepreneurial
opportunity.
Chapter 4
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Entrepreneurship: Ideas in Action
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Why is it important for you to
understand the competition your
business faces?
Chapter 4
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Entrepreneurship: Ideas in Action
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Types of Competition
 direct competition
 originates from a business that makes
most of its income by
 selling the same products or services as you
 to the same market
Chapter 4
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Entrepreneurship: Ideas in Action
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 indirect competition
 originates from a business that makes only a
small amount of money by
 selling the same products or services as you
 to the same market
Chapter 4
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Entrepreneurship: Ideas in Action
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Large Retailers?
 Reasons that large retailers can be a
source of strong competition include:
 they can order and stock large quantities
of products
 the volume discounts they obtain result in lower
prices to the consumer
Chapter 4
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 they have multiple product lines
 if one product does poorly, there are other
products available to generate sales
 they have larger advertising budgets
Chapter 4
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Entrepreneurship: Ideas in Action
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What is the difference between
direct and indirect competition?
Chapter 4
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Entrepreneurship: Ideas in Action
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Competitive Analysis
 competitive analysis
 identifying and examining the
characteristics of a competing firm
Chapter 4
Slide 39
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
 Follow these steps to begin your
competitive analysis:
 Make a list of your competitors.
 Summarize the products and prices offered
by your competitors.
 List each competitor’s strengths and
weaknesses.
 Find out the strategies and objectives of your
competitors.
 Determine the strength of the market.
Chapter 4
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Chapter 4
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What is the purpose of a
competitive analysis?
Chapter 4
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Maintaining Customer Loyalty
 Listen and Respond to Feedback
 Perpetually ask for and respond to
customers’ needs.
Chapter 4
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 Other strategies for Maintaining
Customer Loyalty
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superior service
convenient hours
easy return policies
store-specific credit cards
personal notes or birthday cards
frequent-buyer programs
Chapter 4
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What are some strategies for
maintaining customer loyalty?
Chapter 4
Slide 45
Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western
PERFORMANCE INDICATORS
EVALUATED
 Develop a convincing multimedia
presentation.
 Recognize and respect copyright issues.
 Develop and support a theme with a
multimedia presentation.
Chapter 4
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 Make use of and implement innovative
technology in a multimedia presentation.
 Set priorities and manage time to prepare
and present an effective multimedia
presentation.
Chapter 4
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THINK CRITICALLY
1. Why must the Super Bowl use a
multimedia presentation to attract new
corporate sponsors?
2. What kind of music or visual images
would be good for a Super Bowl
multimedia presentation?
Chapter 4
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3. Why must the presentation emphasize the
potential return on investment for
corporate sponsors of the Super Bowl?
4. What is the value of being associated as a
financier of the Super Bowl?
Chapter 4
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Entrepreneurship: Ideas in Action
© Cengage Learning/South-Western