Entrepreneurship unit 2 1
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Entrepreneurship Unit 2.1. Analyzing a business’s customers. Students will analyze their market’s customers. Students will be able to: Define target market Define market segmentation by demographics, psychographics, geographics, and buying characteristics

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Entrepreneurship Unit 2.1

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Entrepreneurship unit 2 1

EntrepreneurshipUnit 2.1

Analyzing a business’s customers


Students will analyze their market s customers

Students will analyze their market’s customers.

  • Students will be able to:

    • Define target market

    • Define market segmentation by demographics, psychographics, geographics, and buying characteristics

    • Distinguish the difference between primary and secondary research

    • Describe a focus group

    • Identify the steps of market research


Why market analysis

Why Market Analysis?

  • Market analysispresents research findings about target markets.

  • Market analysisincludes a target market profile that explains the traits of the company’s potential customers.

  • Market analysisprovides potential investors with a realistic forecast of the growth potential for the market in which your company will operate.


What is a target market

What is a Target Market?

  • A target market is a particular group of customers of interest to an entrepreneur.

  • Understanding the characteristics of the desired market segment allows a company to tailor its marketing effort to reach and appeal to the market segment.


What is market segmentation

What is Market Segmentation?

  • 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.


What are the four types of market segmentation

What are the four types of market segmentation?

  • Geographics

  • Demographics

  • Psychographics

  • Buying Characteristics


4 types of market segmentation

4 Types of Market Segmentation

  • Geographics – the study of the market based on where customers live by region, state, city, and/or area.

  • Demographics – the personal characteristics of a population: age, gender, family size, income, occupation, family life cycle, education, religion, race, nationality, or social class.


4 types of market segmentation cont d

4 Types of Market Segmentation(cont’d.)

  • Psychographics – the study of consumers based on social and psychological characteristics: personality, values, opinions, beliefs, motivations, attitudes, and lifestyle elements, including activities and interests;

  • Buying characteristics

    – knowledge of and personal experiences with the actual goods or services.


Guidelines to segment the target market

Guidelines to Segmentthe Target Market:

  • The target market should be measurable.

    How many potential buyers are in the market?

  • The segment should be large enough to be profitable—to recover costs and make a profit.

  • The segment should be reachable.

    Product information and product availability must be considered.

  • The target segment should be responsive;

    i.e., that people are interested in the

    product.


Market segment profile example

Market Segment Profile (Example)

  • Situation: Clothing boutique specializes in trendy fashions for teenagers. Located in a fast-growing metropolitan area with several high schools and a college.

  • Profile: Girls 13-18 years old; reside within city, nearby suburbs, or rural areas; part-time annual income of $1500; rarely buy expensive items; aware of current trends and attitude toward

    where to buy influenced by peers.


3 types of market research

3 Types of Market Research

  • 1. Exploratory Research is used when you know little about a subject. Check with industry & government publications.

    You can organize a focus group of people whose opinions are studied to determine the opinions that can be expected from a larger population.


3 types of market research cont d

3 Types of Market Research (cont’d.)

  • 2. Descriptive Research

    Develop a customer profile. Learn the age, gender, occupation, income, and buying habits of potential customers. Such information can be collected through questionnaires, interviews, or observation.


3 types of market research cont d1

3 Types of Market Research(cont’d.)

  • 3. Historical Researchinvolves studying the past. Trade associations and trade publications are two sources of useful historical data. Historical research might be useful to learn why a type of business has been successful or unsuccessful.


What is primary data

What is Primary Data?

  • Research collected for the first time and relates directly to the collector’s study.

  • How do I collect primary data?

    • Observation

    • Interviews – in person, by phone, through mail

    • Surveys

    • Observe buyers at competitor’s site

    • Focus groups


What is secondary data

What is Secondary Data?

  • Information collected by someone else for their own purposes.

  • Where do I find Secondary Data?

    • Internet

    • Government and community organizations

    • Website of the U.S. Census Bureau

    • Chamber of Commerce

    • Trade associations

    • Trade publications

    • Commercial research agencies


Five steps of market research

Five Steps of Market Research

  • Step 1: Identify your Information Needs.

    • What data needs to be collected?

    • What methods of analysis will be used?

    • How will the data be used?

      Example: Before opening a hobby store, you need to know who your first customers will be and what they want? Also, you must gather information about the competition.


Five steps of market research cont d

Five Steps of Market Research (cont’d.)

  • Step 2: Obtain Secondary Resources. Information that has been collected by someone else is called secondary data.

    • What are the demographics of the customer?

    • What are the psychographics 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?


Five steps of market research cont d1

Five Steps of Market Research (Cont’d.)

  • Step 3: Collect Primary Data

    1. What are the demographics of your customer?

    2. Would potential customers purchase your product or service? Why or why not?

    • How much would customers purchase?

    • When would customers purchase?

    • Who would customers like to find the product or service?

    • What do customers like about your competitors’ products and services?


Five steps of market research cont d2

Five Steps of Market Research(cont’d.)

  • Step Four: Organize the Data

    Categorize 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. This data can help you refine your market analysis.


How may data be represented

How may Data be Represented?

  • Bar graphs

  • Pie charts

  • Line graphs


Five steps of market research cont d3

Five Steps of Market Research (cont’d.)

  • Step Five: Analyze the Data.

    Now that your information has been organized, ask yourself these questions:

    • Is there a market for the product or service?

    • How big is the market?

    • Will the industry support such a business?

    • What do substitute products/service reveal about demand for the product/service?

    • What do customers, end users, and intermediaries predict the demand will be?


Let s review

Let’s Review

  • Define target market

  • Define market segmentation by demographics, psychographics, geographics, and buying characteristics

  • Distinguish the difference between primary and secondary research

  • Describe a focus group

  • Identify the steps of market

    research


Sources

Sources

  • Allen, Kathleen R., & Meyer, Earl (2006). Entrepreneurship and small business management. New York: Glencoe.

  • Green, Cynthia L. Entrepreneurship: ideas in action. Boston: Thompson/

    South-Western.

Created by: JJ Abernathy

Snow Canyon High School

2006


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