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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

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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