EIA Chap-04

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. Brians recommendations for entrepreneurs focus on the Five Ps of Entrepreneurship:
Planning Patience Persistence People Profit
Chapter 4 Slide 2
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 Slide 3

Terms
target market market segments customer profile demographics psychographics use-based data geographic data
Chapter 4 Slide 4
Target Market
Customers are your most important asset. target market
the individuals or companies that are interested in a particular product or service
Chapter 4 Slide 5

Identify Your Target Market

Consider the following information regarding your customers:
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 Slide 6
What questions should you ask when identifying your target market?
Chapter 4 Slide 7

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.
Chapter 4 Slide 8

Customer Profile
customer profile
a description of the characteristics of the person or company that is likely to purchase a product or service
Chapter 4 Slide 9

demographics
data that describes a group of people in terms of

Chapter 4 Slide 10
age marital status family size ethnicity gender profession education income
psychographics
data that describe a group of people in terms of
tastes opinions personality traits lifestyle habits
Chapter 4 Slide 11

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
Chapter 4 Slide 12

Name four types of customer data that may be analyzed in developing a customer profile.
Chapter 4 Slide 13

Lesson 4.2
Research the Market

Goals
Explain the role of market research. Identify the six steps involved in market research.
Chapter 4 Slide 14

Terms
market research primary data survey focus group secondary data
Chapter 4 Slide 15

Role of Market Research

market research
a system for collecting, recording, and analyzing information about
customers competitors goods services
Chapter 4 Slide 16

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
Chapter 4 Slide 17

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
Chapter 4 Slide 18

disadvantages of primary data

expensive time consuming
Chapter 4 Slide 19

Secondary Data
secondary data
information found in already-published sources
Secondary data can be found in:

government publications and websites industry specific books trade publications newspaper articles books about entrepreneurs in similar businesses
Chapter 4 Slide 20
What types of data do entrepreneurs collect through market research?
Chapter 4 Slide 21

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.
Chapter 4 Slide 22

Chapter 4 Slide 23

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.
Chapter 4 Slide 24

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.
Chapter 4 Slide 25

Chapter 4 Slide 26

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 Slide 27

What are the six steps of market research?
Chapter 4 Slide 28

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 Slide 29

Terms
direct competition indirect competition competitive analysis
Chapter 4 Slide 30

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 Slide 31

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 Slide 32

Why is it important for you to understand the competition your business faces?
Chapter 4 Slide 33

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 Slide 34

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 Slide 35

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 Slide 36

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 Slide 37

What is the difference between direct and indirect competition?
Chapter 4 Slide 38

Competitive Analysis
competitive analysis
identifying and examining the characteristics of a competing firm
Chapter 4 Slide 39

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 competitors strengths and weaknesses. Find out the strategies and objectives of your competitors. Determine the strength of the market.
Chapter 4 Slide 40

Chapter 4 Slide 41

What is the purpose of a competitive analysis?
Chapter 4 Slide 42

Maintaining Customer Loyalty

Listen and Respond to Feedback
Perpetually ask for and respond to customers needs.
Chapter 4 Slide 43

Other strategies for Maintaining Customer Loyalty

superior service convenient hours easy return policies store-specific credit cards personal notes or birthday cards frequent-buyer programs
Chapter 4 Slide 44

What are some strategies for maintaining customer loyalty?
Chapter 4 Slide 45

PERFORMANCE INDICATORS EVALUATED

Develop a convincing multimedia presentation. Recognize and respect copyright issues. Develop and support a theme with a multimedia presentation.
Chapter 4 Slide 46

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 Slide 47

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 Slide 48

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 Slide 49


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Chapter 4

Identify and Meet a Market Need

Entrepreneurship: Ideas in Action

Identify Your Market

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Identify Your Target Market

Entrepreneurship: Ideas in Action

Most products and services appeal to a small portion of the population.

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Research the Market

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Role of Market Research

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

disadvantages of primary data

Entrepreneurship: Ideas in Action

Secondary data can be found in:

What types of data do entrepreneurs collect through market research?

Entrepreneurship: Ideas in Action

Six Steps of Market Research

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

1. Define the Question

2. Determine the Data Needed

Entrepreneurship: Ideas in Action

3. Collect the Data

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

4. Analyze the Data

6. Evaluate the Results

Entrepreneurship: Ideas in Action

What are the six steps of market research?

Entrepreneurship: Ideas in Action

Know Your Competition

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Understand the Competition

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

they have multiple product lines

they have larger advertising budgets

Entrepreneurship: Ideas in Action

What is the difference between direct and indirect competition?

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

Follow these steps to begin your competitive analysis:

Entrepreneurship: Ideas in Action

Entrepreneurship: Ideas in Action

What is the purpose of a competitive analysis?

Entrepreneurship: Ideas in Action

Maintaining Customer Loyalty