Chapter 3: Getting to know the Market

3.1 MARKET RESEARCH

Entrepreneur know thy market well!This simple reminder must keep the entrepreneur alert at all time. The entrepreneur
should exert all efforts to know the market he or she wants to exploit. The more you know about your market, the better you
will be able to determine customer needs and wants. You will be able to reach them wherever they are. This can be possible
through conducting a good market research.

Basic Questions in Market Research

There are seven basic questions that you must ask in preparation for any major market research.

Why Purpose and objective for conducting the market research.

What Determines the scope and the limitations of the market research to be conducted.

Which Determines which segment of the market must be studied; this must be the market
segment that he entrepreneur is eyeing.
Who Identifies who among the members of the selected market segment will participate in the
market research.
When Determines the time and timing of the research. This is critical for entrepreneurs whose
product or service will be offered to a time-constrained market such as office workers.
Where Pinpoints the relevant location of the market research.

How Determines the methodology to be used for the market research (e.g., survey, focus
group, discussion, observation, etc.).

Market Research Methodologies

Important market information can only be obtained by conducting a good market research. The more the entrepreneur
knows about his or her relevant market, the more customers can be properly segmented and reached, products can be
positioned, brands can be promoted, prices can be set, and locations can be pinpointed. Entrepreneurs and investors do not
want to put resources in unknown markets. Good market research allows entrepreneurs and investors to make wiser decisions.

In order to aid the entrepreneur in gathering relevant market information, there are several market research methodologies
using scientific approaches that can be employed.

Sales Data Mining

Using the information from Case Example 3, the data can logically be arranged chronologically from 7am to 7pm otherwise
known as data array (Table 3). The data can be further grouped into intervals of two, three, or four hours. On the other hand the
hotdog customers can be further classified into male and female customers. They can be sub-classified into small children (12
years old and below), teenagers (13 to 19 years), and adults (20 years and above).

Case Example 3: Selling Hotdogs

A researcher observed and recorded the following data in a store selling hotdogs.
1. Boy, aged 10, bought two hotdogs at 2pm.
2. Girl, aged 8, bought one hotdog at 4pm.
3. Man, aged 26, bought three hotdogs at 1pm.
4. Couple, man and wife, aged about 30, bought two hotdogs at 8am.
5. Boy, aged 14, bought five hotdogs for friends at 3pm.
6. Three girls, aged about 18, bought six hotdogs at 6pm.
7. Girl, aged 5, asked maom to buy her one hotdog at 11pm. Mom aged 27, bought one for herself.
8. Twin boys, aged 7, asked their older brother to buy them four hotdogs at 12 noon. Older brother,aged 14, bought
two hotdogs for himself
9. Two teenagers, boy and girl, aged 15, bought two hotdogs at 1pm.
10. Five children (two girls, three boys), about nine years old, bought five hotdogs at 12 noon.
11. Man, aged 27, bought two hotdogs at 9am.
12. Woman, aged 30, bought three hotdogs at 10am.
13. Three boys, aged 13, bought five hotdogs at 4pm.
 Table 3.1. Hotdogs Sales According to Two-Hour Time Interval

Time Hotdogs
bought
7-8am 2
9-10am 5
11-12nn 13
1-2pm 7
3-4pm 11
5-6pm 6

After arraying and classifying data, the researcher can now do a frequency distribution and construct a frequency table. This
table organizers data into groups of values according to the most logical characteristics (Table 3.2)

Table 3.2. Hotdog Sales Summary

Time Hotdogs Male Female

bought
12 below 13-19 20 above 12 below 13-19 20 above
7-8am 2 1 1
9-10am 5 2 3
11-12nn 13 7 2 3 1
1-2pm 7 2 1 3 1
3-4pm 11 10 1
5-6pm 6 6
TOTAL 44 9 13 6 4 7 5

13 20 11

The frequency distributions and relative frequency distributions above can be more useful if translated into graphs. Graphs
show visual patterns what are not easily seen in a table such as table 3.2.

In market research, there are three commonly used graphs: histogram (commonly known as bar graph), frequency polygon,
and pie chart.

Histogram
9
8
7
6
Frequency

5
4
3
2
1
0
7-10am 11-2pm 3-6pm
Time

Figure 3.1. Histogram (Hotdog Sales)

 A histogram or bar graph consist of a series of triangles or “bars”. Each bar is proportional in width to the range of values
within a class and proportional in height to the number of items falling in a class (Figure 3.1).