Entrepreneurship &

Small Business Operations Name:_______________________________________

Unit 6: Market Research for Entrepreneurs and Small Business Operations
Directions: Complete this unit outline during class discussion.

I. The Importance of Market Research

A. Market Research is the gathering and interpreting of information about a market,

about a product or service to be offered to that market, and about the customers for
that product or service.
1. The components of market planning and research include:
a. An understanding of the purpose of the small business – why does the
business exist.
b. A description of the industry and the target market for the small business.
c. A description of the products and services offered and the pricing strategy
used.
d. A description of any competitors.
e. The channels of distribution used.
f. The unique value proposition of the small business.
B. Entrepreneurs should research the market for their product or service. If you are
interested in opening a dog grooming business, you should know what the demand is
locally and nationally for that service.
1. Approximately $19.69 billion is spent annually on pet grooming, boarding, and
supplies.
2. More importantly, this industry is growing by about 4% annually.
C. The target market should be clearly defined. The target market is the group of
customers who the entrepreneur will focus on serving.
D. Entrepreneurs should thoroughly understand the industry related to their new
business.
1. Take a class or course related to the industry.
Enrolling in a class or course relevant to your industry can enhance your
knowledge, skills, and qualifications, making you more competitive and
proficient in your field.
2. Read books and journals about the industry.
Reading industry-specific books and journals can provide you with the
latest insights, trends, and research, helping you stay informed and develop
expertise in your field.
3. Interview people who currently work in the industry. Interviewing industry
professionals can offer you real-world perspectives, advice, and a deeper
understanding of the industry’s challenges and opportunities, which can be
invaluable for your career development.
4. Gain personal experience with the industry. Gaining personal experience
through internships, volunteering, part-time jobs, or freelance work allows
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 you to apply your knowledge, build a professional network, and understand
the industry’s practical aspects.
5. Become an observer of the industry. Observing the industry involves staying
updated with news, trends, and developments, attending industry events,
and monitoring leading companies and influencers to gain insights and
identify opportunities.

E. The entrepreneur should research existing competition for the new business.
1. Visit your competitors (as appropriate) to gain first-hand knowledge about their
business.
2. Use research tools (like Google) to learn more about your competitors.
3. Social media can be an important source of information.

F. The entrepreneur should profile potential customers for the new business.
1. Determine (to the degree possible) the typical customer’s age, gender, income,
education level, and other characteristics.
2. It is important to know who your customers are so that you can effectively reach
and better serve them.
3. Entrepreneurs should customize their products and services to meet the needs
of the target market.

G. The trading area should be carefully analyzed and evaluated. The trading area is the
region or the community that will be served by the entrepreneur’s new business.
H. The entrepreneur should scan the marketplace to identify factors that could influence
product decisions.
1. What are the economic and demographic trends currently affecting the
marketplace in your area? slowing population growth.
2. What social or cultural trends are taking place? Return to traditions.
3. What are the 4 largest US states in terms of population?
California , Texas , Florida, New York
4. Discuss a cultural trend. The Creator Economy Keeps Growing.

II. The Market Research Process

A. Consider the steps of Market Research:

1. Define the problem to be solved or the goal to be achieved.

2. Study the situation and review relevant secondary data.
3. Develop a procedure for collecting primary data.
4. Gather and analyze the collected data.
5. Interpret the information gathered.
6. Propose a solution to the problem or a way of achieving the goal.

B. Define the problem to be solved or the goal to be achieved.

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 1. A well-defined problem is one that will be more easily solved. has a clear goal
or solution.
2. Any goal should be specific and measurable. SMART is an acronym that
stands for Specific, Measurable, Achievable, Realistic, and Timely.

C. After carefully and clearly defining the problem and analyzing the situation, relevant
existing information should be studied.
1. Begin by analyzing secondary data, which is useful information that has already
been collected for another purpose.
2. One of the advantages of reviewing secondary data it can be done quickly and
easily.
3. The data already exists and entrepreneurs just need to take time to access the
information.
4. However, secondary data can be out of date, and may not be specific to the
needs of the particular problem or situation.

D. Develop a procedure for collecting primary data.

1. Primary data is information collected for the first time to solve the problem
being studied or for use in achieving the goal of the project.
2. A survey is a planned set of questions to which individuals or groups of people
respond.
a. Closed ended questions offer two or more choices.
b. Open ended questions allow respondents to develop their own
answers.
3. A focus group is another type of survey where a small number of people are
brought together to discuss elements of a specific issue or problem.
4. A test market is a geographic area in which a new product or service is tested
in order to gather information about customer reaction to the tested product or
service.
a. During the test marketing process, the business will observe sales of the
new product to determine demand.
b. During test marketing, customers may also be surveyed to obtain their
opinions about the new product.
c. If the product is not accepted by the test market, the business may change
the product and retest it later, or it may decide to discontinue the product.

5. The observation method collects information by recording the actions of

customers without interacting with or communicating with them.
1. Observation is the most accurate way of collecting information.
2. You can’t always believe what people say, but you can always believe
what they do.
E. Gather and analyze the collected data.
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 1. Create a chart or infographic.
2. Google trends shows how often a particular search term is entered relative
to the total search volume across various regions of the world.
F. Interpret the information gathered. What does the data mean?
G. Propose a solution to the problem or a way of achieving the goal.
III. Marketing Information Management

A. A Marketing Information system (MIS) is an organized method of collecting, storing,

analyzing, and retrieving information to improve the effectiveness and efficiency of
marketing decisions.
B. Businesses often use marketing information to analyze what customers want and
need in order to develop and market new products.
C. How can the new business owner track sales? The point of sale system (POS) is an
effective tool for gathering sales and product information for use in decision-making.
D. Many businesses maintain internal records that indicate the types of products that
currently are selling well and to which customers are attracted.
E. Businesses can use this information to develop similar products that will appeal to
specific markets.
F. Retailers (like Walmart) can analyze sales records and determine that consumption
of bottled water is up and soda is down.
G. Based on pervious sales information (secondary data) Walmart knows that certain
items will spike in sales before and after a hurricane.
H. "We didn't know in the past that strawberry Pop-Tarts increase in sales, like seven
times their normal sales rate, ahead of a hurricane.“ Linda M. Dillman, Wal-Mart's
Chief Information Officer
I. A serious ethical consideration related to market research is invasion of privacy.
J. Businesses use personal information to reach customers with targeted advertising.
K. Good requires that customers be informed if personally identifiable information is
being collected about them.