GETTING

TO KNOW
THE
MARKET
Market Research
Entrepreneur, know thy market well! This
simple reminder must keep the entrepreneur
alert all the time. The entrepreneur should
exert al i8l 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 the
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

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.
•
The Five Market Research Methodologies
Focus Groups
When most people think of market research, focus groups are likely the methodology that comes
immediately to mind. Focus groups offer many advantages, including allowing you to gather data
from a diverse group of people at the same time.

Surveys
When a large sample size is needed, surveys are often the most cost-effective way to get
the information you need. Questionnaires are given to participants either by mail, email,
telephone, or in-person in a location such as a shopping mall.

Interviews
Interview participants are asked broad, open-ended questions which means that
responses tend to provide deeper insight than methods like surveys
 Field Trials
If you have an established product and you’d like to get real customer feedback on it,
putting it on the shelves with a test run can help you determine whether the
effectiveness of things like packaging, price point, and the product itself.

Observation
Participant’s written or oral responses to questions are often at odds with how
they behave in real life, so observing the actual behavior of customers can be
invaluable
Focus Group Discussion

Focus group discussion (FGD) is one of the

most common qualitative research tools. It is
effective in extracting consumer and non-
consumer experiences regarding products,
places, or programs. This method can also be
used for generating initial insights.
FGD can be used to address substantive issues such as:
understanding consumers' perceptions, preferences, and behavior concerning

a product category, obtaining impressions on new product concepts;

generating new ideas about older products;

developing creative concepts and copy material for advertisements;

securing price impressions; and

obtaining preliminary consumer reaction to specific marketing programs.

 The FGD is an interview by a facilitator of a small group of
people that normally lasts for an hour and a half up to three
hours. The participants are selected because of their knowledge
about the topic. The objectives must be clear and precise. It
takes a great deal of planning from the researcher's end to ensure
that objectives set are met. There are four key decisions to be
made: (1) respondent selection; (2) sample size: (3) data
gathering; and (4) data analysis.
Data gathering methods in FGD involve:

1. the selection and preparation of the venue and equipment;

2. the formulation of the discussion agenda, and
3. a facilitator who is very skilled in moderating and possesses the
ability to draw out significant insights from the participants.

Data analysis includes

1. the integration of the information gathered;
2. some observations on respondent behavior, and
3. listing of recommendations and report writing,
Let us go to the nine steps in conducting a focus group
discussion.
1. Develop the research objectives. What is the research all about
2. Determine the participants' profile. Who are the most knowledgeable or most
relevant participants?
3. Determine the appropriate token or "compensation" for the participants.
4. Develop a participant screener questionnaire
5. Recruit the participants.
6. Select a good facilitator. The key qualities of a good facilitator are:
•kindness with firmness
•involvement and encouragement
•complete understanding
•flexibility
•sensitivity

7. Develop a facilitator's discussion guide.

8. Arrange for the venue and logistics. 9. Analyze the results
of the focus group discussion.
Observation Technique

Observation technique is probably one of the best

ways of gathering data about customers in their
natural setting without having to interact or talk to
them. One has to simply observe people as they go
about their usual activity such as buying and using
products and services and assess how they behave.
Having a clear objective in mind will help the
researcher focus on the important things to observe or
watch out for. Recording the event as it happens may
be the best means to capture the information.
These observations must be documented and tallied for
proper analysis later on. Prior to doing the observation, it
is important for the researcher to ensure that the
following conditions are met:

1. The needed information must be observable or

inferable from the behavior that can be observed.
2. The subject matter contains some sensitivity that needs
detached observation.
3. The behaviors of interest must be repetitive, frequent,
or predictable in some manner.
4. The behaviors of interest must be of a relatively short
duration.
Let us take a look at the advantages and disadvantages of
observation technique.
Advantages of Observation Research

1. It allows the researcher to see what customers actually do

what they say they do. rather than rely on
2. It allows the researcher to observe customers in their
natural setting.
3. It does not subject the researcher to the unwillingness of
customers or the inability to reply to certain questions.
4. Some information are better gathered quickly and
accurately through observation.
Disadvantages of Observation Research
The researcher can only see the outside behavior of the customer, but
canno determine the inner motivation of the customer.

1. The researcher cannot get the reasons behind the behavior.

2. The researcher can only focus on the "here and now." It cannot cover
the part nor cover the future.
3. Finally, the observation technique may border on the unethical
because the respondents have not agreed to be observed.
There are two different types of observation techniques.
The first is human observation and the other is
mechanical observation. In human observation, humans
observe the events as they happen; while in mechanical
observation, mechanical devices are used to record events
for later analysis.
Below are the guidelines in conducting observation research.

1. Determine the pre-observation objectives.

2. Prepare your pre-observation tips:

a Prepare and clarify your observation points and issues.
b. Prepare your observation materials.
c. Identify the persons to be observed.
d. Position yourself strategically without being noticed

3. Focus on what you want to observe.

a. Is it customer demographics?
b. Customer buying behavior?
c. Customer usage behavior?
d. Other customer information?
4. Observation proper: 5. Post-observation tips:

a. Observe keenly and listen intently. a. Review your notes.

b. Be mindful of the surroundings. b. Make sure that the flow is correct.

c. Be alert for obvious movements.
d. Be sensitive to subtle movements. c. Tabulate what needs to be tabulated.
e. Look at the customer when the
customer is not looking d. Interpret and analyze your data.
f. Do not be obvious:
g Observe and take note of other e. Make a formal report.
things that you feel are important.
Survey Research
survey is the most preferred instrument for in–depth quantitative research. the
respondents are asked a variety of questions which are often about their personal
information, their motivations, and their behavior. surveys can be conducted via
telephone, personal and mail interview.

In planning a survey, there are three important concerns that has to look into :
1. sampling technique
2.getting the sample size
3.designing the questionnaire
Questionnaire Design
there are some basic rules that have to be followed in
question formulation. these are
• the questions, in their totality, should be able to elicit all
the necessary information required in the research
• each question should be clear and definite
• each question should cover one topic at a time
each question should be presented in a nuetral manner
• each question should be translated into the dialect that the
target respondents are familiar with.
Sampling Technique
sampling technique are classified into probability and non–
probability sampling.

Probability sampling is where the respondents are randomly selected

from a population such as is lottery method.

Non-probability sampling, in the other hand, refers to the technique

that is resorted ro "when it is difficult to estimate the population of
the study because they are mobile or transitory in a given location.
Sample Size
there are three basic sample size determinants. these are as follows:
1. Data variability of a proportion
2.confident level in the estimation process
3.error in the result of the estimation process

assuming that the population is unknown, the formula for computing the sample size
is as follows:

2
𝑛=𝑍 [𝑝(1 −𝑝 )]
2
𝑑
WHERE:

Z = 1.96 (The value of the normal variable for a confidence level of 0.95. This
means that the probability of finding the true population value within a given interval is
95%. If 99% is the chosen confidence level, the value of Z is 2.58.)

p = 0.50 (the proportion of getting a good sample)

1-p = 0.50 (the proportion of getting a bad sample)

d = error margin in decimal

n = sample size

conducting a survey research

 1.develop the
research
objectives
2.determine
3.choose the your sample
interview
methodology
4.create your p s in g a
questionnaire ste uctin rch
d a
con ey rese
surv
5.pre–test the
questionnaire
6.conduct
interviews and
enter data

7.analyze the
data
Costumer Profiling
when the entrepreneur starts doing the market research, he or she os also
beginning to understand his or her costumers, and therefore, profiling them
. costumer knowledge starts with good costumer profiling

methods of costume profiling

demographics
In demographic classification, we categorize costumer into the following:
1. age
2.income classes
3.social classes/reference groups
4.ethnic background
5.religious beliefs
6.occupation
7.domiciles
Income levels determine the purchasing power of
costumer. usually the costumers are classified
according to the following o

income classes:
1. Class A, The high income class
2.Class B, the upper middle income class
3.Class C, the middle income class
4.Class D, the lower middle income class
5.Class E, the low income class
Psychographics
psychographics defines the costumer's motivations,
perceptions, preference and lifestyle.
●motivation goes to the roots of costumer's needs and
wants
●perception is the way a person chooses to receive or
interpret information from the external world.
●preferences shape costumer decisions
●lifestyle talk about what people value most in their lives.
Technographics
Technographics classifies people according to their level of expertise
in using a product or a service.
For example:

•Sports beginners might just want basic equipment. Sports regulars

may be looking for more sophisticated equipment.
•Finally, sports professionals would want the best of the best for
competitive purposes.
•In technographics, products and services can range from general
purpose items to highly specialized, customized, and "technologized"
goods.out
Application of Customer Profiling
The entrepreneur can use or apply customer profiling in two ways.

1. The first way is to develop a product or service to test out in the marketplace.

a. The customers most attracted to the product or service can then be profiled
b. After profiling, the next step is to find out how huge this market is for exploitation purposes.

2. The second way is to profile the different types of customers in a given industry or area as to
their needs and wants.

a. From these types, the entrepreneur could then choose the customer group with the best
potentials.
b. Products or services can be developed by the entrepreneur to match this chosen customer
group.
Market Segmentation
Customers with similar needs and wants and similar willingness and ability to pay can be
grouped into one customer segment. Within this customer segment, we can have finer cuts. We
can have different customer sub-segments. Within these sub-segments we can even have finer
and finer cuts. Therefore, we can produce products and services that are highly specialized for
any type of consumer segment.

Market Aggregation

Some entrepreneurs prefer to appeal to broader market if possible. They want market aggregation
rather than market segmentation. They prefer to deal in commodities like rice, bread, and water
that appeal to market aggregates rather than market segments
Market Mapping

Similar to sales data mining, market mapping refers to

grouping customers and products according to certain market
variables. An entrepreneur can use one or a combination of
demographics, psychographics, and technographics to create
a market map.
example of market map:

Table 3.4. Map 1 - Students Market Map (Before K to 12)

Household Income Bracket

School Age Low Lower Middle Upper High
Stage Middle Middle

Post-Tertiary 22-up

Tertiary 17-21

Secondary 13-16

Elementary 6-12

Pre-School 2-5
 Table 3.5. Map 2 - Students in Accountancy
Mathematical Aptitude

Student’s Motivation In Taking

the Course Poor Pair Good Excellent

Parent’s Occupation
Likes Numbers
Job Availability
Friends Influence
Perceived Ease or Difficulty
Other Reasons

Products or services can be mapped according to their relative

positioning in the market based on certain consumer parameters.
Schools offering medical degrees, for example, can be mapped according to the perceived degree of
difficulty of entry and their tuition fees, as shown in Figure 3.4.
High Tuition

School z School y

Low High
Difficulty Difficulty
School School
v u

School School
w x

Low Tuition

Figure 3.4 Map - School Positioning in Medical Degree

The purpose of market mapping is to provide the market analyst a
better understanding of the market as a whole and to paint a
clearer picture of where the different competitors are relative to
the different market segments. Market mapping would also allow
entrepreneurs to discover market segments that are relatively
unserved or underserved. They could then develop products and
services that fulfill the gaps in the marketplace.
 THA
NK
YOU
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