GETTING TO KNOW

THE MARKET
 “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/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.
MARKET RESEARCH
 BASIC QUESTIONS IN
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 if 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.).
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 ca
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 approach that
can be employed.
 MARKET RESEARCH
METHODOLOGIES
1. SALES DATA MINING
 SALES DATA MINING
CASE EXAMPLE 1:
1. Couple, man and wife, aged about 30,
bought 2 hotdogs at 8am.
 SALES DATA MINING
CASE EXAMPLE 1:
2. Man, aged 27, bought 2 hotdogs at 9am.
3. Woman, aged 30, bought 3 hotdogs at
10am.
 SALES DATA MINING
CASE EXAMPLE 1:
4. Girl aged 5, asked mom to buy her 1
hotdog at 11am. Mom, aged 27, bought
1 for herself.
5. Five children (2 girls, 3 boys), about 9
years old, bought 5 hotdogs at 12 noon.
 SALES DATA MINING
CASE EXAMPLE 1:
6. Twin boys, aged 7, asked their older
brother to buy them 4 hotdogs at 12
noon. Older brother, aged 14, bought 2
hotdogs for himself.
 SALES DATA MINING
CASE EXAMPLE 1:
7. Man, aged 26, bought 3 hotdogs at 1pm.
8. Two teenagers (boy and girl), aged 15,
bought 2 hotdogs at 1pm.
9. Boy, aged 10, bought 2 hotdogs at 2pm.
 SALES DATA MINING
CASE EXAMPLE 1:
10.Boy, aged 14, bought 5 hotdogs for
friends at 3pm.
11.Girl, aged 8, bought 1 hotdog at 4pm.
12.Three boys, aged 13, bought 5 hotdogs
at 4pm.
 SALES DATA MINING
CASE EXAMPLE 1:
13.Three girls, aged 18, bought 6 hotdogs
at 6pm.
 SALES DATA MINING
Using the information Time
Hotdogs
from Case Example 1, Bought
7AM – 8AM 2
the data can logically 9AM – 10AM 5
be arranged 11AM – 12AM 13
chronologically from 1AM – 2AM 7
7am to 6pm otherwise 3AM – 4AM 11
known as data array. 5AM – 6AM 6
 SALES DATA MINING
After arraying and classifying data, the researcher can now
do a frequency distribution and construct a frequency
table.
12 and below 13 – 19 20 above
Hotdogs
Time
Bought MALE FEMALE MALE FEMALE MALE FEMALE

7AM – 8AM 2 0 0 0 0 1 1
9AM – 10AM 5 0 0 0 0 2 3
11AM – 12AM 13 7 3 2 0 0 1
1AM – 2AM 7 2 0 1 1 3 0
3AM – 4AM 11 0 1 10 0 0 0
5AM – 6AM 6 0 0 0 6 0 0
TOTAL 44 9 4 13 7 6 5
 SALES DATA MINING
The frequency distribution and relative frequency distribution
below can be more useful if translated into graphs.
12 and below 13 – 19 20 above
Hotdogs
Time
Bought MALE FEMALE MALE FEMALE MALE FEMALE

7AM – 8AM 2 0 0 0 0 1 1
9AM – 10AM 5 0 0 0 0 2 3
11AM – 12AM 13 7 3 2 0 0 1
1AM – 2AM 7 2 0 1 1 3 0
3AM – 4AM 11 0 1 10 0 0 0
5AM – 6AM 6 0 0 0 6 0 0
TOTAL 44 9 4 13 7 6 5
 SALES DATA MINING
In market research, there are
three commonly used graphs:
1. Histogram (Bar Graph)
2. Frequency Polygon
3. Pie Chart
SALES DATA MINING
HISTOGRAM
 SALES DATA MINING
HISTOGRAM
A histogram or bar graph consists of
series of rectangles or “bars”. Each
bar is proportional in width to the
range of values within class and
proportional in height to the number
of items falling in a class.
SALES DATA MINING
FREQUENCY POLYGON
 SALES DATA MINING
FREQUENCY POLYGON
A frequency polygon is constructed
by marking the frequencies on the
vertical axis with a dot corresponding
to the values on the horizontal axis.
These dots are then connected with a
straight line to form a polygon.
SALES DATA MINING
PIE CHART
 SALES DATA MINING
PIE CHART
A pie chart is a circular graph divided
into sections that represent the
relative frequency or magnitudes of
the grouped values
 SALES DATA MINING
While the histogram, frequency
polygon and pie chart are helpful,
the interpretation of data does
not end with generating a
frequency table and graph.
 SALES DATA MINING
In order for the data to be more useful
to the entrepreneur, a cross-tabulation
is highly recommended. This will
explain why some data fall at one end of
the distribution while others are at the
opposite end.
 SALES DATA MINING
CROSS–TABULATION
TIME 12 below 13 – 19 20 above TOTAL
7am – 10am 0 0 7 7
11am – 2pm 12 4 4 20
3pm – 6pm 1 16 0 17
 SALES DATA MINING
CROSS–TABULATION
TIME 12 below 13 – 19 20 above TOTAL
7am – 10am 0% 0% 100% 100%
11am – 2pm 60% 20% 20% 100%
3pm – 6pm 5.88% 94.12% 0% 100%
 MARKET RESEARCH
METHODOLOGIES
2. FOCUS GROUP
DISCUSSION
FOCUS GROUP DISCUSSION
FGD can be used to address substantive
issues such as:
1. understanding consumers’ perceptions, preferences, and
behavior concerning a product category;
2. obtaining impressions on new product concepts;
3. generating new ideas about older products;
4. developing creative concepts and copy material for
advertisements;
5. securing price impressions; and
6. obtaining preliminary consumer reaction to specific
marketing programs.
FOCUS GROUP DISCUSSION
The FGD is an interview by a
facilitator of a small group of people
that normally lasts for 1½ hours up
to 3 hours. The participants are
selected because of their knowledge
about the topic.
FOCUS GROUP DISCUSSION
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 4 key decisions to be made:
1. Respondent selection
2. Sample size
3. Data gathering
4. Data analysis
 Respondent selection includes:
1. the definition of the respondents;
2. the classification of the
respondents; and
3. the screening of respondents.
FOCUS GROUP DISCUSSION
The number of respondents per
group should range from 6 to 8,
depending on the skill of the
facilitator and the topic being
discussed.
FOCUS GROUP DISCUSSION
If the number falls below 6, the likelihood of
generating a momentum and group dynamics
necessary for a good discussion will not
happen. However, if the group exceeds 8, it
may be too crowded, resulting in the passive
participation of some respondents and a
discussion that is not cohesive.
FOCUS GROUP DISCUSSION
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.
FOCUS GROUP DISCUSSION
Data analysis includes:
1. the integration of the information
gathered;
2. Some observations on respondent
behavior; and
3. Listing of recommendations and report
writing.
FOCUS GROUP DISCUSSION
9 Steps in conducting an FGD:
1. Develop the research objective. 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” of the
participants.
4. Develop a participant screener questionnaire.
5. Recruit the participants.
6. Select a good facilitator.
Key qualities of a good facilitator:
• 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.
FOCUS GROUP DISCUSSION
In analyzing FGD, the researcher should
compare and contrast all points raised by
the different respondents and note from
what point of view they are coming from.
The researcher must summarize the points
where the participants strongly agreed
upon or disagreed on about an issue.
FOCUS GROUP DISCUSSION
The researcher must also write down
quotations that seem particularly
relevant to his or her identified
objectives and must group similar
comments together in order to
identify participants’ preferences.
 MARKET RESEARCH
METHODOLOGIES
3. OBSERVATION
TECHNIQUE
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.
 OBSERVATION TECHNIQUE
Prior to doing the observations, 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 behavior of interest must be of a relatively short duration.
 OBSERVATION TECHNIQUE
Advantages of Observation Research:
1. It allows the researcher to see what customers actually do rather
than rely on what they say they do.
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 their inability to reply to certain questions.
4. Some information are better gathered quickly and accurately
through observation.
 OBSERVATION TECHNIQUE
Disadvantages of Observation Research:
1. The researcher cannot get the reason behind the
behavior.
2. The researcher can only focus on the “here and
now”. It cannot cover the past nor cover the future.
3. The observation technique may border on the
unethical because the respondents have not agreed
to be observed.
OBSERVATION TECHNIQUE
2 Types of Observation Techniques:
1. Human Observation
– humans observe the events as they
happen
2. Mechanical Observation
– mechanical devices are used to record
events for later analysis
 OBSERVATION TECHNIQUE
Guidelines in conducting
observation research:
1. Determine the pre-observation objectives.
2. Prepare your pre-observation tips.
3. Focus on what you want to observe.
4. Observation proper.
5. Post-observation tips.
OBSERVATION TECHNIQUE
PRE-OBSERVATION TIPS:
1. Prepare and clarify your observation points
and issues.
2. Prepare your observation materials.
3. Identify the persons to be observed.
4. Position yourself strategically without being
noticed.
OBSERVATION TECHNIQUE
WHAT YOU WANT TO OBSERVE:
1. Is it costumer demographics?
2. Customer buying behavior
3. Customer usage behavior
4. Other customer information.
 OBSERVATION TECHNIQUE
WHAT TO DO DURING OBSERVATION
PROPER:
1. Observe keenly and listen intently.
2. Be mindful of the surroundings.
3. Be alert for obvious movements.
4. Be sensitive to subtle movements.
OBSERVATION TECHNIQUE
WHAT TO DO DURING OBSERVATION
PROPER:
5. Look at the customer when the customer is
not looking.
6. Do not be obvious.
7. Observe and take note of other things that
you feel are important.
OBSERVATION TECHNIQUE
POST–OBSERVATION TIPS:
1. Review your notes.
2. Make sure that the flow is correct.
3. Tabulate what needs to be tabulated.
4. Interpret and analyze your data.
5. Make a formal report.
 MARKET RESEARCH
METHODOLOGIES
4. SURVEY RESEARCH
 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.
 SURVEY RESEARCH
Surveys can be conducted via
telephone, personal (face-to-face
interview), and mail interview (either
printed or email). Probably the most
popular type of survey is the Usage,
Attitude, and Image (UAI) survey.
 SURVEY RESEARCH
Important concerns in planning a
survey:
1. Sampling technique
2. Getting the sample size
3. Designing the questionnaire
 SURVEY RESEARCH
CLASSIFICATION OF
SAMPLING TECHNIQUE:
1. Probability sampling
– Respondents are randomly selected
2. Non-Probability sampling
– When it is difficult to estimate the
population of the study
 SURVEY RESEARCH
3 BASIC SAMPLE SIZE DETERMINANTS:
1. Data variability of a proportion
– dispersion of the data or how widely
spread the data is from a central point.
 SURVEY RESEARCH
3 BASIC SAMPLE SIZE DETERMINANTS:
2. Confidence level in the estimation
process
– the higher the confidence level desired,
the bigger the sample size needed; the
current industry standard has 95%
confidence level.
 SURVEY RESEARCH
3 BASIC SAMPLE SIZE DETERMINANTS:
3. Error in the result of the estimation
process
– the less error margin desired, the bigger
is the required sample size; it is
expressed as plus or minus (+/–) a
certain percentage.
 SURVEY RESEARCH
FORMULA FOR COMPUTING THE
SAMPLE SIZE:
𝒁
𝟐
[ 𝒑 ( 𝟏− 𝒑 ) ]
𝒏= 𝟐
𝒅
 SURVEY RESEARCH
𝒁
𝟐
[ 𝒑 ( 𝟏− 𝒑 ) ]
𝒏= 𝟐
𝒅
Where:
the value of the normal variable
1.96 (confidence level of 95%)
2.58 (confidence level of 99%)
 SURVEY RESEARCH
𝒁
𝟐
[ 𝒑 ( 𝟏− 𝒑 ) ]
𝒏= 𝟐
𝒅
Where:
0.5 (the proportion of getting a
good sample)
0.5 (the proportion of getting a
bad sample)
 SURVEY RESEARCH
𝒁
𝟐
[ 𝒑 ( 𝟏− 𝒑 ) ]
𝒏= 𝟐
𝒅
Where:
error margin in decimal
sample size
 SURVEY RESEARCH
7 STEPS IN CONDUCTING A
SURVEY RESEARCH:
1. Develop the research objective
2. Determine your sample
3. Choose the interviewing methodology
4. Create your questionnaire
 SURVEY RESEARCH
7 STEPS IN CONDUCTING A
SURVEY RESEARCH:
5. Pre-test the questionnaire
6. Conduct interviews and enter data
7. Analyze the data
CUSTOMER
PROFILING
 When the entrepreneur starts
doing the market research, he or
she is also beginning to
understand his or her customers,
and therefore, profiling them.
 3 METHODS OF
PROFILING CUSTOMER
1. Demographics
2. Psychographics
3. Technographics
 DEMOGRAPHICS
In demographic classification, we
categorize customers into the following:
1. Age 5. Religious beliefs
2. Income classes 6. Occupations
3. Social classes / 7. Domiciles
Reference groups
4. Ethnic backgrounds
 DEMOGRAPHICS
INCOME CLASSES
Income levels determine the purchasing
power of customers.
1. High income class 4. Lower middle
2. Upper middle income class
income class 5. Low income class
3. Middle income class
 DEMOGRAPHICS
ETHNIC BACKGROUND &
RELIGIOUS BELIEFS
These affect the cultural beliefs of people
such as the food they eat, how they save
and how they spend, and their levels of
conservatism or progressivism.
 DEMOGRAPHICS
SOCIAL CLASSES &
REFERENCE GROUPS
These often dictate what is acceptable or
unacceptable behavior. These classes or
groups often include family, friends,
neighbors, fellow workers, and social
affiliations.
 DEMOGRAPHICS
OCCUPATIONS
Such as those of factory workers,
construction workers, office workers,
doctors, nurses, taxi drivers, and teachers
also determine what kinds of goods and
services these people would buy.
 DEMOGRAPHICS
DOMICILES
Also called habitats, or areas of residence
and environmental surroundings,
oftentimes, define and limit the choices
available to customers.
 PSYCHOGRAPHICS

It defines the customer’s

motivations, perceptions,
preferences, and lifestyle.
 PSYCHOGRAPHICS
MOTIVATION
Motivation goes to the roots of
customer’s needs and wants. This can be
classified into physiological and
psychological.
 PSYCHOGRAPHICS
MOTIVATION
Physiological needs and wants refer to
the customer’s personal likes and dislikes
and include the satisfaction of thirst,
hunger and shelter.
 PSYCHOGRAPHICS
PERCEPTION
Perception is the way a person chooses to
receive or interpret information from the
external world. While motivation
provides the drive for action, perception
defines exactly what that person will do.
 PSYCHOGRAPHICS
Usually, information comes through our
five senses. A person will process this
information using the faculties of the
brain. Hence, different persons may
actually see different things in very
different ways.
 PSYCHOGRAPHICS
PREFERENCES
Preferences shape customer decisions.
Because of our genetics, our nature,
our environment, our experience,
our exposure, and our expectations,
we begin to prefer certain people, certain
things, certain colors, and certain textures over
others.
 PSYCHOGRAPHICS
PREFERENCES
Because of our genetics, our nature,
our environment, our experience,
our exposure, and our expectations,
we begin to have a unique set of like and
dislikes. We begin to appreciate things
because of our emotional and mental
memories.
 PSYCHOGRAPHICS
LIFESTYLE
There are lifestyle classifications that
talk about what people value most in
their lives. Some talk about their
behavioral characteristics as
consumers.
 TECHNOGRAPHICS
Technographics classifies people
according to their level of expertise in
using a product or a service.
 TECHNOGRAPHICS
For example:
Sports beginners might just want
basic equipment.
 TECHNOGRAPHICS
For example:
Sports regulars may be looking for
more sophisticated equipment.
 TECHNOGRAPHICS
For example:
Sports professionals would want the
best of the best for competitive
purposes.
 APPLICATION FOR
CUSTOMER PROFILING
1. Develop a product or service to
test out in the market.
2. Profile the different types of
customers in a given industry or
area as to their needs and wants.
 APPLICATION FOR
CUSTOMER PROFILING
1. Develop a product or service to test out in
the market.
• The customers most attracted to the product
or service can then be profiled.
• After profiling, the next step is to find out
how huge this market is for exploitation
purposes.
 APPLICATION FOR
CUSTOMER PROFILING
2. Profile the different types of customers in a
given industry or area as to their needs and
wants.
• From these types, the entrepreneur could then choose
the customer group with the best potentials.
• Products or services can be developed by the
entrepreneur to match this chosen customer group.
 CUSTOMER PROFILING
MARKET SEGMENTATION
Customers with similar needs and wants
and similar willingness and ability to pay
can be grouped into one customer
segment.
CUSTOMER PROFILING
MARKET SEGMENTATION
With this customer segment, we can have finer
cuts. We can have different customer sub-
segments. With this sub-segments we can even
have finer and finer cuts. Therefore, we can
produce products and services that are that are
highly specialized for any type of customer
segment.
 CUSTOMER PROFILING
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.
 CUSTOMER PROFILING
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
Students’ Market Map (Before K to 12)
Household Income Bracket
School Stage Age Lower Upper
Low Middle High
Middle Middle
Post-Tertiary 22 – up
Tertiary 17 – 21
Secondary 13 – 16
Elementary 6 – 12
Pre-School 2–5
 EXAMPLE OF MARKET MAP
Students In Engineering
Mathematical Aptitude
Student’s Motivation in
Taking the Course Poor Fair Good Excellent
Parent’s Occupation
Likes Numbers
Job Availability
Friends’ Influence
Perceived Ease or Difficulty
EXAMPLE OF MARKET MAP
School Positioning in Medical Degree
High Tuition
Schoo Schoo
lZ lY
Low High
Difficulty Difficulty
Schoo Schoo
lV lU
Schoo Schoo
lW lX
Low Tuition
 CUSTOMER PROFILING
MARKET MAPPING
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.
 CUSTOMER PROFILING
MARKET MAPPING
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.
THANK
YOU!