7

CHAPTER

Market Research
Section 7.1 What Is Market
Research?
Section 7.2 What Is Your
Competitive Advantage?
 What Is Market
7.1
SECTION

Research?
OBJECTIVES
 Explain why market research is important
 Consider important factors when targeting a market
 Identify market research methods

Section 7.1: What Is Market Research? 2

 Introductory Questions

Question: Is competition good for business?

3
Why Is Market Research
Important?

Section 7.1: What Is Market Research? 4

Market research is an organized way to gather
and analyze information needed to make
business decisions.
Section 7.1: What Is Market Research? 5
 3 main aims of market research
 Consumer tastes what consumers are looking for in the
products they buy and how their tastes are changing.

 Consumer behavior the factors that influence consumers to

buy one product instead of another.

 Competition. what other companies are offering consumers.

At the same time, a company needs to differentiate itself from
the competition

 A market is a group of potential customers—people or

businesses—who are willing and able to purchase a particular
product or service.
Section 7.1: What Is Market Research? 6
 Targeting Your Market

The limited number of customers who are most

likely to buy the product or service represents your
target market.Section 7.1: What Is Market Research? 7
 Targeting Your Market
 One of the goals of market research is to develop a
customer profile, which is a detailed description of
your target market’s characteristics.
A company that sells to individuals is sometimes
referred to as a business-to-consumer (B2C)
company.
A company that sells to other companies is
sometimes called a business-to-business (B2B)
company.

Section 7.1: What Is Market Research? 8

 Targeting Your Market
 A market segment is a grouping of consumers or
businesses within a particular market that has one or more
things in common.
 Demographics are social and economic facts about
people such as sex, age race.
 Basing market segments on where consumers live or
where businesses are located is called geographics.
 Psychological characteristics of consumers, such as
attitudes, opinions, beliefs, interests, personality,
lifestyle, political affiliation, and personal preferences,
are called psychographics.
Section 7.1: What Is Market Research? 9
 Market Research Methods
The two basic types of market research are derived from
secondary data and primary data:
 Secondary Data. Existing information that was previously
gathered for a purpose other than the study at hand is
secondary data.
 Sources include:
 Government
 Trade Groups and Journals
 Business Magazines and Reports
 Local Community Resources

Section 7.1: What Is Market Research? 10

 Market Research Methods
 Primary Data. New information that is collected for a
particular purpose is primary data.
 Some common ways to obtain such primary data are:
 Interviews/Surveys
 Focus Groups
 Observations

Section 7.1: What Is Market Research? 11

 What Is Your
Competitive
7.2
SECTION

Advantage?
OBJECTIVES
 Learn how to identify competitors
 Determine your competitive advantage
 Identify the steps in researching a market

Section 7.2: What Is Your Competitive Advantage? 12

 Identifying Your Competition
Another critical area of market research involves identifying
your competitors. The data you collect about your competitors
is called competitive intelligence.

Your competitive intelligence will be of two types:

 Direct competitors. A business in your market that sells a
product or service similar to yours is your direct
competitor.
 Indirect competitors. A business that sells a different
product or service from yours but fills the same customer
need or want is your indirect competitor.

Section 7.2: What Is Your Competitive Advantage? 13

 Determining Your
Competitive Advantage
A competitive advantage is something that puts your business
ahead of the competition.
 Competitive intelligence enables you to compare your competitors’
strengths and weaknesses with your potential business.
 A competitive matrix is a grid that compares characteristics of your
business with those of your direct competitors.
 A differentiator is a unique characteristic that distinguishes your
business from others.
 Competitive advantages rarely last forever, thus market research is an
ongoing process.
 Expand your SWOT analysis to include competitor data.

Section 7.2: What Is Your Competitive Advantage? 14

Steps in Researching a Market
1. Identify Research Objectives. Before you actually start gathering data,
list the objectives you wantyour research to accomplish.
2. Determine Methods and Sources. Based on your objectives, decide
which research methods will best help you achieve your goals
3. Gather the Data. Make adjustments to your research plan depending on
what you learn as you collect the data.
4. Organize the Data. Organize the information as you gather it.
5. Analyze the Data. Analyze your data by comparing competitor’s
characteristics, identifying potential differentiators, and creating an
expanded SWOT analysis that compares the strengths and weaknesses of
your business to those of your competitors.
6. Draw Conclusions. Using the data you analyzed in Step 5, decide
whether to proceed with your business idea, alter it, or stop completely.

Section 7.2: What Is Your Competitive Advantage? 15