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Chapter 4

Identify and Meet a


Market Need
4.1 Identify Your Market
4.2 Research the Market
4.3 Know Your Competition

Entrepreneurship: Ideas in Action


© Cengage Learning/South-Western
Ideas in Action
Serving Customers’ Needs
 By continually assessing market needs, Brian
Hendricks was able to start a variety of PC
related companies.
 Brian’s recommendations for entrepreneurs focus
on the “Five P’s of Entrepreneurship”:
 Planning
 Patience
 Persistence
 People
 Profit
Chapter 4 Entrepreneurship: Ideas in Action
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Lesson 4.1

Identify Your Market

Goals
 Identify a target market by analyzing
the needs of customers.
 Explain how market segmentation can
help an entrepreneur analyze a target
market.

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Terms
 target market
 market segments
 customer profile
 demographics
 psychographics
 use-based data
 geographic data

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Target Market
 Customers are your most important
asset.
 target market
 the individuals or companies that are
interested in a particular product or service

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Identify Your Target Market
 Consider the following information regarding
your customers:
 individuals or companies?
 age and income?
 industries customers are in?
 needs and wants my product will satisfy?
 number of potential customers?
 competitive environment?
 pricing of product or service?
 what is unique about my offering?

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What questions should you ask
when identifying your target
market?

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Market Segments
 market segments
 groups of customers within a large market
who share common characteristics
 Most products and services appeal to a
small portion of the population.
 Segmentation helps you serve your niche
efficiently.

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Customer Profile
 customer profile
 a description of the characteristics of the
person or company that is likely to
purchase a product or service

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 demographics
 data that describes a group of people in
terms of
 age
 marital status
 family size
 ethnicity
 gender
 profession
 education
 income

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 psychographics
 data that describe a group of people in
terms of
 tastes
 opinions
 personality traits
 lifestyle habits

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 use-based data
 data that helps you determine how often
potential customers use a particular service
 geographic data
 data that helps you determine
 where your potential customers live
 how far customers will travel to do business with
you

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Name four types of customer data
that may be analyzed in developing
a customer profile.

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Lesson 4.2

Research the Market

Goals
 Explain the role of market research.
 Identify the six steps involved in market
research.

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Terms
 market research
 primary data
 survey
 focus group
 secondary data

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Role of Market Research
 market research
 a system for collecting, recording, and
analyzing information about
 customers
 competitors
 goods
 services

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Primary Data
 primary data
 information collected for the very first time
to fit a specific purpose
 survey
 a list of questions you ask your customers
to determine
 demographic information
 psychographic information

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 observation
 determining information by watching
customer behavior
 focus group
 an in-depth interview with a group of target
customers
 questions are similar to survey questions
 group interaction allows for more in-depth
discussion

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 disadvantages of primary data
 expensive
 time consuming

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Secondary Data
 secondary data
 information found in already-published
sources
 Secondary data can be found in:
 government publications and websites
 industry specific books
 trade publications
 newspaper articles
 books about entrepreneurs in similar
businesses
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What types of data do
entrepreneurs collect through
market research?

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Six Steps of Market Research

 Although primary data collection is time


consuming and expensive, it will tell
you exactly what you want to know.
 Primary data can uncover information
that is often not available through
secondary sources.

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Chapter 4 Entrepreneurship: Ideas in Action
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1. Define the Question
 Determine exactly what it is you need to
know.
2. Determine the Data Needed
 Decide what data you need to answer the
question.

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3. Collect the Data
 Conduct secondary research to help
determine the primary data requirements.
 Determine the most effective methodology
for primary research collection.
 Questionnaires should contain only the
most pertinent questions.

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Chapter 4 Entrepreneurship: Ideas in Action
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4. Analyze the Data
 Thoroughly analyze and interpret data.
 Write down analysis results for future
reference.
5. Take Action
 Use your analysis results to develop an
action plan.
6. Evaluate the Results
 Entrepreneurs must perpetually reassess
the effectiveness of their actions.

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What are the six steps of market
research?

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Lesson 4.3

Know Your Competition


Goals
 Explain the importance of
understanding your competition.
 Determine types of competition.
 Prepare a competitive analysis.
 Describe strategies for maintaining
customer loyalty.

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Terms
 direct competition
 indirect competition
 competitive analysis

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Impact of Competition
 To remain competitive, you should offer
products that are of equal or better
quality than the competition and that
sell for the same or lower prices.

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Understand the Competition
 Determine the ways your competition is
not meeting the needs of their
customers.
 The unmet needs of these customers
provides you with an entrepreneurial
opportunity.

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Why is it important for you to
understand the competition your
business faces?

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Types of Competition
 direct competition
 originates from a business that makes
most of its income by
 selling the same products or services as you
 to the same market

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 indirect competition
 originates from a business that makes only a
small amount of money by
 selling the same products or services as you
 to the same market

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Large Retailers?
 Reasons that large retailers can be a
source of strong competition include:
 they can order and stock large quantities
of products
 the volume discounts they obtain result in lower
prices to the consumer

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 they have multiple product lines
 if one product does poorly, there are other
products available to generate sales
 they have larger advertising budgets

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What is the difference between
direct and indirect competition?

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Competitive Analysis
 competitive analysis
 identifying and examining the
characteristics of a competing firm

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 Follow these steps to begin your
competitive analysis:
 Make a list of your competitors.
 Summarize the products and prices offered
by your competitors.
 List each competitor’s strengths and
weaknesses.
 Find out the strategies and objectives of your
competitors.
 Determine the strength of the market.

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Chapter 4 Entrepreneurship: Ideas in Action
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What is the purpose of a
competitive analysis?

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Maintaining Customer Loyalty

 Listen and Respond to Feedback


 Perpetually ask for and respond to
customers’ needs.

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 Other strategies for Maintaining
Customer Loyalty
 superior service
 convenient hours
 easy return policies
 store-specific credit cards
 personal notes or birthday cards
 frequent-buyer programs

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What are some strategies for
maintaining customer loyalty?

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PERFORMANCE INDICATORS
EVALUATED
 Develop a convincing multimedia
presentation.
 Recognize and respect copyright issues.
 Develop and support a theme with a
multimedia presentation.

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 Make use of and implement innovative
technology in a multimedia presentation.
 Set priorities and manage time to prepare
and present an effective multimedia
presentation.

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THINK CRITICALLY
1. Why must the Super Bowl use a
multimedia presentation to attract new
corporate sponsors?
2. What kind of music or visual images
would be good for a Super Bowl
multimedia presentation?

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3. Why must the presentation emphasize the
potential return on investment for
corporate sponsors of the Super Bowl?
4. What is the value of being associated as a
financier of the Super Bowl?

Chapter 4 Entrepreneurship: Ideas in Action


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