Market Research

1. Market Research Business Planning

2. Market Research is used to: • Provide data about customers, products, services, prices, location, what promotions to use, etc. • Project future sales • Tell entrepreneurs what products or services are in demand • Help the Entrepreneur refine and adapt their products or services • Provide information on how your competitors are doing

3. There are three main forms of market research: • Primary Research– gathering data firsthand (observation, interviews and surveys, etc.) • SecondaryResearch – using data gathered by others (Statistics Canada or Canada Business Website: www.canadabusiness.ca www.teamfredericton.comBIZPAL http://www.enterprisefredericton.ca/

4. InternalResearch–using a business’ own records to gather information (about sales, products, customers or complaints).

5. For Your Business Plan The market research section of a business plan has the following sub-sections: • Customer Profile • Analysis of the Competition • Industry Profile

6. 1. Customer Profile It is important to know who will be buying your product or service; this is referred to as your “target market”. (A particular group of customers of interest to an entrepreneur) • (If you are selling skateboards who would your typical customer be?) Entrepreneurs will look at the potential market and defining parts of the market by a specific characteristic.

7. Market Segmentation • Markets can be grouped into smaller subgroups this is known as Market Segmentation. • The key is to find one or more ways of classifying or grouping users or potential users that really matter in terms of reaching them and satisfying their needs.

8. What you want out of market segmentation is one or more groups that are: • Large enough to be profitable • Not as satisfied in some fashion as they want to be • Relatively easy to reach • Measurable

9. There are four types of market segmentation: • Geographics: The study of the market based on where customers live by city, town, urban or rural. • Demographics :The personal characteristics of a population: age, gender, family size, income, occupation, education, race, nationality, etc.

10. Psychographics: The study of the consumers based on social and psychological characteristics: personality, values, opinions, beliefs, motivations, attitudes, activities and interests • Buying Characteristics: Knowing how often and why someone purchases a product or service

11. You must answer the following: • Where do your customers live? (Geographics) • What is their Demographic makeup? (i.e. their age, education, gender, religion, family life cycle, race, nationality or social class) • How many are there? (Use statistics where possible)

12. What makes them “tick”? (i.e. their likes, dislikes, values, opinions, beliefs, motivations, attitudes, and interests) Psychographics • Why will they buy your product/service? (Buying Characteristics)

13. Create a market segment profile for a 3-on-3 Basketball Tournament to take place at a local basketball court.

14. Market Niche • A very specific group of consumers whose needs are not being met by what is already on the market. (Gluten free products.) • Usually a very small market.

15. Competitive Analysis

16. The Purpose of the Competitive Analysis • It explains the market positions of a company’s direct and indirect competitors. • It uncovers new business opportunities by pinpointing where customer needs are not yet being met.

17. Direct Competitors – Offer similar products (e.g. You want to buy a chocolate bar, all chocolate bars on the market are direct competitors) • Indirect Competitors – Offer close substitutes that meet the same basic need (a bag of chips or some other snack that costs the same as the bar)

18. Analysis of the Competition • You must identify your topdirect competitor and your topindirect competitor • State the locations of your top competitors and the number of years in business. • Describe the primary markets or market segments that your competitors serve.

19. Analysis of the Competition cont.. • Describe what they offer your target market. • Describe any overwhelming strengths and weaknesses held by the competition • Explain what you will do better

20. Analysis of the Competition cont.. You must complete a SWOT analysis for your own company SWOT represents Strengths Weaknesses Opportunities and Threats, with regard to your own company.

21. Strengths and Weaknesses are internal; you have control over these elements, as they exist within the company. • Opportunities and Threats are external; you do not have control over these elements, as they exist outside of the company. - See example on handout

22. 3. Industry Profile • Each industry has basic characteristics or demographics. • Number of companies • Annual revenues • Average size of the companies by number of employees • Industry Trends: Trends or patterns of change. (e.g. Rates of sales growth, economic conditions, recession)

23. Industry Forces that can Affect Your Business • Barriers to Entry: Conditions or circumstances that make it difficult or costly for outside firms to enter a market and compete with the established firm or firms. (One company owning certain distribution channels.) • Threats from Substitute Products: similar products that satisfy the same “basic” need

24. Suppliers:Access to affordable sources of inventory, raw materials and goods • Competing with the “giants”: (Wal-Mart) Small businesses usually compete by offering personalized service and customized products.