Based on the provided document, here is a detailed explanation of the headings and
subheadings related to marketing research.
Perspective on Marketing Research
Marketing research is defined as "the systematic and objective process of gathering, recording,
and analyzing data for aid in making marketing decisions". Its main purpose is to supply
information for decision-making. For an entrepreneur, the type of information needed differs
between the pre-start-up phase and after the business is established.
● Before start-up, an entrepreneur needs to determine if a market exists for the product,
who the primary customers are, how to position the venture, and how to price, promote,
and distribute the product.
● After the firm is established, research expands to include continuous analysis of the
competition.
Market Research in the Pre-Start-up Phase
Before committing to a new business, the most critical question to answer is, "Will it sell?". A
common error made by entrepreneurs is simply assuming their product or service will find
buyers. Thorough market research helps to answer this fundamental question.
Who Is the Customer?
This is a foundational element of market research that involves creating a clear profile of
potential customers, known as a "customer scenario". Customers can be individuals with varied
characteristics or categories of businesses. Failing to define this scenario can lead to poor
decisions. The following characteristics are considered:
● Sex and Age: These are two essential characteristics to identify in a customer profile. An
example provided is the "Tru-Putt" golf trainer, which was designed for male golfers but
was ultimately purchased almost exclusively by women as a gift for men. Entrepreneurs
should break down age into specific groups to make better decisions about inventory and
store image.
● Income Status: A consumer's purchasing power influences the product concept, price,
promotions, and distribution methods. For instance, a clothing boutique in a high-priced
resort would stock expensive, fashionable items if its target customers have high family
incomes, but would need moderately priced items or bargain racks if the typical visitor has
a lower income.
● Occupation and Education: These factors significantly influence an entrepreneur's
decisions. For example, a bookstore in a university community will require a different
inventory than one in a rural town. These factors also directly influence the sales of
products like specialized software, clothing, financial services, and entertainment.
● Other Customer Characteristics: This category includes family profiles (married, single,
divorced, number and age of children), ethnic group, religion, and where they live. As an
example, Campbell Soup developed nacho cheese sauces with three different flavor
profiles to match distinct consumer tastes on the East Coast, in California, and in
southwest Texas. Research in this area also uncovers consumer buying habits, such as
homeownership, car ownership, hobbies, and media consumption.
Where Is the Market?
This part of the research involves identifying the geographic location of the potential customer
base. It includes determining the market size and its potential for change. Entrepreneurs can
study census data, federal and state reports, and information from local economic development
agencies to develop a customer profile.
Segmenting the Market: What Niche to Fill
A market segment, or "market niche," is a specific customer group on which a business focuses
its efforts regarding products, pricing, and promotions. Targeting a niche allows a company to
use its resources more effectively. Apple Computer is cited as an example of a company that
successfully targeted niches in education and graphic design.
● Niche Characteristics: These mirror a specific customer profile. By studying the market,
entrepreneurs can find untapped niches. The goal is to develop a marketing strategy
aimed at a specific niche to avoid potential failure.
● Growth Characteristics: Market segments are dynamic, and entrepreneurs need to
identify a market that is growing. Investors and lenders will require hard data on growth
trends and will be skeptical of projections that are not supported by factual studies.
Competition: Who Are the Market Players?
Once a new idea is conceived, an entrepreneur must research the competition.
● Existing Competitors: Most of the time, existing competitors can be readily identified.
For retail businesses, this can be done by observing competitors and their advertising.
For professional firms, directories and association listings are useful sources.
● Products or Substitutes: This research seeks to find out what alternatives are available
to the target customer. A key question is whether customers will choose a substitute
product if their first choice is not available. For instance, if seafood is not an option, will
customers buy beef or chicken instead?.
● Distribution: How Will Customers Be Reached?: A distribution system is the physical
process of getting products to the market or delivering services. This channel can be the
business itself, as seen with Avon's direct selling or Domino's Pizza's delivery service.
Many industries rely on channels like franchising, mail-order, or direct marketing.
● Sales Forecast: A well-defined sales forecast is the result of good market research. It is
the quantified volume and value of projected sales within a specific market niche over a
set period. This forecast is used to accurately estimate revenues, costs, and profits.