U2A5: Market Research



U2A5: Market Research

Market Research

Market research is gathering, recording, and analyzing the data pertaining to a venture in order to reduce the risk of failure. This is the best way to see if consumers are ready for the product. The following questions need to be answered:

•  Are any competing products or services already available?

•  Why would someone buy my product rather than my competitor's?

•  How many people will want my product or service?

•  How much money will these people be willing to pay for my product or service?

In answering the questions above, you will be able to determine the following:

•  Competitors

•  Target market

•  The needs and wants of your target market

•  The demand

•  Price and cost of your product/service

Types of Market Research

There are two main types of market research. They are called primary data and secondary data.

Resources

1. sme.ic.gc.ca

2.

3. www2.index.cgi

4. strategis.ic.gc.ca/sc_coinf/ccc/engdoc/homepage.html

Types of Market Research

1. Primary Data - This is information collected first hand, that is, information that you created. It includes interviewing potential customers about their needs and willingness to purchase the type of product or service offered - and at what price

Conducted by the Entrepreneur

o Personal Interview - The easiest way of collecting information and provides you with valuable information and even more valuable sales leads.

|Advantages |Disadvantages |

|Provides first hand account of what prospective consumers need |Can be biased |

|Very cost effective |Can be time consuming to find and interview individuals |

o Observation - Simply watching your potential consumers shopping will provide you with a wealth of information on what they are looking for, what they buy and what they won't buy.

|Advantages |Disadvantages |

|Provides first hand information on buying patterns. |Implies that you will be able to find interviewees in their |

|Least expensive option |natural shopping habitat |

| |Can be time consuming to find and interview individuals |

o Focus Groups - This is a method of bringing together a group (or groups) of potential consumers to have them discuss the product/service, react to potential features, describe their preferences and provide you with first hand feedback on the product/service through guided information sessions.

|Advantages |Disadvantages |

|Allows you to obtain detailed information |Sessions can be costly |

|Allows you to gain multiple opinions at once |Sessions can be difficult to manage if a trained professional is |

| |not running the group |

o Surveys or questionnaires - Used frequently, surveys can be conducted in person, via the telephone, mail or the Internet, and provide an efficient way to capture a lot of information from each respondent.

• Four main methods of conducting surveys: mail, internet, experiments/taste tests and by phone

|Advantages |Disadvantages |

|Can reach many people and control the number of responses |Response rates tend to be low |

|Allows for the option of closed ended answers for easy |Respondents have a limited attention span and willingness to |

|comparisons and groupings |participate |

2. Secondary Data - This is information that is relevant to your market, but has been gathered or compiled through other organizations or individuals. Secondary data includes information such as data from trade journals, and publications.

Conducted by an outside source

o Books - Local and School Library, Newspapers (National, Local, Regional)

o Magazines

o Websites (Thomas Directory - , Small Business Profiles - , Fraser's Trade Directory - , Canadian Company Capabilities - )

o Statistics Canada (Census Surveys, etc. ( See ())

o Annual Reports from Corporations – (See )

Automobiles and the Consumers Who Drive Them

Describe in detail the type of consumer who would typically use the following automobiles. Use at least three things to describe the type of consumer (e.g., how old they are, where they live, how much money they earn, gender, likes/dislikes). Focus on both the demographics and psychographics of the target market for each vehicle.

|Vehicles |Consumer Traits |

|The latest model of GMC Sport Utility Vehicle: |1. |

|GMC SUV vehicle |2. |

| |3. |

|A Ford crew-cab 4-wheel-drive half-ton truck: |1. |

|Ford Truck |2. |

| |3. |

|A 2 door Nissan sports car (black in colour): |1. |

|Nissan two door sports car |2. |

| |3. |

|A Dodge Caravan dual sliding door mini-van: |1. |

|Dodge Caravan |2. |

| |3. |

|A Ford Focus station wagon: |1. |

|Ford Focus Station Wagon |2. |

| |3. |

|A Mercedes Benz luxury sedan: |1. |

|Mercedes C Class |2. |

| |3. |

|A yellow Volkswagen Beetle: |1. |

|VW Beetle |2. |

| |3. |

|A vehicle of your choice ___________________________: |1. |

| |2. |

| |3. |

Competitive Analysis

What needs to be considered? Answer the following questions as they pertain to your venture.

1. Who are the competitors for your venture?

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2. How many are there?

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3. Are they profitable?

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4. What are their prices?

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5. What level of customer service do they provide?

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6. What is the quality of the product?

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SWOT Analysis

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Strengths:

1. __________________

2. __________________

3. __________________

Weaknesses:

1. __________________

2. __________________

3. __________________

Threats:

1. __________________

2. __________________

3. __________________

Opportunities:

1. __________________

2. __________________

3. __________________

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