Entrepreneurship Ideas in Action Chapter 4

target market

individuals or companies that are interested in a particular product or service willing and able to pay for it. To identify a target market, entrepreneurs need to answer a several questions

market segments

groups of customers within a large market who share common characteristics

customer profile

description of the characteristics of the person or company that is likely to purchase a product or service

demographics

data that describes a group of people in terns of age, marital status, family size, ethnicity, gender, profession, education, and income

psychographics

data that describe their tastes, opinions, personality traits, and lifestyle habits

use-based data

data that help you determine how often potential customers use a particular service

geographic data

data that help you determine where your potential customers live and how far they will travel to do business with you

market research

system for collecting, recording, and analyzing information about customers, competitors, products, and services. (i.e. spreadsheets and databases). Can be time consuming and expensive but worthwhile when major decisions must be made.

survey

list of questions you would like to ask your customers to find out demographic and psychographic information. Should be kept to a page in length when read over the phone or mailed to respondents. Most common type of primary market research.

focus group

an in-depth interview with a group of target customers who provide valuable ideas on products or services

primary data

information collected for the very first time to fit a specific purpose. Examples of how to collect primary data include surveys, observations, and focus groups.

secondary data

found in already-published sources (i.e. the U.S. Census, SBA, chamber of commerce, books, websites, trade magazines, newspapers, etc.). Data on population, family size, household income, economic trends, industry forecasts, etc. can be found in these resources.

Customer Relationship Management (CRM)

new marketing trend that focuses on understanding customers as individuals instead of as part of a group

social media marketing

form of internet marketing that utilizes social networking websites as a marketing tool

competitors

companies that offer similar or identical products to the same group of target customers

direct competition

a business that makes most of its money selling the same or similar products or services to the same market as other businesses

indirect competition

a business that makes only a small amount of money selling the same or similar products and services to the same market as other businesses. Locating this indirect competitors are more difficult than direct competitors.

competitive analysis

identifying and examining the characteristics of a competing firm

Electronic Data Interchange (EDI)

the movement of data between locations in a structured, computer-retrievable format

data mining

used to find hidden patterns and relationships in the customer data stored in the data warehouse. Allows a company to transform individual bits of data into useful information that marketers need to develop successful marketing strategies.

What types of data can be collected through market research?

primary and secondary data

frequent buyer program

a loyalty program in which loyal consumers are rewarded for making multiple purchases of a particular good or service. This is a popular strategy businesses use for maintaining customer loyalty.

Why do entrepreneurs need to conduct market research?

it helps to find out potential markets and how much customers are willing to pay for their products or services

Why is competitive analysis important to an entrepreneur?

it will help identify opportunities and threats against their business

What is the difference between primary data and secondary data?

primary data is information collected for the very first time to fit a specific purpose. secondary data is found in already-published sources.

How are market segments useful to an entrepreneur?

it can help develop a product or service that will meet specific customer needs and wants

What are the six steps of competitive analysis?

1) Identify your customer

2) Summarize the products and prices offered by the competition

3) List each competitor's strengths and weaknesses

4) Find out the strategies and objectives of competitors

5) Determine the opportunities in the market

6) Identify threats to your business from the competition

What are the six steps of market research?

1) Define the question

2) Determine the data needed

3) Collect the data

4) Analyze the data

5) Take action

6) Evaluate the results

touch point

any type of interaction a customer has with a company in a CRM system