Module: 3

Revised:

CIPSED Project
State University of Gorontalo [UNG]

Entrepreneurship ToT Program

Techniques for Conducting

Market Analysis
CanadaIndonesiaPrivateSectorEnterpriseDevelopment[CIPSED]Project

Contents
1.
2.
3.
4.
5.
6.

PURPOSE
WHY DO MARKET ANALYSIS ANYWAY?
THE MARKET ANALYSIS PROCESS
IDENTIFYING WHAT MOTIVATES CONSUMERS
TARGET MARKET SEGMENTATION
RESEARCH & ANALYSIS TECHNIQUES

Purpose

To create an understanding of the importance of

market analysis.
To discuss and demonstrate techniques for
conducting market analysis for assessing any
business opportunity.
To enable participants to form a strong
foundation upon which to pursue selfemployment objectives.
it is very difficult to take advantage of a marketplace
which you dont understand. A good understanding of the
marketplace is a prerequisite to a winning Marketing
Strategy.
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Why Do Market Analysis?

TO ANSWER THE QUESTIONS:

Will enough customers buy my product[s] or service[s] in

sufficient quantities for my business to be profitable?

Is there a need for my products or services?

What kind of customer is most likely to buy my products?
Are there enough buyers for my business to earn a profit?
What do these potential customers want?
How do these customers make buying decisions?
Where and when do these customers shop?
How am I going to reach and attract customers?
Is a competitor already meeting my customers needs?
Can I offer something the competition cant?

Primary versus Secondary Data

PRIMARY DATA
Data and information you generate yourself first-hand,
original data.
Often the most valuable kind of data right from the source.
SOURCES: Observations, surveys, focus groups and/or
demonstrations of your products and services.

SECONDARY DATA
Data and information produced by others therefore, it is
secondary to you.
Sometimes obsolete, too general or not a good fit with your
needs.
SOURCES: Government agencies [e.g., BPS], news organizations,
trade sources, internet, etc.

UTILIZE BOTH TYPES OF DATA!

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Types of Markets

CONSUMER:
Individuals, households buying goods/services for
personal use.

INDUSTRIAL:
Individuals, groups and organizations buying goods or
services for further production or other industrial
applications.

RESELLER:
Intermediaries, such as wholesalers, middlemen and
retailers who buy finished, or even unfinished goods for
resale.

Market Analysis Process

READY, WILLING, AND ABLE TO BUY!

STEPS:
1. Identify why a customer would buy your product.
2. Define your target market through segmentation.
3. Conduct market research.
4. Analyze the results of your research. (May need to
repeat/revise previous steps based on analysis.)
5. Incorporate your findings into strategic business
decisions.

Step 1: Why Would a Customer Buy?

UNDERSTAND YOUR PRODUCT:

Features
What is it?
Characteristics, Specifications.

Benefits
What does it do from your perspective?
What does it do from your customers
perspective?

Worksheet #1: Features & Benefits

LIST THE FEATURES AND BENEFITS OF YOUR

PRODUCT OR SERVICE
REFER TO WORKSHEET #2

The Nature of Goods/Services

HOW DO CONSUMERS CHOOSE BETWEEN ONE

PRODUCT AND ANOTHER?
CLUSTERS OF ATTRIBUTES [A THEORY]*
Consumers dont consume the goods or services
themselves, they consume the attributes:
Car = reliable transportation, comfort, power, aesthetics, etc.

Attributes can be varied by sellers:

Produce new goods
Differentiate from competition.

*A theory first advanced by micro-economist Kevin Lancaster

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Worksheet #2: Attributes

Exercise I: A trip to Makassar

Attributes

Attributes

Exercise II: A Mystery Product/Service?

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Step 2: Segmentation

WHY?
Because you are NOT Coca-Cola
A can of coke within arms reach of everyone on the planet.

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Types of Segmentation

GEOGRAPHIC WHERE THEY ARE.

o Example: Gorontalo

DEMOGRAPHIC WHO THEY ARE.

o Example: female, age 18-25, low-mid income, no children.

PSYCHOGRAPHIC WHY THEY BUY.

o Example: active, independent, like to be mobile

BEHAVIOUR HOW THEY USE PRODUCTS.

o Example: transportation to work, shopping

WHAT PRODUCT OR SERVICE CAN SERVE THIS

MARKET?
WHAT ARE THE RESEARCH & MARKETING
IMPLICATIONS?

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Uses of Segments Types

GEOGRAPHIC
Area that can be supported
o Easily identified starting point, but too broad
o

DEMOGRAPHIC
Age, gender, income, occupation
o Family size, education
o Easy to measure still broad
o

PSYCHOGRAPHIC
Attitudes, lifestyles, beliefs, emotions
o Factors influencing purchasing decisions
o Can be difficult to measure
o Can be used in conjunction with demographics
o

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Uses of Behaviour Segmentation

BEHAVIOUR
Buying behaviour, end use of the product or service
Goes beyond characteristics of buyer to identify
situational aspects
Effective when dealing with products sold to businesses
Use whenever it provides the most accurate description

EXAMPLE: DIFFERENT REASONS FOR EATING

SNACKS

Stress and boredom

In-between meals cravings
Eating-on-the-go
Immediate gratification

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Target Market Example

Discount Furniture Store:
Male

Female

1.Select geographic region

2.Further segment

56+
4655

Totalpopulationin
geographicarea

3645
Aim
Here!

2032

2135
1625

Marriedcouples
Lowmidincome

015

Makeshomedecorationdecisions

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Worksheet #3: Market Segment Identification

IDENTIFY THE RELEVANT DEMOGRAPHIC

CHARACTERISTICS OF YOUR TARGET MARKET[S].
i.e. age, income range, gender, occupation, education, marital status,
family size, etc.

IDENTIFY THE PSYCHOGRAPHIC CHARACTERISTICS OF

YOUR TARGET MARKET[S].
i.e. lifestyle, personality traits, attitudes, values, etc.

IDENTIFY TYPICAL BEHAVIOURS OF YOUR TARGET

MARKET[S]
i.e. purchasing patterns (frequency, amount), benefits sought,
usage, etc.

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Worksheet #4: Segmentation/Target

Market Profile

CREATE A DEFINITION OF THE TARGET MARKET

FOR YOUR BUSINESS THAT IS AS SPECIFIC AS
POSSIBLE, USING APPROPRIATE TYPES OF
SEGMENTATION:
May need several definitions, one for each
product/service.
Develop customer profiles invent characters.
Target market cohorts must be identifiable and
measurable.

Note: You may have more

than one target market.

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Step 3: Research

USE YOUR TARGET MARKET PROFILE[S] TO

RESEARCH THE MARKET.
QUESTIONS TO ANSWER:
Is the target market description accurate?
What is the size of the target market? Is it growing?
What does my target market want?
How do people in this target market make buying
decisions?
How would I reach this market?
What current buying trends exist?
..

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Research Techniques

STATISTICAL DATA, PUBLISHED INFO

SURVEYS
oPersonal interviews: door-to-door; sample groups, etc.
oTelephone interviews
oMail surveys

FOCUS GROUPS
PRODUCT DEMONSTRATIONS/TESTS

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Research Techniques: Surveys

PERSONAL INTERVIEWS:
High response rate.
Time-consuming/Can be expensive.

TELEPHONE SURVEYS:
Convenient [for the surveyor]

MAIL SURVEYS:
Allows you to cover distance, inaccessible customers.
Typically have low response rates.
Expensive.
Requires good, up-to-date mailing lists.

EMAIL/ONLINE SURVEYS
More popular today, but somewhat age biased.

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Designing a Questionnaire

POINTS TO KEEP IN MIND:

Keep questions concise and understandable.
Be direct when asking questions about the subject.
Make sure the questions can be answered easily yes/no
answers preferred, but they must yield the information
you need.
Be careful to avoid offending anyone.
Dont lie about the intention of the survey.
Dont answer the question for the survey respondents.
Provide enough time to answer the questions.
Dont react negatively or positively to answers.
Never forget to be courteous be sure to thank them, they
are doing you a favour.
Test drive your questionnaire with a control group before
general distribution/application.
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Worksheet #5: Market Survey Questions

FOR THE BUSINESS THAT YOU HAVE SELECTED TO

RESEARCH, LIST FOUR CRITICAL QUESTIONS YOU
WOULD WANT TO ASK POTENTIAL CUSTOMERS.
Example:
Question:

How often do you buy snack foods?

At least once per day

4-6 times per week
1-3 times per week
1-3 times per month
Less than once per month

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Competitive Analysis

EVERY BUSINESS FACES COMPETITION

REALISTIC/HONEST ASSESSMENTS ARE CRITICAL
QUESTIONS:
Who are the relevant competitors?
What are their target markets?
How satisfied are their customers?
What are their strengths and weaknesses?
What are their marketing strategies?
Where are they positioned in the marketplace?
How will they react to your entry into the marketplace?
How can I develop a competitive advantage?

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Competitive Position

WHERE ARE THE PRODUCTS OR SERVICES OF

COMPETITORS PLACED IN THE INDUSTRY
CONTEXT?
Price
Quality - attributes

SonyEric

Size/Strength
Nokia
Motorola
P
Where do you position
yourself on this line?
Where are your chief
competitors?

Samsung
LG

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Worksheet #6: Competitor Analysis

CONDUCT A COMPARATIVE ANALYSIS OF MAJOR

COMPETITORS FOR YOUR BUSINESS
OPPORTUNITY
Dont forget indirect competitors
Consider the positioning of competitors relative to your
potential market position

remember, you can always out-service the competition.

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Marketplace Analysis

POLITICAL

ECONOMIC

Licensing, regulation
Support
Taxes
Stability/Predictability
Growth
Price stability
Cost stability
Financing

SOCIAL/CULTURAL
Preferences, attitudes
Product adoption
Skills/knowledge

TECHNOLOGICAL
Sophistication
Automation
Rate of change
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Worksheet #7: Marketplace Analysis -- PEST

CONSIDER THE MARKETPLACE CONDITIONS FOR

YOUR BUSINESS OPPORTUNITY, BASED ON THE
FOLLOWING ASPECTS:
Political
Economic
Social/Cultural
Technological

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Resource Capabilities Analysis

HUMAN RESOURCE ANALYSIS

FINANCIAL RESOURCE ANALYSIS
PHYSICAL RESOURCE ANALYSIS

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Step 4. Analyze the Research Results

NOT ENOUGH JUST TO COLLECT DATA AND

INFORMATION
ANALYZE THE RESULTS OF YOUR RESEARCH
What have you learned?
Is what you have learned consistent with your original
expectations?
Does the research point to a strong basis for your
business opportunity?

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Worksheet #8: Research Analysis

REVIEW THE DATA AND INFORMATION IN

WORKSHEET #7
ANALYZE THE INFORMATION TO PROVIDE SOME
ADVICE ON SNACK FOODS BUSINESS:
What should be the target market segment?
What types of products have potential?
How should the products be positioned?
What further market research is needed?

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Step 5. Factor Results into Plans

INCORPORATE YOUR RESULTS INTO STRATEGIC
DECISION-MAKING AND THE DESIGN OF YOUR
MARKETING STRATEGY

Develop or adjust your business strategy based on what

you have learned.

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Market Analysis Never Ends!

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