Question

Summarize the following information in easily way and in simple words as your understanding without missing the keywords. ( the Question will be 25 on this information in final )

MARKETING RESEARCH FOR THE NEW VENTURE
Information for developing the marketing plan may necessitate conducting some marketing research. Marketing research involves the gathering of data to determine such information as who will buy the product or service, what is the size of the potential market, what price should be charged, what is the most appropriate distribution channel, and what is the most effective promotion strategy to inform and reach potential customers. Since marketing research costs vary significantly, the entrepreneur will need to assess available resources and the information needed. There are also some research techniques that are not costly and can provide, at least initially, significant evidence to support the market potential for the new venture. One of these techniques is the focus group, which is discussed later in this section. Marketing research may be conducted by the entrepreneur or by an external supplier or consultant. There are also opportunities for entrepreneurs to contact their local colleges or universities to identify faculty who teach marketing and are willing to have externalclients for student research projects. Suggestions on how to conduct market research are discussed next. Market research begins with a definition of objectives or purpose. This is often the most difficult step since many entrepreneurs lack knowledge or experience in marketing and often don’t even know what they want to accomplish from a research study. This, however, is the very reason why marketing research can be so meaningful to the entrepreneur.2
Step One: Defining the Purpose or Objectives The most effective way to begin is for the entrepreneur to sit down and make a list of the information that will be needed to prepare the marketing plan. For example, the entrepreneur may think there is a market for his or her product but not be sure who the customers will be or even whether the product is appropriate in its present form. Thus, one objective would be to ask people what they think of the product or service and whether they would buy it, and to collect some background demographics and attitudes of these individuals.This would satisfy the objective or problem that the entrepreneur defined earlier. Other objectives may be to determine the following:
• How much would potential customers be willing to pay for the product or service?
• Where would potential customers prefer to purchase the product or service?
• Where would the customer expect to hear about or learn about such a product or service?
Step Two: Gathering Data from Secondary Sources
Secondary sources, discussed earlier in this chapter and in Chapter 7, offer a means of gathering information for the industry analysis section of the business plan. There are many other market research secondary sources that may be used to address the specific objectives of the project identified in step one. As mentioned, trade magazines, newspaper articles, libraries, government agencies, and the Internet can provide much information on the industry market and competitors. The Internet can even be used to gather informal primary data by reviewing competitor’s Facebook pages.Commercial data may also be available, but the cost may be prohibitive to the entrepreneur. However, business libraries may subscribe to some of these commercial services such as Nielsen Indexes, Audits and Surveys’ National Market Indexes, and Information Resources,Inc. Before considering either primary sources or commercial sources of information, the entrepreneur should exhaust all free secondary sources. At the federal level, the U.S. Census Bureau publishes a wide range of census reports, as does the Department of Commerce. Other excellent sources at the state and local levels are the State Department of Commerce, chambers of commerce, local banks, state departments of labor and industry, and local media. A comprehensive list of Web sites (some are fee based and others are free) as well as a number of excellent databases can be found in Table 8.2. Some of the fee-based sources may actually be accessible through a local university or community library. In addition to all the sources of data described in Table 8.2, the entrepreneur should also review any possible sources of research data at the Small Business Administration Web site (www.sba.gov). The most important purpose of reviewing secondary sources is to obtain information that will assist the entrepreneur in making the best decisions regarding the marketing of a product or service. Improvements in information technology today make this a very effective source in gathering information on customers, competitors, and market trends. Completion of this task will also determine if more data are needed, in which case a primary data gathering will then need to be planned.

Step Three: Gathering Information from Primary Sources Information that is new is primary data. Gathering primary data involves a data collection procedure—such as observation, networking, interviewing, focus groups, or experimentation—and usually a data collection instrument, such as a questionnaire.Observation is the simplest approach. The entrepreneur might observe potential customers and record some aspect of their buying behavior. Networking, which is more of an informal method to gather primary data from experts in the field, can also be a valuable low-cost method to learn about the marketplace. One study of new ventures found that the most successful ventures (based on growth rate) were focused on information about competitors, the customer, and the industry, using networking, trade associations, and recent publications. Less successful ventures were more focused on gathering information on general economic and demographic trends and hence had less of a sense of what was happening in their specific target market.3 Interviewing or surveying is the most common approach used to gather market information. It is more expensive than observation but is more likely to generate more meaningful information. Interviews may be conducted in person, by telephone, through the mail, or online, an approach growing in popularity, particularly for firms with an existing customer base. Each of these methods offers advantages and disadvantages to the entrepreneur and should be evaluated accordingly.4 Table 8.3 provides comparisons of each of these three methods of data collection.The Internet is becoming an important resource for new ventures to gather information both formally and informally. The informal sources typically involve the use of Facebook,Twitter, or LinkedIn. Entrepreneurs can solicit feedback on many related company or product issues utilizing these social networks. More formal research methods such as the use of Web-based survey tools may involve some expense. SurveyMonkey and Zoomerang are the most popular of these Internet survey tools. The information box later in this chapter provides more information regarding the application and benefits of these Web survey tools.The questionnaire, or data collection instrument, used by the entrepreneur should include questions specifically designed to fulfill one or more of the objectives.

Answer 1

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