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CHAPTER 3: Getting To Know the Market
Objectives:
1. Know the basic questions in market research
2. Determine the market research methodologies’
MARKET RESEARCH
Entrepreneur, know thy market well? This simple reminder must
keep the entrepreneur alert all the time. The entrepreneur should exert all efforts to know
the market he or she want to exploit. The more you know about your market, the better
you will be able to determine customer needs and wants.
Basic Question is Market Research
There are seven basic question that you must ask in preparation for any major
market research.
Why Purpose and objective for conducting the market
research
What Determines the scope and the limitations of the
market research to be conducted.
Which Determine which segment of the market must be
studied; this must be the market segment that the
entrepreneur is eyeing.
Who Identifies who among the members of the
selected market segment will participate in the
market research.
When Determines the time and timing of the research.
This is critical for entrepreneurs whose product or
service will be offered to a time constrained
market such as office workers.
Where Pinpoints the relevant location of the market
research.
How Determines the methodology to be used for the
market research (e.g., survey, focus group
discussion, observation, etc.).
Market Research Methodologies’
Important market information can only be obtained by conducting a good market
research. The more the entrepreneur knows about his or her market, the more customers
can be properly segmented and reached, products can be position, brands can be
promoted, prices can be set, and locations can be pinpoint.
Sales Data Mining
Using the information from case Example 3, the data can logically be arranged
chronologically from 7am to 6pm otherwise known as data array (Table 4.1). The data
can be further grouped into interval of two, three, or four hours.
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Table 3.1 Hotdog Sales According to Two-Hour Time Interval
Time Hotdog Bought
7-8am 2
9-10am 5
11-12nn 13
1-2pm 7
3-4pm 11
5-6pm 6
After arraying and classifying data, the research can now do a frequency distribution
and construct a frequency table. This table organized data into groups of values
according to the most logic characteristics (Table 3.2).
Time Hotdog Male Female
Bought
12 below 13-19 20 above 12 below 13-19 20above
7-8am 2 1 1
9-10am 5 2 3
11-12nn 13 7 2 3 1
1-2pm 7 2 1
3-4pm 11 10 1
5-6pm 6 6
Total 44 9 13 6 4 7 5
13 20 11
Histogram
Figure 3.1. Histrogram (Hotdog sales)
A histogram or bar graph consist of a series of rectangles or “bar”. Each bar is
proportional in width to the range of values within a class and proportional heigt to the
number of items falling in a class (Figure 3.1.).
Frequency Polygon
Figure 3.2. Frequency Polygon (Hotdog sales)
The frequency polygon is constructed by marking the frequencies on the vertical
axix with a dot corresponding to the values on the horizontal axis. These dots are then
connected with a straight line to form a polygon (Figure 3.2).
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Pie Chart
Figure 3.3. Pie chart (Hotdog Sales)
Another way of interpreting the data array is through pie chart (Figure 3.3). It is
circular graph divide into sections that represent the relatives frequecies or magnitudes
of the grouped values.
To be able to do this, the researcher must expand the tables into two or more dimension,
as shown in Table 3.3
Table 3.3. Cross- Tabulation (Hotdog Sales)
Time 12 below 13-19 20-above sum
7-10am 0 0 7 7
11-2pm 12 4 4 20
3-6pm 1 16 0 17
Time 12 below 13-19 20 above Sum
7-10am 0.00% 0.00% 100.00% 100.00%
11-2pm 60.00% 20.00% 20.00% 100.00%
3-6pm 5.88% 94.12% 0.00% 100.00%
Focus Group Discussion
Focus group discussion (FGD) is one of the most common qualitative research
tools.
FGC can be used to address substantive issues such as:
Understanding consumers perception preference and behavior concerning a
product category;
Obtaining impression on new product concept ;
Generating new ideas about older products;
Securing price impression; and
Obtaining preliminary consumer reaction to specific marketing programs.
Observation Technique
Observation technique is probably one of the best way of gathering data about
customers in their natural setting without having to interact or talk to them. One has to
simply observe people as they go about their usual activity such as buying and using
products and services and assess how they behave. Having a clear objective in mind will
help the researcher must focus on the important thing to observe or watch out for.
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Prior to doing the observation , it is important for the researcher to ensure that the
following conditions are met:
1. The need information must be observable or inferable from the behavior that can
be observed.
2. The subject matter contains some sensitivity that needs detached observation.
3. The behavior of interest must be repetitive , frequent or predictable in some
manner.
4. the behavior of interest must be of a relatively short duration.
Advantages of Observation Research
1. It allows the researcher to see what customers actually do rather than rely on what
they say they do.
2. It allows the researcher to observe customers in their natural setting
3. It does not subject the researcher to the unwillingness of customers or their inability
to reply to certain question.
4. Some information are better gathered quickly and accurately through observation
Disadvantages of Observation
The researcher can be only see the outside behaviour of the costumer, but cannot
determine the inner motivation of the customer:
1. The researcher cannot get the reasons behind the behaviour.
2. The researcher can only focus on the “here and now”. It cannot cover the past nor
cover the future.
3. Finally, the observation technique may border on the unethical because the
respondent have not agreed to be observed.
Survey Research
Survey is the most preferred instrument for in-depth quantitative research. The
respondent are asked a variety of question which are often about their personal
information, their motivation, and their behaviour.
In planning a survey, there are three important concern that one has took into:
1. Sampling technique
2. Getting the sample size
3. Designing the questionnaire
Questionnaire design
There are some basic rules that have to be followed in question formulation. These
are;
The questions, in their totality, should be able to elicit all the necessary information
required in the research.
Each question should be clear and definite
Each question should cover one topic at a time
Each question should be presented in a neutral manner
Each question should be translated into the dialect that the target respondents are
familiar with.
Sampling Technique
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Sampling technique are classified into probability and non-probability
sampling probability sampling is where the respondent are randomly selected from
a population such as in the lottery method.
Non-probability sampling on the other hand, refers to the technique that is
resorted to “when it is difficult to estimate the population of the study because they
are mobile or transitory in a given location”.
Sample Size
There are three basic sample size determinants. These are as follow:
1. Data variability of a proportion- dispersion of the data or how widely spread the
data is the form a certain point.
2. Confidence level in the estimation process- the higher the confidence level
desired, the bigger the size needed; the current industry standard has 95%
confidence level.
3. Error in the result of the estimation process- the less error margin desired, the
bigger is the required sample size; it is expressed as plus or minus (+/-) a certain
percentage.
Assuming that the population is unknown the formula for computing the sample size is
as follows;
Z2[p(1-p)]
N= d2
Where:
Z =1.96 (The value of the normal variable for a confidence level of 0.95. This means
that the probability of finding the true population value within a given interval is 95%. If
99% is the chosen confidence level, the value of Z is 2.58.)
P = 0.50 (the proportion of getting a good sample)
1-p = 0.50 (the proportion of getting a bad sample)
D = error margin in decimal
N =sample size
Do-it-yourself survey: Step in Conducting a survey Research
1. Develop the research objectives. Determine what you want to know and learn.
Define the goals of your research
2. Determine your sample. Identify who and what kind of people you will interview
and where you are going to find them.
3. Choose the interviewing methodology. From the different interview methods,
such as face-to-face, by phone or by mail choose the appropriate methodology to
use for your research .
4. Create your questionnaire. In drafting your questionnaire identify the key
information you will have to ask from your respondent.
5. Pre-test the questionnaire. Determine a similar profile of target respondent and
test the questionnaire.
6. Conduct interviews and enter data. Plan and execute the implementation of your
survey well (including areas to go to, routes to take time to conduct the interviews
etc.)
7. Analysis the data. Review your notes. Organize the questionnaire for more
orderly processing.
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Please refer to the link below for a Documentary about: Example of market
research https://www.shopify.com/encyclopedia/market-research
https://www.youtube.com/watch?v=rjO3t6uVXuQ
Reference:
www.rexpublishing.com.ph
Entrepreneurship by Dr. Eduardo A. Morato Jr.
