Market Research Workshop

1
Market Research Workshop

• Joe Giglierano
• February 19, 2005

2
Agenda

• Exploratory research to determine
• Need
• Target market segment
• Elements of offering
• Exercise
• Secondary Research to determine market size
• Maybe an exercise
• Survey research to refine market size and
  offering

3
Why do this?

• Because new companies often fail from
  insufficient attention to markets and customers
• Good idea aimed at wrong market
• No real need or need is too weak
• Product with wrong features
• Wrong kind of marketing (or even wrong business
  model)
• Bad idea

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Concurrent Processes in a Startup
Note These processes do not progress in
lockstep Information flows between
the processes
Initial ValueProposition Initial Product
Concept Initial choice of target segments Build
the Team Initial businesspitch prepared
I D E A
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Concurrent Processes, continued
Simple. Strategy
Init. Bus. Model
Elaborated Model Strategy
Strategy Dev Product Dev Customer Value
Dev Organization Dev Financing
Test, validate,revise
Test, validate,revise
Prototypes
Dev. customer
1st customer(s)
Test, validate,revise
Test, validate,revise
Customer info
Target recruit
Translate to next segs.
Test, validate,revise
Test, validate,revise
Early hires
Build strengths
Early co-ord. procedures
Test, validate,revise
Test, validate,revise
Early money
Bus. Plan
More formal
Test, validate,revise
Test, validate,revise
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Info Needed Early in Startup What decisions
have to be made?

• Who to target?
• Seldom able to choose optimum, so pick the best
  apparent segment
• Validation for business and product idea?
• Is it important for the targeted customers?
• Can you structure the business in such a way that
  you deliver value and make a profit?
• Look at the Appendix Sample Business Plan Format

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Objectives in designing the exploratory
instrument

• Get the respondent to give thoughtful answers
• Get the respondent to distinguish between ideas
  or issues that are tightly connected and those
  that are only loosely connected
• Get the respondent to talk about the most
  important things first

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Tips for Exploratory Interviews

• Choose people who will explain well and who have
  insight
• Choose people who will tolerate naïve questions
• Ask open ended questions (come prepared) ask
  them to explain their answers
• Dont wear out your welcome
• When finished, ask permission to ask future
  questions

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Getting Insight

• Focus your questions on problems, situation
• Ask about recent events or situations
• Ask about how the person copes with current
  situation
• Ask about importance
• Compare importance to other problems that are
  already solved

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ExampleFiling system for home office

• Suppose you have a business idea
• a system that helps people with complex home
  office store and organize their materials that
  need to be filed
• Elements
• Database
• Hand-held scanner
• Intelligent, learning-based software interface
• Storage containers and file cabinets

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Practice writing questions for your own business
idea

• Write exploratory questions
• Interview each other
• Revise your questions
• www.cob.sjsu.edu/svbpc/

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Estimating size of market

• (A) Estimate of customers in larger group
  secondary data
• (B) Estimate in real market assumption or
  est. from research
• (C) Estimate avg. purchase or usage rate per
  customer in real market -- research
• (D) Estimate avg. price per unit -- research
• Market Size A x B x C x D

Group thatcontainsmarket
Portion ofgroup that isreal market
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Secondary Sources

• U.S. Government
• Bureau of the Census www.census.gov
• Fed-stats www.fedstats.gov
• Local planning agencies
• E.g. www.abag.ca.gov
• World Bank or U.N for international
• Trade organizations
• Industry / trade publications
• Simmons Market Data (MLK Library)

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Conclusive Research

• Early on may want to use quantitative research
  to determine proportion in real market
• Later, as you progress in business planning
• Refine your estimates of market size
• Get more refined data for designing offering
• Validate your offering gt estimate sales

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Objectives in designing the conclusive instrument

• Get enough data to work with
• high response rate
• large enough sample of right respondents
• Get accurate data
• accurate, unbiased answers
• Get data you can interpret
• enough detail
• without alternate explanations

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Tips for questionnaires

• Ask for exactly what you want
• Dont lead use unbiased language
• Avoid compound questions
• Use scaled response, or multiple choice questions
  as much as possible
• Ask sensitive questions last
• Dont wear out your welcome

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Using Online Surveys

• Take a look at Zoomerang or Survey Monkey
• www.zoomerang.com
• www.surveymonkey.com
• Be careful that your target audience is reached
  with online surveys
• (otherwise try to survey in person or by pencil
  paper)

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Example questions Filing system for home office

• See the appendix

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Practice writing questionnaire for your own
business idea

• Write survey questions
• Try out on each other
• Revise your questions

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Some Sources

• Market Research Made Easy by Don Doman, Dell
  Dennison, and Margaret Doman (2002) 14.95
  (12.71 on Amazon)
• State of the Art Marketing Research by Albert
  Blankenship, George Breen, and Alan Dutka (1998)
  49.95 (32.97 on Amazon)
• The Market Research Toolbox A Concise Guide for
  Beginners by Edward F. McQuarrie (1996) 39.95
  (same on Amazon)