Market Research and the Competitive Advantage

Understanding your MarketWhat is Your Competitive

Advantage?

Why is Market Research Important?

We live in a world that changes rapidly and frequently. Because of this, each business must stay informed about its market.

Market is a group of potential customers – people or businesses – who are willing and able to purchase a particular product or service.

Why is Market Research Important?

Market Research is an organized way to gather and analyze information needed to make business decisions

It can help you decide to start a new business or not

It should be an ongoing activity, not just when starting a business

Understanding Your Market

Business Environment – Refers to any social, economic, or political factors that could impact your business. Includes global, national, and industry-

related factors Customers – Can be individual

consumers or business. Businesses need to satisfy their customers while making a profit

Understanding Your Market

Competition – Running a business would be a lot easier if it were the only one of its kind.

A number of competitors are already in the marketplace.

They may offer a product or service similar to yours or one that fills the same customer need or want.

Research helps you identify who they are.

TYPES OF CUSTOMERS CONSUMERS – Sales to individuals.

Sometimes called business to consumer. You must understand characteristics such as age, gender, occupation, and neighborhoods

BUSINESSES – Sales to other companies. Sometimes called business to business. You must understand characteristics such as company size, industry type, and geography

MARKET SEGEMENTS A market segment is a grouping of

consumers or businesses within a particular market that has one or more things in common.

Demographics – objective social and economics facts about people. Includes age, gender, marital status, family size, ethnic background, education, occupations, annual income, renters vs home owners.

MARKET SEGEMENTS Geographics – Basing market segments

on where consumers live or where businesses are located. Groupings include nations, region, state, county, city, neighborhood, and climate.

Psychographics – characteristics such as attitudes, opinions, beliefs, interest, personality, lifestyle, political affiliation, and personal preferences. Also is the area employee or customer oriented.

TYPES OF COMPETITION The data collected about your

competitors is called competitive intelligence.

Types of Competition Direct competitors – a business in your

market that sells a product or service similar to yours.

McDonalds and Burger King are direct competitors.

TYPES OF COMPETITION Types of Competitors

Indirect competitors – A business that sells a different product or service from yours but fills the same customer need or want.

Taco Bell is an indirect competitor to McDonalds

Other Competitors – Customers may choose options other than buying from your business or your competitors. IE: Eating at Home instead of going out to eat.

Determining Your Competitive Advantage

Something that puts your business ahead of the competition.

Gather Competitive Intelligence What products do they carry? What is their customer service like? How many potential customers are in the

area? What does the competitor offer to its

customers?

Determining Your Competitive Advantage

Analyze the Competition – You must organize and analyze the data you collect. Don’t be surprised if your indirect competitors list is much longer than your direct ones.

Analyze direct competitors more detailed with a helpful tool called a competitive matrix.

COMPETITIVE ANALYSISFACTOR MY BUSINESS STRENGTH WEAKNESS COMPETITOR A COMPETITOR B COMPETITOR C

IMPORTANCE TO CUSTOMER

Products              

Price              

Quality              

Selection              

Service              

Reliability              

Stability              

Expertise              

Company Reputation

             

Location              

Appearance              

Sales Method              

Credit Policies              

Advertising              

Image              

Determining Your Competitive Advantage

Identify Your Differentiators – a unique characteristic that distinguishes your business from others.

What do you have that they don’t? What mix of products do you have that

they don’t? What is your selling or delivery method vs

them? How do you meet customer needs and

wants?

Determining Your Competitive Advantage

Anticipate Future Competition Just because you have an advantage

today in your market don’t mean it will last.

Once your competition becomes aware of your advantage, they will copy and find ways to improve it.