Marketing Research 101


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Basic "how-to" for marketing research.
What is marketing research, why is it important, what are the key elements and where can you find good resources and information. Developed to be taught to patrons - educational on market research concepts but also included some bibliograhic instruction.

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  • You especially want to do MR prior to introducing something new… but smart companies do MR all the time. Study latest consumer trends Check up on competition’s activity Research new markets for new products or services You should be working to continually learn about your customers, competition and market(s)
  • But it’s not just about convincing lenders… YOU need to understand your customers and your market. Helps you maximize your sales efforts.
  • Developed by company called Knowledge inForm. Combines 4 of Michael Porter’s 5 Forces and the traditional 4 Ps to show the inter-relationships b/w those concepts and to suggest starting points for research projects. Michael Porter’s 5 Forces are Rivalry (competitors), Threat of Substitutes, Buyer Power (customers), Supplier Power (vendors), and Barriers to Entry/Threat of Entry (industry). You can spin both wheels to combine different concepts and then formulate research questions around those concepts. If you cannot objectively answer your research question, then you should conduct research in those areas before developing your strategy(ies) or market analysis.
  • Customer Segmentation 6 Steps to segmentation: Determine market boundaries – what is business’ focus? What are fundamental needs in market? Determine segment variables – typical customer? What are their characteristics? Collect & analyze segment data – ID specific customers w/same wants and needs Draw a profile of each segment – using variable info to form a picture of buying behavior Target segments by looking for the best opportunities that come from matching your resources with those opportunities. Design your marketing plan that best highlights your product features and creates an appealing image. Different ways to segment customers: Customergraphics: B-2-C VS B-2-B Demographics: Age, Education, Gender, Education, Income, etc… Psychographics: Hobbies, lifestyles, opinions, values/beliefs, etc… Geographics: zip code, city, state, country Productgraphics: brand loyalty, product/service benefits and/or usage
  • Figure out the strategic direction of your competitors…what are they doing? Can you determine what their goals are? Establish the market as seen by your competitors…how they choose to market a product will give you insight into how they see the market. Visit your competition – online, in-store/in-person, telephone calls
  • General Business File ASAP & Business & Company Resource Center are both available through the Michigan eLibrary ( On the MeL home page, click on “Business & Jobs” in the menu on the left side of your screen for access to selected business websites and business databases.
  • One of the 1 st things I do when I’m researching a market is look up the NAICS code.
  • Economic census done every 5 years. Caution! This data is dated. Remember this is ONE point of data and is ONLY a starting place. It SHOULD NOT be the only data you examine to give you a feel for how big your market is. 2007 EC data release schedule…we won’t start seeing any 2007 data until next month. And even then, data that is meaningful to you probably won’t appear until late spring/early summer. State level data probably won’t be released until early 2010.
  • CAGR is …the rate at which something would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the growth/ returns. Your CAGR would be the ratio of your ending value to beginning value ($19,500 / $10,000 = 1.95) raised to the power of 1/3 (since 1/# of years = 1/3), then subtracting 1 from the resulting number: 1.95 raised to 1/3 power = 1.2493. (This could be written as 1.95^0.3333).  1.2493 - 1 = 0.2493 Another way of writing 0.2493 is 24.93%. (Future value divided by Present value)1/n - 1 Thus, your CAGR for your three-year investment is equal to 24.93%, representing the smoothed annualized gain you earned over your investment time horizon. Value of Shipments is…the received or receivable net selling values, f.o.b. plant (exclusive of freight and taxes), of all products shipped, both primary and secondary, as well as all miscellaneous receipts, such as receipts for contract work performed for others, installation and repair, sales of scrap, and sales of products bought and sold without further processing. Included are all items made by or for the establishments from material owned by it, whether sold, transferred to other plants of the same company, or shipped on consignment. The net selling value of products made in one plant on a contract basis from materials owned by another was reported by the plant providing the materials.
  • So at this point, we only have an historical growth estimate for this industry nationwide. We need some additional data…
  • 2006-2007 Michigan GDP -1.2% 2003-2007 Michigan Economic & Workforce Indicators report says the overall Michigan economy has been shrinking since 2003. Michigan GDO dropped 3% between 2003-2007
  • Marketing Research 101

    1. 1. Market Research 101 Capital Area District Library Elizabeth Kudwa, Business Librarian
    2. 2. Workshop Goals <ul><li>Define Market Research </li></ul><ul><li>Highlight key components </li></ul><ul><li>Identify research resources </li></ul><ul><li>Learn how to find information </li></ul>
    3. 3. What is Market Research? <ul><li>Dictionary definition </li></ul><ul><ul><li>The gathering & studying of data relating to consumer preferences, purchasing power, etc… especially prior to introducing a product or service. </li></ul></ul><ul><li>Purpose : Gauge who your potential customers might be + potential demand for your product/ service. </li></ul>
    4. 4. Why is market research important to you? <ul><li>Bottom line </li></ul><ul><li>Show lenders that you’ve done your homework and understand the forces at work in your market. </li></ul><ul><li>Convince lenders that you have enough customers to generate sales sufficient to make your business profitable. </li></ul>
    5. 5. Market Intelligence Circle <ul><li>Key Components for this workshop: </li></ul><ul><li>Market/ Industry </li></ul><ul><li>Customers </li></ul><ul><li>Competitors </li></ul>Source : Know! Market Research & Analysis: The Fundamentals. Duxbury, MA: Know! Books Press, 2005.
    6. 6. Market Profile: Components <ul><li>Market Definition </li></ul><ul><li>What will you be doing? </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Your personal definition </li></ul></ul><ul><ul><li>Economic Census – NAICS/SIC </li></ul></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>You can have more than 1 NAICS code: primary/secondary </li></ul></ul><ul><li>Market Size </li></ul><ul><li>Dollars, units </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Economic Census – NAICS/SIC </li></ul></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Just how big is your market? Are you a big fish in a small pond? Or a small fish in a big pond? </li></ul></ul>
    7. 7. Market Profile: Components <ul><li>Market Growth </li></ul><ul><li>Historical/future growth </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Economic Census </li></ul></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>What kind of market are you entering? Shrinking/stable/mature/ growing </li></ul></ul><ul><li>Market Segments </li></ul><ul><li>Subgroups within your market </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Economic Census </li></ul></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Will you fit in with a particular subgroup? </li></ul></ul>
    8. 8. Market Profile: Components <ul><li>Market Trends </li></ul><ul><li>Where is the market headed? </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Knowing about new trends ahead of time will help you stay competitive. </li></ul></ul><ul><li>Market Relationships </li></ul><ul><li>What other types of players are in the market? What is the flow of goods/services? </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Activity in related markets that may impact your business. </li></ul></ul>
    9. 9. Customer Profile: Components <ul><li>Buying Behavior </li></ul><ul><li>Lifestyle/ lifestage/ geography </li></ul><ul><li>Finding information </li></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>What is important to your target market? What are their buying/spending habits? </li></ul></ul><ul><li>Target Market </li></ul><ul><li>Demographics: age, gender, education, occupation, income, etc… </li></ul><ul><li>Finding information </li></ul><ul><ul><li>U.S. Census data </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Who will you sell to? What is your target market? </li></ul></ul>
    10. 10. Competitor Profile: Components <ul><li>Product/Service </li></ul><ul><li>Comparison </li></ul><ul><li>What are competitors selling? </li></ul><ul><ul><li>Benefits/features comparison </li></ul></ul><ul><li>Finding information </li></ul><ul><ul><li>Competitor websites </li></ul></ul><ul><ul><li>Product lit/ store displays </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Competitive specializations </li></ul></ul><ul><ul><li>How can you stand out? </li></ul></ul><ul><li>Competition </li></ul><ul><li>Who are primary competitors? </li></ul><ul><ul><li>Market share/size/years in business </li></ul></ul><ul><li>Finding information </li></ul><ul><ul><li>Economic Census data </li></ul></ul><ul><ul><li>Trade Associations/ Journals </li></ul></ul><ul><ul><li>Library Databases </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>Is there room for you in the market? </li></ul></ul>
    11. 11. Identify Resources <ul><li>Print </li></ul><ul><li>Electronic Library Databases </li></ul><ul><li>Internet </li></ul><ul><li>Accuracy & Timeliness of Information </li></ul>
    12. 12. Resources: Print <ul><li>North American Industry Classification System: United States , 2007, R 338.02012 North </li></ul><ul><li>( ) </li></ul><ul><li>Community Sourcebook of Zip Code Demographics , 2008, R 304.6021 Community </li></ul><ul><ul><li>Demographic info for every U.S. Zip Code, based on release of ESRI 2008/2013 projections of key population & income data. </li></ul></ul><ul><li>American Incomes: Demographics of Who Has Money , R 339.220973 American </li></ul><ul><ul><li>Women’s/Men’s, discretionary, poverty, etc… </li></ul></ul>
    13. 13. Resources: Print <ul><li>Encyclopedia of Associations , R 016.3 Encyclopedia </li></ul><ul><li>Best Customers: Demographics of Consumer Demand , R 339.47 Best </li></ul><ul><ul><li>Reveals who spends the most and who controls market share for over 300 products/services </li></ul></ul><ul><li>County & City Data , 2007,  R 317.3 County  </li></ul><ul><ul><li>Contains data for every U.S. state, county, metropolitan area, Congressional district, & for cities with populations above 25,000. Includes population projections for 2010, 2020, 2030, and expanded 2005 housing information. </li></ul></ul>
    14. 14. Resources: Electronic Library Databases <ul><li>  Research Tools  Business </li></ul><ul><ul><li>General Business File ASAP : journal articles, SIC codes, company profiles </li></ul></ul><ul><ul><li>Business & Company Resource Center : company profiles, market research reports, SIC/NAICS codes </li></ul></ul><ul><ul><li>BusinessDecision : demographics, customer group profiles </li></ul></ul><ul><ul><li>Hoovers & First Research : company data; competitor info; industry profiles </li></ul></ul><ul><ul><li> : industry reports </li></ul></ul>
    15. 15. Resources: Internet - Demographics <ul><li>Michigan Dept of Energy, Labor & Economic Growth: Labor Market Information ( ) </li></ul><ul><ul><li>Industry, wage, & occupation data and more. </li></ul></ul><ul><ul><li>U.S. Census data ( ) </li></ul></ul><ul><ul><li>Portal to all types of census data </li></ul></ul><ul><ul><li>U.S. Bureau of Labor Statistics ( ) </li></ul></ul><ul><ul><li>Good place for “latest numbers”: PPI, CPI, unemployment, etc… </li></ul></ul><ul><ul><li>Wide variety of other data too: spending & time use; plus links to wage data (Occupational Outlook Handbook) </li></ul></ul>
    16. 16. Resources: Internet Search Tips <ul><li>Start with simple search strings: “concept” + “industry” </li></ul><ul><ul><li>Example: “market size” + “bakery” </li></ul></ul><ul><li>Be open to using variations of search string…bakery, retail bakery, baked goods, etc… </li></ul><ul><li>Start with broad searches. Narrow as needed. </li></ul>
    17. 17. Resources: 5 Tips for Selecting Sources <ul><li>Accuracy </li></ul><ul><li>Authority </li></ul><ul><li>Objectivity </li></ul><ul><li>Currency </li></ul><ul><li>Coverage </li></ul><ul><li>Error-free info? </li></ul><ul><li>Fact checkers or editors used? </li></ul><ul><li>Qualifications/reputation of source? </li></ul><ul><li>Is bias possible? Does source try to influence opinions of others? </li></ul><ul><li>Publication date? Information timely? </li></ul><ul><li>Breadth/ Depth of information </li></ul>
    18. 18. EXAMPLE Retail Bakery Market Profile
    19. 19. Market Profile Definition NAICS Code 311811 Retail Bakeries Retailing bread and other bakery products not for immediate consumption made on the premises from flour, not prepared dough. Size Michigan market size: $122 M* 312 establishments Ingham County market size: $881,000* 11 establishments [Based on 2002 Economic Census data . Visit , click on “Economic Census” and select the data set by sector…in this case “Manufacturing”] *Total value of shipments
    20. 20. Market Profile… A word about estimates <ul><li>Most recent U.S. Economic Census data is 2002. Most of the 2007 data has not yet been released. </li></ul><ul><li>How do you obtain more current market size & growth data? </li></ul><ul><ul><li>Look for data in other Government departments…Bureau of Labor Statistics </li></ul></ul><ul><ul><li>Supplemental data from trade journals & associations </li></ul></ul><ul><ul><li>Educated guesses!!! </li></ul></ul>
    21. 21. Market Profile <ul><li>Growth </li></ul><ul><li>US Growth: Establishments </li></ul><ul><li>1997 – 7,119 establishments </li></ul><ul><li>2002 – 7,485 establishments </li></ul><ul><li>US Growth: Value of Shipments </li></ul><ul><li>1997 - $1.9 B </li></ul><ul><li>1998 - $3.3 B </li></ul><ul><li>1999 - $2.2 B </li></ul><ul><li>2000 - $2.6 B </li></ul><ul><li>2001 - $2.5 B </li></ul><ul><li>2002 – $2.8 B </li></ul>2002 Economic Census data 6.68% Compound Annual Growth Rate (CAGR) Compound Annual Growth Rate Calculator Investopedia
    22. 22. Market Profile…compound annual growth rate <ul><li>Compound Annual Growth Rate </li></ul><ul><ul><li>The rate at which something would have grown if it grew at a steady rate. CAGR is a way to smooth out growth/ returns & takes into consideration the time value of money. </li></ul></ul><ul><li>FORMULA : Ratio of future value to present value raised to the power of 1/number of years minus 1. </li></ul><ul><li>EXAMPLE : ($19,500 / $10,000 = 1.95) raised to the power of 1/3 (since # of years = 3), then subtracting 1 from the resulting number: 1.95 raised to 1/3 power = 1.2493. (This could be written as 1.95^0.3333).  1.2493 - 1 = 0.2493 Another way of writing 0.2493 is 24.93%. </li></ul>
    23. 23. Market Profile… Arriving at your estimate <ul><li>Obtain additional pieces of data </li></ul><ul><ul><li>BLS statistics: 2006 U.S. employment of bakers + projected 2016 U.S. employment of bakers indicates “growing” occupation (15,000 new jobs between ‘06 & ‘16) </li></ul></ul><ul><ul><li>Michigan Dept of Labor & Growth – Labor Market Information </li></ul></ul><ul><ul><ul><li>Bakers are a “growing” occupation in State of Michigan for the period 2006-20146 </li></ul></ul></ul>
    24. 24. Market Profile… Arriving at your estimate <ul><li>Baker occupation appears to be growing. </li></ul><ul><li>Apply 1997-2002 CAGR to 2002 market size to get 2008 estimate of market size. </li></ul><ul><li>The use of historical growth rates is one of the simplest methods of estimating future growth. </li></ul><ul><ul><li>However, historically high growth rates don't always mean a high rate of growth looking into the future, because industrial and economic conditions constantly change. </li></ul></ul>
    25. 25. Market Profile… Arriving at your estimate <ul><li>2002 Michigan market size $122 M </li></ul><ul><li>$169 M (e) </li></ul><ul><li>$125 M (e) </li></ul>Historical CAGR 6.7% Conservative Estimate* CAGR .5% 2008 market size * Given Michigan economy 2008 market size
    26. 26. Market Profile <ul><li>Market Segments </li></ul>U.S. Segmentation Bread/Rolls Cakes Cookies Donuts Pies Bagels Other sweets 2002 Economic Census data Dollars* $272.8 M $199.7 M $114.6 M $76.8 M $49.9 M $17.7 M $149.5 M Percentages 31% 23% 13% 9% 5% 2% 17% Remember : This is just ONE piece of data; research to find at least one other input for market segmentation. * Total value of shipments Apply to your estimated 2007 market size.
    27. 27. Market Profile <ul><li>Market Relationships </li></ul>Wheat Producer Flour Manufacturer Bakery Supply Wholesaler Retail Baker Consumer Farmer Bob Gold Medal Flour ABC Bakery Supply Suzy’s Bakery <ul><li>What’s happening with the price of wheat? </li></ul><ul><li>Has the growing season been normal? </li></ul>SAMPLE
    28. 28. Market Profile <ul><li>Market Trends </li></ul><ul><li>Sources </li></ul><ul><li>Modern Baking (trade journal) </li></ul><ul><li>Retail Bakers of America (trade association) </li></ul><ul><li> (trade website) </li></ul>
    29. 29. Market Profile <ul><li>Market Trends </li></ul><ul><li>High gas prices effecting bakery operations costs and consumers’ ability to spend money at bakery. </li></ul><ul><li>Commodities prices are volatile – rising cost of essentials are a barrier to profitability and growth </li></ul><ul><li>Cakes remain a key segment – largest percentage of sales for retail bakers and a profit driver </li></ul><ul><li>Growth in whole wheat/ whole grain breads </li></ul><ul><li>Niche goods like “Gluten free” and “low carb” are more prevalent in the market </li></ul><ul><li>From Modern Baking’s 2007 Retail Bakery Survey, June 2007 </li></ul>
    30. 30. Review <ul><li>Preparing a market, customer and competitor profile for your Market Analysis is necessary for a complete Business Plan. </li></ul><ul><ul><li>Show lenders that you’ve done your homework and understand the forces at work in your market. </li></ul></ul><ul><ul><li>Convince lenders that you have enough customers to generate sales sufficient to make your business profitable. </li></ul></ul><ul><li>You will not find answers to every question in the secondary data you gather for your analysis </li></ul><ul><ul><li>Making educated guesses & estimates is a part of the process </li></ul></ul><ul><ul><li>To make sound estimates, try to find at least 2-3 pieces of data </li></ul></ul>
    31. 31. Thank You! <ul><li>Elizabeth Kudwa </li></ul><ul><li>Business Librarian </li></ul><ul><li>Capital Area District Library </li></ul><ul><li>401 S. Capitol Ave. </li></ul><ul><li>Lansing, MI 48933 </li></ul><ul><li>517-367-6301 </li></ul><ul><li>[email_address] </li></ul><ul><li> </li></ul>
    32. 32. Sample Customer Profile <ul><li>Rustbelt Traditions </li></ul><ul><li>(Largest group of customers in Ingham County) </li></ul><ul><li>Demographic Profile </li></ul><ul><li>Rustbelt Traditions residents are the backbone of older industrial cities in states bordering the Great Lakes. Their median age is 36 years, the same as the U.S. median age. One of the largest Tapestry markets, Rustbelt Traditions neighborhoods are a mix of married-couple, single-parent, and single-person households. Most residents are white. </li></ul><ul><li>Source : Community Tapestry Handbook, ESRI, BusinessDecision database </li></ul>
    33. 33. Sample Customer Profile <ul><li>Rustbelt Traditions </li></ul><ul><li>(Largest group of customers in Ingham County) </li></ul><ul><li>Socioeconomic Profile </li></ul><ul><li>Slightly below the U.S. median, Rustbelt Traditions residents’ median household income is $44,000. Their median net worth is $88,000, which is 12 percent below the U.S. median. Most have graduated from high school or community college. For years, these residents sustained the manufacturing industry that drove the local economies. Now the service sector predominates. Many find employment in administrative, production, and sales positions. </li></ul><ul><li>Source : Community Tapestry Handbook, ESRI, BusinessDecision database </li></ul>
    34. 34. Sample Customer Profile <ul><li>Rustbelt Traditions </li></ul><ul><li>(Largest group of customers in Ingham County) </li></ul><ul><li>Residential Profile </li></ul><ul><li>Most Rustbelt Traditions residents live in modest, single family homes. The median home value of $93,000 is about two-thirds of the U.S. median. The relatively lower home value partly reflects the older homes in these communities; two-thirds of the homes were built before 1960. </li></ul><ul><li>Source : Community Tapestry Handbook, ESRI, BusinessDecision database </li></ul>