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

4. Strategy Dev Product Dev Customer Value Dev Organization Dev Financing Validate Validate Validate Validate Validate 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

5. Concurrent Processes, continued Init. Bus. Model Simple. Strategy 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

6. 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

7. 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

8. 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 • Don’t wear out your welcome • When finished, ask permission to ask future questions

9. 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

10. Example:Filing 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

11. Practice writing questions for your own business idea • Write exploratory questions • Interview each other • Revise your questions • www.cob.sjsu.edu/svbpc/

12. 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

13. 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)

14. 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 => estimate sales

15. 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

16. Tips for questionnaires • Ask for exactly what you want • Don’t lead; use unbiased language • Avoid compound questions • Use scaled response, or multiple choice questions as much as possible • Ask sensitive questions last • Don’t wear out your welcome

17. 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)

18. Example questions: Filing system for home office • See the appendix

19. Practice writing questionnaire for your own business idea • Write survey questions • Try out on each other • Revise your questions

20. 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 MarketResearch Toolbox: A Concise Guide for Beginners by Edward F. McQuarrie (1996); $39.95 (same on Amazon)