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Market Analysis and Entrepreneurship

Market Analysis

Market research is the process of identifying and quantifying potential markets in which to sell a product or service. The process is far more than mere quantitative analysis of numbers of potential customers and past purchasing date. It involves many qualitative aspects that recognize the particular desires, customs, preferences, and characteristics of individual markets. Market analysis regards the use of these quantitative and qualitative variables to determine whether a market is attractive or will sustain a given business operation.

The next section of the feasibility analysis is the market analysis. This portion may be the most important in determining whether an idea is a valid business opportunity. It focuses on determining whether there is a potential market for the product. Every market analysis should contain the following five sections:

  • Customers (Segmentation) – Identifying the customer segment will allow you to understand who wants or needs your product and is qualified as a potential customer.
  • Price (determined for each customer segment) – You need to know how much a potential customer in a given customer segment would be willing to pay for your product or service (i.e., how much revenue you can expect from each customer segment).
  • Market Size – The market size (made up of all of the identified customer segments) will tell you how many of those people who want your product(s) are in the market.
    • Market Size = the number of potential customers x the quantity purchased by an average buyer x the price of the unit.
  • Priority – Priority shows the willingness of customers to purchase at a given level of information about the product (i.e., sales and marketing effort by the business).
    • In summary, the number of potential customers, market size, price, and customer priority, taken together, will allow you to make projections of how many sales you will make at a given price. For example, grabbing 1% of the market value yields a specific amount of potential revenue.
  • Important Strategic Information About Market:
    • If you are unable to serve all segments, then you will choose the customer segment and corresponding price point that maximizes your value.
    • Customer trends give rise to increased demand for your product, higher prices at the level of demand, and new customer segments within the market.

Customers (Segmentation)

Customer segmentation deals with grouping potential customers according to their preferences or characteristics. In a way customer segmentation is a form of stereotyping. It assumes that like customers with certain, specified characteristics will have similar needs or wants with respect to your product or service. Understanding the preferences and characteristics of customers is the subject of marketing study. At this stage you will have to undertake research to find out much of this information. In the next chapter we discuss primary and secondary research techniques to help you identify customer segments and characteristics about particular markets.

  • Side Note: Marketing analytics firms provide value to businesses by analyzing market segments for customer preferences. These firms conduct research or purchase massive amounts of consumer data to make determinations about the purchasing activity of customers that share like or identifiably similar characteristics.

Even with the use of research techniques, grouping potential customers according to their characteristics requires a great deal of assumption about their general preferences. Without detailed information about your customers and the market in general, this practice can be inaccurate. Also, other factors, such as new trends or economic changes, can heavily influence a customer segment. Nevertheless, understanding who are your potential customers is instrumental in adequately evaluating an idea.

Identifying the Customer Segments

You are conducting the market analysis in order to determine whether sufficient customer demand for your product or service exists at any given price point (discussed below) so that it will create the amount and type of desired value. All of this is considered in light of the costs associated with operations (discussed below).

Here are some questions to ask in determining whether the market potential is sufficient to create the amount and type of desired value.

  • Identifying Your Customer Segments
    • Who are your primary, secondary, and tertiary target customers?
      • Note: You may be able to break apart your target customer markets into segments based on any number of defining characteristics. You should try to identify the factors that are most important to each potential customer segment (price, quality, efficiency, easy of use, etc.)
    • What are the defining characteristics of each segment?
      • Note: Explain why these characteristics create a need or want that your product or service will fulfill.
    • Is there potential overlap of your customer segments?
      • Note: For any given product or service, different customer segments may overlap in their specific needs or wants. The minimum viable product that serves the greatest target market often provides the greatest total revenue. However, it may not provide the greatest margin for each product or service sold.
  • Further Understanding Your Target Customer Attributes – The attributes that you identify in your target customer audience will help you make strategic marketing decisions in the future. For each customer segment, make certain that the characteristics you identify are:
    • Recognizable
    • Significant
    • Measurable
    • Compatible (with the business’ mission, strength, and ability)
  • Characteristics that Often Constitute Segments
    • Demographic Information
      • Demographic information about your customer segment often provides the greatest accuracy for prediction of consumer activity. That is, members of a particular demographic group tend to demonstrate very similar consumer characteristics.
      • The first step is separating your customers into businesses (Business – to – Business or “B2B”) and individuals (Business – to – Consumer or “B2C”). Obviously, individuals will demonstrate drastically different consumer tendencies from businesses.
      • For B2B target customers, you should, at a minimum, identify the following business characteristics:
        • # Employees,
        • Industry
        • Revenues and other financial characteristics (such as margins, market concentration, total capitalization, etc.)
      • Other classifications include: Age, Gender, Ethnicity, Income, and Level of Education.
  • Psychological Information – Segmenting customers according to psychology generally deals with characterizing their mental outlook that characterizes the way they live. Examples of psychological segments include:
    • Religious beliefs,
    • Morals or Values,
    • Political Beliefs
    • Sources of entertainment (also behavioral)
  • Behavioral Segmentation – Regards the activities that people undertake, the frequency with which they undertake those activities, and other metrics that measure the degree or extent of activity by an individual. Examples of behavioral segments include:
    • Unique benefits sought,
    • Rate of individual or group consumption or use
    • Other behavioral patterns (ice cream during summer)
  • Behavioral segmentation has given rise to various methods and theories for determining customer behavior. Research “Day-in-the-Life-of-the Customer” (DILO) technique for an example.
  • Geographic Location – Different customer segments may be local, national, international, geographically dispersed, or concentrated in certain markets.
    • Note: This is often a subject of strategic decision-making.
    • Example: David Hasselhoff sold very few records in the United States, but was extremely successful in Germany. Recognizing where his target market was located, he toured and market his records in that area of Europe.

Results of Segmentation

Grouping your potential customers in this fashion allows you to examine key characteristics about the customer group, such as:

  • number of customers (size of market segment),
  • value of product or service (price point),
  • type of need or want (type of features for product or service),
  • the level of need or want (the priority or urgency that they have for buying the product).

Later, you will use this information to market your products or services toward those customers who will provide the greatest net transfer of value for the product or service (greatest profit). This is why companies will often create multiple versions of the same product. They seek to capture multiple customer segments with the same product, without cannibalizing sales of other versions or another similar product.

  • Example: The smartphone serves a number of customer segments. Early in the development of the smartphone industry, phones were equipped with diverse features at varying price points in order to attract business professionals and teenagers alike. Adding additional features or functionality to a product that are not valued by customers forfeits value and profitability. Likewise, charging a lower price for a far less expensive product may produce greater total profit than charging a higher price and selling fewer products.

The point to take away from this scenario is that it is important to segment your potential customers in order to adequately position your product in the market and to meet the targeted customer’s desired value. Later we will discuss arriving at a minimum viable product, which involves developing a product that meets the minimum customer expectations and thereby creates the greatest value for the customer at the lowest cost to the business.

Market Size

Market size is likely the most important factor in the feasibility analysis. Without a sufficient market size, the idea may not be able to create the amount of desired value. Market size is generally measured in one of two manners

  1. the total number of buyers or sellers in the market, or
  2. the total value of transaction within a given market.

If you are able to identify your intended customer segments, then you may be able to identify the number of individuals who fit into those segment and add them together.

Customer Segment 1 + Customer Segment 2 = Potential Customers

This information may be sufficient to deduce that the idea is a feasible business opportunity. However, it may be the case that you need a more detailed understanding of the total value of transactions in order to determine if there is sufficient value in the idea. For example:

  • You may need to calculate the total revenue potential in order to evaluate the feasibility of the idea. This is common in industries where the costs of entry or operations are very high.
  • You will likely need to incorporate this information into your business plan in order to attract investment capital. An investor who is reading your business plan will want to know both the number of potential customers and the total value that those customers represent.

To calculate the total market value you will need the following information:

  1. the total number of customers,
  2. the average price paid per customer, and
  3. the average number of purchases per customer.

Below we discuss methods for determining each of these values.

Calculating the Total Market Size (Value)

Calculating market size begins with determining the number of potential customers. Calculating the market size is best introduced as a series of steps.

  • Total Potential Customers: Many market studies begin estimating the market size by starting with the total number of individuals and reducing that number based on certain characteristics or criteria of the individuals.

Example: I want to know what the market for new baby strollers is within the United States. I research how many babies are born in the US in a year (e.g., 1 million). I do further research and learn that 50% of these are the first and only child. If it were a second child then there may not be a need for a new stroller. So there are 500,000 newborn, first babies each year. I learn or make a presumption based on primary research that 50% of those parents purchase a new baby stroller and the rest purchase or receive used strollers. So the market is now down to 250,000. There may be other criteria that help me narrow down the market further, but this scenario illustrates a manner of estimating the number of potential customers.

This method, often referred to as the Total Addressable Market (TAM), is more speculative than other methods of calculating the number of workers. A better way to begin estimating the market is to calculate the total number of individuals within all of the addressable, customer segments. The number is then adjusted for any circumstances that either add or subtract from this number.


Customer Segment 1 + Customer Segment 2 + (1% of individuals from non-customer segment) – (85% of total purchasers of competitors product or service with last 2 years) = Total Potential Customers in all Segments

This calculation will generally yield a much smaller number than beginning with the total number of qualified people. Importantly, you will still have to employ certain techniques to estimate the total number of individuals in the customer segment, which requires far greater access to information about your potential customers.

Note: In the following chapter, we discuss methods for obtaining consumer market statistics.

  • Average Price: The next step is to multiply the number of potential customers by the average price for the good or service.


Note: The next section deals with estimating the potential price of a product or service. The important thing to note is that, in order to estimate the market size, you will need to know the average value of the price that customers in different segments are willing to pay. In the chapter on business strategy, you will work to position your product in a manner that allows you to achieve the greatest value (highest margin when serving the greatest number of people that yields the greatest return).

  • Sales Per Customer: Next multiply this amount by the average number of purchases by each customer. This will yield the total market size.

Secondary Research Techniques for Calculating Market Size

There are several other well-recognized manners of estimating market size. The most common are as follows:

  • Information from Competitors
  • If you need to know that total number of potential customers in a market segment, you may be able to use statistics from similar or competitor products or services. Even if no similar or competitive product exists, you may be able to identify a business’ customer base as similar to your intended customer segment.
  • If similar products or services exist, you may be able to estimate market size as the value of all market transactions. In this case, your feasibility analysis turns on your ability to acquire a sufficient percentage of the market as customers so as to provided the desired type and amount of value.

Approaches to Calculating Market Size as Dollar Value

  • Bottom-Up-Approach – This approach uses the statistics from suppliers to competitor businesses to calculate the total amount of sales by that business. This approach requires a great deal of work because you have to obtain statistics from suppliers of all of the competitor businesses.
  • Top-Down-Approach – The top down approach is most suitable when you can easily identify the sales information from your competitors. This is most often the case when the major competitors are publicly traded companies and the information is available through public filing with the Securities and Exchange Commission. By adding up the total sales you can estimate the total market size.

In the entrepreneurial situation, much of this information may not be available. For example, the business may be selling an innovative product that has no sales history or comparable competitors to use as guidance on the number of potential customers or the number of purchases per customer. In that case, you should attempt to use the Total Addressable Market or Customer Segments Techniques described further above.


Product pricing hinges upon the concept of customer value. That is, what is the value of your product or service to customers in the market? Value is a relative to word to the entrepreneur and his or her intended audience. The entrepreneur will recognize an idea as an opportunity when the idea has the potential to create the type and level of value desired. Value could be measured in money, social impact, importance or prestige, etc. Likewise the prospective customer or client will evaluate the entrepreneur’s value offering (product or service) and subconsciously make a determination as to whether the value the client or customer receives from the product or service is worth the value required. Typically the required value from customer is money or the price of the good. Value can also take other forms. A customer may be willing to pay a certain amount for a product, but is not willing to do what is necessary to travel to a given location to physically purchase the product (travel), to put the product together (IKEA), to use the product on an electronic device (Kindle book), etc. All of these things represent something of value to the customer that they have to give up or forgo in exchange for the value provided by the product.

Pricing for Feasibility

Early in the business planning process, you do not necessarily have to set a price for your product. Rather, for the purposes of a feasibility analysis, you are trying to project what your customers (each customer segment) would be willing to pay. You can average the prices across multiple customer segments to determine what the average market price that customers are willing to pay for your product or service. Later, if the idea proves feasible at a the average market price, you will undertake a strategic analysis to determine at what price you will maximize your return above costs. Remember, you may or may not position your product to serve all customer segments. I may be more beneficial to target a single segment. On the other hand, it may be beneficial to have multiple product or service lines (varying features) that address all segments. In any case, if customers are willing to pay an amount for your product or service that exceeds your cost by a sufficient amount, the business idea may constitute a valid business opportunity.

Pricing Methods

Pricing is a very difficult issue for an innovative product or service. You have to estimate what the market is willing to pay without any actual sales information. Below I introduce a number of methods that businesses use to set their prices. Each of these methods is useful in particular situations. The primary methods are as follows:

  • Cost-Plus – This method involves estimating the cost of manufacturing the product and then adding a specified margin or markup above cost.
  • Revenue Target – This method involves estimating the price you would have to charge in order to bring in a certain amount of revenue.
  • Competitor Prices – This method involves looking at the price of competitor’s goods or the price of similar goods purchased by your target customer segments.
  • Primary Market Research – The market research method deals with conducting primary research on your target customer segments.

The primary market research method is the most effective way of accurately estimating what individual customer segments are willing to pay for your product. Marking competitor prices is often inaccurate because prices for products generally go down over time and based on the availability of substitute or competitive products. Using a competitor’s prices may cause you to overestimate the price. The revenue target methods may supply an entrepreneur with a target price based on the projected sales that he or she must charge in order for the business to be feasible. Unfortunately, this method does little to indicate the value that different customer segments are actually willing to pay. The cost-plus method sufferings from the same drawbacks at the revenue target method.

Other Factors in the Pricing Process

As stated above, you are attempting to determine what the average customer in the target market will pay for your product. This will give you a picture of your products’ economic feasibility. However, you will eventually need to make a strategic determination of how to price your product or service. The above stated methods are examples of how you can set your price. However, you will also take into consideration multiple other issues that affect how you position your product strategically in the market. Below are some questions that help illustrate this point.

  • What are the top 1 or 2 most important benefits for the customer?

Note: This will help you determine that actual value of the product or service to the customer. If the product or service fulfills a very important need or want, then the value to the customer is higher.

  • What is the market’s perception of the amount of benefit that they receive from you and the customers?

Note: This brings up the question of branding. Do you want to be considered the low-cost alternative? Do you want to be the premium product or service that is worth the higher cost? Do you want your product to be perceived as useful in lots of situations or the best product for a given situation? All of this can have an effect on pricing.

  • Who are the real competitors and what are their prices?

Note: If you can identify the competitors that fulfill this exact same need or want (even if in different manners) then you have an adequate point of comparison as to what customers are willing to pay for the product or service.

The Customer Priority

Customer priority involves the emotional drive of the customer to buy your product or service. An entrepreneur may create a product that fulfills an important need or want for the customer; however, the customer’s willingness to buy that product or service at a given time is measured by priority. For example, when the next generation of the IPhone is coming out, customers line up outside of stores and wait for days. This shows that there is a high degree of priority for this customer segment. On the other hand, the greater the number of options that exist for fulfilling the need or want, generally the lower the level of priority. When you see a commercial for a new type of dishwashing detergent, you typically don’t rush directly to the store to purchase it. This shows that you have a low priority.

Factors for Determining Customer Priority

The most important aspect of priority concerns the level of effort that it will take to convince the customer to purchase your product. Further, that will influence the amount of the product or service that the customer will purchase. There are several factors that you can use to determine the level of priority for a given product:

  • The severity of the need or want that your customer has for the product (often referred to as the customer’s level of “pain” or “hurt”.

Note: How important is it that the customer fulfill the need or want. Are there any physical, financial, social or other repercussions for failing to fulfill it.

  • How urgent is it that the customer fulfills that need or want?

Note: This has to do with the issue of timing. If the need or want needs to be fulfilled in a short period of time, there is a higher degree for customer purchase at first introduction.

  • What are the costs of the product to the customer or client?

Note: The price, inconvenience, social costs, etc., should be at a level that it will increase the customer’s priority, rather than dissuade a purchase. Think of product sales. The customer priority goes up because there is a perception that the good or service will not be available at that price for long.

  • Are there other goods that or providers who meet or fulfill the customer’s need or want?

Note: Generally, the greater the number of options (substitute goods or services or providers of a type of good or service), the lower the level of priority. Customers feel that they have other options and do not need to settle on a product or service at a given point in time. This increases the need for sales and marketing effort to acquire the customer or client.

Market Potential: Projecting Sales or Revenue form Market Size

Generally, your will determine potential sales based on the market size and a reasonable percentage of the customers that you will serve. Most entrepreneurs are unrealistic in assuming the percentage of the market that they will be able to capture. They either overestimate the strength of demand, the number of interested individuals, or the strength and presence of competitors. When calculating potential profitability, take a conservative percentage (e.g., 1% or less) of the total market to estimate the amount of sales.

Arriving at the Potential Revenue

Once you have a conservative estimate for the number of customer or immediately-addressable market (IAM), you can arrive at projected revenue numbers by multiplying the IAM by the average price of the good across customer segments.


Discounting Potential Revenue for Priority

As discussed in a separate post, priority accounts for the eagerness of a customer to purchase the good or service. Allocating a given level of priority to a product or service is a good way to discount the potential revenue from serving the IAM. If customers have an extremely high demand or priority for the item, then give it a factor or “1”. This assume that the customer will definitely purchase the product or service. If the demand for the product is medium to extremely low, give it a level of priority between “.6” and “.1”. This indicates that anywhere from 10% to 60% of individuals will purchase the goods. If the demand for the good or service is recurring in multiple periods, then you can multiply the discount factor for the number of purchases by an individual customer. Multiply this factor times the potential revenue as a method of discounting your market potential.


Example of Calculating the Market Potential

Market size = 5,000,0000

Market capture = 1% or (.01) x 3 (The avg. number of purchase by a customer)

Price = $50

Priority = .5


5,000,000 x .03 x $50 x .5 = $3,750,000


The formula demonstrates the market potential for the product or service within the given useful life or a product or services offered.

How Entrepreneurs conduct and use market research?

Market research regards learning about your customer. Specifically, market research is identifying the needs and wants of your target customer, scope business operations to meet those needs, the manner in which to reach the customer with your offering, and broadening your product or service to include other prospective customers.


What is marketing research?

Business owners and entrepreneurs acquire information through marketing research that helps identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.


Is marketing research valuable to entrepreneurs?

Marketing research can help small businesses determine the following:

  • What are the demographics of your potential customer base? (Age, race, ethnicity, community or belief association, socio-economic status, etc.)
  • Where is your potential customer base located?
  • How may people within a given area meet those demographics?
  • What is the level of urgency (level of need or want) for the product among the potential customers?
  • To what extent will your product or service meet that specific customer demand?
  • Are there other businesses already serving these customers?
  • How well do these competitors meet the customer’s level of demand?
  • Does any competitor have a competitive advantage over other businesses in meeting the customer demand?
  • Do you have a competitive advantage in meeting the customer demand? That cannot be replicated? That cannot be outdone?

The above questions are just examples of the type of information you will want to understand in evaluating the value proposition or potential of a product, service, or idea to be a profitable entrepreneurial venture.


Two basic types of market research

The two basic types of marketing research are Primary and Secondary Research.

Secondary Research involves using data or information from third parties to make an assessment about the characteristics of the market. Primary research involves assembling information and resources oneself to determine the market characteristics.


Quantitative and Qualitative Primary Market Research

Primary research is split into two categories: quantitative and qualitative.

Quantitative research provides hard numbers to some of the questions above. For example, it should give you a baseline of the number of potential customers in a given product market, the number of potential markets, etc.


Qualitative Research deals less with hard numbers and addresses more of the preferences among identified customer segments. This research method relies greatly on soft data, such as conversations and customer opinions.

Market Research

You now understand the litany of information that is important in determining whether a business idea is a feasible opportunity. The information you acquire when conducting the feasibility analysis is not lost at the time you decide to undertake your business. Rest assured that all of the information will be used in various ways in planning and carrying out your business operations.

Now that you understand the need for information, we turn to the methods or techniques for collecting information. Below we introduce the first of two main categories of market research (primary and secondary research) and provide you resources to carry out the activity.

Effective market research requires the ability to identify and locate necessary information. That is, you need to know what information is valuable, be able to locate the information, understand the significance of the information, and employ the information in your planning process.

Primary Research Explained

Primary research involves the first-hand collection of information by the entrepreneur. That is, the entrepreneur observes or actively tests a given situation to derive information. Common methods for conducting primary research include:

  • ¬Personal Interviews – Personal interviews with individuals who you assume to be part of a larger consumer group.
    • Benefits: Personal interviews are the most accurate, yet time-consuming and costly manners of conducting marker research. They are more efficient because they allow follow-up and clarifying questions as well as the use of multiple methods of extracting information. They also allow the greatest flexibility in choosing the representative individual or group to study. Remember, the purpose is to identify the wants and needs of various groups and to associate those wants or needs with other members who possess certain like characteristics or preferences.
    • Methods: There are number of methods to carry out the personal interview. The 3 most common are face-to-face, telephone, or mail interview.
  • Face-to-Face: This method provide the greatest benefit. There is little to no distortion in the lines of communication. The researcher can judge body language and expressions, as well as the answers to the questions.
  • Telephone: Telephone interviews are the next best method. They allow for the greatest customization of questioning and answer follow-up. It does, however, lack the person-to-person contact benefits of a face-to-face meeting. Further, people can get anxious or frustrated by long or drawn-out interviews. It is easier for the responder to dissociate from the questions and put less effort into answering sincerely.
  • Survey: A survey is generally done as a mail interview. For this reason it allows for the greatest reach. You can send interview questions to large numbers of individuals quickly and at low cost. Further, it generally allows for very thoroughly written and explained questions and may also present sufficient time and context for equivalent answers. However, the technique lacks the benefits of spontaneity of response that telephone and face-to-face interviews possess. Also, it is often difficult to get respondents to participate. Those who do respond may no longer be representative of the overall market.
  • Focus Groups – A focus group allows you to test an idea (product or service) on a particular group and receive their feedback.
    • Note: When developing a new product or idea, the focus group is one of the most effective primary research methods. It has many of the benefits of a face-to-face meeting, while allowing you to conduct research on multiple individuals at the same time. The most difficult part about using a focus group is to attract participants who are representative of the market. Using students at a university is generally the best manner of attracting representative participants. As with brainstorming, the two keys to running a successful focus group is participation and having a skilled facilitator or moderator. Both allow for the free flow of ideas while maintaining focus on the topic at hand.
  • Public Observation – Public observation allows the entrepreneur to glean information from the general habits of individual in a given situation (such as the buying trends of teenagers in the mall).

Who Should be the Focus of Primary Research?

Primary research is used to determine who is your target market, as well as determining the preferences and characteristics of those who may or may not be part of the target market.

  • Situation 1: If you need to determine who would be interested in your product or service, you will likely address members of the public at random. You will design your research technique (questions) to identify the reason that they want or need your product or service and their level of priority.
  • Situation 2: Once you identify individuals who are part of your target market, you will want to identify the characteristics that allow them to be grouped with other similar consumers.

Types of Relevant Information

You will customize your questions to the information you seek from the participants. Below are examples of the type of information you may seek from your research subjects:

  • Gender, race, ethnicity, age
  • Income
  • Occupation
  • Education
  • Location
  • Martial Status
  • Children
  • Financial Status
  • Physical Status
  • Interests
  • Habits
  • Activities and Hobbies
  • Health

Designing Research Questions

Any type of primary research requires preliminary planning. Particularly, the entrepreneur must work to develop questions that solicit the type of information desired. This task is far more difficult than it sounds. Below are some tips for drafting a questionnaire that serves to promote effectiveness:

  • Be short and concise.
  • Make certain the question is easily understandable upon reading.
  • Always ask questions directly and in the affirmative?
  • Don’t ask “why they didn’t do something”; rather, ask “why did you do A?”
  • Make questions easy to answer. (Yes/No, with a “Why” option)
  • Don’t attempt to be coercive of the reader.
  • Don’t make questions offensive.
  • Be truthful about the intentions of the questionnaire.
  • Provide sufficient time to answer the question.
  • Don’t show emotional reaction to the answers.

Secondary Research

Secondary research regards identifying and using information previously collected by third parties. Below are the most common sources of data for secondary research.

  • Professional (Trade) Resources – Professional resources include collections of data and statistics, literary material showing customer activity (such as books, magazines, guides), etc.
  • Academic Resources – These generally include empirical studies based on the collection of information or direct observation of individuals.
  • U.S. Government Sources – Government resources often provide the source of raw data for further analysis (such as population and demographic statistics).

These sources are all valid methods for determining statistical information, demographic information, industry trends, consumer purchasing patterns, etc. Other useful resources are any industry groups in the area where your product or service is being offered. They can provide relevant insight into the level of demand for you product or service.

Sources of Secondary Data

  • Industry Relevant Publications – There are numerous publications that provide content around specific industries.
    • Standard & Poor’s Industry Surveys – S&P puts out the surveys for financial analysts, but they provide valuable insight into industry trends, major industry players. These surveys are generally available through university or large public libraries.
  • Trade Association Publications – A basic Internet search will provide with a thorough list of industry organizations or trade association that address your type of business. Another good resource is the Gale Encyclopedia of Associations.
    • The Statistical Reference Index (SRI), published by the Congressional Information Service, reports statistical studies from major organizations, including trade associations. A second volume, SRI Abstracts, provides brief summaries of the information included in these reports.
  • Commercial Consumer Research Publications – These publications are put out by commercial firms who wish to earn money from statistical analysis.
    • American Marketplace: Demographics and Spending Patterns: is a publication put out by New Strategist Publication that attempts to identify and list the characteristics of U.S. consumer groups.
  • Sales or Marketing Magazines – The best magazine in this field is Sales and Marketing Management Magazine. It publishes consumer data such as population, income levels, retail sales data per household, and other key metrics in most medium and large consumer markets across the United States.
  • Sales Representatives for Media Companies – Media companies generate revenue through advertisements on their media sources. Many larger organizations have marketing departments that actively research the breakdown of their customer markets. When they seek to sell advertising space, they provide this market information to prospective advertisers.
  • Academic Publications – Many research articles (particularly in the field of marketing) contain detailed analysis of consumer statistics. Many of these academic publications are available through the internet.
    • Google Scholar – Google Scholar is the most well-known and fasting growing free academic research tool.
    • ProQuest – ProQuest is an industry leading academic database that provides high quality search parameters for academic works.
  • Geographic Industry and Consumer Research Publications – These types of commercial publications attempt to break down industry or consumer traits by geographic area.
    • County Business Patterns (CBP) – The CBP, published by CENDATA, provides industry information analyzed by geography. This is a useful tool for analysis market trades within target locations.
    • Sourcebook of County Demographics – ESRI publication of customer demographics by U.S. County.
    • Sourcebook of Zip Code Demographics – ESRI publication of customer demographics by U.S. zip code.
    • Demographics USA – Trade Dimensions International publication that provides consumer breakdown by regions across the U.S.
  • U.S. Government Publications – Most Government publications are available online or through a local state university. Also, any of the reports can be ordered from the Government Printing Office.
    • American Statistics Index (ASI) is an index to all of the statistical publications of the US Government. A volume in the index, ASI Abstracts gives an abstract of every report listed within the ASI. (Reported by the Congressional Information Service.
    • US Industry and Trade Outlook – This provide general economic data from the past year and forecasts for the coming year. (Reported by Department of Commerce)
    • Current Industrial Reports (CIR) – The CIR provides industry reports on 5000 manufactured products in the US. It provides information on shipping, inventories, consumption, and the number of firms manufacturing a product.
    • U.S. Censuses – The U.S. Census Bureau publishes a census every five years. The Economic Census provides statistical information for industries, such a services, retail trade, transportation, and manufacturing. The publications contain monthly sales figures and trends, information on sales by specific merchandise in geographic areas. An Annual Survey of Manufacturers is published in between census years.
  • State and Local Government – Each state has dedicated offices that collect information about industries and companies throughout the state.
    • The Chamber of Commerce – The local chamber of commerce exists to serve businesses and the local economy. They provide a litany of resources that can include information on other businesses in the area.
  • Libraries
    • Local Universities – Aside from providing access to library resources, many local universities have Marketing Analytics Centers or Clubs. These internal organizations generally contain data (and often analysis) of many local consumer segments.

Quantitative and Qualitative Research Process

Start by defining the purpose and scope of the intended research? Have a concrete idea in your head about the problem or issue you are trying to solve. In the initial market research phase, it may be very general (such as determine the preference of a certain product). However, you should subdivide your objective as much as possible. The more specific you can make the issue or question you are trying to answer, the more useful and reliable your results will be.


Next, identify the sources of data where you can retrieve the information. Remember you will want to test as broad of a sample base as possible. The pool of individuals that you test should be relevant to the geographic area or market you intend to serve. Remember, you do not always have to do things yourself. There are often places where you can purchase collected data and research.


You will then need to develop a reliable method for collecting the data. Examples of data collection sources is questionnaires, surveys, conducting or purchasing third party observational research. If you are using a survey or questionnaire, you will need to spend considerable time identifying questions that will provide answers to your objectives. The questions should be specific and use vocabulary that any potential customer can readily understand. The questions should not be too long, in order to avoid the bias of frustration in completing a long form. The meaning of each question should be clear and unambiguous at the first reading. The questions should also be as relevant as possible to the issues your are trying to address without becoming pointed or biased. The hard part in this situation is to draft questions that are not biased or influence the individual answering the question toward an answer. Better said, the questions would be completely neutral and free of self-serving influence.


Lastly, you will need to categorize the characteristics or demographics of the individuals taking the survey. This is the only manner to match customer preference with identifiable customer demographics. Often, potential customers will be reluctant to provide this information, as some of the information can be sensitive to the customer. At a bare minimum, you need to identify the age, race, gender, geographic area, and socio-economic status of the potential customer. Other information, such as education level, ethnicity, marital status, children’s age, etc., may be helpful.


Analyzing the Data

Data analysis can be a very difficult task. Remember your purpose. You are trying to take the customer demographics and preferences and translate that into meaningful information that allows you to meet the customer’s demand preferences.

The primary way of using the data is through statistical software. You will have to determine the relationship between the individual data points. This is generally done by carrying out simple statistical analysis. Explaining how to use simple business statistical techniques is beyond the scope of this post, but examples of such techniques include:

  • Correlation
  • Variance
  • Chi-square test f
  • The t-test

Note: You can learn more about these statistical methods through various youtube channels.

The result of your statistical analysis should summarize the findings in a way where you can answer the issues or objective questions. These will form the basis of your decision to either pursue or forgo a potential market opportunity.

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