Identify, in order, and briefly explain each step of conducting market research giving examples where appropriate.

Question

What will be an ideal response?

Answer 1

1. Defining purpose or objectives-The most effective way to begin is for the entrepreneur to sit down and make a list of the information that will be needed to prepare the marketing plan. For example, the entrepreneur may think there is a market for his or her product but not be sure who the customers will be or even whether the product is appropriate in its present form. Thus, one objective would be to ask people what they think of the product or service and whether they would buy it, and to collect some background demographics and attitudes of these individuals. Other objectives may be to determine the following:
How much would potential customers be willing to pay for the product or service? 
Where would potential customers prefer to purchase the product or service? 
Where would the customer expect to hear about or learn about such a product or service? 
2. Gather data from secondary sources-The most important purpose of reviewing secondary sources is to obtain information that will assist the entrepreneur in making the best decisions regarding the marketing of a product or service. Some examples include trade magazines, newspaper articles, libraries, government agencies, and the Internet can provide much information on the industry market and competitors. The Internet can even be used to gather informal primary data by reviewing social media and blogs. Before considering either primary sources or commercial sources of information, the entrepreneur should exhaust all free secondary sources. Other specific source examples may come from table 8.2.

3. Gather data from primary sources-Information that is new is primary data. Gathering primary data involves a data collection procedure-such as observation, networking, interviewing, focus groups, or experimentation-and usually a data collection instrument, such as a questionnaire. Interviewing or surveying is the most common approach used to gather market information. It is more expensive than observation but is more likely to generate more meaningful information.

4. Analyzing and interpreting results-Depending on the size of the sample, the entrepreneur can hand-tabulate the results or enter them on a computer. In either case, the results should be evaluated and interpreted in response to the research objectives that were specified in the first step of the research process. Often, summarizing the answers to questions will give some preliminary insights. Then data can be cross-tabulated to provide more focused results. For example, the entrepreneur may want to compare the results to questions by different age groups, sex, occupation, location, and so on.