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Class Intro and Market Research

I come from a background where I majored in business communication at Arizona State University and although we have all these courses that we take in school, nothing really prepares you for business until you are actually out in the field. And I think one thing that really bothered me is that when I decided to embark in business, I really had no idea where to start, where to go and what advice I should absorb and the things that I shouldn't. And so really I'm just a representation of years of gathering and consolidating information. So I'm one of those people where I like to go online, I like to get around the actual resources and take that advice from there. So really today is going to be a consolidation of all of that, a lot of you guys online and here you guys have worksheets that I've created that can help you kind of follow along with some of the information that I share. And I think the other thing is that sometimes as creatives business can be really overwhelming because we real...

ly just use our brains to be creative. We're not really thinking strategically from a business standpoint. So I just have a lot of people to not be overwhelmed with the information that I am going to share today. Just know that sometimes it makes sense to partner with someone else who may have a better business acumen, but it's great for you guys to at least understand the information today. So with that, let's go ahead and dive in and we'll start off just by talking about market research. So before you decide to actually pull the trigger with your business, it's just really important to get a summary of the market um that you want to tap into. So then you can understand more of your competitive positioning strategy. So ultimately, the question here is who is your customer base? A lot of people unfortunately kind of going into business blindly and they don't really think who is my ideal customer, because once you identify your ideal customer again, that's where you can be more strategic in the way that you tap into that market. So the first question here is how do you uncover whether or not there is an actual demand? You have to understand whether or not it makes sense for you to enter into a market because maybe that market is no longer serve a ble. And so one of the quick things that you can do is what we call a market demand. So I have a definition here. So demand is the quantity of a good or service that consumers and businesses are willing and able to buy at a given price in a given time period. So market demand is the sum of the individual demand for a product from buyers in the market. So um this is best portrayed by creating a demand curve which it includes the individual curves of your competitors um to uncover the actual market demand. So it shows the quantity demanded of the good or service by all companies, um varying price points. Um It's knowing is excuse me, knowing this is very important because it will affect your sales strategy, you know your pricing decisions. And so here in this example, what you see here is price. So the price here is on the Y curve and then the X. Curve. This is the quantity. And so these are examples here of different businesses and you get the market demand by totaling all of those out. And so for you when your understanding how your position yourself into the market, you'll know okay if I want to price my business at this price point, this is the demand. This is pretty much what I'm going to expect in terms of my consumers. So it's good to get your brain thinking in that capacity. So then the next piece here is you want to tap into understanding your market size, uh your market size, of course, will help you in determining how many people that you actually have access to. So here's the definition for market sized. Um it's the number of individuals in a certain market who are potential buyers and or sellers other product or service. So um as a new company, knowing the market size before launching your new product or service in the area is very important. You know, it determines your profitability essentially. So you want to know what angle you can take from a competitive advantage standpoint and your overall business strategy. So you need to know the actual numerical data and the way that you have to pull that is by looking at different sources. So when I like tell people what that really means, it just means. What piece of the pie is yours? What piece of the pie is yours that you can take that you can tackle that. You can make profitable for yourself. So um for about this is a better visual for you guys. So most industry is, what they've done is they've been able to create different reports that you can tap into that give you a potential and customers. And so um this light here kind of list. A few of them are read a few of them for you guys here. Um You can use the U. United States Bureau of Labor Statistics. Um Hoover's also has information for you. Yahoo finance uh info U. S. A. U. S. Company information, the U. S. Census Bureau, Professional Trade organizations, professional industry associations, Chambers of Commerce and Analyst reports. So I would say that this is the most intricate piece in developing your business. It's going to take a lot of time and a lot of the time you when you're new to business and you're starting into it you may be new. And so there's no there's not a lot of real data. And so that's why you have to create assumptions with the understanding that as you enter into market you're going to create your own um more tangible results that you can kind of cater to figure out, you know where your market is and what your size of your market is. Um So here are some more market reports. I was also wanted to point out that you can join associations where they have updated market reports that you can continually tap into. And I'll also say that if you plan on making your your business in such a way that you want investors, these are the things they want to see. They want to see what is the sizable market. So this next graphic here will give you just kind of like a rundown of what I mean when I say market size. So this is a fictitious brand. So we're not putting any brands up here that you know, And so what I hear is a thought process here. So you're thinking, okay, I have X. Y. Z. That's the business that I have. And it's a travel company. We book Travel adventures. So in its travel adventures in Asia. So the first piece here is figuring out how many people travel to Asia. What's what's the amount here and then how many people are in the target countries in Asia that you want to tap into. And then you determine that you have of that market five million, which is an addressable market, which is 15% of those people there who are spending $7,000. So you know that your opportunity is 35 billion. And again, that helps you in understanding how to strategize with your business when you understand what the actual dollar amount of the opportunity is. So the next thing here is understanding economic indicators. Um and there are three types of economic indicators. One of them is called leading, the other is called lagging and the other is called coincident and study dot com actually gives like a really great breakdown of what each of these mean with some corresponding examples. So the first one here is called leading indicators. So this pretty much helps you to predict what the economy um will do in the future. So, an example of a leading indicator is number of hours worked by an employee. So if you notice that an employee is is spending more time at work, they're increasing their hours. Well, then that tells you from a business standpoint that you're probably going to need to hire more people because the workload is increasing. So you understand that that's a leading indicator next year is lagging. So lagging indicators confirm what leading indicators predict. So if the leading indicator again, is hours worked from an employee increasing, That means that after a few months the lagging indicator of employment should fall because again, there's a need for more jobs in this particular business. And then the last thing here is called a coincidence and that is basically mirroring what the data is saying currently. So uh coincident indicators are generally what's happening right now, for example, job reports. So for leading indicators predicting that future jobs are, there's a game for that and the lagging indicator is saying that unemployment is falling, then a coincident indicator would basically be, you know, the current employee number. So it's just important for you to understand these market trends as you prepare to enter into the market yourself. So then the next thing here is called location data. And location data basically gives you insights around your audience and their movement. So location data, you know, it should be uh compiled to identify basically a new consumer markets and you know, you can improve your marketing when you understand where your current client base is and just knowing that data is just really useful when you're considering considering like ad targeting. So location data is something that honestly, I would say it's best for you to have a data scientist to try to pull that. I think the other way that you could do that maybe more homegrown would be if you have google um analytics that really shows you where your business is in terms of targeting. But again, that would mean that you of course would have to at least launch your business and have some of that data already calculated. So if you're looking for past data on similar brands, I would try to get a data scientists. Uh so moving on here will reflect now on market saturation. So uh market saturation happens when the demand for a product decreases, but just because the demand for a product decreases doesn't mean that you're not, you don't need to play in that market. Um There's different ways that you can strategize. So here is the official definition of market saturation. Um so market saturation is a situation that arises when the volume of a product or service in a marketplace has been maximized at the point of saturation, a company can only achieve further growth through new product improvements by taking existing market share from competitors or through a rise in overall consumer demand. So what I want to show you guys here is an example of a situation where the market is saturated, but that actually is a benefit. Use an example of one of the businesses that I have called Tunnel. So total is a diverse stock photography business. And when you look at how many images image, uh digital image companies are out there, you'll see that stock photography is oversaturated. I mean, there's over 120 stock photos with billions of images. So women thank gosh, you know, they're probably isn't an angle for me, But the global stock images market will actually grow at CAGR of 7.37% during 2016-2022. So the reason why there is a rise in that is because the demand for stock images is directly correlated to the number of growing websites. So we already know just from that alone that there's going to be an increased need and imagery. So we took that as an advantage point, but it's important for you to understand where you are at in the market because maybe you won't be afforded this type of opportunity. Maybe it doesn't make financial sense for you to enter into it. All right. So the next thing here is talking about pricing. So pricing as it pertains to market research really uncovers what customers are willing to pay for your product or for your service. So, you know, organizations can then decide the optimal price point um to maximize profit and revenue or market share. So how do you do that? Well, one of the great ways that you can do it is to actually survey your target audience. There are a lot of survey platforms that you can utilize. One of the things that we like to do is we created a landing page where we gather information from you prior, so that during the period that we're setting up our website, we could actually figure out, okay, how much are you actually willing to spend? And so in my research, I found that there is a really great uh type of survey and it's called a conjoint analysis. It's basically the most accurate and reliable way to determine price. So, I'm gonna show you guys just a graphic here, that kind of depicts what I mean by conjoint analysis. So how it works is the understanding is that, um, you know, through discrete choice ng it's the modeling part of it is showing you what means the most to your consumers when it comes to price and value. So what that means is, so this is an example where there are three product profiles. It's the plasma, the L. C. D. And the L. E. D. Rather than to say, hey, how much would you pay for a plaza when you isolate it? They're saying, put everything out there and then create levels for each attribute. Okay, so here the L. E. D. They're putting it at 8 99 And then the attributes are price, brand, size, and type. And so the logic is that you're considering both the product and the price point when you're making a decision here. So if you believe that the L. E. D. is worth it and you choose 899 then that means that you're probably thinking that somebody is willing to spend up to that point. So maybe if I had it for 6 99 they'd buy it. Maybe if I had it for 4 99 they'd buy it. So it's doing discrete choice in to really help you figure out a price point. Now of course this is just one of many ways that you can survey people if you want to be more deliberate and say how much are you willing to spend and leave like a blank box And and make it a requirement for your audience to or your your consumers to answer. They can I think you just run the risk of people being um cheap. Maybe when you leave that box open, so I would just be a little bit more directive, put some price points. But I found that I think that this is the most accurate way of trying to understand what your consumer is willing to pay for.