Understanding Customer NeedsUnderstanding

Customer Needs

Today….• Understand why customer needs are

important

• Understand primary research

Why understand customers?

Because they are all different

Where would these people shop and what would they buy?

Customers differ in many ways…

• What they want• Amount they are able to or willing to

pay• Media they see• How much they buy• Time they buy• Where they buy

What a start-up needs to know

• How many potential customers are there? • How fast is the market growing?• Who are the existing competitors?• How is the market segmented? ie What kind of customers are

there in the market? - What do they like in terms of when and where they buy? - What prices are they willing pay and what are their

likes and dislikes? - Which methods of promotion are effective?

The answer – market research

Primary v Secondary data

• Primary data– Data collected first-hand

for a specific purpose by the entrepreneur

• Secondary data– Data that already exists

and which has been collected for a different purpose

Primary data – why?

• Primary data is best used by a start-up

• Finds out EXACTLY what you need to know

• Can get straight to the point

BUT….• Obtaining primary research

data is time-consuming & expensive

Primary data – main sources

• Observation• Postal surveys• Telephone interviews• Online surveys• Focus groups• Face-to-face surveys• Experiments

Your Task….

• You must design a questionnaire to find out what people in your class spend their spending money on……

• You must find out how much they spend, how often they spend money, when they spend it and do they believe they get enough money to spend….

• THINK about your design…. A lot of people will be answering your questionnaire!!!

You must find out if they think they get enough spending money and how often they spend money

Do they save any??

Today you have…

• Understood why customer needs are important

• Understood primary research

Market Research

Today….• Recap Primary Research

• Understand different methods of secondary research

You tell me…..

• Survey

• Respondents

• Questionnaire

• Focus Group

Homework….

Write down four conclusions you can make from your questionnaires. eg:

• What age and gender were the people you interviewed?

• What did most people spend their money on?• Did this vary with gender and age?• What was the most money someone received? What

gender and age were they?• What was the least money someone received? What

gender and age were they?

Understanding Customer needs

Market Research

Quantitative v Qualitative Research

Quantitative Research Qualitative Research

Based on opinions, attitudes, beliefs and intentionsAnswers questions such as “why”? “Would?”, or “how?”

Aims to understand why customers behave in a certain way or how they may respond to a new product or service

Focus groups and interviews are common methods used to collect qualitative data

Concerned with data Addresses questions such as “how many?”, “how often”, “who?”, “when?” and “where?”

Based on larger samples – this is why numbers are used to analyse.

The main methods of obtaining quantitative data are the various forms of survey – i.e. telephone, postal, face-to-face and online.

Secondary ResearchSecondary Research involves the collection of

secondary data.

Secondary Data:

This is information which is already available either within an existing business or outside the business.

Secondary research

Advantages

• Already exists - saves time

• Ease of access• Low Cost

Disadvantages

• Might not answer exactly what need to know

• Time consuming

Secondary data – main sources

Internet A great way of getting quick market research for free

National Statistics

Provide detailed insights on the economy and on many industry sectors

Trade Newspapers & magazines

Essential reading for an entrepreneur, particularly if he/she has little or no experience of the market

Competitor websites Valuable information on marketing activities of competitors

Over to you….

• There are two methods of secondary research Jack intends to

use before he starts up his business. In pairs, find out as much as you can for Jack Padmore’s Bouncy Castles.

* Internet * National Statistics

Is unemployment falling or rising?

Will people be able to afford to rent the bouncy

castles?

Where are the

competitors located?

Is there a lot of

competition?

Who are my Competitors?

Will there be a demand for my bouncy

castles?

The internet: National Statistics:

What did you find out for me?

Thanks Guys!

Conclude your research…

• What did you find out for Jack?

Competitors Are customers spending?

EmploymentWill he be in demand?

Are sole traders popular?

Should he advertise?

Market Research

A.K.A……

• Primary research can also be known as FIELD research

• Secondary research can also be known as DESK research

Remember …

The entrepreneur can learn much about customers needs

simply by chatting to customers, rather than

buying expensive market research

Direct Customer Contact

• This is very important for a business.• Customers can provide vital information for a

business• Direct customer contact will help understand

the market and how it is changing

I was in Brighouse Boots last summer …

Interpreting Data

By analysing data collected it can help answer some questions:

• What does it all mean?• Was it important?• What does different data tell you?• Will the business be successful?• Is starting up a business a risk?

Case Study…..

Fabulous Cakes

1. Read the Case Study2. Answer ALL 3 questions3. Use information in the case study for your answer

Fabulous Cakes

Question 1

• Give a definition of “primary research” (2 marks)

• Explain in a sentence, one method of primary research used by Grace and Peter (2 marks)

• Explain in a sentence, a second method of primary research used by Grace and Peter (2 marks)

Fabulous Cakes

Question 2

• Give a definition of “secondary research” (2 marks)

• Explain in a sentence, one method of primary research used by Grace and Peter (2 marks)

• Explain in a sentence, a second method of primary research used by Grace and Peter (2 marks)

Fabulous Cakes

Question 3

• Give your opinion: eg “I think/do not think Grace & Peter do have a good understanding of their customer needs because …………..” (2 marks)

• Justify your decision – explain TWO different types of research that Grace & Peter did that helped them find out what their customers wanted/liked/disliked when they bought cakes (4 marks)

Chris wants to set up a business fitting kitchens and looks in the Yellow Pages to see what other businesses offer similar service in his area. This is an example of what type of research?

A – QualitativeB – PrimaryC – SecondaryD - Observation

Chris wants to set up a business fitting kitchens and looks in the Yellow Pages to see what other businesses offer similar service in his area. This is an example of what type of research?

C – Secondary

Chris designs a questionnaire and asks the respondents to tick, from a list, which colour kitchens they prefer. This is an example of what type of research?

A – QualitativeB – SecondaryC – QuantitativeD - Observation

Chris designs a questionnaire and asks the respondents to tick, from a list, which colour kitchens they prefer. This is an example of what type of research?

C – Quantitative

Which TWO of the following are most likely to give a researcher qualitative data?

A – The meeting of a focus groupB – Researching names of businesses in an area

from a telephone directoryC – Conducting interviews with shoppers in a

supermarketD – Analysing government statistics

Which TWO of the following are most likely to give a researcher qualitative data?

A – The meeting of a focus group

C – Conducting interviews with shoppers in a supermarket