210 ENTREPRENEURSHIP
ing business functions to provide maximum satisfaction, and striving to deliver the
product or service at the lowest possible price are not primary concerns. For sales-ori-
ented ventures, moving product out the door is Job #1.
Increasingly, socially oriented firms are succeeding. Examples such as Ben and
Jerry’s^5 ice cream and The Body Shop^6 prove that a social conscience need not be in con-
flict with business effectiveness. Often these firms’ products affirm the customers’ own
social concerns, and those customers will pay a premium because a certain percentage of
their money will go to support social causes espoused by the founding entrepreneurs, or
because they believe the products are environmentally sound.Market Research
A marketing priority requires that customer satisfaction be the company’s primary
objective, and understanding what will satisfy the customer in any particular business
concept requires extensive knowledge of those potential purchasers. Market research is
designed to provide that information.
Market researchcan be defined as “the systematic and objective process of gather-
ing, coding and analyzing data for aid in making marketing decisions.”^7 In Chapter 3
we introduced a framework for analyzing customers, competitors, and industry forces,
and that data came from market research. Effective market research can help the new
venture answer such important questions as:- Who is the customer?The customer profile includes demographic characteristics,
values and attitudes, buyer and shopping behavior, and buyer location. Customers
may be local, regional, national, or international. Understanding the customer is the
basis for market segmentation. - Who are the players?The profiles of existing and potential competitors can indi-
cate the likelihood of retaliation and the probable nature of their reactions. - How can the customer be reached?Distribution networks and channels are
responsible for the actual delivery of the product or service. Sometimes the answer
to this question falls back on standard industry practices: “ship by common carrier,”
“retail channels,” “in-house sales force.” But other times the distribution systemis
the business—as with Avon, Domino’s Pizza, and Amway.
Conducting market research, an early step in new venture creation,^8 is a common
practice among small businesses. As many as 40 percent of smaller businesses do mar-
ket research, and the vast majority are satisfied with the results.^9 This research need not
be expensive or time-consuming. In fact, answers to the important marketing questions
are frequently well within the grasp of the entrepreneur, and most market research can
be done by the founders themselves.
Conducting market research is a six-step process.
Step 1begins with a definition of the purposes and objectives of the study. Deciding
at the outset what questions need to be answered will save time and money and will also
make the results easier to interpret. In this important preliminary stage, the researcher
specifies the nature of the problem, determining what facts, knowledge, and opinions
can help the entrepreneurs make a better decision.^10 For example, asking potential cus-
tomers whether they would buy your product is not as effective as asking if they would