Entrepreneurship, Second Edition

5.3. Acquiring Market Information

An entrepreneur needs to do research to identify and assess an opportunity. Intuition, personal expertise, and passion can take you only so far. Some studies show that good pre-venture market analysis could reduce venture failure rates by as much as 60%.^[] But many entrepreneurs tend to ignore negative market information because of a strong commitment to their idea. Whereas Chapter 2 defined what an opportunity is and Chapter 3 presented a checklist for assessing how attractive your opportunity might be, this chapter provides a drill-down on how you collect data to validate your initial impressions of the opportunity.

We define marketing research as the collection and analysis of any reliable information that improves managerial decisions. Questions that marketing research can answer include the following: What product attributes are important to customers? How is customers' willingness to buy influenced by product design, pricing, and communications? Where do customers buy this kind of product? How is the market likely to change in the future?

There are two basic types of market data: secondary data, which marketers gather from already published sources like an industry association study or census reports, and primary data, which marketers collect specifically for a particular purpose through focus groups, surveys, or experiments. You can find a great deal of market information in secondary resources. Secondary research requires less time and ...