Welcome to Unit 2, Video 1. Market Research and Testing to Identify Opportunities. In this video, we will review the need for market research. We will also introduce both informal and formal types of research and we will preview the other Unit 2 topics. Let's quickly review market research. As you may remember from Unit 1, Video 10 Market research is the collection and study of information about what people like to buy. Market research is an important part of new product development. It helps the entrepreneur test how people may respond to a new product before making an investment. If people respond positively, then the entrepreneur can find those people who would be most likely to buy a new product. This group is called a Market Niche. If people respond positively an entrepreneur can use the information to help persuade investors that the new product will be successful. If people do not respond positively, then the entrepreneur has two choices. Make changes to the new product and then do more research to test people's responses again or decide to develop a different idea for a new product. Market research is important to gain information about the product but it also is important to learn more about customers. Market research can answer the following questions. What are their demographic profiles? Demographic profiles include things like sex, age, and income. What are their past and current preferences? What are their future needs? What features and benefits from product do they want? Would they be willing to buy this product? How much would they be willing to spend? All of this information is important to decide whether a product is really an opportunity. Now, let's turn to looking at the two methods for doing market research, Informal and Formal. Informal research often occurs to casual conversations. Formal research requires using specific questions. Formal research is usually done by a survey or through a focus group. A Survey is a set of questions that people are asked to gather data, data is information, or to find out their opinions. Surveys are way to collect Quantitative data. Quantitative data can be measured in amount or number. A survey question might ask how many times somebody uses a product each month. This is Quantitative information, because it can be measured. A Focus group is a group of people who are brought together to discuss a particular subject. They do this in order to solve a problem or suggest ideas. Focus groups are a way to collect Qualitative data. Qualitative data is about opinions feelings and experience. Unlike facts, it can't be measured. A Focus group question might ask what features do people in the group like in a product and why? These answers will vary and are not easily measured. This is qualitative information. Here's a simple example to show the difference between quantitative and qualitative data. A survey asks 100 people the following two questions. One, how many times do you brush your teeth everyday? Two, why? A researcher could quantify or count the answers to question 1 by analyzing how many people responded with 1, 2, 3 or 4 times per day. This would be quantitative data because it is measurable. On the other hand, the answers to question 2 would be impossible to count, because people could express their answers in many ways, and with many different reasons. This would be Qualitative data. Both Quantitative and Qualitative data are useful when deciding whether a product idea is an opportunity. In this video, we have briefly discussed how market research helps an entrepreneur test their response to a new product and learn more about customers. We looked at Informal and Formal types of research. And introduced the two Formal method of a survey and a Focus group. We also briefly discussed Quantitative and Qualitative data. In this unit, we'll learn more about both informal and formal market research. We will practice listening strategies, question structures, and intonation. Finally, in preparation for the final unit assessment, we will also create a formal survey and talk about how to collect and evaluate results.