new business module

INTRODUCTION TO BUSINESS 17
The market for locally produced traditional sandals for men
(see Hand-out 5)
Market segment 1: Local men with low incomes. Their product of preference is cheap
footwear providing basic protection for their feet. They usually buy cheap, low-quality local
sandals. Their main concern is the price. If they cannot find local sandals, they buy cheap
imported plastic slippers. They mainly buy on the central marketplace.
Market segment 2: Local men with moderate incomes. Their product of preference is
footwear that provides good protection for their feet, is durable, and, ideally, meets with
local fashion and traditional standards. They usually buy locally produced or mid-quality
imported leather sandals. They keep them for a long time and bring them to a shoemaker
if they need repair. Their main concerns are price and durability. They buy in small shoe
shops or directly from the producers.
Market segment 3: Local adults with high incomes. Their product of preference is highquality
local footwear. They almost exclusively buy traditional, locally produced, highquality
leather shoes and sandals. They buy several pairs and see shoes as a way to
emphasize their social status. Their main concerns are exclusivity, design and quality. They
buy their shoes in small shoe shops.
Market segment 4: Tourists and foreigners. Their product of preference is locally produced
authentic footwear. They buy the leather sandals primarily as souvenirs. They almost
exclusively buy quality sandals of traditional design. They buy primarily from the tourist
shops around the hotels.
When defining and elaborating your business idea, you should
ask yourself if there is a demand for the good or service you
plan to offer. You should ask the following questions:
• What market and what market segments do I plan to
target?
• What goods or services do customers in this market and
in these market segments buy?
• What characteristics (e.g. types, quality) do customers
require from the goods or services?
• What prices are customers willing and able to pay for
these goods or services?
Finding the answers to these questions is called market
research. It is an important step before opening for business.
When doing market research, entrepreneurs must always consider
the competition. The competitors present in the markets
and market segments they plan to target are competing for
the same customers. If they want the business to succeed, they