Output and Market Size

• Output requirements are tangible specifications a consumer expects to be fulfilled in a product.
• Service requirements can take the form of output requirements; an example is when on-time arrival becomes an output requirement when a consumer hires a multi-cab.
• For customers who buy gadgets like phone speakers, output requirements include specifications like loudness and clarity.

Market Size

• Calculating market size and its potential value is critical for entrepreneurs starting a business.
• Market research helps determine possible customers in a particular locality.
• Market size is the arena where entrepreneurs play their business.
• It is the approximate number of sellers and buyers in a particular market.
• Companies determine market size before launching a new product or service in an area.
• Strategic marketing research from reliable sources can be used to determine the market size.
• The first step is to estimate the potential market (approximate number of customers).
• The second step is to estimate the customers who probably dislike buying the product or service.
• The third step is estimating the market share by plotting and calculating the competitor's market share.
• Market size becomes the most important factor for raising funding for a business.

Target Market

• Market Targeting is a stage in market identification that aims to determine buyers with common needs and characteristics.
• Prospect customers are a market segment that an entrepreneurial venture intends to serve.
• Targeting a specific market can exclude people who do not fit the criteria.
• Target marketing allows focus of marketing money and brand message on a specific market.

Market Segmentation

Common methods of segmentation are geographic, demographic, psychological and behavioural.

• Geographic segmentation divides the total market based on geographical location.
• Factors to consider include climate, dominant ethnic group, culture, and density (rural or urban).
• Demographic Segmentation divides the market based on consumers.
• Factors to consider include gender, age, income, occupation, education, religion, ethnic group, and family size.
• Psychological Segmentation divides the market based on how customers think and believe.
• Factors to consider include needs and wants, attitudes, social class, personality traits, knowledge and awareness, brand concept, and lifestyle.
• Behavioral Segmentation is divided by customer's behaviour pattern as they interact with a company.
• Factors to consider include perceptions, knowledge, reaction, benefits, loyalty, and responses.

Customer Requirements

• Customer requirements are the specific characteristics that customers need from a product or service.
• Two types of customer requirements exist: service and output.
• Service Requirement is an intangible thing or product a customer can't touch but can feel the fulfillment from.
• Elements of service include on-time delivery, service with a smile, and easy payment options.
• This includes all aspects of how a customer expects to be treated while purchasing and how easy the buying process is.

Value Proposition and Unique Selling Proposition

• Unique Selling Proposition (USP) refers to how a product or service is sold to customers.
• USP addresses the wants and desires of customers.
• Effective USP tips include:
• identifying and ranking the uniqueness of the product or service's characteristics
• being specific
• keeping it short and simple (KISS)
• Entrepreneurs present the best feature of their product or service that differentiates it from competitors.
• Identifying USP requires marketing research and should emphasize what differentiates the product from competitors.
• Value Proposition (VP) summarizes why a consumer should buy a company’s product or use their service.
• USP and VP are used to differentiate products from competitors and are valuable frameworks for entrepreneurs.

Value Proposition Elements

Entrepreneurs consider the following basic elements in creating a value proposition:

• Target customer
• Needs/opportunity
• Name of the product
• Name of the enterprise/company
• An important aspect of Value Proposition is that it must be truthful and establish credibility.
• Aling Charing demonstrates USP by offering a sari-sari store that opens 24/7, which differentiates it from competitors.

Definitions

• Buyers: Those who pay cash in exchange for goods and services.
• Competition: Act or the process of trying to get something or to win.
• Entrepreneurial process: Steps taken to begin a new enterprise, it is a step-by-step method to set up a business.
• Entrepreneurial ideas: Innovative concept for financial gain, usually centered on a product or service.
• Essentials of entrepreneur's opportunity: Seeking (mind frame, heart flame and gut game) as basics in seeking business opportunity.
• External environment: Refers to the physical, societal, and industry environments.
• Government: Refers to the local (municipality, city or provincial) or national government and its branches.
• New entrants: Those who enter something.
• Opportunity: Seeking: The considering, evaluating, and pursuing market-based activities beneficial for the business.
• Rivalry: State or situation in which people or groups compete with each other.
• Sources of opportunity: Assessed by looking environment changes, technological discovery and advancement, government's agenda/ policies/ programs and thrust, people's experiences and interest
• Substitute: Anything that replaces or functions as another similar item.
• Suppliers*: Those who supply what is needed or wanted.
• Buyers: The ones that pay cash in exchange for goods and services.
• The buyer has strong and magnified bargaining power.
• Potential New Entrants: Defined as businesses or companies that can penetrate or enter a market. New entrants decline to join the business if it requires capital, which gives a threat to the business.
• Rivalry Among Existing Firms: State or situation where business organizations compete, depends on competitions marketing strategies (free-bies & special offer).
• Substitute Products: A substitute serves the same purpose as another product.
• Suppliers: Provides what is needed in business operations such as office supplies.

Factors of Competition

• Buyers: Have influence over the price or in the bargaining strategy and can affect the terms of the exchange.
• Potential New Entrants: Companies that can penetrate or enter a particular industry.
• The level of capital requirements can influence the competition.
• Rivalry among Existing Firms: Competition depends on marketing strategies like freebies and special offers. Intensity of rivalry is characterized by diversity of rivals, number of competing firms, characteristics of products/services, increased capacity, amount of fixed costs and rate of industry growth.
• Substitute Products*: Products that serve the same purpose as one another.
• The Suppliers: Provide something businesses need for operations.
• Government's Thrust, Programs, and Policies: Priorities, projects, programs, and policies of the government are sources of ideas.
• People's Interests: The interests, hobbies, and preferences of people are rich sources of entrepreneurial ideas.
• Past Experiences: Expertise and skills gained from previous work can lead to opening a related business.

Areas to Consider

• The Physical Environment: includes climate, natural resources, and wildlife.
• The Societal Environment includes political forces, economic forces, sociocultural forces (customs, lifestyles, and values), and technological environment.
• The Industry Environment of a business includes competitors, customers, creditors, employees, government, and suppliers.

Essentials of Entrepreneurship

• The entrepreneurial process involves the creation of entrepreneurial ideas, identification of opportunities, and opening of a venture.
• Essentials of entrepreneur's opportunity involve seeking to establish the basic foundation.
• The process includes having entrepreneurial mind frame, entrepreneurial heart flame, and entrepreneurial gut game.
• Sources of opportunities include changes in the environment.
• A person with an entrepreneurial drive views changes in the external environment positively.
• The External environment refers to the physical environment, societal environment, and industry environment.