ENTREP - 1Q PDF

ENTREP INTRODUCTION TO ENTREPRENEURSHIP ENTREPRENEURSHIP proactive process of developing a business venture to make a profit seeking opportunities in the market, establishing and operating the business out of the opportunity and assessing its risks and rewards throug...

ENTREP INTRODUCTION TO ENTREPRENEURSHIP ENTREPRENEURSHIP proactive process of developing a business venture to make a profit seeking opportunities in the market, establishing and operating the business out of the opportunity and assessing its risks and rewards through close monitoring of the operations USEFULNESS OF THE COURSE TO STUDENTS 1. Develop skills in starting up a business. 2. Demonstrate skills in maintaining business in long term basis. 3. Enhance knowledge of business operations and expansion. 4. Finds next level of training or access other resources and services. 5. Demonstrate business management. 6. Uses components of a business plan. 7. Considers to become employer rather than employee. 8. Changes attitude toward entrepreneurship as a means of making a living. 9. Changes in personal and career attitudes. IMPORTANCE OF ENTREPRENEURSHIP EDUCATION 1) Entrepreneurship is very important to our economy as key driver. 2) Entrepreneurship education is an individual lifelong learning process. 3) Entrepreneurship will energize school management. 4) Entrepreneurship will transform learners to be innovators. ENTREPRENEURSHIP ❖ science of converting processed ideas into a remarkable business venture. ❖ capacity for innovation, investment and expansion into new market, products and techniques COMPETENCY ❖ capability, capacity and ability of the learner in handling situations in various areas in business operations such in marketing, management, production or technical and financial. ENTREPRENEURIAL COMPETENCIES A. Locus Control - determine the state to which a person agreed that their actions can directly affect a situation or that they can control a result. B. Specific Goal Setting - motivated to set goals, particularly business growth objectives, have been found to increase firm growth C. Self-efficacy - must believe in their own ability or self-confidence. D. Layers of competency - know the group of attributes, some of which are applicable for all entrepreneurs, while others are occupation or industry specific. E. Need for achievement - must have a high need for achievement take responsibility for outcomes. F. Ambition - must be motivated, persistent and persevere even in the face of situational challenges. G. Willingness to learn - should have a strong willingness to learn often pursue opportunities to acquire new skills and competencies. H. Strong initiative - must have a high initiative to work hard. work independently to achieve task master, regardless of the extra effort necessary to do so. I. Adaptability and flexibility - must learn how to be highly flexible and adaptable often deal very well with a unique adaptability to choose actions even without all necessary information. J. Willingness to take risks - identify and calculate risks. skilled at developing new plans and scenario. K. Interpersonal skills - have skills of working well with people from different backgrounds. INDUSTRY WIDE COMPETENCIES/WORK COMPETENCIES  Networking and collaboration Creativeand critical thinking Organizing Checking, examining and recording Planning Business principles Computer competencies 10 COMPETENCIES FOR ENTREPRENEURIAL SUCCESS 1. Integrity 2. Conceptual Thinking 3. Risk Taking 4. Networking/Collaboration 5. Strategic Thinking 6. Commercial Aptitude 7. Decisiveness 8. Optimism 9. Customer Relation Service 10. People Centered CORE COMPETENCIES IN ENTREPRENEURSHIP o Negotiating o Planning o Risk assessing o Purchasing o Accounting o Recruiting and training o Selling o Controlling o Dealing with emergencies JOB OPPORTUNITIES Entrepreneurship helps the Philippine economy to uplift its performance in the worldwide competition in terms of economic level. a. Employment is one great factor in economic development b. Income opportunity in the countryside is still subsistence in nature PROFILE OF A SUCCESSFUL ENTREPRENEUR 1. Strong desire for independence 2. Develops strong drive to succeed 3. Strong determination in decision making 4. Develops feedback mechanism for results. 5. Results-driven individual CAREERS IN ENTREPRENEURSHIP 1. Mid-level management 2. Business consultant 3. Sales 4. Research and development 5. Fundraiser 6. Teacher 7. Recruiter 8. Business reporter Module 2: Developing a Business Plan Business Plan also called a venture plan  is a step-by-step guide that will assist you in realizing your business idea. shows the profile of the business by describing its product/service, its potential buyers, the production process, as well as the management and financial aspects of the business. Environmental Scanning - the environment of business is vast with opportunities and the entrepreneur must have a greater look into this potential as well as the conditions prevailing in the community. Strength, Weaknesses, Opportunities, Threats (SWOT) SWOT analysis - entrepreneurial tool in determining the profitability of the business operation. Strengths, Weaknesses: Internal; controllable Opportunities, Threats: External; uncontrollable STRENGTHS Available technology in product processing The source of raw materials must be abundant and at lower price Skilled workers must be available Capital investment in machinery and operating expenditures Expertise and technical skills of the management team WEAKNESSES Poor quality and high price Product design and appeal Production cost Supply and demand Weak product management OPPORTUNITIES Product demand Presence of poor quality in the market Government policies and support Liberal credit terms and interest rates THREATS Entrance of Competition Limited supply of raw materials The emergence of leftwing labor unions Basic Phases of Business Plan 1) Marketing and Distribution Study - Deal with product demand analysis. 2) Production and Technology Study - the machineries, plant location, and other technical aspect in the making of product. 3) Financial Management - capital investment and sources of funding the operation of the business. Micro Business Plan - Used to assess, examine and analyze the viability or feasibility of the study. A. Executive Summary – synopsis of your business plan. B. Marketing plan – tell how fast or slow your product will move in the market C. Operations plan – company’s expected sales for the coming year and the costs of running the business in general D. Financial plan – show how much money is needed to generate sales; how much is going to be spent on a particular item; and how much will be borrowed and paid Problem-Identified Research ❖ Brand Image - impression in the consumers’ mind of a brand’s total personality. ❖ Market Characteristics - attributes of the buyers in making decisions related in purchasing a certain product. ❖ Market Potential - estimated maximum total sales revenue of all suppliers of a product in a market during a certain period. ❖ Market share - percentage of total sales volume in a market captured by a brand, product or company. Problem-solving Research ❖ Distribution Research: how to transfer the product from the manufacturer to ultimate user. ❖ Market Segmentation: Grouping customers by similar characteristics or similar purchase behaviors.  ❖ Pricing Research: ideal price for the product. ❖ Product Research: testing the new or revised products or completing test marketing. ❖ Promotional Research: best research in the area of disseminating information. Market Analysis – is a quantitative and qualitative assessment of a market ability to respond positively. 1. Demographic and Segmentation Demographic – statistical characteristics of human population. Segmentation – process of dividing into segments with similar characteristics. 1. Target Market – type of customers that are focused within the market. 2. Market Need – determine the needs of the market through analysis based from research conducted. 3. Competition – determining the competitor’s positioning and describe their strengths and weaknesses. Product: Its Nature and Sustainability Levels of Product 1. Tangible products (Actual) – basic physical appearance which can be a service or idea having precise specifications and is offered under a given/specified description (Ex.: Honda Brio model) 2. Augmented product – includes the image and service features of a certain entity. It gives on the intangible benefits that the customer will be getting from buying the product. (Ex.: Medical and dental benefits) 3. Generic product (Core) – emphasizes the impact of the product to the consumer. signifies the purpose of its existence and the primary objective in creating the product. (Ex.: Prestige, status signal, professional image) Types of Products 1) Tangible products a) Durable goods – physical products that are used over a long period of time b) Non-durable goods – physical products that are quickly and easily be consumed or worn out 2) Services – intangible products a) Rented-goods services – consumer rented facility b) Owned-goods services – repair and maintenance services rendered c) Non-goods service – personal service Consumer Products - goods and services destined/produced for the final consumer for personal, family, or household use. Types of Consumer Products 1) Convenience Products - purchased with the minimum or less effort because the buyer has knowledge of product characteristics prior to shopping. a) Staples – low priced items that are routinely purchased on a regular basis b) Impulse – items consumer does not plan to buy 2) Shopping products - consumers acquire through further knowledge and information in order to make final purchase decision. (Airline tickets, furniture, electronics, clothing, and phones) a) Attribute-based shopping products – provide information and evaluated product features, performance b) Price-based shopping – enable customers to judge product attributes 3) Specialty products - items with particular brands and stores to which consumers are loyal and ready to exert special effort. (specific brands of fancy products, luxury cars, professional photographic equipment, and high-fashion clothing) 4) Unsought products - consumers are either not aware of the brand existence or have awareness of the brand however not usually considering buying it. (Ex.: funeral services, encyclopedias, fire extinguishers and reference books) Industrial Products - goods or services purchased for use/consumption in the  production/manufacturing of other goods or services 1) Accessory equipment (capital equipment) 2) Raw materials (materials and parts) 3) Industrial or operating supplies New Product Development Process 1. Internal – looks at the company’s objectives and resources 2. External – looks at the customer’s needs and wants Product Satisfying Features A. Design B. Product colors C. Product quality – features and attributes of a product or service D. Product warranties – state where buyer is assured that the product meets the specifications stated in the product Establishing Products and Services 1) Branding – name, term, signs, symbols, designs, or combinations of these which serve as identification of the products, services, or institutions. 2) Packaging – process of designing and producing container or wrapper for products. 3) Labeling – simple tags to intricate graphics, label plays a vital role in creating an identity to the brands. It serves as identification of the brand. 4) Product support service – essential in building healthy relationships with customers. Stages of Product Life Cycle 1. Product Development New Product Planning Process a. Idea generation – searching and looking for new product or business opportunities. b. Idea Screening – most feasible and practical ideas to develop c. Concept Testing – feedback from the consumer. d. Marketing strategy and Development stage – based on the tested and treated new product concept. e. Business Analysis – review of market factors, revenues, cost, trends and profit. f. Product Development – converted into tangible form g. Test Marketing – selling of a fully developed product in selected city (product’s marketability) h. Commercialization – actual marketing of the product in the target market 2. Introduction a. introduced into the marketplace and generate customer interest. b. research and development, market testing, and launching of the product. 3. Growth a. expand distribution and the range of available product alternatives. b. having sales increase at a fast rate. 4. Maturity a. companies try to maintain lower price, better product features for as long as possible. b. Stage when sales are near their peak. 5. Decline a. falls as substitutes and new competitors enter the market. b. Final stage of the cycle. Unique Selling Proposition (USP) ❖ a marketing strategy that focuses on a product’s special feature, one that is not carried by any other product Value Proposition ❖ is a promise of value to be delivered and recognized.  ❖ belief from the customer how value (benefit) will be delivered and experienced. Target market - as the potential buyer of the product. Business-to-business markets include: 1. Target market 2. Frequency of product purchase 3. Tendency for replacement needs versus expansion purchasing process. 4. Estimates of market size, initial targeted geographic area, enterprise’s targeted market share. Business-to-consumer markets include: 1. Demographic factors, such as income level, age range, gender, educational level, ethnicity of the target market; 2. Psychographic factors of the target market Categories of Consumer A. Price Shoppers – interested in the best deal for a product. commonly called as PRAKTIKAL and price conscious. B. Brand-Loyal Customers – believes that present brands are superior to others and are willing to pay fair prices for products. C. Status Seekers – interested in prestigious or signature brands or known product categories and willing to pay at any price. D. Service or Feature – seeks a high value on customer service and product features and will pay for them. E. Convenience Shopper – value nearby locations, long store hours and are willing to pay for easier shopping. Module 3.1: Product and Place Marketing mix – strategy in choosing and implementing the best possible course of action to attain the organization’s long-term objectives and gain customer bonding ➔ original 4Ps (product, place, price, promotion) ➔ additional 3Ps – people, physical, and process Original 4Ps PRODUCT ❖ any physical good, service, or idea that is created by an entrepreneur in serving the needs of the customers and addressing their existing problem. ❖ Product strategy - roadmap of a product and outlines what the product will become ❖ Level 1: Core Benefits of the Product or Service ❖ Level 2: Physical characteristics of the product or service ❖ Level 3: Augmented benefits of a product or service Product Strategies Breadth strategy – reaching multiple segments with single product Depth strategy – serving one segment with multiple products Tailored strategy – customizing products for each segment PRICE peso value that the entrepreneur assigns to a certain product or service after considering its costs, competition, objectives, positioning, and target market. Objective Sales Based – firm is interested in sales growth or maximizing market share. Profit Based – firm is interested in maximizing profit, earning a satisfactory. Status Quo Based – maintain good image to the community by creating projects that protect its welfare and goodwill. Broad price policy - pricing decisions are coordinated from other sellers. Penetration pricing – uses low prices to capture customers.  Skimming pricing – uses high prices to attract a market segment concerned with product quality, status. Price strategies - Ways to accomplish the goals and objectives of the company in gaining profit. Cost-based price strategy – sets prices by computing costs, expenses Demand-based price strategy – sets prices after researching consumer desires Competition-based price strategy – sets prices in relation to the competitors Implementing price strategy Customary pricing – price is maintained over an extended period of time Variable pricing – price responds to costs fluctuations or differences in demand. One-price policy – set one price for all products available for sale even though they differ from design Flexible pricing – based on customer’s ability to negotiate or buy power of the customer Odd pricing – uses odd numbers to attract customers Price-quality association – having a high price contain high quality materials Prestige pricing – follow the price floor and ceiling set by the government Leader pricing – selling key items at low prices to gain consumer loyalty within its product line. Multiple-unit pricing – offer discounts to consumers for buying in large quantities Price lining – sells two models of different quality and features at different prices Price bundling – offers a basic product and service for one total price. Unbundled pricing – sells by individual components and allows customer to decide what to buy Geographic pricing – prices are set depending on the distance of the buyer to the seller Terms of payment – price agreements including discounts, timing of payments and credit agreements PLACE location or the medium of transaction. Channel of Distribution - people or organizations involved in the distribution process. Common Distribution Channels: Direct sale - company/firm plans are to move goods directly to the users. Original equipment manufacturer sales - selling a manufactured product which is later sold as a finished product to the end user. Manufacturer’s representative - wholesaler employed by producers and paid according to quantity sold. Wholesalers - sell to retailers or other agents for further distribution through the channel Brokers - distributors who buy directly from wholesalers and sell to retailers or end users. Retailers - sell directly to customers in the store. Direct mail - printed materials used in a targeted campaign to consumers. Basic Types of Channel Distribution: Direct channel distribution – transfer of goods & services from manufacturer to final user or customer without the intervention of independent middleman Indirect channel distribution – transfer of goods or tangible/intangible products and services from manufacturer or producers to independent intermediaries to customer. Intensity of Channel Coverage: Exclusive distribution – limited number of middlemen used in a geographic area. Selective distribution – organizing a moderate number of wholesalers Intensive distribution – organizing a large number of middlemen used to obtain widespread market coverage and channel acceptance. Physical Distribution – covers the broad range of activities in connection with the efficient delivery of raw materials & finished products to designated places and designated times and in proper conditions. Price adjustments - Changes in cost, competitive conditions and consumer demand. Factors that Influence Price Determination Internal organizational factors – marketing objectives, marketing mix strategy and the  cost-plus pricing strategy. External factors – market demand, competitors’ strategy and the economic and social concerns. PROMOTION presenting the products or services to the public and how these can address the public’s needs, wants, problems, or desires. Promotional mix – combination of the strategies to accomplish the promotion objectives of an organization. Promotional Mix Tools – entire set of activities, which communicate the products, brand or service to the user. Advertising – paid, non-personal communication regarding goods, services, organizations transmitted through various media by business firms, government, Publicity/Public relations – non-personal communication regarding goods, services, organizations transmitted through media but not paid by an identified sponsor. Personal selling – oral communication with prospective buyers by paid representatives for the purpose of making sales. Sales promotion – paid marketing communication activities that stimulate consumer purchases and dealer effective. Promotion Strategy 1. Advertising Aspects - Advertising budget, Positioning message, First year media schedule 2. Public Relations – detailed presentation of the publicity strategy of the firm 3. Sales promotion – means used to support the sales message like special sales, coupons, contests, etc. 4. Personal sales – present the sales strategy which includes pricing procedures, rules on returns and adjustments, etc. Extended Marketing Mix (3Ps) PEOPLE identify the specific, necessary job roles of employees and their descriptions, so they will be able to know their purpose clearly and serve customers well. PROCESS the step by step procedure or activity PHYSICAL EVIDENCE/ENVIRONMENT lasting proof that the service has happened, in terms of buying a physical product; the physical evidence is the product itself. Module 3.3: Packaging, Positioning, and Branding PACKAGING how the product or service is presented to customers. overall identification (look and feel) of the product of service. to entice the customers to purchase the product or service Servicescape - the overall ambiance of the place where the service is performed. Packaging Strategies 1. Family packaging - making the package identical for all products using common feature on all products 2. Reuse packaging - designing and promoting package which can serve other purposes when contests are consumed. 3. Multiple packaging - placing several units of a product in a single container. POSITIONING how the firm differentiates their product or service from those of the competitors and serving a niche. Product Positioning  Create an image to the public presenting how they want to position the product. target market must be well informed about a new product – what it is, what it can do, what makes it better than others, and who should buy it. Market Positioning Innovator/Leader vs. Follower - company can be considered as an innovator/leader means being an initiator in selling a new product to the market. Domestic vs. International/Global - only for local consumption. focuses only on the minority of markets in the country. Quality vs. Price - Quality must be the priority in selling the product not considering how much it will cost, prioritizes the materials being used BRAND name or mark is intended to identify the seller’s product and differentiate it from the product of the competitors. Brand mark - part of the brand that appears in the form of symbols designed in distinctive lettering or colors. Advantages of Branding 1. Brands make it easy to identify the product or service. 2. It assures the buyer that they get the same quality of products. 3. It reduces price comparison Branding Strategies 1. Producer’s Strategy – employed by product manufacturers’ that dominate the greater market due to the superiority of their product. 2. Middleman’s Strategy – called as co-branding where the producer and sole distributor carry the brand name of the manufacturer and that of the middlemen. Advantages of Co-Branding 1. It creates broader customer appeal 2. It develops greater brand equity 3. It expands the middlemen brand in the market Disadvantages of Co-Branding 1. Coordination is oftentimes difficult with the producer and the middlemen 2. It entails legal contract which can be complex and difficult.