Entrepreneurship 1st Semester Reviewer PDF

ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost under...

ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title CONCEPT OF ENTREPRENEURSHIP e. Persuasion - means that he can entice people to buy even if theydonʼt Entrepreneur – was derived from the want to. French verb enterprendre, which means “to undertake.” This is f. A Planner - he makes plans before pinpointing to those who “undertake” doing things and does not fail to the risk of enterprise. monitor it. The enterprise is created by an g. Risk-taker - which means that he is entrepreneur and the process is called willing to gamble but he will calculate it “Entrepreneurship.” Entrepreneurs are first. innovators. They are willing to take the risks and generate unique ideas that 2. Environmental Factors which include can provide profitable solutions to the political, climate, legal system, needs of the market and the society. economic and social conditions and market situations. Entrepreneurship is all about being innovative, taking risks, and coming up Common Competencies in with ideas that can benefit both the Entrepreneurship market and society. 1. Decisive - an entrepreneur must be Factors Affecting Entrepreneurship firm in making decisions. 1. Personality Factors which include: 2. Communicator - an entrepreneur must have a convincing power. a. Initiative - doing things even before being told. 3. Leader - an entrepreneur must have the charisma to be obeyed by his b. Proactive - which means he can employees. classify opportunities and seize it. 4. Opportunity seeker - an c. Problem Solver - which means he entrepreneur must have the ability to can retain good relations with other be the first to see business chances. people. 5. Proactive – an entrepreneur can d. Perseverance - meaning he will control a situation by making things pursue things to get done regardless of happen or by preparing for possible challenges. future problems. 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title 6. Risk Taker – an entrepreneur has the economical ideas. courage to pursue business ideas. 2. Imitating Entrepreneurs - They are 7. Innovative - the entrepreneur has big business ideas and he does not those who donʼt create new things but stop improving and thinking of new only follow the ideas of other worthwhile ideas for his business entrepreneurs. Core Competencies in 3. Fabian Entrepreneurs - They are Entrepreneurship skeptical about changes to be made in the organization. They donʼt initiate 1. Economic and Dynamic Activity - but follow only after they are satisfied. Entrepreneurship is an economic activity because it involves the 4. Drone Entrepreneurs - They are creation and operation of an enterprise those who live on the labor of others. with a view to creating value or wealth They are die-hard conservatives even by ensuring optimum utilization of ready to suffer the loss of business. limited resources. 5. Social Entrepreneurs - They are 2. Innovative – The entrepreneur those who initiate changes and drive constantly looks for new ideas, thus he social innovation and transformation in needs to be creative. the various fields such as education, health, human rights, environment and 3. Profit Potential - The enterprise development. entrepreneurcan be compensated by his profit coming from the operation. ENTREPRENEURSHIP 4. Risk bearing – The entrepreneur - Is the maximization of available needs to gamble but wise enough to resources in the community and offset the risk. transform these into either products/services. Types of Entrepreneurs ENTREPRENEURʼS TASK 1. Innovative Entrepreneurs - They are those who always make new things by The entrepreneur is responsible for thinking of new ideas. They have the assembling the resources consisting of ability to think newer, better and more land, labor, and capital for the purpose of producing goods and services and 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title deciding on the rate of output his allows the entrepreneur to see things venture must produce. in a very positive and optimistic light in the midst of crisis or difficult situation. OPPORTUNITY SEEKING, SCREENING, Crisis is composed of two characters AND SEIZING in Chinese writing which means (1) OPPORTUNITY – it is an idea that has danger and (2) opportunity. commercial potential. -Wei Ji – a time of danger; a time of -Something you can make money with, opportunity develop a business around it, or create - Ji Wei – we look first at the value with it. opportunity, and yes, recognize that OPPORTUNITY SEEKING there is danger. - It is the ongoing process of ENTREPRENEURIAL HEART FLAME - considering, evaluating, and pursuing also known as the surging passion market-based activities that are Driven by passion, they are drawn to believed to be advantageous for the find fulfillment in the act and process firm. of discovery. - Essential to an entrepreneurʼs - Talks about personal passion, high opportunity seeking are the organizational commitment and people entrepreneurial mind frame, heart skills. flame, and gut game.However, o PASSION - is that great desire to entrepreneurial thinking is more attain a vision or fulfill a mission. Its concerned with learning and about wanting something so much that development. The entrepreneur is able a person would be willing to totally to use these problematic solutions as devote oneʼs self to the quest. inspiration in creating something innovative. Translating problems into o HEART FLAME - is also about opportunities. Mind frame is one of emotional intelligence or EQ, which is optimism and eagerness to explore often manifested in the entrepreneurʼs potentials and possibilities. efforts to nurture relationships with customers, employees and suppliers. ENTREPRENEURIAL MIND FRAME - 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title ENTREPRENEURIAL GUT GAME - refers d. Ecological Environment – includes all to the ability of the entrepreneur to -natural resources and the ecosystem, sense without using the five senses. habitat of men, animals, plants, and This is also known as intuition / lakas minerals. ng loob. e. Technological Environment – new SOURCES OF OPPORTUNITIES scientific and technological discoveries,which often lead to the 1. Macro Environmental Sources of launch ofcommercialization of new Opportunities refers to the “big or products with superior attributes or to macro sources” that affect the area, rendering the old ones obsolete, are the industry, and the market, which the entrepreneursʼ nightmare. the enterprise belongs to. 2. Industry Sources of Opportunities - Five Categories of Macro An industry is according to product Environmental Sources of types or according to the functions of Opportunities the product or service. a. Socio – Cultural Environment - Tracing the industry from its most includes the demographics and cultural basic raw material down to its various dimensions that govern the relevant consumer applications, otherwise entrepreneurial endeavor. known as product chain or value-added chain. Product chain focuses on the b. Political Environment – defines the volume produced or converted at each government system of the country or link of the chain. On the other hand, the local area of the business. It value added chain focuses on the includes all the laws, rules, and economic rather than the volume regulations that govern business aspect of the chain. practices as well as the permits, approvals, and licenses necessary to Participants of the industry include: operate the business. a. Rivals or competitors in a particular c. Economic Environment – supply and type of business. Example: Jollibee vs demand forces mainly drive the macro- McDonaldʼs, Globe vs Smart, and economic environment. Samsung vs Apple b. Suppliers of input to rivals as well as 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title suppliers of machineries and particular groups of people. The equipment, suppliers of manpower and consumer's age, culture, and status expertise, and suppliers of affect their preferences. merchandise. o Consumer preferences refer to the c. Customer market segments being tastes of particular groups of people. served by rivals or competitors. o Consumer piques (dislikes) refer to d. Substitute products or services, the things that irritate the customers. which customers shift of turn to. o Consumer perception is typically e. All other support and enabling affected by advertising, reviews, industries. public relations,social media, personal experiences and other channels. 3. MARKET SOURCES OF OPPORTUNITIES - It is the strategy of OPPORTUNITY SCREENING- It is the the enterprise to increase its market process of evaluating which market reach. Market trend analysis is also offers the greatest opportunity. It is conducted by determining the critical also important to make sure that that variables, which would most likely the chosen option is sustainable affect the future directions of the industry. Lastly, market traits, 12 Rs of Opportunity Screening characteristics, and behaviour are 1. Relevance to vision, mission, and identified in order to match these objectives of the entrepreneur. customertraits with the product offerings of the enterprise. 2. Resonance to values. The must match the values and desired virtues 4. MICROMARKET - Refers to the that you have or wish to impart. specific target market segment of a particular enterprise. These are target 3. Reinforcement of Entrepreneurial customers that represent the Interest. It is how the opportunity immediate customers of an enterprise resonate with the entrepreneurʼs directly buying the products or personal interest, talents and skills. services. 4. Revenues. It is important to 5. Consumers Preferences, Piques and determine the sales potential of the Perception - It refers to the tastes of products or services you want to offer. 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title 5. Responsiveness to customer needs than those requiring more resources. and wants. 12. Risks. In entrepreneurial 6. Reach. Opportunities that have good chances of expanding through endeavor, there will always be risks. branches, distributorships, However, some opportunities carry dealerships, or franchiseoutlets in more risks than others, such as those order to attain rapid growth are better with higher technological, market, opportunities. financial, and people risks. 7. Range. The opportunity can OPPORTUNITY SEIZING- It is all about potentially lead to a wide range of thriving business opportunities. It possible product service offerings, talks about how you search/thrive or thus, tapping many market segments find an opportunity for yourself. The of the industry. “pushing through” with the business opportunity. 8. Revolutionary Impact is the opportunity which will most likely be Process of Opportunity Seizing the “next big thing” or even a game 1. Crafting a positioning statement – changer that will revolutionize the the entrepreneur is advised to look at industry, then there is a big potential other competitors in the market place. for the chosen opportunity. - customer profiling will come into 9. Returns. Products with low cost of picture. production and operations but are sold at higher prices will definitely yield the - Going through the process of highest returns on investments. questioning, the entrepreneur will be able to come up with each of the 10. Relative Ease of Implementation competing productʼs Main Value the question if the opportunity will be Proposition (MVP). relatively easy to implement or there will be obstacles and competency gaps The following key points can help out to overcome. the entrepreneur on how to go about this questioning: 11. Resources Required. Opportunities requiring fewer resources from the o What are the main customer entrepreneur may be more favored segments? 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title o What are the different product “obsolete” and “old-fashioned.” attributes and features of each of the competitors. 3. Designing, prototyping, and testing the product o What are the existing marketing practices of the various competitors? - The entrepreneur must render the concept and translate it into its very o What are the market preferences of physical and very real dimensions. the consumers when it comes to the products being offered? - Be ready for the actual testing by potential customers through FGD, 2. Conceptualizing the product or surveys, product demo sessions, etc. service offering - It is an idealized abstraction of the product or service to - Assess how much resources available. be offered to the preferred market of 4. Implementing, organizing and the entrepreneur. financing Options or Directions in Coming up o Choose correct technology with a Product/Service Concept o Choose the right people o The first is to create a concept similar to the winning products in the o Design the operating work flow marketplace and ride with the obvious market trends o Specify the systems and procedures o The second is to find a market niche o Design the organizational structure that has not been filled by the UNIQUE SELLING PROPOSITION competitors. o It is what makes you different from o The third is to conceptualize a your competitors. product in a positioning category where the participants are rather weak. o It refers to how you sell your product or services to your customer. You will o The fourth is to conceptualize a address the wants and desires of your product that would change the way customers. customers think, behave, and buy, thus making existing products o A unique selling proposition is a 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title statement you choose to embody that  The proposition must be one differentiates your products and your that the competition either brand from your competitors. cannot, or does not, offer. o UNIQUE – it clearly sets you apart  Proposition must be unique and from your competition, positioning you strong. the more logical choice.  There's no requirement for a o SELLING – it persuades another to USP to be pithy (brief or exchange money for a product or condensed) or memorable. service.  USP speaks to the buyer in the o PROPOSITION – it is a proposal or language of the buyer about offer suggested for acceptance. what matters to the buyer. o Basically, a unique selling  Taglines are used in proposition, more commonly referred advertisements to catch the to as a USP, is the one thing that makes attention of the viewers. your business better than the competition. Itʼs a specific benefit that  Taglines are summary of the makes your business stand out when USP. compared to other businesses in your market.  Great taglines should incorporate or touch upon the o A USP isnʼt just a persuasive line of USP but there are many taglines copy on your homepage. Its ultimately that don't. how you position your products or even your entire business to the rest of the  Taglines could (and probably world. should) be a short, catchy summary of the USP. UNIQUE SELLING PROPOSITION & TAGLINE Remember that a USP is not a tagline, but a good tagline will effectively  Each advertisement must say to summarize the full USP in one sentence the reader: "Buy this product to make it impactful and digestible. and you will get this specific benefit." UNIQUE SELLING PROPOSITION 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title BENEFITS brands, or curbside pickup. o Creates or defines your brand HOW TO DEVELOP A UNIQUE SELLING identity: A solid and specific unique PROPOSITION? selling proposition sets the tone for what your business is, what it stands STEP 1: Use your biggest benefits for, and how it presents itself. STEP 2: Be unique o Differentiates your business from its STEP 3: Solve an industry “pain point” competitors: Your USP serves as a key or “performance gap” differentiator compared to competing businesses and alternative solutions. STEP 4: Be specific and offer proof This allows you to focus on what your business does better than others, STEP 5: Condense int one clear and further setting your company apart and concise sentence providing specific comparative STEP 6: Integrate your USP into all statements for marketing and sales. marketing materials o Overcomes customer objections: By STEP 7: Deliver on your USPʼs promise having an established value - Pain points are specific problems proposition,you can develop ready-to- faced by current or prospective go responses to overcome common customers in the marketplace. Pain objections by emphasizing the unique points include any problems the value given to customers who choose customer may experience along their your products or services. journey. o Establishes customer expectations: - Simply put, a performance gap is the Because your USP defines your brand, difference between intended and it sets the expectation that your actual performance. business will deliver the promised value. For instance, if youʼre a retail VALUE PROPOSITION shop with a selling point of having the lowest prices in town, customers will - is a business or marketing statement expect their overall experience to be a that summarizes why a consumer small amount of money spent vs other should buy a company's product or use elements, like fast checkout, high-end its service. This statement is often 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title used to convince a customer to 1. Market Segmentation - involves purchase a particular product or dividing a market into parts that reflect service to add a form of value to their different customer needs and wants lives. In creating value proposition, entrepreneurs will consider the basic - Dividing the market into small elements: target customer, segments with distinct needs, needs/opportunity, name of the characteristics, or behavior. product, name of the TYPES OF MARKET SEGMENTATION enterprise/company. o Geographic Segmentation - the total - A value proposition is a promise of market is divided according to value stated by a company that geographical locations in the summarizes how the benefit of the Philippines like provincial regions, companyʼs product or service will be cities, provinces, municipalities, and delivered, experienced, and acquired. even barangay units. When the Essentially, a value proposition entrepreneur divides the total market specifies what makes the companyʼs into a smaller segment using product or service attractive, why a geographical segmentation, the customer should purchase it, and how following variables must be considered. the value of the product or service is differentiated from similar offerings. o Demographic Segmentation - TAKE NOTE: While the USP situates a - Gender business in relation to its competitors, the value proposition focuses more on - Age how customersʼ lives will be improved - Income by working with the business. In other words, while a USP describes for your - Occupation target market how youʼre different, a value proposition answers the question: - Education Why should they care about that - Religion difference? - Ethnic group 3 STRATEGIC MARKETING APPROACHES - Family size 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title o Psychographic Segmentation - It aims to determine the set of buyers with common needs and - Needs and wants characteristics.In the market targeting - Attitude phase, the entrepreneur has already divided the total market and is now in - Social class the process of - Personality traits o evaluating each market segment and - Knowledge and awareness o selecting the target market segment or segments to serve. - Brand concept MARKET SEGMENT EVALUATION - Lifestyle o Size of the segment and its expected o Behavioral Segmentation – actual growth. behavior o Existing and probable structure of the segment. POINTS TO CONSIDER IN SEGMENTATION o Capability of the business. ✓ Accessibility of the market segment. 3. Market Positioning - the place a The market segment must be product occupies in customer minds accessible to the business. relative to competing products. ✓ Size of the market segment. The - Positioning simply refers to the act of market segment must be large enough occupying a certain place. In the field to provide wealth to the of entrepreneurship, it may either refer entrepreneurial venture. to the act of placing the business in a specific place in the industry or placing ✓ Distinction of the market segment. the product in a certain place in the The market segment must be easily market. differentiated from the total market. - NOTE: Market Positioning is to have a 2. Market Targeting - set of customers distinct place in the minds of the target sharing common needs and wants that consumers. a business decides to target. 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title MARKET (OR POSITIONING) MAP to the products is not higher than the expected benefits - illustrates the range of “positions” that a product can take in a market MARKETING MIX based on two dimensions that are important to customers ✓ The marketing mix simply refers to a mode, means, or tool used by The three steps in determining the entrepreneur to position the product in market position of the product in the the target market segment to minds of the consumer are the efficiently and effectively deliver it to following: the consumers and to convince them about the benefits that they will derive ✓ The entrepreneur determines from buying the product. whether the market position is distinct from others. ✓ The marketing mix is the set of controllable, tactical marketing tools ✓ The entrepreneur evaluates the that a company uses to produce a advantages or benefits of every desired response from its target possible position. market. ✓ The entrepreneur decides on the ✓ It consists of everything that a market position. company can do to influence demand BENEFITS OF MARKET POSITIONING for its product. It is also a tool to help marketing planning and execution. o IDENTIFIABLE - The benefits or attribute is easily associated with the ✓ Capture attention. Educate product prospects. Convert. o BENEFICIAL - The attribute provides ✓ It was created by Jerome McCarthy valuable benefits to the target in 1960, the 4Ps encourages a focus on customers Product, Place, Price and Promotion. o DISTINCTIVE ADVANTAGE - The ✓ The model has been continuously attribute is distinct to the product modified until there become 7Ps of o EFFICIENT AND REWARDING - The Marketing Mix. Three elements have cost in attaching the attribute or value been added, namely, people, 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title packaging, and positioning. o Helps understand your product or service can offer to your customers. o Helps plan a successful product The marketing mix basically offering. addresses the following questions: o Helps with planning, developing, and 1. How can the target consumers be executing effective marketing influenced to buy the product or strategies. service? o Helps business make use of their 2. What marketing strategy must be strengths and avoid unnecessary cost. adopted to convince the consumers that the product or service being o Helps be a proactive in the face of offered satisfies their needs risk. Proactive management means anticipating needs and challenges so Customer-driven strategy prioritizes that you and your team are prepared to the customer experience above all else overcome them. and uses customer needs to guide every facet of operations, from the o Help determine whether your product marketing plan to product or service is suitable for your development. customers. o Helps learn when and how to promote your product or service to your customers. 1. PRODUCT - The tangible good or intangible service offered by the business to the target consumers BASIC ENTREPRENEURIAL TENETS RELATIVE TO PRODUCT ARE AS FOLLOWS: o The product is only produced once IMPORTANCE OF MARKETING MIX there is an existing need or want. 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title distribution channel. It can include any physical store as well as virtual stores o The product must satisfy the need or or online shops on the Internet. want better that the competing products. Place definition in marketing highlights where and how a business will PRODUCT MIX strategically locate its products or It is also known as product assortment services to capture the target market's or product portfolio, refers to the attention and optimize purchases. It is complete set of products and/or used to develop marketing campaigns services offered by a firm. A product that ensure customers can mix consists of product lines, which conveniently access the products and are associated items that consumers services offered. tend to use together or think of as The entrepreneur must establish similar products or services. his/her business or product in the most DIMENSIONS OF A PRODUCT MIX strategic place or location. o WIDTH. The number of product lines The basic entrepreneurial concept offered by a company relative to place in the marketing mix is very simple and straightforward, that o LENGTH. The total number of is, put your business where your products in a firmʼs product mix consumers are willing to buy the productPlace strategy is a strategic o DEPTH. The number of variations part of the marketing mix that deals within a product line with how a company should sell its services or products. Why is it o CONSISTENCY. How closely the strategic? Because the objective is to product lines are to each other ensure the goods and services are 2. PLACE - The place where the target readily available to end users. consumers are expected and willing to Marketers should carefully choose the buy the product. location for selling their products - Place represents the location where because it will directly impact sales. the buyer and seller exchange goods or The best way to determine astrategic services. It is also called as the location for the business is by 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title conducting market research to buys products from a manufacturer or understand consumer behavior and wholesaler and sells them to end users patterns. or customers. In a sense, a retailer is an intermediary or middleman that Consumers prefer convenience. As customers use to get products from such, products must be conveniently the manufacturers. available to the consumer when they walk into a retail store or search online. Channel 3 is called a "direct- Where accessibility and product marketing"channel, since it has no availability are compromised, the intermediary levels. In this case the customer will likely favor alternative manufacturer sells directly to options. customers. Place strategy is also referred to as 3. PRICE - The value we pay in distribution strategy because it brings exchange for the product and services the products or services to consumers. offered by a company. This includes online, physical, and several other distribution methods. VARIABLES THAT HIGHLY INFLUENCE THE SETTING OF PRICES STAGES OF DISTRIBUTION CHANNEL 1. Availability of the competing Channel 1 contains two stages between products -When the supply of the producer and consumer - a wholesaler competing product is high, the price of and a retailer. A wholesaler typically the product is usually low. As an buys and stores large quantities of entrepreneur you must know then the several producersʼ goods and then level of supply and demand for the breaks into bulk deliveries to supply product. retailers with smaller quantities. While retail involves selling products directly 2. Cost of making the product - The to the end consumer, wholesale term cost refers to the amount spent involves selling products in bulk to by the manufacturer in view of the other businesses such as retail stores. expected future benefits. The manufacturing cost includes the direct Channel 2 contains one intermediary. materials, direct labor (wages paid), In consumer markets, this is typically a and factory overhead. retailer. A retailer is a company that ✓ Direct Labor – refers to the wages 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title paid to the workers who are directly The product stages: involved in manufacturing the products. ✓ Introductory Stage ✓ Factory overhead – includes indirect materials and labor and other expenses ✓ Growth Stage like the cost of light, water, fuel, or ✓ Maturity Stage machinery maintenance. ✓ Decline Stage ✓ Direct materials – pertain to the materials that form part of the finished 6. Pricing Strategies - The pricing product. model that may be adopted during the introductory stage is price skimming 3. Type of product approach. The new product is highly ✓ Industrial Products - are used as raw priced when introduced in the market , materials of other manufacturing but is gradually reduced as entities. These products usually have competitors increaseThe pricing model higher prices compared to consumer that may be adopted during the products. introductory stage is price skimming approach and price penetration. ✓ Consumer Products – are used and consumed by individuals/consumers. ✓ Price skimming approach mean the new product is highly priced when *Industrial goods are bought and used introduced in the market , but is for industrial and business use. gradually reduced as competitors Consumer goods are ready for the increase. consumption and satisfaction of human want. ✓ Price penetration approach, the product is introduced with low 4. Presence of substitute products - price.The pricing model that may be The presence of substitute products is adopted in the growth and maturity a threat to the primary product. stage is cost based model, in which Substitute products basically set the price is simply equal to the cost plus limit to the selling price of the primary desired profit margin. product. ✓ Competition Pricing - A pricing 5. Stages of the product in the market method in which a seller uses prices of 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title competing products as a benchmark products because the prices are higher. instead of considering own costs or the customer demand. ✓ Psychological Pricing - is the practice of setting prices slightly lower ✓ Product Line Pricing - The practice of than rounded numbers, in the belief reviewing and setting prices for that customers do not round up these multiple products that a company prices, and so will treat them as lower offers in coordination with one another. prices than they really are. In reality a firm has three options and o Promotional Pricing – where products these are to price lower, price the same are sold at a lower price in a limited or price higher than competitors temporary period like midnight sale,.Rather than looking at each product Christmas sale, or anniversary sale. separately and setting its price, product-line pricing strategies aim to o Odd or even pricing – where products maximize the sales of different sold at the prices that end in odd products by creating more number such as 99.99 or 78.25, use an complementary, odd pricing strategy, whereas prices ending in an even number, such as rather than competitive, products. If 200.00 or 18.50, use an even strategy. you offer more than one product or service, consider the impact that one o Prestige pricing – where products are product's or serviceʼs price will have purposely sold at a higher price in the on the others order to create a high or superior image ✓ Bundle Pricing - The act of placing ✓ Optimal Pricing - The company earns several products or services together more through cross-selling products in a single package and selling for a along with a basic core product. lower price than would be charged if This practice is based on the belief that the items were sold separately. customers tend to process a price from ✓ Premium Pricing - Setting the price the left-most digit to the right, and so of a product higher than similar will tend to ignore the last few digits of products. The goal is to create the a price. perception that the products must The main product does not have many have a higher value than competing features (and is priced low) which can 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title be enhanced through optional or o Television or radio commercials accessory products which are sold at premium by the same company o Print advertisements like those on 7. Demographic profile of the target billboards, magazines, telephone consumer – Consumers demographic directories, or newspaper. profile highly influences the process of setting the most appropriate prices of o Online advertising the goods or services. o Packaging ads - The pricing strategies most often used by retail businesses include Advertising must be able to do the psychological pricing and discount following: pricing. o Attract the attention of consumers 4. PROMOTION - The mode of o Communicate the message of the conveying information about the product product to the target consumers. o Elicit the feeling or desire to buy the - Through promotions, the business product communicates to the target consumers the pertinent information about the o Identify the benefits of the product product including its benefits, price, and position in the market. It create o Convey the message using plain and awareness of the product in the minds simple language of consumers and elicits their desire to o Appeal to consumersʼ understanding buy it. by being meaningful and believable PROMOTIONAL MIX o Distinguish the product from similar 1. ADVERTISING products The most common medium of 2. PUBLICITY - Members of media are promoting a product or a service is usually informed through a formal through advertising in the following statement or press release about a forms: particular event where the product or service will be presented or endorsed 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title of a well-known personalities. R - recognize, reward and reinforce the good behavior 3. PERSONAL SELLING - It involves a salesperson who has personal or direct I - involve and participate in the contact with the prospective activities and programs consumers and is in a competitive position to influence the consumers to D - develop skills and attitude buy the product. E - evaluate and measure performance 4. SALES PROMOTION - This strategy 6. PACKAGING - The process of putting involves giving incentives to the product in a package or container consumers so they will acquire the product or service. The most popular FIVE BASIC FUNCTIONS OF tools adopted in sales promotion PACKAGING category are discounts, coupons, cash rewards, and gift certificates. It aims 1. Protection to influence the target consumers to 2. Containment buy the product or avail of the service now. 3. Information 5. DIRECT MARKETING - It is 4. Utility of Use undertaken through the internet. The entrepreneur starts by building a 5. Promotion consumer database, performs one-on- CRITERIA FOR CHOOSING PACKAGING one approach in building consumer relationship, and sells the product MATERIALS online. 1. Protection – can the package give 5. PEOPLE - Individual employees or workers who are directly involved in ample protection to the product? the production, marketing, and sale of 2. Cost – will it be cost-efficient? the product or service. 3. Size – what is the industry practice? PRIDE PROCESS Any weight limit? P - provide a pleasant working 4. Display Value – can it attract environment 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title costumer? 4. Develop a positioning strategy 5. Convenience – is it easy to carry? BRANDING Will the package be too heavy? o The use or combination of a name, 7. POSITIONING - The place occupied term, symbol, or design to identify a by the product in the minds of the product. consumers o A brand combines dimensions that STEPS IN POSITIONING PROCESS differentiate the offering in some way STEP 1 – Confirm Your Understanding from other offering designs to meet of Market Dynamics similar need. Brand name has a narrower meaning. A brand name is a STEP 2 – Identify Your Competitive word, letter, or a group of words or Advantages letter. STEP 3 – Choose Competitive o Brand names connect a product with Advantages that Define Your Niche the benefits the customer can expect. STEP 4 – Define Your Positioning o Branding will ultimately reside(s) in Strategy the mind of every consumers, thus, it STEP 5 – Communicate and Deliver on plays a significant role in every the business. Positioning Strategy o Branding is providing products and services with the power of brand. HOW TO CREATE AN EFFECTIVE MARKET o Branding is all about making differences. POSITIONING STRATEGY 1. Determine the company uniqueness by comparing to competitors To brand a product, it is essential to teach consumer “who” the product 2. Identify current market position is—by giving it a name and using other brand elements to help identify it—as 3. Competitor positioning analysis well as “what” the product does and 12-MACHIAVELLI Alyzza Neri  ENTREPRENEURSHIP [ 1st sem: Reviewer] Key Notes (annotations) Underline = main idea Blue Highlights = supports the main idea ? = I don't understand ( )= unfamiliar 🔴 circle ( )= I almost understand Blue ink : note/explanation TITLE = main title “why” consumers should care. 5. Can be pronounced in only one way o It is a long-term design for the 6. Can be pronounced in all languages (for international markets) development of a popular brand in order to achieve the goals and 7. Suggestive products benefits objectives. A well-defined brand strategy shakes all parts of a business 8. Adaptable to packaging/labelling and is directly linked to customer needs needs, wants, emotions, and 9. No undesirable imagery competitive surroundings. 10. Always timely (does not go-out of COMMONLY USED BRANDING date) STRATEGY 11. Adaptable to any advertising 1. Purpose (Functional or Intentional) medium 2. Consistency 12. Legally available for use (not in use 3. Emotion by another firm) 4. Flexibility 5. Employee Involvement 6. Loyalty 7. Competitive Awareness GOOD BRAND NAME CHARACTERISTICS 1. Short and simple 2. Easy to spell and read 3. Easy to recognize and remember 4. Easy to pronounce 12-MACHIAVELLI Alyzza Neri