Recognize a Potential Market - Entrepreneurship Lesson PDF

Okay, I will do my best to convert the attached document into a structured markdown format. # Lesson 1: Recognize a Potential Market ## What is It? ### Entrepreneurial Ideas The creation of an entrepreneurial idea leads to the identification of entrepreneurial opportunities, which in turn results...

Okay, I will do my best to convert the attached document into a structured markdown format. # Lesson 1: Recognize a Potential Market ## What is It? ### Entrepreneurial Ideas The creation of an entrepreneurial idea leads to the identification of entrepreneurial opportunities, which in turn results in the opening of an entrepreneurial venture. The entrepreneurial process of creating a new venture is presented in the diagram below (Aduana, 2017). **Figure 1. The Entrepreneurial Process of Creating a New Venture** The image is a diagram representing the entrepreneurship process as three horizontally arranged, rectangle shapes. From left to right these shapes read: * Creation of entrepreneurial Ideas * Identification of entrepreneurial opportunities * Opening of entrepreneurial venture ## Essentials in Entrepreneur's Opportunity Seeking These are the basic foundations that an entrepreneur must have in seeking opportunities: * Entrepreneurial mind frame. This allows the entrepreneur to see things in a very positive and optimistic way in the midst of a difficult situation. Being a risk-taker, an entrepreneur can find solutions when problems arise. * Entrepreneurial heart flame. Entrepreneurs, driven by passion, are attracted to discover satisfaction in the act and process of discovery. Passion is the great desire of an entrepreneur to achieve his/her goals. * Entrepreneurial gut game. This refers to the ability of the entrepreneur of being intuitive. This is also known as intuition. The gut game also means confidence in one's self and the firm believes that everything you aspire to be reached. ## Sources of Opportunities There are many ways to discover opportunities. Looking at the big picture, some have noticed the emerging trends and patterns for business opportunities, while others are trying to find out their target market. Some are the following sources of opportunities: ### 1. Changes in the Environment Entrepreneurial ideas arise when changes happen in the external environment. A person with an entrepreneurial drive views these changes positively. *External environment* refers to the physical environment, societal environment, and industry environment where the business operates. * 1.1 The physical environment includes: * a. Climate- the weather conditions. * b. Natural resources- such as minerals, forests, water and fertile land that occur in nature and can be used for economic gain. * c. Wildlife- includes all mammals, birds, reptiles, fish, etc that live in the wild. * 1.2 The Societal environment includes the various forces like: * a. Political forces- includes all the laws, rules and regulations that govern business practices as well as the permits, approvals and licenses necessary to operate the business. * b. Economic forces- such as income level and employment rate. * c. Socio-cultural forces- customs, lifestyles and values that characterize a society. * d. Technological environment- New inventions and technology innovations. * 1.3 The industry environment of the business includes: * d. Employees * e. Government * f. Suppliers For example, one factor in the physical environment that can easily change is the climate. The temperature is very high during summer but very low during the rainy season. An individual with entrepreneurial drive can be extremely imaginative and inventive in identifying opportunities. He/she can venture a business that responds to the needs of the people during summer and rainy season. ### 2. Technological Discovery and Advancement A person with entrepreneurial interest sees the possibility of business opportunities in any new discovery or because of the latest technology. For example, an individual with knowledge in the repair and installation of a machine engine discovers additional engine parts that considerably reduce fuel consumption. ### 3. Government's Thrust, Programs and Policies The priorities, projects, programs and policies of the government are also good sources of ideas. For example, the use of firecrackers to celebrate New Year's Eve is strictly prohibited. People without entrepreneurial interest will view the ordinance as a plain restriction. However, for an entrepreneur, it is a business opportunity to come up with a new product that will serve as a substitute for firecrackers. ### 4. People's Interest The interest, hobbies and preferences of the people are a rich source of entrepreneurial ideas. Like the increasing number of internet cafes at present could be lead to the strong attachment of young people to computers. ### 5. Past Experiences The expertise and skills developed by a person who has worked in a particular field may lead to the opening of related business enterprises. For example, an accountant who has learned the appropriate accounting and management skills and techniques in a prominent accounting firm can start his/her business venture by opening his/her own accounting firm. ## Forces of Competition Model It is alsoKnown as the "five forces of competition." An industry environment is a competitive environment. Regardless of what product or services you have, competition is always present. *Competition* - It is the act or process of trying to get or win something. For example, the prices are lower when there is competition among the stores. These are the five forces competing within the industry: * Buyers * Potential new entrants * Rivalry among existing firms * Substitute products * Supplier --- ## 1. Buyers The *buyers* are the ones that pay cash in exchange for your goods and services. For example, the influence of the price or in the bargaining strategy. The buyer has strong and magnified bargaining power. The threat of its bargaining power will be less if the following factors are noticed: a. There are several suppliers available in the market. b. the buyer has the potential for backward integration. c. The cost of switching the supplier cost is minimal. d. The product represents a high percentage of the buyer's cost. e. The buyer purchases large portions of the seller's product or services. ## 2. Potential new Entrants A *new entrant* is defined as one who enters something. For example, the level of capital requirements, if the business requires huge capital, potential new entrants should decline to join the business. This gives a threat to the business. This can be noticed if there is the presence of the following factors: a. substantial capital requirement. b. strict government policy. c. Difficulty in accessing distribution channels. d. Economies of sale. e. High cost of product differentiation. f. High switching cost ## 3. Rivalry among Existing Firms *Rivalry* is a state or situation in which people or groups are competing with each other. For example, it depends on the marketing strategy of your competitor, like giving freebies and special offers. The intensity of rivalry among existing firms is characterized by the following factors: a. Diversity of rivals. b. Number of competing firms. c. Characteristics of the products or services. d. Increased capacity. e. Amount of fixed costs. f. Rate of industry growth. ## 4. Substitute Products *Substitute* means anything that takes the place or function of another. For example, the consumers decide to use margarine as a substitute for butter. In case the price of butter increases, preferably the consumer will gradually switch to margarine. A substitute product can give a big threat in the industry environment if the following factors are noticed: a. Switching cost is low. b. Preferences and tastes of the customers easily change. c. Product differentiation is highly noticeable. d. The quality of substitute products dramatically improves. e. The price of the substitute product is substantially lower. ## 5. Suppliers The *Suppliers* are the ones that provide something that is needed or wanted. For example, if the supply and services being offered are unstable or keep. The intensity of the threat is strong in this kind of competitive force in the industry. this can be noticed if there is the presence of the following factors: a. The supplier has the ability for forward integration. b. Suppliers in the industry are few, but the sales volume is high. c. Substitute products are not readily available in the market d. The switching cost is very high. e. The product or service is unique. --- ## What I Have Learned ### Definition of Terms * **Opportunity seeking** - Process of considering, evaluating, and pursuing market-based activities that are accepted to be beneficial for the business. * **Entrepreneurial process** - Can be defined as the steps taken in order to begin a new enterprise. It is a step-by-step method, one has to follow to set up a business. * **Entrepreneurial ideas** - An innovative concept that can be used for financial gain that is usually centered on a product or service that can be offered for money. * **Essentials of entrepreneur's opportunity seeking** - These are the basic foundation that the entrepreneur must have in seeking opportunities, such as entrepreneurial mind frame, heart flame, and gut game. * **Sources of opportunity** - Can be attained by assessing and looking at changes in the environment; technological discovery and advancement; government's thrust, programs, and policies; people's interest; and past experiences. * **External environment** - Refers to the physical environment, societal environment, and industry where the business operates. * **Government** - Refers to the local government (municipality, city, or provincial) or the national government and its branches. * **Competition** - It is the act or process of trying to get or win something. * **Substitute** - Anything that takes the place or function of another. * **New entrants** - The one who enters something. * **Suppliers** - Are the ones that provide something that is needed or wanted. * **Buyers** - are the ones that pay cash in exchange to your goods and services. * **Rivalry** - Is a state or situation in which people or groups are competing with each other. --- # Lesson 1: Recognize and Understand the Market Value Proposition (VP) is a business or marketing statement that summarizes why a consumer should buy a company's product or use its service. This statement is often used to convince a customer to purchase a particular product or service to add a form of value to their lives. In creating Value Proposition, entrepreneurs will consider the basic elements: * Target Customer * Needs/opportunity * Name of the product * Name of the enterprise/company There are many competitors in the market to establish superiority for them. Entrepreneurs should think of some alternatives and how they work better. An important aspect in Value Proposition must be truthful that will establish credibility to the consumers. Example: Potential value proposition is most common in small businesses of your locality. Aling Charing Sari-sari Store opens only from 6:00 am to 6:00 pm, but Aling Charing noticed that there are customers who go to a nearby town to look for a convenience store at around 10:00 pm to 6:00 am. She believes that this is a great opportunity for her store to operate 24/7. In this example, proposed value proposition: "Charing Sari-sari Store, opens 24/7". The business describes *sari-sari* store - a basic retail store. The assurance from this value proposition is because of the phrase "opens 24/7." Aling Charing Sarisari Store opens 24/7, which makes it different from other competitors. **Unique selling proposition (USP)** refers to how you sell your product or services to your customer. You will address the wants and desires of your customers. As entrepreneur, you think of a marketing concept that persuades your target customers. The following questions you may ask in doing this, What the customers want? What brand does well? What does your competitor do well? --- * Identify and rank the uniqueness of the product or services characteristics * Very Specific * Keep it short and simple (KISS) As entrepreneur, present the best feature of your product or services that are different from other competitors. Identifying the unique selling proposition requires marketing research that you will learn from the other modules. In promoting your products or services, make sure that it is very specific and put details that emphasize the differentiator against the competitors. Keep it short and simple and think of a tagline that is easy to remember. Right now, the proposed unique selling proposition: "Charing Sari-sari Store, opens 24/7". Readers get confused between value propositions and unique selling propositions. The two propositions are used to differentiate the products from competitors. For example, Jollibee is known to have a Filipino taste burger. This brand has unique selling points because of its tagline" Langhap Sarap" Unique Value Proposition and Value Proposition are two most famous tools used to explain why prospective customers buy each product and service. Based on each definition, we learn that USP and VP are frameworks of each business industry. The two propositions are valuable for the entrepreneurs. After you understand the value proposition and the unique selling proposition, now it's time to understand the target market, customer requirements and market size. ## A. Target Market Market Targeting is a sage in the market identification process that aims to determine buyers with common needs and characteristics. Prospect customers Our market segment that entrepreneurial venture intends to serve. In targeting a specific market, it will exclude people even if it will not fit your criteria. Rather, target marketing allows you to focus your marketing money and brand message on a specific market that is more likely to buy from you than other markets. Product is more affordable, efficient and effective ways to reach potential clients and generate business. Commonly used methods for segmenting the market are as follows. ### 1. Geographic segmentation The total market is divided according to geographical location. Variables to consider: * Climate * Dominant ethnic group * Culture * Density (either rural or urban) ### 2. Demographic Segmentation Divided based on consumers. Variables to consider: * Gender * Age * Income * Occupation * Education * Religion * Ethnic group * Family size ### 3. Psychological Segmentation Divided in terms for what customers think and believe. Variables to consider: * Needs and wants * Attitudes * Social class * Personality traits * Knowledge and awareness * Brand concept * Lifestyle ### 4. Behavioral Segmentation Divided according to customer behavior patterns as they interact with a company. Variables to consider: * Perceptions * Knowledge * Reaction * Benefits --- ## B. Customer Requirements Customer requirements are the specific characteristics that the customers need from a product or a service. There can be two types of customer requirements: 1. Service Requirement 2. Output Requirement ### Service requirement Intangible things or products that are not able to be touched but a customer can feel the fulfillment. There are elements in a service requirement like on time delivery, service with a smile, and easy payment etc. It includes all aspects of how a customer expects to be treated while purchasing a product and how easy the buying process goes. ### Output Requirements Tangible things or things that can be seen. Characteristic specifications that a consumer expects to be fulfilled in the product. A costumer that will avail services as a product, then various service requirements can take the form of output requirements. For example, if a consumer hires a multi cab, then on time arrival becomes an output requirement. Customer buys gadgets (phone speaker), the specification like the loudness and clarity are the output requirements. ## C. Market Size Entrepreneur's most critical task is to calculate the market size, and the potential value that market has for their startup business. Market research will determine entrepreneur possible customers in one locality. ### What is Market Size? Market size is like a size of arena where the entrepreneurs will play their business. It is the approximate number of sellers and buyers in a particular market. Companies are interested in knowing the market size before launching a new product or service in the area. In determining the market size, the entrepreneur will conduct a strategic marketing research from reliable sources using the following method. The first step is to estimate the potential market - approximate number of customers that will buy the product or avail of your services. The second step is to estimate the customers who probably dislike buying your product or availing the services. The third step is for the entrepreneur to estimate the market share, that means plotting and calculating the competitor's market share to determine the portion of the new venture. Market size becomes the most important if you ever need to raise funding for your business. ### What Is It? Data Collection is the most valuable tool for any type of research study. Inaccurate data collection may cause mistakes and ultimately lead to invalid results. #### TIPs IN GATHERING DATA * Organize collected data as soon as it is available. * Know what message you want to get across and then collect data that is relevant to the message. * Collect more data * Create more data * Regularly run experiments or collect data * Challenge your assumptions * Set reasonable expectations * Take note of interesting or significant data In this lesson, we will consider the three different data collection techniques ### SURVEY, INTERVIEW and FOCUS GROUP DISCUSSION and evaluate their suitability under different circumstances. *Surveys* are the most common way to gather primary research with the use of questionnaires or interview schedule. These can be done via direct mail, over the phone, the internet (e.g. Google) or email, face to face or on the Web (e.g Skype or Viber). --- When designing or constructing your own research questionnaire, remember the following guidelines (Edralin, 2016) * Keep it simple as possible. * Make sure it is clearly appealing and easy to read. * Cluster or block related questions. * Move from complex questions to more specific questions. * Make sure questions are concise and easily understood. * Avoid questions that are difficult to answer. * Make sure any response scales used are consistent with categories that are mutually exclusive. ### INTERVIEW Is one of the most reliable and credible ways of getting relevant information from target customers and is typically done in personal between the researcher/entrepreneur and a respondent where the researcher asks pertinent questions that will give significant pieces of information about the problem that he will solve. The interview is also helpful even when the business has already started because the customers' feedback provides the entrepreneur a glimpse of what the customers think about the business. Interviews normally last from 15 to 40 minutes, but they can last longer, depending on the participants' interest in the topic. In a structured interview, the researcher asks a standard set of questions and nothing more (Leedy and Ormrod, 2001). #### Personal interviews These are the traditional method of conducting an interview. It allows the researchers to establish a relationship with potential participants and therefore gain their cooperation. It generates the highest response rates in survey research. They also allow the researcher to clarify indefinite answers and when necessary, seek follow-up information. #### Telephone interviews These are less expensive and less time-consuming, but the disadvantages are the response rate is not as high as the face to face interview, but considerably higher than the mailed questionnaire. --- **FOCUS GROUP DISCUSSION (FGD)** - is an excellent method for generating and screening ideas and concepts. It can be moderated group interviews and brainstorming sessions that provide information on users needs and behaviors. The following are considerations in the use of focus group discussions in market research: * The length of the session is between 90 and 120 minutes. * Usually, conduct focus groups with 8 to 10 participants per group. * Assign an expert moderator / facilitator who can manage group dynamics. * Use a semi-structure or open format discussion. * Strive for consistency in a group composition (for example, it may not be advisable to have business customers and retail customers in the same focus group, their needs are very different). ### What's More Aside from the main basic groups of research methods (quantitative, qualitative and mixed), there are different tools that can be used to collect data. Interviews can be done either in personal or over the phone. Surveys/questionnaires can be paper or web based. Focus Group Discussions can be moderated group interviews and brainstorming sessions that provide information on users needs and behaviors. ## WHAT Is It # Entrepreneurship Quarter 1 - Module 5 ###7 P's of Marketing and Branding Marketing MIX is a set of controllable and connected variables that a company gather to satisfy a customer better than its competitor. It is also known as the "Ps" in marketing. Originally, there were only 4Ps, but the model has been continually modified until became 7P's. The original 4 P's stands for: product, the place, price and promotion. Eventually, three elements have been added namely: *people, packaging and Positioning* to comprise the 7 P's. The 7 P’s of Marketing Mix ## 1. PRODUCT Marketing strategy typically starts with the product. Marketers cannot plan a distribution system or set a price if they don't know exactly what the product will be offered to the market. PRODUCT refers to any goods or services that are produced to meet the consumers' wants, tastes and preferences. An example of goods includes: tires, MP3 players, clothing and etc. Goods can be categorized into business goods or consumer goods. A buyer of consumer goods, may not have thorough knowledge of goods he buys and uses. An example of services includes: hair salons and. accounting firms. Services can divide it into consumer services, such as hair styling or professional services, such as engineering and accounting. --- ## 2. PLACE *Place* represents location where the buyers and seller exchanges goods or services. It is also can include any physical store as well as virtual stores or online shops like internet. The image shows a diagram with three rows and three columns, each element describing a step in the distribution process. Row 1: * Producer * Wholesaler * Retailer Row 2: * Producer * Consumer Row 3: * Producer * Consumer Channel 1 contains two stages between the producer and consumer - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers' goods and then breaks into bulk deliveries to supply retailers with smaller quantities . For small retailers with Limited order quantities, the use of wholesalers makes economic sense. Channel 2 contains one intermediary in consumer markets; this is typically a retailer, which is a company that buys products from a manufacturer or wholesaler or sells them to End users and customers. In a sense, a retailer is an intermediary or middleman that customers use to get products from the manufacturers. Channel 3 is called a "directly-marketing "channel since it has no INTERMEDIATE levels. In this case the manufacturer SELLS directly to customers. --- ## 3. PRICE The price is a serious components of a marketing mix. What do you think is the meaning of a *Price*? In the narrowest sense, *price* is the value of money in exchange for a product or services. Generally speaking, the price is the amount or value that a customer gives up to enjoy the benefits of having or using a product or services. One example of a pricing strategy is the penetrations pricing. It is when a price charged ( for products AND services is SET artificially low in order to GAIN market share. *Once THIS is attained*. The Price can BE higher. than before. for example: If you are going to OPEN a beauty Salons You need to. set your prices lower than the one of your competitors I so that you can Penetrate the market; If you already Have a good number of market share then you can Slowly INCREASE ## 4. PROMOTION Promotion refers to the complete, SET of activities., Which Communicate. the Product, brand or services. to. the USER,. THE IDEA is to. attract people. to buy. your product over others. 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