Entrepreneurship – process of creating or seizing an
opportunity and pursuing it regardless of resources controlled
(Howard H. Stevenson)
- Science of converting processed ideas into a remarkable
business venture. (Marife Agustin-Acierto)
- capacity for innovation investment, and expansion into new
markets and techniques (Fajardo)
Competency – The capability, capacity, and ability of the
learner in handling situations in various areas in business
operations.
- The capability, capacity, and ability of the learner in handling
situations in various areas in business operation.
Entrepreneurial Competencies
Locus of Control – Knowledge in determining the state to
which a person agreed that their actions can directly affect a
situation, or that they can control a result. (Internal/External)
Specific Goal Setting – Motivation to set goals, specifically
business growth objectives.
Self-Efficacy – Belief in own ability, Self-confidence.
Layers of Competency – Entrepreneurs understand that some
skills and competencies are applicable to all entrepreneurs
while some skills and competencies are only applicable to
some.
Need for Achievements – Entrepreneurs should feel the need
to succeed and take responsibility for the outcomes of their
actions.
Ambition – Entrepreneurs stay motivated, Persistent, and
Persevere even in the face of a difficult challenge.
Willingness to Learn – Entrepreneurs pursue opportunities to
acquire new skills and competencies.
Strong Initiative – Entrepreneurs are always driven to work
hard, they can work independently to achieve the task.
Integrity – Entrepreneurs should have a positive sense of
values and personal beliefs.
Conceptual Thinking – Entrepreneurs are willing to use new
approaches and ideas that may enhance work.
Networking/Collaboration – Entrepreneurs understand the
ability of networks. They can negotiate with other people.
Strategic Thinking – Entrepreneurs know that thinking using
strategies can help achieve goals in the organization.
Commercial Aptitude – Entrepreneurs keep themselves
updated with their surroundings.
Decisiveness – Entrepreneurs are able to resolve issues as
they arise in an unavoidable situation and are able to respond
flexibility to change.
Optimism – Entrepreneurs perform in the hope of success
rather than the fear of failure.
Customer Relation Service – Entrepreneurs are able to
develop and build trust and long term relationship with their
customers.
People Centered – Entrepreneurs can create commonality
among stakeholders and are able to be inclusive in decision
making.
Entrepreneurial Skills
Creative/Critical Thinking – Learners who engage in creative
thinking are able to both generate innovative solutions and use
relevant information to understand the greater picture.
Organization – Entrepreneurs can plan and prioritize work to
ensure that time is managed effectively.
Planning – Entrepreneurs must be specific about the direction
of their venture and their strategy.
Business Principle – Entrepreneurs must be well versed in
market knowledge, economic principles, and ethical practices.
Computer Competency – Entrepreneurs must be competent in
the use of basic computer hardware and software.
Workplace Competencies – Entrepreneurs are able to apply
their skills, knowledge, and values to job tasks and work related
experiences.
High-Growth High-Value Entrepreneurship – Entrepreneurs
typically offer incentive compensation, manage business
operations, build a strong entrepreneurial culture around
determination and high work ethic, and from effective board of
directors and advisors.
Marketing – Entrepreneurs are competent in both executing
strategies that promote their products and establish
client/customer relationships
Interpersonal Skills – Entrepreneurs can work well with people
regardless of their backgrounds. They are also insightful on the
behavior of people.
The A-Z Characteristics of an Entrepreneur
A – Ambiguity - A situation where something can be understood
in more than one way. Entrepreneurs see this confusion as an
opportunity.
B – Beachhead Strategies - Strategies the an entrepreneur uses
to gain market penetration and customer acceptance for their
products.
C – Commitment - Commitment is the founding drive of an
entrepreneur. Commitment to do, see it through, even if everything
is on the line. Commitment to the long term and to never give up
and start over again if needed.
D – Destiny - Entrepreneurs believe they are there to make a
difference and live a life of significance. They are driven to take
control of their destiny and craft their own future, even if it means
sacrificing the short-term for a greater long-term.
E – Effectual Reasoning - Starting with clearly defined goals that
translate into specially defined objectives that inform strategies
and then determine tactics. Taking everything into account when
making decisions.
F – Focus - Successful entrepreneurs always have their eyes on
the prize. They are not easily distracted and almost never quit.
The stay fixated on the task at hand until it is done.
G – Global - Being able to recognize the power of the Internet to
affect all of the world. With that in mind, they shape their business
to include it in the future.
H – Health - Many entrepreneurs do not get sick because they
simply refuse to be sick saying that they cannot afford to be.
I – Innovation - Entrepreneurs know how to add value by making
a product better and getting a target market to demonstrate their
appreciation of it by parting with their money.
J – Just do it - They are often able to just do it, even if it means
doing it alone. When they get rejected, they look for an alternative
instead of just shelving it.
K – Keep it real - Entrepreneurs often have an objective
approach. They are obsessed with the truth and are honest and
straightforward in their dealings.
L – Leadership - Entrepreneurs lead because they don’t trust
other’s decisions to heavily. They lead because others follow and
they follow because they their own need being fulfilled. It’s not
about status but about function.
M – Meaning - They have the desire to make the world a better
place. They can find or create meaning in what they do which will
then become their motivation.
N – Never give up - Entrepreneurs do not look at failures as a
failure but as a learning experience, a chance for character
development, or simply a barren environment or improper timing.
So they keep working and never quit.
O – Opportunistic - Entrepreneurs keep their eyes for significant
change that may trigger a promotion from option to opportunity.
P – People - Of all the resources entrepreneurs can secure to
build an enterprise, it is the people that are the most valuable.
Q – Quirky - A quirky ingredient can only be produced by a
person with self-esteem and confidence in their offer. This
quirkiness can create a lasting impression in the minds of their
customers.
R – Risk - Entrepreneurs know that risk is unavoidable, even if the
risk leads to the loss of personal assets. Life is lost if lived without
significance, without seeking to be the best one can be.
S – Subjective Advantages - These are advantages that
entrepreneurs achieve because they know how to perfectly
position their offer to fulfill a customer’s emotional needs.
T – Timing - Most successful ventures happened because the
ventures launched it in the right place at the right time.
Entrepreneurs know how to prepare and achieve this perfect
timing.
U – Under the Radar - Entrepreneurs find most success when
they secure their entry into the market with minimal notice,
ensuring the least negative reaction from competitors, suppliers,
partners or customers.
V – Value-Added - An entrepreneur’s primary goal in a
commercial endeavor is to add value. They make money by taking
a slice of the added value that they create for their customers.
W – Work and Play - Do what you love and love what you do. It is
nearly impossible for them to tell when they are working or when
they are having fun.
X – X factor - A special something that entrepreneurs have that
others don’t. It differs from person to person. Some people have it
and some people don’t.
Y – You - Entrepreneurs have a good understanding of
themselves. What motivates them, what makes them work and
what makes them tick.
Z – Zest - This is the life-blood of the entrepreneur. They are very
passionate in their belief that they can create and control their
future.
Business plan – serves the Entrepreneur who must set a
navigational course. It serves investors and cautious financers. It
serves the managers and staff of the organization.
I. Introduction
A. The Business Concept and the Business Model.
B. The Business Goals: Vision, Mission, Objectives, and
Performance Targets
C. The Business Offering and Justification
II. Executive Summary
III. The Business Proponents: Organizers with their Capabilities
and Contributions
IV. The Target Customers and the Main Value Proposition to the
Customer
V. The Market, Market Justification based on the Industry
Dynamics and the Macro Environmental Factors
VI. The Product and Service Offerings.
VII. The Enterprise Strategy and Enterprise Delivery Systems:
Business Competitiveness.
VIII. The Financial Forecasts and Expected Returns, Risks, and
Contingencies.
IX. Environmental and Regulatory Compliance
X. The Capital Structure and Financial Offering: Returns and
Benefits to Investors, Financiers, and Business Partners.
Business Concept – contains the essence of the enterprise in a
concise but powerful manner.
- Essence of the Enterprise
- Value of the Product Offering
- An idea that is the basis for founding or transforming a business
- Identify exactly what you are offering
- Explain what you will be doing and determine and specializations
- Clarify the unique aspects of your company.
- Combine them into a few sentences and make a powerful
statement
Business Model – a formula on how the enterprise exactly plans
to make money out of the business.
4 areas of money making which the business model
1. How will the business raise revenues.
2. What will be the cost of the enterprise products and other cost
of the business.
3. What will be the major investments of the enterprise.
4. How will the enterprise finance the investment
Business Goals – shows the future and long-term prospects of
the enterprise. (composed of vision, mission, objectives, key
results areas, and performance indicators)
Vision (or Vision Statement) - Aspirational description of what an
organization would like to accomplish in the medium or long-term
future.
Mission (or Mission Statement) - Declaration of an
organization’s core purpose and focus that normally remains
unchanged over time
Objectives - A specific result that is to be achieved within a time-
frame.
KRAs and Performance Indicators - Qualitative manifestation of
the objectives that are being achieved.
Performance Indicators
- Quantified performance measurements.
- Serves as a scorecard for the KRAs
II. EXECUTIVE SUMMARY – contains everything that is relevant
and important to the business audience. It is a synthesis of the
entire plan. Contains the major argumentations of the business
proponent.
- should also contain a section on the environmental and
regulatory compliance of the proposed business.
- should present the capital structure of the proposed business.
- must discuss and justify
Enterprise Strategy – builds and develops the game plan for
attaining competitiveness.
Enterprise Delivery System – entire process of converting input
into output and output to outcomes.
III. Business Proponents – contains information about the
business proponents or stakeholders
Four Types of Stakeholders
1. Resource mobilizers and financial backers
2. Technology providers and applicators
3. Governance and top management
4. Operating and support team
IV. TARGET CUSTOMERS AND THE MAIN VALUE
PROPOSITION - 4th section of the business plan
- business proponent must be precise of the target audience
Target Customers – must be of sufficient size, sufficient paying
capacity, and sufficient interest to purchase the products being
offered by the enterprise.
Main Value Proposition – the unique selling proposition of the
enterprise.
V. MARKET DEMAND AND SUPPLY, INDUSTRY DYNAMICS,
AND MARCO ENVIRONMENTAL FACTORS -
SPEET forces
Social environment – includes the demographics and cultural
dimensions that govern the relevant entrepreneurial behavior.
Political environment – defines the governance system of the
country or the local area of business. It includes all the laws, rules
and regulations.
Economic environment – driven by supply and demand forces. It
is the same factor that drives the interest and foreign exchange
rate.
Ecological environment – includes all natural resources and the
ecosystem that habitat of man, animals, plants, and minerals.
Technological environment – makes or breaks competing
participants in any industry. Technological discoveries leads to
launch of new products.
VI. PRODUCT/SERVICE OFFERING (Description, Evolution, and
Justification) – contains a description, evolution, and justification of
the product/service offerings.
VII. ENTERPRISE STRATEGY AND ENTERPRISE DELIVERY
SYSTEM – (EDS) starts from the Input (resources mobilized),
proceeds to the Throughput (Transformation of input to output),
and produces the Output (products/service). Output is marketed.
Marketing and Desired Outcomes.
VIII. FINANCIAL FORCASTS (: Expected Returns, Risks, and
Contingencies) – including the financial returns, the financial risks,
and the financial contingencies.
Important Return Calculation
1. Expected return on sales
2. Expected return on assets or investments
3. Expected return on stockholders’ equity.
IX. ENVIRONMENTAL AND REGULATORY COMPLIANCE –
Business plan must articulate the laws, rules, and regulations,
governing the business. It should ascertain that all the necessary
permits.
X. CAPITAL STRUCTURE AND FINANCIAL OFFERING (:
Returns and Benefits to Investors, Financiers, and Partners) –
incudes some discussions on who are the investors, the
financiers, and the partners of the enterprise. - Business plan must
appeal to its target audience.
CHAPTER 2: OPPORTUNITY SEEKING, SCREENING, AND
SEIZING
2.1 OPPORTUNITY SEEKING
Entrepreneurial Mind Frame, Heart Flame, and Gut Game
Entrepreneurial Mind Frame – allows the entrepreneur to see
things in a very positive and optimistic light in the midst of crisis or
difficult situations.
(Chinese) Crisis is composed of two characters. First character
means danger while the second character means opportunity.
Entrepreneurial Heart Flame (Surging Passion) – Driven by
passion, they are drawn to find fulfillment in the act and process of
discovery.
- is also about emotional intelligence or EQ which is often
manifested in the entrepreneur’s efforts to nurture relationships.
Passion – is that great desire to attain a vision or fulfill a mission
Entrepreneurial Gut Game (Intuition) – This refers to the ability
of the entrepreneur to sense without using the five senses.
MANY SOURCES OF OPPORTUNITIES
Macro Environmental Sources of Opportunities
Macro Environment – refers to the “big or macro forces” that
affect the area, the industry, and the market, which the enterprise
belongs to.
1. Socio-Cultural Environment – includes the demographics and
cultural dimensions that govern the relevant entrepreneurial
endeavor.
2. Political Environment – defines the governance system of the
country or the local area of business. It includes all the laws, rules,
and regulations that govern business practices.
3. Economic Environment – Supply and demand forces mainly
drive the macro economic environment. They are the same factors
that drive the interest and foreign exchange rates that fluctuate
with the movement of the market forces.
4. Ecological Environment – includes all natural resources and
the ecosystem, habitat of men, animals, plants, and minerals.
5. Technological Environment – New scientific and
technological discoveries, which often lead to the launch and
commercialization of new products with superior attributes or to
rendering the old ones obsolete.
Industry Sources of Opportunities
Participants in an industry include:
1. Rivals or competitors in a particular type of business. True rivals
or competitors are those competing for the same or similar
markets.
2. Suppliers of input to rivals as well as suppliers of machinery and
equipment, suppliers of manpower and expertise, and supplies of
merchandise.
3. Consumer market segments being served by rivals or
competitors.
4. Substitute products or services, which customers shift or turn to.
5. All other support and enabling industries.
- The most common way of defining an industry is according to
product types or according to the functions of the product or
service.
- The difference between the product and value-added chain is the
focus of the analysis.
Product chain (Raw Material – Semi-Processing – Fully
Processed Products/Services) – focuses on the volume produced
or converted at each link of the chain.
Value-added chain (Raw Materials’ Price and Additional Cost and
Profits – Semi-processed goods prices and additional cost and
profits – Prices of Processed Goods) – focuses on the economic
rather than the volume aspect of the chain.
- concentrates on the ‘value’ added from one stage of the product
to the other.
- a value that is given by the market price differential between
stages of production.
Market Sources of Opportunities
- entrepreneur must also be able to measure the actual demand
and supply as well as the potential demand and supply of industry.
- discovered from increased or decreased demand as well as
higher or lower supply.
Mircomarket
- refers to the specific target market segment of a particular
enterprise. These are the target customers that represent the
immediate customers of an enterprise.
- the need for segmentation would be crucial in micromarket
analysis because the definition of value for money differs from
group to group.
Consumer Preferences, Piques, and Perceptions
Consumer preferences – refer to the tastes of particular groups
of people.
Consumer dislikes – refer to the things that irritate customers.
Other Sources of Opportunities
1. Customer preferences change over time
2. People’s tastes in clothes, music, shoes, entertainment, dance,
sports, hobbies, and even careers have evolved over the years.
3. What piques customers is a great source of opportunities.
4. Before the customer is won over, there is first a battle for the
mind. Next, there is a battle for the heart. Finally, there is a battle
for the wallet.
5. The longer the customer want to use the product, the greater
the chances of creating lasting loyalty.
6. Opportunities abound in shaping consumer perceptions or
occupying spaces in their minds of places in their hearts that have
not yet been filled.
7. New inventions, new systems and work processes, new insights
about the human psyche, new applications for old knowledge, new
revelations about how the physical world works, new
interpretations, new combinations based on the convergence of
previous technologies, new outlooks about how life should be led,
and a host of other new things are tremendous sources of
opportunities.
8. Determining personal preferences and competencies lay the
foundation for a new business venture.
9. Unexpected occurrences in both the external and internal
environment of the enterprise indicate that significant changes are
happening and opportunities are sprouting.
2.2 OPPORTUNITY SCREENING
The Personal Screen - the entrepreneur first has to consider his
or her preferences and capabilities by asking three basic
questions:
1. Do I have drive to pursue this business opportunity to the end?
2. Will I spend all my time, effort, and money to make the business
opportunity work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship,
and forego my usual comforts to succeed in this business
opportunity?
12Rs of Opportunity Screening
1. Relevance to vision, mission, and objectives of the
entrepreneur.
2. Resonance to values.
3. Reinforcement of Entrepreneurial Interest. How does
opportunity resonate with personal interests, talents, and skills
4. Revenues. Sales potential of the products or services you want
to offer.
5. Responsiveness to customer needs and wants.
6. Reach. Opportunities that have good chances of expanding
through branches.
7. Range. Opportunity can potentially lead to a wide range of
products.
8. Revolutionary Impact. Opportunity will most likely be the “next
big thing”
9. Returns. It is a fact that products with low cost of production
and operations but are sold at higher prices.
- can also be intangible; meaning they come in the form of high
profile recognition.
10. Relative Ease of Implementation.
11. Resources Required. Opportunities requiring fewer resources
from the entrepreneur is favored.
12. Risks.
The Pre-Feasibility Study
Factors that are contained in a pre-feasibility study:
1. Market potential and prospects.
2. Availability and appropriateness of technology
3. Project investment and detailed cost estimates
4. Financial forecast and determination of financial feasibility
Market Potential and Prospects
Market potential – based on the estimated number of possible
customers who might avail of the product or service.
- Basic needs tend to be commodities or “commoditized”
The customers would, oftentimes, make the final choice on what
to buy according to several factors:
1. Purchasing power or disposable income
2. Proximity or accessibility to the goods or services
3. Individuals desires and preferences
4. Age or generational grouping
5. Social, cultural, or ethnic background
6. Peer group preferences
7. Gender
8. Season of the year
9. Personal identification with trend setters
10. Educational attainment
11. Technical proficiency and product expertise
12. Motivational impetus
13. Lifestyle preferences
14. Susceptibility to certain advertising and promotional appeals.
Segmenting the Market
- Using a set of demographics will be the most basic approach in
determining the target segment.
- do actual field research like surveys, focus group discussions, in-
depth interviews, observation techniques, etc.
Assessing Competition – SWOT Analysis
- This process would determine how saturated the market is in the
given area of coverage.
- some entrepreneurs prefer to enter the biggest, richest, most
competitive markets in order to achieve high visibility and growth
potential.
- In order to assess one’s strengths and weaknesses, there must
be a comparison made with the closest competitors.
Estimating Market Share and Sales
- After estimating the number of potential target market, the next
thing that the entrepreneur should assess is the potential market
share he attract.
Entrepreneur should evaluate the relative strength of the various
suppliers or competitors in the marketplace
1. Who has dominance?
2. Who has greater bargaining power?
3. Which segment of the total market are saturated and over
served and which ones are relatively underserved?
4. Are there market segments which are more attractive than other
for the entrepreneur.
- Without a very definite product formulation, this requires some
“educated guessing” or intuitive insightfulness.
The sales forecast can be computed using the following formula:
(Estimated Sales Volume x Estimated Price)
Technology Assessment and Operations Viability
- By going through this process, the entrepreneur would be able to
determine whether the product or service offering will meet
customer demand or not.
4 Target Customer Expectations Affecting the Scale and
Complexity of an enterprise’s operation
1. Quantities demanded – This would determine the needed
capacity of operations.
2. Quality specifications demanded – This would dictate the
following
a. quality of input or raw materials
b. quality assurance process in transforming input to output
c. quality output that meet the operations, standards set
d. quality outcomes for the customers who will be looking for
specific results.
3. Delivery expectations – Knowing how much, how frequent,
and when to deliver to costumer.
4. Price expectations – The selling price of the product of service
would be evaluated by the customers according to the value they
would receive.
Investments Requirements and Production/Servicing Costs
1. Pre-Operating Cost – these are the costs related to the
preparation for the launch of the business. (pre-feasibility study,
in-depth feasibility study)
2. Production/Service Facilities Investment - this refers to the
long-term investment for the actual business establishment,
including investment in land, buildings, machinery, equipment …
3. Working Capital Investment – this includes the investment
needed to operationalize the business, composed of cash,
accounts receivable, and inventories.
Operating expenses would include the following:
a. Employee salaries, wages, and benefits
b. Rent and lease expenses
c. Utilities
d. Transportation
e. Fees and licenses
f. Commissions
g. Office supplies, etc.
Financial Forecasts and Determination of Financial Feasibility
Financial Forecasts – refer to the monetary transactions that the
business is expected to engage in. This indicates the feasibility of
the enterprise.
Financial forecasting calls for the creation of the 4 critical financial
statements:
1. Income statement
2. Balance Sheet
3. Cash flow statement
4. Funds flow statement
Income Statement – a financial statement that measures an
enterprise’s performance in terms of revenue and expenses over a
certain period.
REVENUES – EXPENSES = INCOME OR PROFIT (LOSS)
Balance Sheet
- it looks at assets, liabilities, and equities.
Assets – represents all the investments in the enterprise including
the initial investments that you considered in the pre-feasibility
study. (cash, accounts receivable, inventory goods, equipment)
Liabilities – represent the enterprise’s debts to suppliers, to
banks, to government, to employees, and other financiers.
Stockholders’ equity – represents the investors’ investments in
the stock of the business.
The balance sheet equation is
ASSETS = LIABILITIES + EQUITY
Financial Ratios and Measurements
Payback Period – how long will it take for him or her to get back
what he or she has invested in the enterprise.
PAYBACK PERIOD = TOTAL INVESTMENT / ANNUAL NET
INCOME AFTER TAXES
Return on Sales (ROS) – ratio where the entrepreneur calculates
how much profit the enterprise is earning for each peso sold
RETURN ON SALES = NET PROFIT AFTER TAXES / SALES
Return on Assets (ROA) or Return on Investment (ROI) - the
return on the investments made
ROA/ROI = NET PROFIT AFTER TAXES / TOTAL
ASSETS/INVESTMENTS
The Feasibility Study – more comprehensive and detailed.
- prepared to convince bankers and investors to put money into
the business opportunity.
2.3 OPPORTUNITY SEIZING
“Will I be able to manage to my advantage, the critical success
factors and avoid the critical failure factors?”
Crafting a Position Statement – in order to craft a positioning
statement, the entrepreneur is advised to look at other competitors
(or substitutes) in the marketplace.
Main Value Proposition (MVP) - Second is to choose the right people who can perform the
technical and the managerial functions necessary to realize the
Following key points can help out the entrepreneur on how to go desired end results.
about this questioning - Third is to design the operating workflow that would assure the
1. What are the main customer segments? effective, economical, and efficient production of the output.
2. What are the different product attributes and features of each of - Fourth is to specify the systems and procedures that would allow
the competitors? the people to function at their best.
3. What are the existing marketing practices of the various - Fifth is to design the organizational architecture that would allow
competitors? the people to function at their best.
4. What are the market preferences of consumers when it comes
to the products being offered? Chapter 3: Getting to know the market

A. Main Customer Segment Basic questions in Market Research

1. Profile
2. Traits and characteristics Why Purpose and objective for conducting the market
research.
3. Buying behavior Determines the scope and the limitations of the market
What
4. Usage pattern research to be conducted.
5. Image of product Which Determines which segment of the market must be
6. Major motivation studied; this must be the market segment that the
B. Product Attributes and Features entrepreneur is eyeing.
Who Identifies who among the members of the selected
1. Materials used market segment will participate in the market research.
2. Sizes available When Determines the time and timing of the research. This is
3. Colors critical for entrepreneurs whose product or service will
4. Design, models, and variations be offered to a time constrained market such as office
5. Packaging workers.
Where Pinpoints the relevant location of the market research.
6. Weight
How Determines the methodology to be used for the market
7. Ease of Operation research.
8. Durability
9. Frequency of upgrades Market Research Methodologies
10. Functionality
11. Others Sales Data Mining – It is a process used by companies to turn
C. Marketing Practices raw data into useful information. By using software to look for
1. Marketing channels patterns in large batches of data, businesses can learn more
2. Advertising and promotions about their customers and develop more effective marketing
3. Communication message strategies as well as increase sales and decrease costs.
4. Prices and selling terms - It identifies patterns and establish relationship to solve problem
5. Places and outlets sold through data analysis. Data mining tool allows enterprises to
6. Market reach predict future trends.
D. Market Performances
1. Sales Volume Histogram – (bar graph) consists of a series of rectangle or bars.
2. Sales trends Each bar is proportional in width to the range of value within a
3. Best performing models, variations class and proportional in height to the number of items falling in a
4. Worst performing models, variations class.
E. Strengths of Competitors’ Products
Frequency Polygon – is constructed by marking the frequencies
F. Weaknesses of Competitors’ Products
on the vertical axis with a dot corresponding to the values on the
G. Main Value Proposition of Competitors’ Products
horizontal axis. These dots are then connected with a straight line
Conceptualizing the Product or Service Offering to form a polygon.
Concept – an idealized abstraction of the product or service to be
Pie chart – it is a circular graph divided into sections that
offered to the preferred market of the entrepreneur.
represent the relative frequencies or magnitudes of the grouped
In order to come up with the product or service concept, the values.
following options or directions may be considered by the
In order for the data to be more useful to the entrepreneur, a
entrepreneur:
Cross-tabulation is highly recommended.
1. The first is to create a concept similar to the winning products in
the market place and ride with the obvious market trends. Focus Group Discussion – is one of the most common
2. The second is to find a market niche that has not been filled by qualitative research tools. It is effective in extracting consumer and
the competitors. non-consumer experiences regarding products, places, or
Niche – small segments of the market where discriminating programs. This method can also be used for generating initial
customers are searching for special product/service features and insights.
attributes. FGD can be used to address substantive issues such as:
3. The third is to conceptualize a product in a positioning category - understanding consumers’ perceptions, preferences, and
where the participants are rather weak. behavior concerning a product category
4. The fourth is to conceptualize a product that would change the - obtaining impressions on new product concepts
way customers think, behave, and buy, thus making existing - generating new ideas about older products
products “obsolete” and “old fashioned” - developing creative concepts and copy material for
advertisements
Designing, Prototyping, and Testing the Products
- securing price impressions
Designing – the entrepreneur must render the concept and - obtaining preliminary consumer reaction to specific marketing
translate it into its very physical and real dimensions. programs

Implementing, Organizing, and Financing There are four key decisions to be made:
1. respondent selection
A good planner and programmer must make several important 2. sample size - The number of respondents per group should
choices to achieve the desired end results. range from six to eight, depending on the skill of the facilitator and
- First to choose the correct technology, the one that would the topic being discussed.
produce the output that would meet the quality specifications of 3. data gathering
the customers. 4. data analysis
Respondent selection includes
1. The definition of the respondents
2. The classification of the respondents
3. The screening of respondents
- the number of respondents per group should range from six to
eight, depending on the skill of the facilitator and the topic being
discussed.
- if the group exceeds eight, it may be too crowded, resulting in the
passive participation of some respondents and a discussion that is
not as cohesive.
Data gathering methods in FGD involve:
1. The selection and preparation of the venue and equipment
2. Some observations on respondent behavior
3. A facilitator who is very skilled in moderating and possess the
ability to draw out significant insights from the participants
Data analysis:
1. The integration of the information gathered
2. Some observations on respondent behavior
3. Listing of recommendations and report writing
Let us to the nine steps in conducting a focus group discussion
1. Develop the research objectives. What is the research all
about?
2. Determine the participants’ profile. Who are the most
knowledgeable or most relevant participants?
3. Determine the appropriate token or “compensation” for the
participants.
4. Develop a participant screener questionnaire.
5. Recruit the participants.
6. Select a good facilitator. The key qualities of a good facilitator
are:
- kindness with firmness
- involvement and encouragement
- complete understanding
- flexibility
- sensitivity
7. Develop a facilitator’s discussion guide.
8. Arrange for the venue and logistics.
9. Analyze the results of the focus group discussion.
In analyzing FGD, the researcher should compare and contrast all
points raised by the different respondents and note from what
point of view they are coming from.
Observation Technique – one of the best ways of gathering data
about customers in their natural setting without having to interact
or talk to them.
Prior to doing the observations, it is important for the researcher to
ensure that the following condition are met:
1. The needed information must be observable or inferable from
the behavior that can be observed.
2. The subject matter contains some sensitivity that need
detached observation.
3. The behaviors of interest must be repetitive, frequent or
predictable in some manner.
4. The behavior of interest must be of a relatively short duration.
Advantages of Observation Research
1. It allows the researcher to see what customers actually do
rather than rely on what they say they do.
2. It allows the researcher to observe customers in their natural
setting.
3. It does not subject the researcher to the unwillingness of
customers or their inability to reply to certain questions.
4. Some information are better gathered quickly and accurately
through observation.
Disadvantages of Observation Research
- The researcher can only see the outside behavior of the
customer, but cannot determine the inner motivation of the
customer.
1. The researcher cannot get the reasons behind the behavior.
2. The researcher can only focus on the “here and now.” It cannot
cover the past nor cover the future.
3. Finally, the observation technique may border on the unethical
because the respondents have not agreed to be observed.
Two different types observation techniques:
Human observation – humans observe the events as they
happen.
Mechanical observation – mechanical devices are used to
record events for later analysis.
Below are the guidelines in conducting observation research
1. Determine the pre-observation objectives.
2. Prepare your pre-observation tips:
3. Focus on what you want to observe
4. Observation proper
5. Post-observation tips
Survey Research – Survey most preferred instrument for in-
depth quantitative research. The respondents are asked a variety
of questions.
- Surveys can be conducted via telephone, personal (face-to-face
interview) and mail interview
- The most popular type of survey research is the Usage,
Attitude, and Image (UAI) survey which is intended to derive
market awareness, market size and share, product usage and
preference, customer interest, and customer image.
In planning a survey, there are three important concerns that one
has to look into:
1. Sampling technique
2. Getting the sample size
3. Designing the questionnaire
Questionnaire Design
There are some basic rules that have to be followed in question
formulation There are:
- The questions, in their totality should be able to elicit all the
necessary information required in the research.
- Each question should be clear and definite.
- Each question should cover one topic at a time
- Each question should be presented in a neutral manner.
- Each question should be translated into the dialect that the target
respondents are familiar with.
Sampling Techniques – are classified into probability and non-
probability sampling.
Probability Sampling – where the respondents are randomly
selected from a population such as in the lottery method.
Non-probability sampling – refers to the technique that is
resorted to “when it is difficult to estimate the population of the
study because they are mobile or transitory in a given location.”
Sample Size
There are three basic sample size determinants. These are as
follows:
1. Data variability of a proportion – dispersion of the data or
how widely spread the data is from a central point.
2. Confidence level in the estimation process – the higher the
confidence level desired, the bigger the sample size needed; the
current industry standard has 95% confidence level.
3. Error in the result of the estimation process – the less error
margin desired, the bigger is the required sample size; it is
expressed as plus or minus a certain percentage.
Computing the sample size – n = Z2[p(1-p)]/d2
Do-it-yourself Survey: Steps in Conducting a Survey
Research
1. Develop the research objectives. Determine what you want to
know and learn. Define the goals of your research.
2. Determine your sample – Identify who and what kind of people
you will interview and where you are going to find them.
3. Choose the interviewing methodology – from the different
interview methods, such as face-to-face, by phone, or by mail,
choose the appropriate methodology to use for your research.
4. Create your questionnaire – identify the key information you
will have to ask from your respondents.
5. Pre-test the questionnaire – determine a similar profile of
target respondents and test the questionnaire.
6. Conduct interviews and enter data – Plan and execute the
implementation of your survey well.
7. Analyze the data – Review your notes. Organize the
questionnaires for more orderly processing.
3.2 CUSTOMER PROFILING
Methods of Customer Profiling
Demographics
1. Age
2. Income classes
3. Social classes/Reference groups -
4. Ethic backgrounds
5. Religious belief
6. Occupations
7. Domiciles
Ethic background and religious belief affect the cultural belief of
people.
Social classes and reference groups often dictate what is
acceptable or unacceptable behavior. These classes or group
often include family, friends, neighbors, fellow workers, and
societal affiliations.
Occupations – such as those of factory foremen, doctors, taxi
drivers, nurses and teachers also determine what kinds of goods
and services these people would buy.
Domiciles or habitats or areas of residence and environmental
surroundings.
Psychographics – defines the customer’s motivations,
perceptions, preferences, and lifestyle.
- Motivation – goes to the roots of customer’s needs and wants.
This can be classified into physiological and psychological.
- Physiological needs – refer to the customer’s personal likes
and dislikes and include the satisfaction of thirst, hunger, and
shelter.
Perception – is the way a person chooses to receive or interpret
information from the external world.
Usually information comes through our five senses. A person will
process this information using the faculties of the brain.
Technographics - classifies people according to their level of
expertise in using a product or a service. For Example:
- Sports beginners might just want basic equipment.
- Sports regulars may be looking for more sophisticated
equipment.
- sports professionals
In technographics, products and services can range from general
purpose items to highly specialized, customized, and
“technologized” goods.
Application of Customer Profiling
the entrepreneur can use or apply customer profiling in two way.
1. The first way is to develop a product or services to test out in
the marketplaces.
a. The customers most attracted to the product or service can
them be profiled.
b. After profiling, the next step is to find out how huge this market
is for exploitation purposes.
2. The second way is to profile the different type of customers in a
given industry or area as to their needs and wants.
a. From these types, the entrepreneur could then choose the
customer group with the best potentials.
b. Products or services can be developed by the entrepreneur to
match this chosen customer group.
Market Segmentation – Customers with similar needs and wants
and similar willingness and ability to pay can be grouped into one
customer segment. Therefore, we can produce products and
services that are highly specialized for any type of consumer
segment.
Market Aggregation – broader market. Deals in commodities like
rice, bread, and water that appeal to market aggregates.
Market Mapping – refers to grouping customers and products
according to certain market variables.
Products or services can be mapped according to their relative
positioning in the market based on certain consumer parameters.
Chapter 4: Let the Market Know You Better
Positioning
Positioning has three overlapping objectives
- First, positioning has an enterprise perspective. The enterprise
scans the market environment and decides to position itself with
products that specifically address the needs of a chosen target
market.
- Second, positioning has a competitive perspective. The
enterprise has to differentiate and distinguish itself from its
competitors.
- Third, positioning takes the customers’ perspective.
Enterprises can establish their positioning either by starting with
their own product creations or with their customers’ outcome
expectations.
Latitude – lays out what is important to the different customer
segments from their differing points of view.
Longitude – represents the product features and attributes of
competitors in the marketplace.
The latitudinal and longitudinal dimensions will draw the
parameters of the map, locating both the customers and the
competing enterprises in their respective positioning.
In determining its positioning its positioning, the enterprise should
be mindful of the main value proposition (MVP) to its customers
relative to its competitors.
To establish the positioning of its various products in the
marketplace, the enterprise endeavors to build the brand of each
product. Branding serves three purposes.
1. To differentiate the product from other products.
2. To avoid a commodity image for the product.
3. To fill a space in the consumer’s mind that would prevent other
products from occupying the same space.
Product – the tangible good or the intangible service that
enterprise offers to its customers in order to satisfy their needs
and to produce their expected results.
Four general types of products that are marketed by enterprises:
1. Breakthrough products – offer completely new performance
benefits
2. Differentiated products – try to claim a new space in the mind
of the customer different from the spaces occupied by existing
products.
3. Copycat products – will not make much impression on the
consumer’s mind
4. Niche products – do not intend to compete directly with the
giants. They are products with lower reach, lower visibility, lower
prices, and lower top of mind.
Packaging - There were used to be a time when products came
wrapped in ordinary packaging that prominently displayed the
brand name, the main attributes of the product, the company's
logo, and its place of business.
5 Packaging Purposes:
1. Identifies the product, describes its features and benefits, and
complies with government rules on specifying its contents, weight,
chemical composition, and potency. It provides easy brand
identification for the consumers.
2. Differentiates the product from its competitors and even from its
other brand offerings.
3. Lengthens the lifespan, physically protects, and extends the
usefulness of the product.
4. Packaging has become an environmental issue by itself.
Recyclability and biodegradability are now a major concern of
packagers and consumers alike.
5. The aforementioned purposes of packaging have increased the
cost of packaging and, therefore. the price of the product.
- Packaging does not refer only to the wrapper or container of the
product. It can mean the bundle of products or services that are
put together to attract and delight customers and also mean the
terms and conditions attached to the sale or after-sale servicing of
the product.
PLACE
Initial Location Screening - ln finding a good location, one needs
to consider the following.
1. The number of customers residing or working in the area, and
the number of customers who frequently pass through the area.
2. The density or number of customers per unit area.
3. The access routes to alternative locations and their traffic count
in those routes.
4. The buying habits of customers or where they buy, at what time
and how frequent.
5. Locational features such as parking spaces, foot access,
creature comforts, and the like.
In a similar way, the entrepreneur must be able to determine the
price that comes with the location because it will spell out the
success or failure of the business. The entrepreneur has to
consider the following:
1. The cost of buying or renting, renovating, and operating the
location.
2. Customer volume, drop-in rates (what percentage of customer
traffic would stop by the store) and sales conversion ratios (what
percentage of drop-ins would actually purchase something from
the store).
3. Revenues based-on the volume and mix of goods and services
expected to be sold at certain prices.
4. Profits.
In addition to the above factors, the final choice of location must
be based on the following:
1. Image and location conditions. This refers to the physical
look of a location, sanitary conditions, crime and safety levels, etc.
2. Exact lit to target customers. Is the location traffic generally
composed of your target customers?
3. Clustering of competitor establishments. This oftentimes
results in drawing a bigger market to the location.
4.Future area development. A certain location might not have the
most customers or the best economics in the short term. but it
might become a central business hub within the next five years.
5.Fiscal and regulatory requirements. An entrepreneur would
want to set up shop in a town or city with low tax rates, good
governance, excellent, infrastructures and great public services.
Relevant Location Drivers - It would benefit the entrepreneur to
do an in-depth location analysis. These are the 'musts' in
choosing the location for your business:
1. Physical Proximity to Target Market - Locations are chosen
based on how close it is to the target market. Ideally, the best
locations should be easily accessible from home or the workplace.
2. Customer Traffic Flow - Refers to the people that regularly
come into contact with your business establishment. Your shop
might not be near to customers’ homes or workplaces, but it might
be situated somewhere along their daily routes.
3. Industry Clustering - A lot of competitors clustered in one
location usually draw in a bigger market to the area, some
entrepreneurs prefer to establish a monopoly far away from
competitors.
4. Convergence of Multiple Industries - Locations where
multiple industries converge. To able to attract more customers
because of one-stop shopping convenience.
5. Population Concentrations – Urbanization creates population
concentrations. Where people live, goods and services follow. The
more populous the location is, the greater is the opportunity for
business and profit.
6. Activity Hubs - Activity hubs such as large schools, high-rise
buildings, public parks, transport terminals, and entertainment
centers provide good location potentials for food establishments
and client-specific services.
7. Growth Potential - The new development site will be the
natural greener pasture for early locators. The early locators will
catch the early customers.
8. Business Climate - Enterprises prefer locations that are
conducive in doing business. This includes areas with:
- high economic growth
- stable political situation
- effective social services
- good infrastructures
- cheap Utilities
- efficient transportation and logistics
- availability of skilled labor force
- low crime rates
- a good fiscal incentives
- trusted public officials
Comparative Location Analysis - A potential location is through
comparing it with other locations with more or less the same
features and tenant mix or clusters of competitors. These locations
must have that ‘extra something’ that makes competitors fight for a
store space within the same area.
Geography and Atmosphere Determinants - For the geography
determinant, there are six decision tensions:
1. Concentration versus Destination - it is natural for
entrepreneurs to prefer places where there is large concentration.
2. Access versus Abundance - it is the ability to reach a place
easily and inexpensively.
3. Clustered versus Dispersed - clustered competitors allow
customers to choose from a great variety of products offerings.
4. Developed versus Underdeveloped - there is also some
tension in choosing to locate in highly-developed areas of
business versus locating in relatively underdeveloped areas.
5. Physical versus Virtual - the internet has enabled the
proliferation of virtual market places where customers and sellers
converge at the comfort of their own homes.
6. Upscale versus Downscale - the tension between choosing
upscale places versus downscale places. the more well-off
customers can afford to spend more in upscale places. Downward
places have advantage of attracting the masses who might have
lower purchasing power but greater numbers.
Access – the ability to reach a place easily and inexpensively.
Clustered competitors allow customers to choose from a great
variety of product offerings. The clustering of many sellers attract
buyers.
Developed areas would have ready-made markets and all the
utilities and transportation systems in place but tend to be more
expensive than underdeveloped areas.
The Internet has enabled the proliferation of virtual market places
where customers and sellers converge at the comfort of their own
homes or wherever they are through computers, laptops, or
mobile devices.
For the atmosphere determinant, there are five decision tensions:
1. Formal versus Informal
2. Exclusive versus Public
3. Conservative Versus Adventurous
4. Aesthetics versus Functionality
5. Minimalist versus Maximalist Initial Process Mid Process Final Process
+ Comparison of + Customers who + Taste test
Atmosphere – refers to the state or condition of the environment, product features have tried the + Physical demo
which affects the mind and mood of customers, either in a positive and probable results products before. + Free trial period
or negative way. - Window shopping + Professional + Money-back
- Internet browsing evaluator’s guarantee offer.
- brings out the intangible qualities which customers are looking - brochures guidebook on
for through the tangible or physical manifestation of the place. collection and competing products.
comparison. + Testimonials from
Formal Atmosphere – projects a stylized, classy, highly- - asking friends credible endorsers
organized, and well-structured image for the place. It gives and relatives + How often others
customers the feeling of elegant tradition and civilized order. + Word of mouth are seen actually
feedback using the product or
Informal Atmosphere – projects a casual, easy-going, + Gut reaction services.
unstructured, and unpretentious image for the place. Availability – means that the enterprise has the goods or services
on hand.
Exclusivity Atmosphere – the preferred atmosphere by some
customers who want privacy and elitist isolation. Accessible – means that the customers can easily get the
product from their usual buying places or the products can be
Public Atmosphere – one where people from all walks of life can conveniently delivered to them.
congregate.
Adequate – means the product meets the quality and delivery
Conservative Atmosphere – one where they can feel safe and specifications of the customer.
secure. These customers want a experience the familiar, the tried
and tested, and the “normal.” Acceptable – means that the customer is convinced by the selling
points of the product, finds very little or no objectionable features
Adventurous Atmosphere – (adventurism) They want to try out- in the product, and accepts the conditionality, warranties, and
of-the-ordinary escapades. amenities given by the seller.

Aesthetics Atmosphere – customers who go for the aesthetics of
a place.
Functionality Atmosphere – customers who go for the
functionality of the place.
Affordable - means the price and payment terms are right.
The organizational modality to educate the customers, to help
them in their decision-making process, and to close the sale would
depend on four variables.

Minimalist Atmosphere – customers who don’t want clutter in the
atmosphere. They like the minimalist approach and believe in the
adage that “less is more.”
Maximalist Atmosphere – They like everything to be in one place
altogether.
People - are the ultimate marketing strategy.
- The people in a marketing organization play a crucial role in the
success of the enterprise.
1. Is there a need for high contact (face to face) or will low contact
(internet) be sufficient?
2. ls there a need for high accessibility? If so, the company
requires distributors, dealers, branches, and franchisees to
expand their reach. Alternatively, they need a very fast, reliable,
and economical delivery system.
3. How heavy or light is the transaction cost? High transaction cost
products need new competent people to sell them.

The marketing efforts of people are organized at four levels: 4. Does the customer need a lot of sale servicing and after-sales
1. to create customer awareness. servicing?

2. to arouse customer interest. PROMOTION - is the explicit communication strategy adopted by

3. to educate customers as they evaluate their buying choices.
4. to close the sale and deliver the products.
To arouse the interest of customers, the enterprise can use
several people or organizational modalities.
1. The first modality to outsource the people from advertising
agencies, events management outfits, call centers, and
telemarketers.
2. The second modality to build in house capabilities by hiring
market researchers, brand managers, salespeople, public
relations officers, website writers, orchestrators, etc.
3. The third modality to collaborate or enter into partnerships with
principals, distributors, dealers, and industry associations.
Educating customers in their evaluation process requires the
enterprise to know the customer’s decision-making process.
1. What and who are involved in the buying process?
2. Where are the customers in the buying process? Are they still
canvassing and “shopping around"? Are they currently focusing on
a few candidates? Are they seriously evaluating the company’s
product?
an enterprise to elicit the patronage, loyalty, and support not only
from its customers but also from its other significant stakeholders.
Promotion encompasses all the direct communication efforts of
the enterprise, such as advertising, public relation campaigns,
promotional tours, product offerings, point-of-sale displays,
websites, flyers, emails, letters, telemarketing, and others.
Effective promotion depends on three critical factors:
1. the credibility of the communicator
2. the message and the medium of the message
3. the receptiveness of the audience to all that is being
communicated.
The idea is to match the size of the market with the medium used
and the resources of the enterprise.
PRICE - Pricing depends on the business objectives set by the
enterprise.
- Major factor for the customer in buying a product, it is not the
only factor such as in the case of buying premium products.
Non-price factors outweigh the price factor whenever a customer
is buying a premium item because he or she is more particular
about the 'premiumness' in terms of quality, the status or image
that the product brings, shorter waiting time or immediate delivery,
and other such decision criteria.

3. What are the next steps of the customers and how can the
company facilitate their next steps? What else do the customers
need to know and what issues must be addressed by the
marketer? The customer evaluation process may follow something
similar to Table 4.1.
- Finding the right price for a product is, therefore, not a simple
matter of adding a mark-up on the cost of a product or service, as
some companies do.
- The enterprise should set the prices of its products or services
based on its business objectives such as the following:
1. Profit maximization
2. Revenue maximization
3. Market share maximization
4: Attainment of the desired prestige or quality leadership
5.Penetration, survival, or liquidation
6.Scarcity pricing or market skimming
7. Cost recovery
8. Subsidy pricing
9. Marginal pricing

The first three pricing strategies pertain to the related dynamics of

the different price ranges applied across different product volumes
or quantities while considering the product costs incurred as these
products are bought or sold.