ENTREPRENEURSHIP

APPLIED SUBJECT:
( GRADE 12 First Semester)

MODULE 2
RECOGNIZING THE POTENTIAL MARKET
 RECOGNIZING THE POTENTIAL MARKET MODULE 2

The Entrepreneurial Process

- It is a step by step procedure in establishing any kind of business that an

entrepreneur has to undergo.

Four Aspects of Entrepreneurial Process

1. Opportunity Spotting and assessment

- This is the beginning of the process and is considered the most difficult.
- Entrepreneurs at this point take note of interesting trends in their environment.
- Consumers are reliable sources of opportunity information because market needs
originate from them.
- Major sources of opportunity are the glaring problems in the environment, problems
encountered by co-entrepreneurs, new trends, process and the developments in
the environment.
- Other minor sources are feedback from distributions or business partners such as
retailers, wholesalers, manufacturers and technical people that the entrepreneur is
working with.
2. Developing a business plan
- Entrepreneurs should formulate a business plan when they have already spotted
and assessed the opportunities for a market.
- A business plan is comprehensive paper that details the marketing, operational,
human resource, financial, strategic direction and tactics of the business.
- Business plan will be the core guide and direction of the entrepreneur in calculating
the resources needed assessing how to obtain these resources efficiently and
running the business sustainably.
3. Determining the capital needed
- A big idea can never be translated into reality if the entrepreneurs’ resources are
limited. Therefore, it is mandatory in the entrepreneurial process to calculate the
resources needed to establish the business and compare this against the
entrepreneurs’ current resources.

4. Running the business

- This is the part, where the entrepreneur should use the resources allocated for the new
venture.

- The business plan prepared in step 2 should already have been implemented.

- All aspects of the business should be critically observe from operations, marketing and
sales, human resources, finance, and strategy implementation.

- The entrepreneur should have a control and monitoring system to serve as a check and
balance of the formulated plans.

Table 2.1

2 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

Opportunity Spotting Developing a . Determining the Running the business

and assessment business plan capital needed
Evaluate the Come up with a Calculate the intrinsic Practice leadership
identified opportunity business description and extrinsic capital as a way of life.
and analysis needed
Conceptualize and Perform industry Calculate the existing Recognize critical
measure the analysis capital success factors
opportunity
Identify the Come up with the Calculate the Identify existing and
perceived value of marketing plan difference between foreseeable
the opportunity to the needed capital problems and issues
the company and and the existing
the customers. capital. Choose the
most cost-efficient
suppliers or
serviceproviders

Do cost benefits Prepare the Develop contact -Employ risk

analysis of the operations plan and relationship mitigating controls
opportunity including the with suppliers and and monitoring
including risk analysis organizational plan service providers systems

Match the Come up with the Devise an

opportunity with the financial plan expansion
entrepreneur’s skills sustainability
and objectives strategy

-Scan the strengths identify strategies

and weaknesses of and tactics
competitors

Perform monitoring
and control

Scanning the Marketing Environment

- Scanning the marketing environment is the starting point of any venture that
involves understanding.
- An entrepreneur can recognize various opportunities and at the same time
understand thoroughly the arena where the future business will operate.
- The process of seeking, screening and seizing is adapted to create the most suited
product or service for an opportunity.
- The general rule is to find the opportunity first before coming Up with a new product
or service, not the other way around.

Secking, Screening. and Seizing

3 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

- The 3S of opportunity spotting and assessment is the framework that most of the
promising entrepreneurs use to finally come up with the ultimate product or service
suited for a specific opportunity. An opportunity is an entrepreneur's business idea
that can potentially become commercial product or service in the future.
-

S1: Seeking the Opportunity

- Opportunity seeking is the first step and is the most difficult process of all due to the
number of options that the entrepreneur will have to choose from. It involves the
development of new ideas from various sources as follows:

1. Macroenvironmental Sources
a. Steepled – a mnemonic for sociocultural, technological, economic, environmental,
political, legal, ethical and demographic factors. This represents the general
environment where the entrepreneur can identify business opportunities from and
where the future business is about to operate.

b. Industry – This is the sourse of current trend on what is happening in the industry
where the future business will belong to.

c. New discovery or knowledge- These are new trends that can be the core business
model of a new venture.

d. Futuristic opportunities- These are projected new opportunities that can possibly
affect new business while it is running.

2. Micromarket
a. Consumer preferences, interest, and perception – These are the current needs and
wants of potential customers that should be discovered right away by budding
entrepreneur.
b. Competitors - Recognizing and understanding potential competitors will aid the
entrepreneur to develop a product or service that is unique and will surely stand
out from the competition.
c. An unexpected opportunities from customers- the most brilliant ventures come from
the most unexpected opportunities. It may happen in unlikely situations, unlikely
place and with unlikely people.
d. Talents, hobbies, skills, and expertise- The entrepreneur's talents, hobbies, skills, or
expertise can be a source of business opportunity.
e. Irritants in the market place such as deterrents, problems, complaints, and delays –
Entrepreneurs see opportunities in situations where there is a recurring problem or
sometimes when there is no hope in solving the problem.
f. Location- Entrepreneurs just have to look at their ecosystem and they will be able
to spot a business opportunity right away.

4 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

Methods of Generating ideas

1. Focus group discussion- Moderators handles a very open, free-flowing, and in

depth discussion with the group of people who can provide insightful ideas about a
new product or service that will fill a market need.

2. Brainstorming- It is an activity that allows the participants to share creative ideas

using the following rules:
a. No destructive criticism
b. Wilder ideas are accepted
c. More ideas are preferred
d. Improvement of other’s ideas is followed

3. Brainwriting or Internet Brainstorming - It is not used face to face, but in writing or

online so the result of brainwriting or internet brainstorming usually take longer, as
the answers depend on the availability of the participants in answering the
questionnaires online.
4. Problem Inventory Analysis – The participants are already given an inventory of
product or service problems. The participants will just identify from the list given the
compelling problems of a potential product or service instead of generating the
ideas from them.

Macroenvironmental Sources

Steepled Analysis

1. Socio-cultural factors- These factors represent a general view of a locality’s

traditions,customs, beliefs, norms and perceptions. These factors affect how a person
of the locality behaves and reacts to marketing and selling activities.

The entrepreneur should take note of the following socio-cultural factors:

- Health consciousness
- Education level
- Attitudes toward imported goods and services
- Attitudes toward the persons’ lifestyle
- Attitudes toward product quality and customer service
- Attitudes toward saving and investing
- Emphasis on safety
- Buying habits
- Religion and beliefs

2. Technological Factors- These are composed of innovations of an existing technology

or an invention of a new one mostly on applied science and engineering research
areas.

5 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

The entrepreneur should take note of the following technological factors:

- Basic infrastructure level

- Rate of technological change
- Spending on research and development
- Technological incentives
- Legislation regarding technology
- Communication infrastructure
- Access to newest technology
- Internet infrastructure and penetration

3. Economic factors- These factors play a vital role in the scanning of marketing
environment because economic factors directly affect any business venture.

The entrepreneur should take note of the following economic factors:

- Growth rates
- Inflation rates
- Exchange rates
- Unemployment trends
- Labor costs
- Stages of business cycle
- Trade flows and pattern
- Level of consumers’ disposable income
- Monetary policies
- Price fluctuations
- Stock market trends

4. Environmental or Ecological factors- This should be given much importance in

conducting a business especially when the world has already suffered severely from
human-induced calamities.

The entrepreneur should take note of the following Environmental factors:

- Weather
- Climate change
- Laws regulating environment pollution
- Air and water pollution
- Recycling
- Waste management
- Attitudes toward “Green” or ecological products
- Endangered species
- Attitudes toward and support for renewal energy

5. Political Factors- These factors are mostly induced by government policies and
administration, which can have a strong effect in the entrepreneur’s business.

6 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

The entrepreneur should take note of the following political factors:

- Government stability and likely changes

- Bureaucracy
- Corruption level
- Tax policy
- Freedom of press
- Rule of law
- Government effectiveness
- Political rights
6. Legal factors- are government laws and regulations that can restrict or allow business
activities.

The entrepreneur should take note of the following legal factors:

- Anti-trust law
- Discrimination law
- Copyrights, potents, intellectual property rights
- Consumer protection
- Employment law
- Health and safety law
- Data protection law

7. Ethical factors-m It will serve as an entrepreneurs’ guide on how to be ethical in

running the business

The entrepreneur should take note of the following ethical factors:

- Ethical advertising and sales practices

- Accepted accounting, management, and marketing standards
- Attitude toward counterfeiting and breaking potents
- Attitude toward development and well-being of employees

8. Demographic factors- the characteristics of the people in the target market.

The entrepreneur should take note of the following ethical factors:

- Population growth rate

- Age distribution and life expectancy rates
- Gender distribution
- Social classes
- Family size and structure
- Minorities

S2: Screening the opportunity

Opportunity Screening- is the process of cautiously selecting the best opportunity. The
selection will depend on the entrepreneurs’ internal income etc. the main objective that the

7 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

business will accomplish in the entrepreneurs life, and the external intent, which will address
the compelling needs of the target market.

Time- must be considered by the entrepreneur in screening the opportunities at hand, as it is

considered one of the most critical resources of an entrepreneur.

The entrepreneur should say no to an opportunity if it does not contain any of these business
opportunity elements;

1. Has superior value to customers

2. Solves a compelling problem, issue, a need, or a want
3. Is a potential cash cow
4. Matches with the entrepreneurs’ skills, resources, and risk appetite

The Opportunity Attractiveness Test (OAT)

- Aims to assist entrepreneurs in ensuring that the opportunity that they will venture
into is an attractive and feasible prospect. The entrepreneur must answer this test
realistically and avoid over estimation or under estimation. All the risks must be
accounted and assessed first.
- The answer in this test will be guiding principles of the entrepreneur in writing the
business plan.
- The concept and the strategy – the entrepreneur should think of the reason for the
business existence. He or she can do this through crafting a brief vision statement.
- A vision statement is simply defined as what the business should do in the future.
- The entrepreneur needs to device a differentiator or a positioning strategy.
- Opportunity Metrics- these are considered as the opportunity’s critical success
factor. These will approximately determine the attractiveness of the new venture
depending on the total scores that it will generate and risk appetite of the
entrepreneur.

Total Attractiveness Score

- The entrepreneur should first compute for the total scores per factor then, a
corresponding weight or percentage should be given as to the importance of the
factors to the venture’s overall standing.

S3: Seizing the Opportunity

Opportunity Seizing- It is the last step in opportunity spotting and assessment. This is the
“pushing through” with the chosen opportunity. Entrepreneurs should make the best out of
this opportunity and should exert effort and full dedication for the success of the new
venture.

Innovation- Is the process of positively improving an existing product or service. It is a key

driver for economic growth. It is inevitable as the world constantly changes.

8 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

Three types of Innovation (According to the degree of distinctiveness)

1. Breakthrough innovation- Include inventions occur infrequently as these establish the

platform on which future innovations in an area are develop.
2. Technological innovation- These occur more frequently than breakthrough innovation.
These innovations are technological advancements of an existing product or service.
3. Ordinary innovation- These occur ordinarily as the name implies. They are commonly
originating from market analysis and technology pull instead of technology push.

Product or Service Planning and Development Process

- It is also called the refining process. It has four keys stages:

1. Idea Stage- the entrepreneur determines what are the feasible products and or
services that will perfectly suit the opportunity.
2. Concept Stage- the acceptable product or service has already been identified. It will
go through the concept stage. The develop idea will undergo a consumer
acceptance test.

3. Product Development Stage- the entrepreneur leverages on the informative

generated from the prospective customers via the concept stage. Actual reactions
from prospective customers are determined.

4. Test marketing Stage- This validates the work done from the first three stages to
measure success in the commercialization of the product or service. Actual sales result
will be the foundation of the consumers’ acceptance level and will be the basis in
commercializing the product or service.

9 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

ENTREPRENEURSHIP
NAME:______________________________ GRADE AND SECTION_____________

LET’S DO IT!

I. Read and understand the given questions.

1. In STEEPLED Analysis, choose 1 factor that will aid the entrepreneur in deciding what
product or service to set up. Explain why.
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

2. How do you identify a potential market and analyze the market needs?
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

3. Give at least three Filipino entrepreneurs today that you think underwent the product
or service planning and development process before they become successful
entrepreneurs.
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

10 Our Lady of Assumption College – Batangas Branch

 RECOGNIZING THE POTENTIAL MARKET MODULE 2

IDENTIFICATION
II. Identify the following:

_________________1. It is an entrepreneur's business idea that can potentially become

commercial product or service in the future.

_________________2. These factors represent a general view of a locality’s traditions, customs,

_________________3. It is a step by step procedure in establishing any kind of business that an

entrepreneur has to undergo.

_________________4. It is an activity that allows the participants to share creative ideas.

_________________5. This is the beginning of the process and is considered the most difficult

_________________6. These factors play a vital role in the scanning of marketing environment.

_________________7. This is the source of current trend on what is happening in the industry
where the future business will belong to.

_________________8. These are composed of innovations of an existing technology or an

invention of a new one mostly on applied science and engineering research areas.

_________________9. It must be considered by the entrepreneur in screening the opportunities

at hand, as it is considered one of the most critical resources of an entrepreneur.

_________________10. These are projected new opportunities that can possibly affect new
business while it is running.

PERFORMANCE TASK

MAKE A VIDEO PRESENTATION ON THE GIVEN QUESTION BELOW

1. Why do you think that many Filipinos remain poor and that the disparity between the
rich and the poor still very high?

11 Our Lady of Assumption College – Batangas Branch