MODULE 1: OVERVIEW OF ENTREPRENEURSHIP excellence in their work.

They have fully learned, and continue to

What is Entrepreneurship?
practice, a four-step process of thinking-
It is a proactive process of developing a business
idealization, visualization, verbalization,
venture to make a profit.
and materialization.
It involves…
- Seeking opportunities for a market True entrepreneurs have an income that
- Establishing and operating a business out of the keeps on multiplying even if they do not put
opportunity; and much effort.
- Assessing risks and rewards through close monitoring of
the operations.
ENTREPRENEURS’ FOUR-STEP PROCESS OF
SOCIAL AND ECONOMIC BENEFITS OF THINKING
ENTREPRENEURSHIP
 Entrepreneurship produces  Entrepreneurship disperses Idealization entrepreneurs dream enormously and
more jobs that equate to an the economic power and desire to build an ideal environment
increase in national income. creates equality.
Visualization entrepreneurs start to create plans to
make the dream a reality
 Entrepreneurship amplifies  Entrepreneurship controls
economic activities of the local wealth and Verbalization involves sharing of ideas with other
different sectors of society. balances regional people, knowing that their vision is
development. already occurring
 Entrepreneurship introduces
Materialization happens when the vision becomes a
new and innovative  Entrepreneurship reduces
reality
products and services. social conflicts and political
unrest.
 Entrepreneurship improves TERMS FOR AN ENTREPRENEURS’ FIELD OF
people’s living standards. EXPERTISE
 Entrepreneurship elicits
Technopreneur entrepreneur who puts technology at
economic independence and
the core of his or her business model
capital formation.
Social takes advantage of the country’s social
entrepreneur problems and turn them to profitable
Who is an Entrepreneur?
institutions with the intention of
An entrepreneur is a unique individual who has the
helping the disadvantaged community
innate ability and extraordinary dedication to establish and
rather than making a profit
manage a business, acknowledging all the risks and reaping its
rewards. Intrapreneur an entrepreneur in a large company or
corporation who is tasked to think,
Entrepreneurship is composed of varying degrees or levels of establish, and run a new big idea or
intensity. According to action coach, there are project.
FIVE LEVELS of ENTREPRENEURIAL
Intrapreneurs are usually the product
DEVELOPMENT
managers or the business development
managers of a company
1. The Self- They are not comfortable with the routines
Employed of a desk job. They do not want to conform to Extrapreneur entrepreneur who hops from one
a fixed working schedule. They will company to another to act as the
eventually realize that a successful business innovation champion, providing
should work for them. creative and efficient solutions
2. The Entrepreneurs feel the need to step up and
Manager ask some help from the people around them.
They delegate and hire potential employees to COMMON AND CORE COMPETENCIES IN
do the work. ENTREPRENEURSHIP
3. The Leader Entrepreneurship in this level already
 Proactive  Have a sharp  Networkers
enjoy seeing their people flourish, stepping up
 Agents of eye for  Decisive
and producing great results with minimal
change opportunities  Balanced
supervision. They already recognized key
 Risk takers  Sociable  Innovative
leaders in their organization.
In effect, these key leaders also enjoy the
entrepreneurs’ trust and are satisfied with the
outcome of their careers. Entrepreneurs at this CORE TRAITS THAT ENTREPRENEURS SHOULD
stage now focus on the big picture and DEVELOP IN MANAGING AND RUNNING THE
strategic direction of their business rather than BUSINESS
in generating sales and operating the business.
Leaders Specialist
4. The Investor Investors look for more opportunities for
their business to grow. They may either Communicators Problem Solvers
purchase one or two businesses that can
potentially add value to the company, or sell
their established business as a franchise to
potential entrepreneurs.
5. The True True entrepreneurs, based on their
Entrepreneur experience, now aim for quality and
 ENTREPRENEURSHIP OR EMPLOYMENT? 6. Comfort level at work
- is comfortable in - may be comfortable with
Important career Entrepreneur Employee
doing multiple and routines and minimal
factors
challenging tasks and risks; may also be
takes accountability comfortable in working
1. Income
with the risks and for the company itself
- income generated - income generated actively profits of the business;
passively even when the (on working hours only) does not want to be
entrepreneur is resting no work = no pay confined in a box;
- opportunity income - income usually fixed per thinks outside the box
unlimited, depending on month and increases every or sometimes thinks
the success of the year depending on the there is no box
business employer and the
- income only earned employee’s performance
when the business is - income earned whether CAREERS IN ENTREPRENEURSHIP
successful the business is successful
or not (LIST OF THE MOST COMMON SMALL BUSINESS IN THE
PHILIPPINES)
2. Hiring and Firing; Organization setup, and major - Sari sari store - Tutorial - Cellphone loading
key result areas - Hair styling and business business
- provides jobs; is the owner - seeks for a job; is the one make up - Buy and sell - Laundry and dry
of the business and applying for a job and is - Rice retailing business cleaning business
conducts the talents interviewed by the - Spa, gym, and - Baking business - Website
selection company’s hiring officers nail care - Street food development and
- fully responsible for - has the goal of satisfying - Food cart busines design/blogging
serving customers, making only the employer or the business - Flea market or - Car wash and car
the business direct supervisor - Video and tiangge care
profitable/sustainable, and - fully dependent on the photography - Online selling - Bar, café, and
providing employee employer’s performance; - Printing business restaurant
satisfaction is at risk of losing his job business - Direct selling - Water station and
- has the power to if the company does not LPG station
disengage nonperforming perform well; may find it
employees applying the difficult to just leave their
due process policy of below par employer if this ENTREPRENEUR PHILIPPINES’ FRANCHISE OR
disengaging personnel is their only source of START-UP BUSINESS OPTIONS IN THE PHILIPPINES
- can venture into expansion income
of business such as - can only work for the - Bakeries, bakeshops, and - Fastfood establishments and
franchising and buying current employer bread products restaurants
other similar businesses exclusively - Bars, cafes, and coffee - Food and snack carts
shops - Gas/petroleum products and
3. Daily Tasks - Beverage and water stations
- perform all necessary variable - has routine tasks confectionary - General merchandise and
tasks to establish and manage a and works on - Car care retail
start-up business, which usually regular or normal - Clothing and accessories - Health and wellness (salon,
takes most of the time; spend hours - Convenience stores massage, spa, and gym)
more hours on work than a - follows policies, - Drug stores and - Schools
regular employee and sometimes procedures, and pharmacies - Services
gets no sleep memoranda from
- prepares policies, procedures, and the employer
memoranda for the business

4. Leisure time and vacations

- has a flexible schedule and - has a limited number of
can take unlimited number vacation days imposed
of vacation days by the employer

5. Taxation
- taxed on the net income; - taxed on the gross income;
can claim taxable cannot use expenses
income deductions for incurred related to the job
allowable expenses such as food and
incurred by the business transportation expenses to
claim for deductions from
taxable income
 MODULE 2: RECOGNIZING THE POTENTIAL MARKET DETERMINING THE RUNNING THE BUSINESS
CAPITAL NEEDED
THE ENTREPRENEURIAL PROCESS  Calculate the intrinsic and  Practice leadership as a way
- Is a step-by-step procedure in establishing any kind of extrinsic capital needed of life
 Calculate the existing capital  Recognize critical success
business that an entrepreneur has to undergo
 Calculate the difference factors
Four (4) Aspects:
between the needed and  Identify existing and
1. Opportunity spotting and assessment existing capital. Choose the foreseeable problems and
2. Developing a business plan most cost-efficient suppliers issues
3. Determining the capital needed or service providers
4. Running the business
SCANNING THE MARKETING ENVIRONMENT
- the starting point of new venture that involves
1. OPPORTUNITY SPOTTING AND ASSESSMENT understanding and knowing the intracacies of
- The beginning of the process and is considered the most difficult macroenvironment, microenvironment, and internal
- Entrepreneurs take note of interesting trend in their environment environment.
The process of seeking, screening and seizing is adapted to create the most
Consumers are reliable sources of opportunity information because
suited product or service for an opportunity. The general rule is to find the
market need originate from them. opportunity first before coming up with a new product or service, not the other
Other MAJOR sources: way around.
- Glaring problems in the environment
- Problems encountered by co-entrepreneurs SEEKING, SCREENING, AND SEIZING
- New trends, processes, and developments in the environment The 3S of opportunity spotting and assesment is the
Other MINOR sources: framework that most of the promising entrepreneurs use to finally
- Feedback from distribution or business partners such retailers, come up with the ultimate product or service suited for a specific
wholesalers, manufacturers, etc. opportunity.
The entrepreneur’s TOUGHEST job is to:
- carefully assess the opportunity through estimation of opportunity Opportunity
length, capitalization required, threats, profitability, and - an entrepreneur's business idea that can potentially become
calculation of real and perceived value a commercial product or service in the future
- assess if the opportunity is aligned with their personal goals and The entrepreneur serves as the catalyst of creating a value for the
attributes costumers through the new or innovated product or service. As a
“Entrepreneurs should already think in advance how they will position the reward, the entrepreneurs can earn profits when the costumers are
product or service in the market and showcase its unique selling proposition”
satisfied and delighted.

S1: SEEKING THE OPPORTUNITY

2. DEVELOPING A BUSINESS PLAN
Opportunity Seeking- the first step and is the most difficult of all
Business plan
due to the number of options that the entrepreneur will have to
- is a comprehensive paper that details the marketing, operational,
choose from
human resource, financial, strategic direction, and tactics of the
business.
It involves the development of new ideas from various sources as
- core guide and direction of the entrepreneur in calculating the
follows:
resources needed, assessing how to obtain these resources efficiently,
1. Macroenvironmental Sources
and running the business sustainably
a. STEEPLED
- A mnemonic for Sociocultural, Technological, Economic,
3. DETERMINING THE CAPITAL NEEDED Environmental, Political, Legal, Ethical, and Demographic
factors
- it is mandatory in the entrepreneurial process to calculate the - Represents the general environment where the entrepreneur can
resources needed to establish the business and compare this against identify business opportunities from and where the future
the entrepreneur's current resources business is about to operate.
- caution must be applied in computing the complete set of resources - Any external factor or a combination of external forces from
needed and include only those items that are considered as the real these 8 environmental forces can have a direct effect in
needs in venture creation opportunity generation and business sustainability.
- allowance must be considered as well because there will be times that b. Industry
resources will be inadequate or unsuitable - the source of current trend on what is happening in the industry
where the future business will belong to
For example: establishing of rice tailing business
4. RUNNING THE BUSINESS c. New discovery or knowledge
- new trends that can be the core business model of a new venture
- This is the part where the entrepreneur should use the resources
d. Futuristic opportunities
allocated for the new venture
- projected new opportunities that can possibly affect the new
- The business plan should already have been implemented
business while it is running
- All aspects of the business plan should be critically observed from
For example: sari-sari stores in the future will be able to
operations, marketing sales, human resources, finance, and strategy
incorporate financial transactions such as accepting bills
implementation.
payment and process remittances
- The entrepreneur should have a control and monitoring system to
serve as a check and balance of the formulated plans
2. Micromarket
a. Consumer preferences, interests, and perception
COMPONENTS AND STEPS IN THE ENTREPRENEURIAL
- current needs and wants of potential customers that should be
PROCESS: A SUMMARY
discovered right away by a budding entrepreneur
i. Need
OPPORTUNITY SPOTTING DEVELOPING A BUSINESS
AND ASSESSMENT PLAN - recognized when a customer believes that there is a difference
 Evaluate the identified  Come up with a business between his or her current situation versus his or her desired
opportunity description and analysis condition
 Conceptualize and measure  Perform industry analysis ii. Want
the opportunity  Come up with the marketing - recognized when a customer believes that there is a specific
 Identify the perceived value plan product or service that can perfectly suit the need
of the opportunity to the b. Competitors
company and the customers - 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
- 7Ps of marketing – Product, Place, Price, Promotion, People,
Process, Packaging
 c. Unexpected opportunities from customers  Labor costs
- Oftentimes, the most brilliant ventures come from the most  Stages of business cycle
unexpected opportunities. business venture  Trade flows and patterns
It may happen in unlikely situations, unlikely places, and  Levels of consumers’ disposable
- - include income,
income
unlikely people. Existing problems and bottlenecks often give expenses, and  Monetary policies
rise to an unexpected opportunity resources  Fiscal policies
d. Talents, hobbies, skills, and expertise  Price fluctuations
- Business opportunities do not just come from outside forces, but  Stock market trends
also from within the entrepreneur. 4. Environmental
 Weather
- The entrepreneur’s talents, hobbies, skills, or expertise can be a factors  Climate change
source of business opportunity - The scan of these  Laws regulating environment
e. Irritants in the market placesuch as deterrents, factors will help the pollution
problems, complaints, and delays entrepreneur determine  Air and water pollution
- entrepreneurs see opportunities in situations where there is a if the business will  Recycling
recurring problem or sometimes when there is no more hope in comply the  Waste management
solving the problem environmental  Attitudes toward “green” products
f. Location standards or will just  Endangered species
 Attitudes toward and support for
- entrepreneurs just have to look at their ecosystem and they will be a hazard to people, renewable energy
be able to spot a business territory right away animals and nature
 Government stability and likely
METHOS OF GENERATING IDEAS 5. Political factors changes
1. Focused group discussion (FGD) - mostly induced by  Bureaucracy
- a moderator handles a very open, free-flowing, and in- government policies  Corruption level
depth discussion with a group of people who can provide and administrations,  Tax policy (rates and incentives)
which can have a  Freedoom of press
insightful ideas about a new product or service that will fill Rule of law
a market need. strong effect in the 

entrepreneur's business  Government effectiveness

2. Brainstorming  Political rights
- is an activity that allows the participants to share creative  Anti-trust law
ideas using the following rules: (a) no destructive criticism 6. Legal factors  Discrimination law
or judgment is allowed, (b) wilder ideas are accepted, (c) - government laws and  Copyright, patents/intellectual
more ideas are preferred, and (d) improvement of other’s property rights
regulations that can  Consumer protection
idea is allowed. In short, brainstorming is a fun discussion restrict or allow  Employment law
with lenient rules. business activities  Health and safety law
3. Brainwriting or Internet brainstorming  Data protection law
- exactly the same as brainstorming except that the channel  Ethical advertising and sales
used is not face-to-face, but in writing or online. The results practices
usually take longer, as the answers depend on the 7. Ethical factors  Accepted accounting, management,
availability of the participants in answering the - Entrepreneur’s guide and marketing standards
questionnaires online. on how to be ethical in  Attitude toward counterfeiting and
4. Problem inventory analysis running the business breaking patents
 Attitude toward development and
- similar to FGD except that the participants are already
well-being of employees
given an inventory of product or service problems. The Population growth rate
participants will just identify from the list given the 8. Demographic 

factors  Age distribution and life expectancy

compelling problem(s) of a potential product or service rates
instead of generating the ideas from them. - These are the
 Gender distribution
-
characteristics of the  Social classes
people in the target Family size and structure
Macroenvironmental Sources: Examples of Findings 
market  Minorities
STEEPLED Analysis
- The result of the STEEPLED scan will aid the entrepreneur in
deciding which product or service to set up and whether this S2: SCREENING THE OPPORTUNITY
new venture will succeed or not
- The important thing is for the entrepreneur to fully scan these This is the concept where you can inculcate what are the
factors so he or she can decide if there is a compelling business opportunities as an entrepreneur that can derive from the
opportunity or impending threat macroenvironmental and microenvironmental sources. The key here
- NOT ALL factors can have an effect on the new venture is in the effective choosing or careful diligence. Entrepreneurs should
1. Socio-cultural start with the big picture. This is the best way in ensuring that the
 Health consciousness entrepreneur has scanned the best potential business to venture into.
factors  Education level
- these factors represent a
 Attitudes toward imported goods and
general view of a services Opportunity Seeking
locality's traditions,  Attitudes toward product quality and - is the process of cautiously selecting the best opportunities.
customs, beliefs, norms, customer service - The selection will depend on the entrepreneur’s internal intent,
and perceptions.  Attitudes toward saving and i.e., the main objective that the business will accomplish in the
- these factors affect how investing entrepreneur’s life, and the external intent, which will address
 Emphasis on safety
a person behaves and the compelling needs of the target market.
 Buying habits
reacts to marketing and - The entrepreneur should apply due diligence and independent
 Religion and beliefs
selling activities judgment in selecting the opportunities that have a potential and
eliminate those that are not within the scope of the
2. Technological
entrepreneur’s risk appetite (entrepreneur’s tolerance of business
factors  Basic infrastructure level
Rate of technological change risks).
- Composed of 
innovations of an  Spending on research and Time must be considered by the entrepreneur in screening the
existing technology or development
opportunities as one of the most critical resources of an entrepreneur.
 ‘technology incentives
an invention of a new  Legislation regarding technology
one  Communication infrastructure
- Entrepreneurs should be  Access to newest technology
up-to-date for they are  Internet infrastructure and
catalysts in improving penetration
products and services
3. Economic factors  Growth rates
- play a vital role in the  Inflation rates
scanning of marketing  Interest rates
 Exchange rates
environment because
 Unemployment trends
they directly affect any
 The entrepreneur should say NO to an opportunity if it does not - needs to be protected too
contain any of these business opportunity elements: - (ex: Wi-Fi, laptop, jet airplane)
1. Has superior value to customers 3. Ordinary innovation
2. Solves a compelling problem, issue, a need, or a want - occur ordinarily as the name implies
3. Is a potential cash now - commonly originating from market analysis and technology
4. Matches with the entrepreneur’s skills, resources, and risk pull instead of a technology push. This means that the
appetite market has a strong influence in the implementation of an
innovation
- ex: unlimited internet plans of telecommunication
The Opportunity Attractiveness Test companies, wireless mouse, airbus for economical travelers
- Aims to assist entrepreneurs - All the risks must be accounted and
Entrepreneurs often encounter the problem in defining "new"
in ensuring that the assessed first. This can come from
product or service, or identifying its components or features. The
opportunity that they will different aspects of business such
"newness" is also independent on the eyes of the market and the
venture into in an attractive as operations, market, economy,
company. The entrepreneur must then establish that the new product
and feasible prospect. and finance.
or service offered will provide true value to the customers and
- This is a framework to - These risks must be estimated and
influence their behavior. Further, the new product or service should
measure how compelling an measured to determine the impact
increase the profitability potential of the enterprise.
opportunity is. of the potential business.
- This test is designed to detail - The components of the OAT will
each entrepreneurial aspect be used to channel the PRODUCT OR SERVICE PLANNING AND
to come up with a sound entrepreneur’s direction in data DEVELOPMENT AND PROCESS
entrepreneurial decision. gathering. It is vital that this test “refining process”
- The entrepreneur must must be carefully reviewed over
answer this test realistically and over again before finally going 1) Idea stage
and avoid underestimation. to the last step of seizing the - the entrepreneur determines what are the feasible product and/or services
opportunity. that will perfectly suit the opportunity
- In this stage, market evaluation is conducted, products and services that
The entrepreneur can also customize this test to better suit the are unappealing to the market will be eliminated
screening requirements of the new venture. With the four business 2) Concept stage
opportunity elements and the OAT, the entrepreneur can’t go wrong - Once the acceptable product or service has already stage been identified,
in his or her new venture. it will go through the concept stage.
The key is EFFECTIVE DILIGENCE. - The developed idea will undergo a consumer acceptance test.
Conversational interviews are conducted to understand consumer
preference on physical characteristics and attributes of a product or the
1) The “concept” and the “strategy” physical evidence and characteristics of a service.
- Both favorable and unfavorable results will be used to devise and
- The entrepreneur should think of the reason for the business’
existence. He or she can do this through crafting a brief vision acceptable product or service. This will also be used to compare the new
statement. This is simply defined as what the business do in the idea with the competition with regard to superiority and inferiority.
future. 3) Product development stage
- The entrepreneur leverages on the - The participants' task is to critique
- The entrepreneur should devise a value creation proposition.
The value that the product or service will after to the target information generated from the the actual product or service and
customers or the satisfaction of the needs and the behavior of the prospective customers via the record the good qualities and
target customers. concept stage. inferior attributes. They are also
- Actual reactions from prospective given samples of competitors'
- The entrepreneur needs to devise a differentiator or a positioning
strategy. customers are determined. products or services for
- The entrepreneur will conduct a comparative purposes.
2) Opportunity Metrics consumer panel where the actual - Consumer preference will largely
product samples or actual service be based on methods such as
- These are considered as the opportunity’s critical success samples will be given or rendered multiple brand comparisons, risk
factors. These factors will approximately determine the to the panel of potential analysis, level of repeat
attractiveness of the new venture depending on the total scores customers. purchases, or intensity of
that it will generate and the risk appetite of the entrepreneur. preference analysis (Hisrich,
- The answers, however, require extensive research, so the 2010).
entrepreneur must be careful in answering the metrics table. 4) Test marketing stage
Moreover, the entrepreneur can extend the scoring system - This stage validates the work done from the first three stages to measure
depending on the complexity of the industry and the venture success in the commercialization of the product or service. - Actual sales
itself. results will be the foundation of the costumers' acceptance level and will
be the base in commercializing the product or service.
In this module, you have understood the importance of the
S3: SEIZING THE OPPORTUNITY entrepreneurial process as a helpful scientific process in guiding the
Opportunity Seeking entrepreneur to follow the right way of establishing a new venture.
- “Pushing through” with the chosen opportunity You understood that scanning the market environment or spotting
- It is where entrepreneurs exert effort and full dedication for the the opportunities is the first step in the entrepreneurial process. These
success of the new venture. influencers are the compelling source of opportunities.
Innovation
- “Pushing through” with the chosen opportunity You have also scrutinized the 3S of opportunity spotting.
- The process of positively improving an existing product or The seeking process is vast and requires macroenvironmental,
service - key driver for economic growth microenvironmental, and internal scans. The screening process
- Inevitable as the world constantly changes. Therefore, products validates the attractiveness of the opportunity based on specified
and services must also adapt to these changes factors. The seizing process is the refinement of the opportunity
supported by customer insights.
THREE TYPES OF INNOVATION When you have your own venture in the future, you will
realize that learning the 3S of opportunity spotting, and that these are
1. Breakthrough innovation practical and methodical approaches to ensure business success,
- may also include inventions, occur infrequently as these instead of just purely relying on your guts and emotions.
establish the platform in which future innovations in an
area are developed.
- must be protected by a patent, a trade secret, or a copyright.
(ex: Internet, computer, airplane)
2. Technological innovation
- occur frequently than breakthrough innovations
- technological advancements of an existing product or
service
 MODULE 3: THE MARKETING PLAN
After the comprehensive processes of seeking, screening, and seizing the
opportunity, it is now time for the entrepreneur to focus on the chosen
business and dig deep. Entrepreneurs must write a business plan.
Business plan
- a comprehensive paper that details the situation analysis, objectives,
strategies and tactics, and how to monitor and control the enterprise
VALUE PROPOSITION AND UNIQUE SELLING PROPOSITION
In a nutshell, marketing is all about knowing the customers.
Therefore, the marketing process starts with identifying the customers'
needs where you are tasked to create a meaningful value proposition. Next,
you study what the customers want or desire for you to build a unique selling
proposition.
Value proposition (VP)
- simply states why a customer should buy a certain product or service.
- Customers are very specific when it comes to their needs and their
desired benefits. Thus, the value proposition is the major driver in
customer purchase or service availment.
- The start-up entrepreneur will surely have a hard time thinking of a
value proposition for his or her business. The entrepreneur should bear
in mind that a value proposition has to be direct in addressing the
problems of the customers, should have quantifiable benefits, and
should differentiate itself from the competitors.
The following are some tips for the entrepreneur on how to create
an effective value proposition to the target customers:
1. Prepare a situation analysis that details the problem(s) of the customers.
2. Make your value proposition straight to the point, simple, and specific; in
short, there should be no complications. Your value proposition has to target
your major objective.
3. Highlight the value of your product or service so that the customers will
easily get what benefits you can provide.
4. Adapt to the language of your market. Ensure that your target market
understands clearly what you are trying to say and avoid putting unnecessary
and inexplicable phrases.
5. Add credibility-enhancing elements such as actual testimonials from
customers, partners, and other stakeholders, putting specific assurance
elements and social acceptability metrics found in social media or press
materials. Several quality management certifications, such as the ISO seal,
add more credibility to the product that you're trying to sell.
6. Differentiate your value proposition with your competitors. Examples of
value proposition differentiators are the originality of the product or service
can be tailor-fitted to the customer's preference, among others.
To illustrate, here is a sample potential value proposition from the
most common small businesses in the philippines:
Situation analysis:
Prior to the establishment of a sari-sari store, Aling Tere notices that there is
a convenience store in her vicinity, where many call center agents, nurses
and construction workers buy food, beverages, and other products during
odd hours (from 10 PM to 6 AM). She discovers that the customers either
ride a tricycle or a jeepney just to reach the convenience store. There are two
sari-sari stores nearby, but they close at 9 PM. Aling Tere realizes she needs
to address the needs of the customers to differentiate her business from the
competition. She decides to establish a 24/7 sari-sari store. As an initial
investment, Aling Tere hires three employees who will help her run the sari-
sari store in three shifts. During their break, Aling Tere mans the sari-sari
store herself. She designs her sari-sari store like a semi-convenience store
where customers can freely go and choose the product they want. It is also
air-conditioned. For security purposes, she also installs a CCTV camera. Her
task now is to craft a worthwhile value proposition for the potential
customers.
Proposed value proposition: “Tindahang maaasahan, bukas kahit anong
oras!”
Why should this be considered an effective value proposition?
It is specific and straight to the point. It describes what the
business is by referring to tindahan a Filipino term for a basic retail store. It
highlights the value to the customers that they can buy their basic necessities
from the store. It is easily understandable because it is in Filipino language,
which can be understood by the customers, most of whom speak the
language. There is a compelling assurance from this value proposition
because the phrase “bukas kahit anong oras” signifies a guarantee that
customers will be served anytime of the day. And last, Aling Tere's store is
the only sari-sari store that is open 24/7, which makes her store different
from the competitors.
Unique selling proposition (USP)
- refers to how you will sell the product or service to your customers. It
addresses the customers' wants and desires. After you create your
value proposition, you have to figure out how to advertise or promote
certain unique features of the product or service that you're trying to
sell.
- You can do this in the form of product or service characteristics,
promotion strategies and tactics, distribution centers and supply chains,
pricing, physical attributes or physical evidence and human resources.
KNOW YOUR CUSTOMERS
After the general scan and research performed during the course of
preparation for the value proposition and unique selling proposition, it is
now time to dig deep and understand the target customers through
marketing research.
Marketing research
- is a comprehensive process of understanding the customers’ intricacies
and the industry they revolve in.
- Marketing research is one of the most critical tasks of an entrepreneur.
Therefore, no budding entrepreneur should establish a business
without undergoing the marketing research process or else the
business will surely fail.
- The result of marketing research is the entrepreneur’s major
investment in a business, as it will lead him or her to the most effective
strategies to employ. Marketing research aims to scrutinize the target
market, their specific requirements, and the market size where the
business operates.
Market size
- is simply the size the of the arena where the entrepreneur’s business
will play.
- It is the approximation of the number of buyers and sellers in a
particular market. The entrepreneur is required to determine the
market size first to gauge the fastness or tininess of the market where
he or she intends to join.
- The only way to do this is to conduct a strategic marketing research
from reliable sources using dependable methods.
First step: Estimate the potential market.
The approximate number of customers that will buy the product
or avail the service. Usually, this is what you call the market space or the
market universe because this is the total market.
For example, rice, the staple food of Filipinos, virtually covers the
whole country in terms of market size because majority of Filipinos eat rice.
Second step: Eliminate the customers who are probably unlikely to buy
the product or avail the service.
Using the rice retailing business again, the entrepreneur can
already eliminate socioeconomic classes A, B, and C because most of these
customers buy rice in bulk (sacks) or are given freely buy some employers.
They are also not the major consumers of rice.
Last step: Estimate the market share.
This is the plotting and calculation of the competitors’ market
share to determine the remaining portion for the new venture.
The entrepreneur should first assess the market situation via
surveys, customer reviews, or any other data-gathering methods. From
there, he or she will be able to calculate the number of potential customers
that will buy the product or service offered. This will be the basis decide
whether the business is worth the capital that will be used.
Continuing with the rice retail business, because the entrepreneur
already identified socioeconomic classes D and E to be the market size, he or
she should plot the number of rice retail businesses within the vicinity and
calculate the market share of each. The remaining portion can be the
potential market share of the rice retailer and can also be increased by those
who will switch depending on the effects of the entrepreneurs marketing
strategies.
Market share computation illustration:
Mr. Daniel Kyapo, a budding entrepreneur, wants to establish a
rice retailing business in his area in Barangay Mag Move On Na Lagi Ko. He
wants to know if this business is worth his capital and effort. He dug deep
and found out that there are approximately 500 families in his barangay with
an average of five members per family. He did a survey and found out that
only 475 families eat rice; they consume an average of 1 kilo of rice per day.
There are four other rice retailers in the area that have been there for 10
years already, and they have equal market shares of 20% each. The other
20% of the market is buying in bulk (per sack) from groceries or convenient
stores. The average net profit per kilo of rice is 10 php. How big is the market
size and what could be the potential market share of Daniel’s rice retail
business?
Market size of rice business in the barangay = Number of families who eat
rice x average consumption per annum
Market size = 475 x 1 kilo per day x 365 days
= 173 375 kilos of rice
Market size profit = 173 375 kilos x 10 php
 = 1 733 750 php per annum
The objective of Mr. Kyapo in the first year is to capture the 20%
of the market by implementing marketing strategies in pricing (reduced
markup of 2php) and promotion (free delivery of rice for five kilos and up)
through text message or phone call. None of the competitors have thought
of or done these strategies yet.
In the example, the four rice retailers are considered as direct competitors
because they offer exactly the same product and are structured similarly with
Mr. Kyapo’s proposed business. On the other hand, the groceries and
convenient stores are considered indirect competitors because they don’t
offer exactly the same product type (i.e., rice sold in sacks instead of by kilo)
and are not similarly structured but still compete with Mr. Kyapo’s business
indirectly.
Potential market share = market size x estimated market share
= 1 733 750 php x 20%
= 346 750 php
However, because Mr. Kyapo will reduce the markup by 2 php, the net profit
per kilo will only become 8 php.
Potential market share = 173 375 kilos x 20% x 8 php
Potential market share = 277 400 php
This market share for a startup business is an attractive venture. Mr Kyapo
also has a bigger chance of capturing the market share of competitors if he
implements relevant and enticing marketing strategies.
CUSTOMER REQUIREMENTS
Customers are said to be the lifeblood of the business. These are the people
who buy the products or avail the services of the entrepreneur. Their
thoughts, feelings, and experiences shape the decisions of the business.
Thus, the phrase “the customer is always right” is a mantra that most
successful entrepreneurs follow.
Customer requirements
- are specific features and characteristics that the customers need from a
product or a service.
- It is in these customer requirements that business opportunities
originate. Entrepreneurs must be aware of all these requirements for
them to come up with features that best suit their needs. They must
know who buys, and what, when, where, how and most importantly,
why they buy.
- These requirements can be used to formulate the value proposition and
the unique selling proposition, as addressing the requirements would
increase the competitive edge of the business. Entrepreneurs should
also be vigilant with the constant change in customer requirements.
PRIMARY AND SECONDARY TARGET MARKET
The entrepreneur can tap a primary target market and a secondary target
market as resources are limited during startup page. With this, the
probability of success is higher as the entrepreneur can focus to sell to the
identified customer groups.
Market intelligence
- which includes customer profiling, drives the entrepreneur on what
correct strategies and tactics to employ. This can only be obtained
through a meticulous market segmentation process.
Market segmentation
- is the process of grouping similar or homogeneous customers according
to demographic, psychographic, geographic (location), and behavior.
 Demographic
Demographic segmentation (socioeconomic segmentation)
- is the process of grouping customers according to relevant
socioeconomic variables for the business venture.
- These socioeconomic variables include:
a. income range and social class – represent the purchasing power of the
market.
b. occupation – should also be considered not just to determine the
customers’ income but also their daily routine where goods and services can
be properly positioned.
c. gender and age group – this life cycle of customers and their gender
influence their buying behavior.
Sex and Age Potential Product or Service Demand
group
Male teenagers Products: Trendy clothes, rubber shoes, soft drinks, chips,
(13-19) prepaid cellphones load, sport apparel
Services: Cool hangout places, gyms, barber shops
Single females Products: Beauty products, bags, clothes, perfumes,
(20-30) magazines, shoes
Services: Spa, beauty clinics, gyms, beauty salons, coffee
shops, movie houses
Married couples Products: Food and grocery items, diapers, milk products, baby
with kids (30-50) clothes
Services: Theaters, babysitters, theme parks, travel packages
Senior citizens Products: Fruits and vegetables, hair dye, medicines
(60 onwards) Services: Travel packages, health services
d. religion and ethnicity – should be taken account because these affect the
way they buy products or avail of the services. Examples are food choices,
events and holidays, traditions and beliefs, spending habits and
conservativeness.
 Psychographic
Psychographic segmentation
- is a process of grouping customers according to their:
a. perceptions – a process wherein an individual receives external stimuli
using the five senses. A product can be perceived differently by different
people.
b. way of life – gives the entrepreneur an overview of what products or
services can best suit the problems of the customers that is happening on a
daily basis.
c. motivations
 Physiological motivations involve the needs of the person.
 Psychological motivations involve the customer’s preferences.
 Aspirations are what the customer wants to achieve.
 Deprivations involves the customer’s recognition of certain voids.
d. inclinations – involve preferring one product over another as a result of
gaining a refreshing experience when using the product, possibly due to the
product’s unique features or due to it giving more value than other products.
Inclinations also encompass the customer’s personal preferences. The
entrepreneur must be aware of what makes the customers buy the products,
so he or she will know to segregate the customers based on their way of life.
 Geographic
Geographic segmentation
- is simply grouping customers according to their location.
- This is critical in the analysis of the target market as this encompasses
the cultures, beliefs, preferences, politics, and lifestyle of a certain
geography.
- Geographic segmentation can be as small as a street, a village, or a
barangay. It can also be based on municipality, city, province, or region.
It can be as big as a country or continent depending on the
entrepreneur's business objectives.
For example:
Meat products such as pork can easily be sold in Region 3 (Central
Luzon) and Region 4 (Cavite, Laguna, Batangas, Rizal, and Quezon, or
CALABARZON), but it will be difficult to sell in the Autonomous Region in
Muslim Mindanao (ARMM) and Region 12 or SOCCSKSARGEN (South
Cotabato, Cotabato, Sultan Kudarat, Sarangani, and General Santos City)
because these regions differ in religion.
 Behavioral
Behavioral segmentation
- is the process of grouping customers according to their actions.
a. occasions
b. desired benefits – the entrepreneur determines the exact needs of the
customers and offer the most suited product or service.
c. loyalty – the result of maintaining satisfied customers. Behavioral
segmentation through loyalty is a major key result area of the entrepreneur
as it is more expensive to sell to new customers than to maintain customers.
Usage of products or availment of service
- describes to the entrepreneur how often a product is being used or the
service is being availed.
- Therefore, he or she can group customers as light users, medium users,
or heavy users.
For example: There are women who are occasional users of makeup, and
there are girls who wear makeup every day. There are men who are
occasional users of hair products, and there are men who apply wax or gel on
a daily basis.
Although segmentation is a strategic and an efficient way of
classifying and grouping customers, there is also a term in marketing called
market aggregation.
Market aggregation
- happens when an entrepreneur wants to target a broader market
as possible because the product or service that the business offers
is suited for an undifferentiated market such as fruits, vegetables,
rice, water, and bread, as well as services such as haircut,
plumbing, or transportation.
TALKING TO YOUR CUSTOMERS
Marketing research will not be complete without talking directly
to the target customers. The best way to fully understand the customer’s id
to ask them about their specific thoughts and desires.
Conducting marketing research in a methodical way will bring the
entrepreneur a substantial bunch of relevant ideas that can be used to
effectively run the business.
- A marketing research should first - Identify the target market
have a solid objective. segment for the research project.
- Identify the appropriate research - Analyze proper timing for
activities, tools, and samples that research execution.
will set the scope and limitation - Establish a market research
 of the research project. design that will effectively
implement the steps mentioned.
Depending on the objective, responses are either qualitative or
quantitative.
 Qualitative research - includes identifying the written or spoken
opinions of customers, whereas
 Quantitative research – involves analysing the customers' preferences
by using relevant statistics (such as those in surveys).
METHODS OF COLLECTING DATA FROM TARGET CUSTOMERS
1. The Interview
- The interview is one of the most reliable and credible ways of getting
relevant information from the target customers. It is a face-to-face
contact between the researcher/entrepreneur and a respondent where
the researcher asks pertinent questions that will give him significant
pieces of information about the problem that he will solve.
- It is a credible way of getting information because the researcher will
be able to capture not just verbal but also the nonverbal answers such
as facial expressions, character of words used, or body language. The
interview is also helpful even when the business has already started
because the customers' feedback provide the entrepreneur a glimpse
of what the customers think about the business.
The main types of interviews:
 Unstructured interview
- is an informal type of interview and does not follow a specific set of
questions.
- The researcher has a checklist of high-level issues that he wants to
clarify with the respondent. It is a preparatory interview to gather
ideas about the problem(s) that will be solved, so that these issues will
be considered in the formal survey questionnaire to be presented to
the respondents later.
- In this type of interview, the respondent can answer freely including
everything that he or she feels about the issues raised, so long as
these are related to the questions being asked by the researcher. The
unstructured interview produces qualitative data.
 Structures interview
- on the other hand, employs a specific set of questions and produces
quantitative data.
- A pre-arranged questionnaire with specific questions usually
answerable by or no (closed-ended), forced ranking, multiple choice,
or choose-the-best will be answered by the respondents.
- Unlike the unstructured interview, a structured interview does not
allow the interviewer and the respondent to omit or add questions,
nor change the sequence or how the questions are worded.
For both methods, the researcher has to be very objective and avoid
biases to come up with impartial answers. He or she should be able to
raise relevant questions that can directly give appropriate answers to the
research objective(s).
2. The Focus Group Discussion (FGD)
- Commonly used by market researchers to capture qualitative results
from target customers. It is a process of mining customer and
noncustomer experience and insights about a specific product or
service.
- Through an FGD, the researcher will be able to generate relevant
concerns and issues of customers such as their views and inclinations
towards a product or service, perceptions or impressions on new
product or service models, innovations of the older product or service,
inventive concepts on promotions, price elasticity, and initial feedback
of customers on marketing tactics and advertisements.
FGD Illustration for a Food Cart Business
Vicky Velasquez just retired from her job as a banker for 35 years.
She is thinking of ways on how to preserve the retirement benefit she
received from the bank. One day, she notices that while commuting, a lot of
passengers are stopping by to eat or drink in convenience stores or in food
carts. They are buying pasalubong for their loved ones, be it in the form of
donuts, ensaymada, siomai, waffles, or siopao. She is interested to put up a
food cart business in that terminal, but she is unsure what particular product
or combination of products will be liked sustainably by the passengers. Vicky
decides to employ a focus group discussion in knowing the pulse of the
target market-the passengers.
FGD objectives
 To determine the top products that passengers buy for
themselves or pasalubong for their families and loved ones.
 To understand the buying behavior of the passengers.
 To know if the passengers want new or enhanced merienda or
pasalubong products.
Participants
Vicky will invite six passengers who are waiting in line from the
bus.
All of these passengers have been buying merienda for themselves or
pasalubong for their loved ones.
Venue and logistics
An FGD will be held at Vicky's residence in Santa Rosa City,
Laguna, where most of the participants live. She will set up her dining area as
a mini-conference room. As a sign of gratitude, Vicky will provide the
participants with free snacks and pasalubong.
Moderator
Vicky will act as the moderator and will use her smartphone to record the
session. As both the moderator and researcher, Vicky us be able to elicit
transparency, objectivity and kindness, but she should also be firm, flexible
and sensitive.
Moderators discussion guide
A. Introduction (10-15 mins) – explain the purpose of the FGD.
B. Product usage, attitude and image discussion (30 mins)
C. New or enhanced product (15 mins)
D. Conclusion (5 mins)
Analysis of FGD results
Because is a qualitative method of generating ideas, Vicky should
compare, contrast and analyze each point raise by the participant. She
should focus on the answers that directly target her objectives. After all
relevant points are enumerated, Vicky should summarize the findings and
from there she can decide if the new venture is worth the try or not.
3. Observation
- It is one of the preferred and practical methods of generating ideas
because the researcher documents the behavioral patterns of people or
of objects or events without necessarily requiring them to participate in
the research process. One method is to simply watch and examine the
costumers' behavior in there raw state without biases and pretentions,
thereby providing more accurate results and faster process.
- Observation is reliable because it allows the researcher to see the real
and actual behavior of costumer rather than hearing what they need to
say (which may sometimes be biased, incomplete, sugar coated or
exaggerated). Therefore it is not a pushy as the interview and the FGD.
Examples of human observation:
1) Customer purchase pattern
- Used to understand the buying behavior of the customers such as
determining their pain points, buying patterns (how many times and
how often do they buy or their inclinations toward a product or
service), location, price, or promotion.
Application to printing business:
- The human observer will count and rank the type of printing jobs
requested by the customers per month (e.g., calendars, posters,
student publications, invitations).
- The objective is to analyze the pattern of behavior of the printing
business customers as to which months the business should prepare for
peak volumes.
2) Mystery shopping
- the researcher pretends to be a customer of his own business or the
competitor's. This is a test to determine the quality of customer service.
Application to laundry business:
- The human observer will bring his laundry bad to a competitor and
validate if the service provider piece counts the clothes and if the same
will be delivered completely.
Examples of machine observation:
1) Video cameras or closed-circuit television (CCTV)
- these are positioned within the business premises. They record the
customers in their organic shopping or service behaviour
- (e.g., how they examine the products, how they interact with the
service personnel).
Application to a gym business:
- The machine observer (the video camera) will record the behavior of
gym members as to which gym equipment is used more often.
- The objective is to understand if there is queuing for a specific kind of
equipment and what time does the queuing happen. This will help the
gym owner to decide if there is a need to add more gym equipment or
remove the equipment not being used often.
2) Traffic counters
- These are very common machine observers used by researchers to
determine foot traffic or vehicular traffic in a particular location.
- On the marketing side, the researcher will be able to determine where
to sensibly install a tarpaulin, signage, or billboard, as these counters
give a glimpse of how many people or vehicles pass the area. These also
provide the researcher an idea where to find a strategic location for the
business.
Application to a convenience store business:
 - The traffic counter needs to determine how many people pass by the
area to determine if the entrepreneur can meet sales targets.
3) Web analytics
- This is an online tool that tracks the performance of a Web site as to
the number of its visitors, the contents they usually access, and other
information relevant to the Web site owner such as geographical
locations of the visitors and statistics on how long they stayed in the
website.
- This gives the online entrepreneur a report on how his Web site
performs and how this drives awareness and sales for the business.
Application to online buy-and-sell business
4) Barcode scanners
- these machines help researchers understand the purchase behaviour of
the customers by reading the product codes and generate relevant
sales information.
Application to a supermarket business:
- A barcode scanner is usually being used by groceries or convenience
stores and supermarkets to analyze the customers' purchase behavior
and inclinations. Through the information gathered by barcode
scanners, business owners will be able to understand what customers
buy, how many times they buy, and how much do they buy.
5) GPS technology
- this technology allows tracking of vehicles and pedestrians exposed to
out-of-home advertisements.
Application to a fast food restaurant:
- Owners of fast food restaurants will be able to determine where to
strategically position their tall signage so that it will be seen by more
passing vehicles and pedestrians.
Observation only becomes a relevant research tool if it meets the following
conditions:
i. If person, object, or event is indeed observable.
ii. If the person does the activity regularly of the event happens on a
regular basis.
iii. If doing an FGD is becoming intrusive of the privacy of a person.
iv. If the subject of observation does not take too long to produce
relevant information.
4. Traditional and Online Surveys
- When it comes to quantitative research, taking surveys is essential. It is
the process of getting answers from a sample of respondents derived
from a particular population. (You can also survey the whole population
if needed.) Depending on the objective of the survey, the respondents
will be given a questionnaire asking about their awareness level (e.g.,
no idea, has little idea, or familiar), their profile, preferences, and
behaviors. These questionnaires can be distributed and answered
verbally, by writing, or through the Internet.
Survey
- very simple and practical to run because it requires preparation of
predetermined questions answerable by definite responses using
equitable scales
- This is advantageous to the researcher because not only is it
systematized and easier to analyze, but there is also a definitive
quantitative result to be interpreted. Some of the traditional ways to
conduct a survey are via telephone, face-to-face interaction, or snail
mail.
- The emerging and more efficient way of conducting a survey is through
the Internet-through e-mails, Web sites, or social media sites. It is more
efficient because the results can be derived in real-time depending on
the availability of the respondents. Also, it will not require the
researcher to travel physically or spend on telephone calls or mails.
Customer Satisfaction Survey Template
1. How convenient is our company to use?
o Extremely convenient
o Very convenient
o Moderately convenient
o Slightly convenient
o Not at all convenient
2. How professional is our company?
o Extremely professional
o Very professional
o Moderately professional
o Slightly professional
o Not at all professional
In preparation for the survey, the researcher must identify what sampling
technique to follow, the number of respondents to be surveyed, and the
blueprint of the questionnaire.
1. Sampling techniques.
A sample is a percentage of a specific population carefully chosen by
the researcher to generally represent the whole population. When the entire
population is relatively small, the researcher may choose to include the
whole population in the research project. This method is called census.
However, most of the time, the entire population is too large for the
researcher to cover. Thus, there is a need for the sampling process.
 Probability sampling is a technique wherein samples are given
equitable chances or nonzero chances of being selected from a
population. The researcher needs to apply randomization. The
advantage of probability sampling is that sample error can be
quantified. Sampling error is a range of inaccuracy to which a sample
might vary from the particular population.
 Nonprobability sampling does not give the samples equal chances of
being selected, because samples are instead selected according to their
accessibility or personal choice of the researcher. Therefore, the scale
of error where the sample deviates from the population for
nonprobability sampling is unidentified. In short, results of
nonprobability sampling do not generalize the population chosen.
2. Sample size.
The researcher must be able to calculate first the appropriate sample
size in conducting the survey; otherwise, if the sample size is too large, he or
she will waste his or her capital and time, whereas a sample size that is too
small will lead to imprecise results. Therefore, the sample size must be the
right size.
3. Questionnaire blueprint.
a. Be specific and direct with the questions and the answers
required.
b. Be flexible with the respondents' convenient way of answering
the questionnaires (mail, telephone, face-to-face, or online).
c. Ensure that each question is necessary and not repetitive.
d. Always put yourself in the shoes of your respondents. The
questionnaire should be simple but should meet the objectives.
e. Make sure that questions are arranged in a coherent order.
f. The questionnaire should look professional, be divided into
strategic parts, and be properly numbered.
The Marketing Mix: The 7PS of Marketing
Marketing mix
- a widely accepted strategic marketing tool that combines the original
4P's (product, place, price, promotion) with the additional 3Ps-people,
packaging, and process-in formulating marketing tactics for a product
or service
Entrepreneurs must use the 7Ps model to do the following:
a. conduct a situation analysis;
b. set objectives;
c. conduct SWOT or competitive analysis
d. ultimately come up with marketing strategies and tactics
7PS OF MARKETING
A challenge to a budding entrepreneur is to ask the following key questions
at the onset:
1. Product:
What product or service is the most appropriate for the
opportunity, and why will customers buy or avail them?
2. Place:
What location is best suited for the business where there are
more potential customers? Can they conveniently transact on-site
or online? How is the process of distribution of products or
performance of services?
3. Price:
What is the most appropriate price, and what pricing strategies
wil be used for the target customers?
4. Promotion:
What is the most effective advertisement or combination of
advertisements, and which advertising tool should be used to
drive awareness and increase sales?
5. People:
What type of people need to be hired? What are the basic skills
needed for the job? What leadership style will be applied by the
entrepreneur?
6. Packaging:
What is the best packaging for the product that is attractive
enough to customers and cost-efficient at the same time? What
physical evidence does the entrepreneur need to set up so as to
sell the service?
7. Processing:
What is the most compelling feature of the product or the
business that will make a difference in the lives of the customers?
What sets the product or service from the rest?
PRODUCT
 - any physical good, service or idea. The 3-level concept of products or
services summarizes the reasons that a customer decides to buy or
avail the service:
Level 1: Core benefits of the Product or Service
Level 2: Physical Characteristics of the Product or Service
Level 3: Augmented benefits of the Product or Service
PLACE
- The location or medium of transaction.
 A strategic location depends on the nature of the business and
the primary target market.
 In a physical location, the entrepreneur must research about the
area's population, the traffic, the people's common paths, their
buying behavior, and their preferences for the location (e.g., Wi-Fi
access, spacious area for parking).
 In a cyber location, the entrepreneur must use Web analytics data
to understand Web Site performance (e.g., number of visitors,
duration of their stay on the Web site, or the frequently visited
contents).
- Place also covers the product distribution and the whole business
logistics. The logistics for products should cover production, ordering
and receiving raw materials or finished goods from goods from the
suppliers, storage, reorder points, and transportation systems. The
logistics side for services covers the physical evidence or servicescape,
service providers, and service delivery process, as well as policies and
procedures of the business.
- The entrepreneur must devise a set of criteria in choosing the right
location aligned with certain objectives, such as suitability to the target
market, condition of the neighborhood, potential of the area for future
developments, laws and regulations in the area, direct and indirect
competitors, foot traffic, and cost of doing business.
PRICE
- the peso value that the entrepreneur assigns to a certain product or
service after considering its costs, competition, objectives, positioning,
and target market. It is the only P in the 7Ps that generates revenue for
the business. Here are the most common pricing strategies.
1. Bundling 6. Psychological pricing
2. Penetration pricing 7. Premium pricing
3. Skimming 8. Cost-based pricing
4. Competitive pricing 9. Cost-based pricing
5. Product line pricing 10. Cost plus pricing
The profit of an entrepreneur can be determined only if there is a proper
computation of costs associated with the product or service. There are two
classifications of costs.
1. Variable costs or controllable costs
- These costs are directly proportional to the number of products
manufactured or to the number of services performed.
- For example, one of the variable costs involved in a car wash
business is the cost of cleaning materials. The business will incur
higher costs only when more customers avail of the service, or it will
incur lower costs when there are few customers.
2. Fixed costs or uncontrollable costs
- These are costs not directly proportional to the manufacturing of a
product or to the performance of the service. These are usually the
cost of equipment, employee remuneration, rental cost, and utilities.
These are considered fixed costs because the business will still incur
these costs whether or not they provide more or less. Therefore, if
the entrepreneur produces more products and performs more
services, his or her fixed costs per unit will be lower because the
fixed cost will be allocated to the number of units produced or
number of services performed (Sim, 2009).
The entrepreneur must follow these general pricing guidelines to make the
business sustainable and thriving:
1. Do not price the product or service below its cost.
2. Monitor competitors' prices, and ensure that your prices are at par with
them unless the product or service is really way superior to the
competitors".
3. Align prices with the other 6P's (product, place, promotion, people,
packaging, and processing)
4. Implement price strategies that are relevant to your market segment.
For example, tingi (sachet) pricing is more appropriate in the grassroots
locality or barangay.
5. Align prices with your business objectives.
PROMOTION
- Promotion involves presenting the products or services to the public
and how these can address the public's needs, wants, problems, or
desires. In promotion, the primary target market should be identified
because it will become the main audience. The main goal of promotion
is to gain attention.
- A strong integrated marketing communication plan (IMC) should be
devised to deliver the compelling messages effectively. Key marketing
messages for promotion can be the following:
(1) value proposition or unique selling proposition of the product
or service;
(2) product or service image;
(3) business image; or
(4) business values and philosophy.
- Once the key marketing message is established, the entrepreneur must
choose the right promotion tools to deliver these message to the target
market. The entrepreneur can choose one or combination of the following
promotional tools:
1. Advertising
- This is a type of communication that influences the behavior of a
customer to choose the product or service of the entrepreneur
over the competitors.
- The objectives of advertising include the following:
(1) informing, educating, and familiarizing the public with the
product and service offerings;
(2) building a trustworthy image; and
(3) increasing sales.
- There are so many ways to advertise, but the challenge for the
entrepreneur is to choose which is the most cost-effective and
targeted channel to relay the key marketing message to the target
market. The entrepreneur can choose to advertise through the
following:
- Television -regular channels, cable TV
- Radio -AM and FM radio
- Internet -e-mails, Web sites, blogs, social media, search
engines, podcasts
- Mobile phones -text messages, mobile applications, mobile
Internet
- Print -newspapers, magazines, flyers, directories, signages,
posters
- Out-of-home -billboards, buses, bus stops, trains, train
stations, advertisements
2. Selling
- This is the act of trading a product or service for a price or a fee.
- The entrepreneur must identify the target customers who will
likely buy the product or service. Once identified, he or she must
do further research on the target customers to know their profile
and behavior to come up with a convincing way to sell the
product or service.
- He or she must also know how to handle objections through
highlighting the product benefits and directing the customers to
their compelling need or want.
- The entrepreneur must also know how to close a sale by leaving a
convincing conclusion that will trigger the customer purchase.
After such, he or she must monitor the customer's satisfaction,
which is called the after sales.
- Depending on the size of the business, the entrepreneur must
decide whether to hire personnel or not. If so, he or she needs to
plan for the recruitment and selection, training, salaries, scope of
work, and communication system
3. Sales promotions
- These are short-term promotional gimmicks wherein practical
incentives and appealing activities are incorporated to entice
the customers to buy the product or avail of the service.
These are also called “below-the-line” promotions.
- These are normally implemented when an entrepreneur
needs to reach a certain sales quota to either recover
investment or achieve better profitability.
- Successful sales promotions involve time limit and sense of
urgency, as this strategy enables customers to act
immediately to avail of the promo.
- Longer sales promotions usually result in customers not
taking advantage and not acting immediately.
- Here are common examples of sales promotions in the
Philippines:
 Sales discounts or discount coupons
 Raffles
 Contests and games
 Promo items
 Product or service bundles
 Trade fairs or exhibits (e.g., wedding expo)
 Sample distributions or free taste/free trials
 Premiums (e.g., free toys for fast food meals)
 Point-of-purchase promotions (e.g., display stands in
grocery stores)
 Advertising specialties (e.g., pens, notebooks, umbrellas,
bags, calendars)
 Rewards (e.g., reward cards)
 4. Public relations
- These are image-building initiatives of the entrepreneur to
make the name of the business reputable to stakeholders,
such as the target customers, government agencies, business
partners, media, and the public. Unlike advertisements, public
relations (PR) do not directly promote products or services.
These PR strategies affect customers indirectly, but they do
influence the stakeholders to build more trust to the business.
This stimulates the stakeholders to write or share positive
news, resulting in more effective marketing campaigns than
regular advertisements. Positive write-ups from journals,
newspapers, Web sites or social media, and even word-of-
mouth are more credible than traditional advertisements.
- Examples of PR strategies are as follows:
 Press conferences
 Launching events
 Strong media relations through press kits
 Social responsibility events (e.g., charitable or
community events)
 Lobbying (e.g., good relationships with government
officials)
 Web public relations (e.g., blogs, social media, e-
mails, word-of-mouth)
PEOPLE
- People is one of the three additional Ps in the marketing mix. In today’s
marketing arena people play a vital role in servicing customers even
though the entrepreneur sells only physical goods. With the influx of
various competing products and services, one of the major
differentiators is how people or employees make a difference in the
lives of the customers. It is not just about the quality of products
anymore, but how employees serve customers. Employees have
become a major influence in the customer’s buying behavior.
- Most of the legwork at the beginning is done by either the
entrepreneur or some of his or her family relatives. Most entrepreneurs
only hire people when the business starts to expand. The core job of
the business owner is more of strategy implementation. When the
need arises to hire people, he or she must identify the specific,
necessary job roles of employees and their descriptions, so they will be
able to know their purpose clearly and serve customers well. These
potential employees also need to be well-compensated and provided
with benefits. The entrepreneur must list the criteria of the following
job offers, as well as the requirements such as academic background,
job experience, skills or expertise, attitude, and other documents (e.g..
police and NBI clearance).
PACKAGING
- Another addition in the 7Ps is packaging. Packaging is how the product
or service is presented to customers. It is the overall identification (look
and feel) of the product or service. This will determine the uniqueness
of the product from competitors.
- This is the first element that customers see because they don't know
what's inside yet. Aside from this, packaging preserves the shelf life of
the product service. Because of the clamor in ensuring environmental
protection and preservation, many businesses begin to make packages
out of environment-friendly materials, not just in products but also in
services.
Packaging's ultimate goal is to entice customers to purchase the product or
service. Thus, the entrepreneur should focus on pleasing the customers'
eyes. It is not just limited on the product or service alone, but on its totality,
including its accessories, after sales service, and warranty.
Packaging is very important in selling physical products or goods, as it
establishes the brand's identity, as well as its unique selling proposition.
Therefore, elements such as color (which has different meanings on the
customer segment and culture), shape, size, materials, font and text, and
graphics must be considered. After establishing the final packaging, the
product must be put into several tests, such as packaging and graphics tests,
to ensure that the packaging is attractive and of high quality.
In selling services, the term servicescape was used to refer to the overall
ambiance of the place where the service is performed. For example, in a spa
business, the servicescape should be cozy, service staff should be friendly,
the massage bed should be comfortable and clean, and relaxing music and
the aromatic smell of nature should be evident. Packaging services often
involve bundling to make them look attractive. Examples are tour packages
offering hotel accommodation or a beauty salon having a rebond package
with free hair coloring or hot oil treatment.
As one of the additional Ps in the marketing mix, packaging plays a vital role
in persuading a customer to try a product or avail of a service based on what
he or she has seen. In fact, packaging sometimes matters more than the
product or service itself. Indeed, it must please the eye of the beholder.
PROCESS
- Process is the last addition in the marketing mix as marketers began to
realize the importance of the internal and external operations of the
business to serve customers better.
- Process is defined as a step-by-step procedure or activity workflow that
the entrepreneur or employees follow to effectively and efficiently
serve customers. Its components include input, throughput, and
output.
- The internal process includes the back-office operations (preprocessing,
processing, and postprocessing), wherein employees or machines
process customers requests without necessarily being seen by the
customer. The external process includes the actual servicing where
customers are part of the process.
Fundamentals of Brand Management
Brand
- refers to the identity of a company, of a product, of a service, or of an
entrepreneur himself or herself.
- symbol of promise or assurance from the entrepreneur that what it
purports to the customers will happen.
- A good brand not just entices customers to try the product but makes
them loyal to it. Moreover, the brand sets the image of the business to
the public. The challenge now for the budding entrepreneur is to
understand how to craft the brand, how to market this brand, and how
to make this brand deliver-these are the entire message of brand
management.
Brand management
- is the supervision of the tangible and intangible elements of a brand.
The tangible elements include the product itself, its packaging, its price,
and its location. The intangible elements, on the other hand, include
the perception and relationship of the customers with the brand.
Branding
- is the process of integrating the strategies formed from the marketing
mix to give an identity to the product or service.
- The goals of branding include the following:
(1) establishing to target customers that the business is reliable and
trustworthy and that the product or service is the superior
solution to their current problem;
(2) differentiating with competitors; and
(3) driving customer loyalty and retention.
With strong branding, customers will feel that they are safer in using the
products or availing the service, and that the risks are minimal or low. If two
products will be offered, the customer will likely choose the one from a
reputable brand. Promoting the brand is also the same as promoting the
product or service. For budding entrepreneurs, choosing the cheapest and
most efficient channels of communication for the brand is the best choice.
One of the emerging but cheaper ways to promote a brand is through social
media, because these are platforms where conversations take place,
resulting in "sticky" relationships. The key for the entrepreneur is to manage
the conversations-handle both good and bad reviews and feedback. Another
technique in branding is to observe competitors' brands (both the successful
and not so successful) and analyze their best practices and flaws. The brand
should be clear, simple, catchy, and consistent, so that the target market will
have little or no efforts in retaining the business brand to their minds.
As an important element of a brand, the brand name is a major differentiator
of the entrepreneur against the competitors. To be different and catchy, a
brand name must possess the following characteristics:
 Unique
 Extendable
 Easy to remember
 Can describe the benefits of the product or service
 Can be converted to other dialects or languages in case the
entrepreneur expands to other territories
 Can describe a product category
 Can describe concrete qualities
 Positive and inspiring
The brand is the marketing element that sticks to the mind of the target
customers and the public. Therefore, the entrepreneur must think critically
on how to position the brand and be able to sustain it.