Q1_MODULE_3

Learning Competency: Recognize a potential

market and analyze the market need
(CS_EP11/12ENTREP-0a-3
LOOKING BACK TO YOUR LESSON
As we go further, let us try to recall our lesson about the potential market and
market need.
 Competencies such as risk seeking, assertiveness and vision are considered
typical of a successful entrepreneur (www.ideasforleaders.com). o
 Specific techniques and habits must be practiced and developed by all
would-be entrepreneurs. Aside from business competencies,
entrepreneurs need interpersonal and self-leadership skills too; however,
these are often overlooked. Entrepreneurial behavior’ can be learned and
developed (www.ideasforleaders.com). o
 If you’re an aspiring entrepreneur, there are different career paths you
can take to turn your dream into a reality. Which path you choose will
depend on your experience, skills, finances, and flexibility, as well as your
goals for the future (Doyle, A., 2020).
 The Potential Market

1. Potential market is the part of the total population that has shown
some level of interest in buying a particular product or service.
Potential market is also called Total addressable market (TAM)
(MBA Skool Team, 2018).
2. A potential market is the part of the market you can capture in the
future. It includes the demographic groups that are not currently
your customers but could become customers in the future (Lake, L,
2019). 3. Market potential is the total demand for a product in a
given business environment (Bhasin, H., 2018).
3. Market potential is the total demand for a product in a given
business environment (Bhasin, H., 2018).
 The Importance of Potential Markets
(Lake, L., 2019)

 Potential markets are an important part of a business's

future growth.
 Ensure the future of your business by identifying new
customers.
 Think proactively about ways for your business to grow and
change.
 Show the potential of your business to investors or
collaborators.  Increase your revenue.
 Create a plan B that will weather changes in the economy
or market.
 How to Identify Your Potential Markets
(Lake, L., 2019)

 Consider every target demographic that you

currently sell to, as well as those you have not
yet targeted. Identify what they have in common
with each other, new milestones that they will
encounter in their lives that will impact their
buying patterns, and where they overlap or
diverge from your current customers.
Ask yourself these questions that will help you identify both new
ways to market your current products or services, as well as new
products and services that you can begin selling.
 What other products do my customers need now?
 What related products will they need in the future?
 Who else could make use of the products I am selling now?
 What demographic information does that new group have in
common with my current customers?
 What demographic information does that new group have in
common with each other?
For example, a business that makes face masks and PPEs
could identify potential markets such as:
  Hospitals and other health related industries whose
employees are prone to COVID -19 virus and other viruses.
 Business industries and other organizations who want to
ensure the health condition of their employees.
  Employees and workers who need to report to work to
earn income.  Households who needs to go out for their
necessities.

 Note: Depending on the size and age of your company, as

well as your industry, you may have a clear picture of the
potential markets that are available.
Reaching Your Potential Market (Lake, L., 2019)
Once you've identified and chosen a potential market to begin targeting, you
will need new marketing strategies in place to communicate with them. Use
this profile to identify:
The demographic information that people in a group have in common.
The best forms of media to reach them.  How they prefer to shop and
make purchases.
The concerns, struggles, or problems that you can help them
overcome.
What values matter to them, both in everyday life and when shopping.
The language that resonates with them.
The figure below depicts what is a potential market with
respect to the total population and how it can be
converted to a penetrated market:
Available Market
 Prospects who are willing and capable (have sufficient
resources) buyers, and have access to a particular market or
service (www.businessdictionary.com).
 Defined as the number of people who are both willing and
capable of buying a particular product or service in a
particular market (MBA Skool Team, 2020).
Target Market
 Refers to a group of potential customers to whom a company
wants to sell its products and services. Target markets are
generally categorized by age, location, income, and lifestyle.
Defining a specific target market allows a company to home in
on specific market factors to reach and connect with
customers through sales and marketing efforts. (Kenton, W.,
2019).
Penetrated Market
 A set of customers or clients who are already using a particular
product or service. A penetrated market means that the potential
users of a product or service are aware of it, and in many cases
are active consumers of it. (www.businessdictionary.com).

The size of a potential market helps a company understand the level of

investment it should make further in the market, while taking into
consideration other factors. If the potential market is very small, it means
there is a very small fraction of the total population showing any interest in
the product or category. This means that it is better that the company doesn’t
invest further in the product or category because people won’t buy it. If the
size of the potential market is large, it means that there is a huge fraction of
the total population which is showing interest in the product, so further
investment can be made on the product development or modification,
marketing, promotions etc. The size of the potential market gives an
estimate of what all a company should do and how much it should invest
(MBA Skool Team, 2018).
The Market Need

 1. Need
 A motivating force that compels action for its satisfaction.
Needs range from basic survival needs (common to all human
beings) satisfied by necessities, to cultural, intellectual, and
social needs (varying from place to place and age group to age
group) satisfied by necessaries (www.businessdictionary.com).
 A driver of human action which marketers try to identify,
emphasize, and satisfy, and around which promotional efforts
are organized (www.businessdictionary.com).
2. Market
A Market is a place where two parties can gather to facilitate the exchange
of goods and services. The parties involved are usually buyers and sellers.
The market may be physical like a retail outlet, where people meet face-to-
face, or virtual like an online market, where there is no direct physical
contact between buyers and sellers (Kenton, W. & Boyle, M., 2020).

A market does not refer to a particular place but it refers to a market for a
commodity or commodities. It refers to an arrangement whereby buyers and
sellers come in close contact with each other directly or indirectly to sell and
buy goods (Shaikh, S., retrieved 2020

A market is any place where sellers of particular goods or services can

meet with buyers of those goods and services. It creates the potential for a
transaction to take place. The buyers must have something they can offer in
exchange for the product to create a successful transaction (Moffatt, M.,
2019)
Your market consists of (Stull, C., Myers, P.& Scott
D.M. (2008) as cited in: https://learn.marsdd.com
/):
 Existing customers: People who have already
purchased your product.
 Prospects: People who have not yet purchased
your product but are considering it.
 Target market users: People in your target
market who are not currently looking for a
solution.
Define the Market Need for Your New
Business
 Why is it important to clearly define market needs?
 The market now demands that your business align to
their needs. In order to properly align your marketing
efforts ‒ and your content, in particular ‒ to what buyers
need, you have to have a clear understanding of the
many intricacies, pains and pressures within your market.
To achieve such alignment, the ability to define market
patterns, needs, interests, preferences, etc. for a
comprehensive view of the buying process is critical
(www.aberdeen.com).
Below are ways to define your market
(Lancaster SCORE (2010):

 • Consider whether the business offers a new solution to an old problem

or complements an emerging trend.
 • Have a clear picture of your target market.
 • Determine the benefits that your product or service offers.
 • Examine industry data that can confirm whether there is a sustained,
growing demand for your product or service.
 • Identify the percentage of market share that it is realistic for you to
capture. The more competition you have, the lower the margins will be.
 • Consider how realistic your pricing is. How can you present your
product or service to potential customers so that it appears to be a good
value, while still affording you a healthy profit?
THANK YOU!
 .