Lesson 1: Entrepreneurship

What is Entrepreneurship?

Entrepreneurship is a proactive process of developing a business venture to make a

profit. It involves seeking opportunities for a market, establishing and operating a
business out of the opportunity, and assessing its risks and reward through close
monitoring of the operations. With this definition, being an entrepreneur may seem
difficult, but it can be rewarding if the enterprise flourishes. Creating a sound business
plan, along with efficient and effective operation of the business, will not only benefit
the entrepreneur but also the entire society and the economy.

An entrepreneur is successful if the business that he or she envisioned has materialized

into a thriving industry with regular costumers a d financial gain. He or she either
decides to maintain his or her business or expand. This eventually reflects on the society
and the economy as a whole. Here are the societal and economic benefits of
entrepreneurship.

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1.        Entrepreneurship produces more that equate to an increase in national income.

Millions of unemployed people will have the opportunities to have a decent occupation.
Small business produces jobs and creates wealth.

2.        Entrepreneurship amplifies economic activities of different sectors of society. A simple

eatery in a rural area and coffee shop in an urban area both ignite economic activity
regardless of their business scale.

3.        Entrepreneurship introduces new and innovative products and services. New product
and services are always available in the market because if the ingenuity of entrepreneurs
to seek opportunities and improve on them.

4.        Entrepreneurship improves people’s living standards.  How can you look good if not
for the services of your nearby salon or barber shop? How can your day be complete
without the food that a nearby eatery cooks? How can you live without the  sari-sari  store
near your house where you buy your basic needs?

5.        Entrepreneurship disperses the economic power and creates equality.  It balances the
economy by distributing national income to more business rather than to only few
monopolies.
6.        Entrepreneurship controls the local wealth and balances regional development.  It
make sure local resources are used to properly and that every area has an appropriate
allocation of resources.

7.        Entrepreneurship reduces social conflicts and political unrest.  Imagine if there are no
or only few  sari-sari  or supermarkets store in your area. All of you will then fight for the
food supplies because the store cannot supply all your needs.

8. Entrepreneurship elicits economic independence and capital formation.  A country with

more entrepreneurs is highly likely to become financially independent and will less likely
need the help of other countries. This also applies to families, barangays, and cities.
Entrepreneurship creates wealth instead of borrowing wealth.

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Who is an entrepreneur?

The word "entrepreneur" has a French origin and was coined from the words  entre, which
means "between", and  prendre,  which means “to take.”

An  entrepreneur  is a unique individual who has the innate ability and extraordinary
dedication to establish and manage a business, acknowledging all the risks and reaping
its rewards. Like other vocations, being an entrepreneur is also calling. It is not a career
that one can just jump into when he or she decides so. It entails a holistic business talent
to be considered one, ranging from product and marketing expertise to operations agility,
and to financial proficiency.

An entrepreneur will only expect returns once he or she already added or created value
out of an opportunity. An entrepreneur's natural talent is being perceptive for
opportunities in his or her surroundings that normal people don't give importance to or
often neglect. He or she sees existing problems about a certain product or service as
prospects rather than threats. Leadership is the core of every entrepreneur. He or she is
always excited about his or her business and bravely takes risks. He or she innovates,
executes his or her big ideas, and rarely procrastinates.

  The definition of an entrepreneur only provides you with a general description or shows
you what is expected from an entrepreneur. However, entrepreneurship is composed of
varying degrees or levels of intensity. According to Action Coach, there are five levels of
entrepreneurial development.
1.        The self-employed.  Self-employed persons are, simply put, not comfortable with
the routines of a desk job. They do not want to conform to a fixed working schedule. They
want to things in their own way and start too agitated when controlled by the powers-
that-be. While they can be self-sufficient, their tendency is to become too reliant on
themselves, which leads to exhaustion. They will eventually realize that a successful
business should work for them, not the other way around. If they realize this, they can
move on to the next level.

2.        The manager.  In this level, entrepreneurs feel the need to step up and ask some
help from the people around them. They delegate and hire potential employees to do the
work. However, they may have the tendency to get more people who do not know the
exact needs and requirements of the job, because entrepreneurs think that the battle is in
the scale and not the profitability. As a result, entrepreneurs may get frustrated because
the business does not go as planned, and some potential problems arise from how
employees operate. When they begin to realize this, entrepreneurs will start knowing their
employees better, assessing their strengths and their areas for improvement. They will
begin to create positions that match the requirements of the business and the employees'
expertise. Entrepreneurs can now move on the next level.

3.        The Leader.  Entrepreneurs in this level already enjoy seeing their people flourish,
stepping up and producing great results with minimal supervision. Unlike before where
they are in charge of virtually everything, they can now sleep peacefully at night and have
more freedom and time for themselves. They already recognized key lenders 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 stage now focus on the
big picture and strategic direction of their business rather than in generating sales and
operating the business. At this point, entrepreneurs can now move on to the next level.

4.        The investor. Investors look for more opportunities to for their business to grow.
They may either purchase one or two businesses that can potentially add value to the
company, or sell their established business (as a franchise) to potential entrepreneurs.
They will delegate a suitable manager for such operations and will act as directors. When
this becomes successful, they will now become true entrepreneurs.

  5.The true entrepreneur.  True entrepreneurs, based on their experience, now aim for
quality and excellence in this work. They have fully learned, and continue to practice, a
four-step process of thinking starting with idealization, visualization, verbalization, and
materialization. In idealization, entrepreneurs dream enormously and desire to build an
ideal environment. In visualization, entrepreneurs start to create plans to make the dream
reality. Verbalization involves sharing their ideas with other people, knowing that their
vision is already occurring. Materialization happens when the vision becomes a reality. In
this stage, true entrepreneurs now have an income that keeps on multiplying even if they
do not put much effort.

The world of entrepreneurship these days has already evolved, and new terms are
coined to suit an entrepreneur's field or expertise. Here are some of them.

1. A technopreneur is an entrepreneur who puts technology at the core of his or

her business model.
2.  A social entrepreneur is one who takes advantage of the country's social
problems and turns them to profitable institutions with the intention of helping
the disadvantaged community rather than making a profit.
3. An intrapreneur is an entrepreneur in a large company or corporation who is
tasked to think, establish, and run a new big idea or project. Intrapreneurs are
usually the product managers or the business development managers of a
company
4. An extrapreneur is an entrepreneur who hops from one company to another to
act as the innovation champion, providing creative and efficient solutions.

Lesson 2: Common and Core Competencies in

Entrepreneurship
Common and Core Competencies in Entrepreneurship

Entrepreneurship is a career that requires a plethora of common and core competencies.

Therefore, to be considered a successful entrepreneur, he or she must possess common
entrepreneurial competencies that are needed all throughout the entrepreneurship career.
At the same time, he or she should also possess core competencies that are needed for
business sustainability and management.

Common traits that entrepreneurs should always have

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·                  Proactive.  Entrepreneurs are reactive rather than passive. They address issues,
problems, and challenges before they come rather than when they already happened.
They ensure that proper research is done, the risk factors are assessed, and plans are
executed on a timely and most efficient way.

·                  Agents of change.  Entrepreneurs are innovation champions. They see

opportunities in hopeless and complex situations. They are always enthused to improve
and develop new products and services and introduce them in the market. They don't
settle for mediocrity and the status quo.

·                  Risk takers. Entrepreneurs will not be successful if they do not take risks. By
taking risks, entrepreneurs do not just grab opportunities left and right: they have to take
into consideration the potential various threats they may encounter. Entrepreneurs
calculate risks: if they think that there is a big chance of succeeding, they push through
with the venture and don't let the opportunity pass.

·                  Have a sharp eye for opportunities.  Entrepreneurs have a talent for

recognizing and opportunity even by using the macro level data only. They know how to
access the net cause and effect of an opportunity and decide intelligently if a venture
should be considered or not.

·                  Sociable.  Soft skills are one of the most important competencies of entrepreneurs
as these establish the relationship with the most assets of the company-its people and its
customers. Relationship management is the key for employee and customer retention,
which can be achieved by a sociable entrepreneur.

·                  Networkers. A networker knows the key people to connect with. Networking can
be a very intimidating task, for it takes a lot of guts to pull it off.  Successful entrepreneurs
gain  trust of their valuable network and maintain a long-lasting relationship with them.

·                  Decisive.  Entrepreneurs always have a decision about their business. They do not
settle for gray areas or unclear solutions. They do not leave an issue unsolved without a
disposition. They make sure that all aspects of their business have clear objectives and
strategies. Last, they base their decisions on scientific calculations backed up  by their
experience and technical knowledge.

·                  Balanced.  The minds of entrepreneurs should have a balance between the

analytical and the creative side. Their brains are always playing with "unique ideas" that
no one has ever thought of yet. Entrepreneurs always have "Eureka!" moments and enjoy
them.

.                Innovative.  The minds of entrepreneurs are rich with big ideas that can add value to their
existing business or could become a game changer in the industry or business where they belong.
They do not stop improving and thinking of new and worthwhile ideas for their business.

Here are the  core traits  that entrepreneurs should develop in managing and running the
business

1.        Leaders.  Successful entrepreneurs always have the heart of a leader. To be

successful leaders, they must be a source of inspiration for their employees. They must be
very humble, approachable, friendly and know how to listen to people's concerns. Leaders
act on their responsibilities that were given to them. They use their strengths and
limitations to make the best of a situation. They must also be decisive and must  know
how to own up  to their decisions. They know how to unite the team and bring out the best
in every employee.

2.        Communicators.  Entrepreneurs know how to use all forms of communication to

effectively share ideas and address certain concerns with their customers of employees.
Effective communication not only provides people with a clear view of what the business
offers, they also help prevent mishaps in an organization. Communication channels
between entrepreneur’s and their employees or customers should always be open to
ensure the smooth flow of operations in their business.

3.        Specialist.  Entrepreneurs are experts in their chosen business. They are tactical and
are very keen with details. When asked about the specifics of their product or service, they
can easily answer without heavily relying on their people. They understand the totality
and specificity of their business. As a result, they can easily think innovating and
improving the product or service offerings because they know their intricacies. They enjoy
being in action instead of being behind the scenes.

4.  Problem solvers. Entrepreneurs possess critical thinking skills and look at problems as
challenges or puzzles that they need to solve. They know how to handle issues in any of the
business, be it finance, operations, or marketing. They listen to the plight of their employees on
certain problems involving their units, and come up with strategic solutions. Entrepreneurs are
able to solve problems by immersing themselves in day-to-day activities, knowing what is
happening in and out of their business. Entrepreneurs should also be aware of their employees'
personalities: they must know how and when to use them to hell solve problems. Entrepreneurs
have faith that every problem has a solution no matter how hard it is. They must also be
courageous and know how to face the consequences of their decisions.
Lesson 3: Entrepreneurship and employment
Entrepreneurship or Employment?

Entrepreneurship and employment are two different career paths that a person can
choose depending on his or her personal aspirations and work characteristics. It is really
up to the person at the end of the day on what career trail he or she will follow,
considering all compelling career factors that are important to him or her. Table 1.1 shows
a comprehensive list of the perks and the downside of being an entrepreneur as compared
to being employed.

Table 1.1 pros and cons of entrepreneurship vs. employment

Important
Entrepreneur Employee
Career factors
1. Income ·           Income generated passively ·          Income generated actively 
even when the entrepreneur is resting (i.e., on working hours only);  no
work = no pay
·           Opportunity income unlimited,
depending on the success of the business ·          Income usually fixed per
month and increases every year
·           Income only earned when the depending on the employee’s
business is successful performance

  ·          Income earned whether the

business is successful or
unsuccessful
2. Hiring and ·           Provides jobs; is the owner of ·          Seeks for a job; is the one
Firing, the business and conducts the talent applying for a job and is interviewed
Organizational selection by the company’s hiring officers
Setup, and
Major Key ·           Fully responsible for serving ·          Has he role of satisfying
Result Areas customers, making the business only the employer or the direct
profitable/sustainable, and providing supervisor
employee satisfaction
·          Fully dependent on the
·           Has the power to disengaging employer’s performance; is at risk
personnel of losing his or her job if the
company does not perform well;
·           Can venture into expansion of may find it difficult to just leave
business such as franchising and buying their below par employer if this is
other similar businesses
 their only source of income

·          Can only work for the

current employer exclusively
3. Daily task ·           Performs all necessary variable ·          Has routine tasks and works
task to establish and manage a start-up on regular or normal hours
business, which usually takes most of the
entrepreneur’s time: append more hours ·          Follows policies,
on work than a regular employee and procedures, and memoranda from
sometimes gets no sleep the employer

·           Prepares policies, procedures,

and memoranda for the business
4. Leisure Time ·           Has a flexible schedule and can ·          Has a limited number of
and Vacations take unlimited number of vacation vacation days imposed by the
days                             (applicable employer
only if the business has stabilized
already)  

 
5. Taxation ·           Taxed on the net income; can ·          Taxed on the gross income;
claim taxable income deduction for cannot use expenses incurred
allowable expenses incurred by the related to the job such as food and
business transportation expenses to claim for
deductions from taxable income
6. Comfort Level ·           Is comfortable in doing multiple ·          Maybe comfortable with
at work and challenging tasks and takes routines and minimal risks; may
accountability with the risks and profits also be comfortable in working for
of the business; does not want to be the company itself
confined in a box; thinks outside the box
and sometimes thinks there is no box

Lesson 4: Careers in Entrepreneurship

Careers in Entrepreneurship

          Entrepreneurship consists of vast career options depending on the passion and

field of interest of the entrepreneur. The saying “When you love what you do, It’s as if
you are not working” is very much applicable to entrepreneurs who consider managing
their business as enjoyment rather than working exhaustively.

Here is the list of the most common small business in the Philippines.

1.    Sari- sari store. There are approximately more than one million sari-sari stores in
the Philippines. Situated in almost all neighborhoods, these convenience stores provide
affordable basic retail products to nearby communities. A sari-sari store is one of the
easiest businesses to set up due to the minimal capital required and because it can be
managed at home, where the business owner lives.

2.    Rice retailing. Because rice is the staple food of Filipinos and other Asian countries,
rice retailing business is very common in the country. According to the infographic
presented by Rappler (2012), Filipinos spend 20% or 20 centavos per every peso for rice.
An average Filipino consumed an average of 92 kilograms (kg) of rice from the 1980s to
1990s, 111 kg from 2008 to 2009, and 119 kg from 2009 to 2010.

3.    Food cart business.  This business is also very popular in the Philippines. The
number of food cart businesses is not as big as the number of sari-sari stores, but food
carts are present in almost every populous location. They are usually located inside or
outside the malls, schools, parks, train stations, and offices. Popular food items sold in
food carts are dumplings (siomai), boiled fertilized duck eggs and quail eggs deep fried
in batter (tokneneng and kwek-kwek), fish balls, and squid balls, burgers, fried noodles,
shawarma, hotdogs,, sandwiches, pizza, donuts, and pastries. Popular beverages sold by
food carts are sago't gulaman (tapioca pearls and jelly), soft drinks, mineral water, milk
tea, coconut juice, and other juices. Food cart businesses are usually under franchising
arrangements.

4.    Printing business.  This business is also lucrative in the Philippines because the
demand is very high. Usually situated near schools and offices, printing businesses cater
to the needs of students for their projects and also offers for their advertising and
business requirements (flyers, billboards, magazines, newspapers, journals, and
calendars). Printing businesses also cater to the printing demands of occasions such as
weddings, anniversaries, birthdays, funerals, and graduations.

5.    Buy-and-sell business. This business is one of the emerging businesses in the

Philippines, and it is not just done traditionally in brick-and-mortar stores buy also over
the Internet. The influx of buy-and-sell. Web sites has changed the behavior of how
Filipinos exchange goods in the most efficient and practical way. Everyone can
technically be a seller even without an actual business.

6.      Street food business. Just like the food cart business, this kind of business is
widespread in the Philippines. Street food businesses are literally located in streets,
selling almost the same food products being sold by the food card business. Majority of
the street food business owners are selling grilled food items such as barbeque. Some
unusually popular street foods are isaw (chicken intestines), betamax (chicken blood),
and adidas (chicken feet). The famous balut (developing duck embryo) is also sold in the
streets. These street food businesses have been successful and are timeless.

7.    Flea market business or tiangge. In this type of business, entrepreneurs set up a

small space and sell any type of goods in a relationship palengke set up that is normally
in an open space. Customers are more interested to buy from these flea markets
because they can bargain for the price products being sold range from clothes, to food
items, to souvenirs and to household effects.

8.    Online selling business. This business deals with adding the internet as a

marketing and transaction channel for selling. This is very similar with the buy-and-sell
business, except that the focus is on selling existing and established products online.
The Internet has revolutionized the way Filipinos transact business.

9.    Cellphone loading business. More than 95% of Filipinos are prepaid mobile phone
users, according to an article published by the Philippine Daily Inquirer (2012).
Moreover, 80% of Filipino households have access to mobile phones. This is the reason
why there are so many cellphone loading stations in the country. Some entrepreneurs
link the cellphone loading business to their existing businesses such as the sari-sari
store, food cart, or online business.

10.  Laundry and dry cleaning business. This type of business is often located at
central business districts and areas with several condominiums and townhouses.
Furthermore, these business establishments also have a significant presence near
schools, dormitories, and apartments. One thing common about the residents of these
places is that they do not have enough time to wash and dry their clothes and just give
the job to the laundry and dry cleaning business. The business owner should follow
hygiene requirements before starting this business.

11. Hair styling and makeup business. One of the successful business in the
Philippines is the hairstyling business, which includes parlors and barber shops. Aside
from the core service of giving haircuts, this business also offers auxiliary services such
as hair treatments (perm, straightening, highlighting), massage, and nail styling. Filipinos
are generally conscious about proper grooming and hygiene, so that’s why this business
is profitable.

12. Spa, gym, and nail care business. Related to the hair styling and makeup business
is the spa, gym, and nail care business. One of the ways Filipinos cope with stress is by
going to a spa. This business offers a range of massage treatments that can relax the
stressed areas of the body, as well as other skin treatments such as facials and body
scrubs. Filipinos now also go to the gym because more Filipinos are becoming health-
conscious. Nail care is very much enjoyed by Filipino women who avail of a manicure, a
pedicure, or both. Filipino men are also focusing into their overall appearance these
days.

13. Video and photography business. This business requires talent in capturing

precious moments of celebrators in weddings, birthdays, anniversaries, graduations and
other important events. This business is gaining popularity because of the presence of
social media, where videos and photographs are supposed to be shared to other
people.

14. Tutorial business. This business caters to students who are not able to catch up
with their lessons, or those who just want to be ahead in class. A tutorial business is
composed of experts in a particular field who transfer their knowledge to another for a
fee. In the Philippines, the tutorial business has become an important aid in reinforcing
and enriching the students’ basic education knowledge.

15. Baking business. A lot of bakeries are present in almost all neighborhoods in the
Philippines because bread is the second staple food of Filipinos. Pan desal is the most
common bread being offered by the business.

16. Web site development and design/blogging. The popularity of the Internet

brought so many opportunities to Internet-savvy budding entrepreneurs. In this
business, the Web site developer conceptualizes and implements a Web site for another
business whose objective is to inform, persuade, and remind its customers. Blogging,
although initially made as a site to write your personal thoughts, has become a source
of income by most online writers, depending on the writer’s agenda. A blog may
become famous or successful if the site has a number of followers or readers. Some
people may earn cash by allowing companies to place ads on their blog.

17. Direct selling business. This business is also very common in the Philippines. It is a

face-to-face selling of products by a sales agent. The products include fashion
accessories, health and wellness items, clothing, food supplements, and homecare items.
18. Car wash and car care business. You often see this business in large cities because
of the proliferation of cars. In fact, the demand for car care increases every year.

19. Bar, café, and restaurant. The number of foodies (food enthusiast) has increased
because the Filipino palate became globalized. Filipino consumers’ demand for variety
and quality taste has evolved as well; thus businesses are continuously thriving.

20. Water station and LPG (liquified petroleum gas) station. These businesses can
never go wrong as they continuously serve households, supplying them with their
purified water and gas needs. The products that they sell are used for daily
consumption, which is why a lot of these are found in almost every corner in the
Philippines, especially in the urban areas.

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No successful business started huge right away. A business starts with an idea. Once the
business is established, the business owner, the entrepreneur, can choose to expand and
explore franchising, intrapreneurship (managing a start-up business in an established
business), and acquisition  (buying another similar business or a new
business). Franchising is a business arrangement wherein the franchisor, who is the
owner of the business, acquires distribution centers through the franchisees or the
affiliated dealers.

Listed below are Entrepreneur Philippines franchise business options in the Philippines,

which a potential entrepreneur can pursue after college or even after finishing the K to
12 program.

Franchise or Startup Business

·         Bakeries, Bakeshops, and bread products

·         Bars, cafes, and coffee shops

·         Beverage and confectionary

·         Car care

·         Clothing and accessories

·         Convenience stores

·         Drug stores and pharmacies

·         Fast food establishments and restaurants

·         Food and snacks carts

·         Gas stations / petroleum products

·         General merchandise and retail

·         Health and wellness (salon, massage, spa, and gym)

·         Schools

·         Services (personal and business)

·         Water stations

A franchise (or franchising) is a method of distributing products or services involving a

franchisor, who establishes the brand’s trademark or trade name and a business
system, and a franchisee, who pays a royalty and often an initial fee for the right to do
business under the franchisor's name and system. Technically, the contract binding the
two parties is the “franchise,” but that term more commonly refers to the actual business
that the franchisee operates. The practice of creating and distributing the brand and
franchise system is most often referred to as franchising.

There are two different types of franchising relationships. Business Format Franchising is

the type most identifiable. In a business format franchise, the franchisor provides to the
franchisee not just its trade name, products and services, but an entire system for
operating the business. The franchisee generally receives site selection and development
support, operating manuals, training, brand standards, quality control, a marketing
strategy and business advisory support from the franchisor. While less identified with
franchising, traditional or product distribution franchising is larger in total sales than
business format franchising. Examples of traditional or product distribution franchising
can be found in the bottling, gasoline, automotive and other manufacturing industries.

Franchising Is About Relationships

Many people, when they think of franchising, focus first on the law. While the law is
certainly important, it is not the central thing to understand about franchising.  At its
core, franchising is about the franchisor’s brand value, how the franchisor supports its
franchisees, how the franchisee meets its obligations to deliver the products and
services to the system’s brand standards and most importantly – franchising is about the
relationship that the franchisor has with its franchisees.

Franchising Is About Brands

A franchisor’s brand is its most valuable asset and consumers decide which business to
shop at and how often to frequent that business based on what they know, or think they
know, about the brand.  To a certain extent consumers really don’t care who owns the
business so long as their brand expectations are met. If you become a franchisee, you
will certainly be developing a relationship with your customers to maintain their loyalty,
and most certainly customers will choose to purchase from you because of the quality of
your services and the personal relationship you establish with them. But first and
foremost, they have trust in the brand to meet their expectations, and the franchisor and
the other franchisees in the system rely upon you to meet those expectations.

Franchising Is About Systems and Support

Great franchisors provide systems, tools and support so that their franchisees have the
ability to live up to the system’s brand standards and ensure customer satisfaction.  And,
franchisors and all of the other franchisees expect that you will independently manage
the day-to-day operation of your businesses so that you will enhance the reputation of
the company in your market area.

When selecting a franchise system to invest in, you want to evaluate the types of
support you will be provided and how well the franchisor is managing the evolution of
the products and services so that it keeps up with changing consumer expectations. 
Some of the more common services that franchisors provide to franchisees include:

 A recognized brand name,

 Site selection and site development assistance,
 Training for you and your management team,
 Research and development of new products and services,
 Headquarters and field support,
 Initial and continuing marketing and advertising.

You want to select a franchisor that routinely and effectively enforces system standards. 
This is important to you as enforcement of brand standards by the franchisor is meant
to protect franchisees from the possible bad acts of other franchisees that share the
brand with them.  Since customers see franchise systems as a branded chain of
operations, great products and services delivered by one franchisee benefits the entire
system. The opposite is also true.

Franchising is also a Contractual Relationship

While from the public’s vantage point, franchises look like any other chain of branded
businesses, they are very different. In a franchise system, the owner of the brand does
not manage and operate the locations that serve consumers their products and services
on a day-to-day basis. Serving the consumer is the role and responsibility of the
franchisee.

Franchising is a contractual relationship between a licensor (franchisor) and a licensee

(franchisee) that allows the business owner to use the licensor’s brand and method of
doing business to distribute products or services to consumers. While every franchise is
a license, not every license is a franchise under the law. Sometimes that can be very
confusing.

In the United States, a franchise is a specific type of licensing arrangement defined by

the Federal Trade Commission and also by several states. In the United States a
franchise generally exists when:

 The franchisor licenses a franchisee the right to use its trade or service mark;
 To identify the franchisee’s business in marketing a product or service using the
franchisor’s operating methods;
 The franchisor provides the franchisee with support and exercises certain
controls; and,
 The franchisee pays the franchisor a fee.

 The definition of a franchise is not uniform in every state.  Some states for
example, may also include a marketing plan or community of interest provision in
the definition.  The definition of what is a franchise can vary significantly under
the laws in some states and it is important that you don’t simply rely on the
federal definition of a franchise in understanding any particular state’s
requirements.

 Put another way, in a franchise a business (the franchisor) licenses its trade name
(the brand, such as BrightStar Care or Sport Clips) and its operating methods (its
system of doing business) to a person or group operating within a specific
territory or location (the franchisee), which agrees to operate its business
 according to the terms of a contract (the franchising agreement).  The franchisor
provides the franchisee with franchising leadership and support, and exercises
some controls to ensure the franchisee’s adherence to brand guidelines.

 In exchange, the franchisee usually pays the franchisor a one-time initial fee (the
franchise fee) and a continuing fee (known as a royalty) for the use of the
franchisor’s trade name and operating methods. The franchisee is responsible for
the day-to-day management of its independently owned business and benefits
or risks loss based on his own performance and capabilities.

 Investing in a franchise or becoming a franchisor can be a great opportunity.  But

before you select any franchise investment and sign any franchise agreement, do
your homework, understand what the franchise system is offering and get the
support of a qualified franchise lawyer.

Other Additional Business Opportunities

·         Dealership

·         Direct selling

·         Distributorship

Definition of Direct Selling

Direct selling refers to selling products directly to the consumer in a non-retail
environment. Instead, sales occur at home, work, online, or other non-store locations.
This system often eliminates several of the middlemen involved in product distribution,
such as the regional distribution center and wholesaler. Instead, products go from
manufacturer to the direct sales company, to the distributor or rep, and then to the
consumer. 

The products sold through direct sales are usually not found in typical retail locations,
which means finding a distributor or rep is the only method to buy the products or
services. 

Direct selling is usually associated with party-plan and network marketing companies.
Although these companies use direct sales, they aren't the only ones. Many businesses
that sell business-2-business (B2B) use direct selling to target and sell to their end
customers. For example, many companies that sell advertising or office supplies will
send their reps directly into the stores that can use their services.

Don't confuse direct selling with direct marketing. Direct selling is when individual
salespeople reach out to consumers directly, whereas direct marketing is when a
company markets directly to the consumer.

          Again, the entrepreneur is not limited to the businesses cited. An entrepreneur
can actually choose any business that may embraced by the potential target market.
Therefore, career options for entrepreneurs are limitless and boundless. In light of the
2015 ASEAN integration, which includes the opening of free trade (high-quality
products can be exported around the Southeast Asian region), as an entrepreneur, you
should also think of the global scale in creating your products and providing excellent
services to your customers. You should also be given easier access to financial resources
to help your business.
Module 2: RECOGNIZE AND UNDERSTAND MARKET

Lesson 1: Describe the unique selling proposition and

value proposition

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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. A business plan is a comprehensive paper that
details the situation analysis, objectives, strategies and tactics, and how to monitor and
control the enterprise.

Some entrepreneurs fail to give importance to the voice of a business venture-the

market. If 1gnored or given small attention, this becomes a major source of the
entrepreneur's failure.

This module will also let you understand and identify what makes a product or service
stand out from the competitors through defining the unique selling proposition and
value proposition of the product or service. You will understand the behavior, attitude,
and psychology of the entrepreneur's customers through various ways of customer
validation. You will understand in detail and apply the 7Ps of marketing or the
marketing mix in instigating awareness and driving sales of the business venture. Last,
you will understand the fundamentals in brand management and how branding gives a
specific business an overall appeal and credibility.

Value proposition and unique selling proposition

Before focusing on the topics of value proposition and unique selling proposition, you
must first know the marketing process. 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. From there, it
is imperative to identify the most strategic market or group to tap.

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A 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, so the value proposition should cater to those particular needs. 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 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 partners, and other stakeholders, putting specific 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
or service 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, its functionalities, or if 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.

Ronaldo S. Batisan, Entrepreneurship, DIWA SHS series 2016) p. 43

Aling Tere's Sari-Sari Store

Situation analysis
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.

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On the other hand, a unique selling proposition (USP) refers to how you will sell the
product or service to your customers. It addresses the customer’s 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, human resources or human capital market positioning strategies. The ability
to craft an effective USP is a gauge on how well an entrepreneur knows his or her
product or service.

The following are some tips for the entrepreneur on how to create an effective unique
Selling proposition to the target customers:

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1.        Identify and rank the uniqueness of the product or service attribute. This is the most
difficult part because you only need to choose one or two at the most. That attribute will
be your key to success, as this will compel customers to purchase from you and not from
your competitors. The unique selling proposition, while it presents the best features of your
product or service, should also avoid competition. Put yourself in the customers shoes and
ask yourself, "Why should I choose you over the others'? Or, "Why should I deal with you
at all?" Identifying the unique selling point is a tough job and requires marketing research.
The best way to identify it is to identify the marketing mix (7Ps) and distinguish which
among those displays the product's unique features. The 7Ps will be discussed later in this
module.

2.          Be very specific. Put details that emphasize the differentiator against the
competitors. This differentiator should be very compelling and should make the customers
think that they are really getting more value from you than the others. By being specific,
make sure that the USP does not rely on heavy, extravagant promotion. The customers do
not want to feel that they are being fooled.

3.          KISS (Keep it short and simple). One challenge that marketers always face is that
the customers attention span is limited and very easy to switch. Therefore, think of a very
catchy unique selling proposition in the Simplest and shortest way possible. You can
compare it with a headline of a newspaper or a Web site. That's the first item that the
customer will see.

To illustrate, use the example from the previous discussion to build a potential unique
selling proposition for Aling Tere's Sari-Sari Store.
The first step is the identification and ranking of the uniqueness of the product or
service attribute using the 7Ps of marketing. Make sure that there is a thorough
explanation and analysis about the ranking.

7P’s Product or Place Price Promotion People packaging Process

Services
USP Retail Near a Competitiv Signage 3 Shifts Semi- The only
description Products call e of Aling convenience sari-sari
center Tere store store that
operates 24
hours a day
Unique? No No No No Yes Yes Yes
Ranking of         3 2 1
USP’s

The process was ranked first as the most unique because Aling Tere wants to solve a
compelling problem of the customers, i.e., the availability of a retail store near their
workplace in odd hours. This was based on her marketing research about her
environment. Packaging was ranked second because it is the only semi-convenience
store in the area, a hybrid of a convenience store and a sari-sari store. People ranked
third because it is the only sari-sari store that has three persons who work in shifts. It is
common that the owner or an assistant attends to the store with a predetermined
schedule, and not the entire day.

Proposed unique selling proposition: “Tindahang maaasahan, bukas kahit anong Oras”

You will notice that the proposed value proposition and unique selling proposition
are the same. Why? Because the most compelling differentiating factor is positioning,
the value proposition is also the perfect unique selling proposition, considering all the
factors enumerated were all met (defined unique attribute, specific, and short/simple). It
is catchy, too. However, this may not be the best unique selling proposition for Aling
Tere. The entrepreneur's creativity and inventiveness will always come into play. Both
the value proposition and unique selling proposition should be clearly communicated to
the target customers in the catchiest way possible. Common Communication channels
include signage, Web sites, social media, print ads, television and radio commercials,
and mobile advertisement
Lesson 2: Determine who the customers

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Know Your Customers

After the general scan and research performed during the course of preparation for the
value proposition and the 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.
The first step is to 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.

The second step is to 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 by some employers.  They are also not the
major consumers of rice.

 
The last step is for the entrepreneur to estimate the market share, which 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 to decide whether the business is worth the capital that will be used. Continuing with the
rice retail business, because the entrepreneur already denied 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 entrepreneur's marketing strategies.

 Market share computation illustration:  Mr. AIvin Antonio, a budding entrepreneur,

wants to establish a rice retailing business in his area in Barangay San Isidro. 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 Barangay San Isidro 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
convenience stores. The average net profit per kilo of rice is P10.00. How big the market
size and what could be the potential market share of Alvin's rice retail business?

The objective of Mr. Antonio in the first year is to capture the 20% of the market by
implementing marketing strategies in pricing (reduced mark-up of P2) and promotion
(free delivery of rice for five kilos and up) through text message or phone call. None of
the competitors have thought or done these strategies yet. In the example, the four rice
retailers are considered direct competitors because they offer exactly the same product
and are structured similarly with Mr. Antonio’s proposed business. On the other hand,
the groceries and convenience stores are considered indirect competitors because they
don’t offer the same product type and are not similarly structured but still compete with
Mr. Antonio’s business indirectly.
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Customer’s Requirements

Customers are said to be the life blood of the business. These are the people who buy
the product or avail the services of the entrepreneur. Their thoughts, feelings and
experiences, shape the decisions of the business. Thus, the phase “the customer is
always right” is a mantra that most successful entrepreneurs follow. Customer
requirements are specific features and characteristics that a customer need from a
product or service. It is in these customer requirements that the business opportunities
originate.

Entrepreneur must be aware of all of these requirements for them to come up with this
features that best suit their needs. They must know who buys, and what, when, where,
how, and most importantly, why we buy. These requirements can be used to formulate
the value proposition and the unique selling proposition, as addressing the
requirements would increase the competitive advantage of the business. Entrepreneur
should also be vigilant with the constant change in customer requirements. For example,
cell phone repair services five years ago are way different now because of the
proliferation of the smart phones today as compared with regular mobile phones.

For example, in the restaurant business, some customers prefer cheaper prices or a bundled
menu; some will prefer a cozy ambiance; some prefer with relaxing music; some are prefer to
have food served fast; and some will prefer to pay using their credit cards. In short customers’
requirements vary from person to person. Thus, entrepreneur must group them together,
calculate their size and come up with the products and services that suit them. The customer is
the voice of every businesses that entrepreneur should listen to.

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Primary and Secondary market

Most entrepreneurs believe in the misconception that they can serve all types of customers
or, if not, a wide range of customers. Little do they know that this thinking may lead to
failure. Entrepreneurs must focus only on customers whom they can serve beneficially
because they will be wasting resources if they will target all, or worse, target none. The
entrepreneur can tap a primary target market and a secondary target market as resources
are limited during the start-up stage.

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. It is a necessary activity in marketing
because it gives the entrepreneur a holistic and general view of the market group that he
or she is serving. Therefore, there will be efficiency and proper logic in implementing
marketing strategies and tactics to this chosen market group. It is best to create a
persona(s) of the target customer to represent the general characteristics and behavior of
the target market. A secondary target market is also necessary to spread out the capital
expenditure and the risks as well. They are the customers who don't have enough
purchasing power or have fewer demands. They may not be your primary target market,
but they can be converted once effective marketing strategies are implemented.

Demographic

Demographic segmentation, also called socioeconomic segmentation, is the process of

grouping customers according to relevant socioeconomic variables for the business
venture. These socioeconomic variables include income range and social class, occupation,
gender and age, religion, and ethnicity. These data help the entrepreneur target customers
accurately and classify their respective needs, wants, and desires. Demographic data can
usually be derived from public documents or the Internet, thereby giving the entrepreneur
an easier task of collecting data. To further validate the information gathered from the
public sources, it is still best to do a random sampling just to check if the data are
accurate. The risk in focusing solely on demographic data is that these data change with
society. Therefore, the entrepreneur must be alert with these changes.

Income range and the social class  of the customers are very important factors for the
entrepreneur to consider because these represent the purchasing power of the market.
From here, the entrepreneur will be able to determine the extent to which the customers
can buy or avail of the service, therefore, he or she will have an idea on how the
profitability look. The socioeconomic class of the Philippines according to the 2011 report
of SWS (Weather Stations) is dominated by the socioeconomic class D with 60% of the
families earning an approximate of PI91 000 per year. This is followed by class E with 30%
of the families earning only P62 000 per year, and then by class C with 9% of the
population earning 6U3 000 per year. Last on the list is class AB with only 1% of the
families earning 857 000 per annum.

Ronaldo S. Batisan, Entrepreneruship, DIWA SHS series 2016)

Occupation  should also be considered not just to determine the customer’s income but
also their daily routine where goods and services can be properly positioned. In the
previous example ab0ve of Aling Tere's sari-sari store, she based her decision of putting
up the store because she has knowledge of customers' occupations (i.e., call center agents
and night shift nurses).  Gender and Age group are data must be mined because the life
cycle of customers and their influence their buying behavior. Here are some practical
examples.
Religion and ethnicity  also should be taken to account because these affect the way
they buy the products or avail of services. Examples are food choices, events and holidays,
traditions and beliefs, spending habits, and conservativeness. The entrepreneur should
include demographic items that he/she thinks are relevant to the chosen business so that
he can accurately align worthwhile products or services customers.

Psychographic

Psychographic segmentation is a process of grouping customers according to their

perceptions, way of life, motivations, and inclinations. Perception is a process wherein an
individual receives external stimuli using the five senses of hearing, touching, smelling,
seeing, and tasting.  A product or service can be perceived differently by different people.
The customer’s way of life will give an entrepreneur an overview of what products or
services can best suit the problems of the customers that happening on a daily basis. A
person s motivation can be either physiological or psychological. Physiological
motivations involve the needs of the person (e.g., food, clothing, shelter); they seek to
avoid pain and give pleasure. Psychological motivations involve customers

preferences (what the customer likes or dislikes).

Motivations are also affected by their aspirations and deprivations. Aspirations are what
the customer wants to achieve (e.g., inner peace, financial stability, work-life balance).
Deprivation involves the customer's recognition of certain voids to fill (e.g., lack of
financial security, lack of love, lack of knowledge). For example, let’s look at Jacob, who

comes from a low-income background. He wants to become one of the best accountants,
and so he aspires to go to one of the premier universities in Manila to study accountancy.
With this, he is motivated to uplift his reputation and his personal value, as well as his
status on the society or his appreciation of other people. Customers' 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 now to segregate the customers based on their way of
life.

Geographic
Geographic segmentation is simply the grouping of customers according to their location.
This is critical in the analysis of the target market as this encompasses the cultures, beliefs,
preferences, politics, and life style of a certain geography. Geographic segmentation can
be as small as street, a village or barangay. It can also based on municipality, city,
province or region. It can be as big as a country or continent depending on the
entrepreneurs business objectives.

Behavioral

Behavioral segmentation is the process of grouping the customers according to their

actions. These behaviors are instigated by occasions, desired benefits, loyalty, and usage of
products or availment of services.

Occasions drastically affect the customers buying behavior. The Christmas season entices
the people to buy gifts. The Valentine season encourages people to buy flowers and
chocolates for their special someone. The summer season elicits customers to go to the
gym to be fit, to the beaches and resorts to beat the heat, to book a trip for a summer
getaway, or to buy summer outfits. Birthdays and graduations induce customers to go to
buffet restaurants or hotels and resorts to celebrate.

Using customer’s  desired benefits  in behavioral segmentation is efficient because the

entrepreneur determines the exact needs of the customers and offer the most suited
product or service for them. Examples include offering wash, dry, and press services for
busy office workers in the city because they don't have time to do this chore, or offering 3-
in-1 coffee for budget conscious customers and those who prefer instant coffee.

Loyalty  is the result of maintaining satisfied customers. The goal of every entrepreneur is
to inform, persuade, and remind customers to buy the product or avail of the service
consistently. Therefore, 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. Loyalty programs and rewards separate loyal customers from the new ones.

Usage of products  or availment of service is also a behavior segmentation factor that

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 Customer's,
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.

Figure of public market (left) and transportation terminals (right) are examples of
businesses that have market aggregation because of the wide range of customers that
avail of the product or services

Lesson 3: Customer-related concerns

Talking to Your Customers

Marketing research will not be complete without talking directly to the target customers.
It’s good to estimate numbers such as market size, market share, and other general
market assumptions, but the best way to fully understand the customers is 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 have a
solid objective, which states the research purpose. From this objective, you will identify
the appropriate research activities, tools, and samples that will set the scope and
limitation of the research project. When relevant research methodologies are already
defined, you should now identify the target market segment for the research project,
which should be dissected into key samples that represent the target market segment.

Next is to analyze proper timing for research execution. This is important because the
entrepreneur will be able to get maximum results when he or she identifies the
respondent's answering pace. Geography is also important to determine the behavior of
the target market as well as the foot traffic. Last is to establish a market research 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
analyzing the customer’s preferences by using relevant statistics (such as those in
surveys).
In the succeeding discussions, you will be familiarized with the four most common
methods of collecting data from the target customers: interview, focus group discussion,
observation, and survey.

The Interview

The interview is one of the most reliable and credible ways of getting relevant
information iron 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 provides the entrepreneur a glimpse of what the customers think
about the business. The drawback though is that interviews are often expensive,
especially if the number of respondents is large. The solution is to apply sampling which
is the selection of respondents that statistically represent the total population. The two
main types of interviews being conducted by the researcher are unstructured and
structured interviews. An 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 or she wants to clarity 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 researcher will ask all the possible questions until he or she
is satisfied that all the necessary issues in his or her checklist have been answered. The
researcher usually records the conversation, reviews it, and summarizes the findings. The
unstructured interview produces qualitative data.

Structured Interview, on yhe opther hand employs apspecific set of questions and produces
quantitative data. A pre arranged questionnaire with specific question usually answerable by yes
or no. Unlike the unstructured interview, a structured interview does not allow the interviewer or
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/she should be able to raise question that

can directly give appropriate answers to the researchers objective.

Challenges in an interview

1. The first challenge involve the appointment with an interviewee, which includes asking
repondents permission. Some of the respondents can be skeptical and need to know the
reputation of the one conducting an interview before allowing themselves to be interviewed. 
Therefore, the researcher needs to set a friendly tone and must explain the rationale and
objectives in aclear and not intimidating way.

2. Second, chgallenge involve the differences to tell hoe they share their opinion.
Introducing the interview is very important as this will set the tone of the discussion. The
entrreporeneur therefore must be able to estbalish a relax ambiance and must first
explain clearly why the interview is conducted and how it benefits the interviewee. The
language must be the one that interviewees use (formal), due to most interviewees
being common, the length of the interview must be short as not to occupy much of
their time; and interviewees should be assured that the results be kept confidential and
be presented summatively.

3. The third challenge involves getting unbiased answers from the repondents. There are
factors for such challenge. The first factor is the limited memory or goregetfulness of the
respondents. The second factor is the difficulty of questions, gicing the respondents a
hard time to answer relatively. The third factor is the environment they are in. Some of
the respondents in an ointerview maybe influenced by relatives ir peers who overhear
the interview.  Many filipino tend to be courteous, telling you what you want to hear
instead of what you need to hear/ They may also be influenced by the interbviewer
himself or herself by injecting his/her ideas, being companssionate, or  by being
surprised or diasgreeing. The reasercher therefore must have an objective approach to
the interview so as not to affect the results.

The Focus Group Discussion

The focus group discussion or FGD is 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 toward 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.

What's unique about FGD is that it is led by a moderator who keeps the discussion
spontaneous and on the right track. The moderator's task is not that of an interviewer
who is asking a set of questions. Instead, his or her role is to encourage a group of
participants to talk about a list of topics prepared prior to the FGD. The moderator will
direct the discussion in the right path ensuring all angles are covered and the discussion
doesn't go too much from the topic.

This is the reason that it is called FGD, because the discussion will be specially focus on
finding relevant answers (e.g, sirong branding or service preferences), The moderator
must also be objective at all times, avoiding biases and unnecessary reactions.

The participants, on the other hand, are selected based on the objective of the
entrepreneur and should be homogeneous as much as possible. For example, if the
entrepreneur wants to know it there is an opportunity for a beauty salon business in his
or her area, then he or she will choose to have female salon experts. If his or her
objective is to test an existing product such as carinderia viands, then he or she will
invite a group of students or a group of employees who are food enthusiasts as
participants.

The focus group session usually lasts from one to two hours. It will be more credible if
the actual product or a potential product/service is showcased in the FGD to elicit
realistic reactions from the participants. The FGD session must be recorded by either
audio or video, so that the researcher can digest the session and pick the most relevant
insights from the participants.

In the case of starting entrepreneurs, they don't necessarily have to follow a formal FGD
session, but the ultimate objective of getting raw and fresh responses of the participants
must be elicited (e.g, casual conversation with a group of homogeneous individuals such
as students, employees, and factory workers). The FGD is also a preparatory step in
crafting a quantitative survey because this method generates background information
or hypotheses for a new product or service. As compared to the interview, the FGD has
some advantages as follows:

1. The researcher can get combined insights from the participants.

2. The participants are more spontaneous and enthusiastic because of the interaction
with co-participants, thereby sharing more insights to the researcher.
3. It can be observed by various spectators.

It also has some disadvantages as follows:

1. It obtains only qualitative data.

2. Examination of the focus group session is difficult and requires more time.
3. There are potentially biased answers from the participants because they will
encounter peer pressure. There may also be instances that one or two among the eight
participants will dominate the discussion, resulting in biased responses.

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.

Ronaldo S. Batisan, Entrepreneruship, DIWA SHS series 2016) p. 59

FGD objectives:

1. To determine the top products that passengers buy for themselves or pasalubong for their
families and loved ones.
2. To understand the buying behavior of the passengers.
3. To know if the passengers want new or enhanced merienda or pasalubong products.

Participants
1.    Vicky will invite six passengers who are waiting in line from the bus. All of these
passengers have been buying merienda tor themselves or pasalubong for their loved
ones.

Venue and logistic

1.    An FGD will be held at Vicky's residence m Santa Rosa City, Laguna, where most of
the participants live. She will set up her dining area as a mini-conference room. As sign
of gratitude, Vicky will provide the participants with free snacks and pasalubong.

Moderator

1.    Vicky will act as the moderator and will use her smartphone to record the session.
As both moderator and researcher, Vicky must be able to elicit transparency, objectivity,
and kindness, but she should also be firm, flexible, and sensitive.

Moderator's discussion guide

A. Introduction (10-15 minutes) - Vicky should be able to explain to the participants the
purpose of the FGD and the ground rules before starting. She should disclose to the
participants that she'll be using her smartphone to record the session and that all
responses will be treated with confidentiality. The participants can freely voice their
opinions regarding the topics to be raised and must speak one at a time with a clear
tone.

B. Product usage, attitude, and image discussion (30 minutes) - Vicky Will be asking the
following questions during the discussion proper to validate the first two objectives:

·         What images are connected with pasalubong products?

·         How were these images derived? Was it through packaging, price, location,
signage or the service personnel?

·          What are the words that first come to mind when merienda or pasalubong is
mentioned?

·          What are the top three food cart businesses that you frequently patronize? What
products do you buy from them, and how f these products do you buy (i.e., quantity
and amount)? How many times do you buy in a week?

·          Why do you prefer to buy snacks and pasalubong from these food carts?

C. New or enhanced products (15 minutes)- Vicky Will be asking the following questions
to validate the third objective:

·         What new products excite you to be part or the food cart business? Why is this
so?

·          What enhancements or improvements would you like to see in the existing food
cart products that you patronize, price, Location?  features?  signage? service?
personnel?

D. Conclusion (5 minutes)

Analysis of FGD results

Because the FGD is a qualitative method of generating ideas, Vicky should compare,
Contrast, and analyze each point raised by the participants. She should focus on the
answers that directly target her three objectives. After all relevant points are
enumerated, Vicky should summarize the findings and from there she can decide it the
new venture is worth the try or not.

Observation
Observation 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 customer’s behavior in their 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 customers rather than hearing what they need to say (which may sometimes
be biased, incomplete, sugarcoated, or exaggerated). Therefore, it is not as pushy as the
interview and the FGD.

The key to observation is that the researcher must be keen and accurate on what he or
she really wants to observe he or she must have a very clear objective. Observation can
be performed by either a human or a machine observer. The human observer records
information as it occurs or as it happens using his or her five senses. The machine
observer employs an equipment (e.g., video camera or computer) to record the
information needed.

Examples of human observation:

1.    Customer purchase patterns-This human observation technique uses the researcher

to understand the buying behavior of the customers such as determining their pain
points, buying patterns (i.e., how many times and how often do they buy or their
inclinations toward a product or service), location, price, or promotion.

Application to a 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. This is a common practice of service busınesses today where the
researcher pretends he or she is a customer of his or her own business or the
competitors. This is a test to determine the quality of the customer service or if the
service provider is doing the right job.

Application to a laundry business: The human observer will bring his or her laundry bag 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
behavior (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 1s 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 encounters give a glimpse of how many people or vehicles pass the
area. This is also provides 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 target.

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 Web site. This gives the online entrepreneur a
report on how his or her web site performs and how this drives awareness and sales for
the business.

Application to online buy-and-sell business:  The researcher will use Web analytics to
track how many visitors click on the features of the Web site, the content they usually
access, and where they are geographically located so that he or she can strategize on
what content to improve on, and analyze the factors that lead them to buy the products.
4. Barcode scanners- These machines help researchers understand the purchase
behavior 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 the

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.

Despite the advantages of observation, it only provides the researcher a facade of what
necessarily know the feelings of he or she sees or watches and does not let the
researcher necessarily know the feelings of customers. It is only limited to extrinsic
behaviors, thereby not capturing the intrinsic ones such as beliefs, inclinations, and
stimuli customers. In a sense, it also becomes unethical at times, because the researcher
directly observes the subject without asking for their permission.

Observation only becomes a relevant research tool if it meets the following conditions:

1.    If the person, object, or event is indeed observable. There are instances when
observation is not applicable or not practical to use. For example, cell phone load
entrepreneur will not be able to observe how many times in a day a customer calls or
sends text messages because that customer for sure does not want to be disturbed.

2. 1f the person does e activity regularly or the event happens on a regular basis.
Observation is useful for a street food business if the entrepreneur notes that his or her
customers always buy his or her products every 4 PM and in groups. From here, he or
she can already start cooking these street food items before 4 PM.

3. If doing an interview or FGD is becoming intrusive of the privacy of the person.

Instead of asking customers how many times in a day they brush their teeth, it may be
better if the entrepreneur just observes how many times in a week do they buy
toothpaste and in what variant (e.g., per sachet, per box).

4. If the subject of observation does not take too long to produce relevant information.
It would be practical to observe how a customer decides and orders a beverage rather
than a customer buying a car because the former requires little time because he will
drink anyway, whereas the latter requires pre-purchase tasks such as research on the
features and price, looking for a bank to enhance the loan, and so on.

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.

A survey is very simple and practical to run because it requires preparation of

predetermined questions answerable by definite responses using equitable scales. This
18 advantageous to the researcher because not only it is systematized an 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, Snail mail. The emerging and more efficient way of conducting a Survey is
through the through e-mails, Web sites, or social media sites. It is more efficient
because the results can be derived in real-time depending on availability the
respondents. Also, it would not require the researcher to travel physically or spend on
telephone calls or mails.

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.

Sampling techniques include probability and nonprobability sampling. 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, wherein he or she needs to assure that every sample has an actual
representation for the selection process to be unbiased. 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 particular population. Sampling error is always
reflected in the research results inferred from the population.

·         Nonprobability sampling, on the other hand, 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-  Here are some tips on how to create a blueprint for the
questionnaire:

·         Be specific and direct with the questions and the answers required.

·          Be flexible with the respondents convenient way of answering the

questionnaires    (a telephone, face-to-face, or online). Therefore, the researcher must
be ready with any
these four formats.

·         Ensure that each question is necessary and not repetitive.

·         Always put yourself in the shoes of your respondents. The questionnaire should
simple but should also meet the objectives. The composition and type of questions
(multiple choice, dichotomous, open-ended) should also be geared towards their
convenience.

·         Make sure that questions are arranged in a coherent order that will lead to the
answers required. At the onset, qualifying questions are positioned, followed by general
questions, and then specific questions.

·         The questionnaire should look professional, be divided into strategic parts, and be
properly numbered.

MODULE 3: SELECT THE BEST PRODUCT OR SERVICE

Lesson 1: Analyze the market need
LESSON 1

As the saying goes, the most difficult part of every task is where and how you start. The same is
through with entrepreneurship. You may have all the resources needed to operate a new venture,
but it will never be easy to start one. This module will discuss the proper and efficient ways of
starting a business. You will be introduced to the entrepreneurial process, which starts with
identifying and evaluating the opportunity. The heart of this module is the scanning of the
marketing environment where you can formulate a product or service solution applying the
techniques of seeking, screening and seizing opportunities. As a result, you will deal with
analyzing the need of the market, think of the potential set of products or services that will the
need, asses the feasibility of the solution, and select the best product or service that will address
the need.

The Entrepreneurship Process

 The entrepreneurial process is a step-by-step procedure in establishing any kind of business that
an entrepreneur has to undergo. It is composed of two aspects.

Table 2.1 summarizes the components and steps in the entrepreneurial process (Hisrich, 2010).

  1. Opportunity spotting and assessment. This is the beginning of the process

and is considered the most difficult. Entrepreneur at this point take note of
  interesting trends in their environment. Consumes are reliable sources of
opportunity information because market needs originate from them. Other
  major sources of opportunity are the glaring problems in the environment,
problems encountered by co-entrepreneurs, new trends, processes,
  developments in the environment. Other minor sources are feedback from
distribution or business partners such as retailers, wholesalers, manufacturers,
  and technical people that the entrepreneur is working with. The entrepreneurs
toughest job is to carefully assess the opportunity through estimation of
  opportunity length, capitalization required, threats, profitability, and
calculation of real and perceived value. Entrepreneurs should also assess if
  the opportunity is aligned with their personal goals and attributes. Last,
entrepreneurs should already think in advance how will they position the
  product or service in the market and showcase its unique selling proposition.
This module will focus mainly on opportunity spotting and assessment,
which represent the entrepreneur’s stimulus in starting a new venture.

 
  

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 a comprehensive paper that details the marketing,
operational, human resource, financial, strategic direction, and tactics of the
business. The business plan will be core guide and direction of the
entrepreneur in calculating the resource 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 entrepreneur’s 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 entrepreneur’s current resources.
Caution must be applied in computing the complete set of resources needed
and include only those items that are considered as the real needs in venture
creation. Allowance must be considered as well because there will be times
that resources will be inadequate or unsuitable.
4. Running the business. This is the part where 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 plan
should be critically observed from operations, marketing 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 Components and steps in the entrepreneurial process

Opportunity Developing a Determining the Capital Running the Business

Spotting and Business Plan Needed
Assessment
l  Evaluate the l Come up with a l Calculate the intrinsic l Practice leadership as a
identified opportunity business description and extrinsic capital way of life
and analysis needed
l  Conceptualize and l Perform industry l Calculate the existing l Recognize critical
measure the analysis capital success factors
opportunity
l  Identify the l Come up with a l Calculate the difference l  Identify existing and
perceived value of the marketing plan between the needed foreseeable problems
opportunity to the capital and existing and issues
company and the capital. Choose the most
customers cost-efficient supplier or
service providers
l  Do cost-benefit l Prepare the l Develop contact and l Enjoy risk mitigating
analysis of the operations plan relationship with controls and monitoring
opportunity including including the suppliers and service systems
risk analysis organizational plan providers
l  Match the l Come up with the   l Devise an
opportunity with the financial plan expansion/sustainability
entrepreneur’s skills strategy
and objectives
l  Scan the strengths l Identify strategies    
and weaknesses of and tactics
competitors
  l Perform    
monitoring and
control

Lesson 2 & 3: Determine the possible product/s or

service/s and Screen the proposed solution/s
Scanning the Marketing Environment

Scanning the marketing environment is the starting point of any view venture that
involves understanding and knowing the intricacies of the macro environment,
microenvironment, and internal environment. With this process of scanning the general
environment, 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. This is one of the mistakes that
budding entrepreneurs commit in starting a new venture

Seeking, Screening, and Seizing

The 3Sof opportunity spotting and assessment is the framework that most of the
promising entrepreneurs use to finally come up with ultimate product or service suited
for a specific opportunity. An opportunity is an entrepreneur’s business idea that can
potentially become a commercial product or service in the future. The entrepreneur
serves as the catalyst of creating a value for the customers through the new or
innovated product or service. As a reward, the entrepreneur earns profits when the
customers are satisfied and delighted.
S1: Seeking the Opportunity

Opportunity seeking is the first step ad 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

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a. Industry. This is the source of current trend on what is happening in the industry
where the future business will belong to. For example, the entrepreneur should be fully
acclimated on what is happening with rice industry if he or she wants to establish a rice
retailing business.

b. New discovery or knowledge. These are new trends that can be the core business
model of a new venture. For example, the influx of mobile applications necessitates
business to have this platform as of their transaction channels.

c. Futuristic opportunities. These are projected new opportunities that can possibly affect
the new business while it is running. For example, sari-sari stores in the future will be
able to incorporate financial transactions such as accepting bills payment and process
remittances.

2.   Micromarket

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a.    Consumer preferences, interests, and perception. These are the current needs and
wants of potential customers that should be discovered right away by a budding
entrepreneur. This way, he or she will be able to take a chance of the opportunity.
A need is recognized when a customer believes that there is a difference between his or
her current situation versus his or her desired condition. A want, on the other hand, is
recognized when a customer believes that there is a specific product or service that can
perfectly suit the need.
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. The 4Ps of marketing (product, place, price, and promotion) will
be competitively positioned if the entrepreneur is familiar with his or her competitors.

c.    Unexpected opportunities from customers. Oftentimes, the most brilliant ventures

come from the most unexpected opportunities. It may happen in unlikely situations,
unlikely places, and with unlikely people. Existing problems and bottlenecks often give
rise to an unexpected opportunity. What entrepreneurs usually do is be on top of the
situation and change the market’s perception of a product or service or build a new
market. In the Philippines, there are a number of building social entrepreneurs who
turned unnoticed products into superstar products that carry also the value of social
responsibility.

d.    Talents, hobbies, skills, and expertise. Business opportunities do not just come

from outside forces, but also from within the entrepreneur. The entrepreneur’s talents,
hobbies, skills, or expertise can be a source of business opportunity. For example, if the
entrepreneur is an artist, why not sell his or her paintings? If he or she is a musician, why
not put up a bar and perform there? If he or she is an expert in home interior design,
why not make it a business?

e.    Irritants in the marketplace such as deterrents, problems, complaints, and

delays. Generally, entrepreneurs see opportunities in situations where there is a
recurring problem or sometimes when there is no more hope in solving the problem.
When customers are already sick and tired of the same old issue or problem that is
when the opportunistic entrepreneur should come in and make a difference.

f.     Location. Often, entrepreneurs just have to look at their ecosystem and they will be
able to spot a business opportunity right away. For example, if the entrepreneur’s
location has many schools, then a restaurant, an eatery, or probably a computer shop
might be a good business to establish. If the entrepreneur is in an island with an
awesome beachfront, why not put up a hotel?

Methods of Generating Ideas

          Recognizing and understanding the vast sources of opportunities is one difficult
activity to do. Also, the methods of generating ideas may be overwhelming to undergo
through. Either one or a combination of methods given can be employed by the
entrepreneur in generating new ideas.
 

1.    Focused group discussion (FGD). In this method, moderator handles very open, free-
flowing, and in-depth discussion with a group of people who can provide insightful
ideas about a new product or service that will fill a market need.

2.    Brainstorming. Similar to an FGD, brainstorming is an activity that allows the

participants to share creative ideas using the following rules: (a) no destructive criticism
or judgement is allowed, (b) wider ideas are accepted, (c) more ideas are preferred,
and (d) improvement of others’ ideas is allowed. In short, brainstorming is a fun
discussion with lenient rules.

3.    Brainwriting or Internet brainstorming. This is exactly the same as brainstorming

except that the channel used is not face-to-face, but in writing or online. The results 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. This method is similar to the FGD except that the
participants are already given an inventory of product or service problems. The
participants will just identify from the list given the compelling problem(s) of a potential
product or service instead of generating the ideas from them.

STEEPLED Analysis

          The result of the STEEPLED scan will aid the entrepreneur in deciding what
product or service to set up and whether this new venture will succeed or not. The focus
of this scan is only on the macroenvironment. Again, not all factors can have an effect
on the new venture. The important thing is for the entrepreneur to fully scan these
factors o he or she can decide if there is a compelling business opportunity or an
impending threat.

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 sociocultural factors:

·         Health consciousness

·         Education level

·         Attitudes toward imported goods and services

·         Attitudes toward the person’s 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.
Entrepreneurs should always be up-to-date with the technological changes, as these are
catalysts in improving a product or service or replacing them entirely. The entrepreneur
should take note of the following technological factors:

·         Basic infrastructure level

·         Rate of technological change

·         Spending on research and development

·         Technology incentives

·         Legislation regarding technology

·         Communication infrastructure
·         Access to newest technology

·         Internet infrastructure and penetration

3. Economic factors- These factors plays a vital role in scanning of marketing

environment because economic factors directly affect any business venture. These
factors include income, expenses, and resources that can influence the cost of doing
business and generating income.

The entrepreneur should take note of the following economic factors:

·         Growth rates ·         Trade flows and patterns

·         Inflation rates ·         Level of consumer’s disposable income
·         Interest rates ·         Monetary policies
·         Exchange rates ·         Fiscal policies
·         Unemployment trends ·         Price fluctuation
·         Labor costs ·         Stock market trends
·         Stages of business cycle  
 

4. Environmental or ecological factors. These factors should be given much importance in

conducting a business especially when the world has already suffered severely from
human-induced calamities. The scan of these factor will help the entrepreneur
determine if the business he or she entering into will comply the environmental
standards or will just be a hazard to people, animals, and nature. Moreover, the
entrepreneur will know if the business venture will be suited with the weather conditions
in his or her locality.

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 renewable energy

5. Political factors. These factors are mostly induced by government policies and

administrations, which can have a strong effect in the entrepreneurs business.

The entrepreneur should take note of the following political factors and examples:

·         Government stability and likely changes

·         Bureaucracy

·         Corruption level

·         Tax policy (rates and incentives)

·         Freedom of press

·         Rule of law

·         Government effectiveness

·         Political rights

6. Legal factors. Related with political factors, legal factors are government laws and
regulations that can restrict or allow business activities.

The entrepreneur should take note of the following legal factors and examples:

·         Anti-trust law

·         Discrimination law

·         Copyright, patents/ intellectual property rights

·         Consumer protection

·         Employment law

·         Health and safety law

·         Data protection law

7. Ethical factors.  These are factors that will serve as an entrepreneur’s guide on how to
be ethical in running the business.

The entrepreneur should take note of the following ethical factors:

·         Ethical advertising and sale practices

·         Accepted accounting, management and marketing standards

·         Attitude toward counterfeiting and breaking patents

·         Attitude toward development and  well-being employees

8. Demographic factors.  These are the characteristics of people in the target market.

 The entrepreneur should take note of the following demographic factors:

·         Population growth rate

·         Age distribution and life expectancy rates

·         Gender distribution

·         Social classes

·         Family size structure

·         Minorities

S2 -Screening the opportunity

By now you already feel overwhelmed with how vast S1 (Opportunity seeking) is, but
you don't have to worry that much. This concept has been inculcated to you to see the
universe of opportunities an entrepreneur can derive from the macroenvironmental and
microenvironmental sources. The key here is in the effective choosing or careful
diligence. Entrepreneurs should start with the big picture. This is the best way in
ensuring that the entrepreneur has scanned the best potential business to venture into.
Once the compelling opportunities are identified, S2 will be the next crucial step.

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Opportunity screening is the process of cautiously selecting the best opportunity. The
selection will depend on the entrepreneur's internal intent, i.e., the main objective that
the business will accomplish in the entrepreneur's life, and the external intent, which will
address the compelling needs of the target market. The entrepreneur should apply due
diligence and independent judgment in selecting the opportunities that have a potential
and eliminate those that are not within the scope of the entrepreneur's risk appetite.
Risk appetite refers to the entrepreneur's tolerance of business risks. 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. Time should only be
devoted to worthwhile opportunities. Therefore, entrepreneurs must always be sharp-
eyed for real opportunities. They must able to intelligently say no to low-compelling
opportunities and proceed with sensible ones. The crafting of a business plan starts only
when entrepreneurs already said no to many opportunities and said yes to one Forceful
opportunity, to which they will devote their time and resources. Detailed here are the
most important elements that are always present in a compelling opportunity. 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

The Opportunity Attractiveness Test

     The Opportunity Attractiveness Test (OAT) (Youngleson, 2009) aims to assist
entrepreneurs in ensuring that the opportunity that they will venture into is an attractive
and feasible prospect. This is not the "be all" in the road to entrepreneurial success but a
framework to measure how compelling an opportunity is. This test is designed to detail
each entrepreneurial aspect into small chunks to come up with a sound entrepreneurial
decision. The entrepreneur must answer this test realistically and avoid overestimation
or underestimation. All the risk must be accounted and assessed first.

These can come from different aspects of the business such as operations, market,
economy, and finance. These risks must be estimated and measured to determine the
impact to the potential business.

      The answers in this test will be the guiding principles of the entrepreneur in writing
the business plan. The components of the OAT will be used to channel the
entrepreneur's direction in data gathering. It is vital that this test must be carefully
reviewed over and over again before finally going to the last step of seizing the
opportunity. At the end of this test, the entrepreneur should be able to at least decipher
the relative Attractiveness of the business opportunity. Ultimately, the decision lies in
the risk appetite of the entrepreneur.

       Because each venture is unique, some components of this test might not be
applicable to all businesses. It is the job of the entrepreneur to discern which among
these components can put an equitable weight to components that are relevant to the
potential venture. The entrepreneur can also customize this test to better suit the
screening requirements of the new venture. In summary, with the four business
opportunity elements and this OAT, the entrepreneur can't go wrong in his or her new
venture. The key is effective diligence.

1.    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 should also devise a value creation proposition, i.e., the value that the
product or service will offer to the target customers or the satisfaction of the needs or
wants of the target customers. This proposition should be compelling enough to
influence the behavior of the target customers. Influencing the behavior means enticing
the target customers to an above average or a premium price on the product or service.
The entrepreneur should also understand the importance of the timing of the business.
He or she should ask: is it really necessary to establish the business now? Last, the
entrepreneur needs to devise a differentiator or a positioning strategy-----what
difference will the new business inculcate to the target customers are compared with the
rest? Is this compelling enough to influence the behavior of potential customers?

2.    Opportunity metrics. These are considered as the company's critical success factors.

These factors will approximately determine the Attractiveness of the new venture
depending on the total scores that it will generate and the risk appetite of the
entrepreneur. Table 2.2a--g consist of the basis metrics necessary in starting up a
business. The answers, however, require extensive research, so the entrepreneur must be
careful in answering this metrics table. Moreover, the entrepreneur can extend the
scoring system depending on the complexity of the industry and the venture itself. In
this example, the entrepreneur can put 5 as the highest score and 1 as the lowest score.
Again, the weight of each factor should be determined by the entrepreneur.

Table 2.2a. Opportunity metrics for market potential

 Industry or Market Highest Potential Lowest Potential Attractiveness Score
Potential Description Description
1.    Market Need ·         Easily identifiable ·         Unclear market  
market
·         Revenue just
·         Potential onetime or seasonal
recurring revenue from
the market ·         Market unstable

·         Market-driven

 
a.    Customers Accessible Already stuck with  
competitors
 
b.    Payback period Within one year or less Three years or more  
c.    Value to Significant Insignificant  

d.    Customers  
e.    Product ·         Durable or long ·         Perishable  
shelf-life
·         “Me too”
·         New or
innovative ·         Unreasonable
priced
·         Value for money
f.     Service Highly demanded Seasonal  
2.    Market structure Emerging Declining or stagnant  
3.    Market size ·         Established and ·         Unknown;  
clear undetermined

·         Big enough for ·         Small

the entrepreneur
4.    Growth rate Faster and acceptable Slow and  
growth rate unacceptable growth
rate
5.    Market capacity Fully capacitated Undercapacitated  
6.    Market share ·         Easier and faster ·         Difficult and  
market penetration slow penetration

·         Highly potential ·         Low potential

in maximization of in maximization of
market share percentage market share
(e.g. 20% or more) percentage (e.g. 5% or
less)
7.    Cost leadership Cost-efficient Too costly  
Total (Weight):      

Table 2.2b. Opportunity metrics for financial feasibility

Financial Feasibility Highest Potential Lowest Potential Attractiveness

Description Description Score
1.    Net income Robust Fragile, inconsistent  
2.    Return on High and faster Low returns (e.g. 20% or  
investment returns   (e.g. 20% or less in 5 years)
more in 1 year)
3.    Capitalization Reasonable Unreasonable   
capitalization required capitalization required
4.    Internal rate of High and consistent Low and inconsistent IRR  
Return(IRR)- annual IRR (e.g. 20% or more) (e.g. 20% or less)
return that makes the
initial investment turn
into future cash flows
5.    Free cash flow- Highly positive (e.g. ·         Low or not enough to  
represents the liquidity 30% of gross cover capital expenditures
of a business after sales/revenue or more)
allocation of capital ·         Low in liquidity
expenditures
a.    Sales growth High Low  
b.    Asset intensity Low High  
(assets/sales)
c.    Working capital Low High  
d.    Research and Low High  
development and other
capital expenditures
e.    Gross income High (e.g. 30% or Low (e.g. 30% or less)  
more)
6.    Capacity recovery Fast (e.g. 2 years or Too slow (e.g.5 years)  
period less)
Total (Weight):      
Table 2.2c. Opportunity metrics for exit strategies or harvest options

Exit Strategy or Highest Potential Lowest Potential Attractiveness

Harvest Options Description Description Score
1.    Value added High strategic value  Low strategic value  
potential
2.    Exit strategies Many envisioned Limited or no exit  
 options, e.g., merger, strategies
acquisition, or strategic
alliance
3.    Capital valuation ·         Reasonable ·         Unfavorable  
capital valuation capital valuation

·         Realizable capital ·         Credit crisis

Total (Weight):      

Table 2.2d. Opportunity metrics for competitive advantages

Competitive Highest Potential Lowest Potential Attractiveness

Advantage Description Description Score
1.    Fixed and variable Cost-efficient  Costly  
costs
2.    Control over prices, Strong Weak  
distribution, and costs
3.    Barriers to entry  Difficult to enter  No barrier(s) at all or  
easy to enter
a.    Legal and Exclusivity  None or unsecured  
proprietary protection
b.    Response and lead Competition is not yet ·         Tough competition  
time aggressive
·         Unable to gain
competitive advantage
c.    Networks  Accessible and close  Limited access and  
relationship requires intensive
relationship building
 Total (Weight):      

Table 2.2e. Opportunity metrics for management team

Management Team Highest Potential Lowest Potential Attractiveness

Description Description Score
1.        Entrepreneurial Fully dedicated, driven,   Undecided and just  
lineup and united testing the waters
2.    Industry and Highly skilled and Weak background and  
technical experience experienced in the experience in the industry
industry chosen chosen
3.    Integrity and  Highest degree of  Questionable and unsure  
concern to the new integrity and concern
venture
4.    Intellectual honesty Willing to understand  Unwilling to understand  
what they don’t know what they don’t know
Total (weight):      

Table 2.2f. Opportunity metrics for strategic differentiation

Strategic  Differentiation Highest Potential Lowest Potential Attractiveness Score

Description Description
1.    Degree of fit  High Low   
2.    Entrepreneurial Excellent and Mediocre and less  
differentiation innovative skilled entrepreneurial
entrepreneurial team
3.    Service management  Excellent customer  Mediocre and  
intimacy unimportant customer
servicing
4.    Timing  Perfect timing Bad timing –  
weaknesses and
- strengths and threats all over the
opportunities place
conspiring
5.    Fatal flaw Almost none or almost Few to many  
risk-free
6.    Technology “I first”  “Me too”  
7.    Flexibility Adaptability to changes Traditional and slow  
8.    Opportunity orientation Opportunity is treated Opportunity treated as  
as continuum a vacuum
9.    Pricing Price leadership Lower than  
competitors
10. Place of distribution Accessible in many Inaccessible or limited  
traditional and channels available to
alternative channels the customers
11. Margin of mistakes or Forgiving and believes Unforgiving and stiff  
errors in second chances
Total (Weight):      

Table 2.2g Opportunity metrics for assessment of personal resources

Assessment of Highest Potential Lowest Potential Attractiveness

Personal Resources Description Description Score
1.    Personal goals and Has clear objectives  Goals unclear and  
fit  and matches with the disconnected to the
entrepreneur’s capacity entrepreneur’s capacity
and resources and resources
2.    Success or failure Propensity t succeed Propensity to fail high  
high
3.    Opportunity costs Willing to sacrifice  Contented with status  
first for a better quo
opportunity
4.    Desirability Matches with the Ultimate desire is only  
lifestyle and preference big returns
and the entrepreneur
5.    Risk appetite  Calculated risks  Undefined and  
unknown risks
6.    Stress management  Can live comfortably Inability to manage  
with stress stress
 Total (Weight):      
Total Attractiveness Score

          At the end of this test, 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 factor to the venture’s overall standing. This weight must be
multiplied to the total score accumulated per test. The entrepreneur should also
establish a tiered scale and description on the total attractiveness score.

Sample Tiered Scale:

          4.00-5.00 – Very attractive

          3.00-3.99 – Attractive

2.00-2.99 – Tolerable but must take caution and due diligence of the risks

1.00-1.99 – Not attractive or too risky

Industry or Highest Potential Lowest Potential Attractiveness Score

 Market Description Development
Potential
1. Market ·         Easily identifiable ·         Unclear market 4.25*
need market
·         Revenue just one- Families are identified as
·         Potential recurring time or seasonal primary target market
revenue from the market even though recurring
·         Market unstable revenue is not guaranteed.
·         Market-driven
 
a. Customer Accessible Already stuck with 4
competitors
Has two competitors
b. Payback Within one year or less Three years or more 3
period
Estimated to be two years
c. Value to Significant Insignificant 5
customers
The objective of the new
venture is to solve the
problem of the families.
d. Product ·         Durable or long ·         Perishable Not applicable:
shelf-life
·         “Me too” Lena is offering services,
·         New or innovative not products.
·         Unreasonably priced
·         Value for money
e. Service Highly demanded Seasonal 5

Lena’s business is not

seasonal.
2. Market Emerging Declining stagnant 4
structure
There is an increasing
demand for beautification
and relaxation services in
the community.
3. Market size ·         Established and ·         Unknown; 4
clear undetermined
There are 200 families to
·         Big enough for ·         Small be catered. This is already
entrepreneur big enough for a budding
entrepreneur as a Lena.
4. Growth rate Faster and acceptable Slow and unacceptable 3
growth rate growth rate
   Growth of service such as
these tend to be stable
(i.e., has a moderate
growth rate).
5. Market Fully capacitated Under capacitated 3
capacity
Market capacity is at
equilibrium as well.
6. Market ·         Easier and faster ·         Difficult and slow 3
share market penetration market penetration
Some families may be
·         High potential in ·         Low potential in enticed by this, but some
maximization of market maximization of market are already loyal to  the
share percentage (e.g., share percentage (e.g., 5% beauty salon or barber
20% or more) or less) shop that they’ve been
patronizing ever since
7. Cost Cost-efficient Too costly 4
leadership
Putting all services under
one shop is economical
Total 3.61 (3.61 x 20% = 0.72)

(Weight =
20%)
*The score in the first row is acquired by getting the average of all the subfactors in the
first column (criteria).

          After getting the initial total scores and multiplying them with the weight or
percentage, compute the total attractiveness score. Use the sample tiered scale from the
discussion as your basis for the assessment.

Lesson 4: Select the best product or service that will meet

the market need
Product or Service Planning and Developing Process
          In the seeking process, one opportunity stood out form a number or sources. This
opportunity was tested according to its attractiveness and feasibility in the screening
process. The last process, called the seizing process, involves refining and developing
this opportunity. The refining process is called product or service planning and
developing process. It has four key stages.

  1. Idea stage. In this stage, the entrepreneur determines what are

the feasible products and/or services that will perfectly suit the
  opportunity. Usually, a market evaluation is conducted by the
entrepreneur to assess whether the new product or service ideas
will be accepted by the market using values and benefits to
consumers as metrics. On the other hand, the value of the new
product and/or services should also be assessed if these will
benefit the entrepreneur. Products and services that are
unappealing to the market should be eliminated at this stage.

 
  2. Concept stage. Once the product or service has already been
identified, it will go through the concept stage; the developed ide
  will undergo a consumer acceptance test. This test includes
getting the initial reactions of the primary target market and the
  distribution channel. Conversational interviews are conducted to
understand consumer preference on physical characteristics and
attributes of a product or the physical evidence and characteristics
of a service. Both favorable and unfavorable to compare the new
idea with the competition with regard to superiority or inferiority.
Once all of the necessary pieces of information are gathered, the
entrepreneur can already proceed with the next stage.
3. Product development stage. In this stage the entrepreneur
leverages on the information generated from the prospective
customers via the concept stage. Actual reactions from
prospective customers are determined. The entrepreneur will
conduct a consumer panel where the actual product samples or
actual sample will be given or rendered to the panel of potential
customers. The participants’ task is to critique the actual product
or service and record the good qualities and inferior attributes.
They are also given samples of competitors, products or services
for comparative purposes. Consumer preference will largely be
based on methods such as multiple brand comparisons, risk
analysis, level of repeat purchases, or intensity of preference
analysis (Hisrich, 2010).
4. Test marketing stage. This stage validates the work done from
the first three stages to measure success in the commercialization
of the product or service. Actual sales results will be the
foundation of the consumers’ acceptance level and will be the
 basis in commercializing the product or service.

Recognizing the potential market is really one of the most difficult tasks to do. It
involves tedious research and analysis to ensure success. This process is very critical,
especially for budding entrepreneurs whose capitalization comes from hand-earned
money. They will now just let their fruits of labor be put to vain. Once the 3S of
opportunity spotting and assessment have been diligently done, the entrepreneur
should now be ready to prepare a comprehensive business plan that covers marketing,
operations, and financial plans.

MODULE 4: RECOGNIZE THE IMPORTANCE OF MARKETING MIX

Lesson 1: Describe the Marketing Mix (7Ps) in relation to

the business opportunity vis-à-vis
The Marketing Mix: The 7Ps of Marketing

The marketing mix is a widely accepted strategic marketing tool that combines the
original 4Ps (product, place, price, promotion) with the additional 3Ps people, packaging
and process in formulating marketing tactics for a product or service. These 7Ps are
employed until the entrepreneur finds the right combination that will most effectively
serve the customer's needs and wants and at the same time achieve the profitability
objective.

The 7Ps are controllable by the entrepreneur and therefore must be well thought of to be
successful. Prior to the 7Ps, the 4Ps were used in marketing products or physical goods
only. However, these are not completely applicable to marketing services; thus, the other
3Ps, which are also applicable in marketing products, were introduced. Only very few
products are pure products and only few services are pure services. Therefore, the
marketing mix will be able to address marketing components of both goods and services
or even the hybrids.

Entrepreneurs must use the 7Ps model to do the following: conduct a situation analysis,
set objectives; conduct a strength, weakness, opportunity, and threat (SWOT) or
competitive analysis; and ultimately come up with marketing strategies and tactics. A
challenge to budding entrepreneur is to ask the following key questions at the onset:

Product- what product or service is the most appropriate for the opportunity, and why will
customers buy or avail them?

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?

Price-what is the most appropriate price, and what pricing strategies will be used for
the target customers?

Promotion-what is the most effective advertisement or combination of advertisements, and

which advertising tool should be used to drive awareness and increase sales?

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?

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?

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?

Three level concept of the product

Level 1: Core Benefits of the Product or Service- the core benefits of a product or service
are the major factors why a customer buys a product or avails of a service. For example, a
customer buys coffee because he or she wants to feel energetic and alert the whole day.

Level 2: Physical Characteristics of the Pr0duct or Service- once the core benefit has been
satisfied and options are available to the customers, the tendency is to look for the second
layer of selection, i.e., which has a better packaging for products or a better physical
evidence or customer experience for services. In the previous example, the customer can
choose a coffee with a more appealing packaging or a more aromatic smell.

Level 3: Augmented Benefits of a Product or Service- augmented benefits are only

additional benefits; a customer will still get the core benefits of a product or service even
without the augmented benefits. However, in case of common products and services
where there are a number of competitors, the differentiator comes from the physical
characteristics or physical evidence, the customer experience, or the augmented benefits.
Therefore, the entrepreneurs must provide customers with augmented benefits that
distinguish them from the competitors. In the previous example, the customer can choose
a coffee product that comes with a loyalty card, so that when he or she accumulates, say,
10 coffee drinks, he or she will be able to get a free coffee drink.

Place Strategy

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The place refers to a location or the 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 or 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 (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
side for products should cover production, ordering and receiving raw materials or
finished  goods from the suppliers, storage, re-order points, and transportation systems.
The logistics side for services covers the physical evidence or services cape, service
providers, and service delivery process, as well as policies and procedures of the business.
One of the major objectives of the entrepreneur for place is to provide customers with
pleasant experience in buying the product or availing or the service so that they will keep
on coming back whether on-site or online. The entrepreneur should place the product or
service depending on the needs of the customers and on where the profits will be
maximized. The entrepreneur should also have a reliable supplier or the distribution of
products or services. The place, whether on-site or Online, Should also be presentable,
appealing, and catchy.

The entrepreneur must devise a set of criteria in choosing the right location aligned
certain objectives, such as suitability to the target, 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 strategy

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Price-  is 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 7p's that generates revenue for the business.

 
Here are the most common pricing strategies

·             Bundling-This refers to two or more products or services in one reduced price (e.g, 3-
in-I coffee for P8.00, manicure and pedicure for Pl50).

·             Penetration pricing- This refers to setting low prices to increase market share, but the
entrepreneur will eventually increase the price once the desired market share is achieved (e.g, a
mobile app-based transportation service offering reduced booking fee of P15 as Its introductory
price).

·             Skimming- this is the opposite of penetration pricing where prices are initially high and
then they are lowered to offer the product or service to a wider market (e.g., a real estate
company offering top-tier projects is now offering low-cost housing of same quality to serve the
middle market segment).

·             Competitive pricing-  this refers to benchmarking prices with the competitors (e.g
milk tea prices are competitively priced).

·             Product line pricing- this refers to pricing different products or services within a
parallel product array using varying price points (e.g, LED TV is more expensive than the LCD
TV even if under the same brand).

·             Psychological pricing- this considers the psychology and positioning of price in the
market (e-g. price of haircut service is at P199 because consumers tend to think that odd prices
are considerably lower than what they are; in this example, they tend round off the price to PI00
instead of P200).

·             Premium pricing- this refers to setting a very high price to reflect elitism and the
superiority (e.g. prices of signature clothes, bags, perfumes).

·             Optional pricing-this refers to adding an extra product or service on top of the original
to generate more revenue (e.g-, meals on top of the air fare).

·             Cost-based pricing-  the basis of mark-up is the cost of sales. For example the
entrepreneur will compute the cost of coconut juice by adding the cost of the coconut juice (P10)
and the plastic container (P4). He or she can set the price at P20 to earn P6 per coconut juice.

·             Cost plus pricing-The mark-up is based on a certain percentage of cost (e.g., the
entrepreneur wants to set a 50% mark-up on the coconut juice cost which is P14 x 50% =P7 the
new price is P14 +P7=P21).
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 or 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 which 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).
  

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 includes 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 entrepreneurs can cho0se 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, signage, posters

·                  Out-of-home- billboards, buses, bus Stops, rains, train stations, taxis, street
advertisements

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Figure on billboard advertisement

2. Selling- this is the act of trading a product or service or 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 products
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
trigger the customer purchase. After such, he or she must monitor the customer
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/tree trials

·                  Premiums (e.g., free toys for fast food meals)

·                  Point-of-purchase promotions (CB, 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

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People-  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 identity the specific, necessary job roles of
employees and 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 as academic background, job experience, skills or expertise,
attitude and other documents.

Packaging

Rolando S. Batisan, Entrepreneurship, DIWA SHS series 2016) p. 72

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 or 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 t establishes the
brand 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 service-scape 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 package accommodation or a beauty salon having a rebonds
package with free hair coloring or hot oil treatment. As one of the additional Ps in the
marketing g mix, packaging plays a vital role in product or avail or 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.

Lesson 2: Develop a brand name

Fundamentals of Brand management

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A  brand  refers to the identity of a company, of a product, of a service, or of an

entrepreneur himself or herself. A brand is a 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 is 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
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 conversation take place in
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 at 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 clement 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.

The brand is the marketing clement 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.