ENTREPRENEURSHIP 12

LESSON 1. Entrepreneurial Development and Entrepreneurial Process

5 Levels of Entrepreneurial Development

• The self-employed
- Do not like routinary work
- Want to do things on their own
- Too reliant on themselves

• The manager
- Feel the need to step-up & ask some to do the work
- Delegate & hire employees to do the work
- Focus more on the scale

• The leader
- Enjoy seeing their employees flourish
- Can recognize key leaders in their organization
- Focus on the BIG picture and strategic direction of their business

• The investor
- Look for more opportunities
- May purchase 1 or 2 businesses
- Franchising

• The true entrepreneur

- Aim for quality and excellence in their work
- Fully learned but continue to practice the 4-step process of thinking :
• Idealization (dream)
• Visualization (create plans)
• Verbalization (sharing of ideas)
• Materialization (vision becomes a reality)

TYPES OF ENTREPRENEURS ACCORDING TO THEIR FIELD OR EXPERTISE

• TECHNOPRENEUR – puts technology at the core of his or her business model

• SOCIAL ENTREPRENEUR – helps the community rather than making a profit
• INTRAPRENEUR – an entrepreneur in a large company who is tasked to think, establish, and run
a new big idea or project.
• EXTRAPRENEUR – hops from one company to another to act as innovation champion, providing
creative and efficient solutions.

The entrepreneurial process is a step-by-step procedure in establishing any kind of business

that an entrepreneur has to undergo.

1. Opportunity spotting and assessment

- beginning of the process and the most difficult
- take note of interesting trends
- find sources of opportunity information
2. Developing a business plan
- A business plan is a comprehensive paper that details the marketing, operational,
human resource, financial strategic direction, and tactics in business.
3. Determining the capital needed
- It is mandatory in the entrepreneurial process to calculate the resources needed to establish
the business and compare this process to calculate the resources needed to establish the business and
compare this against the entrepreneur’s current resources.
4. Running the business.
The business plan should already have been implemented.
Scanning the Marketing Environment
- starting point of any new venture that involves understanding and knowing the intricacies of
the macroenvironment, microenvironment, and internal environment.
 - find the opportunity first before coming up with a new product or service, not the other way
around.

3s of Opportunity Spotting and Assessment

- framework that most of the promising entrepreneurs use to finally come up with the ultimate
product or service suited for a specific opportunity.
1. Seeking the opportunity
2. Screening the opportunity
3. Seizing the opportunity
S1: SEEKING THE OPPORTUNITY
The first step and is the most difficult process of all due to the number of options that the
entrepreneur will have to choose from. It involves the development of ideas from various sources as
follows:
MACROENVIRONMENTAL
 STEEPLED
 Industry
 New discovery or knowledge
 Futuristic opportunities
MICROMARKET
 Consumer preferences, interests, and perception
 Competitors
 Unexpected opportunities from customers
 Talents, hobbies, skills and expertise
 Irritants in the marketplace such as deterrents, problems, complaints and delays.
 Location
STEEPLED Analysis
 Socio-cultural Factors
- represent a general view of a locality’s traditions, customs, beliefs, norms and perceptions.
 Technological Factors
- composed of innovations of an existing technology or an invention of a new one mostly on
applied science and engineering research areas.
 Economic Factors
- has a direct effect on any business venture
 Environmental or Ecological Factors
- will help the entrepreneur determine if the business he or she is entering into will comply with
the environmental standards or will just hazard to people, animals and nature
 Political Factors
- induced by the government policies and administrations
 Legal Factors
-Government laws and regulations that can restrict or allow business activities

 Ethical Factors
- factors that will serve as entrepreneur’s guides on how to be ethical in running the business.
 Demographic Factors
- these are the characteristics of the people in the target market.

METHODS OF GENERATING IDEAS

1. Focused Group Discussion (FGD)
- A moderator handles a very open, free-flowing, and in-depth discussion with a group of people
2. Brainstorming
- allow participants to share creative ideas
3. Brainwriting or Internet brainstorming
- Exactly the same as brainstorming except that the channel used is not face-to-face, but in
writing or online.
4. Problem inventory analysis
- Similar to FGD except that an inventory of product or service problems are already given.

S2: SCREENING THE OPPORTUNITY

Opportunity Screening is the process of cautiously selecting the best 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
 4. Matches with the entrepreneur’s skills, resources, and risk appetite.
S3: SEIZING THE OPPORTUNITY
Opportunity Seizing is the last step in opportunity spotting and assessment. This is the “pushing
through” with the chosen opportunity. The entrepreneur’s idea can be any type of innovations listed
here.
Innovation is the process of positively improving an existing product or service. It is a key driver
for economic growth. There are three types of innovations according to the degree of distinctiveness.
1. Breakthrough innovation
2. Technological innovation
3. Ordinary innovation
1. Breakthrough innovation – These inventions occur infrequently as these establish the platform
on which future innovations in an area are developed. These innovations must be protected by a
patent, a trade secret, or a copyright.
2. Technological innovation - These innovations occur more frequently than breakthrough
innovations. These innovations are technological advancements of an existing product or
service.
3. Ordinary innovation – These innovations occur ordinarily as the name implies. They are
commonly originating from market analysis and technology pull instead of a technology push.
 Technology push – is when research and development in new technology drives the
development of new products. It tends to start with a company developing an innovative
technology and applying it to a product.
 Technology pull – refers to the need/requirement for a new product or a solution to a problem,
which comes from the market place. A product or a range of products are developed, to solve
the original need.

The last process, called the seizing process, involves refining and developing this opportunity. The
refining process is called product or service planning and development process. It has four key stages.
1. Idea stage - Identify the feasible products and/or services that will perfectly suit the
opportunity.
2. Concept stage – The developed idea will undergo a consumer acceptance test. This test
includes getting the initial reactions of the primary target market and the distribution channel.
Both favorable and unfavorable results will be considered to devise an acceptable product or
service.
3. Product development stage – The entrepreneur will conduct a consumer panel where the
actual product or service samples will be given to potential customers for criticism purposes.
They are also given samples of competitors’ products or services for comparative purposes.
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.

LESSON 2: TARGET MARKET

• A specific group of consumers at which a company aims its products and services.
• It is a group of people considered likely to buy a product or service.

PRIMARY TARGET MARKET

• It is a specific group of consumers you want to attract to your product or service.
• This market accounts for the highest volume of sales and are most likely to buy now!
• This market shares common characteristics and behaviors.
SECONDARY TARGET MARKET
• The secondary target market includes future primary buyers, which are those buying at a higher
rate within a small market segment and are those who influence primary buyers.
• Their characteristics and buying behaviors usually differ from those of the primary target
market.

MARKET SEGMENTATION - Market segmentation is the process of dividing a market of potential

customers into groups, or segments, based on different characteristics.

DEMOGRAPHIC SEGMENTATTION
• It is the process of grouping customers according to relevant socioeconomic variables for the
business venture. It is also called socioeconomic segmentation.
PYSCHOGRAPHIC SEGMENTATION
 • It is the 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 5 senses of hearing,
touching, smelling, seeing and tasting.
2 Kinds of Motivation
1. Physiological motivations – involve the needs of the person (food, shelter & clothing)
2. Psychological motivations – involve customer’s preferences (what the customer likes or dislikes)

MOTIVATION
• Aspirations – what the customer wants to achieve (inner peace, financial stability, work-life
balance)
• Deprivations – involves the customer recognition of certain voids to fill (lack of financial security,
lack of love, lack of knowledge)
• Inclinations – involve preferring one product over another as a result of gaining of 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.
GEOGRAPHIC SEGMENTATION
• It is simply grouping customers according to their location. It encompasses the cultures, beliefs,
preferences, politics, and lifestyle of a certain geography.
BEHAVIORAL SEGMENTATION
• It 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.

FOUR MOST COMMON METHODS IN COLLECTING DATA

1. Interview
2. Focus Group Discussion
3. Observation
4. Survey

 Interview - 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.
2 TYPES OF INTERVIEW
• Unstructured Interview – informal type of interview and does not follow a specific set
of questions.
• Structured Interview – employs a specific set of questions and produces a quantitative
data. ( yes or no questions, forced ranking, multiple choice, or choose the best answer)
 Focus Group Discussion - It is a process of mining customer and non-customer experience and
insights about a specific product or service. It is led by a moderator who keeps the discussion
spontaneous and on the right track.
 Observation - One of the preferred and practical methods of generating ideas because the
researcher documents the behavioral patterns of people or of objects of events without
necessarily requiring them to participate in the research process. It is reliable because it allows
the researcher to see the real and actual behavior of customers rather than hearing what they
need to say.
HUMAN OBSERVATION
1. Customer purchase patterns – this technique uses the researcher to understand the
buying behavior of the customers. (how many times and how often do they buy or their
inclinations toward a product or service)
2. Mystery shopping – the researcher pretends he or she is a customer of his or her own
business or the competitor’s.
MACHINE OBSERVATION
1. Video cameras or closed-circuit television (CCTV).
2. Traffic counters
3. Web analytics
4. Barcode scanners
5. GPS Technology
 Survey - It is the process of getting answers from a sample of respondents derived from a
particular population. The respondents will be given a questionnaire asking abut their
awareness level, their profile, preferences, and behaviors. These questionnaires can be
distributed and answered verbally, by writing, or through the internet.
2 WAYS TO CONDUCT
• Traditional -telephone, face-to-face interaction, or snail mail
• Internet or Online- e-mails, web sites, social media sites
 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.
SAMPLING TECHNIQUES
1. Probability sampling – technique wherein samples are given equitable chances or nonzero chances of
being selected from a population. (Randomnization)
2. Nonprobability sampling – does not give the samples equal chances of being selected, because
samples are instead selected according to their accessibility or personal choice of the researcher.

SAMPLE SIZE
The researcher must be able to calculate first the appropriate sample size in conducting the
survey.

LESSON 3: VALUE PROPOSITION and CUSTOMER REQUIREMENTS

Value Proposition
• A value proposition describes why a customer should buy a product or service
• It targets a well-defined customer segment
• It convinces prospective customers that a particular product or service will add more value or
better solve a problem than competitive products or services
UNIQUE SELLING PROPOSITION
• It refers how you will sell the product or service to your customers.
• It addresses the customers wants and desires.

Customer requirements
are specific features and characteristics that the customers need from a product or service.

CUSTOMERS are said to be the lifeblood of the business.

 Customer Requirements vary from person to person.

 The Entrepreneur must group them together, calculate their size, and come up with products
and services that suit their customers.
 Customer is the voice of every business that every Entrepreneur should listen to.

LESSON 4: MARKETING PLAN

Marketing Plan - The written document that describes your advertising and marketing efforts for the
coming year; it includes a statement of the marketing situation, a discussion of target markets and
company positioning and a description of the marketing mix you intend to use to reach your marketing
goals .

Preparing a marketing plan is a research-based, very technical, and focused on coming up with a
methodical marketing plan.
Implementing a marketing plan is a strategy and tactics-based, needs manpower to execute, and is
results-oriented.

Strategies - A plan of action designed to achieve a major or overall aim.

Marketing Strategies
It is a business' overall game plan for reaching people and turning them into customers
of the product or service that the business provides.
It tells you what to say, how to say it and who to say it to in order to make more sales.
Market Size - Is simply the size the arena where entrepreneur’s business will play. It is the
approximation of the number of buyers and seller in a particular market.

Marketing Research
➢ It is a comprehensive process of understanding the customers’ intricacies and the industry they
revolve in.
➢ 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.
➢ It aims to scrutinize the target market, their specific requirements, and the market size where
the business operates.
LESSON 4: 4M’s OF OPERATION

MANPOWER
➢ It is a comprehensive process of understanding the customers’ intricacies and the industry they
revolve in.
➢ 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.
➢ It aims to scrutinize the target market, their specific requirements , and the market size where
the business operates.
MACHINES
 Machines can be described as the “best friend” of manpower in producing goods and offering
services.
 Machines are not limited to physical equipment but can also pertain to new technologies that
help business operations become standardized and seamless.
1. Equipment and other facilities
2. Telecommunications and Information Technology
MATERIALS
The entrepreneur has to pinpoint a number of dependable suppliers of quality raw materials and
supplies. Options when it comes to materials requisitioning should include the following:
1. Manufacturing own products or offer services
2. Outsourcing manufacturing or service activities to a third party.
3. Purchasing own product or service from present suppliers.
METHODS
 The processes to be followed in effectively manufacturing or delivering a product or service.
 It describes how an entrepreneur will run the business from all facets of the business such as
the manufacturing of goods, service delivery process, distribution of goods and services, logistics
for delivery of goods and inventory management.

 Manufacturing is the process of translating raw materials into finished goods that are
acceptable to the customer’s standards. It consists of three elements:
 Inputs – the materials or ingredients to be used in creating the product
 Process – the transformation phase where inputs are processed by manpower and
machines to come up with the final product.
 Output – the final product of the process stage, which is intended to be sold to target
customers.
BUSINESS MODEL
 GREEN LIGHTS
- these are the positive signals that can help entrepreneurs develop ideal business models and
eventually succeed.
 RED LIGHTS
- these are the negative signals that entrepreneurs should be wary of.
GREEN LIGHTS
 Target high value customers.
1. Someone who is easy to find.
2. Someone who is willing to pay the price.
3. Someone who is easy to persuade with the least
promotional effort.
4. Someone who can join the bandwagon of customers that can generate substantial amount of
revenues.
 Offer products or services with great value.
 Offer product or services with reasonable profits.
There are 2 ways of achieving reasonable profits:
1. Increasing markup
2. Decreasing operational costs.
RED LIGHTS
 Satisfying the customer becomes too costly and irrational.
Examples of Customer Satisfaction Costs that can impede the success of an entrepreneur:
a. Warranty
b. After sales costs
 Being a market leader is difficult to sustain
 Return on investment (ROI) takes too long and too small.

LESSON 5: 7P’s of MARKETING MIX

Marketing Mix
 It refers to the set of actions, or tactics, that a company uses to promote its brand or product in
the market.
 The combination of marketing components that will maximize customer satisfaction and ensure
PROFITS.

1. PRODUCT - Any physical good, service, or idea that is created by an entrepreneur or an innovator in
serving the needs of the customers and addressing their existing problems.

2. PLACE - It refers to a location or the medium of transaction. It also covers the product distribution and
the whole business logistics.
- To make the product conveniently available to the target market consistent with their
purchasing pattern.

3. PRICE - It is the peso value that the entrepreneur assigns to a certain product or service after
considering its costs, objectives, positioning and target market.
- It is the only P in the 7Ps that generates revenues for the business.
Price Strategies
1. BUNDLING – This refers to two or more products or services in one reduced price.
2. PENETRATION PRICING – This refers to setting low prices to increase market prices but
the entrepreneur will eventually increase the price once the desired market share is
achieved.
3. 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.
4. COMPETITIVE PRICING – This refers to the benchmarking prices with the competitors.
5. PRODUCT LINE PRICING – This refers to pricing different products or services within a
parallel product array using varying price points.
6. PSYCHOLOGICAL PRICING – This considers the psychology and positioning of price in the
market.
7. PREMIUM PRICING – This refers to setting a very high price to reflect elitism and
superiority
8. OPTIONAL PRICING – This refers to adding an extra product or service on top of the
original to generate more revenue
9. COST-BASED PRICING – The basis of markup is the cost of sales.
10. COST PLUS PRICING – The markup is based on a certain percentage of cost.
2 Classification of Cost
 VARIABLE COSTS OR CONTROLLABLE COSTS – these costs are directly proportional to the
number of products manufactured or to the number of services performed. (raw materials used)
 FIXED COSTS OR UNCONTROLLABLE COSTS – these costs are not directly proportional to the
manufacturing of a product or to the performance of the service. (cost of equipment, rental cost
and utilities)
4. PROMOTION - It involves presenting the products or services to the public and how these can address
the public’s needs, wants, problems, or desires. The primary target market will become the main
audience.

Promotional Tools
 ADVERTISING - This a type of communication that influences the behavior of a customer to
choose the product or service of the entrepreneur over the competitors.
 Informing, educating and familiarizing the public with the product and service
offerings
 Building a trustworthy image
 Increasing the sales
FORMS OF ADVERTISING
 Television - regular channels, cable TV
 Radio - AM and FM radio
 Internet – e-mails, websites, blogs, social media
 Mobile phones – test messages, mobile applications
 Print – newspapers, magazines, flyers, directories, signages, posters

 SELLING - this is the act of trading a product or service for a price or a fee. Once the product is
identified, he or she must do further research on their target market to know their profile and
behavior to come up with a convincing way to sell the product or service.
  SALES PROMOTIONS - These are the 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.
Examples:
Sales discounts or discount coupons / Free tastes
Raffles / Premiums / Reward cards
Contests and games
Promo items
Product or service bundles
Trade fairs or exhibits
 PUBLIC RELATIONS - These are the image-building initiatives of the entrepreneur to make the
name of the business reputable to stakeholders, such as target customers, government
agencies, business partners, media and the public.
Examples:
Press conferences
Launching events
Strong media relations through press kits
Social responsibility events (charitable or community events)
Lobbying (good relationships with government officials)
Web public relations (blogs, social media, e-mails, word-of mouth)

5. PEOPLE - It is one of the additional Ps in the marketing mix.

- It is not just about the quality of products, but how employees serve customers.

6. PACKAGING - It is how the product or service is presented to customers.

- It is the overall identification (look and feel) of the product or service.

7. POSITIONING/PROCESS - It is the last addition in the marketing mix as marketers began to realize the
importance of the internal and external operations of the business to serve customers better.
- It is defined as a step-by-step procedure or activity workflow that the entrepreneur or employees
follow to effectively and efficiently serve customers.

FUNDAMENTALS OF BRAND MANAGEMENT

• 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.
• Brand management is the supervision of the tangible and intangible elements of a brand.

Branding is the process of integrating the strategies formed from the marketing mix to give an identity
to the product or service.

 Establishing to target customers that the business is reliable and trustworthy

and that the product or service is the superior solution to their current problem.
 Differentiating with competitors
 Driving customer loyalty and retention

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 strategy
• Can describe concrete qualities
• Positive and inspiring

 PRODUCT DEVELOPMENT is the process of developing, testing and commercializing a product or

service with the ultimate objective of solving the problem of the primary target market.
4 SEQUENTIAL STEPS
1. Developing a product or service description
2. Creating a prototype
3. Testing the prototype
 4. Validating the market
A PROTOTYPE is a preliminary model or sample of a new product or service that is created to
test a product concept or process.

To GOD be All the Glory!

Prepared by:

Ms. Faith Arkem P. Borja