MODULE 2: RECOGNIZING

THE POTENTIAL MARKET

 LEARNING OUTCOME:

At the end of this module, the learners can:

• Identify the market problem to be solved or the market to be met.

• Propose solutions in terms of products and services that will meet the need using
techniques on seeking, screening, and seizing opportunities.
• Analyze the market need.
• Determine the possible products or services that will meet the need.
• Screen the proposed solutions based on viability, profitability, and customer
requirements.
• Select the best products or service that will meet the market need.
 THIS MODULE WILL:

• Discuss the proper and efficient ways of starting a business.

• Introduce the entrepreneurial process.
• Familiarize with the marketing environment.
• Teach you to apply the techniques of seeking, screening, and seizing opportunities.
• Let you deal with analyzing the need of the market, think of the potential set of
products or services that will meet the need, assess the feasibility of the solution,
and select the best product or service that will address the need
THE ENTREPRENEURIAL 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 four aspects.
 1. OPPORTUNITY SPOTTING AND
ASSESSMENT
• This is the beginning of the process and is considered the most difficult. Entrepreneurs
at this point take note of interesting trends in their environment. Consumers are
reliable sources of opportunity information because market needs originate from them.
• The entrepreneur’s 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.
• Entrepreneurs should already think in advance how they will position the product or
service in the market and showcase its unique selling proposition.
 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 the core guide and direction of
the entrepreneur in calculating the resources needed, assessing how to
obtain these resources effectively, 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.
• 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 the entrepreneur use the resources allocated for the
new venture.
• All aspects of the business plan should be critically observed from
operations, marketing and sales, human resources, finance, and strategy
implementation.
• The entrepreneur should have a control and monitoring system to serve
as a check and balance of the formulated plans.
 SCANNING THE MARKETING ENVIRONMENT
• The starting point of any new venture that involves understanding and
knowing the intricacies of the macroenvironment, microenvironment,
and internal environment.
• An entrepreneur can recognize various opportunities and at the same
time understand thoroughly the arena where the future business will
operate.
• 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 3S of opportunity spotting and assessment is the framework that
most of the promising entrepreneurs use to finally come up with the
ultimate product or service suited for a specific opportunity.
• An opportunity is an entrepreneur’s business idea that can potentially
become 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. And, earns
profits when the customers are satisfied and delighted.
 S1: SEEKING THE OPPORTUNITY

• Opportunity seeking is the first step and is the most difficult

process of all due to the number of options that the
entrepreneur will have to choose from.
• It involves the development of new ideas from various sources
as follows:
 MACROENVIRONMENTAL SOURCES 
• STEEPLED. This is a mnemonic for sociocultural, technological,
economic, environmental, political, legal, ethical, and demographic
factors. This represents the general environment where the entrepreneur can
identify business opportunities from and where the future business is about to
operate.
• Industry. This is the source of current trend on what is happening in the
industry where the future business will belong to.
• New discovery or knowledge. These are new trends that can be the core
business model of a new venture.
• Futuristic opportunities. These are projected new opportunities that can
possibly affect the new business while it is running.
MICROMARKET
• Consumer preferences, interests, and perception. These are the currents needs and wants of
potential customers that should be discovered right away by a budding entrepreneur. 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.
• 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.
• Unexpected opportunities from customers. Oftentimes, the most brilliant venture 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.
• 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.
• 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.
• Location. Often, entrepreneurs just have to look at their ecosystem and they will be able to
spot a business opportunity right away.
 METHODS OF GENERATING
IDEAS
• Focused group discussion (FGD)
• In this method, a moderator handles a 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.

• Brainstorming
• Similar to the FGD, brainstorming is an activity that allows the participants to share creative
ideas using the following rules:
• no destructive criticism or judgment is allowed
• wilder ideas are accepted
• more ideas are preferred
• improvement of other’s ideas is allowed
• Brainstorming is a fun discussion with lenient rules.
• 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.
• 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
problems(s) of a potential product or service instead of generating the
ideas from them.
MACROENVIRONMENTAL SOURCES:
EXAMPLES OF FINDINGS
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.
• Not all factors can have an effect on the new venture.
• The important thing is for the entrepreneur to fully scan these factors so he or she can decide
if there is compelling business opportunity or an impending threat.
• 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.
• 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.
• Economic factors. These factors play a vital role in the scanning of marketing environment
because economic factors directly affect any business venture.
• 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.
• Political factors. These factors are mostly induced by government policies and
administrations, which can have strong effect in the entrepreneur’s business.
• Legal factors. Related with political factors, legal factors are government laws and
regulations that can restrict or allow business activities.
• Ethical factors. These are the factors that will serve as an entrepreneur’s guide on how to be
ethical in running the business.
• Demographic factors. These are the characteristics of the people in the target market.
S2: SCREENING THE OPPORTUNITY 

• 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.
• 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.
• Entrepreneurs must always be sharp-eyed for real
opportunities.
• The entrepreneur should say no to an opportunity if it does not
contain any of these business opportunity elements:
• Has superior value to customers.
• Solves a compelling problem, issue, a need, or a want.
• Is a potential cash cow.
• Matches with the entrepreneur’s skills, resources, and risk
appetite.
THE OPPORTUNITY ATTRACTIVENESS TEST
• The OAT aims to assist entrepreneurs in ensuring that the opportunity
that they will venture into is an attractive and feasible prospect.
• 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 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.
• 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.

• Opportunity metrics. These are considered as the opportunity’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.
 S3: SEIZING THE OPPORTUNITY 
• Opportunity seizing is the last step in opportunity
spotting and assessment. This is the “pushing through”
with the chosen opportunity.

• Innovation is the process of positively improving an

existing product or service. It is a key driver for
economic growth. Innovation is inevitable as the world
constantly changes.
3 TYPES OF INNOVATIONS (ACCORDING TO THE DEGREE OF
DISTINCTIVENESS)

1. Breakthrough innovation. These innovations, which may also include inventions, occur
infrequently as these establish the platform on which future innovations in an area are
developed.
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.

• Entrepreneurs often encounter a problem in defining a “new” product or

service, or identifying its components or features.
• The “newness” is also independent on the eyes of the market and the
company.
PRODUCT OR SERVICE PLANNING AND
DEVELOPMENT PROCESS
• In the seeking process, one opportunity stood out from a number of 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 development process. It has five 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.
2. Concept stage. Once the acceptable product or service has already been
identified. In the concept stage, the developed idea will undergo a
consumer acceptance test.

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.

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.
THANK YOU!