Recognizing the

Potential Market
Subject: Entrepreneurship

Reporters: Georgie Mae S. Amper

Jannille Q. Badaran
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 anddirection 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

Scan the marketing environment by understanding

the macro, micro, and internal environments to
recognize opportunities and comprehend the future
business arena before developing a new product or
service.
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:
1. Macroenvironmental Sources
a.) 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.
b.) Industry. This is the source of current trend on what is
happening in the industry where the future
business will belong to.
c.) New discovery or knowledge. These are new trends
that can be the core business model of a new
venture.
d.) Futuristic opportunities. These are projected new
opportunities that can possibly affect the new
business while it is running.
2. Micromarket

a.) 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.
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.

c.) 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.
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.
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.
f.) 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

1. 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.
2. Brainstorming
• Similar to the FGD, brainstorming is an activity that allows
the participants to share creative ideas using the following
rules:

a.) no destructive criticism or judgment is allowed

b.) wilder ideas are accepted
c.) more ideas are preferred
d.) improvement of other’s ideas is allowed
• 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 problems 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.
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.
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.
3. Economic factors. These factors play a vital role in the
scanning of marketing environment because economic
factors directly affect any business venture.
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.
5. Political factors. These factors are mostly induced by
government policies and administrations, which can have
strong effect in the entrepreneur’s business.
6. Legal factors. Related with political factors, legal factors
are government laws and regulations that can restrict or
allow business activities.
7. Ethical factors. These are the factors that will serve as
an entrepreneur’s guide on how to be ethical in running the
business.
8. 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:

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.
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.
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.
2. 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 stage

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.