The

Entrepreneurship
Learning Objectives
At the end of the lesson, the students can
1. differentiate needs and wants as basis of production;
2. explain the relationship of consumption, production and
marketing;
3. understands the market structure

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Above pictures are examples of the needs and wants of

every individual. Needs are the things that people must have in
order to survive. A want, in economics, is one step up in the
order from needs and is simply something that people desire to
have that satisfies themselves and give them happiness..
 While there is life, man’s needs never end. So, consumption is the very reason
why production is happening. Adam Smith (1723-90), the “Father of Economics,” wrote
“Consumption is the sole end and purpose of all production, and the interests of the
producer ought to be… for promoting that of the consumer. “
Entrepreneurship
The other side of production is demand
Man produces
in order
or consumption. In life, there will to consume.
always be demand or consumption,
just as there will always
be production or supply.
Simply stated, the law of
economics is that we consume
in order to produce,
and we produce in order to come.
Thus, in a way, man produces Man produces
in order to consume, and he in order
to consume.
consumes in order to produce.

Needs and wants are demands that are part of basic marketing principles.
According to Abraham Harold Maslow,
human beings are motivated because of
needs.
The products we buy and use and the brands
we choose answer a specific need. The type
of need a product addresses depends on the
consumer’s view.

Figure 3.
Abraham Harold Maslow’s Hierarchy of Needs
 Definition of Consumption and Production
Entrepreneurship
Demand or consumption is the economic activity of demanding t, needing, or
buying goods and services to satisfy one’s needs and wants. Because it is never
satisfied, we call consumption demand. The one who demands is called consumer.
The consumer is a person who demands, consumes or buys goods and services.
Production is an economic concept. Production is the creation of goods and
services. It is also defined as the creation of utility. Utility is defined as the ability or
power of goods to satisfy human wants. A person who owns the production is called
manufacturer, supplier or capitalist.

The entrepreneur assumes the risk and management of production. Without the
entrepreneurs, it cannot address the problem of people’s desires and satisfaction of
wanting something.

The Market
Ordinarily, the term “market” refers to a particular place where goods are
purchased and sold. In economics, the definition of a market does not mean a particular
place but the whole area where the buyers and sellers of a product are spread.
According to Gregory Mankiw, in his 6th Principle of Economics, “Markets are
usually a good way to organize economic activity. It plays a vital role on the part of a
producer and a consumer. The exchange of goods and services between the
consumers (demand) and producers (supply) takes place. The consumers buy the
products produced by the producers.
Prof. R. Chapman, “The term market refers not necessarily to a place but always
to a commodity and the buyers and sellers who are in direct competition with one
another.” In the words of A.A. Cournot, “Economists understand by the term ‘market’,
not any particular place in which things are bought and sold but the whole of any region
in which buyers and sellers are in such free intercourse with one another
that the price of the same goods tends to equality, easily and quickly.”
The market could be local, regional, nationwide or global. On-line
shops is trending now a days. Shopping through internet is a good example
of buying goods or commodities local, regional, nationwide or global.
 The Market Structure
A v a r i e t y o
essentially refer to the degree of competition in
Entrepreneurship
a market.

Market structure refers to the nature and degree of

competition in the market for goods and
services. The structures of market both for
goods market and service (factor) market are
determined by the nature of competition
prevailing in a particular market.

O n e t h i n g t o r
of them are just theoretical concepts. But they
help us understand the principles behind the
classification of market structures.

.On the basis of competition, a market can be classified in the following ways:
1. Perfectly Competitive Market
2. Imperfectly Competitive Market
a. Monopoly
b. Oligopoly
c. Monopolistic Competition
d. Monopsony

1. Perfect or Pure Competition Market

Perfect competition exists in a market structure with a large

number of firms that all produce the same product, there are many
buyers and sellers, the sellers offer identical products, the buyers
and sellers are well-informed about products, and sellers can enter
and exit the market freely.
 According to R.G. Lipsey, “Perfect competition is a market structure in which all
firms in an industry are price- takers and in which there is freedom of entry into, and exit
from, industry.”
Entrepreneurship
2. Imperfect Competition Market

Imperfect competition contrasts with perfect competition. This market structure

called imperfect competition because it has the power to control or influence the price in
the market. It does not meet the conditions of perfect competition.

Imperfect competition exists in every country in the world. It is something we

have had to learn to live with. Some industries and sellers today enjoy the luxury of
influencing the price in order to make more money.

Some forms of imperfect competition market comprises the following:

 Monopoly
Monopoly is a market situation in which there is
only one seller of a product with barriers to
entry of others. The product has no close
substitutes. The cross elasticity of demand with
every other product is very low. This means that no other firms
produce a similar product. According to D. Salvatore, “Monopoly is the
form of market organization in which there is a single firm selling a
commodity for which there are no close substitutes.”

 Oligopoly

An Oligopoly is a market that is

dominated by very few producers.
The players are known as
oligopolists. Sometimes, a market
ends up an oligopoly because the main players collude to reduce
competition, raise barriers of entry, and manipulate prices.
  Monopsony

This market has several producers and sellers, but just one buyer.
Entrepreneurship This is analogous to the case of monopoly in which there is only
one seller in a market.

Monopsony also refers to the job market – when one major

company or organization is by far the largest employer in a town.

That company has monopsony power in the labor market. One

good example for this is the
government that buy the services of
employees such as the teachers,
police, soldiers, etc. by means of
paying their salaries. Since the
government has a direct power, it can control the wages of the said
employees. .

 Monopolistic Competition

Monopolistic competition exists in

a market where there are many
producers that sell products which are
differentiated from one another – they
are not perfect substitutes.

In other words, there are many

competitors, but each one makes and sells a slightly different product.

In many markets, such as toilet paper, smartphones and

toothpastes, producers practice differentiation by changing their product’s
physical composition, using special packaging, or simply making the
claim that they have superior goods based on advertising and brand
images.
 Restaurants are all chasing the same type of customer – one who
wants to come in and eat. However, each restaurant offers something
different and claims to have an element of uniqueness.

Entrepreneurship
 Name: ___________________________________________
Grade: __________________ Section: ________________ Paste your
picture here
Date: __________________ Score: _________________

Let’s do it!

Activity 1. Crossroads

1. Differentiate needs and wants using a Venn Diagram.

2. Understanding the hierarchal needs of Abraham Harold Maslow, as an

entrepreneur, how will you be able to achieve the highest level?
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
 ___________________________________________
________________________________________

Activity 2. GRAPHIC ORGANIZER

1. Write what is being asked below (Graphic Organizer). How the different forms of
market structure an advantage or disadvantage to start-up your own business?
(Write your answer inside the template.)

Two main types of Market Structure

COMPETITION
Learning Objectives

At the end of the lesson, the students can

1. understands competition;
2. recognizes signs that business out to competitors;
3. explain the benefits of selling;
4. differentiate selling from marketing; and
5. demonstrates critical thinking in handling objections
and rejections in networking.

How can you beat

competition?
YOU
COMPETITORS Competition is a basic fact of
business. When you first
establish business, competition
usually don’t take notice. But when they see that you’re becoming successful, they
then devise ways to protect their profits. Therefore, you need a good
understanding or your competitor’s situation as you formulate your plan.

There are basically two types of competitors. A direct competitor is a

business that sells the same products or services to the same market. It devises
ways and means on how to eat up your market share so profits are diverted from
you. A weak competitor is more of product or service or something similar, but
it doesn’t affect your sales significantly.
COMPETITOR PROOF?

There is no such thing as a competitor-proof

business. For any business to grow, there
must be competition. It helps you see where
you stand and how you can improve. And
even when you devise new products and
services, anticipate competition.
 GATHER COMPETITIVE INFORMATION

Entrepreneurship There are a variety of ways to gather information about your competitors.
You can source newspaper and magazine ads, customers of your competitors,
company or industry gatherings, sales, brochures and pamphlets, Web sites, and
even avail of your competitor’s products or services. You need to gather enough
information that you could study later on.

Then, make a detailed comparison with your competitor in the following

aspects:

 number of years in the business

 percentage of market share
 quality of product or service
 marketing strategy
 degree of company stability range of products or services
 effectiveness of customer service

You’ll then see how strong you can be in dealing with your competitors-
and be surprised where you need to improve. Competition is inevitable in
business, but it can surely, be a catalyst towards improvement.

WHEN TO COMPETE?

Competition has always been tough, but if

you honestly feel that your competitor can’t
be beaten, its best to exit early before
competition pummels you down. Then,
explore or venture into a new field which you
know can help earn anew before competition
sets in.
 SIGNS THAT YOUR BUSINESS WILL
LOSE OUT TO COMPETITORS
Entrepreneurship

Believe it or not, you can actually help your competitors even when you’re
still planning your business. A business is not s picnic; you need to plan carefully,
establish a secure foundation, and write down specific goals to succeed. Make
sure you’re not a victim of one of these:

Unclear goals or objectives

Poor planning
Poor implementation
Poor financial management
Bad customer service
Incompetent employees or workers
Operating beyond available resources or capacity
Improper budget allocation
Extreme motivation for profit
Bad decision-making
Deterioration of product or service quality
Inability to keep up with developments or trends
Inability to deal with competition
Delegation problem

Make your business as “competitor resistant” as possible from the very

start. Now go and face your competitor squarely to succeed.
 What’s the difference between
selling and marketing?

Entrepreneurship
Many people use the word salea and marketing interchangeably.
Actually, each word a different definition, and knowing the
difference can help you understand how to sell effectivelly.

What is arketing?

Marketing is mainly formulating strategies that:

 Help identify potential customers
 Understsnd customer needs
 Determining priec and other charges
 Offering your products/services
 Making sales techniques

These actually constitute the the seven (7) Ps originally ( 4)Ps of

marketing: products, pricing, promotion and place of sale where
businesses were more likely to sell products, rather than services. Over
time, Booms and Pitner added three extended ‘service mix P’s':
Participants, Physical evidence and Processes, and later Participants was
renamed People. Today, it's recommended that the full 7Ps of the
marketing mix are considered when reviewing competitive strategies.

When planning your marketing strategy, you go into such things like
identifying the best customers, set the product or service price range,
conceptualize possible advertising methods , do market research, and
think of other products/services you could possibly offer .
 What is sales?

Entrepreneurship Sales on the other hand, is actually part of the marketing effort. You
actually involve all the steps you planned to convince your customers of your
product or service. Selling works best when you address your customers directly
with a product they really want or need, have an acceptable price, and use the
right sales proposal.

In effect, sales simply means matching your products or services with

someone who truly needs them. It’s different from manipulation, where
someone tries to offer someone else to buy something which later on was not
really wanted or needed, In fact, successful selling is based more on a lot of
smaller sales to clients than one spectacular big sale that doesn’t necessarily
leave buyers satisfied.

Both marketing and sales efforts require one basic fact: get close enough
to your customers so you could understand their purchasing habits.

Why
should you
sell?

“Make your income grow

through selling”

Becoming rich is not impossible if you find another source of

income apart from your job.

Selling is an integral part of becoming rich. Apart from relying on

their salaries to earn as much as they can, many people on the path of
financial success also augment their earnings through selling. People sell
while holding on to a job, while others make a career or business out of
selling. Whatever the choice, there are minefields of opportunities in both
fields.
 Why sell? Tom Hopkins, one of the most successful in the United
States and the author of numerous bestselling books about selling,
provides the answer. “Selling is the highest paid hard work,” he says, and
what I’ve achieve in my selling career was entirely up to e.” After failing
during the first half year in his sales career, Hopkins applied the best
techniques and earned over 1, 000,000 in just three years.

There’s practically nobody you know who hasn’t sold anything. You
yourself must have definitely sold something before, whether it would be
old personal effect or a brand new item that you didn’t necessarily need. In
other words, everybody is a seller; and because everybody can sell,
anybody can learn the best-selling techniques to help make their financial
dreams come true.

Selling is the foundation of virtually everything we do in order to

earn money. Even if you work in a non-income-generating unit such as
government office, the money pay you still comes from sources which deal
with selling. Thus, selling gives you the possibility to be as successful as
you dream to be. There are no limits to the income you can dream of you
and your family.

What
should I
. sell?

What kind of selling

should you engage in?

There are basically two things

to sell: products and services. Some
sell products, others sell services, while some combine both products and
services. Let’s define each so we can understand and maximize the
potential of each one:
 Products. This refers to all types of items ranging from
homemade cakes to big lots. You can sell either by piece or by bulk,
depending on the item or goods you have. Generally, if people buy from
you y piece, then it’s usually for immediate use or consumption, while if
they buy by volume, it could be for resale purposes.

Services. Selling a range

of skills or expertise. This
kind of selling also requires
personal work to be
rendered through tools or
equipment. Services offered can include everything from offering
architectural plans for a house to fixing a broken computer. Fees are
based for the amount of time spent, expenses incurred, and quality or
level of work given.

WHAT IS YOUR BEST-SELLING

THE BENEFITS OF SELLING TOOL?

Selling helps you do what you
basically want to do and make money
out of it. If you love computers, you
can sell computers or offer repair
services. If you have a passion for
flowering pants, you can set up your
own flower shops. It’s one of those
great professions where you can
actually be yourself!
Nothing more than your mouth. If
you know the right things to say,
if you concentrate on saying the
right things at the right time and
with the right manner, you won’t
regret saying things you
shouldn’t. Always think of our
mouth as a powerful tool in
selling.

-SELLING AND EMOTIONS

Selling gives you happiness
and contentment-in short, it’s fun.
Selling what you enjoy doing or having
makes your income much more
valuable. And since you love making
sales out of your passions, you can find
more ways to achieve greater sale
Every product or service sold is
actually a response to a particular
buying emotion. A successful
seller needs to tap into these
powerful emotions, namely:
ambition, health, passion, peer
pressure, pride of ownership,
security, self-improvement, style,
color, creativity, and yes, vanity.
 Selling offers high potential returns in exchange for a modest
capital investment. True, you will have to sacrifice and make do with what
you earn at the start, but as your earnings accumulate and you customers
increase, you realize how far your investment has taken you.

Lastly, selling helps you feel satisfied with other people. Don’t you
fell so good and complete when someone says that he or she likes what
you just sold to him or her?

CONSIDER SELLING SERVICES

It’s actually good to sell your services first before products because
it costs less and requires minimal or even no input of money before
you sell.

Starting small, by offering a possible service you’re god at, can help
reduce your start-up expenses. Another advantage of selling services is
that it requires less preparation, maintenance and follow-up than a
product. For instance, you don’t need to worry about whether the foodstuff
you have might spoil while unsold. You also don’t have to worry about
storage space.

A bit elementary, you might think,

but this actually helps clarify what you
think you could sell best. However, if you
still think products are better, then by all
means go for it. If you think you are good
at making people look more attractive,
then you could sell beauty products. If
you think, on the other hand, that you can
offer the best kind of massage of work a
People are your most important
asset. Whether you like it or not,
in today’s world you have to deal
with other people. In order to
make the most of our endeavors
successful, we need other people.
_Renee Harmon-
Author of The Complete Book of
Success: Your Guide to Becoming
a Winner

weary person, then you could offer

massage services.
 How can you sell successfully?

A sale always goes through

specific stages before you make anticipated deal. When you plan to sell
something to somebody, make sure your strategy is meant to move a
prospective customer or prospect from one stage to another, instead of
rushing them to clinch a sale. The steps below are meant to guide you.
Perform these steps out of sequence and you will have poor results. So,
study each step carefully as you make your marking strategy:

1. Know your prospect. Think of individuals or firms who might be

interested in the products you have or the services you offer. When
selling a product or service for the first times, it’s wise to sell initially
among people you know such as relatives, friends, acquaintances and
workmates. You have more convincing power and they are more willing
to give you time.

2. Prepare your product or service. Make

sure that you have the kind of product or service
that your prospect really needs. You need to know exactly what they
really like to buy, why they want to buy it, how many they want to buy,
what their purchasing power is, etc. The more you know about their
plans and needs, the better you can prepare a specific product or
service fit for them.

3. Contact your prospect. Initiating communication between you and

your prospect can take a variety of forms: person-to-person, through the
phone. by mail, etc. Experience has shown that the best way to make a
good and lasting impression is to do it personally. If this isn’t possible,
its best to initiate contact by phone-there’s something about the human
voice over something written that makes people more interested.
4. Offer your product or services. This is the most crucial part of
your sales plan: the proposal. You actually explain to your prospect why
your product or service is what he or she needs, and, if necessary,
explain the reason behind the cost or price. Proposals can range from
offering a homemade goodie to your friend to presenting a variety of
services before a company committee. Whatever your situation, make
sure you’re well prepared!

5. Seal the transaction. Once they’ve accepted your sales proposal

and avail of products or services, thank and compliment them for their
decision and reassure hem of the worth of their purchase. This is
virtually the best way to seal any transaction. Make sure that the
customer is happy with his/her choice and doesn’t have any doubts or
second thoughts.

6. Commit them to avail of your product or service. Do you

know that you most valuable assets are your repeat customers? One
they’re convinced of the quality of your products or services, this now
becomes your opportunity to commit them to patronize you. You can do
this by letting them to know that you place their needs and wants first
and would like to give them the best deals. Show them that you have
their best interests at heart and that you aren’t necessarily after the
sale.

SELL SOMETHING YOU

BELIEVEE IN
You must sell something you
actually use or believe in. It’s no
use at all to sell soap you don’t
use or food you don’t eat.
People can easily detect
between real and artificial sales
talk; the former is based on
one’s conviction of the product,
which is based on positive
experience.
ANTICIPATING QUESTIONS
Questions are one of the most
important elements in successful
selling. The more a buyer has
questions, the more he/she will
likely buy. That’s because a real
buyer wants to be assured of the
quality of the product he or she
will pay with hard-earned money.
 CONSIDER JOINING
MULTILEVEL OR
NETWORK
MARKETING

Practically everybody has heard of-and so many have joined

network marketing enterprises, better known as multi-level marketing (MLM)
to direct selling groups, It’s always been marketed as the fastest and best
way to get rich; by selling products manufactured or distributed by MLM
firms along with recruiting other people to join your sales network, you
earn points or quotas which in turn translate to cash incentives.
After paying initial fees, network marketing companies grant you
membership and/or license to sell. You then sell mostly by word of mouth;
there are no marketing expenses such as advertising or promotions
except by the company itself. There’s also the advantage of being able to
sell while holding on to another work.
But the big question is this: does network marketing really
sell? The answer actually depends on how much and how far you
commit yourself to it. Based on testimonies and experiences of other
people who have been successful in selling MLM/direct marketing
products, it seemingly works. But based on the stories of other people who
are no longer active, it too has its flaws and weaknesses. In reality, if you
want to venture into network marketing, the way you sell can ultimately tell
whether you will be successful or not.
 TIPS IN JOINING NETWORK COMPANIES

 Study the Products. What is the quality of the products being

offered? Remember this: you cannot sell effectively unless you
yourself are convinced of he quality and effective ness of the product
and that you also use it.

 Study the Company. How long

has the company been operating?
How many people have joined and
how many have quit? Compare their
compensation plans with other
network marketing companies.

 Interview people involved.

Interview those who have been
successful in selling and have
reached the anticipated compensations, but interview also those who
quit the business and find out why they didn’t persevere. You need to
have a balanced evaluation of the pros and cons of selling network
marketing products.

 Asses the compensation plan. No matter how attractive any

compensation plan might look, if you don’t feel comfortable working
through it, you won’t’ be successful. For any to be successful in selling,
he or she has to enjoy doing it. Thus, if you enjoy recruiting new
members, explaining products
(even if
KNOW-SHOW-DO-REVIEW your
Many successful sellers use a technique called customer
know-show-do-review :
looks
KNOW – Explain the product thoroughly.
SHOW – demonstrate how it is used.
DO – Invite your buyer to try it.
REVIEW – Ask your prospective buyer how
he/she liked using it.
 disinterested), and working hard to meet monthly quotas, then network
marketing could be for you.

 What other benefits can it give you? Are they providing you with
continuous training via seminars and demonstrations? Do they give
incentives and gifts like other products, home appliances, cars and
travel?

CHARACTERISTICS OF A GOOD
NETWORK COMPANY

If the network marketing company has one or more

characteristics found here, then it’s worth joining:
 It pays you good commissions for selling products
and recruiting members.
 It doesn’t force you to buy entire product kits or sales
materials.
 It allows buyers to return products for justifiable
reasons,. Your membership is still in good standing
even if you don’t buy new products.
 It has wide variety of quality products available.
 It creates or manufactures its own products.
 It offers money-back guarantee or replacement on
defective products.
 It has a reasonably-priced annual renewal fee for
members.
 It allows you to operate within a given sales territory
not just within your country but also abroad.

If you feel that direct selling is for you, then do so. If you feel,
however, that you would do better earning money through plain old
selling without
constantly thinking
about things such as
up lines, sales targets, networking and other feature of network
marketing, then do it that way. It all boils down to what you really enjoy
doing.

How do you handle objections

and rejections?

Let’s face it: rejections are a normal-even necessary part of any

sales experience. Whenever we hear “no”, we automatically think that
our product service is being rejected. True, but sometimes rejection is
actually a good way of allowing one to re-evaluate his/her way of selling
something, and at the same time it can also be a great way to motivate
oneself to sell. more aggressively.
Change your attitude towards rejection.
And you’ll realize that selling isn’t as
hard as it seems to be.

Three are five excellent ways to handle objections and rejections:

1. Rejection isn’t a failure but a learning experience. You

actually receive a lesson in salesmanship that helps you understand
better how to sell next time. If the customer doesn’t want your product
because they’re already contended with the product they have, then
that’s the good sign to look into he qualities of the product they prefer
and compare it with yours.

2. Rejection is a signal to modify sales strategies. Have you

ever had somebody say words like “I like this one,” “It’s so nice.”
“This is what I need,” and yet not even buy your product? Not
everybody you encounter will warm up to one kind of sales strategy.
What may appeal to one will not necessarily appeal to another? So,
 it’s wise to make a variety of sales techniques that can suit a wide
variety of people.

3. Rejection is an opportunity to enhance relationships with

buyers. Some people buy instantly, but many people do not buy right
away. Remember the expression “hard-earned money”. During these

challenging times, not a few prospects instantly let go of their money.

So, if you prospect doesn’t buy at first, that doesn’t necessarily mean
they’re not going to buy at all. You may need to develop friendly, close
relationship with them that may take time. But once that relationship is
cemented, be assured that a sale is on its way!

4. Rejection is an opportunity to practice sales techniques.

Practice makes perfect. Every sales opportunity, whether it results in
a sale or not, is a chance to help perfect your sales talk. You may
have practices before in front of a mirror, but being with your actual
prospect is a lot better because you can never fully anticipate the type
of objections he/she might raise.

5. Rejection helps you get closer to an actual sale.

There is natural law which states that for every specific number of
rejections, there’s always going to be a sale. Professional salesman
swear by it, in fact. For instance, one successful multilevel marketer
says that he is able to sell his products by planning his “rejection
ratio,” the number of persons he anticipates will reject him in
exchange for one successful sale.

GETTING CUSTOMERS THROUGH REFERRALS

 Do you know that the best way to make a sale is through referrals?
That’s right, people referred by those who buy from you are more likely to
buy than those who haven’t. It’s been said that a great salespeople are
able to close between 40-60% of heir qualified referrals. Have you ever
asked your buyer something like this after you close your sales: “Do
you

know who might

also be interested
in my products or
services?”
Regardless of their
answer, one thing’s for
sure: birds of the same
feather flock together,
and if they’re sold on your product or service, so will their friends and
associates.

Another good reason why referrals are excellent sources of future

sales is because the person who referred them-your previous buyer-
most possibly already shared some information about your product or
service, which most likely would be positive information. In short, your
buyers actually become part of your sales strategy. No wonder many
sales people are already adept at making referral networks.

STEPS TO EFFECTIVE REFERRAL-MAKING

1. Always ask your buyer for

somebody who might be
interested. This the most basic and
effective way of gaining potential new buyers.
With proper timing and use of words, ask
your buyers in such a way that they would be
happy to refer other prospects to you.
2. Give several business cards per buyer. If you have
business cards, make sure to give at least two or three o your buyers.
They will tend to pass it on to other people they know. Better still,
have a special business card that states what you specialize in.

3. Ask from people who didn’t from you. Even if they reject
what you have to offer, that doesn’t mean that they won’t refer you to
somebody else. In many cases some people still say, “Why don’t you
try Mr.________? I know he’s interested in those kinds of things.

4. Contact their referrals promptly. Do this especially if you

have something to offer that has lots of competitions. It’s ideal to
contact your referrals up to one week after your buyer refers him or
her to you. Who knows, somebody might have offered something else
already?

5. Give incentives to buyers who refer successfully. If

somebody buys from you more than once, why not offer special
rebates or discounts? The more positive your relationship with your
buyer, the more he/she will refers new prospects to you.

Get ready to expand your

income by selling successfully. Know what to sell, and make sure it sells
well. There’s an entire market waiting for you out there!

SELL TO SOMEONE YOU KNOW

It’s best to sell to people who know

you. they can be more honest with
their questions and are more likely
to buy. Since they know you more
than others, they can see the
relationship between you and the
product or service you’re offering.
 Name: ___________________________________________ Paste your
Grade: __________________ Section: ________________ picture here
Date: __________________ Score: _________________

Let’s do it!

1. Define in your own words the following important concepts:

a. Selling -

b. Marketing -

c. Sales -

d. Competition -

e. Market -

2. Expound
How selling make your income grow and be successful?

Accomplish

Study the sample network marketing. Write a short

essay of your learnings and how the member of the
network marketing benefited from the company?
 ANALYSIS
Consumer Buying Behavior

Learning Objectives
At the end of the lesson, the students can:
1. Describe the concept of consumer buying behavior;
2. Identify the environmental factors that influence consumer
buying behavior; and
3. Enumerate the steps in the buying decision process.

The term behavior refers the reaction of the consumers to

changes happening in the environment that influence their buying decision.
The is simply the reaction of he consumers to various events or forces that
are happening in the business community which contribute to the
decision process.

Determining the buying behavior of the consumers is not easy. It

may take several wild guesses to predict their reactions and responses to
the stimuli.

Some relevant questions on consumer buying behavior are as

follows:
 1. What are the taste and preferences of the consumers?
2. What makes the consumers buy or not buy the product?
3. What factors influence the consumer buying behavior?
4. How does the consumer decide in buying the product?

Various studies have determined some degree of relationship

between the environment al factors and the buying behavior of the
consumers. The most common of these are the environmental factors,
buying decision process, and marketing mix. In addition, the buying
decision process may also contribute in determining the buying behavior
of the consumers.

Environmental Factors

The environmental factors include the following:

1. Cultural factor
2. Social Factor
3. Personal Factor
4. Psychological Factor

Cultural Factor

There are different ethnic or racial groups in the Philippines. Each

ethnic or racial group has a different and distinct culture. The perceptions,
attitudes, value system, and even religion of these groups influence their
buying behavior. These comprise the cultural factor.

For example, the subculture of the Ilocano consumers is definitely

different from that of Visayan consumers. The entrepreneur needs to
determine the dominant culture of the Ilocanos and Visayans for that
matter. By having a concrete understanding of it., the entrepreneur can
predict the buying behavior of the consumers in these groups. He/She
can also make an assessment as to how the needs and wants of these
target consumers can be satisfied.

Each ethnic or racial group in the Philippines has different

priorities. The entrepreneur must find all the possible means t design a
product that will provide a value proposition to the majority of a particular
segment to be served. The product must be tailored to the needs of the
consumers with a distinct culture in the targeted market.

Social Factor

The term social factor refers to the relationship maintained or

established by the consumers with other members of society. This is
characterized by the social class where the consumers belong and their
social roles and affiliations with some social groups.

The social class is an informal grouping of consumers based

either on the personal perception of the consumers or that of others.
Usually the social class is composed of elite and wealthy consumers, the
middle social is made up of professionals and blue-collar-and-white collar
workers, and the lower social class consist of the working poor and
marginalized people.

Each category of social class has a different pattern of buying

behavior. The wealthy and elite consumers buy expensive goods, live in
luxurious homes, ride in high-end cars,
and send their children to exclusive
schools. The lower class, on the other
hand, is only capable of purchasing the
cheapest goods in the market.

The social roles and affiliations with

social groups also affect the buying
behavior of the consumers. The buying
behavior tends to coincide with the social roles of the consumers in
society and the social groups where they belong. The buying behavior
works in accordance with the old maxim that consumers of the same
social roles flock together. Consumers who belong to a certain social
class tend to have the same or similar buying behavior.

Personal Factor

The personal factor in this lesson refers to the personal

characteristics of the buyer in terms of age, occupation, income, and
lifestyle. The buying behavior of the consumers, in addition to the
influence of the social group where they belong, is also largely influenced
by the personal factor.

As a person grows,, he/she experiences changes in the different

aspects of his/her life. These changes such as age, perception,
preference, interest or hobby are sometimes due to aging. For example,
the game that a preschooler play s may not be the same game that a
high schooler plays. Similarly the type and style of clothes that are highly
favored by adolescents may change when they reached middle age. The
entrepreneur, therefore, has to be conscious of the changes happening in
the buying behavior of consumers as they experience changes in various
life stages.

The type of occupation of consumers also influences their buying

behavior. The corporate bigwigs of multinational corporations have
different tastes and preferences in clothes compared to those of blue-
collar workers. The income and lifestyle of the consumers likewise affect
their buying behavior. Consumers with high paying jobs can afford an
extravagant lifestyle unlike their wage-earnings counterparts.

Personal Factor

The term psychological factor in this context refers to the

perceptions, beliefs and attitudes of the consumers. These are highly
attributed to their specific experiences with particular products. Hence
consumers may have different perceptions, beliefs and attitudes toward
the same stimulus. In this case the entrepreneur must evaluate the
dominant or prevalent perception, belief and attitude of the target market.
HE/She must conduct substantial research since the psychological factor
cannot be measured quantitatively.

Buying Decision Process

The entrepreneur must properly evaluate the buying decision
process of the consumers. Some consumers may undergo the complete
buying decision process, while others may immediately buy the product

without passing through the buying decision process. This usually

happens when the consumer has an impulsive buying behavior.

The buying decision process of consumers involves the following

steps:

 Recognition of their needs and wants

 Search for relevant information about the product
 Evaluation of alternatives
 Purchase decision
 Post-purchase analysis

Recognition of the Consumers’ Needs and Wants

The first step in the buying decision process is the recognition of

the needs and wants of the consumers. Everybody buys of their needs,
but not all buy because of their wants.

When a person feels that there is a need to buy, then he/she

processes the thought of such necessity. He/She recognizes the dictate
of the inner voice that there is a need to buy. The recognition of the need
basically comes from within the person. For example, when a person
feels thirsty, then he/she buys water or soda to drink. When he/she feels
hungry, he/she buys food to eat.
 However, for others, the first step in the buying decision process is
the recognition of their wants. When the basic needs have already been
satisfied, the consumers tend to move to the higher level of an external
factor that stimulates such desire. For example, a person becomes
interested with the features of a brand new car. He/She develops the
desire to drive it. He/She then recognizes the want to own the car. If the
person is an impulsive buyer, then, he/she will immediately satisfy his/her
want and buy the car.

The entrepreneur must clearly determine whether the buying

decision of the consumer is stimulated by their needs or wants.

Search for Relevant Information about the Product

After the recognition of the need to buy, consumers usually try to

gather enough information about the product. The search for relevant
information usually happens when the product is not an ordinary
household commodity. For example, buying a car requires more relevant
information before making a decision compared to buying an electric flat
iron. On the pother hand, when the product is a commonly used
household commodity. like a detergent, the consumer does not have to
gather much information about it.

The consumer usually gathers the desired information from

commercial publications; advertising catalogs; television and radio
commercial, members of the family, friends , and colleagues; and the
Internet. As more information is provided, the level of awareness of the
consumer about various competing products is enhanced. Therefore, the
entrepreneur must be watchful enough to design the right advertising or
promotional plan.

Evaluation of alternatives
 Once the desired information are already available to the
consumers, they can make the necessary evaluation of various
alternatives and make an intelligent comparison of the different brands
existing in the market.

Consumers consider the following significant areas of the product:

 Price
 Quality and durability
 Brand, color, and design
 Terms and conditions

 Required payment
 Amount of credit

The entrepreneur intervenes to influence the buying decision of the

consumers. He/She acts like a marketer to aid in or appropriately
influence the decision process of the consumer. The marketer usually
intervenes when the grocery shoppers are in the process of evaluating
what brand to purchase. He/She approaches the grocery shoppers and
tries to influence their buying decision. He/She introduces the brand and
highlights the value proposition of the product.

Purchase Decision

The purchase decision is the stage when the consauler

actually buys hthe product. His/Her decision to buy a paarticuar brand of
product may come solelllly from his/her own decision or may be attributed
to the influence of outside factors like family members, social group,
friends, or some future economic events.

For example, while a shopper in a grocery is in the process of

deciding which powder detergent to purchase, a close friend comes by
and shoes another (that he/she personally uses). The shopper may then
be influenced by his/her friend’s recommendation.
 At this stage the entrepreneur must clearly define how the buyers
formulate their purchase decision in order to prepare the proper
marketing approaches to influence their final decision.

Post-purchase Analysis

Post-purchase analysis is the last stage in the buying

decision process when the buyer makes a simple analysis at the back of
his/her mind whether his/her expectation has been met or not.

Before the consumer buys the product he/she has already set the
expectation on the p[probable benefits or value that he/she may derive
from the product. The bundle of expectation s usually arise at the time of
gathering the desired information about the product.

After the product is used by the consumer either to satisfy his/her

needs or wants, the consumer usually compares the actual benefits or
value received against the expectations,. In most instances the consumer
recalls the different factors considered during the buying decision process
to compare the actual value proposition and the expectations.

The extremes of the post-purchase analysis are the levels of being

highly satisfied or being poorly satisfied. The consumer is highly satisfied
when the features of the product surpass his/her expectations. He/She is
poorly satisfied when the value he/she receives from the product
purchased has not met even half of his/her expectations.

The entrepreneur at this stage must gather enough information

about the level of satisfaction of the consumer as manifested by the fast
or slow sale of the product. He/She then must address the response of
the consumers to the product.
 Name: ___________________________________________
Grade: __________________ Section: ________________
Date: __________________ Score: _________________

Let’s do it!

I. Write True if the statement is correct. Otherwise write False and state
reason briefly. Write also where and what paragraph that prove your
answer

_______1. The entrepreneur does not need to know the consumer buying
behavior since the market has already been segmented.

_______2. The culture of the market segment may influence the buying
behavior of the consumers.

________3. The goods purchased by the consumer, in terms of price and

quality, do not necessarily reflect the social class where
the consumer belongs.
________4. The age or occupation of the consumer influences his/her
buying
behavior.

________5. The beliefs and attitudes of the consumer may influence his/her
buying behavior.

________6. Generally the buying decision process starts when the

consumer gathers information about the product.

_______7. It is important for the entrepreneur to determine whether the

desire of the consumer to buy has been influenced by internal
or external factors.

_______8. The consumer usually starts to gather information after

buying the product.

_______9. During the evaluation of alternatives in the buying decision

process, the entrepreneur must find ways to influence
the decision of the consumer.

_______10. The entrepreneur has no significant role when the consumer

is already buying the product.

II. Choose one (1) of the following questions and expound.

1. Discuss the concept of consumer buying behavior.

2. Identify some environmental factors that will assist in determining the
buying behavior of the consumers.
3. Explain the steps in the buying decision process.
4. Give the significance of post-purchase analysis to the entrepreneur.

Entrepreneurial Research on Consumer Buying Behavior

Learning Objectives
At the end of the lesson, the students can:
1. Identify the different steps in entrepreneurial research;
2. Describe the types of entrepreneurial research;
3. Identify the research instruments used to gather data; and
environmental factors that influence consumer buying behavior; and
4. Discuss the different types of consumer buying behavior

It is important to know and understand the

buying behavior of the consumers in the
target market segment. The entrepreneur
must have the idea of what goes on in
the mind of the consumers, so that
he/she can plan what marketing
strategy can be best influence their
buying decision and thereby ensure that
his/her business will remain competitive
in the market. Ignoring the buying behavior of the consumers would mean
losing a share in the market in venture and its competitive position in the
market. The best possible means of influencing the buying behavior of
consumers is for the entrepreneur to know by heart thee consumers of
the market segment. He/She must abide by the basic rule of “knowing thy
customers” by conducting an entrepreneurial research work.

Entrepreneurial Research
Most research work is conducted because of the occurrence of a
certain phenomenon in the context of this lesson, research work is
conducted in relation to the buying behavior of the consumers in the
target segment.

Research is defined as a scientific investigation. It involves the

collection, presentation, analysis, and interpretation of gathered data. As
a scientific investigation, research is conducted to find out the buying
behavior of the consumers by following a procedural process.

Research may be concluded to:

1. to determine the taste and

preferences of the consumers;
2. know the competitors, the
suppliers to the raw material, and the processing
methods that best apply to the business; and
3. determine the relationship of the different marketing
variables relative to the buying behavior of the
consumers.

The research work conducted the entrepreneur usually follows the

following procedural steps:

1. Identify the problem

2. Deciding the data to be gathered
3. Evaluating how the data to be collected
 4. Gathering the data
5. Analyzing the data gathered
6. Making a conclusion and recommendation
7. Reporting the result of the research

All research work conducted by the entrepreneur either leads to

searching for a solution to the problem, describing certain relevant
phenomenon, or formulating a theory or hypothesis He/She may conduct
various types of entrepreneurial research
work in order to know what is at the back of
the minds of the consumers.

Types of Entrepreneur Research

There are several dichotomies in the classification of the types of
research endeavor. They can be classified as exploratory , descriptive
and causal research.

Exploratory Research

Exploratory Research is considered the preliminary research

work conducted by an entrepreneur that is primarily designed to gather
baseline information to be used in solving a problem or forming a
hypothesis. A hypothesis is considered a preliminary answer about the
relationship of two or ore variables in the research. The hypothesis may
be true or not depending on the result of the test or the gathered data.

For example, the entrepreneur has a strong belief about the buying
behavior of he consumers. That they will buy more products if the
designed is changed from the traditional to modern. This statement is a
hypothesis. It is a tentative answer to the question, Will the consumer buy
more if the design is changed from traditional to modern?”

A hypothesis is a statement of assertion that must be proven in a

subsequent research work. The above assertion must be proven by the
entrepreneur whether I is true or not. To prove the hypothesis that the
consumers will buy more products once the modern design is adopted,
the entrepreneur must collect quantitative data from the sample and test
them. He/She may also gather the desired information through qualitative
methods.

Descriptive Research

Descriptive Research is
conducted by one entrepreneur when
the foremost objective is to describe
the parent buying behavior of the
consumers in terms of environmental
factors, buying decision process, and
marketing mix.

For example, the entrepreneur would like to know the buying

behavior of the consumers in terms of the following factors:

a. social class
b. age
c. occupation
d. income
 The entrepreneur must gather the desired date in order to describe
the buying behavior of the consumers in terms of the above variables.
Descriptive research simply describes s the present condition or status
that is happening in the business environment relative to the study
conducted.

For example, the data gathered from the sample may provide the
following description of the consumers in the segment market:

1, 48% of the consumers are 21 to 30 years

2. 29 % of the consumers are 31 to 4years old
3. 23% % of the consumers are 31 to 4years old and above

Similarly the entrepreneur may want to know the level of buying

behavior of the consumers. It may either be high, moderate or low.
Descriptive research is usually conducted when the entrepreneur wants
to know the present condition of the consumption.

Causal Research

The entrepreneur conducts a causal research or correlated

study when the objective is to determine whether the buying behavior of
the consumer is caused by some environmental factors. In this study the
entrepreneur must test whether he hypothesis is true or not by
determining the relationship between the buying behavior and other
variables of the study. In causal or correlation study, there is cause –and-
effect relationship between or among the variables.

For example, the entrepreneur strongly believes in the following

hypothesis: the amount of income of the consumers in the market
segment directly affects the pattern of their buying behavior. In the
tentative assertion, the entrepreneur believes that the amount of income
is the cause of the change in the buying behavior of the consumers. The
entrepreneur in this case, will likewise gather he necessary data and test
whether there is a relationship between the change in the buying
behavior of the consumer s and the increase in income.
Research Data

Research Data refers to the kind of necessary information to be

gathered in answering the objective of the research work. In this lesson
research data simply refers to information needed buy the entrepreneur
in order to answer their objective relative to the buying behavior o the
consumers. Research data can be classified either as quantitative or
qualitative data and primary or secondary data.

Quantitative Data

Quantitative Data can be counted and mathematically

computed. They are expressed in numerical values. Some example of

quantitative data relative to the buying behavior of the consumers are as

follows:

1. income of the consumers

2. Sales volume of the product
3. Age of consumers
4. Number of units produced

Qualitative Data

Qualitative Data are generally descriptive data and hence

cannot be counted. Mathematical computations cannot be performed on
qualitative date since they are not numerical values.

Some examples of qualitative data are the following:

1. Ethnic or tribal group where the consumers belong

2. Perception of the consumers
 3. Gender of the consumers
4. Dominant culture of the segment market

Primary Data

Primary Data are research data sourced by the entrepreneur

directly from the consumers belonging in the market segment. The
subject being studied by the entrepreneur is the consumers and their
buying behavior, Hence the data that come directly from the subject are
considered primary data. The commonly used research methods of
gathering primary data are survey, experimentation and observation.

Secondary Data

Secondary Data are data previously gathered by another

researcher for another purposes and now exist on other sources.

Examples of Secondary data are among others, include the

following:

1. Data gathered by marketing association and included in their

publications
2. Data collected from the survey conducted by the National
Statistics Office (NSO) and published in the website.
3. Data gathered by the Bangko Sentral ng Pilipinas (BSP) and
included in the BSP annual report.

Most secondary data are service statistics or information gathered

by different line agencies of the government and used as basis for
decision-making. For example, the information gathered by the NSO
about the number of entrepreneurs engaged in furniture making in year
2015 is a service statistics.
Research Instrument

The entrepreneur does not simply gather based on his/her whims and
caprices but through the so-called research instrument.

A research instrument is tool used by entrepreneur in

gathering or collecting data. The choice of research instrument to use will
depend on the type of research to be conducted and the type of data
gathered. The commonly used research instruments to collect data are
the survey questionnaire, personal interview, and focus group discussion.

Survey Questionnaire

The survey questionnaire is commonly used by entrepreneur

I gathering the required data about the buying behavior of the consumers.
It may be administered personally by the entrepreneur who conducts the
study or mailed directly to the consumers. In case the survey
questionnaire is administered personally, the entrepreneur must first seek
prior approval from the consumer. If it is mailed to the respondent
consumers, the entrepreneur must attach a simple and brief cover letter
explaining the purpose of the survey and the importance of answering the
questionnaire.

In selection of the respondents or the consumers to whom the

questionnaire will be administered, the entrepreneur conducing the
research work may use any of the following sampling methods:

1. Simple random sampling

2. Cluster sampling
3. Stratified sampling
4. Multi-stage sampling

The type of questions contained in the survey questionnaire may

either be:
 1. A dichotomous question that has only two choices or alternative
(e.g., yes or no, true or false, present or absent)’
2. A multi-choice question that has several or multiple choices or
alternative with corresponding numerical weight, or
3. An open-ended question where the respondents are free to
provide their answers in any for.

Personal Interview

In a personal interview he entrepreneur conducting the study

has face-to-face interaction with the consumers who are the respondents
of the study. The entrepreneur carefully prepares a series of questions
that are designed and arranged properly. so that the objective or problem
of

the study is addressed. The instruments which lists the questions to be

asked during the personal interview is called interview schedule.
During the actual interview and with expressed approval from the
respondent consumers, the entrepreneur usually reads the prepared
questions and records in verbatim the responses on the instrument.

Conducting a personal interview is quite costly though the response

rate is high compared to a survey questionnaire. It allows the consumers
to clarify the questions with the entrepreneur based on the level of their
understanding.

Focus Group Discussion.

The focus group discussion. Is conducted by an entrepreneur

with the assistance of a moderator to gather the views of selected
consumers on certain issues relative to their buying behavior. The
entrepreneur purposefully selects the participants from the consumers of
the market segment. The group is normally composed of a small number
of participants ranging from six to twelve members. The participants are
encouraged by the moderator or facilitator to share their opinions, beliefs,
or perceptions about the given issue. All their ideas and opinions are
recorded.

Usually a focus group discussion is used when the research design

is qualitative in nature. In other words the entrepreneur cannot used
focus discussion when there is yet a hypothesis that must be tested as
true or not. In similar manner the opinions, ideas, or perceptions of the
participants in the focus group cannot be used to generalize the whole
consumers of the target market segment. For example, the entrepreneur
is interested to know the perceptions or opinions of the consumers about
their buying pattern on energy drink. Some participants of the focus group
may share an idea that the chemical ingredient used in producing an
energy drink appears to hazardous to health. This opinion of the
participants cannot be applied to the whole market segment. However, it
may serve as hypothesis that has to be proven true or not. Through the
research work, the

entrepreneur may be able to formulate an idea about the buying behavior

of the consumers in a target market segment.

The following two other methods of generating new products

/services aside from the above mentioned are (De Guzman, Angeles
A.,2018)

1. Brainstorming.
Good ideas emerge when the brainstorming effort focuses
on a specific product or market area.

Rules of Brainstorming

a. No criticism of ideas or suggestions. Every idea

even wildest, the non-feasible is accepted.
b. Freewheeling discussion is encouraged
c. Quantity of ideas is desired
d. Combinations and improvements of ideas are
encouraged.
 2. Problem Inventory Analysis. .
Consumers are provided with a list of problems and are
asked to identify products that have those problems. Results must
be carefully evaluated as they may not actually reflect a new business
opportunity.

Generating New Product/Services for

Conventional or Innovative Businesses

Conventional ideas can be taken from tried and tested business

models like opening up a snack bar in competition with almost 100 others
in a particular city. For the innovative businesses, however, a product can
be introduced that is not yet known to the market. Needless to say, it is
where experimentation and boldness in business come in.

Conventional Business Scenario

Below are ways to start conventional business.
a. Start a business that you are familiar with.
b. Start a business due to the needs of existing business contacts.
c. Gain biasness inspiration from your hobby or interest.
d. Gain inspiration from an imported item.
e. Explore the possibility of
import business.

Innovative Business
Scenario
Here are some ways to introduce an innovative business.
a. Gain inspiration from the needs and wants of customers.
b. Gain an inspiration from the problems and issues that bothered
you and your peers.
c. Study the usual or existing solutions and venture in the
alternative solution.
 d. List down existing products and find out their other uses aside
from what was stated.

Sample questionnaire for a new product (Tomato Jam)

QUESTIONS ANSWERS
1. Do you eat other types YES NO
of jam?
2. Which types of jam do List the types of jam
you like best?
3. Do you think you YES NO NOT SURE NEVER
would like tomato
jam?
1 2 3 4 5
Very Good Good Average Bad Very Bad
4. What do you think of
the color of this
tomato jam?
5. DO you like having the
seeds in the jam?
6. What do you think
about the flavor of this
jam?
7. DO you like the texture
of the jam?
8. What do you think
about the jar?
9. What do you think
about the label?
10. What else do you like
about this jam?
11. Is there anything that I
can do to improve this
jam?

Name: ___________________________________________
Grade: __________________ Section: ________________
Date: __________________ Score: _________________

Let’s do it!

GROUP ACTIVITY
(Based on your goup of your Business pal/Research Project)

Activity 1. Survey Questionnaire

Make a Survey Questionnaire for a new product you want
to introduce.

GUIDELINES:

Sources of New Product/Service

1. Consumer
Monitor potential ideas and needs from customers and formally
arrange for consumers to espress their opinions.

2. Existing products and Services

Analysis of products and services uncovers ways to improve offerings
that may result in a new product or service.

3. Distribution Channels
Channel members can help suggest and market new products.

4. Government (Patent Office)

Files f the Patent Office can suggest new product possibilities.
New product ideas can come in response to government regulations.

5. Research and Development

Conduct research on your market and your customer needs. This
results to the development and identification of new and improved
product and services.

Activity 2. Survey Questionnaire

1. Identify the product you wanted to introduce
2. Classify whether the product is a conventional or
an innovative business.
Survey of Market Size and Value

A different set of questions is needed when assessing the size of

the market for a particular type of product and the value of the market
(the amount of money spent on that product each month or year).
 At the same time it is possible to gather information about the types
of people who buy a particular food and where they but it.

The information gathered from potential consumers can be

analyzed by the entrepreneur to get a good idea of the quality
characteristics of the product that consumers prefer, the total demand for
the product and the total value of the market.

This involves making a number of assumptions and it is important

to consider the following:

1. Are the people interviewed really representatives of all potential

consumers?
2. Was the number of people interviewed enough?
3. Were people giving accurate information?

Sample Questionnaire of Market Size and Value

 QUESTIONS ANSWERS
About the Market Size
1. How often do you buy the product? Daily Weekly Monthly
2. Do you buy different amount at different
times of the day? Yes No
3. When are the times that you buy the
most?
4. How much do you buy each time? ______pc
5. When are the times that you buy the
least?
6. How much do you buy each time? ______pc
7. What is the amount of food in the pack? P___________ per ________pc
About the Market Value
8. How much do you pay for a pack on the P
food
9. What is the price difference for larger or P
smaller packs?
10. Does the price change at different times
of the year? Yes No
11. When is the price highest?
12. When is the price lowest?
About the Market Customer
13. Would you say that you have a low,
medium or high income in your Low Medium High
household?
14. To which age group do you belong (check
one only)
1-20
21-40
41-60
Male/Female M F

About Sales Outlet

15. Where do you usually buy belong
(check one only) this food
Food Store
Local Shop
Kiosk
Supermarket
Others (Pls Specify)
 Activity 3. Survey Questionnaire
Make a Survey Questionnaire for a new product you
want to introduce.

Market Share and Competition

Market surveys and the calculation of market size and value are
important to find out whether the demand for a product really exists.

It is therefore important from the outset, to estimate the proportion

of the total market that a new business could reasonably expect to have.
This is referred as the market share.

In many cases, new entrepreneurs over-estimate the share that

they could expect, with the result that production operates at only a small
proportion of the planned capacity.

These figures should not be assumed to represent the scale of

production that could be expected. Even if no one else is currently
making a product locally. It is likely that once a new business starts
production and is seen by others to be successful, they too will start up
in competition.

Example:
Estimate of Market Share for a New Food Business with
Different Levels of Competition

No. of other Many Few One None

Producers
Size of Large Small Large Small Large Small
Competitors
Product Range S D S D S D S D S D S D
Market Share(%) 0- 0-5 5- 10- 0- 5- 10- 20- 0-5 10-15 20-30 40- 100
2.5 10 15 2.5 10 15 30 80

Legend: S = Similar, D = Dissimilar products

Activity 4.
Make an estimate of market share for the product you want to introduce.

Estimate of Market Share for a New Food Business with

Different Levels of Competition

No. of other Many Few One None

Producers
Size of Large Small Large Small Large Small
Competitors
Product Range S D S D S D S D S D S D
Market Share(%)

Legend: S = Similar, D = Dissimilar products

Competitors

Competitors are very important to the success or failure of a new

business. The entrepreneur should recognize that there are different
types of competitors, general competitors, type competitors, and brand
competitors.

Thy also compare with the profit margin and level of service that
they offer to retailers and with special offers or incentives to customers.