Scanning the Marketing Environment

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. 

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.
Sources of Entrepreneurial Ideas

Macroenvironment - big factors or forces that affect the area, the industry and the
market which the enterprise belongs to
A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a
framework or tool used to analyse and monitor the macro-environmental factors that
may have a profound impact on an organisation’s performance. This tool is especially
useful when starting a new business or entering a foreign market. 

o Political Factors

This can include government policy, political stability or instability,

corruption, foreign trade policy, tax policy, labour law,
environmental law and trade restrictions. Furthermore, the
government may have a profound impact on a nation’s education
system, infrastructure and health regulations. 

o Economic Factors

Economic factors are determinants of a certain economy’s

performance. Factors include economic growth, exchange rates,
inflation rates, interest rates, disposable income of consumers and
unemployment rates. These factors may have a direct or indirect
long term impact on a company, since it affects the purchasing
power of consumers and could possibly change demand/supply
models in the economy. Consequently it also affects the way
companies price their products and services.

o Social Factors
 This dimension of the general environment represents the
demographic characteristics, norms, customs and values of the
population within which the organization operates. This includes
population trends such as the population growth rate, age
distribution, income distribution, career attitudes, safety emphasis,
health consciousness, lifestyle attitudes and cultural barriers.

o Technological Factors

These factors pertain to innovations in technology that may affect

the operations of the industry and the market favorably or
unfavorably. This refers to technology incentives, the level of
innovation, automation, research and development (R&D) activity,
technological change and the amount of technological awareness
that a market possesses. These factors may influence decisions to
enter or not enter certain industries, to launch or not launch certain
products or to outsource production activities abroad.

o Environmental Factors

They have become important due to the increasing scarcity of raw

materials, pollution targets and carbon footprint targets set by
governments. These factors include ecological and environmental
aspects such as weather, climate, environmental offsets and
climate change which may especially affect industries such as
tourism, farming, agriculture and insurance. Furthermore, growing
awareness of the potential impacts of climate change is affecting
how companies operate and the products they offer.

o Legal Factors

This include more specific laws such as discrimination laws,

antitrust laws, employment laws, consumer protection laws,
copyright and patent laws, and health and safety laws. It is clear
that companies need to know what is and what is not legal in order
to trade successfully and ethically.

Micromarket - specific target market segment of a particular enterprise

  Consumer preferences, interests and perception - current needs and wants of
potential customers that should be discovered by an entrepreneur

 Competitors - recognizing and understanding potential competitors will aid the

entrepreneur to develop a product that will stand out in the competition.

 Unexpected opportunities from customers - existing problems could pave the

way for identifying a business opportunity

 Talents, hobbies, skills and expertise - entrepreneur's talents, hobbies, skills and
expertise can be a source of business opportunity

 Location - an abundance of a particular raw material in the place where the

entrepreneur is living could also lead him/her to identify a possible opportunity 

Screening the Opportunity

Opportunity Screening is the process of cautiously selecting the best opportunity. The
selection will depend on the entrepreneur’s internal intent, 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.

In screening opportunities, the entrepreneur first has to consider his/her preferences by

asking three basic questions:

1. Do I have the drive to pursue his business opportunity to the end?

2. Will I spend all my time, effort and money to make the business opportunity
work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship and forego my
usual comforts to succeed in this business opportunity?

Opportunity Seizing
the entrepreneur has the idea as to where he or she will locate the business and how he
or she will make the product or service. The question for the entrepreneur in
Opportunity Seizing is "Will I be able to manage, to my advantage, the critical success
factors and avoid the critical failure factors?

Product Planning or Development process:

1. Idea Stage - Determine the feasible products that will perfectly suit the
opportunity.

2. Concept Stage - the developed idea will undergo a consumer acceptance test.
This includes getting the initial reactions of the primary target market and the
distribution channel. Both favorable and unfavorable results will be used to devise
an acceptable product or service.

3. Product Development Stage - entrepreneur leverages the information generated

from the prospective customers via concept stage. Entrepreneur will conduct
consumer panel where actual product samples will be rendered to panel of potential
customers. Participant's task is to critique the actual product or service for
comparative purposes.

4. Test Marketing Stage - this validates the work done from the first three stages to
measure the commercialization of product or service.