Republic of the Philippines

Department of Education
Region VI-Western Visayas
Division of Antique
ANTIQUE NATIONAL SCHOOL
SENIOR HIGH SCHOOL DEPARTMENT
T.A. Fornier St., San Jose de Buenavista, Antique

ENTREPRENEURSHIP
First Quarter
Module 4
Learners are expected to:
1. recognize a potential market and analyze the market need
The Potential Market

1. Potential market is the part of the total population that has shown some level of
interest in buying a particular product or service. Potential market is also called Total
addressable market (TAM) (MBA Skool Team, 2018).

2. A potential market is the part of the market you can capture in the future. It
includes the demographic groups that are not currently your customers but could
become customers in the future (Lake, L, 2019).

3. Market potential is the total demand for a product in a given business

environment (Bhasin, H., 2018).

The Importance of Potential Markets (Lake, L., 2019)

• Potential markets are an important part of a business's future growth.
• Ensure the future of your business by identifying new customers.
• Think proactively about ways for your business to grow and change.
• Show the potential of your business to investors or collaborators.
• Increase your revenue.
• Create a plan B that will weather changes in the economy or market.

How to Identify Your Potential Markets (Lake, L., 2019)

• Consider every target demographic that you currently sell to, as well as those you have
not yet targeted. Identify what they have in common with each other, new milestone that
they will encounter in their lives that will impact their buying patterns, and where they
overlap or diverge from your current customers.

Ask yourself these questions that will help you identify both new ways to
market your current products or services, as well as new products and services that
you can begin selling.
• What other products do my customers need now?
• What related products will they need in the future?
• Who else could make use of the products I am selling now?
• What demographic information does that new group have in common with
my current customers?
• What demographic information does that new group have in common with each other?

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For example, a business that makes face masks and PPEs could identify potential
markets such as:
• Hospitals and other health related industries whose employees are prone to
COVID -19 virus and other viruses.
• Business industries and other organizations who want to ensure the health
condition of their employees.
• Employees and workers who need to report to work to earn income.
• Households who needs to go out for their necessities

Note: Depending on the size and age of your company, as well as your industry, you
may have a clear picture of the potential markets that are available.
Reaching Your Potential Market (Lake, L., 2019)

Once you've identified and chosen a potential market to begin targeting, you
will need new marketing strategies in place to communicate with them. Use this profile
to identify:
• The demographic information that people in a group have in common.
• The best forms of media to reach them.
• How they prefer to shop and make purchases.
• The concerns, struggles, or problems that you can help them overcome.
• What values matter to them, both in everyday life and when shopping.
• The language that resonates with them.

Total Population
Potential Market

Penetrated Market

MBA Skool Team, 2018

The figure below depicts what is a potential market with respect to the total
population and how it can be converted to a penetrated market:

Available Market

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• Prospects who are willing and capable (have sufficient resources) buyers and have
access to a particular market or service (www.businessdictionary.com).
• Defined as the number of people who are both willing and capable of buying a
particular product or service in a particular market (MBA Skool Team, 2020).
Target Market

Refers to a group of potential customers to whom a company wants to sell its products and services.
Target markets are generally categorized by age, location, income, and lifestyle. Defining a specific target
market allows a company to home in on specific market factors to reach and connect with customers
through sales and marketing efforts. (Kenton, W., 2019).

Penetrated Market

A set of customers or clients who are already using a particular product or service. A penetrated market
means that the potential users of a product or service are aware of it, and in many cases are active
consumers of it. (www.businessdictionary.com).

The size of a potential market helps a company understand the level of investment it should make further
in the market, while taking into consideration other factors. If the potential market is very small, it means
there is a very small fraction of the total population showing any interest in the product or category. This
means that it is better that the company doesn’t invest further in the product or category because people
won’t buy it. If the size of the potential market is large, it means that there is a huge fraction of the total
population which is showing interest in the product, so further investment can be made on the product
development or modification, marketing, promotions etc. The size of the potential market gives an
estimate of what all a company should do and how much it should invest (MBA Skool Team, 2018).

The Market Need

1. Need
a. o A motivating force that compels action for its satisfaction. Needs range from basic
survival needs (common to all human beings) satisfied by necessities, to cultural,
intellectual, and social needs (varying from place to place and age group to age group)
satisfied by necessaries (www.businessdictionary.com).
b. o A driver of human action which marketers try to identify, emphasize, and satisfy, and
around which promotional efforts are organized (www.businessdictionary.com).
2. Market
o A Market is a place where two parties can gather to facilitate the exchange of goods
and services. The parties involved are usually buyers and sellers. The market may be physical like
a retail outlet, where people meet face-to-face, or virtual like an online market, where there is no
direct physical contact between buyers and sellers (Kenton, W. & Boyle, M., 2020).
o A market does not refer to a particular place, but it refers to a market for a commodity
or commodities. It refers to an arrangement whereby buyers and sellers come in close contact
with each other directly or indirectly to sell and buy goods (Shaikh, S., retrieved 2020).
o A market is any place where sellers of particular goods or services can
meet with buyers of those goods and services. It creates the potential for a
transaction to take place. The buyers must have something they can offer in
exchange for the product to create a successful transaction (Moffatt, M., 2019)

Your market consists of (Stull, C., Myers, P.& Scott D.M. (2008) as cited in:
https://learn.marsdd.com/):

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 Existing customers: People who have already purchased your product.
Prospects: People who have not yet purchased your product but are
considering it.
Target market users: People in your target market who are not currently
looking for a solution.

EXISTING PROSPECT TARGET MARKET

Customers Users

Define the Market Need for Your New Business

Why is it important to clearly define market needs?
The market now demands that your business align to their needs. In order to properly align your
marketing efforts ‒ and your content, in particular ‒ to what buyers need, you have to have a clear
understanding of the many intricacies, pains and pressures within your market. To achieve such
alignment, the ability to define market patterns, needs, interests, preferences, etc. for a comprehensive
view of the buying process is critical (www.aberdeen.com).
Below are ways to define your market (Lancaster SCORE (2010):
• Consider whether the business offers a new solution to an old problem or complements an
emerging trend.
• Have a clear picture of your target market.
• Determine the benefits that your product or service offers.
• Examine industry data that can confirm whether there is a sustained, growing demand for
your product or service.
• Identify the percentage of market share that it is realistic for you to capture. The more
competition you have, the lower the margins will be.
• Consider how realistic your pricing is. How can you present your product or service to
potential customers so that it appears to be a good value, while still affording you a healthy profit?

ACTIVITY 1.
Read and analyze the given situations below. Identify whether this refers to existing customer,
prospects, or target market users. Write your answer in the space provided.

1. Students need to buy a tablet/ laptop for school requirements

2. Arlene, a student of a public school, needs mobile data in order to comply with the
requirements in school.
3. Ana used to buy shampoo.
4. Hospitals need facemasks and PPEs.
5. Households living in a remote area.

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 6. Mike, a sari-sari store owner, wants to go online selling.
7. Martha, a call center agent, needs a Wi-Fi.
8. Jeep drivers need to modify their jeeps for public transportation.
9. Karlo, a factory worker, needs transportation.
10. Ella needs to buy her vitamin C to boost her immune system.

Prepared By:

LYRA MAE O. MONTUYA

Teacher
Checked by:

LOURENE J. GUANZON
ABM Group Head

Noted By:

SALVADOR J. SEMBRAN, Ph.D

Asst. Principal II - SHS

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