THE CONCEPT OF ENTREPRENEURSHIP

“The concept was first established in the 1700s, and it has evolved ever since.” To most, entrepreneurship means
putting up a business. Economists believe that it is more than simply starting it. To most businesspeople, an entrepreneur is willing to
bear and take the risk of creating a new venture if there is a substantial potential for growth and profit. Others believe that the
entrepreneur’s role is to be the innovator of new products and services that delivers customer’s needs and demands.”
In the 20th century, an economist named Joseph Schumpeter (1883-1950) studied how the entrepreneurs are
motivated to look, innovate, and create new and better ways of doing business.
Business expert Peter Drucker (1909-2005) took this idea even further and described an entrepreneur as someone who
searches for things to change, responds to it by researching and taking new ideas and trends, and exploits these changes as an
opportunity to create and deliver something better. Few good examples of changes are the usage of home phones to cellular
phones, to the internet in the communications industry, while long playing (LP) record to play music has been replaced by mp3
players, and now the usage of music apps such as Spotify.
Most economists and businesspeople agree that entrepreneurship is a necessary component in encouraging economic
growth. It also gives employment opportunities to the increasing workforce and helps resolve poverty in the society.
Benefits to Senior High School Students.

1. Classify individual entrepreneurial interests.

2. Apply basic marketing acumen.
3. Determine legitimate sources of resources.
4. Analyze ownership structures.
5. Convert threats into opportunities.
6. Adaptation of concepts and strategies for idea generation.
7. Evaluate feasibility of ideas.
8. Discovery of entrepreneurial innovators who also have the competence and edge to start their own businesses.
9. Consider ethical and legal business practices.
10. Write a micro business plan.

Importance of Entrepreneurship Education

1. Entrepreneurship is very important to our economy as key driver.

2. Entrepreneurship education is an individual lifelong learning process.
3. Entrepreneurship will energize school management.
4. Entrepreneurship will transform learners to be innovators.

What is Entrepreneurship? Let us talk about is Entrepreneurship. It is described as the process of creating something new
whether it is a product or a service that brings benefit by devoting the time and energy needed to consider the financial,
psychological and social risks, and achieving the possible incentives for financial and personal satisfaction and freedom. To be an
entrepreneur or a businessman means someone has to be able to create something new that can offer value to its chosen market to
be able to get something in return and convert it to a profitable business.

Products are created because of a birth of an idea, which is then turned into either a physical product or non-
physical product, i.e. eBooks, audiobooks, and other educational programs. To become successful in an enterprise, an entrepreneur
must be willing to exert a ton of effort from the start to finish of creation of a product or service.

One great thing about being an entrepreneur is that the rewards are really great to those who are ready to take the challenge.
Though there are lot of great things that can happen in a business, it is imperative to consider that businesses fail because of
different factors. Therefore, an entrepreneur must be willing to take the risk and prepare for the worst possibilities.

An entrepreneur is an individual who plans, organizes and operates a business or businesses, taking greater than normal
financial risks, psychic and social risks. He is someone who creates, or looks for ideas for business, which is then implemented to
become a business. Idea creation is one; the real deal is starting the business and making the idea a reality. There are lot of people
who have great ideas in mind but failed to start, until someone started it and they said to them, “that was my idea few years ago...”
Implementation is the KEY.

Another element that is important in becoming an entrepreneur is passion.

This is the reason why entrepreneurs, most of the times are people who decided to leave their 8am-5pm jobs and started their
own venture and became their own boss.
It was because they wanted to do something that they are passionate about.

B. ENTREPRENEURIAL COMPETENCIES

Entrepreneurial Competencies refer to the fundamental characteristics and traits possessed by successful entrepreneurs that
made them succeed in their chosen enterprise.

McClelland and McBer (1985)

1. Initiative
The entrepreneur should take initiative in learning their industry they belong to, go the extra mile, and do more than what is
expected from them. An entrepreneur always looks for new and better ways of doing things, getting ahead of others and aims to lead
in their chosen industry or line of business.

Examples
• Greeting customers upon entering the door of a fast food shop and thanking them when leaving.
• Extending and serving more customers by opening outlets in new areas and creating new products or services by proactively
researching what the market needs.
 2. Sees and acts on opportunities
An entrepreneur always has the eyes open for new opportunities and most importantly acting on them. As an entrepreneur, it is very
important to always look at the industry trends, anticipate needs of customers, even new technologies that will help them give
value to the customers, as well as opportunities that could help them expand their existing business. After knowing the
market, an entrepreneur should be able to act and execute as soon as possible to get ahead in offering products and services to its
customers.

Examples
• Apple Company known as personal computer manufacturer expanding its business to iPods, iPhone, iPad and even iTunes.
The company saw the demand of consumers for communication and entertainment and created products that enable them to
provide for their customers.
• Jollibee started its business as an ice cream parlor, found out that Filipinos wanted
hamburgers being offered by McDonalds, and later created its own line of hamburger sandwich products.

3. Persistence
In today’s business world, there are lot of competitors that are trying to take a share of the pie or the so-called market. The
entrepreneur’s main job when it comes to competition is to be able to persist in aiming and taking actions for the firm’s
growth by getting the greatest number of customers.

Examples
• KFCs new products come out every three months and test how customers accept it as part of their effort to pull more customers to
their restaurants.
• Samsung competing head to head with Apple in providing electronics and technology products to consumers.

4. Information Seeking
Access to information has never been easy as today. In fact, there is so much information that the question now is how to find the
right information and use it to the company’s advantage and create better products and services for the buyers. It is very essential for
an entrepreneur to make sure that he/she gets the appropriate and significant information, the quickest time possible.

Examples
• Augmented realities being introduce now with the used of Virtual Reality (VR) devices.
• Consulting industry experts in getting relevant and up to date information.
• Seeking information or asking questions to clarify customer’s needs and concerns.
• Doing market research, analysis, or investigation.

5. Concern for Work Quality

Each entrepreneur started an enterprise because of an idea, but it does not end there. The entrepreneur should always strive to
improving and enhancing the products or service to deliver the best work for its customers. This is the reason why companies have
their Research and Development (R&D). A company that does not innovate will for sure loose in the game. Additionally, there should
always be a company standard to have consistency in delivering to its customers.

Examples
• Strong yearn to produce and sell a top or best quality product or service.
• Jollibee having a standard from measurement of every ingredient up to number of minutes a meal should be served to the
customer.

6. Commitment to Work Contract

Starting a business is one, but to execute and delivering on time to customers is another. An entrepreneur should always
have in mind that company’s reputation builds by delivering great products and service to customer and delivering on time is
very important. 80/20 Rule, known as Pareto Principle states that the last 20% of the task needs the 80% effort, and if the
entrepreneur doesn’t understand that finishing task’s importance, the customers will be short changed and therefore
company loose it chance in proving itself in the marketplace, and will likely lose customers and it business.

Examples
• Doing all extraordinary effort to complete a job to satisfy customers.
• Accepting full responsibility for problems and therefore ready to provide resolution.
• Having a customer service hotline for customer complaints.
• Real concern for satisfying the customer.

7. Efficiency Orientation
To succeed, an entrepreneur must always find ways of doing things more efficiently and effectively, with fewer resources
and at a lower cost as possible. Companies constantly think of efficiency in operations and delivering to its customers.
Start-up companies normally have less financial capital, so knowing their situation and being able to produce quality products with
limited resources is really critical for them.

Examples
• Using internet to sell products rather that opening a physical store.
• Using video presentations product write-ups and posted on social media platforms as marketing tools.
• Jollibee using video contents such as “Best Friend”, “Cashier”, “Crush”, “Perfect Pair and “Apo”.

8. Systematic Planning
As the saying goes, “Failing to Plan is Planning to Fail”. There are lot individuals that started businesses and just closed shop after few
months because of lack of careful and systematic planning. The entrepreneur should develop a logical, timely, step-by-step plan to
reach the company goals.

Examples
• Making and formulation plan of actions to follow for smooth operation.
• Anticipating expenses by creating a good cash flow projection.
• Evaluating alternatives.
• Taking a logical and systematic approach in executing activities.
• Having back-plans in place to solve unanticipated scenarios.

9. Problem Solving
Business problems are inevitable. There will always be something that an entrepreneur can do to minimize the impact of a problem
to continue in operation. The challenge of thinking what to do in tough times is in the hands of the entrepreneur. A song goes, “What
Doesn’t Kill You Makes You Stronger”, means every problem solved makes the entrepreneur more knowledgeable and prepared for
the next challenges. The point is, it is a requirement for an entrepreneur to know how to solve problems if he wants the business to
be in the market for long time.

Examples
• Changing strategies in case of problems to reach organizational goals.
• Generating new ideas or innovative solutions.
• Looking at problems as an opportunity.

10. Self-Confidence
Who would like to do business with a person who is not confident about his or herself, or the products or services that he
or she sells? It is safe to say that if you will transact for a business, you will always want to look for someone who can carry a
conversation and will be able to sell his or her products effectively. To become a successful entrepreneur, one must have a strong
belief in self and own abilities.

Examples
• Show confidence in one's ability to carry out tasks, particularly in difficult situations.
• Persist with own judgment in the face of opposition or early lack of success.

11. Assertiveness
As stated, problems are inevitable and therefore the only way to avoid more problems is to face and solve the existing ones. As an
entrepreneur, you must have the courage in looking for solutions, and find for resources, and even people who can help in those
tough times.

Examples
• Communicate to others what they must do and not to.
• Reprimand those failing to perform and inform them of the possibilities for continuance of the behavior.

12. Persuasion
Persuasion means influencing others reach company goals. Great entrepreneurs are great salespeople. Finding resources is a tough
task that requires guts in proving oneself that a certain business will work and grow to get approval for loans.

Examples
• Convincing someone to buy a product or service.
• Convince a firm to provide financing.

13. Use of Influence Strategies

Developing a great relationship with other businesspeople is a very important task of an entrepreneur. Collaboration is one
great way of expanding a business and great networker as sure-fire of becoming a success in a business. As an entrepreneur, one
must learn to work with influential people to reach business.

C. CHARACTERISTICS OF AN ENTREPRENEUR:

A good entrepreneur has a set of attributes that demonstrate qualities of creativity and leadership.

1. Ambition
A successful businessman is motivated to make something out of himself. He knows what he wants, and he is setting a course
for achieving it. Often his desire to do something can be daunting and the drive to create himself can be very consuming. The
passion of an entrepreneur is often the main ingredient which takes him off his chair and brings him into practice , making his
daydreams a reality.

2. Enthusiasm
Also going hand in hand with determination, passion plays a big part in inspiring the entrepreneur. Although ambition is perhaps the
key to the ignition of the entrepreneur, excitement is the gas. Every successful businessman has a positive outlook which gives him
the energy to pursue his endeavors. An entrepreneurial project will gradually wither away into inactivity and failure without
enthusiasm.

3. Creativity
You can rely on imagination to help you out when problems occur. In the first place, creativity is probably what led you to envision
your company and it will be creativity that will help you understand the potential solutions to any hitches that may come your way.
Successful entrepreneurs will find motivation in the process, and also find ways to turn roadblocks into opportunities.

4. Decision-making
Entrepreneurs call in all the actions needed. Although their imagination makes them men of ideas, that will make them men
of action is their ability to make decisions. The decisions taken by businessmen will decide the company's destiny, because it is
only by decision-making that things really will happen. An entrepreneur with poor decision-making skills will see his company placed
in a state of inactivity and degradation; good decision-making skills, on the other hand, will ensure the best possible steps are applied
in setting up the firm.
 5. Perseverance
Maybe the most significant of all entrepreneurs' characteristics is their ability to withstand the troubles that come with
starting a company. Starting a new company is an incredibly challenging experience and as an entrepreneur, if you want your
venture to be a success, you'll have to stick through the storms and pressures. It often takes years for a good idea to start making
money, but when it does, you'll be pleased that you've stood up against adversity.

D. ENTREPRENEURSHIP AS A CAREER

As an entrepreneur, you need to be work hard, be smart in making decisions, creative and think about improvement
of the business, be willing to take risks accompanied with plan of actions, and be good with people since they will be the one aside
from you who will do work for the business and for your clients.

To be successful in the career of entrepreneurship, one must have a heart to continue even if everything doesn't fall
into place or challenging situations happen, have a lot of motivation because you believe in what your company and business vision
and mission and have that drive to always be focused on your goals.

One of the best things about being an entrepreneur is the wide-open possibilities. You get to talk with a lot of people in
your field, learn from their knowledge and experiences, and even create relationships with other businesspeople.

There are also downsides of entrepreneurship. As the owner of a starting business, you will be in-charge with operations,
finance and marketing your products. This means that you will not have regularly scheduled day-offs, sometimes you will not have
day-off on difficult situations. Managing cash flow is difficult most especially to the ones that has limited funds.

The opportunities in entrepreneurship are ultimately endless. The rewards can be high as well are the risks. It requires maturity
from the owner in making hard decisions. But, if you are driven, creative, willing to learn and have the desire to be your own boss,
this may very well be the career for you.

E. BEST SMALL BUSINESS IDEAS IN THE PHILIPPINES

1. Digital Marketing Services

Capital: P1, 000 – P5, 000
Monthly Income: P30, 000 – P500, 000
Difficulty: High
Requires (Skills): Technical, Marketing,
Networking, Sales, and Communication.

2. Vending Machine
Capital: P10, 000 – P20, 000
Monthly Income: P1, 000 – P20, 000
Difficulty: Low
Requires: Good location & maintenance.

3. Street Food
Capital: P5, 000 – P10,000
Difficulty: Low
Requires: Good location

4. 3D printing service
Capital: P10, 000 – P40, 000
Difficulty: Medium
Requires (Skills): Design, Technical, and Marketing.

5. Videography business
Capital: P40, 000 – P100, 000
Difficulty: Medium
Requires: Equipment, Video Editing
Software, Design, and Marketing.

6. Cake Making/Baking
Love baking? Folks love a good cake and other baked goodies. Whether it is a creamy red velvet cupcake or an Elmo-inspired
birthday cake, there will always be demand for rich, delicious bakes.

7. Food Cart or Food Stand

The boom of Food parks in the last few years is testament of the Filipinos craving for a good spot that serves a variety of food. If
you have a good product, you can sign up for a spot on a food park.

8. Food Delivery Business

Online food delivery services like Foodpanda and Honestbee make it easy for Pinoys to order their food online. Others
cook and deliver homepacked meals to busy working Pinoys who do not have the time to leave their desks for a delicious meal.

9. Clothing Boutique
Got an eye for fashion? You can source your inventory directly from clothes makers/printing shops or buy in bulk at Divisoria and set
up a boutique to house your products.

10. IT & Network consulting and training services

Capital: P5, 000 – P20, 000
Difficulty: High
Requires: Standard Equipment, Technical, and Marketing.
 11. Photographer/Photography Business
Offering your camera skills to capture memories (weddings, birthdays, etc.) or for professional purposes (businesses, commercial
use) makes great use of your creative skills while generating a handsome fee.

12. Graphics, Animation, & Multimedia Design Business

Put your creative juices to good use! Companies and clients pay a handsome fee for services that produce rich and amazing
multimedia content.

F. THE MOST SUCCESSFUL ENTREPRENEURS IN THE WORLD

1. Jeff Bezos - Founder of Amazon.com, Jeff Bezos has an approximate net worth of 159.6 billion in September 2018, doubling
his net worth from just 12 months prior and making him the richest person in the world.
2. Bill Gates – Microsoft founder Gates is the second richest person in the world, with a net worth of over 90 billion in
September 2018.
3. Larry Ellison – Oracle founder and CEO, Ellison is now a full-time philanthropist with a net worth of 58.5 billion in March 2018,
making him the 10th richest person in the world.
4. Sergey Brin – Google co-founder Brin has a net worth of 47.5 billion in March 2018, making him the 13 th wealthiest person in
the world.
5. Elon Musk – An Internet mogul who founded Paypal, SpaceX and Tesla Motors, Musk’s net worth of 20.8 billion in September
2018 placed him as the 54th richest person in the world.
6. Mark Zuckerberg – The Facebook founder had an estimated net worth of over 71 billion in March 2018, making him the 5 th
richest person in the world. In January 2013, Zuckerberg reduced his annual salary base to 1 billion.

A. ANALYZE THE MARKET NEED

A market analysis is a quantitative and qualitative evaluation of a market. The goal is to look into the size of the market both in
volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms
of barriers to entry and regulation.

How to do a market analysis?

The objectives of the market analysis are to make sure that everything about the market is clear
and that the business if feasible and it is large enough to build a sustainable business.
These are the recommended items for market analysis:

 Demographics Segmentation
 Target Market
 Market Need
 Competition

1. Demographic Segmentation
Dividing the total people in the market based on the customer demographics.
Demographic segmentation portions the market on parameters like age of the customer, gender, income, family life cycle,
educational qualification, socioeconomic status, religion, etc. This helps in creating groups exhibiting a similar need and want, and
can be targeted in a much more better way by companies.

2. Target Market
A target market is a group of customers that a business has decided to aim its marketing efforts towards. As an entrepreneur,
one should have a well-defined target market to be able to create a strong marketing strategy. Product, price, promotion, and place
are the four elements of a marketing mix that has to be taken into consideration in defining the target market. It is proven
that a business must have a clear definition of its target market in order for it effectively provides what they need.
A target market consists of customers that share similar characteristics, such as age, location, income and lifestyle.
Target markets can be divided into primary and secondary target markets. Primary target
markets are those market segments to which marketing efforts are primarily directed and secondary markets are less
important.

3. Recognizing the Target Market

To build a solid foundation for a business, the entrepreneur must identify first the business’ target market. There is no
such thing as “one size fits all” when it comes to recognizing a market niche. The clearer the business can identify its target customer,
the more effective it could become in tailor-fitting its strategies in getting customers.
On the other hand, targeting a specific market does not mean excluding those who do not fit the criteria. Target marketing
focuses marketing budgets and brand message on a specific market, therefore is more cost-effective and efficient way to
reach customers to generate business.

4. Research the Competition

Competitors are like each companies enemies who always want bigger portion of the market share. By knowing the
competitor, an entrepreneur will be able to compare themselves to see what things that are effective and works for the other
companies in the industry. This can be done by researching on several internet platforms like Google and Yahoo as well as social
media sites like Facebook, Twitter and YouTube. Few other ways to do research would include asking customers, attending
conferences, and even hiring or pirating key employees of a competitor company

B. Identify the Market Needs

In starting a business, one good question to have in mind is if there is a consumer need for your product. Unless it does, you
may end up developing a plan, a product or solution that really doesn't have a problem to solve, which also means there is no market
to buy your product.
Importantly, businesses exist to give solution to customer's problems and meet their needs better than the competitors in the
marketplace, in a reasonable price.
A problem or need is a condition when consumers have the requirement for a solution that either does not exist, or the
available solution have some limitations or gaps that needs to be filled. Successful businesses identify these opportunities to
offer products or services and attempt to fill them with a solution.
Examples:
1. YouTube becoming the second largest search engine, next to its own parent company Google. There is a need for consumers
who prefer video contents be played rather than reading.
2. Podcasting gives opportunity to people who spends hours in driving and can now listen to different audio programs.
3. Uber passengers save time in waiting in the taxi line.

The key point to think of is, as an aspiring entrepreneur, you want to identify what the market (consumers) say is a problem, and not
what you believe is the problem.

NEEDS – necessary or desired things. Needs encourage us to act. Maslow defined a Human Needs Hierarchy which stated that the
lower needs must be met before an individual can strive to meet the higher needs.

Business Planning
Travelling with a map is a useful tool in order for you to visit places you want to visit; it is also the same with putting up a
business. A Business Plan is an effective and versatile tool for you to put up an effective business. It is somewhat called as a
“Businessman’s best friend” for which in today’s global and competitive environment, it is essential to do proper planning in entering
the business world. A business plan helps you to evaluate the viability of your business idea in a SMART way – specific,
measurable, attainable, realistic and time bound. It provides you a plan that will assist you in running your business and improves the
probability of success. Moreover, it serves as a “selling tool” and provides basis on you financial proposal.

Principles of Planning
1. Planning must be realistic. – It must be based on available resources – human, financial and physical resources.
2. Planning must be based on felt needs. – The objectives of the entrepreneur should fit the needs of the people in a
community. Such needs can be known through observations, personal interviews and questionnaires.
3. Planning must be flexible. – Resources, needs and economic conditions change. Planning should be adjusted to such changes
to be effective and relevant.
4. Planning must start with simple projects. – The most appropriate project for poor people with no business experiences is the
micro business. This would require very simple management and technology. It also needs simple and few resources in
terms of funds, materials and equipment.

Criteria of Effective Planning

1. The plan should state clearly its objectives.
2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms of quantity, quality, time and
cost.
3. The plan should state the policies, which should guide people in attaining the objectives.
4. The plan should indicate what department or unit will be involved in accomplishing the objectives.
5. The plan should indicate the time, which should be allowed for each activity.
6. The plan should specify the required resources and their corresponding costs.
7. The plan should designate the officers who will be held accountable for the accomplishment of the objectives.

Components of Business Planning

1. SWOT – The chances of a product or service can be evaluated through the SWOT analyses. Every product or service has its
own strength, weakness, opportunity and threat. Planning should include the improvement of the product/service in order
to survive competition.
2. Objectives – These should be specific and realistic. Such objectives can be daily, weekly, monthly and yearly. Example: 10%
increase in sales after 6 months of operations. Environmental factors should be considered in formulating business
objectives. Peace and order, power supply and government policies affect business activities.
3. Strategies – These are ways of accomplishing the objectives. Such ways are stated in the financial, production, marketing and
organizational plans of the enterprise. Example: In the objective of increasing sales by 10% after 6 months of
operations, one way of attaining it is through advertising, another way is to improve customer relations. It can also
be done by reducing the selling price.
4. Time frame – In business, time is gold. For this reason, an entrepreneur must be efficient in time management. Every activity
has its own time schedule. Activities which are completed on time save money.

Characteristics of a Sound Business Plan

1. Objective
2. Clear
3. Logical and simple
4. Flexible
5. Stable
6. Complete and integrated

Steps in Business Planning:

1. Evaluate your personal resources & interests & the resources of the community. - Check if you have the necessary
funds, skills or management experience, availability of raw materials, government financial & technical assistance, and your
interests in the business and good human relations or interpersonal skills essential to the success of the chosen field of
business.

2. Analyze your market. – Check if there is a good demand for your product or service, the number of competitors in the
market, your estimated share in the market, who are your customers and will they be interested in your product or service; If
it’s possible for your to offer better quality or a lower price or if the business would give you reasonable profit.
 3. Choose proper business location. – Is it near your prospective customers? Are there the necessary facilities such as electricity,
water, transportation and communication? Other alternatives should the chosen location is expensive? Is it accessible to raw
materials and other supplies?

4. Prepare a financial plan. – Identify your objectives, how much money do you need, how will you spend it, your sources of
funds, possible expenses as well as the return of your investments (ROI).

5. Prepare a production plan. – Check if it is more economical to rent or buy production equipment, if you can ensure or
improve your product design or quality, if your production facilities meet the demands, if you have inventory control and you
have a proper scheduling of production.

6. Prepare an organizational plan. – Check what type of business organization is most suitable and be aware of its
corresponding laws, policies, and requirements; what could be the advantages and disadvantages of each type of business
organization and who will be the officers and employees of your enterprise and their duties and responsibilities.

7. Prepare a management plan. – Identify your goals and objectives, strategies, business policies for your customers. Do you
have human resource development for your employees? What is your program of social responsibility?

8. Prepare a socio – economic plan – identify the contribution and help of your company to the community and to the
environment.

Importance of Business Planning:

1. It can eliminate business risks. – Business plans carefully studied the competence, interest and resources of the
entrepreneur against the needs of the needs of consumers, together with the presence of competitors.

2. It can minimize costs of production. – The resources of production such as money, materials, machines and manpower
are properly used and scheduled according to plan.

3. It can detect the weaknesses of the business operations. – Since plans and objectives are formulated in business
planning, alternative strategies can be designed.

Business Planning Format

Chapter I. Introduction
 Background of the Study – in this portion, the nature of the company must be discuss (trends, issues and reasons why
putting up a business)
 Company Logo – in this portion, the logo of the company must be presented together with the interpretation of each symbol,
character, words, etc. used.
 Vision and Mission – in this portion, SMART (specific, measurable, attainable, realistic and time – bound) idea must
be considered. Vision statement discusses the dreams of the company of what it wants to become. Vision Statement
should cover the company itself, the employees working on it, and its community. Mission Statement must support the
vision statement. It is almost the same with the vision statement but it is more concrete and action – oriented.

BUSINESS PLAN TEMPLATE

Executive Summary
1. My Business Logo and tagline would be:
2. My company name will be:
3. My ultimate purpose/goal in doing business is/are:
4. I plan to organize my company as (Sole, Corporation, Partnership, LLC, Other):
5. I have been in business since or plan on starting on:
6. Manager(s) for the company will be:
7. My experience as an owner is/are:
NOTES:

Products & Services

1. The products or services I sell are:
2. The features and benefits of what I am selling are:
3. My products/services differ from my competition by:
4. What makes my product/services unique and desirable is?
5. Customers will buy from me because:
Notes:

The Industry, Competition & Market

1. I consider my competition to be:
2. How I will measure against the competition:
3. My local competitors are:
4. My national competitors are:
5. Some of the trends I see in my industry are:
6. Some potential areas I see for growth are:
7. My typical customers have these characteristics in common:
8. These segments of customers are under-served by competition
Notes:

Marketing Plan
(Marketing should address the four P’s – Product, Price, Placement, and
Promotion)
1. My product or service is/are:
2. My pricing strategy is (For example: premium, every day, low price, frequent sales):
3. The places/channels I will sell my product or service are:
4. I will promote my product or service by:
5. My competitive advantage is:
6. I can add value or compete on the following non-price issues:
7. I will distribute my product or service by:
8. My use of advertising will consist of:
9. I will get feedback from my customers by:
Notes:

Operating Plan
1. The location of my business is:
2. My hours of operation will be:
3. This is a good location for my business because:
4. I will be involved with the business by completing the following duties:
5. The equipment/furniture/fixtures I need for my business would include:
6. If I need to hire new employees, I will need to hire for these new positions:
7. I will provide the following benefits to my employees:
8. I will recruit my employees by or from
9. My suppliers and vendors are:
10. Changes I am considering for the business (if purchasing an existing business):
Notes:

Management & Ownership

1. The owners of my company are:
2. My attorney is:
3. My accountant is:
4. Other professionals that I will use are (accountant, banker, insurance agent, engineer, consultant, etc.):

SWOT Analysis
5. The strengths of my business are (internal characteristics):
6. The weaknesses of my business are (internal characteristics):
7. I see the following opportunities for my business (external characteristics):
8. I see the following threats/challenges for my business (external characteristics):
Notes:

Financials
1. The total investment required is:
2. The collateral I can use for financing includes:
3. If I am short on money for my project, I can get more from:
4. My bank is, or the banks I would like to work with are:

Needs as the Motivation for Buying Products

Consumers buy products because of needs that requires satisfaction. Need is what propels buyers to buy a product.
Every need must be satisfied by a specific product. Knowing the needs of the market is highly important in order for them become
loyal and even stewards of companies that they love and support due to the products that a valued company creates. A
famous determinant of human needs is the Maslow’s Hierarchy of Needs.

The Maslow’s Hierarchy of Needs

Physiological Needs - This is the first stage in the Maslow’s Hierarchy of Needs. Basic needs are the requirements for human
existence. If these requirements are not met, the human body cannot function properly. Physiological needs are the most vital and
therefore should be met first.
Examples include air, water, and food as requirements for survival in all animals, including humans. Clothing and shelter
provide necessary protection. While maintaining an adequate birth rate shapes the intensity of the human sexual instinct, sexual
competition may also shape said instinct.

Safety needs - The second stage in the Maslow’s Hierarchy of Needs. Once physiological needs are satisfied, safety needs take
precedence and dictates behavior.
Example, in the absence of physical safety, people may experience post-traumatic stress disorder or trauma. Safety needs
include personal security, financial security, health and wellbeing, safety net against accidents and illness and their adverse
impacts.

Social Needs - Third stage in the Maslow's Hierarchy of Needs, also known as the stage for love and belongingness.

Esteem Needs - The fourth stage of the Maslow's Hierarchy of Needs. Once basic needs have been satisfied, esteem needs becomes
essential to an individual. Once an individual have adequately met their need for love and belonging, they can begin to
cultivate positive feelings of self-worth and self-esteem.
These needs include:
 Self esteem
 Respect
 Achievement
 Confidence
 Recognition
 Accomplishment

Self-actualization Needs - The fifth and the last stage of Maslow's Hierarchy, it is the highest level of the Maslow’s hierarchy. This
level pertains to what a person’s optimum potential is and realizing that potential.
 THE MASLOW’S HIERARCHY OF NEEDS

D. PRODUCT AND SERVICES

1. What are Products and
Services?
"A product is a tangible item that is put
on the market for acquisition, attention, or consumption, while a service is an intangible item, which arises from the output of one or
more individuals. Although it seems like the main distinction between the two concepts is founded on their tangibility, that is
not always the case. In most cases services are intangible, but products are not always tangible.”

Product marketing Service marketing

Meaning Product marketing refers to the process Service marketing implies the marketing
in which the marketing activities are aligned to promote of economic activities, offered by the
and sell a specific product for a particular segment. business to its clients for adequate
consideration.
Marketing mix 4 P’s 7 P’s
Sells Value Relationship
Who comes to whom? Products come to customers Customer come to service
Transfer It can be owned and resold to another party. It is neither owned nor transferred to
another party.
Returnability Products can be returned. Services cannot be returned after they
are rendered.
Trangibility They are tangible, so customer can see and touch it, They are intangible, so it is difficult to
before coming to the buying decision. promote services.
Separability Product and the company producing it, are separable. Service cannot be separated from its
provider.
Customization Products cannot be customized as per requirements. Services vary from person to person; they
can be customized.
Imagery They are imagery and hence, receive quick response from They are non-imagery and do not receive
customers. quick response from customers.
Quality comparison Quality of a product can be easily measured. Quality of service is not measurable.

2. Sources of Business Ideas

Business ideas are thoughts that when implemented can lead to income generalization. Entrepreneurs first come up with ideas from
different sources that should lead them to starting a well-planned business.
Here are some of the sources of business ideas:

1. Surveys - Business ideas can be generated from surveys. Through this type of data generation method, entrepreneurs will
have awareness of what customers are looking for and therefore an opportunity of a business to innovate based on the
responder’s answers.
2. Training - This is probably the most home-based business. For example, there are seminar that conducts how to cook,
bake, handcraft, and even repair things. Institutions such as NegoEskwela and TESDA are some of the country’s institution
that offers short courses and trainings for aspiring entrepreneurs.
3. Experience - Probably the best and effective source of business idea is from experience. This can be from work or even
at school. As they say experience is the best teacher, which means that good things as well as mistakes from experience can
be valuable factors in creating and growing a business.
4. Hobbies - This can be a good business idea because it is something that an entrepreneur is fond of doing and can
enjoy while doing the business. Most car enthusiasts for example create business out of their own hobby as a way for
them to enjoy while they operate their business.
5. Talents - A talent is something that can be innate in a person, or that has been honed for years. Someone’s talent can be a
good idea for business because like a hobby, it is something that can be enjoyed, and entrepreneur will not have the
feeling of working while doing it. For example, a talented musician who has a passion of teaching and sharing his or her craft
can teach and start a talent school that help potential musician and artists improved their gift.
 6. Market Gaps - Also known as “niche”, spotting a gap in the market can also form a great business idea. A market gap can
mean an important area in the market that is not occupied and therefore is can be filled with product to satisfy the market.
7. Events - A business can also be created through attending events in which new ideas are exchanged. It is also a venue
where people with similar interests gather and where the birth of new business can happen.
8. Media - An idea can also come from the media. Reading magazines, newspapers and such published materials that
contain business related issues can help one bring about.

3. Life Cycle Through the

Stages

1. At the Introduction stage the product comes to the market and the business looks to get a foothold on the sales ladder by:
Establishing branding and assuring the market of the quality of the new product.
An initial low pricing policy to get into the market, though with little competition, price may be high initially to recoup
development costs.
Selection of a distribution model to get the product onto the market.
Promotion of the product through aiming it at specific target groups such as online forums.

2. After successful Introduction comes the Growth stage. This will look to take developments at the first stage up to another level
by:
Maintaining the quality of the product and adding any extra services or support that becomes obvious during introduction.
Keeping the price at a good level to maintain sales growth.
Increasing distribution and sourcing new, faster ways of getting the product onto the shelves.
Marketing campaigns aimed at a broader audience and at growing market share for the product.

3. With growth established, Maturity is the next stage of the life cycle. The business deals with this by:
Adding features that will make the product differ from the inevitable competitors that enter the market.
Cutting price to counter competition.
Revising distribution channels and using incentives to encourage stores to stock the original product in preference to
newcomers.
New promotions that aim to show differences between products.

4. When the Decline happens, the business will consider:

Keeping the product on the market but adding or removing features or finding new uses for it.
Reducing costs and production and keeping it just for a niche segment of the market.
Discontinuing the product or selling the production rights to another company.

VIABILITY, PROFITABILITY AND CUSTOMER REQUIREMENTS

1. How to Determine Market Viability for a Product or Service
Due diligence on the product is the approach used to determine the feasibility of a particular product or service. Popular
strategies include target market study, analysis of the industry and analysis of the competitors. Before implementing a solution, it
is also important to evaluate your internal competences, along with potential threats.

a. Perform Market Research

Market research is an estimation of the possible size and characteristics of customers or firms who could be buying your
product. The market size is the cumulative number of potential consumers who are under-represented or not covered by current
solutions at all. Identifying target markets' attributes and purchasing patterns helps paint the picture of the possible
advantages consumers are looking for. A sales forecast can be produced by combining the size of the market with forecasts for the
scope and frequency of transactions. Projecting sales helps you know if you are going to make enough to cover expenses and earn a
profit.

b. Analyze the Industry

The analysis of an industry is a study of an industry's current scope and the types of products being provided. A brand new
product means that in a new market, you will have the first-mover advantages. This advantage offers you the ability to connect
to the entire business potential. An overview of the number of potential competitors, the solutions that they provide and their price
points is essential in a developed industry.

2. PESTEL: A powerful complement to SWOT

“PESTEL, a complementary tool to SWOT, expands on the analysis of external context by looking in detail at specific types of issues
that frequently have an impact on implementation of project/ initiatives. The term ‘PESTEL’ refers to the domains it considers:
Political, Economic, Social, Technological, Environmental and Legal. PESTEL involves identifying the factors in each of these six
domains that are relevant for the project being considered.”
Analyze Competitors
Competitor analysis includes comparing the characteristics, strengths and weaknesses of the product or service compared to
those provided by the competitors. Sometimes, companies create spreadsheets to map out the plans of any major competitor.
You need courage before entering a market that your intended solution provides strong advantages over the current
solutions. Superior performance, elite operation, reduced costs, exclusive features or natural materials may be your advantages.
Such advantages are important in order to create a market place and to attract clients seeking your distinct advantages.

Conduct a SWOT Analysis

A SWOT analysis is used to determine your internal abilities as well as external factors that may impact your performance. SWOT
is an acronym of strengths, weaknesses, opportunities and threats. Your strengths include the ammunition for creating, promoting
and providing a distinct quality approach from competitor companies. Your weaknesses, or vulnerabilities, give clear insight into
the hindrances to success. You may either build on or embrace shortcomings as intrinsic to your business model. You can
determine, in an honest evaluation, that your weaknesses are too great for entering the market. Analyzing opportunities and
threats lets you plan for market penetration with a clear view of how to make money, and how to protect yourself from future losses.

Strengths
Strengths are internal, positive attributes of your company. These are things that are within your control.
 What business processes are successful?
 What assets do you have in your team, such as knowledge, education, network, skills, and reputation?
 What physical assets do you have, such as customers, equipment, technology, cash, and patents?
 What competitive advantages do you have over your competition?

Weaknesses
Weaknesses are negative factors that detract from your strengths. These are things that you might need to improve on to be
competitive.
 Are there things that your business needs to be competitive?
 What business processes need improvement?
 Are there tangible assets that your company needs, such as money or equipment?
 Are there gaps on your team?
 Is your location ideal for your success?

Opportunities
Opportunities are external factors in your business environment that are likely to contribute to your success.
 Is your market growing and are there trends that will encourage people to buy more of what you are selling?
 Are there upcoming events that your company may be able to take advantage of to grow the business?
 Are there upcoming changes to regulations that might impact your company positively?
 If your business is up and running, do customers think highly of you?

Threats
Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing
them if they occur.
 Do you have potential competitors who may enter your market?
 Will suppliers always be able to supply the raw materials you need at the prices you need?
 Could future developments in technology change how you do business?
 Is consumer behavior changing in a way that could negatively impact your business?
 Are there market trends that could become a threat?

IS PROFITABILITY OR GROWTH MORE IMPORTANT FOR A BUSINESS?

For a company to survive and remain attractive to investors and analysts, profitability and growth are both critical and necessary
to be profitable and stay in business. Profitability is inevitably vital to the life of a corporation, but development is essential to long-
term survival.

1. Profitability
The net profit of a corporation is the income after deducting all the expenditures related to the manufacture, distribution, and
selling of the goods. Profit is "money in the bank." This goes directly to a company's owners or shareholders, or is
reinvested in the business. Profit is the primary aim for any company, and for a company that doesn't have investors or funding at
first, profit may be the sole resource of the business.
A income statement demonstrates not just the performance of a company but also its costs and expenditures for a given period,
usually over a year. The income statement is important to calculate profitability in order to build a profitability ratio. One
can measure several different profitability ratios from which to assess the financial position of a business.

2. Growth
It is important to assess and concentrate a company's productivity at the beginning, or start-up.
At the other hand, demand and revenue growth is the way to attain the initial profitability.
Identifying opportunities for growth will become the next important thing on the target list of every organization after a company
moves past the startup process. Growth is basically an expansion for a company, making the business larger, growing its demand, and
eventually making it more successful. It is possible to calculate growth by looking at certain specific figures, such as total revenue,
number of employees, market share and turnover.

3. The Bottom Line

When it comes to market success, productivity and development all go together. Income as a corporate organization is vital to basic
financial survival while growth is vital to income and long-term success. Investors should consider any factor that relates to a
company.

4. THE FOUR NEEDS OF A CONSUMER

We often think that all we must do to meet customer expectations is to provide our product or service and they will be happy. This
simply is not the case. The aim of any business should be to have loyal trustworthy customers who continually use your product or
service.

The four crucial things customer needs are:

 Fair price
 Good service
 Good product
 Feel valued

1. Fair price
Pricing may be important to you, but it is also important to your clients. They need the fair pricing. When determining if your price
is fair, you can take advantage of looking at the ecommerce stores of your competitor so you can calculate the expectations of
your customers. Although we agree that price anchoring is not always the most intelligent way to decide on pricing, it is
important to know where you stand when opposed to your competition. If you charge a lot more than your rivals, then seriously
question that your product is better than theirs. It is okay to charge more to balance it with improved customer service, such as a
loyalty plan or incentive benefits to justify the higher price point. The main thing about pricing is accountability. Whether you're
above or below the market rate, let your customers know why, and exactly what they're getting for their money.

2. Good service
Strong customer service has consistently been shown to encourage company to charge more. Customers are constantly suggesting
that they would be happy to pay more for a product if it meant that customer service would improve. So, you have to think about
how to fulfill customer expectations.
Having a strong customer support team makes your customers more confident about you. They understand that issues will be dealt
with and fixed in a timely manner and they are more receptive to when things end up wrong. However, good customer service isn't
an excuse for raising your prices. If you can afford your products and provide excellent customer service, better still

3. Good product
Obviously, creating a solid product is a major consumer need, and a great need for you too. Excessive processing costs do
not make sense because no one is buying your bad product. Be positive in the offering, be open to ideas for change and always try to
give the consumer precisely what they need, not what they think they need.

UNDERSTANDING THE MARKET

1. What is a Market?
 A environment in which two or more parties participate in the exchange of goods, services, and information is called
a market. Ideally a market is a place where two or more people are interested in the buying and selling.
 The two parties involved in a transaction are called seller and buyer.
 In return for money the seller sells goods and services to the buyer. In the market to be competitive, there needs to be more
than one buyer and seller.
2. What is Segmentation?
“Segmentation refers to a process of bifurcating or dividing a large unit into various small units which have similar or related
characteristics.”
Market Segmentation
 Market segmentation is a marketing term dividing the entire market into smaller subsets of customers with specific tastes,
demands and expectations.
 A market segment is a small unit composed of likeminded individuals within a large market.
 One segment of the industry is absolutely different from the other.
 A market segment includes individuals with common preferences and thinking along the same lines.
 Individuals from the same group react in a manner similar to market fluctuations.
Basis of Market Segmentation Gender
 Marketers are separating the market into smaller, gender-based divisions. Men and women have different desires and
expectations, and thus require segmentation.
 Companies need different marketing approaches for men which obviously will not work for women.
 A woman does not buy a product intended for men and vice versa.
 Gender segmentation is significant in many industries such as cosmetics, clothing, jewelry.
Age Group
Division based on age group of the target audience is also one of the ways of market segmentation.
 The products and marketing strategies for teenagers would obviously be different than kids.
 Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams
 Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags
 Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels etc.
Income
Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to
their monthly earnings.
The three categories are:
 High income Group
 Mid Income Group
 Low Income Group

2. Types of Market Segmentation

Psychographic segmentation
Individual behaviors are the basis for such segmentation. The attitude, interest, and value of the individual enables marketers
identify them into small groups.

Behavioral Segmentation
Consumers' loyalties to a brand help advertisers divide them into smaller groups, each category consisting of
individuals loyal to a brand.

Geographic Segmentation
Geographic segmentation refers to the classification of market into various geographical areas. A marketer can‘t has similar
strategies for individuals living at different places.

CONCEPT AND COMPONENTS

OF MARKETING MIX
“Marketing includes a number of activities. To begin with, an organization will determine how to serve its target group of
customers. If the target group has been determined, the product shall be placed on the market by offering the appropriate
product, cost, distribution and promotional effort. “These are to be combined or mixed in an appropriate proportion to achieve the
marketing goal. Such mix of product, price, distribution, and promotional efforts is known as ‘Marketing Mix’.”

According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm can use to influence the buyer’s
response”. “The controllable variables in this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion].
Each firm strives to build up such a composition of 4‘P’s, which can create highest level of consumer satisfaction and at
the same time meet its organizational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it
varies from one organization to another depending upon its available resources and marketing objectives. Let us now have a brief
idea about the four components of marketing mix.”

“The marketing mix definition is simple. It is about putting the right product or a combination thereof in the place, at
the right time, and at the right price.”
1. Product
“Product refers to the goods and services offered by the organization. Product can also take the form of a service like an air travel,
telecommunication, etc. Thus, the term product refers to goods and services offered by the organization for sale.”

CONCEPT OF PRODUCT AND ITS CLASSIFICATION

“As stated earlier, the product refers to the goods and services the company provides for sale. Here advertisers have to
understand that buyers are not only interested in a product's physical characteristics, but a collection of tangible and intangible
qualities that fulfill their needs.
For starters, when a customer buys a washing machine, he buys not just a machine but a gadget that helps him wash his clothes. This
should also be remembered that the word product refers to something for consumption, purchase, or use which can be sold to a
customer. The term product is therefore described as "something that can be offered to a market in order to satisfy a want." It
normally has physical objects and services included. However, in a wider context it covers not only physical products and services but
also support services such as brand name, packaging accessories, installation, after-sales service, etc.”

PRODUCT CLASSIFICATION
Product can be broadly classified based on
1) use,
2) durability, and
3) tangibility.

Let us have a brief idea about the various categories and their exact nature under each head, noting while in marketing the terms
‘product’ and ‘goods’ are often used interchangeably.

1. Based on use, the product can be classified as:

a) Consumer Goods; and
b) Industrial Goods.

a) Consumer goods. “Goods meant for personal consumption by the households or ultimate consumers are called consumer
goods. This includes items like toiletries, groceries, clothes etc.

Based on consumers’ buying behavior the consumer goods can be further classified as:”
(i) Convenience Goods;
(ii) Shopping Goods; and
(iii) Specialty Goods.

(i) Convenience Goods. Do you remember, the last time when did you buy a packet of butter or a soft drink or a grocery item?
Perhaps you do not remember, or you will say last week or yesterday. Reason is these goods belong to the categories of convenience
goods which are bought frequently without much planning or shopping effort and are also consumed quickly.
Buying decision in case of these goods does not involve much pre-planning. Such goods are usually sold at convenient retail outlets.

(ii) Shopping Goods. These are goods which are purchased less frequently and are used very slowly like clothes, shoes, household
appliances. In case of these goods, consumers make choice of a product considering its suitability, price, style, quality and
products of competitors and substitutes, if any. In other words, the consumers usually spend a considerable amount of
time and effort to finalize their purchase decision as they lack complete information prior to their shopping trip. It may be
noted that shopping goods involve much more expenses than convenience goods.

(iii) Specialty Goods. Because of some special characteristics of certain categories of goods people generally put special efforts to buy
them. They are ready to buy these goods at prices at which they are offered and put in extra time to locate the seller to
make the purchase. The nearest car dealer may be ten kilometers away, but the buyer will go there to inspect and purchase it. In
fact, prior to making a trip to buy the product he/she will collect complete information about the various brands.
Examples of specialty goods are cameras, TV sets, new automobiles etc.

b) Industrial Goods. “Goods intended for consumption or use as inputs in the manufacture of other products or the supply of
some service are called 'industrial goods. These are meant for non-personal and commercial use and include (i) raw materials, (ii)
machinery, (iii) components, and (iv) operating supplies (such as lubricants, stationery etc.).

2. Based on Durability, the products can be classified as:

a) Durable Goods; and
b) Non-durable Goods.
 a) Durable Goods: Durable goods are products which are used for a long period i.e., for months or years together.
Examples of such goods are refrigerator, car, washing machine etc.
b) “Non-durable Goods: “Non-durable goods are products that are normally consumed in one go or last for a few uses.”
Examples of such products are soap, salt, pickles, sauce etc.”

3. Based on tangibility, the products can be classified as: (a) Tangible Goods; and (b) Intangible Goods.
(a) “Tangible Goods: “Most goods, whether these are consumer goods or industrial goods and whether these are durable or non-
durable, fall in this category as they have a physical form, that can be touched and seen. ”Thus, all items like groceries, cars, raw-
materials, machinery etc. fall in the category of tangible goods.

(b) “Intangible Goods: Services are essentially intangible activities which provide want or need satisfaction. Medical treatment,
postal, banking and insurance services etc., all fall in this category. ”Intangible goods refer to services provided to the individual
consumers or to the organizational
buyers (industrial, commercial,
institutional, government etc.).

2. Price
The price is the amount paid in respect of a good or service. It is the second most significant marketing mix item. It's a
difficult job to set the commodity price. Many considerations, such as demand for a commodity, costs involved, the willingness of
customers to pay, costs paid by competitors for similar goods, government regulations, etc., have to be kept in mind when
setting the price. In fact, pricing is a very crucial field of decision because it affects the demand for the product as well as the
company's profitability.

PRICING AND FACTORS AFFECTING PRICING DECISIONS

“As mentioned, price is the value he / she receives from buying the product / service, in terms of money spent by customers for the
benefits. This is in simple terms, in terms of money, the exchange value of goods and services. The factors usually considered while
determining the price of a product can be broadly described as follows:”

(a) “Cost: No company will succeed unless their manufacturing and distribution costs are covered. The retail prices are calculated
in large quantities of goods by applying an appropriate profit margin to the costs. Higher the rate, the higher the price is likely to
be, the lower the price is likely to be.

(b) “Demand: Demand also has a big influence on the price. If the availability of a product is insufficient and the demand is
high, people buy, even if the producer charges high prices. But how high the price will be depends on the ability and
willingness of prospective customers to pay, and their desire for the product. “In this context, price elasticity, i.e.
responsiveness of demand to changes in price should also be kept in view.””

(c) “Competition: The price charged by the competitor for similar product is an important determinant of price. A marketer
would not like to charge a price higher than the competitor for fear of losing customers. Also, he may avoid charging a
price lower than the competitor. Because it may result in price war which we have recently seen in the case of soft drinks, washing
powder, mobile phone etc.””

(d) “Marketing Objectives: A firm may have different marketing objectives such as maximization of profit, maximization of sales,
bigger market share, survival in the market and so on. The prices have to be determined accordingly. For example, if the objective is
to maximize sales or have a bigger market share, a low price will be fixed. Recently one brand of washing powder slashed its
prices to half, to grab a bigger share of the market.””

(e) “Government Regulation: Prices of some essential products are regulated by the government under the Essential Commodities
Act. For example, prior to liberalization of the economy, cement and steel prices were decided by the government. Hence, it is
essential that the existing statutory limits, if any, are also kept in view while determining the prices of products by the producers.””

3. Place
The products are made to sell to customers. These must be made available to customers at a location where they can make
transactions conveniently. The company has to determine whether to sell to the retailer directly or through the
distributors / wholesaler, etc. It might also plan on selling it directly to customers. The option is directed by a number of factors
you'll learn about later in this chapter.

CHANNELS OF DISTRIBUTION
“You are aware that while a manufacturer of a product is located at one place, its consumers are located at innumerable
places spread all over the country or the world. The \manufacturer must ensure the availability of his goods to the consumers
at convenient points for their purchase. He may do so directly or, as stated earlier, through a chain of middlemen like distributors,
wholesalers, and retailers. The path or route adopted by him for the purpose is known as channel of distribution. A channel of
distribution thus, refers to the pathway used by the manufacturer for transfer of the ownership of goods and its physical transfer
to the consumers and the user/buyers (industrial buyers).” Kotler, (2010).
Primarily a channel of distribution performs the following functions:
a) It helps in establishing a regular contact with the customers and provides them the necessary information relating to the
goods.
b) It provides the facility for inspection of goods by the consumers at convenient points to make their choice.
c) It facilitates the transfer of ownership as well as the delivery of goods.
d) It helps in financing by giving credit facility.
e) It assists the provision of after sales services, if necessary.
f) It assumes all risks connected with the carrying out the distribution function.

TYPES OF CHANNELS OF DISTRIBUTION

Generally speaking, we are not purchasing products directly from the manufacturers.
Typically the producers / manufacturers use one or more middlemen 's services to supply their products to consumers. But even with
no intermediaries in between they have direct contact with the customers. According to Philip Kotler (2010), the various
channels used for distribution of consumer goods can
be described as follows:

(a) Zero stage channel of distribution

“Zero stage distribution channel exists where there is direct sale of goods by the producer to the consumer. This direct contact
with the consumer can be made through door to door salesmen, own retail outlets or even through direct mail. Also, in case of
perishable products and certain technical
household products, door- to-door sale is an easier
way of convincing consumer to make a purchase.”
According to Kotler, (2010).

(b) One stage channel of distribution

Kotler (2010) “In this case, there is one middleman

i.e., the retailer. The manufacturers sell their
goods to retailers who in turn sell it to the
consumers. This type of distribution channel is
preferred by manufacturers of
consumer durables like refrigerator, air
conditioner, washing machine, etc. where
individual purchase involves large amount.”

7 P’s Marketing Mix

 Price
 Promotion
 Place
 Product
 People
 Process
 Physical Evidence