ENTREPRENEURSHIP

LECTURE NOTE 2 – DEVELOPING A BUSINESS PLAN WEEKS 3 AND 4 (1 ST QUARTER)

I. LEARNING OUTCOMES Reaching Your Potential Market (Lake, L., 2019)
Learning Competencies /Learning Outcomes/ Objectives
At the end of this module, the learners are expected to: Once you've identified and chosen a potential market to begin targeting, you will need
a) recognize a potential market new marketing strategies in place to communicate with them. Use this profile to
 analyzing the market need identify:
 determining the possible product/s or service/s that will meet the  The demographic information that people in a group have in common.
need;`and  The best forms of media to reach them.
 Screen the proposed solution/s based on viability, profitability, and  How they prefer to shop and make purchases.
customer requirements  The concerns, struggles, or problems that you can help them overcome.
b) Select the best product or service that will meet the market need.  What values matter to them, both in everyday life and when shopping
 The language that resonates with them.
II. CONTENT
Market Definition
LESSON 2: DEVELOPING A BUSINESS PLAN The set of all actual and potential buyers of product and services.

Definition of marketing starts with the total population and narrowing down level by
LESSON 2.1: RECOGNIZING A POTENTIAL MARKET level.
There are different terms used to understand these levels.
___________________________________________________________________________________________

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
Potential Market. It is the total population in the market that is interested to buy a
product and service
Available market. Within the potential market all those people with enough money
to buy products and services.
Qualified Available Market. People in the available market who are permitted to buy
the available products and services.

Potential markets allow you to:
 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.
Types of Potential Markets
Potential markets take one of three forms:
 New products you market to your current customers.
 New products you market to new customers.
 Current products you market to new customers.
Target Market. It is the segment of the available market that a company ready to
serve it.
Penetrated Market. those customers in the target marketing purchased the products
and services.
Your market consists of:
1. Existing customers: People who have already purchased your product
2. Prospects: People who have not yet purchased your product but are
considering it
3. Target market users: People in your target market who are not currently
looking for a solution

FACTORS TO CONSIDER OF A NEW ENTREPRENEUR

a) know your product or service
b) analyze the market potentials
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c) determine the marketing strategy d) Liberal credit terms and interest rates
d) know the competitors 4. Treats to Product Profitability and Market Expansion:
e) do not set your laurels a) Entrance of Competition
b) The supply of raw materials will be limited as other competitors will be
Environmental Scanning getting the same suppliers.
c) The emergence of leftwing labor unions
The following factors are contributory to the development of customer satisfaction:
1. Business location for small entrepreneurs. My proposed business Competitor A Competitor B
 Rent and space  Prospective sales volume Strengths Production likely to be Good brand image Product is cheaper
 Terms and Lease agreement  Municipal or city ordinance sited close to retailers and range of than A and sells
including taxes and fees than can deliver at products well. They offer
 Types of goods or merchandise  Location of the areas short notice good margin to
 Income level of prospective retailer
customer Weaknesses Difficult to find good Products more Poor quality
packing expensive than B. product, poor
2. Location for small industrial plant or manufacturing facilities uses synthetic label design. I’m
 Land area  Building and other utilities colors and told by retailers
 Facilities for expansion  Plant site accessibility preservatives that supplies are
 Power and utilities irregular and not
always the
Strength, Weaknesses, Opportunities and Threats (SWOT) amount ordered.
Opportunities Retailers say demand Strong promotion Appears to be
SWOT ANALYSIS is an entrepreneurial tool in determining the profitability of the for products without by A. expanding
business operation. Opportunities carries with it some risk involved and this should be additives is increasing. deliveries to new
look into carefully. The strengths and weaknesses are internal factors the entrepreneur I can produce without areas according to
while the opportunities and threats are external factors. added colors. newspaper
reports.
The product must be evaluated along the following areas: Threats There are few wealthy Cheaper products May have over-
1. Product Strength in the Market must have the following: consumers and price is than B. expanded
a) Available technology in product Processing most important factor. distribution
b) The sources of raw materials must be abundant and at lower price I am not yet sure of network and
c) Skilled workers must be available production costs. failing to make
d) Capital investment in machinery and operating expenditures deliveries
e) Expertise and technical skills of the management team ((adapted from: Starting a Small Food Processing Enterprise, by Fellows, Franco
and Rios)
2. Characteristics of Weak products and Weak Management:
a) Poor quality and high price d) Supply and demand Strength
b) Product design and appeal e) Weak product management this is what gives strength to your company. Rather, it is an ammunition for
c) Production cost cultivation, promotion and delivering a quality solution that stands out from your
competitors.
3. Sustainable Product Opportunities in the Market:
a) Product demand Weakness
b) Presence of poor quality in the market This is an obstacle or obstacle to your business. Example: your product is poorly
c) Government policies and support made, or repackaged. The materials are very cheap and break easily
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Opportunity
These are the opportunities that can lead to the growth of your business or be the Categories of a Business Plan
basis for you to rise above your competition.
Threats 1) Business Plan for Profit
These are the threats to your product or business that can cause losses or cause you 2) Marketing Plan
to be left behind in the field of success. 3) Project Plan
4) Business plan for Non-profit and government agency
BUSINESS PLAN 5) Operational Plans
A business plan is a formal statement of a set of business goals, the reasons
why they are believed attainable, and the plan for reaching those goals. HOW TO PRESENT A BUSINESS PLAN?
☛ It is the blueprint of the business that the entrepreneur would like to start.  Tell a compelling story
☛ The road map to guide the future of the business or venture.  Exhibit confidence and professionalism
 Cover the basics
In creating or searching to business opportunities, one must consider the following  Adopt a cooperative attitude when answering questions
factors:
1. the needs of the society 5. availability of raw materials GENERAL FORMAT OF A COMPREHENSIVE BUSINESS PLAN
2. availability of capital resources 6. human resources I. INTRODUCTION
3. business inclination 7. nature of product or services The introduction contains the rationale and the background of the study
4. clientele undertaken. It should include the importance of the project and the proponent’s
background and their desire to establish the business.
Basic Phases of Business Plan II. PROJECT SUMMARY
1. marketing and distribution Study A. Name of the Firm
2. Production and technology study B. Business Location
3. Financial management C. Brief Description of the Business
1. Brief history or how the business was organized
WHY WRITE A BUSINESS PLAN? WHO READS IT? 2. Highlights of the findings in every phase of the business study.
III. MANAGEMENT AND PERSONNEL COMPONENTS
Users of Why the Business Plan is Important to This User IV. MARKETING STUDIES
Business Plan A. Market Profile- this refers to the market segmentation for the distribution of the
Entrepreneur  serves as a road map for managing the business product or service.
 identifies the resources needed to operate and grows the B. Demand Analysis
business 1. Projected consumption in the first year of operation, then Five years and Ten
 allows the entrepreneur to anticipate potential business risks years’ operation
Lender  allows the lender to assess whether the entrepreneur will be 2. Major segment users of the product and their location.
able to meet debt and interest payments C. Supply Analysis
 provides information about collateral or tangible assets that 1. Sources of Product Supply
can be secured for the loan a. Foreign suppliers
Investor  allows the investor to gauge whether projected returns are b. Local suppliers
acceptable 2. Factor analysis of the Past and Future Supply Chain
 provides information about the character of the D. Competitive Analysis
entrepreneur and about the capability of the venture’s 1. Selling Price- refers to the selling price of the product.
management team 2. Competitions- refers to the competing product in the markets as to its
Table 1.1 Value of the Business Plan to Selected Users quality and market acceptability.

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3. Distribution and Cost of Transportation- refers to the transfer or movements d. Production, costing, administrative expense and cost of sales and other
of products from the producer to the ultimate user. projected financial expenses.
4. Channel of Product Distributions- refers to the means of reaching the target B. For existing Project
market or it is the method or strategy to penetrate a particular market 1. Audited Financial Statement- last 3 years
segments a. Balance sheet
5. General Competitive Practice- it is the analysis of how competitors distribute b. Income statement
the product to existing end users. c. Cash flow
E. Program Analysis of Marketing Strategies 2. Fixed assets, Capital investments, depreciation used in Capital Assets
1. Geographic Segmentation Strategy- refers to the place of target market and 3. Tax Assessment, Liabilities, and other Payables
the approaches to penetrate the market niche. 4. Financial Trends and Ratio Analysis
2. Psychographic Strategy- refers to educational background and the lifestyle 5. Financial Cost for administrative expenses, Production and Selling expense
of target market. 6. Financial Projection for the Next Five Years
3. Demographic Segmentation Strategy- refers to the target market as sex, age, 7. Financial Analysis for Return of Investment. Return of Equity, Break even
income, and the other personal factors of the target market. Analysis, Production Volume and Price Analysis.
4. Pricing strategy- this has something to do with the price index of any pricing
strategy that will attract customers. MICRO BUSINESS PLAN
5. Channel distribution- the choices could be retailers, wholesalers, dealership, The major objective of business plan is to assess, examine and analyze the
franchise, or direct marketing. viability or feasibility of the study.
6. Promotion and advertising-media network, personal selling, billboards, or A. Executive Summary
any media penetration strategy. B. Marketing Plan
C. Operations Plan
V. PRODUCTION D. Financial Plan
a) Product specification
b) Production process BUSINESS PLAN OUTLINE
c) Plant rated capacity
d) Machinery and equipment MAJOR SECTIONS TYPICAL CONTENT
e) Plant location
f) Building and facilities Introductory page  Business name and address
g) Raw materials  Names and address of business owners/ entrepreneurs
 Nature of the business
h) Power supply and utilities
 Statement of financing needed
i) Production cost  Statement of confidentiality of the report (optional)
Executive summary  Highlights of the business plan summarized in two or
VI. FINANCIAL STUDIES three pages
A. For New Business Venture Environmental and  Conditions of the general environment (ex. sociocultural,
1. Total Project Cost- industry analysis technological, economics, and politico-legal conditions)
2. Capital Investments required  Conditions of the specific environment (ex. supply and
3. Pre-operating cash flow and its relation to time table- financial projections demand conditions, competition)
for the first year of operation, for the five-year operation in projected Description of the  Products and/or services
business  Size of the business
balance sheets and income statements.
 Mission statement and core values
4. Supporting Schedules in the Financial Statements and income
 Location of the business and its major physical assets
a. Collection period for projected sales or revenue  Background of the business owners/entrepreneurs
b. Inventory levels Production plan  manufacturing process
c. Payments for purchases and expenses  physical plant
 machinery and equipment

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 suppliers of raw materials the general environment where the entrepreneur can identify business
 future capital equipment needs opportunities from and where the future business is about to operate.
Operations plan  description of company’s operations
 flow of orders for goods and services a) Sociocultural factors
Marketing plan  pricing
 Health consciousness  Attitudes toward
 distribution
 promotion
saving and
 sales forecasts investing
Organizational plan  form of ownership  Educational level  Emphasis on safety
 principal shareholders or partners  Attitudes toward imported goods and  Buying habits
 organizational chart/lines of authority services
 background of the management team  Attitudes toward the person’s lifestyle  Religion and beliefs
 roles and responsibilities of management team
Financial plan  assumptions
 pro forma balance sheet
 cash flow projections b) Technological factors
 sources and uses of funds  Basic infrastructure level  Legislation regarding
 breakeven analysis technology
Assessment of risk  potential risks- internal or external  Rate of technological change  Communication infrastructure
 strategies for preventing or minimizing risks  Spending on research and  Access to newest technology
 response to risks should they occur
development
Timetable / Milestones  formal registration of the business
 completion of product or services design  Technology incentives  Internet infrastructure
 completion of prototypes
 hiring of initial personnel c) Economic factors
 reaching agreements with suppliers and distributors  Growth rates  Trade flows and patterns
 actual production  Inflation rates  Level of consumers’
 initial orders, sales, and deliveries
disposable income
Appendices  market research data
 Interest rates  Monetary policies
 detailed financial projections
 curriculum vitae of the management team  Exchange rates  Fiscal policies
 price list from the suppliers  Unemployment trends  Price fluctuations
 profile of competitors  Labor costs  Stock market trends
 Stages of business

LESSON 2.1.1: PROPOSE SOLUTIONS IN TERMS OF PRODUCT/S AND SERVICE/S d) Environmental or ecological factors
THAT WILL MEET THE NEED USING TECHNIQUES ON SEEKING, SCREENING,  Weather  Waste management
AND  Climate change  Attitudes toward “green” or
SEIZING OPPORTUNITIES: ecological products
___________________________________________________________________________________________  Laws regulating environment  Endangered species
pollution
S1- SEEKING THE OPPORTUNITY  Air and water pollution  Attitudes toward and support
for renewable energy
A. Macro environmental Sources  Recycling
1. STEEPLED. This is a mnemonic for sociocultural, technological, economic,
environmental, political, legal, ethical, and demographics factors. This represents e) Political Factors.
 Government stability and likely  Freedom of press
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changes b) Brainstorming. Is an activity that allows the participants to share creative ideas
 bureaucracy  Rule of law using the following rules:
 Corruption level  Government effectiveness  No destructive criticism or judgment is allowed
 Tax policy (rates and incentives)  Political rights  Wilder ideas are accepted
f) Legal Factors.  More ideas are preferred
 Anti-trust law  Employment law  Improvement of others’ ideas is allowed
 Discrimination law  Health and safety law c) Brainwriting or internet brainstorming. This is exactly the same as brainstorming
 Copyrights, patents/intellectual  Data protection law except that the channel used is not face-to-face, but in writing or online.
property rights d) Problem inventory analysis. This method is similar to the FGD except that the
participants are already given an inventory of product or service problems.
 Consumer protection

S2- SCREENING THE OPPORTUNITY

g) Ethical factors.
 Ethical advertising and sales practices
Opportunity screening is the process of cautiously selecting the best opportunity.
 Accepted accounting, management, and marketing standards
The selection will depend on the entrepreneur's internal intent, i.e., the main objective
 Attitude toward counterfeiting and breaking patents
that the business will accomplish in the entrepreneur's life, and the external intent,
 Attitude towards development and well-being of employees
which will address the compelling needs of the target market.
Time must be considered by the entrepreneur in screening the opportunities
h) Demographic factors.
at hand as it is considered one of the most critical resources of an entrepreneur.
 Population growth rate  Social classes
 Age distribution and life  Family size and structure
The entrepreneur should say no to an opportunity if it does not contain any these
expectancy rates
business opportunity elements:
 Gender distribution  minorities
1. Has superior value to customers
2. Solves a compelling problem, issue, a need, or a want
2. Industry. This is the source of current trend on what is happening in the industry
3. Is a potential cash cow
where the future business will belong to.
4. Matches with the entrepreneur's skills, resources, and risk appetite
3. New discovery and knowledge. These are new trends that can be the core business
model of a new venture
S3-Seizing the Opportunity
4. Futuristic opportunities. These are projected new opportunities that can possibly
affect the new business while it is running.
Opportunity seizing is the last step in opportunity spotting and assessment. This is the
"pushing through" with the chosen opportunity. Entrepreneurs should make the best
B. Micro market
out this opportunity, and they should exert effort and full dedication for the success
a. Consumer preferences, interests, and perception
of the venture. The entrepreneur's idea can be any type of innovations listed here.
b. Competitors
Innovation is the process of positively improving an existing product or service. It key
c. Unexpected opportunities from the customers
driver for economic growth.
d. Talents, hobbies, skills, and expertise
Therefore, products and services must also adapt to these changes. There are three
e. Irritants in the marketplace such as deterrents, problems, complaints, and
types of innovations according to the degree of distinctiveness.
delays.
1. Breakthrough innovation
f. Location
2. Technological innovation
3. Ordinary innovation
Methods of Generating Ideas
a) Focus Group discussion (FGD). In this method, a moderator handles a very open,
free-flowing, and in-depth discussion with a group of people who can provide
LESSON 2.1.2 MARKET NEED ANALYSIS
insightful ideas about a new product or service that will fill a market need.
Objective: Analyze the market need

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___________________________________________________________________________________________
☛ a reference to the total market demand for goods or services
Market – a market is a place where two parties can gather to facilitate the exchange
of goods and services. Serviceable Available Market (SAM)
 refers to the group of consumers or organizations that is interested in the
☛ the part of the TAM targeted by the entrepreneur’s goods or services that is
product, has the resources to purchase the product, and is permitted by law
and other regulations to acquire the product. within reach
Needs – is recognized when the customers believe that there is a difference between Serviceable Obtainable Market (SOM)
his current situation versus his desired condition. ☛ the portion of the SAM that realistically reachable
Market share is the plotting and calculation of the competitors’ market share to
Wants – is recognized when customer believe that there is a specific product or
determine the remaining portion for the new venture.
services that can perfectly suit the needs.

Market Analysis Barriers to Entry

A market analysis is quantitative and qualitative assessment of a market 1. investment 5. Access
ability to respond positively. It looks into the size of the market both in volume and in 2. Technology 6. Access to distribution channels
value, the various customer segments and buying patterns, the competition, and the 3. Brand 7. Location
economic environment in terms of barriers to entry and regulation in the industry. 4. Regulation

How to do a Market Analysis? LESSON 2.1.3 PRODUCTS: ITS NATURE AND SUSTAINABILITY
1. Demographics and Segmentation 3 .Market Need Objective: Determine the possible product/s or service/s that will meet the need.
2.Target Market 4. Competition ___________________________________________________________________________________________
A product can be tangible or intangible in nature that can be offered for satisfaction
Methods to Identify Market Needs of the recipients and it may be an idea, a physical entity (a good), service or any
1. Focus Group combination of the three. Product is that bundle of satisfaction which the buyer
☛ A focus group is a market research method that brings together 6- receives as the result of a lease or purchase. It includes the physical good or service
itself (its form, taste, odor, color and texture), the function of the product in use, the
10 people in a room to provide feedback regarding a product,
package, the label, the warranty, the manufacturer's and retailer's services. (p. 16
service, concept, or marketing campaign. This is an excellent
Unpublished Manual on Principle of Marketing, Ramos 2000)
method for generating and screening ideas and concepts.
2. Social Listening
Product Description Necessities
☛ Gives you access to what people are saying about their needs 1. Cite the uniqueness of product over other existing products in terms of
across social media and the web characteristics, variations and the like.
3. Keyword research 2. Use layman's term in describing the firm's product or service. Present a product mix
☛ A way of identifying the needs by the use of search engines most if the firm will be selling more than one product.
3. Illustrate the usefulness of the product/ service. Provide substantial information on
common words and phrases entered
effectiveness of marketing which includes positioning strategies.
4. Present the nature including the content of raw materials that will be used in the
MARKET SIZE
proposed product, and what is the source and where to find it.
Market size is simply the size of the area where the entrepreneur’s business will pay. It
is the approximation of the number of buyers and sellers in a particular market. Levels of Product

Total Available Market (TAM)

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Tangible products are the basic physical appearance which can be a service or
idea having precise specifications and is offered under a given/specified description or
model number.
Examples: Honda Brio Model_______
Augmented product includes the image and service features of a certain
entity. It gives emphasis on the intangible benefits that the customer will be getting
from buying the product.
Example : Car insurance, medical and dental benefits, fire insurance
Generic product emphasizes the impact of the product of the customer, not
the seller. This will signify the purpose of its existence and the primary objective in
creating the product.
Example: Prestige, status signal, professional image
Types of Product
1. Goods are sale of the physical products from the manufacturer to the consumer or
final and user. These are tangible products that can measure the satisfaction with
result or evidences as manifested through physical development.
a) Durable goods are the physical products that are used over a long period of time.
These products are expensive because of the quality of the materials used.
Example: Steel, stainless, appliances
b) Non-durable goods are the physical products that are quickly and easily be
consumed or worn out, become obsolete, unfashionable or no longer popular.
These products are inexpensive and can easily be damaged.
Example: Products made with plastic
2. Services are intangible products that satisfaction can be measured in future
preferences.
Example: Relaxation in salon and spa Education from school
a) Rented-goods services are the consumer rented facility of the sellers in certain
period of time.
Example: Car rental, space or office for rental
b) Owned-goods services are the repair and maintenance services rendered by the
sellers to the products of the customer.
Example: Laundry business, car wash
c) Non-good service is personal service on the part of the seller; most common are
the expertise and profession of the seller.
Example: Teacher will act as tutor, accountant will act as bookkeeper, lawyer will act as
legal consultant, receptionist, and guest relation officer.
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Customer Service in the Enterprise
1. Define/list the customer service the company can provide.
2. What are the company's service strengths and weaknesses?
3. Give strategies for improving the company's customer service.
Characteristics of Services
1. Intangibility is the services that cannot be displayed, transported, stored, packaged
or inspected before buying.
2. The credibility of the service provided most of the time counts.
3. Inseparability is the service provider and services that cannot be separated. It
cannot accomplish the purpose if one is missing.
4. Variability is when the service is difficult to standardize because it varies upon the
performance of the provider.
Consumer Products
These are goods and services destined/produced for the final consumer for
personal, family, or household use. The use of the goods or services designates it as a
consumer product.
Example: Products normally and routinely used by consumers.
Convenience products are purchased with the minimum or less effort because the
buyer has knowledge of product characteristics prior to shopping. The consumer is
not willing to search or look for information and will accept a substitute rather than
visit another store categorized as follows:
1. Staples are low priced items that are routinely purchased on a regular basis and are
products that are used every day.
Example: rice, soap, toothpaste
2. Impulse products are the items that the consumer does not customer was attracted
to buy the product for some reasons like the impressive promotional campaign or low
price on sale items, etc.
Shopping products are products that the consumers acquire through
further knowledge and information in order to make final purchase decision.
Consumers will exert effort in searching or looking for information because these
products have high prices and are bought infrequently and are categorized as follows:
1. Attribute-based shopping products provide customers with information
and evaluated product features, performance, options, warranties and other
factors.
2. Price-based shopping products enable customers to judge product
attributes to be the same and look around for the least expensive item.
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Specialty products are the items with particular brands and stores to which 1 Consider product size and weight 5 Consider seasonality.
consumers are loyal. They are willing to make a significant or specific effort to acquire 2 Consider product fragility. 6 Consider price point.
the brand desired units and will pay a higher or above the price of similar products. 3 Consider SKUs. 7 Consider competition.
4 Consider product lifespan 8 Consider yourself
Industrial Products
Industrial products are goods or services purchased for use/consumption in the The Entrepreneur should look deeper into the following areas based on
production/manufacturing of other goods or services, in the operation of a business Profitability:
or for resale to other customers. Industrial products are categorized based on degree Venturing into business needed financial resources. Money is needed finance
of decision-making involved, cost, rapidity of consumption, role in product, and the activities of business. Whatever capital is available determines the kind of business
change in form. operation. Many small entrepreneurs start with limited capital but they were able to
make business empire as they knew how to invest their money profitable operation.
These are the following: Savings and wise investments are characteristics of successful business entrepreneur.
1. Accessory equipment 4. Component materials
2. Raw materials 5. Installations 7 Ways to Ensure Success and Profitability When Starting a Business
3. Industrial or operating supplies 6. Fabricated parts 1. Start by identifying a customer you want to serve.
2. Talk to your customers.
Product Satisfying Features 3. Let your customers create your business.
4. Presell your product.
5. Launch the business when you have sufficient funds.
1.Design 3. Product quality
6. Create your MVP and let your customers improve it.
2. Product Colors 4. Product Warrantees
 Your job is to get a minimum viable product (MVP) to your founding
members
LESSON 2.1.4 VIABILITY, PROFITABILITY, AND CUSTOMER REQUIREMENTS 7. Scale your business.
Objectives: Screen the proposed solution/based on viability, profitability, and
customer requirements. The Entrepreneur should look deeper into the following areas based on
___________________________________________________________________________________________ Customer requirements:

FACTORS IN SCREENING PROPOSED SOLUTION

Customer are said to be the lifeblood of the business.
☛ viability,
Customer requirements are specific features and characteristics that the customers
☛ profitability need from a product or a service.

☛ customer requirement
Market segmentation is the process of grouping similar or homogeneous customers
according to demographic, psychographic, geographic (location), and behavior.
The Entrepreneur should look deeper into the following areas based on Viability: a. Demographic segmentation- also called socioeconomic segmentation, is the
Management must be able to set the direction of the enterprise with a clear process of grouping customers according to relevant socioeconomic variable
MISSION AND VISION as the guiding tool for its plans and programs. Plans and for the business venture.
programs are tentative activities that will make a definite step towards the  Income range and the social class of the customers
accomplishments of target objectives. Objectives set into motion the goals of the  Occupation
enterprise to profitability.  Gender and age group
 Religion and ethnicity
Things to Consider During a Product Viability Analysis
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b. Psychographic segmentation – a process of grouping customers according to 4. Understand the total costs that the customer perceives to be associated with
their perceptions, way of life, motivations, and inclinations. equipment downtime; and
 Perception- a process wherein an individual receives external stimuli 5. Preparing to change along with the customer's evolving needs and requirements
using the five senses of hearing, touching, smelling, seeing, and for equipment service and support.
tasting.
 Physiological motivations- involves the needs of the person Customer Requirements
 Psychological motivations- involve customer’s preferences (what 1. Understanding the requirements of the customers and markets.
the customer likes or dislikes). 2. Comparing them with the standard operation rules and performance.
 Deprivation –involves the customer’s recognition of certain voids to 3. Analyzing the feasibility of new requirements not currently implemented.
fill 4. Deploying agreed upon requirements.
c. Geographic segmentation is simply grouping customers according to their 5. Monitoring trends for upcoming demands and aligning systems to satisfy
location. them.
d. Behavioral segmentation is the process of grouping the customers according
to their actions. Types of customer requirements
 Occasions
 Loyalty- is the result of maintaining satisfied customers  Functional requirements describe  Life-cycle concerns
 Usage of products or availment of service- is also a behavior the product’s desired behavior
segmentation factor that describes to the entrepreneur how often a  Human factors  Resource concerns
product is being used or the service is being availed.  Physical requirements  Manufacturing requirements
 Reliability
When determining the customer's requirements, consider the following
strategy: LESSON 2:2: BEST PRODUCT FOR MARKET NEED
Customer-Focused Business Strategy OBJECTIVE: SELECT THE BEST PRODUCT OR SERVICE THAT WILL MEET THE
Step 1. Develop Customer-Focused Business Strategy. MARKET NEED.
Step 2. Listening to the various customer complaints. __________________________________________________________________________________________
Step 3. Learn how to identify customer segments. Tips in Choosing the Business Name
Step 4. Present findings to participants. 1. Easy to Recall or Remember
Discussion and Agree Requirements with Customer(s) Tools to identify and agree 2. Pleasant Meaning Creates Pleasant Feelings
customer (and supplier) requirements: 3. Easy to Pronounce
4. Easy to Spell
5. Related to the Product
1. Interviews 4. Customer Requirements Analysis
2 Questionnaires 5. Service Level Agreements
3. Focus Groups 6. Customer Charters Product Life Cycle
The Product Life Cycle concept describes product's sales, profits, customers,
Services providers must understand not only how to fix the equipment, but also how to competitors, and marketing emphasis from its beginning until is removed from the
fix the customer, and this may vary greatly from one customer to another. As a result, market.
the most successful services providers will typically be:
1. Speaking the same language as their customers; Stages of Product Life Cycle
2. Knowing the appropriate individual(s) to deal with respect to fostering long-term
customer relationships; I. Product Development
3. Understands how the customer is using the equipment;

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LECTURE NOTE 2 – DEVELOPING A BUSINESS PLAN WEEKS 3 AND 4 (1 ST QUARTER)
The company must think a new product. new product a modification,
creation, and innovation an existing product which makes the product more III. Growth
meaningful to the customer. The product gains wider consumer acceptance and the objective are to
expand distribution and the range of available product alternatives. More firms. enter
The new product planning process involves series steps: the profitable and tested market. Profits are high because the mass market buys from
1. Idea Generation - searching for new product business opportunities. employees, a limited group of firms. Basic models are modified and chosen; distribution is
channel members, competitors, and customers can be great source. expanded coupled with mass advertising to meet new goals.
Methods:
 brainstorming  visiting suppliers’ facilities
 analyzing Existing products  surveys
 reading trade publications 
2. Idea Screening - ideas which are unsuitable, unattractive, or poor are junked Ideas IV. Maturity
together with attributes are rated on the basis of a rating from 1-10. The product's sales level and companies try to maintain lower price, better
3. Concept Testing - ideas which have passed the screening stage will now require product features for as long as possible. Market is saturated, penetrated, and
feedback from the consumer. competition is at its highest level.
4. Business Analysis is a review of market factors, revenues, cost and trends.
a. Demand Projections d. Required Investment V. Decline
b. Cost Projections e. Profitability The product's sales fall as substitutes and new competitors enter the market.
c. Competition During this stage, firms may reduce or lessen the items produced and outlets used
promotion utilized, or they can revive and renew the product by repositioning
5. Product Development- ideas are converted into tangible form. This stage involves: repackaging or they can terminate the product.
a. Product construction: type and quality of materials, method of production,
production time and cost requirements per unit; plan capacity, sizes and colors 12 Ways to Select the Best Product Idea to Bring to Market
b. Packaging: materials used in promotion or storage, cost; sizes and colors;
c. Branding: choice of new or existing name; exclusivity; trademark protection; 1. Affordable to Develop and Prototype
d. Product positioning: selecting a market segment e. Consumer attitude and usage 2. Affordable to Scale to Mass Manufacturing
testing. 3. Potential for a High Profit Margin
4. Existing Competition.
6. Test Marketing-involves a selling of a fully developed product in a selected city and 5. No Dominating Competitors
6. Easy to Reach Market
observing the actual or on the spot performance under the chosen marketing plan.
7. Recurring Revenue
7. Commercialization- this involves the actual marketing of the product in the target
8. Upfront Market Research
market. The different activities to introduce the product to the market must be
9. You Already Know the Market
presented. 10. Solves a Known Problem
11. Differentiated Product
II. Introduction 12. The Price is Right
A new product is introduced into the marketplace and the objective is to
generate customer interest. The rate of sales growth depends on the desirability of
the product, competition is limited or selected, losses are experienced because of high III. EFAA/ EAA/PC
production and marketing costs. Initial and immediate customers are called
innovators who are willing to take risk because the product is new in the market. EFAA 1. Picture analysis
Promotions must be informative and free samples may be desirable. EFAA 2. Who Am I?
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EFAA 3. Picture analysis
EFAA 4. Concept mapping
EFAA 5. Group activity
EFAA 6. Choose me!

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