APPLIED ENTREPRENEURSHIP

RECOGNIZE AND UNDERSTAND THE MARKET

In previous lesson we learn about the competencies and job

opportunities for entrepreneurship as a career that lead to the
identification of entrepreneurial opportunities, which in turn results in
the opening of an entrepreneurial venture. In opening the new venture
or a business, you need to determine the Unique Selling Proposition
(USP) and Value Proposition (VP) of your product as well as your target
market.

Now, you will learn more about markets - recognize and understand
the market. Everyone can create a business vicinity map reflective of
potential market in one’s locality/town.

This module is divided into two topics:

1. Describe the unique selling proposition and value proposition that

differentiate one’s product/service from existing products/services.

2. Determine who the customers are in terms of:

a . Ta r g e t m a r k e t
b. Customer requirement
c. Market size

Value Proposition (VP) is a business or marketing statement that

summarizes why a consumer should buy a company's product or use its
service. This statement is often used to convince a customer to purchase
a particular product or service to add a form of value to their lives. In
creating Value Proposition, entrepreneurs will consider the basic
elements:

 Ta r g e t C u s t o m e r
 Needs/opportunity
 Name of the product
 Name of the enterprise/company

There are many competitors in the market to establish superiority to

them. Entrepreneurs should think some alternative and how it works
b e t t e r. A n i m p o r t a n t a s p e c t i n V a l u e P r o p o s i t i o n m u s t b e t r u t h f u l t h a t
will establish credibility to the consumers.

Example: Potential value proposition is most common in small

b u s i n e s s e s o f y o u r l o c a l i t y.

Aling Charing Sari-sari Store open only from 6:00 am to 6:00 pm, but
Aling Charing noticed that there are customers who go nearby town to
look for a convenience store at around 10:00 pm to 6:00 am. She
b e l i e v e s t h a t t h i s i s a g r e a t o p p o r t u n i t y f o r h e r s t o r e t o o p e r a t e 2 4 / 7. I n
this example, proposed value proposition: “Charing Sari-sari Store, opens
2 4 / 7 ”.
 The business describes sari-sari store – a basic retail store. The
assurance from this value proposition is because of the phrase “opens
2 4 / 7 ”, A l i n g C h a r i n g S a r i - s a r i S t o r e o p e n s 2 4 / 7 , w h i c h m a k e i t d i f f e r e n t
from other competitors.

Unique selling proposition (USP) refers to how you sell your product
o r S e r v i c e s t o y o u r c u s t o m e r. Y o u w i l l a d d r e s s t h e w a n t s a n d d e s i r e s o f
y o u r c u s t o m e r s . A s e n t r e p r e n e u r, y o u t h i n k o f m a r k e t i n g c o n c e p t t h a t
persuade your target customers. The following questions you may ask in
doing this, What the customers want? What brand does well? What your
competitor does well? Some tips for the entrepreneur on how to create
an effective unique selling proposition to the target customers:

 Identify and rank the uniqueness of the product or services

character
 Very Specific
 Keep it short and simple (KISS)

A s e n t r e p r e n e u r, p r e s e n t t h e b e s t f e a t u r e o f y o u r p r o d u c t o r s e r v i c e s
that are different from other competitors. Identifying the unique selling
proposition requires marketing research that you will learn from the
other modules. In promoting your products or services, make sure that it
is very specific and put details that emphasize the differentiator against
the competitors. Keep it short and simple and think of a tagline that is
e a s y t o r e m e m b e r. R i g h t n o w , t h e p r o p o s e d u n i q u e s e l l i n g p r o p o s i t i o n :
“ C h a r i n g S a r i - s a r i S t o r e , o p e n s 2 4 / 7 ”.

Readers get confused between value proposition and unique selling

proposition. The two propositions are used to differentiate the products
from competitors. For example, Jollibee is known to have a Filipino taste
b u r g e r. T h i s b r a n d h a s a u n i q u e s e l l i n g p o i n t b e c a u s e o f i t s t a g l i n e
“Langhap Sarap”

Unique Value Proposition and Value Proposition are two most

famous tools used to explain why prospect customers buy each products
and services. Based on each definition, we learn that USP and VP are
f r a m e w o r k s o f e a c h b u s i n e s s i n d u s t r y.

The two propositions are valuable for the entrepreneurs. After you
understand the value proposition and the unique selling proposition, now
it’s time to understand the target market, customer ’s requirement and
market size.

A. Target Market

M a r k e t Ta r g e t i n g i s a s a g e i n m a r k e t i d e n t i f i c a t i o n p r o c e s s t h a t
aims to determine the buyers with common needs and characteristics.
Prospect customers are market segment that entrepreneurial venture
intends to serve.

In targeting a specific market, it will exclude people even if it will

n o t f i t y o u r c r i t e r i a . R a t h e r, t a r g e t m a r k e t i n g a l l o w s y o u t o f o c u s y o u r
marketing money and brand message on a specific market that is more
likely to buy from you than other markets. Product is more affordable,
efficient, and effective way to reach potential clients and generate
business.
Commonly used methods for segmenting the market are follows.

1. Geographic 2.Demographic 3.Psychological 4. Behavioral

segmentation Segmentation Segmentation Segmentation
– the total – divided based - divided in - divided
market is consumers. terms for according to
divided customers think customers
according to and behavior
geographical believe. pattern as they
location. interact with a
c o m p a n y.

 Variables to  Variables to  Variables to  Variables to

consider: consider: consider: consider:
a. Climate a. Gender a. Needs and a. Perceptions
b. Dominant b. Age wants b. Knowledge
ethnic group c. Income b. Attitudes c. Reaction
c. Culture d. Occupation c. Social class d. Benefits
d. Density e. Education d. Personality e. Loyalty
(either rural or f. R e l i g i o n traits f. R e s p o n s e s
urban) g. Ethnic group e. Knowledge
h. Family size and awareness
f. B r a n d c o n c e p t
g. Lifestyle

B. Customer Requirements

Customer requirements are the specific characteristics that the

customers need from a product or a service.

There can be two types of customer requirements:

1. Service Requirement
2. Output Requirement

Service Requirement:

Intangible thing or product that is not able to be touched but

customer can feel the fulfillment. There are elements in service
r e q u i r e m e n t l i k e o n - t i m e d e l i v e r y, s e r v i c e w i t h a s m i l e , e a s y - p a y m e n t
etc. It includes all aspects of how a customer expect to be treated while
purchasing a product and how easy the buying process goes.

Output Requirements:

Ta n g i b l e t h i n g o r t h i n g s t h a t c a n b e s e e n . C h a r a c t e r i s t i c
specifications that a consumer expects to be fulfilled in the product.
Costumer that will avail services as a product, then various service
requirements can take the form of output requirements. For example, if
the consumer hires a multi cab, then on-time arrival becomes an output
requirement. Customer buys gadgets (phone speaker), the specification
like the loudness and clarity are the output requirements.

C. Market Size

Market size is like a size of arena where the entrepreneurs will play
their business. It is the approximate number of sellers and buyers in a
particular market. Companies are interested in knowing the market size
before launching a new product or service in the area. In determining
the market size, entrepreneur will conduct a strategic marketing research
from reliable sources using the following method.

First step is to estimate the potential market – approximate number

of customers that will buy the product or avail your services.

Second step is to estimate the customers who probably dislike to

buy your product or avail the services.

Third step is for the entrepreneur to estimate the market share,

that means plotting and calculating of the competitor ’s market share to
determine the portion of the new venture. Market size become the most
important if you ever need to raise funding for your business.

Entrepreneur ’s most critical task is to calculate the market size,

and the potential value that market has for their startup business.
Market research will determine entrepreneur possible customers in one
l o c a l i t y.