Republic of the Philippines

Department of Education
Region VIII
Schools Division of Samar
Catbalogan City
RAMON T. DIAZ NATIONAL HIGH SCHOOL
Gandara, Samar

LEARNING ACTIVITY SHEET IN ENTREPRENEURSHIP

TOPIC : MODULE 2: The Potential Market and the Market Need
MELC & CODE : Recognize a potential market • Analyze the market need
WEEK NO.3 :
BACKGROUND INFORMATION FOR LEARNERS:
LOOKING BACK TO LESSON:
o Competencies such as risk seeking, assertiveness and vision are considered typical of a successful
entrepreneur (www.ideasforleaders.com).
o Specific techniques and habits must be practiced and developed by all would-be entrepreneurs.
Aside from business competencies, entrepreneurs need interpersonal and self-leadership skills too;
however, these are often overlooked. Entrepreneurial behavior’ can be learned and developed
(www.ideasforleaders.com).
o If you’re an aspiring entrepreneur, there are different career paths you can take to turn your
dream into a reality. Which path you choose will depend on your experience, skills, finances, and
flexibility, as well as your goals for the future (Doyle, A., 2020).

The Potential Market

1. Potential market is the part of the total population that has shown some level of interest in buying a
particular product or service. Potential market is also called Total addressable market (TAM) (MBA Skool
Team, 2018).
2. A potential market is the part of the market you can capture in the future. It includes the demographic
groups that are not currently your customers but could become customers in the future (Lake, L, 2019).
3. Market potential is the total demand for a product in a given business environment (Bhasin, H., 2018).

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

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

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

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

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

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

Note: Depending on the size and age of your company, as well as your industry, you may have a clear picture
of the potential markets that are available.

Reaching Your Potential Market (Lake, L., 2019)

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

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

Target Market
 Refers to a group of potential customers to whom a company wants to sell its products and services. Target
markets are generally categorized by age, location, income, and lifestyle. Defining a specific target market
allows a company to home in on specific market factors to reach and connect with customers through sales
and marketing efforts. (Kenton, W., 2019). Penetrated Market
 A set of customers or clients who are already using a particular product or service. A penetrated market
means that the potential users of a product or service are aware of it, and in many cases are active
consumers of it. (www.businessdictionary.com).

The size of a potential market helps a company understand the level of investment it should make further in
the market, while taking into consideration other factors.

If the potential market is very small, it means there is a very small fraction of the total population showing
any interest in the product or category. This means that it is better that the company doesn’t invest further in
the product or category because people won’t buy it.
If the size of the potential market is large, it means that there is a huge fraction of the total population
which is showing interest in the product, so further investment can be made on the product development or
modification, marketing, promotions etc. The size of the potential market gives an estimate of what all a
company should do and how much it should invest (MBA Skool Team, 2018).
The Market Need
1. Need
o A motivating force that compels action for its satisfaction. Needs range from basic survival needs
(common to all human beings) satisfied by necessities, to cultural, intellectual, and social needs (varying
from place to place and age group to age group) satisfied by necessaries (www.businessdictionary.com).
o A driver of human action which marketers try to identify, emphasize, and satisfy, and around which
promotional efforts are organized (www.businessdictionary.com).
2. Market
o A Market is a place where two parties can gather to facilitate the exchange of goods and services. The
parties involved in are usually buyers and sellers. The market may be physical like a retail outlet, where
people meet face-to-face, or virtual like an online market, where there is no direct physical contact
between buyers and sellers (Kenton, W. & Boyle, M., 2020).
o A market does not refer to a particular place but it refers to a market for a commodity or commodities.
It refers to an arrangement whereby buyers and sellers come in close contact with each other directly or
indirectly to sell and buy goods (Shaikh, S., retrieved 2020)
o A market is any place where sellers of particular goods or services can meet with buyers of those goods
and services. It creates the potential for a transaction to take place. The buyers must have something
they can offer in exchange for the product to create a successful transaction (Moffatt, M., 2019)

Your market consists of (Stull, C., Myers, P.& Scott D.M. (2008) as cited in: https://learn.marsdd.com/):
Existing customers: People who have already purchased your product. Prospects: People who have not
yet purchased your product but are considering it.
Target market users: People in your target market who are not currently looking for a solution.

Define the market need for your new business

Why is it important to clearly define market needs?

The market now demands that your business align to their needs. In order to properly align your marketing
efforts ‒ and your content, in particular ‒ to what buyers need, you have to have a clear understanding of the
many intricacies, pains and pressures within your market. To achieve such alignment, the ability to define
market patterns, needs, interests, preferences, etc. for a comprehensive view of the buying process is critical
(www.aberdeen.com).

Below are ways to define your market (Lancaster SCORE (2010):

• Consider whether the business offers a new solution to an old problem or complements an emerging trend.
• Have a clear picture of your target market.
• Determine the benefits that your product or service offers.
• Examine industry data that can confirm whether there is a sustained, growing demand for your product or
service.
• Identify the percentage of market share that it is realistic for you to capture. The more competition you
have, the lower the margins will be.
• Consider how realistic your pricing is. How can you present your product or service to potential customers
so that it appears to be a good value, while still affording you a healthy profit
Entrepreneurial Ideas The creation of an entrepreneurial idea leads to the identification of entrepreneurial
opportunities, which in turn results in the opening of an entrepreneurial venture.

Essentials in Entrepreneur’s Opportunity – Seeking These are the basic foundation that the
entrepreneur must have in seeking opportunities:
Entrepreneurial mind frame.
This allows the entrepreneur to see things in a very positive and optimistic way in the midst of difficult
situation. Being a risk - taker, an entrepreneur can find solutions when problems arise.

Entrepreneurial heart flame.

Entrepreneurs are driven by passion; they are attracted to discover satisfaction in the act and process of
discovery. Passion is the great desire of an entrepreneur to achieve his/her goals.

Entrepreneurial gut game.

This refers to the ability of the entrepreneur of being intuitive. This also known as intuition. The gut game
also means confidence in one’s self and the firm belief that everything you aspire can be reached.

Sources of Opportunities
There are many ways to discover opportunities. Looking at the big picture, some have noticed the emerging
trends and patterns for business opportunities. While others are trying to find out their target market. The
following are some sources of opportunities:

1. Changes in the environment

Entrepreneurial ideas arise when changes happen in the external environment. A person with an
entrepreneurial drive views these changes positively. External environment refers to the physical
environment, societal environment, and industry environment where the business operates.

1.1 The Physical environment includes

a. Climate – the weather conditions.
b. Natural resources – such as minerals, forests, water, and fertile land that occur in nature and can
be used for economic gain.
c. Wildlife – includes all mammals, birds, reptiles, fish, etc., that live in the wild.

1.2 The Societal environment includes the various forces like

a. Political forces – includes all the laws, rules, and regulations that govern business practices as well
as the permits, approvals, and licenses necessary to operate the business.
b. Economic forces – such as income level and employment rate.
c. Sociocultural forces – customs, lifestyles and values that characterize a society.
d. Technological environment – new inventions and technology innovations.

1.3 The Industry environment of the business includes:

a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
f. Suppliers

For example, one factor in the physical environment that can easily change is the climate. The
temperature is very high during summer but very low during the rainy season. An individual with
 entrepreneurial drive can be extremely imaginative and inventive in identifying opportunities. He/she
can venture on a business that responds to the needs of the people during summer and rainy season.

2. Technological discovery and advancement

A person with entrepreneurial interest sees possibility of business opportunities in any new discovery
or because of the use of latest technology.

For example, an individual with knowledge in repair and installation of a machine engine discovers
additional engine parts that considerably reduce fuel consumption.

3. Government’s thrust, programs, and policies

The priorities, projects, programs, and policies of the government are also good sources of ideas.

For example, the use of firecrackers to celebrate New Year’s Eve is strictly prohibited. People
without entrepreneurial interest will view the ordinance as a plain restriction. However, for an
entrepreneur, it is a business opportunity to come up with a new product that will serve as a
substitute for firecrackers.

4. People’s interest
The interest, hobbies, and preferences of people are rich sources of entrepreneurial ideas, like the
increasing number of Internet Cafés at present could lead to the strong attachment of young people
to computers.

5. Past experiences
The expertise and skills developed by a person who has worked in a particular field may lead to the
opening of a related business enterprise.

For example, an accountant who has learned the appropriate accounting and management skills
and techniques in a prominent accounting firm can start his/her business venture by opening his/her
own accounting firm.

Forces of Competition Model

It is also known as the “five forces of competition”. An industry environment is a competitive

environment. Regardless of what product or services you have, competition is always present.

Competition – it is the act or process of trying to get or win something. For example, the prices are lower
when there is a competition among the stores.

These are the five forces competing within the industry:

 Buyers  Potential new entrants  Rivalry among existing firms
 Substitute products  Supplier

1. Buyers
The buyers are the ones that pay cash in exchange for your goods and services.
One example is the influence of the price or in the bargaining strategy. The buyer has a strong and
magnified bargaining power. The threat of its bargaining power will be less if the following factors are
noticed:
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
 e. The buyer purchases large portions of the seller’s product or services.

2. Potential New Entrants

A new entrant is defined as companies or businesses that have the ability to penetrate or enter into a
particular industry. For example, in the level of capital requirements, if the business requires huge
capital, new entrants should decline to join the business. This gives a threat to the business. This can be
noticed if there is the presence of the following factors:
a. Substantial capital requirement
b. Strict government policy
c. Difficulty in accessing distribution channels
d. Economies of scale
e. High cost of product differentiation
f. High switching cost

3. Rivalry among Existing Firms

Rivalry is a state or situation wherein business organizations are competing with each other in a
particular market.
For example, it depends on the marketing strategy of your competitor, like giving freebies and special
offers. The intensity of rivalry among existing firms is characterized to the following factors:
a. Diversity of rivals
b. Number of competing firms
c. Characteristics of the products or services
d. Increased capacity
e. Amount of fixed costs f. Rate of industry growth

4. Substitute Products
Substitute is one that serves the same purpose as another product in the market.

For example, the consumers decide to use margarine as a substitute for butter. In case the price of butter
increases, preferably the consumer will gradually switch to margarine.
A substitute product can give a big threat in the industry environment if the following factors are noticed:
a. Switching cost is low b. Preferences and tastes of the customers easily change
c. Product differentiation is highly noticeable d. The quality of substitute products dramatically improves
e. The price of substitute product is substantially lower

5. Suppliers
The Suppliers are the one that provide something that is needed in business operations such as office
supplies and equipment. In an example where supplies and services being offered is unstable the
intensity of the threat is strong in this kind of the competitive force in the industry. This can be noticed
if there is the presence of the following factors:
a. The supplier has the ability for forward integration
b. Suppliers in the industry are few, but the sales volume is high
c. Substitute products are not readily available in the market
d. The switching cost is very high
e. The product or service is unique

Prepared by:

EVANGELINE S. VASQUEZ
SST-II
SUBJECT TEACHER
 Republic of the Philippines
Department of Education
Region VIII
Schools Division of Samar
Catbalogan City
RAMON T. DIAZ NATIONAL HIGH SCHOOL
Gandara, Samar

WK 3 ACTIVITY in ENTREPRENEURSHIP

Activity 1. DIRECTIONS: To check your prior knowledge about the topic, please analyze the pictures below and
list down at least three (3) potential markets that entrepreneurs should consider during this COVID -19
pandemic and indicate their needs. Write your answer in the space provided.

Potential Market Market Need

1. 1.
2. 2.
3. 3.

Activity 2. FIX ME Direction: Arrange the scrambled letters to form a correct word.

1. PSIEURSPL ________________ 6. UTSBETIUST ________________

2. NISSUBES ________________ 7. ICEVERS ________________

3. KERTAM ________________ 8. PECITIONMTO ________________

4. EDICRRSTO ________________ 9. IMCLTEA ________________

5. SUTEMOSRC ________________ 10. NTERTSAN ________________

Activity 3. Read and analyze the statements below about “Market”. Determine whether the statement is TRUE
OR FALSE. Write TRUE if the statement is correct and write FALSE if otherwise. Write your answer in the space
provided.

__________1. A market is any place where two or more parties can meet to engage in an economic transaction
—and should only involve legal tender.

___________2. Market includes retail stores and other similar businesses that sell individual items to wholesale
markets selling goods to other distributors but may not be virtual.

___________3. Market refers to the whole area of operation of demand and supply.

___________4. A market signifies any arrangement in which the sale and purchase of goods take place.

___________5. The market establishes the prices for goods and other services.

Activity 4. Multiple Choice. Write the letter of the correct answer that best complete the sentence in the space
provided.

______1. All are core competencies in Entrepreneurship, except:

A. basic bookkeeping/ accounting skills B. communication skills

C. building relations with customer D. building competitive advantage

______2. Which of the following is not a business competency? This competency covers the outcomes required
to build, _____ and grow a micro/small-scale enterprise - like developing and maintaining small-scale business,
establish customer base, and manage business finances.

A. Establish customer service B. Manage finances

C. Preparing business letters D. Monitoring operations

______3. Which is not a goal of entrepreneurial competency?

A. Expanding the enterprise B. Expanding markets and clientele

C. Developing individuals and teams D. Enhancing one’s business skill

______4. All are important aspects of Entrepreneurship as a course, except: A. Discussion on economic issues
and concerns. B. Explanation of key concepts of competencies in Entrepreneurship. C. Discussion on the
relevance of the course. D. Exploration of career opportunities.

_______5. Which of the following does not cover a high-performing enterprise?

A. Build and develop the enterprise to be more competitive within a changing business environmen

B. Creating gaps among employees.

C. Responding to consumers’ demand.

D. Maintaining product quality and accessibility.

Prepared by:

EVANGELINE S. VASQUEZ
SST-II
SUBJECT TEACHER