CONENT1:

ENTREPRENEURSHIP
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 CHAPTER ONE: INTRODUCTION TO ENTREPRENEURSHIP

ENTREPRENEURSHIP
-It is the proactive process of developing a business venture to make a profit.
-The activity of setting up a business, taking on financial risks in the hope of earning a profit. (dictionary.com)

Benefits of Entrepreneurship:
1. Entrepreneurship produces more jobs that equate to an increase in national income.
2. Entrepreneurship amplifies economic activities of different sectors of society.
3. Entrepreneurship introduces new and innovative products and services.
4. Entrepreneurship improves people’s living standards.
5. Entrepreneurship disperses the economic power and creates equality.
6. Entrepreneurship controls the local wealth and balances regional development.
7. Entrepreneurship reduces social conflict and political unrest.
8. Entrepreneurship elicits economic independence and capital formation.

ENTREPRENEUR
-The word “entrepreneur” has a French origin and was coined from the words entre, which means “between”,
and prendre, which means “to take”.
-He is a unique individual who has the innate ability and extraordinary dedication to establish and manage a
business, acknowledging all the risks and reaping its rewards.
-It entails a holistic business talent to be considered one, ranging from product and marketing expertise to
operation agility, and to finance proficiency.
-His perspective for opportunities in his or her surroundings that normal people don’t give importance to.
-Leadership is the core of every entrepreneur. He is always excited about his business and barely takes
risks. He innovates, executes his big ideas, and rarely procrastinates.

The FIVE LEVELS OF ENTREPRENEUR

1. The self-employed. They are not comfortable with the routines of a desk job and does not conform
to a fixed working schedule.
2. The manager. They feel the need to step up and ask some help from the people around them.
They delegate and hire potential employees to do the work.
3. The leader. They enjoy seeing their people flourish, stepping-up and produce great results with
minimal supervision.
4. The investor. They look over for more opportunities for business to grow. They may purchase a
new business or sell the established business.
5. The true entrepreneurs. The entrepreneur, based on experience now aims for quality and
excellence in their work. They have fully learned and continue to practice, a four-step process of
thinking.
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 a. Idealization- entrepreneurs dream and desire to build an ideal environment.
b. Visualization- Create plans to make the dream into reality.
c. Verbalization- Sharing their ideas with other people, knowing that their vision is already
occurring.
d. Materialization- Happens when the vision becomes a reality.

OTHER TERMS COINED TO SUIT AN ENTREPRENEUR’s FIELD of EXPERTISE

1. Technopreneur- puts technology at the core of his or her business model
EQ. Dennis Mendiola- Wireless Technology, Chikka Asia
Manny Pangilinan- Telecommunications, PLDT
2. Social Entrepreneur- takes advantage of the country’s social problem and turns them to profitable
institutions with the intentions of helping the disadvantaged community rather than making a profit.
EQ. Blake Mycoskie- “The chief shoe giver” and Founder of TOMS Shoes, Toms
pledged to donate one pair of shoes for every one sold
3. Intrapreneur- entrepreneur in a large company or corporation who is tasked to think, establish, and
run a new big idea or project They are usually the Product managers or business development
mangers of a company.
4. Extrapreneur- an entrepreneur who hops from one company to another to act as the innovation
champion, providing creative and efficient solutions.

COMMON AND CORE COMPETENCE TRAITS OF ENTREPRENEURS

1. Proactive 1. Leaders
2. Agents of Change 2. Communicators
3. Risk takers 3. Specialists
4. Have a sharp eye for opportunities 4. Problem Solvers
5. Sociable
6. Networkers
7. Decisive
8. Balanced
9. Innovative

ENTREPRENEURSHIP vs EMPLOYMENT
Important Career Entrepreneur
Factors
Income  Income generated passively even
when the entrepreneur is resting.
 Opportunity income unlimited,
depending on the success of the
business
 Income only earned when the
business is successful.
Employee
 Income generated actively (no
work= no pay)
 Income is usually fixed per
month and increases every year
depending on the employer and
the employee’s performance
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Hiring and Firing,  Provides jobs; owner of the job
Organizational conducts selection
setup, Major key  Fully responsible for serving
result areas customers, making the business
profitable/sustainable and providing
employee satisfaction
 Has the power to disengage
nonperforming employees applying
the due process policy of the
disengaging personnel
 Can venture into expansion of
businesses such as franchising and
buying other similar businesses
Daily tasks  Performs all necessary variable
tasks to establish and manage a
start-up business; spends more
hours on work compared to a
regular employee
 Prepares policies, procedure, and
memoranda for the business
 Income earned whether the
business is successful or not
 Seeks for a job
 Has the goal of satisfying the
employer
 Fully dependent on the
employer’s performance
 Can only work for the current
employer exclusively (FULL-
TIME employee)
 Has routine tasks and woks on
regular or normal hours
 Follows policies, procedures and
memoranda from the employer

Leisure time and  Has flexible schedule and take
Vacations unlimited number of vacations
Taxation  Taxed on the net income; can claim
taxable income deductions for
allowable expenses incurred by the
business
Comfort level at  Is comfortable in doing multiple and
work challenging tasks and takes
accountability with the risks and
profits of the business
 Has a limited number of vacation
days imposed by the employer
 Taxed on the gross income;
cannot use expenses incurred
related to the job on order to
claim for deductions from
taxable income
 Maybe comfortable with routines
and minimal risks; may also be
comfortable in working for the
company itself

LIST of most COMMON SMALL BUSINESSES in the PHILIPPINES

1. Sari-sari stores 11. Hair styling and make-up business

2. Rice retailing 12. Spa, Gym, and nail care business
3. Food cart business 13. Video and photography business
4. Printing business 14. Tutorial business
5. Buy-and-sell business 15. Baking business
6. Street food business
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 7. Flea market business or tiangge 16. Web site development and
8. Online selling business design/blogging
9. Cellphone loading business 17. Direct selling business
10. Laundry and dry cleaning business 18. Car cash and car care business
19. Bar, Café, and restaurants
20. Water Stations and LPG (liquified
petroleum gas) stations

No successful business started huge right away. A business starts with an idea. Once the business is
established, the entrepreneur (business owner), can choose to expand and explore franchising,
intrapreneuership (managing a startup business in an established business), and
acquisition (buying another similar business or a new business)

***Franchising- a business arrangement wherein the franchisor, who is the owner of the business, acquires
distribution centers through the franchisees or the affiliated dealers.

Ideas for Franchise business option or Start-up Businesses

Bakeries, Bakeshops, and bread products Food and snack carts
Bars, Cafés, and coffee shops Gas station or petroleum products
Beverage and confectionary General merchandise and retail
Car care Health and wellness (salon, massage, spa, and
gym)
Clothing and accessories School
Convenience stores Services (personal and business)
Drug stores and pharmacies Water Stations
Fast food establishments and restaurants

Other additional Business Opportunities

Dealerships Distributorship
Direct Selling

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NOTES:

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 CHAPTER TWO: RECOGNIZING THE POTENTIAL MARKET

THE ENTREPRENEURIAL PROCESS

 This is a step-by-step procedure in establishing any kind of business that an entrepreneur has to
undergo

1. Opportunity Spotting and Assessment

 The beginning of the process and the most difficult
 Entrepreneurs takes note of the interesting trends in their environment
 Major sources of opportunities: Consumers, Problems in the environment, problems
encountered by co-entrepreneurs, new trends, processes, developments in the
environment, feedback from the distribution or business partners
 Assess the opportunity through estimation of opportunity length, capitalization required,
threats profitability, calculation of real and perceived value, this also includes if it is
aligned with their personal goals and attributes
 They should think in advance how they will position the product or service in the market
and showcase its selling propositions

2. Developing a Business Plan

***Business Plan: It is a comprehensive paper that details the
marketing, operational, human resource, financial, strategic
direction, and tactics of the business
 The core guide and direction of the entrepreneur in calculating the resource needed,
assessing hoe to obtain these resources efficiently, and running the business sustainably

3. Determining the Capital Needed

 It is mandatory in this process to calculate the resources needed to establish the
business and compare this against the entrepreneur’s current resources

4. Running the Business

 The Business Plan in step two should already have been implemented
 All aspects of the business plan should be critically observed from operations, marketing
and sales, human resources, finance, and strategy implementation
 The entrepreneur should have a control and monitoring system to serve as a check and
balance of the formulated plans

Summary of the concepts and steps in the Entrepreneurial Plan

Opportunity spotting Developing a Determining the Capital Running the

and Assessment Business Plan Needed Business
Evaluate the identified Come up with a Calculate the intrinsic and Practice leadership
opportunity business description extrinsic capital needed as a way of life
and analysis
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 Conceptualize and Perform industry Calculate the existing capital Recognize critical
measure the opportunity analysis success factors
Identify the perceived Come up with the Calculate the difference Identify existing
value of the opportunity marketing plan between the needed and and foreseeable
to the company and to existing capital Choose the problems and
the customers most cost-efficient suppliers or issues
service providers
Do cost-benefit analysis Prepare the Develop contact and Employ risk-
of the opportunity operational plan relationship with suppliers and mitigating controls
including the risk including the service providers and monitoring
analysis organizational plan systems
Match the opportunity Come up with the Devise an
with the entrepreneur’s financial plan expansion or
skills and objectives Identify strategies sustainability
and tactics strategy
Scan the strength and Perform monitoring
weaknesses of and control
competitors

SCANNING THE MARKETING ENVIRONMENT

 Seeking, Screening, and Seizing
 The 3S of opportunity spotting and assessment is the framework that most of the promising
entrepreneurs use to finally come up with the ultimate product or service suited for a specific
opportunity
 Opportunity: an entrepreneur’s business idea that can potentially become a commercial product or
service in the future

S1: Seeking the Opportunity

 It involves the development of new ideas from various sources as follows:

MACROENVIRONMENTAL SOURCES
 This is the mnemonic for sociocultural, technological, economic,
environmental, political, legal, ethical, demographic
STEEPLED  This represents the general environment where entrepreneur can
identify business opportunities from and where the future business is
about to operate
 This is the current trend on what is happening in an industry where the
Industry
future business will belong to
New Discovery or  These are the new trends that can be the core business model of a new
Knowledge venture
 These are projected new opportunities that can possibly affect the new
Futuristic Opportunities business while it is running

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 MICROMARKET
Consumer preferences,  Current needs and want of a customer
interests, and
perceptions
 Recognizing and Understanding potential competitors will aid the
Competitors entrepreneur to develop a product or service that is unique and will
surely stand out from the competition
Unexpected opportunities  Oftentimes, the most brilliant ventures come from the most unexpected
from Customers opportunities, such as, unlikely situations, places, and people
Talents, hobbies, skills,  Business opportunities comes from within the entrepreneur’s. These can
and expertise be a source of their business opportunity
 Such as deterrents, problems, complaints, and delays
Irritants in the Market
 When entrepreneurs are tired with the same issue and problem,
Place
entrepreneurs should come in and make a difference
 Often, entrepreneurs just have to look at their ecosystem and they will
Location
be able to spot a business opportunity right away

Methods of Generating Ideas

1. Focused Group Discussion (FGD):
 a moderator handle is very open, free-flowing, and in-depth discussion within a group of people
who can provide insightful ideas about a new product or service that will fill a market need
2. Brainstorming:
 allows the participants to share creative ideas using the following rules:
a) No destructive criticism or judgement is allowed
b) Wilder ideas are accepted
c) More ideas are preferred
d) Improvement of other’s ideas
3. Brainwriting or Internet Brainstorming:
 the channel used is either writing or online. Results usually take longer, and answers depend on
the availability of the participants in answering questionnaires online
4. Problem Inventory Analysis:
 This is similar to FGD except that the participants are already given inventory of product or service
problems

S2: Screening the Opportunity

OPPORTUNITY SCREENING
 The process of cautiously selecting the best opportunity
 The selection will depend on the entrepreneur’s internal intent (main objective that the business will
accomplish in the entrepreneur’s life) and the external intent (addresses the compelling needs of
the target market)
 The entrepreneur should apply due diligence and independent judgement in selecting the
opportunities that have a potential and eliminate those that are not within the scope of the
entrepreneur's risk appetite.
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  Business Opportunity Elements
1. Has superior value to customers
2. Solves a compelling problem, issue, a need or a want.
3. Is a potential cash cow.
4. Matches with the entrepreneur’s skills, resources and risk appetite.

OPPORTUNITY ATTRACTIVENESS TEST

 Aims to assist entrepreneurs in ensuring that the opportunity that they will venture into an attractive
and feasible prospect.
 This test is designed to detail each entrepreneurial aspect into small chinks to come up with a
sound entrepreneurial decision.

S3: Seizing the Opportunity

OPPORTUNITY SEIZING
 Last step
 “Pushing Through” with the chosen opportunity
 Entrepreneur's should make the best out of this opportunity and they should exert effort and full
dedication for the success of the new venture.
 The entrepreneur’s business idea can be any type of innovation.
**Innovation: the process of positively improving an existing product or service.

TYPES OF INNOVATION
(ACCDG TO DEGREE OF DISTINCTIVENESS)

BREAKTHROUGH TECHNOLOGICAL ORDINARY INNOVATIONS

INNOVATIONS
These innovations or inventions
occur infrequently as these
establish the platform on which
future innovation in an area are
developed. Protected by a
patent, trade secret, or
copyright.
Eg.: Internet, Computer,
Airplane
INNOVATIONS
These innovations occur more
frequently than break through
innovations. These are
technological advancements of
an existing product or service.
These innovations need to be
protected too.
Eg.: Wi-Fi, Laptop, Jet Airplane
These Innovations Occur
ordinarily. Commonly
originating from market
analysis and technology pull
instead of a technology push.
Which means that the market
has a strong influence in the
implementation of an
innovation.
Eg.: Unlimited Internet Plans of
TelCos, Wireless mouse, Airbus
for economical travelers.

 The last process called the seizing process, involves refining and developing this opportunity.
 The refining process is called Product or service planning and development process.
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 4KEY STAGES IN PRODUCT OR SERVICE PLANNING AND DEVELOPMENT PROCESS
1.Idea Stage • Determines what are the feasible product or service that will suit the
opportunity.

2.Concept Stage • The developed Idea will go through the consumer acceptance stage.
This includes getting the target market’s initial reaction.

3.Product Development • Leverages on the information generated. Actual reactions from the
Stage potential customers are determined.

4.Test Marketing Stage • This stage validated the work done from the first three stages to
measure success in the commercialization of the Product or Service.

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NOTES:

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 CHAPTER THREE: THE MARKETING PLAN
VALUE PROPOSITION (VP)
-it states why a customer should buy a certain
product or service. Customers are specific
when it comes to their needs and their desired
benefits, so VP should cater to those
DEFINITIONS
particular needs.
-VP should be direct in addressing the
problems of the customers, should have
quantifiable benefits, and should differentiate
itself from its competitors.
1. Prepare a situation analysis that
details the problem(s) of the
TIPS ON HOW TO CREATE EFFECTIVE PROPOSITIONS TO THE TARGET
customers.
2. Make your VP straight to the point,
simple, and specific. In short, there
should be no complications. Your
VP has to target your major
objectives.
3. Highlight the value of our product or
service so that customers will easily
get what benefits that you provide.
4. Adapt to the language of your
CUSTOMERS:
market. Ensure that your target
market understands clearly what
you are trying to say and avoid
putting unnecessary and
inexplicable phrases.
5. The credibility enhancing elements
such as actual testimonials from
customers, partners, and other
stakeholders, putting specific
assurance elements and social
acceptability metrics found in social
media or press materials. Several
quality management certifications,
such as ISO seal add more
credibility to the product or service
that you are trying to sell.
UNIQUE SELLING PROPOSITION (USP)
-it refers to how you will sell the product or
service to the customers. It addresses the
customers’ wants and desires.
-after creating your value proposition, you
have to figure out how to advertise or
promote certain unique features of the
product or service that you are trying to sell.
You can do this in the form of product or
service characteristics, promotion strategies
and tactics, distribution centers and supply
chains, pricing, physical attributes, human
resource or market positioning strategies.
1. Identify and rank the uniqueness of
the product or service. Identifying
the unique selling point of the
product requires marketing
research and the best way to
identify it is to identify the marketing
mix (7Ps) and distinguish which
among those displays the product’s
unique features
2. Be very specific. Put details that
emphasize the differentiator against
the competitors.
3. K.I.S.S. (Keep It Short and Simple).
The entrepreneur should think of a
very catchy USP in the shortest and
simplest way possible.
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KNOW YOUR CUSTOMERS (KYC)
-Dig deep and understand the target customers through MARKETING RESEARCH.
**Marketing Research- A comprehensive process of understanding the customer’s intricacies and
the industry they revolve in. It scrutinizes the a) target market, b) their specific requirements, and c
) the market size where the business operates.

MARKET SIZE - The size the arena where the entrepreneur’s business will play.
PURPOSE: The approximation of the number of buyers and sellers in a particular market
To gauge the vastness or tininess of the market where the entrepreneur intends to
join.

METHODS IN DETERMINING MARKET SIZE

1. ESTIMATE THE POTENTIAL MARKET Ex: Selling of Rice by kilo and by sack –
Approximate number of customer that will buy majority of Filipinos eat rice
the product or avail the service. (also known
as Market space or Market universe)
2. ELIMINATE THE CUSTOMERS WHO ARE Ex: the rich people does not buy rice by
PROBABLY UNLIKELY TO BUY THE KILO but by sacks.
PRODUCT OR AVAIL THE SERVICE.

3. TO ESTIMATE THE MARKET SHARE

Plotting and calculation of the competitor’s
market share to determine the remaining
portion for the new venture.

CUSTOMER REQUIREMENTS - Specific features and characteristics that the customers need from a
product or service.
**Customer – the lifeblood of the business. Their thoughts, feelings, and experiences shape the decisions of
the business.
The phrase “the customer is always right” – is a mantra that most successful entrepreneur follow.

PRIMARY AND SECONDARY TARGET MARKET - Most entrepreneurs believe in the misconception that
they can serve ALL types of customers. Entrepreneurs must focus only on customers whom they can serve
beneficially; it will be a waste of resource to target all or target none.
A) PRIMARY TARGET MARKET - a specific group of consumers you want to attract to your product
or service.
B) SECONDARY TARGET MARKET - simply the second most important consumer segment you'd
like to target. Those who has less money to buy or those with fewer demands.
MARKET INTELLIGENCE - is the external data collected by a company about a specific market which it
wishes to enter, to make decisions, thus includes customer profiling which gathers information such as
population age in that area, infrastructure facilities, spending habits of consumers, state or government
regulations etc. Market intelligence is further obtained through market segmentation.

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MARKET SEGMENTATION - The process of grouping similar or homogenous customers according to
DEMOGRAPHIC, PSYCHOGRAPHIC, GEOGRAPHIC AND BEHAVIOR.

DEMOGRAPHIC SEGMENTATION PSYCHOGRAPHIC SEGMENTATION

-also known as Socioeconomic Segmentation
-GROUPING customers according to relevant
socioeconomic variables, such as:
1. Income range and Social class
2. Occupation
3. Gender and Age,
4. Religion and Ethnicity
-GROUPING customers according to
perceptions, way of life, motivations, and
inclinations.
PERCEPTIONS – external stimuli using 5
senses.
MOTIVATIONS
1. Physiological motivations – involve the
needs
2. Psychological motivations – preferences
(likes or dislikes)
**Aspirations - what customers want to achieve
(eg. Inner peace, financial stability, work-life
balance)
**Deprivations - Customer’s recognition of
certain voids to fill. (eg. Lack of financial
security, lack of love, lack of knowledge.)

INCLINATIONS - preferring one product over

another as a result of gaining a refreshing
experience when using the product, possibly
due to the product’s unique feature or due to it
giving more value than other products.

GEOGRAPHIC SEGMENTATION BEHAVIORAL SEGMENTATION

- GROUPING customers according to location. – GROUPING customers according to their
Encompasses cultures, beliefs, preferences, action; instigated by occasions, desired benefit,
politics, and lifestyle of a certain geography. loyalty and usage of products or availment of
-This can be based on municipality, city, province, service.
or region. It can be as big as a country or
continent depending on the entrepreneurs’
business objectives.

MARKET AGGREGATION
-It happens when an Entrepreneur wants to target a broader market as possible because the product
or service that the business offers is suited for an undifferentiated market.
Example: Products: Fruits, Vegetables, Rice, Water and Bread
Services: Haircut, Plumbing, or Transportation

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TALKING TO CUSTOMERS

MARKET RESEARCH DESIGN

TYPES OF RESEARCH DESIGN
(depending on the objective)
QUALITATIVE RESEARCH QUANTITATIVE RESEARCH
- Identifying the written or spoken opinions of - Analyzing the customers’ preferences by using
customers relevant statistics (such as those in surveys)
MOST COMMON METHODS OF COLLECTING DATA FROM TARGET CUSTOMERS
-Most reliable and credible way of getting relevant information from target customers.
-A face to face contact between the researcher (entrepreneur) and the respondent where the
researcher will ask him pertinent questions that will give him significant pieces of information
about the problems that he will solve.
-Captures verbal and non-verbal responses from the respondent
TYPES OF INTERVIEWS:
INTERVIEW

CHALLENGES IN AN INTERVIEW:
 Setting an appointment with an interviewee, which includes asking the respondent’s
permission.
 The respondent’s indifference as to how they share their opinions.
 Getting unbiased answers from the respondents due to limited memory or
forgetfulness, difficulty of the questions, the environment that they are in.

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 -It is a process of mining customers and non-customer experience and insight about a specific
product or service.
-The researcher will be able to generate relevant issues and concerns of customers
-It is led by a moderator who keeps the discussion spontaneous and on the track. Unlike the
interviewer, he encourages the participants to talk about a list of topics prepared prior to the
FGD. Participants are selected based on the objective of the entrepreneur and should be
homogenous as possible.

Example: If the entrepreneur wants to know if there is an opportunity for a beauty salon
FOCUSED GROUP DISCUSSION (FGD)

business in his area, he will be choosing female salon exerts. If his or her objective is to test
an existing product such as carinderia viands, he will then invite a group of students or
employees who are food enthusiasts.

-It is called an FGD because the discussion is focused on finding relevant answers
-FGD sessions usually lasts for 1 to 2 hrs.
-It will be more credible if actual Products or Services are presented in the FGD to elicit actual
reactions.
-It must be recorded through audio or video so that the researcher can choose the most
relevant insight from the participant.

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 -Preferred and practical method of generating ideas because the researcher documents the
behavioral patterns of people or of objects or events without necessarily requiring them to
participate in the research process.
-Watch or examine customer’s behavior in their raw state without biases and pretentions
thereby providing more accurate and faster results. Researcher must be keen and accurate on
what he really wants to observe.

OBSERVATION CAN BE PERFORMED USING:

1. Human Observer- record information as it occurs or using the 5 senses.
OBSERVATION

2. Machine Observer- employs an equipment to record the information needed.

CONDITIONS IN CONDUCTING OBSERVATIONS

1. If the person, object, or event is actually observable.
2. If the person does the activity regularly or if the event happens on a regular basis.
3. If doing an interview or FGD is becoming intrusive of the privacy of the person.
4. If the subject of observation does not take too long to produce relevant information

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 -Quantitative research
1. Traditional Surveys: via telephone, face-to-face interaction, orsnail mail.
2. Online Surveys: Through the internet (emails, websites, SNS)
-Depending on the objective of the survey, the respondents will be given a questionnaire
asking about their awareness level, profile, preferences, and behaviors.
-Can be answered verbally, by writing, or through the internet.
SURVEYS

ADVANTAGES OF TRADITIONAL OR ONLINE SURVEYS

 Systematized and easier to analyze
 More efficient- Can be derived in real time depending on the availability of
customers.
 For OL surveys, Will not require researcher to travel physically or spend on
telephone calls or mails.

THE MARKETING MIX: THE 7PS OF MARKETING

7PS OF MARKETING
1. Product
2. Place
3. Price
4. Promotion
5. People
6. Packaging
7. Processing

PRODUCT- What product or service is the most appropriate for the opportunity, and why will customers buy
or avail them?
-It is a physical good, service or idea created by an entrepreneur or an innovator in serving the needs of the
customers and addressing their problems

THE THREE-LEVEL CONCEPT OF A PRODUCT OR SERVICE

LEVELS EXAMPLES
Level 1: Core benefits of the Product or Service A customer buys coffee because he
Core benefits are the major factors why a customer wants to feel energetic for the whole
should buy a product or avail a service. day.
Level 2: Physical Characteristics of the Product The customer can choose a milk with a
or Service more appealing packaging or a more
Once the core benefit is satisfied and options are romantic aroma
available to the customer, tendency is to look for
second layer of selection.
Level 3: Augmented Benefit of a Product or The customer can choose a coffee that
Service comes with a loyalty card. So that when

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 Augmented benefits are additional benefits. he consumes 10 coffee drinks, he will
Customers will still get the core benefits of the get a free coffee milk
product even without the augmented benefits.
However, entrepreneurs should still provide
customers with augmented benefits to distinguish
them from the competitors.

PLACE - What location is best suited for the business where there are more potential customers? Can they
conveniently transact online or on-site? How is the process or distribution of products or performance of the
business?
-It refers to the location or medium of transaction.
-A strategic location depends on the nature of the business and the primary target market.

DISTRIBUTION AND LOGISTICS

OBJECTIVE
 To provide customers with pleasant experience in buying the product or availing the service so that
they will keep on coming back, whether on-site or online.
 The products or services placed should be the needs of the customers where the profits will be
maximized.
 The place should be presentable, appealing and catchy.

PRICE - What is the most appropriate price, and what pricing strategies will be used for the target
customers?
-It is the peso value that the entrepreneur assigns to a certain product or service after considering its costs,
competition, objectives, positioning and target market.
-It is the only P in the 7Ps that generates revenues for the business.

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MOST COMMON PRICING STRATEGIES

STRATEGY EXAMPLE
Bundling Manicure and Pedicure for P150.00
-It refers to two or more products or services in Postpaid plans
one reduced price. Hotel Packages
Penetration Pricing
-Setting low prices to increase market share, but
New products/ Service
will eventually increase the price once the
Introductory Prices
desired market share is achieved.

Skimming Cellphones
-Opposite of penetration pricing Other Electronic Gadgets
-prices are initially high then lowered to offer the Condominiums
products or services to a wider market.

Competitive Pricing Jollibee P99 perfect pairs VS MC Donald’s

-Benchmarking prices with the competitors. Chicken Mc Savers
Product-Line Pricing In the hospitality industry:
-this refers to pricing different products or Rooms of the same category have different
services within parallel product array using rates because of the difference in the amenities
varying price points. and facilities.
**Product Line- a group of related products under
a single brand sold by the same company.
Companies sell multiple product lines under their
various brands. Companies often expand their
offerings by adding to existing product lines,
because consumers are more likely to purchase
products from brands with which they are already
familiar.
Psychological Pricing Haircut @ P199.00
-This considers the psychology and positioning
of price in the market because consumers tend
to think that odd prices are lower than what they
are.

Premium Pricing Branded Items

-This refers to a very high price to reflect elitism
and superiority.

Optional Pricing Product: For car buyers, they may choose to

-This refer to adding an extra product or service add GPS navigation system and Bluetooth
on top of the original to generate more revenue. wireless communication

21
 -These maybe optional or additional accessories
along with the main product
Cost-based Pricing
-The basis of mark-up is the cost of sales.
Services: Meals on top of air fare
The entrepreneur will compute the cost of
coconut juice by adding the cost of the coconut
juice (P10) and the plastic container (P4).
He can now set the price at P20 to earn P6 per
coconut Juice.
Most Common Pricing Strategies

Cost plus Pricing The entrepreneur wants to set a 50% mark up

-The markup is based on a certain percentage or on the coconut juice cost which is P14.
cost. P 14.00 x 50% =P 7.00
New Price: P14 + P7 = P21.00

CLASSIFICATIONS OF COSTS:
Variable Costs or Controllable Costs
-These costs are directly proportional to the
number of products or services performed.
Higher Costs = More Customers
Lower Costs = Less Customers
Fixed Costs or Uncontrollable Costs
-These costs are not directly proportional to the
number of products or services performed.
-These are usually the cost of equipment,
employee remuneration, rental cost or utilities.
-The business will incur these costs whether or
not they provide more or less service.

PRICING GUIDELINES
1. Do not price the product or service below its cost.
2. Monitor competitors’ prices, and ensure that your prices are at par with them unless the
product or service is really way superior to the competitors’.
3. Align prices with the other 6Ps.
4. Implement price strategies that are relevant to your market segment.
5. Align Prices with your business objectives.

PROMOTION - What is the most effective advertisement or combination of advertisements and which
advertising tool should be used to drive awareness and increase in sales?
-This involves presenting of products or services to the public and how these can address the public’s needs,
wants problems and desires.
-The primary target market should be identified because it will become their main audience
-Main Goal: To gain attention

KEY MARKETING MESSAGE FOR PROMOTION

1. Value Selling and Unique Selling Proposition of the product or service.
2. Product or service image
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 3. Business image
4. Business values and philosophy

PROMOTIONAL TOOLS
Advertising Objective of advertising:
-This is the type of communication that influences  Informing, educating and familiarizing the
the behavior of a customer to choose the product public with the product and service offerings.
or service of the entrepreneur over the  Building a trustworthy image
competitors.  Increasing sales.
-Should choose the most cost-effective and
targeted channel to relay key marketing message Types of Advertisements
to the target market  Television
 Radio
 Internet
 Mobile phones
 Print- Newspapers, magazines, flyers,
directories, signage and posters.
 Out-of-Home- billboards, buses. Bus stops,
trains, train stations, taxis, street
advertisements.
Selling How to Sell:
This is the act of trading a product or service for a  Identify the target market
price or fee.  Cone up with a convincing way on how to sell
the product or service
 Handle objections by highlighting the product
benefits
 Close sale by leaving convincing conclusions
that will trigger the customer purchase.
 Monitor customer satisfaction through after
sale services
Sales Promotion Examples of sales Promotions in the Philippines
-These are short term promotional gimmicks  Sales discounts and discount coupons
wherein practical incentives and appealing  Raffles
activities are incorporated to entice the customers  Contests and Games
to buy the product or avail of the service  Promo Items
-Also called “below-the-line” promotions  Product or service bundles
-Involves time limit and sense of urgency  Trade fairs
 Sample distributions or free taste/trials
 Premiums
 Point-of-purchase promotions
 Advertising specialties
 Rewards

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 Public Relations Example of PR Strategies
-These are image-building initiatives of the  Press Conference
entrepreneur to make the name of the business  Launching events
reputable to stakeholders, such as target  Strong media relations through press kits
customers, government agencies, business  Social responsibility events (e.g.: Charitable or
partners, media and the public. communication events)
-Unlike advertisements, PR do not directly  Lobbying (e.g.: Good relationship with
promote products or services government officials)
-PR strategies affect customers indirectly, but they  Web public relations (e.g.: blogs, social media,
do influence the stakeholders to build more trust emails, word-of-mouth)
to the business
-Positive write-ups from journals, newspapers,
websites or social media, and even word-of-mouth
are more credible than traditional advertisements

PEOPLE - What type of people need to be hired? What are the basic skills needed for the job? What
leadership style will be applied by the entrepreneur?
-People play a vital role in servicing customers.
-The major differentiation is how the employees or customers make a difference in the lives of the customers.
-In hiring people, we must identify the specific, necessary job roles or employees and their job description, so
they will know their purpose clearly and serve customers well.
-Employees should be well compensated and provided with benefits

PACKAGING - What is the best packaging for the product that is attractive enough to customers and cost-
efficient at the same time? What Physical Evidence does the entrepreneur need to set-up so as to sell the
service?-
-It is how the product or service is presented to the customers.
-It is the overall identification (look and feel) of the product or service.
-This will determine the uniqueness of the product from the competitors.
-This is the first element that the customer sees.
-It preserves the shelf life of the product or service.
**ULTIMATE GOAL: to entice customers to purchase the product or service
-It should be focused on pleasing the customers’ eyes.
-It establishes the brand identity
-Elements such as color, shape size, materials, font and text, and graphics must be considered.
**“SERVICESCAPE”- refers to the overall ambiance of the place where the service is performed

“Packaging sometimes matters more than the product or service itself.

Indeed, it is a must to please the eye of the beholder.”

PROCESS - What is the most compelling feature of the product or the business that will make a difference in
the lives of the customers? What sets the product or service apart from the rest?

24
-It is defined as a step-by-step procedure or activity workflow that the entrepreneur or employees follow to
effectively and efficiently serve customers.
-It is used to make the marketers realize the importance of internal and external operations of the business to
serve customers better.

TYPES OF PROCESSES
Internal Processes External Processes
-Back-office operations -Includes actual servicing where customers
-Employees or machines process customer are part of the process.
requests without necessarily being seen by the
customers
E.g.: People who hold jobs that carry out functions
such as clearances, record maintenance,
regulatory compliance, accounting and IT services

FUNDAMENTALS OF BRAND MANAGEMENT

BRAND
-It refers to the identity or a company, of a product, of a service, or or an entrepreneur himself or herself.
-A symbol or promise or assurance from the entrepreneur.
-Good brand makes the customers loyal to the brand.
-Brand sets the image of the business to the public.
-The challenge: how to craft a brand, how to market the brand, how to make this brand deliver

BRAND MANAGEMENT
-Supervision of the tangible and intangible elements of a brand.
Tangible Elements- includes the product itself, the packaging, price and location.
Intangible Elements includes perceptions and relationships of the customers with the brand.

BRANDING
The process of integrating the strategies formed from the marketing mix to give an identity to the product or
service
GOALS:
 Establishing to target customers that the business is reliable and trustworthy and that the product
or service is the superior solution to their current problem
 Differentiating with competitors
 Driving customers loyalty and retention

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BRAND NAME
Major differentiator against the competitors.
CHARACTERISTICS OF A BRAND NAME:
1. Unique
2. Extendable
3. Easy to remember
4. Can describe the benefits of a product or service
5. Can be converted to other dialects or language in case the entrepreneur expands to other
territories.
6. Can describe product category
7. Can describe concrete qualities
8. Positive and inspiring

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NOTES:

27
 CHAPTER 4: PRODUCT DEVELOPMENT, OPERATIONS, AND FINANCIAL PLAN

FUNDAMENTALS OF PRODUCT DEVELOPMENT

 Before commercializing a new PRODUCT or SERVICE, the entrepreneur must FOCUS first on
REFINING THE PRODUCT OR SERVICE and VALIDATE ITS MARKET ACCEPTABILITY.
a. It does not have to be a new product/service;
b. It can be a new product line from existing business of the entrepreneur
c. It can be a product line extension, enhancement, repositioning of an existing product.

 PRODUCT DEVELOPMENT- is the process of developing, testing, and commercializing a product or

service with the ultimate objective of solving the problem of the primary target market.

4 SEQUENTIAL STEPS OF PRODUCT DEVELOPMENT

1.Developing a product or service  Simply describes how a product or service works and
description benefits the customers.
How?
1. It should directly address the primary target in a
personal manner using everyday language. It needs
entrepreneurs empathy towards customers’ needs or
wants.
2. It should highlight the features that will cater to the
customers’ needs or address customers’ problems.
3. Realistic superlatives should be used for the product
description.

2.Creating a prototype  After product/service is defined; proceed the most

challenging product/development step: CREATION OF
PROTOTYPE

**A prototype is a preliminary model or sample of a new

PRODUCT or SERVICE that is created to test a product concept
or service process.

 ADVANTAGES OF PROTOTYPE CREATION

1. Enables entrepreneur to engage in TRIAL-and-ERROR,
provides room for improvements, and refines
functionality of the product design or service process.
2. Provides a window to test the performance and
specifications of various materials and service
processes.
3. Helps the entrepreneur effectively describe the product
or service to the product team.
4. Elicits respect from key stakeholders and customers. It
also gives credibility to the entrepreneur.
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3.Testing the prototype  A vital process before an actual product or service is
launched to the market.

**TESTING THE PROTOTYPE will uncover final LOOPHOLES

that need to be fixed before commercialization.

 TESTING METHODS
1. Focus Group Discussion
Participants will provide relevant insights about the
product or service.
Purpose of FGD: IDENTIFY ERRORS, PROVIDE
SUGGESTIONS AND PRACTICAL SOLUTIONS TO
IMPROVE DEFICIENCIES.
2. Legality and Ethical Test
The product or service should comply with relevant laws
and regulations: license, permit from BFAD.
Ethical issues like threats of health, safety and
environment
3. Safety test
Ensure that the product is safe to use, safe to be
consumed(food/beverages), and safe to be applied
(lotion/makeup)
4. Product Cost Testing
Examine every stage of the manufacturing process or
every process of the service blueprint to evaluate and
finalize costs involved.
5. Component test
Each component of the product or service must be
tested independently to identify component failures for
goods or service.
6. Competitor’s product/service test
Test a similar line of products or competitor’s product or
service itself to compare and get the best practices
applied.

**TESTING THE PRODUCT/SERVICE is MANDATORY to ensure

that the PRODUCT/SERVICE will not fail the customers and will
deliver its DEFINITIVE PURPOSE.

4.Validating the market acceptability  The process of finding out if the intended primary target will
**Market validation is a series of be buying the product or availing the service.
interviews of people in your 1. Market acceptability is a critical factor to be validated
target market. Ideally, market before launching the product or service.

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 validation should start much earlier 2. It tests whether the VALUE PROPOSITION and
in the process UNIQUE SELLING PROPOSITION are appropriate.
3. To deeply understand the value that the product or
service brings to the customer their prospective
purchase behavior.
4. This is the LAST STEP before the product or service
can be introduced to the market.

 OBJECTIVE QUESTIONS to be answered in the process of

market acceptability validation
a. Will the primary target market like the PRODUCT OR
SERVICE?
b. Will the primary target market buy the product or service
when it is already in the market?
 How to answer the QUESTIONS:
1. Use MARKETING RESEARCH TOOLS: FGD, survey,
observation, interview, online survey, email…
2. Prepare relevant OPEN-ENDED QUESTIONS
3. Find Market Experts who target same market but not
direct competitions.
4. Collate data, analyze them, and prepare summative
report that answers the objective questions that were
mentioned earlier.

4 Ms of OPERATIONS

 Operations Plan states the details in operating the business.

1. METHODS – processes to be followed in effectively manufacturing or delivering a product or
service.
2. MANPOWER – the right human resources who will handle certain business operations.
3. MACHINES – the technology used in efficiently operating the business.
4. MATERIALS – used in creating a product, performing service which includes supply chain
management.
METHODS

 It represent the day-to-day operations of the business.

 It describes how an entrepreneur will run the business from all facets of business:
Manufacturing of goods  Manufacturing is the process of translating raw materials into finished
goods that are acceptable to the customer’s standards.
 3 elements in MANUFACTURING
Inputs – materials to be used
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 Process – transformation phase
Output – the final product of the product stage (for selling)

MANUFACTURING SITES
 should also be considered efficiently
1. Home-based –for startups; cheapest and highly flexible
2. Commercial space for rent – advisable if business requires
commercial space and if home is not anymore viable.
3. Commercial space purchase –requires biggest amount of
expenditure; considered as investment
LOCATION
 where the delivery of raw materials and finished goods will be conducted.
1. Accessible to major types of transport vehicles
2. Transportation routes should be efficient
3. Location must operate in an environment-friendly manner

Service delivery  Service is intangible therefore it is the only way the customer can
process appreciate the service.
**SERVICE BLUEPRINT – a detailed flowchart of the service business;
processes relevant to the service business to minimize wastage.

Distribution of goods  The manufacturer and wholesaler must decide how to distribute their
and services products.
 Manufacturers should consider cost and traffic flow in site selection,
because a low-cost, low-traffic location means spending more on
advertising to build traffic.
 The availability of fast shipping and highly segmented mailing lists,
developed or purchased from list brokers, magazines or other companies,
has enabled certain small businesses to operate from any location, yet
serve national or international markets.

Logistics for delivery of  There are no problems if the customers pay in cash, but there are also
goods other methods in payment like credit cards, instalment plans or simple
accounts payable (utang).
 The entrepreneur must ensure that credit payments are without hitches
and customers are aware of the of the terms and conditions of the credit.

Inventory of
management

**Therefore ENTREPRENEUR has to be very detailed formulating these processes and must ensure that the
customer experience will be pleasant and seamless.

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 PROCESSES should abide with INDUSTRY STANDARDS AND POLICIES such as ISO certification
and SOP or standard operating procedures.

MANPOWER
“MAN in management is referred to as a human resource.
It is the recruitment, selection, training, promotion and grievances handling of
personnel. Payment of compensation gratuity, termination of services are the few
issues that have to be dealt effectively to retain the talent within an organization.”

 The need for qualified and expert employees that can handle operational functions.
 The entrepreneur must be very keen in selecting and hiring employee.
 Important terms to remember:
 Job Description – enumerates duties and responsibilities of the potential employee; it is also known
as job title – summary of what the employee will do.
 Compensation and Benefit Range – details of potential salary and benefits the employee will get.
 Duties – describe the job that the employee will assume
 Responsibilities and Accountabilities
 Work Schedules Including Work Hours
 Job Offer
 Employee Development – like training, orientation
 Salary – competitive salary package; non-monetary benefits
Employee Qualification Preparatory Selection of Job Applicants
 Educational Background  Headhunters
 Work Experience  Manpower Agencies
 Specific Skill or Knowledge  Print Ads
 Work Attitude  Recommendation or Referrals
 Job Offer  Business Networkers
 Employee Development  Digital Media
 Mobile Apps

Selection of Job Applicants Job Offer

 Qualifying exams  Rank or Position of the Candidate
 Psychology tests  List of responsibilities and deliverables
 Interview and its scope and limitation
1. Strengths And Weaknesses  Salary and benefits
2. Previous Job Experience  Work schedule
3. Interest In The Present Organization  Probationary period
4. Career Plans  Duration of the contract
5. Work Ethic  Resignation procedure

Employee Development
 Employee Orientation

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  On-the-Job Training
 Buddy System
 Mentor-Mentee Program
 Online Learning Programs or Webinars
 Internal Training Programs

MACHINES

“MACHINES are the basic tools to produce goods or to

generate services. Selection of an appropriate machine not
only enhances efficiency but also saves time and increases
revenue. Tailoring the requirement of the organization.
Selection of a right technical machine and equipment,
availability of spare parts, evolution of After sale services,
substitutes and technology and the organization budget are
the crucial criteria while purchasing a machine.”

 Described as the “best friend” of the manpower producing goods and offering services.
 A very important aspect of goods and service production.
 Machines are not only limited to physical equipment but also to new technologies that help business
operations.
EQUIPMENTS AND OTHER FACILITIES

 Facilities must be strategically placed in the manufacturing site

 Sizes and shapes must adapt to how big or small the pieces of equipment are.
 Site must be conducive, well ventilated, and well-lit
 Pieces of Equipment
 The entrepreneur must ensure that the employee went through proper training.
 Proper storage, parking, power consumption and cost
TELECOMMUNICATIONS AND INFORMATION AND TECHNOLOGY

 Landline Phones
 Mobile Phones
 Laptop and Desktop Computers
 POS Machines
 Accounting and Inventory Software
 Web site
MATERIAL

 Material is a basic ingredient in management be it a service industry or a product industry. Most of the
industries locate themselves nearby to the availability of material.

33
 It is responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling
materials in an optimum manner in order to provide a pre decided service to the customer at a minimum
cost.
THE BUSINESS MODEL

 The entrepreneur must adapt the DYNAMICS of traffic lights in developing a BUSINESS MODEL.

RED GREEN
negative signals that entrepreneurs should be wary positive signals that can help entrepreneurs
of develop ideal business models and eventually
succeed.

RED LIGHTS GREEN LIGHTS

 Satisfying the customer becomes too costly
and irrational
o associated after sales costs that
exceed the profit like WARRANTY.
 Being a market leader is difficult to sustain
 Return of Investment (ROI) takes too long and
too small.
1. Target high-value customers
a. someone who is easy to find
b. someone who is willing to pay a
price
c. someone who is easy to persuade
with the least promotional effort
d. someone who can join the
bandwagon of customers
2. Offer products or services with great value –
attractive and reasonable price,
customization options, provides value
outpacing the competition.
3. Offer products or service with reasonable
profits
a. increased mark up
b. Decrease operational costs

34
NOTES:

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