Uploaded by Marialyn E. De Vera

WEEK 3-DAY1 - Recognizing Potential Market

Developing a Business
Plan: Recognizing the
Potential Market
Prepared by: Ms. Marialyn E. De Vera
How will you
recognize your
potential market?
• The entrepreneurial process is
step-by-step procedure in
establishing any kind of business
that an entrepreneur has to
undergo. It is composed of four
❖This is the beginning of the process
and is considered the most difficult.
Entrepreneurs at this point take
note of interesting trends in their
❖Consumers are reliable sources of
opportunity information because
market needs originate from them.
❖Other major sources of opportunity are the
glaring problems in the environment, problems
encountered by co-entrepreneurs, new trends,
processes, and developments in the environment.
❖Other minor sources are feedback
from distribution or business
partners such as retailers,
wholesaler, manufacturers, and
technical people that the
entrepreneur is working with.
❖Entrepreneurs should formulate a business plan
when they have already spotted and assessed the
opportunities for a market.
A business plan is a comprehensive
paper that details the marketing,
operational, human resource,
financial strategic direction, and
tactics of the business.
❖A big idea can never be translated
into reality if the entrepreneurs
resources are limited. Therefore, it
is mandatory in the entrepreneurial
process to calculate the resources
needed to establish the business
and compare this against the
entrepreneurs current resources.
❖This is the part where the entrepreneur
should use the resources allocated for
the new venture. The business plan
prepared in step 2 should already have
been implemented.
❖The entrepreneur should have a
control and monitoring system to serve
as a check and balance of the
formulated plans.
❖The starting point of any new venture that
involves understanding and knowing the
intricacies of the macro environment, micro
environment, and internal environment.
❖With this process of scanning the general
environment, an entrepreneur can
recognize various opportunities and at the
same time understand thoroughly the arena
where the future business will operate.
Macro environment - is the
condition that exists in the economy
as a whole, rather than in a particular
sector or region. In general,
the macro environment includes
trends in the gross domestic product
spending, and monetary and fiscal
1. Demographic Forces - Demographic forces relate to people. The name refers to the
term Demography. The latter refers to the study of human populations. This includes
size, density, age, gender, occupation and other statistics.
2. Economic Forces - relate to factors that affect consumer purchasing power and
spending patterns. For instance, a company should never start exporting to a country
before having examined how much people will be able to spend.
3. Socio-Cultural Forces - factors that affect society’s basic values, preferences and
behavior. The basis for these factors is formed by the fact that people are part of a
society and cultural group that shape their beliefs and values. Many cultural blunders
occur due to the failure of businesses in understanding foreign cultures.
4. Technological Forces - factors that create new technologies and thereby create new product
and market opportunities.
5. Ecological Forces - are important since they are about the natural resources which are
needed as inputs by marketers or which are affected by their marketing activities. Important
trends in the ecological environment are the growing shortage of raw materials and the care
for renewable resources.
6. Political Forces - his involves laws, government agencies and pressure groups. These
influence and restrict organizations and individuals in a society. Therefore, marketing decisions
are strongly influenced and affected by developments in the political environment. Before
entering a new market in a foreign country, the company should know everything about the
legal and political environment.
The Elements of Micro
Micro environment – it refers
to the environment comprising of
all the actors of an organization’s
immediate environment which
influences the performance of the
company, as they have a direct
bearing on the firm’s regular
business operations.
The Elements of Micro Environment
Competition is what keeps the firm thriving. Competitors are the
rival sellers operating in the same industry. It must be noted that the
nature and intensity of competition highly influence the firm’s
products and services. Product Differentiation is something that
helps the firm to beat the cut-throat competition in the market.
Suppliers are the one who provides inputs such as material,
components, labor and other stock of goods to the firm, which is
required to undertake manufacturing activities. when there is
uncertainty as to the supply constraints, it usually builds pressure
on the firms and they are required to maintain high inventories,
which leads to cost increases.
The Elements of Micro Environment
Customer, the success of the organization greatly
depends on how effectively the firm fulfils the needs and
wants of the customers, which is profitable to the firm
and also provides value to the customer. The firm needs
to analyze what the customers expect from their products
and services so that the firm can satisfy them.
Intermediaries refer to marketing intermediaries
which cover agents, merchants, distributors, dealers,
wholesalers, etc. that participate in the company’s
supply chain, in stocking and transporting the goods
from their source location to their destination.
The Elements of Micro Environment
Shareholders are the real owners of the company who
invest their money in the company’s business, by
purchasing the shares, for which they are paid a dividend
every year as a return. Shareholders have the right to vote
in the company’s general meeting.
Employees, Placing the right person at the right job
and retaining them for the long term by keeping the
staff motivated is very important for the strategic
planning process. Training and development act as a
guide to the firm’s employees which ensures an up-todate workforce.
The Elements of Micro Environment
Media, we all know the power of media these days,
it can make or break an organization or its
products/services overnight.
Management of media whether electronic media,
press media or social media is really important not
just to create a positive and clean image of the
company and its products in front of the audience
but also to support the firm in building a good
reputation in the market. The right use of media
can do wonders for the company and boost its
Internal Environment
Internal Environment – it comprises all the factors that are within the
area or premise of the business.
Internal Environment – the business still need proper monitoring to
ensure the potential of the company to surpass future challenges.
Internal Environment of business - includes physical assets,
technological capabilities, human, financial and marketing resources,
management structure, relationship among various constituents, goods,
objectives and value system prevailing.
Factors of
Factors of Internal Environment
1. Value System/Culture of the Firm
Culture may be defined as the beliefs, customs or arts, of a particular
society, group, place or time. It is also collective behavior of individuals that are part
of a certain organization.
The culture prevalent to the firm may or may not strengthen the profit
maximation. Culture adds to the success of a certain business.
Value system consists of all those components that are a part of regulatory
frameworks, such as culture, climate, work processes, management practices and
norms of the organization. The employees should perform the activities within the
purview of this framework.
2. Vision, Mission and Objectives: The company’s vision describes its future
position, mission defines the company’s business and the reason for its existence
and objectives implies the ultimate aim of the company and the ways to reach those
3. Organizational Structure: The structure of the organization determines the
way in which activities are directed in the organization so as to reach the ultimate
goal. These activities include the delegation of the task, coordination, the
composition of the board of directors, level of professionalization, and supervision.
4. Corporate Culture: Corporate culture or otherwise called an organizational
culture refers to the values, beliefs and behavior of the organization that
ascertains the way in which employees and management communicate and
manage the external affairs.
5. Human Resources: Human resource is the most valuable asset of the
organization, as the success or failure of an organization highly depends on the
human resources of the organization.
6. Physical Resources and Technological Capabilities: Physical resources refers
to the tangible assets of the organization that play an important role in
ascertaining the competitive capability of the company. Further, technological
capabilities imply the technical know-how of the organization.
Quiz Recitation
1. An organization refers to the values,
beliefs and behavior of the organization
that ascertains the way in which employees
and management communicate and
manage the external affairs.
Corporate Culture
2. The business still need proper
monitoring to ensure the potential of the
company to surpass future challenges.
Internal Environment
3. These influence and restrict
organizations and individuals in a society.
Political Forces
4. A comprehensive paper that details the
marketing, operational, human resource,
financial strategic direction, and tactics of
the business.
Business Plan
5. Reliable sources of opportunity
information because market needs
originate from them.
6.What keeps the firm thriving?
7. The most valuable asset of the
organization, as the success or failure of an
organization highly depends on the human
resources of the organization.
Human Resources
8. It can make or break an organization or
its products/services overnight.
❖ Is an entrepreneurs business idea
that can potentially become a
commercial product or services in
the future.
❖Seeking the opportunity
❖Screening the opportunity
❖Seizing the opportunity
❖The first step and is the most
difficult process of all due to the
number of options that the
entrepreneur will have to
choose from.
❖It involves the development of
new ideas from various sources
as follows:
A. STEEPLED- This is a mnemonic for
Sociocultural, Technological,
Economic, Environment, Political,
Legal, Ethical, and Demographic
factors. This represents the general
environment where the
entrepreneur can identify business
opportunities from and where the
future business is about to operate.
B. INDUSTRY- This is the source of current trend on what is
happening in the industry where the future business will belong to.
For example: The entrepreneur should be fully acclimated on what
is happening with the rice industry if he or she wants to establish a
rice retailing business.
are new trends that can be the core business
model of a new venture.
For example: The influx of mobile application
necessitates businesses to have this platform
as one of their transaction channels.
These are projected new opportunities
that can possibly affect the new
business while it is running.
For example: Sari-sari stores in the
future will be able to incorporate
financial transactions such as accepting
bills payment and process remittances.
A. CONSUMER PREFERENCES, INTERESTS, AND PERCEPTIONThese are the current needs and wants of potential customers
that should be discovered right away by a budding entrepreneur.
❖NEED is recognized when a customer
believes that there is a difference
between his or her current situation
versus his or her desired condition.
❖WANT is the other hand, is
recognized when a customer believes
that there is a specific product or
service that can perfectly suit the
B. COMPETITORS- Recognizing and understanding potential
competitors will aid the entrepreneur to develop a product or
service that is unique and will surely stand out from the
competition. The 4Ps of marketing
(product, place, price, and promotion).
CUSTOMERS- Oftentimes, the most brilliant
ventures come from the most unexpected
opportunities. It may happen in unlikely
situations, unlikely places, and with unlikely
opportunities do not just come from outside forces, but also
from within the entrepreneur. The entrepreneurs talents,
hobbies, skills, or expertise can be a source of business
For example: If the entrepreneur is an artist,
why not sell his or her paintings? If he or she
is a musician, why? Not put up a bar and
perform there? If he o she is an expert in
home interior design, why not make it a
DETERRENTS, PROBLEMS, COMPLAINTS, AND DELAYSGenerally, entrepreneurs see opportunities in
situations where there is a recurring problem
or sometimes when there is no more hope in
solving the problem.
F. LOCATION- Often, entrepreneurs just
have to look at their ecosystem and they
will be able to spot a business
opportunity right away.
(FGD)- In this method, a
moderator handles a very open,
free-flowing, and in-depth
discussion with a group of people
who can provide insightful ideas
about a new product or service
that will fill a market need.
2. BRAINSTORMING- Similar to an FGD,
brainstorming is an activity that allows the
participants to share creative ideas using
the following rules:
✔(a) no destructive criticism or judgment is
✔(b) wilder ideas are accepted.
✔(c) more ideas are preferred.
✔(d) improvement of others ideas is allowed. In
short, brainstorming is a fun discussion with
lenient rules.
This is exactly the same as
brainstorming except that the channel
used is not face-to-face, but in writing
or online. The results of brainwriting or
internet brainstorming usually take
longer, as the answers depend on the
availability of the participants in
answering the questionnaires online.
similar to the FGD except that the participants are
already given an inventory of product or service
problems. The participants will just identify from the
list fiven the compelling problems of a potential
products or service insteadof generating the ideas
from them.
S2 – Screening the opportunity
Opportunity Screening
• It is a process of cautiously selecting the best opportunity. The
selection will depend on the entrepreneur’s internal intent,
• the main objective that the business will accomplish in the
entrepreneur’s life and the external intent, which will address the
compelling needs of the target market.
• Risk Appetite - refers to the entrepreneur’s tolerance of business risk.
• The crafting of a business plan starts only when entrepreneurs already
said no to many opportunities and said yes to one forceful
opportunity, to which they will devote their time and resources.
The entrepreneur should say no to an opportunity
if it does not contain any of these business
opportunity elements:
✔Has superior value to customers
✔Solves a compelling problem, issue, a need,
or a want
✔is a potential cash cow
✔Matches with the entrepreneur’s skills,
resources, and risk appetite
Opportunity Screening Matrix (OSM)
aims to assist entrepreneur concretize the evidence that the chosen
opportunity (or opportunities) is well worth pursuing. The 12 Rs of Opportunity
Relevance to vision, mission, and objectives of the entrepreneur.
Resonance to values.
Reinforcement of Entrepreneurial Interests
Revenues – determine the sales potential of the products or services you want to
5. Responsiveness to customer needs and wants.
6. Reach – attainment of rapid growth
7. Range – potentially lead to a wide range of possible product or service offerings
8. Revolutionary Impact – “next big thing” or a game-changer that will revolutionize the
9. Returns – high returns on investment
10. Relative Ease of Implementation – easy to implement
11. Resources Required – fewer resources is better than those requiring more resources
12. Risks
Opportunity Seizing
✔is the last step in opportunity spotting and
✔the “pushing through” with the chosen
✔is the process of positively improving an
existing product or service.
✔it is a key driver for economic growth.
Three (3) types of Innovations according to the degree of
1. Breakthrough innovation
❑may also include inventions, occur infrequently as these establish the platform
on which future innovations in an area are developed.
❑must be protected by patent, a trade secret, or a copyright.
❑Examples: Internet, computer, or airplane
2. Technological innovation
❑occur more frequently than breakthrough innovations.
❑are technological advancements of an existing product or service. These innovations
need to be protected too.
❑Examples: wireless fidelity or Wi-Fi, laptop, and jet airplane.
3. Ordinary innovations
❑occur ordinarily as the name implies.
❑are commonly originating from market analysis and technology pull instead of a
technology push.
❑ This means that the market has a strong influence in the implementation of an
❑Examples: unlimited Internet plans of telecommunications companies, a wireless
mouse, andairbus 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.
Four (4) stages:
1. Idea stage – in this stage, the entrepreneur determines what
are the feasible products and/or services that will perfectly suit
the opportunity.
Market evaluation
Assessment of the value of new products/services
Elimination of unappealing products/services
2. Concept stage – the developed idea will undergo a
consumer acceptance test. This test includes getting the initial
reactions of the primary target market and the distribution
Conversational interviews
Four (4) stages:
3. Product development stage – in this stage, the
entrepreneur leverages on the information generated
from the prospective customers via the concept
Determine actual reactions from prospective
Conduct consumer panel
4. Test marketing stage – this stage validates the
work done from the first three stages to measure
success in the commercialization of the product or
Actual sales results
Once the 3S of opportunity
spotting and assessment have been
diligently done, the entrepreneur
should now be ready to prepare a
comprehensive business plan that
covers marketing, operations, and
financial plans.