12 Department of Education

National Capital Region

SCHOOLS DIVISION OFFICE
MARIKINA CITY

ENTREPRENEURSHIP
Recognize the Potential Market
First Quarter-Module 3

Sheila Mae A. Malesido, MBA, LPT

Writers:
Richelle Requinala, MBA, LPT

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 This module was designed and written with you in mind. It is here to help you
develop knowledge, skills, and attitudes in the course of Entrepreneurship. The
scope of this module permits it to be used in many different learning situations.
The language used recognizes the diverse vocabulary level of students. The
lessons are arranged to follow the standard sequence of the course. But the
order in which you read them can be changed to correspond with the textbook
you are now using.

The module is divided into two lessons, namely:

• Lesson 3 – Recognize a potential market

• Lesson 4 – Select the best product or service that will meet the market need.

After going through this module, you are expected to:

1. identify the potential market
2. discuss the nature and concept of market identification
3. describe the types of market segmentation, and
4. determine the process of target marketing

Shade the (4) four types of market segmentation that you can find in the table
below (diagonally, horizontally and vertically).

B E H A V I O R A L C R G S B G R K M
E D T E A C H E R P Y A E Y H E T H A
C C L I M A T E S F B N O R W O O V R
R O P F E V C E V T U U G U R G U K C
U U U K S U F A A C N L R L U R W M I
I F G R E R E R B V P N A I T A S E H
T M J P D S P C R Y R A P T N P N Y P
E E W U A C A H D T T M Y Y K H O M A
M A R K E T S E G M E N T A T I O N R
H A S C H H V N M F L F C W C C R S G
C E M D H C K D E V E L O P M A N T O
K C K E M E L M F U N D R A I L E R M
U N O T F L A C I G O L O H C Y S P E
P T N E M E G A N A M L E V E L D I D

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 Lesson
Recognize a
3 Potential Market

The entrepreneur must acquire the required competency in order to gain

competitive advantage. After assessing his/her entrepreneurial competency and the
business competency of his/her chosen venture, the entrepreneur now determines
his/her market or customers. His potential market.

Why is there a need for the entrepreneur to clearly identify and define the
customers of his/her proposed business venture? The reason is very simple: Not all
will become customers of the business venture.

How does the Mercury Drug started?

Just like other entrepreneur success stories, Mariano

found opportunities for entrepreneurship after World War 2.
Mariano had been working in a local drugstore when the war
destroyed several businesses in the city. This Photo by
Unknown Author is
Mariano saw the need to supply sulfa drugs, which were used to treat bacterial
infections. He started to buy sulfa tablets and sold them at affordable prices. Soon,
other people followed and adapted Mariano’s strategy.

However, only Mariano sold high-quality sulfa tablets, which ensured him a
steady clientele. With his hard work and dedication to build up savings, he was able
to put up his first drug store in 1945, which he named Mercury Drug. The Roman
god Mercury is known for speed. He also carries the caduceus, which is a symbol in
the medical industry.

Mariano invested his earnings into the company and introduced many
innovations in the service. Among these innovations were a drug-delivery service to
clients and locations that are open 24/7 because he knew people would be needing
medicines any time of the day.

By the time Mariano opened his second Mercury Drug at the newly
constructed Ayala shopping center in Makati, he had invested in technological
innovations, such as biological refrigerators and computer-guided controls.

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 Mariano’s dedication to his business has allowed Mercury Drug into 700
stores and a widely recognized name for quality pharmaceuticals.

In the success story of Mariano Que tells us that a prospective entrepreneur

needs to come up with a good idea. This will serve as the foundation of the new
venture. Sometimes an entrepreneur sees a market need and has an idea for a
product or service to fill it. Other times an entrepreneur gets an idea for a product or
service and tries to find a market for it.

In his story, how did he find the need to put up a drug store? Is he able to
recognize immediately his potential market for the said business venture?

What is a potential market?

The market you need to look at is your

potential market, not the actual market served,
the one that's limited to your existing
customers. Your target market is much wider
than just the people you already reach. It's the
people you might someday reach, or people you
could reach, that you need to be concerned
about.

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.

For example, you want to calculate the potential market for laptops. For this,
the entire population is divided into different segments which show interest in the
product and then all the segments are added up. So, for laptops, the users who might
be interested to buy are the students who are about to join residential campuses,
students who simply want a laptop to differentiate it from the desktop at home, users
of desktops who want to switch to a more portable version and office going people.
The numbers in each of these segments of how many people are interested is found

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out through a market forecast and all the numbers are added up to get the size of
the potential market.

It's your plan--and every plan is different--so you need to know as much as
you can about your potential market.

GETTING THE INFORMATION

The information sources that will help you conduct a market analysis are different
for every business plan. For example, you might need local information you can get
from your local chamber of commerce. Or you might be able to find your market
information in every barangay or you might also need to find other government
statistics, or other commercial statistics, so you may be conducting some internet
searches to track down the information.

Not all the information you need is going to be publicly available, and you may have
to settle for educated estimates. Sometimes you'll have to extrapolate information
from different sources to get the information you're seeking. Some good market
research come from telephone directories, catalogs, industry association statistical
compilations, real estate information and density maps.

The following are the sources of data or information that could help us track down
information of our potential target market:

1. The Philippine Statistics Authority – for information on population, housing,

industry and trade.
2. The Land Transportation Office – for records of vehicles, cars, trucks,
motorcycle, jeeps and the like.
3. The Department of Education and its regional offices, and schools, colleges,
and universities (public and private) – for enrolment and graduate records.
4. The Supreme Court and all lower courts or justice – for records of judicial
cases are kept.
5. All police agencies and offices – for records of criminal cases
6. The Securities and Exchange Commission – for all trade, industrial and
commercial establishments and other organizations, profit or non-profit
records.
7. All other departments, offices and entities of the government and private
organizations, entities or offices – where different kinds and classes of data
and information are registered.

MARKET IDENTIFICATION

Market identification is a strategic marketing approach and process that is intended

to define the specific customer of the product. There are three strategic marketing
approaches that will assist the entrepreneur in defining the specific market of the
product.

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 1. Market segmentation
2. Market targeting;

1. SEGMENTATION

Now that you searched information on your potential

target market, you should next try to divide it into
useful slices or segments. Dividing the market into
these segments helped the entrepreneurs address the
more specific market needs, media, pricing patterns
and decision criteria in each of their different market
segments. This will also help pinpoint the specific
customers who are willing and are able to buy the proposed product/s. This could
be done through the process of segmentation.

1. Demographic Segmentation is a process of dividing the whole market based

on age, gender, status, religion, and the like. The purpose is to limit the market
into their similarities and finding the best strategy to satisfy their needs and
wants.

2. Geographical Segmentation is a process of dividing the whole market based

on geographical locations. It focuses on satisfying the needs and wants of the
customers based on their identified location.

There is a need to consider the variables such as climate, dominant ethnic

group, culture, density (either rural or urban) and classification of the
geographical unit (e.g. first class, second class, etc.) when the entrepreneur
divides the total market into a smaller segment using geographical
segmentation.

3. Psychological Segmentation is that the market is divided in terms of what

the customers think and believe like the needs and wants, attitude, social
class, personality traits, knowledge and awareness, brand concept and
lifestyle.

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 4. Behavioral Segmentation is that the market is divided based on the
variables such as perceptions, knowledge, reactions, benefits, loyalty and
responses.

Market segmentation is a strategy that can assist the entrepreneur in identifying the
particular homogenous segment to serve. After all the consumer population in its
entirety basically has different attitudes, perceptions, inclinations or responses.

The following are the important factors must be considered in segmenting the
market.

1. Accessibility of the market segment. The market segment must be

accessible to the business
2. Size of the market segment. The market segment must be large enough to
provide wealth to the entrepreneurial venture.
3. Distinction of the market segment. The market segment must be easily
differentiated.

2. MARKET TARGETING

Market targeting is a stage in market identification process that aims to determine

the set of buyers with common needs and characteristics.

In the market targeting phase, the entrepreneur has already divided the total market
and is now in the process of
1. Evaluating each market segment and
2. Selecting the target market segment or segments to serve

MARKET SEGMENT EVALUATION

After segmenting the market, the entrepreneur does not simply select any market
segment to serve. He/she must instead conduct a proper and critical evaluation of
every segment with the following important factors:

1. Size of the segment and expected growth

2. Existing and probable structure of the segment
3. Capability of the business.

SIZE AND GROWTH OF THE SEGMENT

The size of the segment or its growth are the two

frequently asked details every time a new business is
about to be opened. The size and growth of a segment
are considered favorable indicators for doing business
in that particular location.

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For example, if local homeowners are part of your target market, then you should be
able to count them. You need to know whether you have 500 people in your market,
or 200,000, or 2 billion. Be able to show what the total market is for your business.

Small entrepreneurs’ ventures in terms of capital base may find such environment
unfavorable even though the size of the industry is large enough and the segment is
growing. The entrepreneur therefore has to critically evaluate whether it is good to
compete in a market segment where several other businesses in it becomes too
competitive.

Market size is dependent on the number of qualified customers and the frequency of
purchase. Qualified customers are customers who need or may need the product,
have the purchasing power to pay, and the authority to buy an available product.
Qualified customers within a market would have the following characteristics with
the acronym N-P-A:

1. Need
The need characteristic answers the question “How many percent of the
market would need the product?” To know this, a floor polisher marketer can
hire a market research agency to conduct a survey and ask question like “To
what extent would you be interested in owning a floor polisher?” If two out of
every ten surveyed say they are definitely interested, then 20% of the total
number of consumers would be the potential market.

2. Pay
There must enough purchasing power for the consumer to be able to pay for
the product. The higher the price of the floor polisher, the lesser the number
of people who can afford it. To overcome this dilemma, some companies such
as Waters Philippines (water purifiers) and many others offer installment
terms to make it more affordable for customers to pay for their products and
to expand their potential market even further.

3. Authority and Availability

Persons below 18 years of age, for example are not a legal market for cars and
alcoholic beverages. They have no authority to use these products. Men are
obviously not the typical consumers to buy bikinis, so they constitute another
category of those without “authority unless they were given the “authority” as
in the case of 7-11 Japan where men buy pantyhose on the behest of their
wives.

STRUCTURE OF THE MARKET SEGMENT

In evaluating the present and future structures of the segment, the
entrepreneur may use Michael Porter’s five forces of competition and address the
following questions:

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 1. What is the level of competition in the
market segment? Are there strong and
aggressive competitors?
2. Are there existing and potential
substitute products? Are the barriers to
substitute products strong?
3. Who are the present and potential
buyers in the segment? Is the
bargaining power of the buyers strong
in the segment?
4. How strong is the bargaining power of
the suppliers in the segment?

MARKET TRENDS

You need to understand what's going on with your

market. What marketing trends and fashions do you
see having an influence on your market segments? If
you're selling cars, for example, is there a trend that
shows people responding to higher gasoline prices or
more environmental concerns? In computers, is there
a trend toward more power and lower prices? How does
the increase in TV recorder equipment affect your
market? The questions that affect target markets will be different for every business,
and these are just examples. What's important is that as you create your business
plan, you become aware of the market trends that affect your specific market.

MARKET SEGMENT SELECTION

Entrepreneurial Marketing Strategies

Individual or one- Segmentation Marketing Mass or
on-one marketing Differentiated Concentrated undifferentiated
marketing marketing marketing
Products are Several segments Only one or few Products are mass
tailored to the are covered and segments are produced for the
needs of individual products are covered, but the whole market
consumers designed to suit product is where consumers
the specific needs designed for the are not
of a particular majority of the differentiated.
segment consumers in the
segment market.

Application of Entrepreneurial Marketing Strategies in Selected Segments

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 Entrepreneurial Marketing Strategies
Individual or one- Segmentation Marketing Mass or
on-one marketing Differentiated Concentrated undifferentiated
marketing marketing marketing
• Tailoring shops • Different • Rolls Royce • Production of
• Furniture toothpaste refined sugar
manufacturers • Different milk
products

Examples of Entrepreneurial Marketing Strategies in Selected Segments

Match the variables in column A with the method of segmentation in column B. Write
the letter as your answer in the space provided before the number.

Column A Column B

________1. Brand concept a. Demographic segmentation

________2. Income b. Geographic segmentation
________3. Culture c. Psychological segmentation
________4. Knowledge d. Behavioral segmentation
________5. Climate
________6. Social class
________7. Lifestyle
________8. Loyalty
________9. Family size
________10. Density

Answer the following questions briefly. Write your answer on the spaces provided.
1. Identify the three ways of identifying the intended market.

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

2. Discuss the concept of market segmentation and how the total market is
segmented.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
____________________________________________________________________

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 Your output will be rated by using the scoring rubric below:

Areas of Unsatisfactory Needs Satisfactory Outstanding

Assessment Improvement
(2) (3) (4) (5)
Ideas and Content is Major points Major points Major points
Content incomplete or are addressed are stated are stated
not clear but not well clearly and
supported are well
supported

Activity 1.1 Do the following tasks:

Watch and observe three products being advertised or promoted on television.

Evaluate the segmenting methods used by the producers of the particular products.
Write your answers on the table below.

Product brand name Method used for segmenting

Product 1

Product 2

Product 3

A. Select the best answer by writing the letter on the space provided before each
number.

_________1. It is the strategic marketing approach and process that is intended to

define the specific customer of the product.
a. Market identification c. Market size
b. Market segmentation d. Market growth

__________2. It is a strategy that can assist the entrepreneur in identifying the

particular homogenous segment to serve.
a. Market identification c. Market size
b. Market segmentation d. Market growth

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__________3. Maria and Jose want to start their restaurant business focusing on
grilled foods. Jose is thinking of idea on limiting the market into their
similarities in religion since certain religions prohibit eating specific
species. He wants to find the best strategy to satisfy their needs and
wants. If you were Maria, what would you recommend to Jose?
a. Demographic segmentation c. Behavioral segmentation
b. Geographic segmentation d. Psychological segmentation

__________ 4. A telephone company is providing unlimited call and text services

throughout Mindanao. The features of these services for consumers in
Cotabato may be different from those for consumers living in Cagayan
de Oro. If you are the manager of the company, what segment method
will you choose to make sure that the services of your company will fit
the needs of the respective market?
a. Demographic segmentation c. Behavioral segmentation
b. Geographic segmentation d. Psychological segmentation

___________5. Avon used segmentation by personality (and profession) in coming out

with different fragrances in the past. They classified women into five
groups: energetic, romantic feminine, experimental, elegant charming
and fresh. What method did Avon used?
a. Demographic segmentation c. Behavioral segmentation
b. Geographic segmentation d. Psychological segmentation

B. Write True if the statement is correct. Otherwise write False and state your
reason briefly.

___________1. The entrepreneurial venture can serve all the requirements of the total
market.
____________________________________________________________________
___________2. Market segmentation applies only to small entrepreneurial ventures.
____________________________________________________________________
___________3. In geographic segmentation, the total market may be divided based on
the income of the population.
____________________________________________________________________
___________4. Demographic segmentation involves dividing the total market based on
the gender of the customers.
____________________________________________________________________
___________5. When a wider geographical are has been selected as the target market,
it will be beneficial if the products are localized.
____________________________________________________________________

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___________6. It is a must for the entrepreneur to segment the market.
____________________________________________________________________
___________7. All the information you need for your segment is publicly available.
____________________________________________________________________
___________8. Your potential market is your actual market.
____________________________________________________________________
___________9. The size and growth of a segment are considered favorable indicators
for doing business in that particular location.
____________________________________________________________________
___________10. After segmenting the market, the entrepreneur must conduct a proper
and critical evaluation of every segment.
____________________________________________________________________

OFFLINE ACTIVITY

A. Think of a product with several product lines that you wish to manufacture,
for example, furniture such as tables and chairs. Determine the segmenting
approach that you deem appropriate to use. See the first table as an
example.

Example

Cosmetics Method used for segmenting

Lipstick Psychological segmentation
Face Powder Behavioral segmentation
Eyeliner Psychological segmentation

Method used for segmentation

1.
2.
3.

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 B. Give examples of business that uses entrepreneurial marketing strategies in
selected segments.

Entrepreneurial Marketing Strategies

Individual or one- Segmentation Marketing Mass or
on-one marketing Differentiated Concentrated undifferentiated
marketing marketing marketing
1. 1. 1. 1.

2. 2. 2. 2.

Glossary of Business Terms

Bargaining power - In negotiating, capacity of one party to dominate the other due
to influence, power, size, status, or through a combination of different persuasion
tactics.
Competition - the rivalry between companies selling similar products and services
with the goal of achieving revenue, profit, and market share growth.
Market - a group of actual and potential buyers with similar needs and wants
interacting with sellers offering various products or services to satisfy those needs
and wants
Market potential / potential market - what a whole market segment might buy
under ideal conditions
Market segment - a fairly homogenous group of customers who will respond to
marketing mix in a similar way
Market segmentation - the process of dividing the total market into several groups
seeking similar benefits from a product or service and requiring separate marketing
mixes
Market trends - changes and developments in buying and selling in the market
Product – the tangible offering of a firm that satisfies customer’s needs and wants
Strategic marketing – identification of one or more sustainable competitive
advantages a firm has in the markets it serves (or intends to serve), and allocation
of resources to exploit them.
- is the process of recognizing the various leads a company has in the market it
serves or seeks to serve and allotting resources to exploit this leads.

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Books

Aduana, Nick L. Entrepreneurship in Philippine Setting for Senior High School, 2017,
C & E Publishing Inc., Quezon City
Baltazar, William B., et. al. In Depth: A Guide to Successful Business Planning,
2017,
Unlimited Books Library Services & Publishing Inc., Manila

Go, Josiah. Fundamentals of Marketing in the Philippine Setting, 2010, Josiah and
Carolina Go Foundation, Inc.

Online Source
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https://www.entrepreneur.com/article/78002
https://tycoon.ph/top-10-successful-entrepreneurs-philippines-story/2/
https://www.mbaskool.com/business-concepts/marketing-and-strategy-
terms/12221-potential-market.html
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aCz&mediaurl=https%3a%2f%2ffanyv88.com%3a443%2fhttps%2fwww.biggerplate.com%2fmapImages%2fxl%2fPpgJI
csK_Market-Segmentation-types-mind-
map.png&exph=284&expw=750&q=behavioral+segmentation&simid=60798599276
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https://www.collinsdictionary.com/dictionary/english/market-trends

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 Development Team of the Module

Writers: Sheila Mae A. Malesido MBA, LPT (SEHS)

Richelle C. Requinala MBA, LPT (CIS)
Internal Reviewer: Dunhill Jan E. Elmido (NHS)
Eva Montaña (MHS)
Sylvette G. Sabaupan (NHS)
Emily C. Santos ( Public Schools District Supervisor)
External Reviewer: Kervin Rey G. Torente, Ateneo De Manila University
Cover Illustrator/ Layout Artist: Sheila Mae A. Malesido MBA, LPT (SEHS)

Management Team:
Sheryll T. Gayola
Assistant Schools Division Superintendent
OIC, Office of the Schools Division Superintendent

Elisa O. Cerveza
Chief, Curriculum Implementation Division
OIC, Office of the Assistant Schools Division Superintendent

Emily G. Santos
Public Schools District Supervisor

Ivy Coney A. Gamatero

EPS– Learning Resource Management and Development System

For inquiries or feedback, please write or call:

Schools Division Office- Marikina City

Email Address: [email protected]

191 Shoe Ave., Sta. Elena, Marikina City, 1800, Philippines

Telefax: (02) 682-2472 / 682-3989