Entrep Module 3

ENTREPRENEURSHIP
Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: ABM 12
Email: [email protected]; Website: www.uc-bcf.edu.ph
MODULE 3 – ENTREP Subject Teacher:
MARKET IDENTIFICATION and

Consumer marketing strategies
Learning Objectives:
At the end of this module, the learners are expected to:
a. Describe the concept of market segmentation;
b. Discuss market targeting;
c. Determine the importance of market positioning;
d. Discuss the concept of consumer buying behavior;
e. Describe the need for entrepreneurial research and;
f. Determine the marketing mix.
MARKET IDENTIFICATION
It is very important for a business to clearly identify its customers because NOT ALL will become
customers of the business venture. Hence, the product or service to be offered should be designed
specifically for the defined market.
 Entrepreneurial concepts and  Scanning of the environment

principles Physical Environment
 Entrepreneurial characteristics Societal environment
 Entrepreneurial skills Industry Environment
Internal Environment
Entrepreneurial Business
Competency Competency
Competitive
Advantage and
distinctive
advantage
Nature and
Form of the
business to open
Who is the market?
Figure 1: The Business Venture and Its Market
Entrepreneurship Page 1 Of 9
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
Market identification is a strategic marketing approach and process that is intended to define the
specific customers of the product or service. There are three strategic marketing approaches that will
assist the entrepreneur in defining the specific market of the product.
I. Market segmentation
II. Market targeting
III. Market Positioning
I. MARKET SEGMENTATION
An entrepreneurial marketing strategy designed primarily to divide the market into small
segments with distinct needs, characteristics, or behavior (Kotler & Armstrong, 2014). Since the entire
market cannot be readily served because the customers are heterogeneous, the entrepreneur has
to find ways to cater to homogenous customers only. This is usually done by market segmentation.
The identified homogenous segment will be the market that can be served better by the
entrepreneurial venture based on its competencies. This entrepreneurial approach is called Niche
entrepreneurial marketing.
The commonly used methods for segmenting the market are:
a. geographic segmentation
b. demographic segmentation
c. psychological segmentation
d. behavioral segmentation
a. Geographic segmentation
The total market is divided according to geographical locations in the Philippines. When using
the geographic segmentation, the climate, dominant ethnic group, culture, density, classification of
the geographical area.
b. Demographic Segmentation
The market is divided based on the demographic variables of the consumers. The common
demographic variables are gender, age, income, occupation, education, religion, ethnic group,
and family size.
c. Psychological segmentation
The market is divided in terms of what the customers think and believe. It is based on needs
and wants, attitude, social class, personal traits, knowledge and awareness, brand concept, lifestyle.
d. Behavioral segmentation
The market is divided based on perceptions, knowledge, reactions, benefits, loyalty,

responses. Entrepreneurs who have constructed athletic gymnasiums may have divided the market
based on the health benefits that their users will derive from them.
Points to consider in segmentation
The following important factors must be considered in segmenting the market:
 Accessibility of the market segment

 Size of the market segment
 Distinction of the market segment
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
II. MARKET TARGETING
Market targeting aims to determine the set of buyers with common needs and characteristics.
They are the market segment that the entrepreneurial venture intends to serve. In the market
targeting phase, the entrepreneur has already divided the total market and is now in the process of:
a.) Evaluating each market segment;

b.) Selecting the target market segment or segments to serve.
a.) Market Segmentation Evaluation
The entrepreneur, after segmenting the market, does not simply select any market segment to
serve. There should be a conduct of paper should and critical evaluation of every segment. The size
of the segment and its expected growth, Existing and probable structure of the segment, and
capability of the business should be considered.
THE SIZE OF THE SEGMENT or its growth are the two frequently asked details every time a new
business is about to be opened. These are favorable indicators for doing business in that particular
location. However, segments with favorable indicators tend to be flocking with entrepreneurs making
the environment too competitive. The entrepreneur, therefore, has to critically evaluate whether it is
good to compete in a market segment where several other businesses already exist.
THE STRUCTURE OF THE BUSINESS varies for each segment. The entrepreneur may use Porter’s
Five Forces in evaluating the present and future structures of the segment. The entrepreneur must
study the different barriers that will lessen the forces of competition on every segment. Usually, a
highly competitive segment limits the profitability and growth of a particular venture. In a similar
manner, substitute products with low prices in the market may attract shifting of customers. The
shifting process can easily be facilitated once the switching cost is minimal.
The strong bargaining power of the buyer can easily bring the prices of the products down.
Similarly, supplier with powerful forces that can control the price of a product is one particular
segment. It will not be good for small entrepreneurs to join a segment like this.
THE CAPABILITY OF THE BUSINESS should be carefully taken into consideration. If the business
has the required competency to take advantage of the existing opportunity, then the entrepreneur
should push through. Otherwise, the entrepreneurial venture may not be able to succeed in its
chosen market segment.
b.) Selecting the target market segment or segments to serve
The number of segments to serve determines the appropriate entrepreneurial marketing

strategy to use. Generally, the entrepreneur can select one segment or all segments of the total
market with different entrepreneurial marketing strategies.
The basic entrepreneurial strategies relative to the selected segment are the individual or one-
on-one marketing; segmentation marketing; mass or unidentified marketing.
ENTREPRENEURSHIP
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ENTREPRENEURAL MARKETING STRATEGIES
Individual or one-one Segmentation Marketing Mass or

one marketing undifferentiated
Differentiated Concentrated or niche
marketing
Marketing marketing
The business provides a Several segments are Only few segments are Products are mass
product that is suited or covered and products covered, but the produced for the
fitted to the particular are designed to suit the product is designed for whole market where
needs of the customers. specific needs of a the majority of the consumers are not
It is based on the particular segment. consumers in the differentiated.
concept that segment market.
“consumers have
different needs and
wants”.
Ex. Tailoring shops Ex. Differentiated milk Ex. For left-handed Ex. Sugar, Salt
products Products
Table 1: Application of Entrepreneurial Marketing Strategies
SEGMENTATION MATRIX
The size of segment is usually expressed in terms of estimated product demand, while the
expected growth may be expressed in terms of estimated product demand, while the expected
growth may be expressed in terms of potential profitability of the segment.
The forces of competition may be classified as strong, moderate, or weak. The force os
considered strong when the barriers to it are generally weak or low. In contrast, the force is
considered weak when the barriers are strong.
In the segmentation matrix that follows, although the size and the growth of the segment 2 is
lower than that of segment 1, the different forces of competition, however, are weak and the
business is highly capable. Hence, segment 2 becomes the priority segment.
Segments Size Growth Potential Substitute Power of Power of Capability Priority of

New Products the the of the the
entrants buyer supplier business segment
Segment 1 3M 5% Strong Weak Strong Strong Low No. 2
Segment 2 1M 3% Weak Weak Weak Weak High No. 1
Table 2: Sample Data for Segmentation Matrix
The evaluation of the segment is quite rigorous since gathering reliable, relevant, and timely
information is not easy or cheap.
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
III. MARKET POSITIONING
Business Positioning refers to the process of determining the place of the business in the
industry. The entrepreneur must conduct industry analysis of the different forces that are strong in the
industry in order to determine the correct position of the proposed venture. On the other hand,
market positioning refers to the process of arranging a product to occupy a clear, distinct, and
desirable place in relation to other competing products in the mindset of the target customers (Kotler
& Armstrong, 2013).
The main objective of market positioning is to have a distinct place in the minds of the
target customers; the concept of differentiation becomes inherent and directly linked to the process.
The first logical step that the entrepreneur must perform in market positioning is to determine
that the product is truly differentiated from competitors, primarily in terms of value and benefits that
the customers will gain from it.
The two major dimensions that will differentiate the product from its competitors in the market
are “lower price” and “more benefits” than those being sold at a higher price.
Once the target position in terms of price and quality dimensions has been evaluated, the
entrepreneur determines the advantages, benefits, and the attributes of the product. The
entrepreneur must strongly promote the said attribute or benefit to the consumers.
For example, a powder detergent may take pride in the following taglines that describe its
attributes and at the same tine can be easily recalled by household consumers: banayad sa kamay.
The following criteria may be considered in identifying the attributed or benefits to be

promoted:
 Identifiable: The benefit attribute is easily associated with the product. The customers
should be able to easily identify any benefit that can be derived from the product.
 Beneficial: The attribute provides valuable benefits to the target consumers.
 Distinctive advantage: The attribute is distinct to the product and can hardly be copied
by the competitors.
 Effective and rewarding: The cost in attaching the attribute or value to the product is
not higher than the expected benefits in terms of profit.
Deciding on the market position
The last phase of the market positioning after differentiating the product from the others in
terms of benefit or attribute is to make a decision on where to position the product. There are two
basic dimensions that must be seriously considered in deciding the market position of the product:
price and product.
Normally, a product sold at a lower price is expected to be of inferior quality and offers less
benefit, while a product sold at a higher price is expected to be of better quality and offers more
benefits.
CONSUMER BUYING BEHAVIOR
At this stage of your entrepreneurial journey, you have already evaluated both the macro and
micro environments using the different environmental scanning tools. Environmental analysis is
important because it assists in determining the position of the proposed venture in the market.
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
Macro and micro To position the business

environmental analysis in the industry
To position the
Market segmentation
product in the
targeted segment
What of the buying behavior

of the consumers in the
market segment?
Figure 2: The Entrepreneurial Journey
At this point of the entrepreneurial journey, the market segment to be served is already known.
Thus, the products that will satisfy the customers in the target market segment can now be designed
and produced. However, before the designing and manufacturing the product, an entrepreneur
should first understand the behavior of the market segment to be served.
Behavior refers to the reaction of the consumers to changes happening in an environment

that influence their buying decision. The consumer buying behavior is simply the reaction of
consumers to various events or forces that are happening in the business community which
contribute to the decision process.
Some relevant questions on consumer buying behavior are as follows:
 What are the taste and preferences of the consumers?

 What makes the consumers buy or not buy the product?
 What factors influence the consumer buying behavior?
 How does the consumer decide on buying the product?
Various studies have determined some degree of relationship between the environmental factors
and the buying behavior of the consumers. The most common of these are the ENVIRONMENTAL
FACTORS, BUYING DECISION PROCESS, AND MARKETING MIX.
Environmental factors
Below are the environmental factors that may affect consumer’s behavior:
 Cultural factor- The entrepreneur must find all the possible means to design a product that will
provide a value proposition to the majority of a particular segment to be served. The product
must be tailored to the needs of the consumers with a distinct culture in the targeted market.
 Social Factor- relationship maintained or established by consumers with other members of
society. This is characterized by social class, which is an informal grouping of consumers based
either on the personal perception of the consumers or that of the others.
 Personal Factors- the personal characteristics of the buyer in terms of age, occupation,
income, and lifestyle.
 Psychological factor- this refers to the perceptions, beliefs, and attitude of customers.
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
Buying Decision Process
The entrepreneur must properly evaluate the buying decision process of the consumers. Some
consumers may undergo the complete buying decision process, while others may immediately buy
the product without passing through the decision buying process. This usually happens if the
consumer has an impulsive buying behavior.
Recognition of their needs and wants

Everybody buys because of their needs, but not all buys because of The entrepreneur must clearly determine whether the buying
their needs deciion of the consumers is stimulated byt heir needs and wants
Search for relevant information about the product

As more information is provided, the level of awareness of
Buyers usually search for relevant information when the product is consumers about the competingproducts is enhanced. Therefore,
not an ordinary household commodity. the entrepreneur must be watchful enough to design the right
promotional plan
Evaluation of alternatives
Consumers now consider the price, qualoty and durability, brand, The entrepreneur intervenes to influence the buying decision of the
color, and design, terms and conditions, required payment, and consuemrs. Ex. A marketer intervening you during our grocery
amount of credit. shopping to influence your decision.
Purchase Decision
At this stage, the entrepreneur must clearly defiine how the buyers
The consumer actually buys the product formulate their purchase decision in order to prepare tje proper
marketing approaches to influence their final decision
Post-purchase analysis
The entrepreneur must gather enough information about the level
the buyer makes a simole analysis at the back of his/her mind
of satisfaction of the consumers by the fast or slow sale of the
whether the expectations has been met or not
product.
Figure 3: Buying Decision Process
MARKETING MIX (7Ps)
Marketing mix is the mode, means, or tool used by the entrepreneur to position the product in
the target market segment to efficiently and effectively deliver it to the consumers and convince
them about the benefits that they will derive from buying the product.
The marketing mix basically addresses the following questions:
 How can the target consumers be influences to buy the product or service?
 What marketing strategy must be adopted to convince the consumers that the product or
service being offered satisfies their needs?
PRODUCT
This is the tangible good or intangible service offered by the business to the target consumers.
A product that cannot meet the needs of the consumers will not stay long in the market.
Information about consumer’s tastes, preferences, perceptions, priorities has significant

contribution to the design of the product. This enables the entrepreneur to satisfy the needs and
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
wants of the consumers. Once the products fail to satisfy the needs and wants of the consumers, the
other Ps may no longer be considered essential in the buying decision.
PLACE
This refers to the place where the targeted customers are. The entrepreneur must establish the
business or product in the most strategic place or location. Na entrepreneur must put the business
here consumers are willing and able to buy the product.
PRICE
Normally, producers apply higher prices for the products to gain a higher profit, while the
consumers want lower prices for the products. This is because there is really no rigid rules as to how
prices are set. However, there are some variables that highly influence the setting of the prices of
goods and services:
 Availability of competing products-when the supply of the competing products is high, the
price of the product is usually low. Hence, as an entrepreneur, one must know the level of
demand and supply of your and the competing products.
 Cost of marketing the product-The manufacturing costs includes the direct materials, direct
labor, and factory overhead. The basic rule is that the entrepreneur should NOT set the price
lower than the cost involved in the making of the product.
 Type of the product- Products are classified as INDUSTRIAL or CONSUMER. Industrial products
are finished products used as raw materials for other products. These products usually have
higher prices compared to the consumer products and remain the same for a long time. On
the other hand, consumer products are sold to the individual consumers and may undergo
frequent price changes.
 Presence of Substitute Products- The presence of substitute products is a threat to the primary
product. Substitute products usually set the limit to the selling price of the primary product. The
threat of the substitute products is strongly felt in the realm of consumer products.
 Stages of the product in the Market- In the introductory stage, price skimming can be
adopted where a new product is highly priced in the market in order to cover the expenses for
the production then gradually lowered once competition becomes fiercer. Price penetration
approach may also be adopted wherein the product is introduced with a low price in order to
build a customer foundation base before gradually increasing the price.
When the product is now in the growth and maturity stage, cost-based pricing model
may be adopted. In here, the price is simply, equal to the cost plus the desired profit. Lastly, on
the decline stage, the product experiences a decreases or negative growth in sales. This leads
to lower profits or eventual losses for the business, and ultimately, the discontinuance of
production and distribution of the product.
 Demographic profile- The entrepreneur may use psychological pricing:

 Promotional pricing- where products are sold at a lower price in a limited temporary
period.
 Odd or even pricing- products are sold at prices that ends in odd number to appear
cheaper compared to the products with prices that end in 0.
 Prestige Pricing- where the products are purposely sold at a higher price to create a
superior image.
ENTREPRENEURSHIP
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
PROMOTION
This is the mode of conveying the presence and attributes of the product to the target
consumers. Through promotion, an entrepreneur can communicate to the targeted consumers the
pertinent information about the product. Promotion can utilize the following appropriate media to
reach the consumers:
 Advertising- television or radio commercials, print ads, online ads, and packaging ads
 Publicity- relief program or other types of extension services to the community. Self
promotion is another approach by handing out goods like pens and calendars.
 Sales Promotion- “eat-all-you-can”, discounts, coupons, cash rewards, and gift certificates.
 Direct Marketing- building a consumer database then performs one-on-one approach in
building consumer relationship then sells the product online.
PEOPLE
This includes individual employees or workers who are directly involved in the production,
marketing, and sale of the product or service. Hence, the entrepreneur must be sure to hire the right
person for the position.
PACKAGING
It is the process of putting the product in a package or a container. The basic purpose of
packaging is to protect the product from spillage damage, or spoilage. The packaging of a product
must be user-friendly and environment-friendly. The label printed on the packaging material must be
attractive, readable, and complete with the necessary product information.
POSITIONING
This is an additional element in the modified model of the marketing mix, refers to the place
occupied by the product in the minds of the consumers. It is a marketing strategy that defined the
target consumers.
References:
BAL 338.04 Kuratko, D. (2012). Entrepreneurship: An Introduction. Pasig City: Cengage Learning Asia
K9654 Pte. Ltd.
2012
BAL 658.421 Batisan, R. (2016). Entrepreneurship. Makati City: Diwa Learning Systems Inc
B3208
2016
BAL 658.421 Aduana, N. (2016). Entrepreneurship in Philippine Setting. Quezon City: C&E Publishing,
B3208 Inc.
2016
Kotler, P., & Armstrong, G. (2013) Principles of marketing (14th ed.). Harlow, England:
Pearson Education Ltd.

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ENTREPRENEURSHIP

Governor Pack Road, Baguio City, Philippines 2600

MODULE 3 – ENTREP Subject Teacher:

MARKET IDENTIFICATION and

 Entrepreneurial concepts and  Scanning of the environment

Who is the market?

Figure 1: The Business Venture and Its Market

MODULE 3 – ENTREP Subject Teacher:

The commonly used methods for segmenting the market are:

The market is divided based on perceptions, knowledge, reactions, benefits, loyalty,

Points to consider in segmentation

The following important factors must be considered in segmenting the market:

 Accessibility of the market segment

MODULE 3 – ENTREP Subject Teacher:

II. MARKET TARGETING

a.) Evaluating each market segment;

a.) Market Segmentation Evaluation

b.) Selecting the target market segment or segments to serve

The number of segments to serve determines the appropriate entrepreneurial marketing

MODULE 3 – ENTREP Subject Teacher:

ENTREPRENEURAL MARKETING STRATEGIES

Individual or one-one Segmentation Marketing Mass or

Table 1: Application of Entrepreneurial Marketing Strategies

Segments Size Growth Potential Substitute Power of Power of Capability Priority of

Table 2: Sample Data for Segmentation Matrix

MODULE 3 – ENTREP Subject Teacher:

III. MARKET POSITIONING

The following criteria may be considered in identifying the attributed or benefits to be

Deciding on the market position

CONSUMER BUYING BEHAVIOR

MODULE 3 – ENTREP Subject Teacher:

Macro and micro To position the business

What of the buying behavior

Figure 2: The Entrepreneurial Journey

Behavior refers to the reaction of the consumers to changes happening in an environment

Some relevant questions on consumer buying behavior are as follows:

 What are the taste and preferences of the consumers?

MODULE 3 – ENTREP Subject Teacher:

Buying Decision Process

Recognition of their needs and wants

Search for relevant information about the product

Figure 3: Buying Decision Process

MARKETING MIX (7Ps)

The marketing mix basically addresses the following questions:

Information about consumer’s tastes, preferences, perceptions, priorities has significant

MODULE 3 – ENTREP Subject Teacher:

 Demographic profile- The entrepreneur may use psychological pricing:

MODULE 3 – ENTREP Subject Teacher:

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