Lesson 1: ENTREPRENEURSHIP (Getting to Know

the Market)
Schedule: Time Frame: 2 weeks

Objective:

At the end of the chapter, the learner-entrepreneurs are expected to:

 Integrate the competencies, skills, and learning acquired by the student from the
enterprise business plan.
 Utilize the tools, methods and learning acquired.
 Complete an enterprise business plan for a product or service idea.
 Identify and coordinate with external partners for the identified product or service
idea; and
 Start execution and implementation of the completed enterprise business plan.

Introduction

ENTREPRENEUR, KNOW THY MARKET WELL!

 THIS SIMPLE REMINER MUST KEEP THE ENTREPRENEUR ALERT ALL THE TIME
 THE ENTRPRENEUR SHOULD EXERT ALL THE EFFORTS TO KNOW THE MARKET HE OR SHE WANTS TO
 EXPLOIT
 THE MORE YOU KNOW ABOUT YOUR MARKET, THE BETTER YOU WILL BE ABLE TO DETERMINE
CUSTOMERS
 NEEDS AND WANTS
 YOU WILL BE ABLE TO REACH THEM WHEREVER THEY ARE
 THIS WILL BE POSSIBLE THROUGH CONDUCTING GOOD MARKET RESEARCH.

Discussion

BASIC QUESTIONS IN MARKET RESEARCH

Why Purpose and objective of conducting a market research.
What Determines the scope and limitations of the market research to be conducted
Determines which segment of the market must be studied; this must be the market
Which
segment the entrepreneur is eyeing.
Identifies who among the members of the selected market segment will participate in
Who
the market research.
Determines the time and timing of the research. This is critical for the entrepreneurs
When whose product or service will be offered to a time constrained market such as office
workers.
Where Pinpoints the relevant location of the market research.
Determines the methodology to be used for the market research(example: survey,
How
focus group discussion, observation. Etc.)

MARKET RESEARCH METHODOLOGIES

Important market information can only be obtained by conducting a good market research. The more the
entrepreneur know about his or her relevant market, the more customers can be properly segmented and reached,
products can be positioned, brands can be promoted, price can be set, and location can be pinpointed.
Entrepreneurs and investors do not want to put resource in unknown markets. Good market research allows
entrepreneurs and investors to make wiser decisions.

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SALES DATA MINING

Using the information in Case Example 3, the data can logically be arranged chronologically from
7am to 6pm otherwise known as data array (Table 3.1). The data can be further grouped into intervals
of two, three, or four hours. On the other hand, the hotdog customers can be further classified into male
and female customers. They can be sub-classified into small children. (12 years old and below), teenagers
(13 to 19 years), and adults (20 years and above).

Case Example 3: Selling Hotdogs

• A researcher observed and recorded the following data in a store selling hotdogs
• 1. Boy, aged 10, bought two hotdogs at 2pm.
• 2. Girl, aged 8, bought one hotdog at 4pm.
• 3. Man, aged 26, bought three hotdogs at fpm.
• 4. Couple, man and wife, aged about 30, bought two hotdogs at 8am.
• 5. Boy, aged 14, bought five hotdogs for friends at 3pm.
• 6. Three girls, aged about 18, bought six hotdogs at 6pm.
• 7. Girl, aged 5, asked mom to buy her one hotdog at 11am. Mom aged 2-for herself.
• 8. Twin boys, aged 7, asked their older brother to buy them four hotdog older brother, aged 14,
bought two hotdogs for himself.
• 9. Two teenagers, boy and girl, aged about 15, bought two hotdogs at 1
• 10. Five children (two girls, three boys), about nine years old, bought 12 noon.
• 11. Man, aged 27, bought two hotdogs at 9am.
• 12. Woman, aged 30, bought three hotdogs at 10am.
• 13. Three boys, aged 13, bought five hotdogs at 4pm.

HOTDOG SALES ACCORDING TO TWOHOUR TIME INTERVALS

Time Hotdogs Bought

7-8AM 2
9-10 5
11-12 13
1-2 7
3-4 11
5-6 6

HOTDOG SALES SUMMARY

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 A Histogram or bar graph consist of series of rectangle or “bars.” Each bar is proportional in width
to the range of values within a class and proportional in height to the number of items falling in a class.

The frequency polygon is constructed by making the frequencies on the vertical axis with a dot
corresponding to the values on the horizontal axis. These dots are then connected with a straight line to
form a polygon.

Another way of interpreting the data array is through a pie chart. It is a circular graph divided into
sections that represent the relative frequencies or magnitudes of the grouped values.

While the above illustrative representations are helpful, t he interpretation of data does not end
with generating a frequency table and graph. In order for the data to be more useful to the entrepreneur,
a cross-tabulation is highly recommended. This will explain why some data fall at one end on the
distribution while others at the opposite end.

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FOCUS GROUP DISCUSSION
• MOST COMMON QUALITATIVE RESEARCH TOOLS
• IT IS EFFECTIVE IN EXTRACTING CONSUMER AND NON CONSUMEREXPERIENCES REGARDING
PRODUCTS, PLACES OR PROGRAMS
• CAN ALSO BE USED FOR GENERATING INITIAL INSIGHTS

FGD CAN BE USED TO ADDRESS SUBSTANTIVE ISSUES SUCH AS:

• Understanding consumers' perceptions, preferences, and behavior concerning a product category;
• obtaining impressions on new product concepts; generating new ideas about older products;
• developing creative concepts and copy material for advertisements; securing price impressions;
and
• obtaining preliminary consumer reaction to specific marketing programs.
The FGD is an interview by a facilitator of a small group of people that normally lasts for an hour and a half up
to three hours. The participants are selected because of their knowledge about the topic. The objectives must be
clear and precise. It takes a great deal of planning from the researcher's end to ensure that objectives set are met.

There are four key decisions to be made: Respondent selection includes:

1. respondent selection; 1. The definition of the respondents;

2. sample size; 2. The classification of the respondents; and
3. data gathering; and 3. The screening of respondents.
4. data analysis.

OBSERVATION TECHNIQUE
Observation technique is probably one of the best ways of gathering data about customers in their
natural setting having to interact or talk them. One has to simply observe people as they go about their
usual activity such as buying and using products and services and assess how they behave. Having clear
objective in mind will help the researcher focus on the important things to observe or watch for.

SURVEY RESEARCH
The most preferred instrument for in-depth quantitative research. The respondents are asked a
variety of questions which are often about their personal information, their motivations, and their
behavior. Surveys can be conducted via telephone, personal (face-to-face interview), and mail
interview (either printed or electronic mail).

Probably the most popular type of survey research is the usage, attitude, and image (UAI) survey,
which is intended to derive market awareness, market size and share, product usage and preference,
customer interest, and customer image. In planning a survey, there are three important concerns that one
has to look into:
1. Sampling technique
2. Getting the sample size
3. Designing the questionnaire of these three concerns mentioned, designing the questionnaire proves to
be the most sensitive phase.

Costumer Profiling
In effect, when the entrepreneur starts doing the market research, he or she is also beginning to
understand his or her costumers, and therefore, profiling them. Customer knowledge starts with good
customers profiling.

In this module, the three methods of classifying or profiling customers are demographics,
psychographics, and technographics.

Methods of Customers Profiling

Demographics:
In demographic classification, we categories customers into following:
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 1. age
2. income classes
3. social classes/reference groups
4. ethnic backgrounds
5. religious beliefs
6. occupations
7. domiciles

Income levels determine the purchasing power of customers. Usually, the customers are classified
according the following income classes.

1. Class A, the high-income class

2. Class B, the upper middle-income class
3. Class C, the middle class
4. Class D, the lower middle-income class
5. Class E, the low-income class

Ethnic backgrounds and religious beliefs affect the cultural beliefs of people such as the fool they eat,
how they save and how they spend, and their levels of conservatism or progressiveness.

Social classes and reference group often dictate what is acceptable or unacceptable behavior. These
classes or groups often include family, friends, neighbors, fellow workers, and societal affiliations.

Occupations such as those of factory foreman, doctors, taxi drivers, nurses and teachers also
determine what kinds of goods and services these people would buy.

Domiciles or habitats, or areas of residence and environmental surroundings, oftentimes, define

and limit the choices available to customers.

Psychographics:

Psychographics defines the customer’s motivations, perceptions, preferences, and lifestyle.

Motivation goes to the roots of customer’s needs and wants. This can be classified into
physiological and psychological. Psychological needs and wants refer to the customer’s personal likes and
dislikes and include the satisfaction od thirst, hunger, and shelter.

Perception is the way a person chooses to receive or interpret information from the external
world. While motivation provides the drive for action, perception defines exactly what that person will
do.

Usually, information comes through our five senses. A person will process this information using
the faculties of the brain. Hence, different persons may actually see different things in every different
way.

Technographics:

Technographics classifies people according to their level of expertise in using product or a service.
For example:
• Sports beginners might want basic equipment.
• Sports regular may be looking for more sophisticated equipment
• Finally, sports professional would want the best of the best for competitive purpose.

In technographics, products and services can range from general purpose items to highly
specialized, customized, and “technologized” goods.

Application of customers profiling:

The entrepreneur can use or apply customer profiling in two ways.

1. The first way is to develop a product or service to test out in the marketplace.
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 a. The customers most attracted to the product or service can then be profied.
b. After profiling, the next step is to find out how huge this market for exploitation purpose.
2. The second way is to profile different types of customers in a given industry or area as to their
needs and wants.
a. From these types, the entrepreneur could then choose the customer group with the best
potentials.
b. Products or service can be developed by the entrepreneur to match this chosen customers
group.

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 Activity Sheet

Name: ________________________________________________ Date: ______________

Section: ______________________________________________

Challenge: Profiling the Customer

Do customer profiling based on the two ways suggested.

In the first way, you should choose a particular popular product or service. You should figure out
by observing or asking who is most attracted to the product or service. After determining the customers
most attracted to the product, the students should guesstimate how big a market this is.

Example:
Try to observe in stores or public markets. Who are the ones most attracted to Sandugo Sandals
(or any other popular footwear brand)? After determining the customers most attracted to the product,
guesstimate how many they are. (you can count the number of customers buying in one day or you can
refer to statistical information available for the target market area.)

In the second way, choose any industry operating in your local area. You may choose the eatery
industry if that is the most common. What are the different types of eateries? Do these different types of
eateries have different types of customers? How large is each one of these major customers segment
(relative to one another)? What do you think is the most attractive market segment for you to tap just in
case you get into this business?

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