Reviewer

Entrepreneurial Mind

|CHAPTER 4: Opportunity Seeking: Market – Product Fit

Opportunity Seeking – is the process of spotting, evaluating and pursuing relevant and sustainable revenue
and profit generating activities in the marketplace.

How to spot opportunities?

Voice of Customers (VOC)

- Is a research process used to capture needs of consumers (end users) and customers (channels).
- A key to voice customers is identifying and understanding pain points, barriers and its root causes to
trigger greater demand in an industry.

Pain Point Process

Step 1: PAIN HUNTING

- Entrepreneurs must choose a specific group of people as their target market.
- The group must behave in a homogenous way like having common traits and seeking common
benefits.

Types of Benefits
a. Functional Benefit – benefit related to the performance of the product or service.
b. Economic Benefit – benefit related to the price of the product or service.
c. Emotional Benefit – benefit related to how the owner feels when owning or using the product or
service.
d. Social Benefit – benefit related to how others will perceive the owner of the product or service.

- When entrepreneurs have chosen a target market for pain hunting, the target group becomes his/her
focus, looking for their unmet needs along the consumer decision journey.
- Without pain hunting, blind spots may happen and the entrepreneur might leave out critical details.

Step 2: PAIN POINTS IDENTIFICATION

- To know consumer pain points, the target market can be asked what they dislike about a particular
brand or product.
- While most benefit segmentation is based on consumer’s functional needs, another way to do
segmentation is via emotive needs, called “Needscope” by market research firm Kantar.
- This includes:
o Expressive (how one looks) – used by fashion and personal care
o Gratification (how one feels) – used by food and pharmaceutical products
o Combination of expressive and gratification ( how one looks and feels) – used by automotive
and telecom industries.
Step 3: PAIN POINTS UNDERSTANDING

- Not all pain points have the same level of importance.

- Entrepreneurs must understand the frequency and depth then choose the key pain point priorities that
must be solved due to relative higher impact that cab be felt by the customer.

Step 4: PAIN POINTS HEALING

- It is important for entrepreneurs to have empathy and not just understand pain points, but also accept
that change is needed, and that speed of change by external factors may leave them obsolete in their
industry.

Lifestyle Trends
 Another practical way to spot opportunity via voice of customers is by looking at lifestyle trends of how
people live, how people work, how people play, how people die and how people invest.

Voice of Enterprise (VOE)

- It is the process to articulate the needs of the entrepreneur or his/her company.

Opportunity-Seeking Process

Opportunity starts with ideation that have specific problems identified, and rough solutions proposed. It is
followed by the discovery phase where the entrepreneur wants to spend a little but learn a lot. This evaluation
and redirection stage narrow the knowledge gaps of the entrepreneur, revealing potential risks, validating or
unveiling faulty assumptions about the business, finally leading to incubation by building the actual solution,
doing rapid testing, prototyping and validating to ensure it is feasible to execute the idea.

|CHAPTER 5: Opportunity Screening

5-Point Test for Opportunity Screening

1. Customer – Is the market real?

2. Timing – is it big enough?
3. Finance – Can it be profitable?
4. Product – Can we differentiate?
5. Competitiveness – Can we win?

A. Is the market real?

- Entrepreneurs must have a sense making skill to determine that a market gap or market problem
truly exists, be practical enough to do business with those willing to transact with them, and finally
be competent enough to know whether or not the firm is in the best position to satisfy the unmet
needs.
B. Is the market big enough?
- A market must be scalable as businesses must plan to grow. Channel of distribution can also
determine the extent of market reach, hence, the size of the market.
C. Can we be profitable?
- Entrepreneurs must know the breakeven point of the company as well as the recovery period of the
investment, so they can plan to gain critical mass of volume to have superior financial returns.
D. Can we differentiate?
- Differentiation is about uniqueness, but uniqueness can only be considered if there is brand
relevance.
E. Can we win?
- Entrepreneurs can have profitable businesses but their financial returns may not be optimal yet.
They must not just think of making money but winning a white space in the marketplace e for impact
and to be effective and efficient.

OPPORTUNITY SCREENING

It is important to come up with a short list of a few very promising opportunities, which could scrutinize in detail.

Personal Screening
- Do I have the drive to pursue this opportunity to the end?
- Will I spend all my time, effort, and money to make the business opportunity work?
- Will I sacrifice my existing lifestyles, endure emotional hardship, and forego my usual comforts to
succeed in this business opportunity?
The Pre-Feasibility Study

To narrow down the many opportunities into one or two attractive ones. The next step is to conduct a pre-
feasibility study to ascertain the viability of the opportunity. This time, the entrepreneur must go down to details
and consider the following factors:

A. Market Potential and Prospects – Market potential is based on the estimated number of possible
customers who might avail the product or service.
1. Segmenting the Market – using a set of demographics (e.g., gender, age, place of residence,
income, etc.) will be the most basic approach in determining the target segment.
2. Assessing Competition – this process would determine how saturated the market is in the given area
of coverage.
3. Estimating Market Share and Sales – entrepreneur should assess the potential market share he or
she can attract.

B. Technology Assessment and Operation Viability – The entrepreneur would be able to determine
whether the product or service offering will meet the demand or not.
1. Quantities Demanded – this would determine the capacity of operations.
2. Quantities Specifications Demanded – dictates the quality of input, quality assurance of the process
transforming input to output. Quality output, and quality outcomes for the customers who will be looking
for specific results.
3. Delivery Expectations – knowing how much, how frequent, and when to deliver to customers.
4. Price Expectations – the selling price would be evaluated by the customer.

C. Investment Requirements and Production / Servicing Costs – The entrepreneur needs to determine
how much money is needed to start the business opportunity which consideration to the technologies and
operation levels required.
1. Pre-Operating Costs – these are the costs related to the preparation for the launch of the business.
2. Production / Service Facilitate Investments – long term investments for the actual business
establishments.
3. Working Capital Investments – this includes needed to operationalize the business, composed of
cash, accounts receivable, and inventories.

D. Financial Forecasts and Determination of Financial Feasibility – Monetary transactions that the
business is expected to engage in. Financial forecasts will indicate the feasibility of the enterprise.
1. Financial Statement – measures an enterprise performance in terms of revenue and expenses over
a certain period.

2. Balance Sheet
Assets – all the investments in the enterprise including the initial investments.
Liabilities – represents the enterprise debts to suppliers, to banks, to government, to employees, and
other financiers.
Stockholders’ equity – investors’ investments in the stock (or shares) on the business.

3. Financial Ratios and Measurements

THE FEASIBILITY STUDY

 - A feasibility study is more comprehensive and detailed.
- A feasibility study is prepared to convince bankers and investors to put money into the business
opportunity.

GATE 2 – Marketing: Mindset, Market, and Message

The second gate of the 4-Gate model is marketing, which involves mindset, market and message, to seize the
golden opportunity chosen.

Opportunity Seizing
- Entrepreneurs need to have an innovation mindset so they can stand out in the marketplace.
- They need to identify their target market and formulate a compelling message, supported by a
marketing mix that matches the desired customer bonding strategy that will resonate with the target
market.

Identify the Target Market

- The more focused the target market definition, the better for the marketing communication group to
know who to send messages to and for the sales force to know who to approach.
- But keep in mind that focus is not the same as having too narrow target market that limits demand and
growth.

Creating a Compelling Message

Positioning is communicating to overall positive impression of a brand, relative to completion.
There are three points to remember in product and service positioning:
1. It must be relevant
2. It must be unique
3. It must be communicated

Being relevant is about identifying and solving pain points.

Being unique is about creating distinctive value compelling enough to attract customers to buy continuously.
Being unique can come in many ways depending on what is needed by the customers.

Marketing Mix

- It is more popularly known as the 4 Ps of marketing.

- A set of controllable and inter-related variables composed of product, place, price and promotions that
the company assembles to satisfy a target group.
- For service industry, there are three additional Ps namely: physical environment, people and process.

Role of each Marketing Mix Element

1. Product/Service – To satisfy consumer needs and wants.

2. Price – To make product affordable to target consumers.
a. Mass market – economy premium pricing, meaning slightly higher than economy brands
justified by quality dimensions and additional features but half the price of the very expensive
brands with the same or similar features.
b. Flexible – being the first to market affordable goods.
3. Place – To make product available consistent with consumers; purchasing pattern.
4. Promotions – To build and improve consumer demand. Promotions have four components called the
promotions mix.
a. Advertising – To effectively inform, persuade and remind the target consumers.
b. Sales Promotions – To convince customers to buy immediately.
 c. Public relations – To offer a positive image of the company and the brand, as well as an
advocacy.
d. Selling – To get the customers to buy.
SERVICE
5. Physical Environment – To create the tangible expression of the brand engaging the senses through
the layout and images of the services cape.
6. People – To show a living representation of the brand promise.
7. Process – To experience how the brand delivers value.

VALUE PROPOSITION

1. SUPERIOR – Better than what’s available: HIGH QUALITY – HIGH PRICE

2. PARITY – Same as what’s available: SAME QUALITY – SAME PRICE
3. INFERIOR – Not as good as what’s available: LOWER QUALITY – LOWER PRICE
4. DIFFERENT – Different from what’s available: Can be higher or Lower Price

DEVELOP A BRAND NAME

- Good branding are easy to pronounce, easy to remember and helps in the brand positioning
process.

INNOVATION

Innovation
- It is about a new way of doing things with commercial success.
- It targets to solve, in a novel way, pain points of customers or non-customers who are willing to pay for
the solution, either through a product or service.
- Instead of asking the typical who, what and how questions, innovators ask who else, what else, and
how else questions to challenge assumptions, change world views and expand possibilities in order to
create new value for both the firm and the consumers.

Innovation in product, service or business model can be:

1. Sustaining (small incremental change)
2. Differentiated (not similar with what competitors are offering
3. Disruptive (creating a new category preferred over existing usage)

*The higher the level of disruption in innovation, the more the innovator should be indifferent to
current rules and best practices, as a successful innovation creates new rules and next practices for
the industry.

No innovation can happen unless there is a new truth or an insight discovered, so entrepreneurs must hunt for
the new truths – what people like or dislike, why they feel the way (motivation), what barriers do they encounter
(tension) and why these are important.

4 Competencies Of An Innovator

1. Creativity – forming a mental image or new idea about the future

2. Critical Thinking – offering unique ways to solve defined problems
3. Collaboration – developing relationships with the right partners to attain objectives
4. Communication – engaging constituents to make them understand and accept your message