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Module Reviewer (Module 2)

The document discusses marketing concepts and strategies for entrepreneurs. It defines key marketing terms like needs, wants, customers, and exchange. It explains the importance of understanding customer needs and demands. It also outlines different business orientations like production, product, and selling and how they differ from the marketing concept of satisfying customer needs.

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Omar Aculan
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0% found this document useful (0 votes)
58 views34 pages

Module Reviewer (Module 2)

The document discusses marketing concepts and strategies for entrepreneurs. It defines key marketing terms like needs, wants, customers, and exchange. It explains the importance of understanding customer needs and demands. It also outlines different business orientations like production, product, and selling and how they differ from the marketing concept of satisfying customer needs.

Uploaded by

Omar Aculan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Bicol University

College of Social Sciences and Philosophy


Political Science Department

THE ENTREPRENEURIAL MIND


Module 2 (Sessions 1-3)
Module Reviewer

SESSION 1 – THE ENTREPRENEUR AND HIS MARKET

Learning Expectations:

1. Appreciate the Concepts of Marketing


2. Apply the principles, approaches, and techniques in your enterprise
3. How to design a product or service that matches the needs of our customers
4. Analyze customers and competitors
5. Make competitor profile matrix
6. Conduct industry and market analyses
7. Craft a simple marketing plan

MARKETING

 Marketing is important in a business because it helps people know what you are selling
and where they can find you if they want your product.
 The entrepreneur has to do a good job identifying consumer needs, developing good
products and prices that fit the consumer needs, promoting and distributing the goods
effectively.
 Marketing is simply ASCERTAINING WHAT A CONSUMER WANTS AND PROVIDING IT
TO THE CONSUMER AT A PROFIT.
 People who have business (ENTREPRENEURS) stimulate the sale and distribution of
their products to somebody else (CUSTOMER)
 Marketing is not selling or advertising or distribution or retailing. Such are just market
activities linking the buyer to the seller.
 Marketing goes beyond that to identification of customer needs and running your
business in a way that it will produce what the customers need.
 In conclusion, MARKETING IS ABOUT UNDERSTANDING CUSTOMERS AND FINDING
WAYS TO PROVIDE PRODUCTS AND SERVICES WHICH CUSTOMERS DEMAND.
Elements of Marketing

1. Ascertain what the consumer want and provide it to them at a PROFIT


2. Meet the NEEDS AND WANTS of the consumer
3. Create a good EXCHANGE ENVIRONMENT
4. Creates TIME, PLACE, and POSSESSION UTILITIES

CUSTOMER NEEDS AND WANTS

Needs

 A human need is a state of felt derivation.


 It is a basic requirement that an individual wishes to satisfy.
 They are a basic part of human life, and are therefore NOT CREATED BY BUSINESS.
 Business try to influence demand by creating products and services that are affordable,
attractive, available and work well for the consumer.

Want

 Desire for a specific product or service to satisfy the underlying need.


 Usually shaped by social and culture forces, individual personality, as well as the
marketing activities of the business such as advertising.

 The customer needs and wants are always changing. The entrepreneur should therefore
pay continuous attention to the changing needs and wants.

CUSTOMERS AND CONSUMERS

 Customer – one who purchases and pays for a product or service


 Consumer – ultimate user of the product or service. The consumer may not have paid
for the product. He/She gets the ultimate utility out of the product or service.
 Therefore, the entrepreneur should direct their marketing efforts to both the consumer
and the customer.

EXCHANGE

 Marketing occurs when people decide to satisfy needs and wants through exchange.
 Exchange – the act of obtaining a desired object from someone by offering something in
return.

DEMANDS

 They are initially customer wants that are then backed up by buying power.
 Since they have endless wants and limited resources, customers have to prioritized the
products that they are willing and able to pay for.
 To decide, they base their decisions on their perceptions of a product’s value.
 CUSTOMER DEMAND – a want for a specific product coupled by the ability and
willingness to pay for it.
 To stimulate demand, entrepreneurs have to not only make products and services that
customers want, but they also have to make them affordable.

BUILDING A MARKET-ORIENTED BUSINESS

 Marketing Concept – a philosophy that believes that achieving organizational goals


depends on determining the needs and wants of target markets and delivering desired
satisfaction more effectively and efficiently than competitors do.
 FIRMS SURVIVE AND PROSPER THROUGH MEETING THE NEEDS AND WANTS OF
CUSTOMERS
 SUCCESS IS DEPENDENT ON SATISFYING CUSTOMER NEEDS

Implications of the Marketing Concept/Orientation

1. The mission is to satisfy the identified needs


2. There must be an undertaking to identify and learn these needs and how they will be
satisfied
3. Recognition that consumers have varying tastes, incomes, and habits and that there
are various competitiors attempting to satisfy the consumers’ needs. The organization
must coherently plan and implement those activities.
 Marketing starts before the production process by identifying consumer needs and
wants and does not end with sales but continues after to ensure consumer satisfaction

Activities/Tasks to be Developed by a Market-Oriented Business

1. Identify the markets you want or intend to serve. This involves establishing potential
customers of the business and identifying those that the business wants to do business
with. To do so, one can use a simple questionnaire or make a formal or informal
inquiries from the people around.
2. Identify the needs of those customers. This can be done by simple market surveys
which collect information on the current and potential needs of the customers in their
target market.
3. Develop products or product concepts to meet the needs of the customers. This is
done through research and development and production activities.
4. Take decision on other marketing mix elements. After determining the target market,
their needs, and developing the products, DETERMINE THE PRICE, HOW YOU ARE TO
PROMOTE THE PRODUCT, AND THE DISTRIBUTION MECHANISMS AND OUTLETS FOR
THE PRODUCT. Such activities will help attach/offer value to the customers to
communicate the product and make it accessible and convenient.
o For small businesess, the most ideal and cost-effective way to promote a product
is by exploring the word of mouth. To achieve a positive word of mouth, the
entrepreneur must ensure that his/her customers are happy/satisfied.
5. Put in place a means to continuously monitor your market. The objective of marketing
is not only to attract customers, but also retain them by building a relationship. The
business needs to get regular feedback on customer satisfaction by using customer
satisfaction surveys. This will help you adjust your product and the other marketing mix
elements to suit the customer needs, as well as to fit within the competitive
environemntal changes.

ALTERNATIVES TO THE MARKETING CONCEPT

 NOT ALL FIRMS ADOPT and follow the marketing concept.


1. PRODUCTION ORIENTATION/CONCEPT
 Mainly concerned with making as many units as possible
 The assumption is that consumers will buy those products which are available and well-
priced, therefore, they will concentrate on availing the product vis-à-vis the quality of it.
 Mass production

Implications of the Production Orientation/Concept

 Consumers will buy the product if it is AVAILABLE


 Consumers’ buying decision is based on the PRICE
 Business concentrates on PRODUCING
 Business concentrates on IMPROVING PRODUCTION AND LOWERING THE PRICE
 Organization needs NO EFFORT TO SALE
2. PRODUCT ORIENTATION/CONCEPT
 Business is OBSESSED with its own products (perhaps even arrogant about how good
they are)
 The assumption is that customers are aware about the existence of the products, and
simply buy those that are reasonably priced.

Implications of the Product Orientation/Concept

 Consumers know the different brands of products on the market


 Consumers’ buying decision is influenced by the PRODUCT, QUALITY FEATURES,
PERFORMANCE, AND PRICE
 Business concentrates on selling WHATEVER HAS BEEN PRODUCED without caring for
the requirements of the consumer.
 The organization DOES NOT MAKE EFFORT TO IDENTIFY THE NEEDS OF THE
CONSUMERS, but simply concentrates on producing good quality and fairly priced
products
 Marketing begins after the goods have been produced and ends with their sale.
 By failing to consider changing technological developments or subtle changes in consumer
tastes, a product-oriented business may find that its products START TO LOSE GROUND TO
COMPETITORS.
3. SELLING CONCEPT/ORIENTATION
 The main problem is they sell less than what they have available
 The assumption is that consumers buy, but they do not buy enough and WILL BUY
MORE IF INFLUENCED by some selling and promotion efforts
 Makes full use of selling, pricing, promotion, and distribution

Implications of the Selling Concept/Orientation

 Consumers buy, but NOT ENOUGH


 Consumers can be INDUCED to buy by some sales effort
 The organization is aware of these conditions and its main task is to INDUCE the
consumer to buy more of its product
 The process of marketing begins AFTER PRODUCTION
4. SOCIETAL MARKETING CONCEPT
 Are businesses “walking the talk”? Do they really identify consumer needs before
production and also look beyond the sale?
 Are organization looking into the NEEDS OF THE SOCIETY? Is public interest
safeguarded?
 A business should not only be concerned with consumer satisfaction, but also PUBLIC
INTEREST AND WELFARE. They should have society’s interest in mind.
5. GREEN MARKETING CONCEPT
 Emerged due to a group of people with a specific concern for the preservation of nature,
maintaining a green world called the GREEN MOVEMENT.
 They believe that efforts of businesses to clean up the mess they produce is not
sufficient.
 Business must ensure that they SHOULD NOT DEPLETE THE RESOURCES that create the
necessary ecological balance
 Businesses need to do an environmental impact study of the things they do or intend to
do
THE PRODUCT STRATEGY

1. Design a product that is either:


 Unique
 High quality
 Low-priced
 Satisfies other customers’ needs!
2. Shift from one product to another, or modify your products to capture better marketing
opportunities.
3. Keep quality of product/service to acceptable standards or as per the needs of the
customers
4. Test your product (and its price) on the market before you launch it

ACHIEVING PRODUCT QUALITY

 Understand quality from a customer’s perception


 Work on the mindset towards quality orientation
 Use raw material with good quality
 Use improved and efficient production process/technology
 Proper finishing
 Good storage facilities – both for raw material and finished products
 Use skilled labor

KEY PRODUCT DECISIONS

 Plan and develop the right product(s) or service(s) required by the customer at the right
place
 Determine the range of products/services (product width and depth)
 Keep in mind the product features that are most important for the customers
 Be mindful of the product quality
 Think of packaging and labeling your products
 Think of product maintenance (where necessary)
 Compare your product with the competitors’

What is the product or service about? The Product or Service?


(Make sure to mention the following:  The Ligtas Pilipinas bracelet is a QR-
 What are the most important functions code embedded bracelet that will
and features? serve as the primary contact tracing
 What customer need does your product instrument of the government to
satisfy? What demands do you meet? determine and track the movement of
For who is the product or service the virus and identify possible cases
conceptualized? Who is your target market? and the individuals who are contacts of
Who is the ultimate user (consumer) of your the positive case.
product?)  The most important feature is that it is
a wearable, water-proof bracelet,
which means the individual no longer
has to consume time to record
personal information. This could also
lessen contact with other people as
there is no need for a pen and paper
and will also avoid instances where
false information are written down or
key information are ommitted or
purposefuly neglected.
 It also comes with a scanner that acts
just like any other barcode scanner,
equipped with the ability to scan the
temperature of the individual.
 Perhaps the satisfaction is the
convenience of just scanning the
bracelet and all necessary and relevant
data about the whereabouts of the
individual is recorded in one go.
 The general population is expected to
benefit from it – individuals who enter
malls, public establishments, grocery
or supermarkets, and PUVs.
What is unique, special or original about the Unique, Special or Original Features of the
product or service (what is your competitive Product or Service
advantage)?  Most, if not all of the contact tracing
(Highlight the add-on value for the customer applications in the Philippines at
and the unmet needs or wants your product or present employ gadgets like mobile
service fulfills! Describe how your product phones to be able to record data and
differs from competitors. Competitive keep track of the person’s
advantages can be: whereabouts.
 An all new product or service  The reality is not everyone owns a
 Lowest price smartphone with mobile data or
 Highest quality internet connection.
 Fastest delivery  With just one scan, like scanning a
 Technically most advanced product in the grocery store, all
 More useful features pertinent information like the location,
 Saves time or money; more effective) time and date of the log-in will be
Are there any weak points regarding your stored in the database.
product (e.g., special delivery, easy to copy by  The database is manned by the
competitors, etc.)? regional/local DOH and DICT offices
(If yes, describe these aspects and explain how which are then transmitted to a
you are going to deal with them!) mother database with a more national
scope. It functions through the use of
telecommunication services like texting
to notify the individual in case he/she
has been in contact with a positive
case.
 A chip is inserted in the scanner that is
directly connected to the database
even without the use of the internet.
The mother database will then be
notified real time of the movement of
the barcode owners.
 The issue is whether or not there is an
existing technology that can connect
the barcode scanner to the main
database without an internet
connection.
 If not, we can deploy
telecommunication services to
function like a text message that will
be sent to the main database or server)
Are you going to develop your product or New and Follow-on Products or Services
service further in the future?  Updates can be made in order to
(If yes, describe the new features of your ensure that the data sent in the main
product or service and whether you target database is delivered in real-time (if
different customers with these new features!) there is no present technology that
could perform such function)
 In the future, we can create face masks
or clothes with the same smart fabric
technology that can be embedded with
the barcode or any better means of
contact tracing.
 More safety measures to ensure that
the barcode is not tampered with, is
not easily worn down or damaged.

ANALYSIS OF MARKET AND CONSUMER BEHAVIOR

 Market – set of actual and potential buyers of a product; arena for potential exchange; a
part of the wider concept of marketing
 It is imperative to scan the market environment and see what opportunities are
available.
 Information from the market environment will help the entrepreneur to make effective
marketing decisions
 Analyzing the needs of buyers and creating products and services that would satisfy
the consumers.

Checklist for Market Analysis

1. Who are the customers (existing and prospective)? Their demographic profile, economic
profile, buying power, and other characteristics
2. What do they buy? Who exactly buys what? What are their needs and wants?
3. Why, how, when, and from where do they buy? Do they buy once a day, weekly,
monthly, once in their life time? Do they buy in the morning, afternoon, evening? Who
makes and influences the customer buying decision? Are the buyers the ultimate users
of the products?
4. How much do they pay for similar/competing products? How much are they willing to
pay for your product? Are they willing to pay for your product?
5. Where are they located? Are they within your operating area, in the next area, district,
etc.?
 Information gathered can be taken from internal sources within the organization or
external sources, which are the already existing records compiled by various
organizations or through administering a simple questionnaire.
 Market research helps identify the following:
1. Who are the customers? You should be specific. e.g. the hotels, the children, bars,
primary schools, universities, etc.
2. Where are they located?
3. How many are found in each location?
4. Are your customers increasing, decreasing or constant?
5. Why do these customers buy from you?

Market Size

 What is the size of your market, is it increasing, decreasing or constant? You can use
your business records and the information from your customers.

Competition

 Name and discuss all major competitors. You should compare your product with your
competitors’ products in terms of price, quality, etc. You should know what they are
doing better than you and what you are doing better than them.
Who is your primary target Primary Target Customers
customer?  The main customers would be the
(Do a segmentation and describe government and its agencies pertinent to
your target group in detail! If your contact tracing like the Department of Health
primary is the end consumer use and Department of Information and
the following attributes: Communication Technology.
 Age  This is a partnership/commission project with
 Gender them, we are merely providing them with the
 Location services that we have to function as a
 Income Level contact-tracing medium.
 Social class and occupation  As for the end-users, they come from across
 Education all ages, genders, locations, income level,
 Other (specific to your social strata and occupation, and education.
industry)  The target consumers would be ranging from
21-55 years old, or including those
Which particular markets will you individuals allowed by the IATF to go out and
target/focus more attention on and enter public establishments or spaces.
why?  There is no specific target gender.
 The location would be all around the country.
 Income level and social class would come
from across all sectors, the working class,
middle class, upper class etc.
 This would target all individuals who go out
and enter public establishments which is a
necessity in these extraordinary times.
Customer Needs Assessment
 The needs met by this product is the need for
a more efficient contact tracing measure, by
saving time and providing more accurate and
time-sensitive data to the authorities.

What are the customers’ needs and


wants? List the products or service
attributes or features that are most
important for your customers when
they make the purchase decision.
Important attributes can be:
 Quality
 Price
 Design
 Branding
 Warranties
 Follow-up service
Do you have target groups for your Secondary and Tertiary Target Customers
product or service in addition to
your primary target groyp?
(If yes, give the same details for
your secondary and tertiary target
groups as for your primary target
group!)

MARKETING MIX

 Made up the controllable variables that must be carefully managed by an entrepreneur


and must meet the needs of the defined target group
 This ensures that the right product gets to the customer at the right time and place at
the affordable price, and the customer is informed about the availability of the product
as well as convincing the customer to buy the product
1. Product
2. Price
3. Place/Distribution
4. Promotion
5. Process
6. People
7. Physical Evidence

Product

 Something offered to the customers for purchase to satisfy their needs and wants
 Purely physical products to services
 The task is to DEVELOP THE RIGHT PRODUCTS required by the customer
 Products, product characteristics/features, packaging, branding, labeling, etc.
 For example, good packaging will protect the product from getting spoiled and makes it
easy for you and the consumer to move the product from one place to another.
 Branding and labeling will make it easy for the customers to identify the product and
refer to it by name.
1. Product Development
2. Range of Products (width and depth)
3. Product Quality
4. Packaging and Labelling
5. Maintenance
6. Service, Guarantees, and Warranties
7. Comparison with Competitors

Price

 Value attached to the product


 What the customers pay for the product
1. Demand for the Product – if there are many people who are interest in buying your
product, you might think of increasing the price to take advantage of the demand;
think also of the customer’s ability to pay the price you set
2. Price of your Competitors – Relate the price to the competitors
3. Cost of the Product – the price you set must be sufficient to cover the cost of the
production or operating the business, and sufficient enough to enable the business
to make profits and survive.

Place/Distribution

 Products have to be moved from the seller to the buyer


 This involves making a decision on the channel through which the product will flow or
be distributed
1. Distribution channels and number of outlets to reach customers
2. Strategic location of the business premises
3. Own building or rent premises
4. Public infrastructure facilities
5. Transport and logistic facilities

Promotion

 Customers have to be informed of the existing products and be persuaded to buy the
products
 The entrepreneur should decide on how to inform the customers, through what media
and what inducements to make
 Radio, television, newspaper, simple signs
 Word of mouth – the most cost effective for small business

THE COMPETITOR ANALYSIS


1. Who are your competitors?
2. How do they conduct their business – what are their products or services?
3. How good are their products, prices, promotional and distribution activities?
4. What are their strengths? What are their weaknesses?
5. What are their sales levels?

POSITIONING YOUR ENTERPRISE

 Plan the position you wish to occupy in the minds of the customer
1. Pick product/service attributes that are important for your customers
2. Cross the attributes with your competitors and estimate your and your competitors’
performance on each attribute

Who is directly and indirectly competing with Direct and Indirect Competitors
you?
(Provide details of your direct competitors –
that is competitors who offer the same
product or service! Give their
 names
 products/services and their special
features (what makes them unique?)
 prices
 location
 promotion services
 and if available information, about
their revenues and profits

Give the same details for indirect competitors


– that is competitors that offer substitute
products or services!

Who of your direct and indirect competitors is


most serious/threatening and why?

How is your position compared to your key competitors? First, take the attributes from the
Working Sheet 04 – Customer Analysis and list them in the first column of the matrix! Then,
cross your key competitors with the attributes or features to form a competitive profile matrix!
Give an honest assessment from 1 (very weak) to 5 (very strong) of your own and your
competitors’ performance on each attribute or feature!

My Company <Competitor 1> <Competitor 2> <Competitor 3>


<Attribute 1>
<Attribute 2>
<Attribute 3>
<Attribute 4>
How is your position compared to your key competitors? Summarize your competitor profile
matrix and derive the most important points for your business! Regarding each competitor,
what are your strengths, what are your weaknesess, and what is your competitive advantage?

Main Competitors Their strengths over Their weaknesses My competitive


my business over my business advantage over
competitors
<Competitor 1>
<Competitor 2>
<Competitor 3>
<Competitor 4>
<Competitor 5>

What aspects do your competitors do better Learning from Competitors


than you? To what extend can you learn from
your competitors?

This section deals with the industry or the market you are going to enter. So, define your
industry or market and give information about its size and future development. Answer the
following questions and you will get your industry and market analysis:

What industry or market does your business The Target Industry


enter? (Define the industry and be concrete
about your specific niche! E.g., if you produce
chewing gums, don’t spin a tale of the multi-
billion Shilling food market! Is the market
saturated with many competitors? Is it an
emerging market?
What is the size of your market regarding Market Size
revenues? (Find out the total size of your
industry and market regarding revenues in the
last years! This gives an idea about the
demand in the market!)
What will be future trends and developments Trends and Future Developments
in your market? (State whether the market will
grow, shrink, or remain stagnant in future and
give reasons and references for your
assessment! State the general trend in the
industry based on recent official analyses, for
example is the market
 emerging
 established
 saturated?
Describe whether customer needs are likely to
change in the short- or long-term!

State other major forces that may affect future


development! For example:
 Recent changes in industry
 Demographic changes
 Economic factors
 Legislative changes
 New technologies (New trends or
fashions)

DESIGNING A MARKETING STRATEGY

 Designed to effectively implement a business’ marketing activities in order to sell and


make a reasonable profit
1. How to segment the market
2. Target market

POSITIONING

 Plan the position they wish to occupy – how they would like to be remembered in their
customers’ minds
 The marketing mix programme/strategies
1. Product Strategy
 What kinds of product(s) are you going to sell?
 What will be the depth and width of your product(s)?
 How are you going to package, design, and label them?
 Test your product (its price and quality) on the market before you launch it
2. Pricing Strategy
 What price do you want to charge for your product?
 What discount do you intend to give if any?
 What about the payment terms?
 Remember that a high price as compared to that of competitors may scare off your
customers
 A very low price may not enable you to make reasonable profit
3. Distribution Strategy
 Where will you sell your product?
 How will you ensure that the product reaches the customers?
 Will you sell to urban or rural areas or both?
 Will you sell beyond your geographical region?
4. Promotion Strategy
 How will you make your product known to your customers?
 Which media will you use to communicate your products?
 Will you use radio, TV, fliers, or a combination?
5. Process, people, and physical evidence (service firms)
6. Stress your strengths over those of the competitor and capitalize over their weaknesess
7. Capitalize on those areas where you are really good
8. Compete ethically

MARKET SEGMENTATION

 Dividing the market into smaller clusters or segments with similar characteristics to help
direct an enterprise’s marketing efforts

According to Demography

1. Age (young, youths, middle-aged, old)


2. Income levels (poor, middle-income earners, rich)
3. Gender (male/female customers)
4. Education levels (higher level, middle level, no formal education)

According to Geography

1. Urban vs rural areas


2. Physical locations

TARGET MARKET
 Specific market segment toward which an enterprise aims its marketing activities

POSITIONING

 The position they wish to occupy, that is how they would like to be remembered in their
customers’ minds

PRODUCT STRATEGY

 What kind of product(s) are you going to sell to your customers? What will be the depth
and width of your product(s)? How you are going to package, design and label them etc.

PRICING STRATEGY

 What price do you want to charge for your product? What discount do you intend to
give if any? What about payment terms?

DISTRIBUTION STRATEGY

 Where will you sell your product? How will you ensure that the product reaches your
customers? Will you sell to urban or rural areas or both? Will you sell beyond your
geographical region?

PROMOTION STRATEGY

 How will you make your product known to your customers? Which media will you use to
communicate your products? Will you use radio, TV, flyers or a combination?
 Come up with the proper choice of media so as to influence your sales positively.

MY ENTERPRISE’S MARKETING PLAN

How do you differentiate your product from Product Strategy


your competitors? (Do you plan to offer any
additional features such as technical support,
warranties, product upgrades, etc.?)

State or draw precisely how your package and


brand, brand mark and brand name would
look like!
Apart from quality, price is most often the Pricing Strategy
most important issue for customers to base 
their purchase decision on. At what price will
you offer your product or service in
comparison to your competitors? Consider the
following issues to get a comprehensive
overview of the current situation in your
industry:
 Reconsider the target group you
mentioned in Action Working Sheet 03
– Production Description! How
important is the price for this group?
Probably, this group is putting a
stronger focus on service or quality?
 What are the prevailing prices? What
are your competitors charging?
 State the price level for your product or
service and explain the reasoning for
your price level!
 If you segmented your markets: Do you
intend to charge different prices across
different customer groups (price
discrimination)?

This is also the place to describe your credit


policies! State whether you will also sell on
credit. If this is the case, do not forget to
mention all related aspects (i.e., your decision
rules for who will get credit, how you are going
to check credit worthiness of new customers,
the terms you offer regarding interests and
payback period, will you offer prompt payment
discounts, follow-up procedures if credit is still
due)
How will the product or service reach the Distribution and Sales Strategy
customers? 
(In this section, start with describing how
customers are currently acquiring the product!
Then restate the means you will use to
distribute your product (e.g., via retail outlets,
wholesales, sales force, direct via web, mail
order, or catalog, independent
representatives, etc.)! Finish with describing
how you are going to access the channels and
means you would like to use!
What can be a campaign that is not costly but Promotion and Advertising Strategy
customers will respond to? 
(Describe the avenues you are going to use to
advertise and promote your product or service!
Think about means that are most effective to
reach your primary target group! Mention the
associated costs! Think also about small
means such as a logo, business cards,
brochures, flyers, and particularly word-of-
mouth!)
Bicol University
College of Social Sciences and Philosophy
Political Science Department

THE ENTREPRENEURIAL MIND


Module 2 (Sessions 1-3)
Module Reviewer

SESSION 2 – THE ENTREPRENEUR AND HIS PLANS

Learning Expectations:

1. Increase appreciation of planning your priorities and executing what you have planned
2. Customize your milestones for your enterprise
3. Set long-term goals
4. Craft a development plan

GOALS AND GOAL-SETTING

 Entrepreneurship is all about taking actions or implementing what you have planned.
 Acting begins with setting goals. Goals are the starting point of actions.
 Goals facilitate being self-starting because they indicate what is still to do and provide
direction for the entrepreneur’s efforts.
 Goals structure the entrepreneur’s efforts. Without goals, the entrepreneur’s actions
would be sporadic and reactive, lacking consistence and purpose.
 Goal specificity – goal is measurable and terminated
 A challenging goal competes against goal commitment, because the higher the goal, the
less realistic goal achievement is and therefore the less committed an individual will be.
 However, the higher the goal, the higher the motivation will be to achieve if the
individual is really committed.

Functions of a Goal

1. Goals CHANNEL ATTENTION – as they give direction which actions the entrepreneur
should focus on
2. Goals MOBILIZE ON-TASK EFFORT – if an entrepreneur sets a challenging goal, the
intensity of effort will be higher than if he or she has no goal
3. Goals SUSTAIN PERFORMANCE OVER TIME – as goals are the discrepancies between
the current and future state, the entrepreneur will keep on putting effort into achieving
the goal if the future state is not achieved yet
4. Goals STIMULATE STRATEGIC PLANNING – Goals define only an end state. The path to
the end-state is not defined by the goal, the entrepreneur hence, must develop a plan
that specifies the actions to be taken.
 Goals should be articulated into SMART:
a. SIMPLE – not complicated
b. MEASURABLE – how much is the exact figure
c. ACHIEVABLE – challenging goals as high as possible
d. REALISTIC – you can and want to achieve
e. TIME-BOUND – exact time you want to achieve the goal

PLANS AND PLANNING

 Planning is an important part of personal initiative and self-regulation, because the


ultimate goal of these two concepts is achieving goals.
 Plans determine the necessary steps to achieve the goal and they determine the
sequence of the necessary steps.
 Plans help entrepreneurs to stay on track – they do not forget what they are supposed
to do next and can stick to their plan in the fact of problems.
 Plans trigger the entrepreneur to think about all the issues that relate to or affect goal
attainment.

The Development Plan

1. To-do list of tasks and goals that have to be accomplished to get the business up and
running
2. Schedule for the next weeks that highlights the steps and milestones in the process of
getting the business up and running
 Helps you plan your next steps and get an idea of where you are and where you are going to
be with your company for the short-run
 Includes MOST IMPORTANT MILESTONES for the set-up of the business
 It is an OVERVIEW OF THE WORK THAT REMAINS TO BE COMPLETED BEFORE LAUNCHING
your business.
 Schedule that highlights the steps and milestones in the process of getting your business up
and running

IMPLEMENTATION

 Implementation intentions build on strong and activated goals that are set by an
entrepreneur.
 The pro-activity facet relates to the future and preparing for future problems as well as
opportunities.
 Proactive goals – an entrepreneur anticipates future problems and opprtunities and
converts them into goals.
1. The entrepreneur should develop back-up plans to be prepared if things fail
2. The entrepreneur should develop plans how to exploit an opportunity if it suddenly
arises

Being Persistent

 Goals, information-seeking, plans, and feedback are protected against interferences or


disturbances
 Being stable on the goal even if there is no immediate success
 It might include that the entrepreneur changes the initial plan or relies on a back-up
plan in order to achieve the goal
 Returning to the planned course of action immediately after disturbances
 To get the feedback, the entrepreneur has to seek it as it is no automatic process.

Self-Regulation

 Being persistent can be facilitated by using principles from the theory on self-regulation:
 Activating or inhibiting
 Prolonging or abridging
 Organizing and structuring
 Modifying
 Monitoring
 Self-regulation works via the following mechanisms:
 Goal-setting
 Self-monitoring
 Self-evaluation and self-consequation
 Meta-skills that include forethought/planning and emotion control skills
 To be persistent in the face of difficulties and temptations, the entrepreneur SHOULD
CONTINUOUSLY CHECK THE PROGRESS MADE REGARDING GOAL ACHIEVEMENT AND
EVALUATE.
 If it is behind the set expectations, the entrepreneur should allocate more resources to
the accomplishment of the goal.
 Emotion-handling – negative emotions affect behavior, thoughts, and eventually
performance by consuming valuable personal resources. The entrepreneur must control
his emotional state through an alteration of the internal dialogue.

MECHANISMS OF SELF-REGULATION

1) Goal Setting
2) Self-Monitoring – status check; a process by which the entrepreneur maintains a record
of his or her progress towards goal attainment; comparing and detecting discrepancy
between the target and actual state
 If failed, self-monitoring provides what the entrepreneur still has to do and mobilizes
energy and effort to reduce discrepancy
 If successful, it increases pride and self-efficacy (confidence to perform specific
activities), is an important factor for performing the specific activity.
3) Self Evaluation and Self Consequation – includes judgment of the actions taken so far,
evaluating the progress towards goal attainment, and drawing the consequences from
such evaluation
 The entrepreneur may fall below expectations
 The entrepreneur may meet the expectations
 The entrepreneur exceeds expectation
4) Emotion Control – deliberate change or maintenance of a mood. It should particularly
keep negative emotional reactions at bay during task engagement. It is important to
control one’s emotions, since negativities divert attentional resources to the self and
away from the task. This could affect task performance.
 Self-mechanism can be either DELIBERATE or AUTOMATIC. It must be taught first to train
the self over a period of six months. Applying the mechanisms continuously leads to an
automatization.
THE ENTREPRENEURIAL MIND
Module 2 (Sessions 1-3)
Module Reviewer

SESSION 3 – THE ENTREPRENEUR AND HIS STRATEGIES

Learning Expectations:

1. Apply the leadership concepts and strategic planning techniques to leverage the
economic value of the enterprise
2. Develop vision and mission statements
3. Prepare a strategic plan to achieve competitive advantage
4. Craft operations plan – process of producing and delivering your product or service

LEADERSHIP

Leadership of Organizations

 Strategic leadership which includes environmental monitoring, as well as strategy


formulation and implementation

Leadership in Organizations

 The processes of influencing and motivating others


 How can entrepreneurs motivate others to make investments in their business?
 Entrepreneurs need to convince potential partners of the SUSTAINABILITY OF THE
ENVISIONED BUSINESS.
 They need to craft a VISION – illustrating their idea of the future business that inspires
others to support the same, with their manpower and critical resources
 This vision is enhanced by EFFECTIVE COMMUNICATION in the manner of charismatic style
elements

TRANSACTIONAL LEADERSHIP TRANSFORMATIONAL LEADERSHIP


 Quid pro quo influencing process  Based on charisma, vision, values, and
 The leader utilizes REWARDS and emotional appeal to influence other
COERCIVE POWER to get people doing people
what the leader wants them to do.  Associated to outcomes
Importance of Leadership

 As an entrepreneur, you have to influence, convince, inspire, and motivate business


stakeholders, so as to get the following resources:
1. Equipment
2. Finances
3. Partners
4. Employees, etc.

VISION

 An ideal and unique image of the future that reflects shared values to which one should
aspire
 Projected mental image of products, services, and organizations
 The initial idea of the entrepreneur is developed into the final concept of the business,
which becomes the basis of the actual business.
 Since the entrepreneur needs help from potential investors, a well articulated vision of
the business will provide more success in acquiring the necessary support.

Characteristics of a Good Vision

1. Brief
2. Clear
3. Abstract
4. Challenging
5. Future-oriented
6. Stable
7. Able to inspire

How to Formulate Vision?

1. Be brief and clear


2. Be challenging and future-oriented
3. Be imaginable
4. Be desirable and have the ability to inspire
5. Stress values that are important for the receiver
6. Depict a positive and general/abstract image of the projected product, service, and/or
organization
7. Can stress differences to your competitors
8. Make the eyes of your receivers sparkle

GOAL VISION
 Specific; they should be measurable  More abstract and should not
and terminated completely specify how to achieve
positive outcome
 Visions and goals go hand-in-hand. The vision should be the overarching guide for the
short, mid, and long-term goals.
MISSION

 Mission Statement – a brief statement of why the organization or company exists


o What the company does
o Who it serves
o What differentiates it from competitors
 It provides focus, direction, and inspiration to employees while it tells customers or
clients what to expect from the business.
 It helps you achieve your vision.

MISSION STATEMENT VISION STATEMENT


 Defines the company’s business,  Desired future position of the company
objectives, and approach to reach
those objectives
STRATEGIC MANAGEMENT

 What is the business’ sustainable competitive advantage to beat its competitors?


 Determines basic direction of the business development
 Guarantee that business maintains profitability and achieves long-term success

The External Environment

 Provides an overview of the environmental factors each firm has to consider to develop
a viable business strategy

Macro-Environment

 Society, economy, ecology, politics, and technology


 Society – aspects of values and attitudes that prevail, but also trends that emerge and
demographic changes taking place
 Economy – affects the business through interest rates, inflation, economic trend, and
rate of unemployment
 Ecology – available resources, pollution, natural phenomena
 Politics – laws and regulations, judiciary, organization and stability of the political
system, political changes (taxation, deregulation, foreign trade regulations, international
climates)
 Technology – source for new products or services, new breakthroughs may also render
existing products or services obsolete
Industry Environment

 Existing competitors, new entrants, substitute products, customers, suppliers


 Existing Competitors – might reduce prices or increase quality of their products and
services, thus reducing the profit potential of the industry.
o Level of rivalry depends on the number of competitors (few or many) and growth
potential of the industry (whether demand is growing or saturated)
o In a saturated market, the intensity of competition increases because a firm can
only grow by gaining market shares from another firm.
 New Entrants – leads to higher density of competitors, which likely reduces profit
margins of existing firms.
o Entry barriers affect probability of new entrants appearing. They are high if
products and services in the industry require a lot of tacit know-how,
investments prior to entry, if customers are tightly bound to existing firms, if
products or services are protected by patents, subsidies, or other regulations.
 Substitute Products – products that might be able to fulfill the same needs, but are not
yet available or the customers do not yet perceive such as substitutes
o Impact depends of their price, performance, customer willingness, feasibility of
change to the substitute
 Customers – their power to enforce a lower price for the same quality or a better one at
the same price might be high or low
o High number of competitors, low costs for changing the supplier, customer’s
comprehensive information on substitutes, customer’s limited interest in the
product increase customer’s power over particular supplier
 Suppliers – their power and control to charge higher prices for the same quality or
reduce quality of supplies but keeping price level constant can be high or low

Internal Conditions

a. Firm’s resources
b. Capabilities to exploit available resources
 Such are the basis for a competitive advantage in the market

Resources

 Total of tangible and intangible resources


 Tangible – equipment, facilities, raw materials, financial resources (most often listed in
the assets section of the firm’s balance sheet)
 Intangible – know-how, information, brand strength, patents, copyrights (critical to a
firm’s advantage)
 NO TWO FIRMS HAVE IDENTICAL BUNDLE OF RESOURCES AVAILABLE
 More resources contribute to competitive advantage, but not so with better quality.
 The resource-based theory suggests that those which are valuable, rare, inimitable, and
not substitutable provide a sustained competitive advantage
o The value of a resource is defined by the EXTENT IT ALLOWS THE FIRM TO
EXPLOIT OPPORTUNITIES OR TO NEUTRALIZE ENVIRONMENTAL THREATS
(usefulness for improving a firm’s effectiveness or efficiency)
o Rarity of resources – number of competitors that have the same resource
available to them (many firms with the same resource may end up with similar
strategies, which cannot result in strong market position and advantage)
o Inimitability – other firms cannot obtain the same resource (unique historical
conditions, imperfect knowledge about origin of the advantage, social
relationships)
 Unique historical conditions – some firms established
structures/connections no other has done allowing them to obtain
unique information/technical know-how/material
 Imperfect knowledge – competitors do not know which resources they
have to acquire to achieve same advantage (special ingredient/firm
secret)
 Complex social connections – interpersonal relationships among
managers, the firm’s culture, reputation among suppliers/customers (not
easily imitated)
o Substitutability – competitors can use a different resource to get same effect
(resources need not be identical, but the resulting product or service may do);
certain combinations of different resources might yield same outcome

Capabilities

 Refers to the skills of the firm to combine available resources to create value
 Each firm has several input factors, and in the throughput stage, it recombines these
input factors to generate an output.
 The firm’s capabilities determine how well the firm transforms the input factors into
high quality outputs
 Core competencies – result from the firm’s resources and capabilities, and they are
critical to the firm’s success

Technology-Related Key-Success Factors

1. Scientific research expertise


2. Technical capability to make innovative improvements in production process
3. Expertise in a given technology
4. Capability to use the Internet for all kinds of e-commerce activities
5. Manufacturing-related

Key-Success Factors

1. Low-cost production efficiency


2. Quality of manufacture
3. High utilization of fixed assets (important in capital-intensive/high fixed-cost industries)
4. Low-cost plant location
5. Access to adequate supplies of skilled labor
6. High labor productivity
7. Low-cost product design and engineering
8. Ability to manufacture or assemble products that are customized to buyer specifications

Distribution-Related Key Success Factors

1. A strong network of wholesale distributors/dealers


2. Electronic distribution via the internet
3. Gaining ample space on retailer shelves
4. Having company-owned retail outlets
5. Low distribution costs
6. Accurate filling of customers orders
7. Short delivery times

Marketing-Related Key Success Factors

1. Fast, accurate technical assistance


2. Courteous customer service
3. Accurate filling of buyer orders
4. Breadth of product line and product selection
5. Merchandising skills
6. Attractive styling or packaging
7. Customer guarantees and warranties
8. Clever advertising

Skills-Related Key Success Factors

1. Superior workforce talent (relevant in accounting and consulting)


2. Quality control know-how
3. Design expertise
4. Expertise in a particular technology
5. Ability to develop innovative products and product improvements
6. Ability to get newly conceived products past the research and development phase and
out into the market very quickly

Organizational Capabilities

1. Superior information systems


2. Ability to respond quickly to shifting market conditions
3. Superior ability to employ the Internet and other aspects of electronic commerce to
conduct business
4. Managerial experience

Other types of Key-Success Factors

1. Favorable image or reputation with buyers


2. Overall low cost
3. Convenient locations
4. Pleasant, courteous employees in all customer contact positions
5. Access to financial capital
6. Patent protection

Strategic Management

 Determining a direction for the business to survive and grow the environment
 Getting competitive advantage
 Monitoring the environment (type of competitors, suppliers, employees)
 Implementing the strategy

Four General Strategic Approaches

1. Price leader
2. Quality
3. Offer unique attributes (insulated paper cup, camera in cellphone, MP3 player in
cellphone, special design)
4. All new product/service

THE SWOT ANALYSIS

 A matrix combining both the external environment and internal conditions of the
business
 Develops a strategy for dealing with future events and developing the business
 The external environment may yield FAVORABLE (opportunities) or UNFAVORABLE
(threats) situations to the business
 The business itself may possess sufficient resources and capabilities (STRENGTHS) or
insufficient resources and capabilities (WEAKNESSES) to deal with the external
environment
 It requires a comprehensive information search to identify all possible opportunities and
threats, as well as strengths and weaknesses
 Combining INTERNAL STRENGTHS WITH EXTERNAL THREATS help identifying new
business opportunities (when strengths meet opportunities to get more revenue,
develop new products, or develop new markets like internationalizing or the internet)
 Combining INTERNAL WEAKNESSES WITH EXTERNAL THREATS AND OPPORTUNITIES
indicate risks that need the business owner’s attention and development of resources
and capabilities.

Sample SWOT Analysis

SWOT-Analysis Opportunities Threats


1. Growing market 1. Competition from China
2. Low shipping costs 2. Paper shortage
Strengths To Do To Do
1. Efficient production 1. Increase production 1. Increase quality
2. Flexibility 2. Go abroad 2. Use paper for other product
Weaknesses To Do To Do
1. Only one product 1. Multiproduct line 1. Form alliance with USA
2. Rising costs in the 2. Build plant abroad 2. Substitute raw material
Philippines
 It should not be limited only to listing all the strengths, weaknesses, opportunities, and
threats.
 An entrepreneur must analyze and interpret the different cells and to derive conclusions
that lead to actions taken by the business owner
 It is important to initiate actions to exploit opportunities to prevent adverse
consequences

POSITIONING THE FIRM: POSSIBLE STRATEGIES

1. Differentiation
2. Low cost
3. Niche
Differentiation

 The firm offers the same product or service that already exists, BUT WITH DIFFERENT
PROPERTIES
 This offers better performance or more benefits for the customer (technical features,
attractive design, special service, brand image)
 It is important to analyze and understand WHAT THE CUSTOMERS REALLY NEED AND
WANT
1. Quality – high quality means the product functions and meets the customer’s
requirements on functionality, durability, and reliability
2. Time – speeding-up operating procedure, delivering faster and guaranteeing
timeliness constitutes competitive advantage; developing and introducing
innovations faster
3. Flexibility – smaller firms can be more flexible in fulfilling customers’ special needs
and wants; product customization

Low Cost

 The firms offers the same product with the same quality, AT A LOWER PRICE
 Economies of scape, economies of scope (suitable for larger firms)
 Cost management – ensuring that the final product or service stays below a certain cost
limit. The cost limit becomes the target for all procedures, and all phases must yield to
the cost limit by adapting and modifying in accordance with the limit
 Cost benchmarking – business owner gets available information on the cost structure of
competitors or some other relevant industry. The firm analyses the own costs with
those of the competitors and identifies the phase with highest difference. Reasons for
difference are identified and measures be taken to reduce such difference.

Niche

 The business owner creates a new market


 The only one offering this special product or service
 Particular target market (wedding services for a couple getting married a second time),
new product, cooperations, speed etc.
 Competitors are non-existent and customers’ powers is low

Market Position

 Business owner should be well aware of the competitors’ position in the market and
choose a unique position to stand out from the other firms’ offerings
ACTION PRINCIPLES

1. Continuously re-direct your business


2. Seek a unique position in the market
3. Investigate your industry
4. Conduct a SWOT-Analysis

OPERATIONS PLAN

 Where the business will be located


 How the owner will produce products or services
 How the owner will ensure the quality of products or services

Location

1. Provides information on how the business will look like and what kind of facilities
must be acquired
2. Points potential strengths and weaknesses of the business that can be used or
addressed by the owner
 Exact address, surrounding areas, type of business
 Floor plan (size, rooms, layout of production facilities and equipment, space for stocks
and inventory)
 Information on the premises, physical necessities, required equipment to get started
 Explain the reason for the location

Operating Procedure/Process

 Describes how the product or service is produced


 What is done and how it is done to create value
1. Front End Process
a. How products/services are presented to the customers
b. How the right product is identified for the customer
c. How purchasing procedure is carried out
2. Back End Process
a. Production cycle/production flow – HOW THE SERVICE IS MADE (input,
processed in the through-put, and output); should be presented in detail
from purchasing of raw materials, organizational chart, production process,
and delivery
b. Order flow – when and how customer’s ORDERS ARE RECEIVED, WHEN
ORDERS ARE ENTERED into the system, AND WHEN THE CUSTOMER
RECEIVES the bill
c. Cash Conversion Cycle – when the BUSINESS OWNER PAYS FOR INPUT AND
WHEN THE CUSTOMER PAYS FOR THE PRODUCT. The time between
purchasing of raw material and getting paid by customers can serve as
performance measure, because in this period the business has a negative
cash flow. The shorter the cycle, the better.
 The business owner should identify potential problems and how they will be dealt with.
 It can serve as PERFORMANCE MEASURE (duration of negative cash flow can be
addressed by the operating procedure chart)

Quality Control

1. Standardize production procedure


 All steps and elements of the production process remain identical each time it is
carried out.
 One way to achieve it is through checklists.
2. Checklists
 Describes all the necessary steps that must be accomplished to get the outcome.
 It can be given to employees to ensure that they indeed carry out each necessary
step.
3. Trainings for new staff
 Ensure that current employees remain qualified for accomplishing tasks on a high
level
 New employees learn the necessary skills and background knowledge
4. Job descriptions
 Everybody knows what he or she has to do
 Determine which employees are responsible for the quality and quality control of
the product and service
5. Complying with norms, laws, regulations
 Products meet the standards set by the industry or the government
 By fulfilling norms, customer can be sure that the products or services reach certain
quality levels

LAST REMARK

 Includes details about the necessary equipment, production process, and the necessary
measures to ensure the quality of the product or service
 Includes information on all incurring expenses, should be the starting point for the
financial projections for the business

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