Chapter 1&3 Handouts
Chapter 1&3 Handouts
Chapter 1&3 Handouts
a. Enterprise Strategy – builds and develops V. Target Customers and the Main Value
the game plan for attaining competitiveness Proposition
Business proponent must be very precise a. Social environment – demographics and
about the target audience or target cultural dimensions that govern the relevant
customers entrepreneurial behavior. The structure,
social status, and dynamics of the population
Target customers must be of sufficient size,
at large and the people’s beliefs, tastes,
sufficient paying capacity, and have
mores, customs, and traditions
sufficient interest to purchase the products
being offered by the enterprise b. Political environment – governance system
of the country or local area of business. It
The main value proposition is the unique
includes all the laws, rules, and regulations
selling proposition of the enterprise
on allowable and disallowable business
The business plan should pinpoint what the practices
customers buy, how they buy, when they
c. Economic environment – mainly driven by
buy, where they buy, and what convinces
supply and demand. It also drives the interest
them to buy
and foreign exchange rates
V. Market Demand and Supply, Industry
d. Ecological environment – all natural
Dynamics, and Macro Environmental Factors
resources and the ecosystem
The business proponent should examine all
e. Technological environment – makes or
the opportunities in a bigger market in order
breaks competing participants in any industry
to determine what exactly influences it
The business plan should discuss the major
The business plan should estimate the total
trends and changing patterns in the macro-
market supply and demand for the product
environment, which would have significant
offerings of the enterprise and should then
impacts on the relevant industry and the
determine the major critical factors that
behavior of consumers.
influence this market demand and supply
VI. Product/Service Offering: Description,
Once these critical factors or variables are Evolution, and Justification
determined, the business plan should then
forecast the future demand and supply. The products/services must be described by
highlighting the features and attributes that
The market analysis and forecasting should
would most appeal to the target customers
lead to a quantification of the current and
prospective size of the market The business plan should also prove that the
products/services would be accepted and
The business plan should discuss the
carried by the distribution channels
relevant industry dynamics:
VII. Enterprise Strategy and Enterprise
Who are the competing enterprises in the Delivery System
industry and what are their comparative
advantages and disadvantages? What The business plan should expound on the
business models and strategies are they enterprise strategy (ES) by mapping the
employing? competitive landscape and by situating the
enterprise and its competitors as to their
Who are the suppliers in the industry and
strategies and chosen positionings
what are their capabilities and bargaining
power? The business plan should then show how the
enterprise delivery system (EDS) would
What are the channels of distribution being
enable the business to implement the
used by the industry? How effective are
enterprise strategy
these channels?
Both the industry players and the market are
affected by the macro environment, which
includes SPEET:
• Enterprise Delivery System VIII. Financial Forecasts: Expected Returns,
Risks, and Contingencies
The business plan must translate everything
that we have discussed so far into financial
forecasts and outcomes
From the financial forecasts, the business
plan should then calculate the expected
returns from the business such as:
1. Expected return on sales
2. Expected return on assets or
investments
3. Expected return on stockholders’
equity
The business plan should also calculate the
long-term returns, using the time value of
The outputs are then marketed to the money, this means estimating the internal
customers (in the case of goods) or rate of return and the expected net present
experienced by the customers (in the case of value
services)
The business plan should then evaluate both
Customer satisfaction level, profits the business risks and financial risks
generated, and the performance of people involved
from the transaction are the Outcomes of the
EDS. IX. Environmental and Regulatory
Compliance
The output will then be delivered to the
customers through the Marketing unit of the The business plan must articulate the laws,
EDS. rules, and regulations governing the
business, and the industry that the
The Operations and Marketing units are enterprises is in
supported by the Finance, Administration,
and Human Resource Management units, It should ascertain that all the necessary
which oversee the flow of money, the permits, licenses, and authority to use
procurement and maintenance of machinery proprietary intellectual capital had either
and materials, and ensure the proper been secured or would definitely be secured
deployment and development of people It should also assure the reader that all the
The EDS serves as the enabler of the necessary local government ordinances and
Enterprise Strategy barangay ethics would be followed by the
enterprise
The business plan must demonstrate how
the EDS and ES tandem lead to the X. Capital Structure and Financial Offering:
attainment of the desired enterprise outcome Returns and Benefits to Investors,
Financiers, and Partners
The business outcomes should include:
This section contains the capital structure
High customer satisfaction levels and financial offerings of the enterprise
High sales volume, market share, and including some discussions on who are the
market reach investors, the financiers, and the partners of
High financial returns the enterprise
High people performance, productivity, and
morale levels
Finally, the business plan must appeal to its Where Pinpoints the relevant
target audience. It must highlight for them the location of the market
main features of the business plan that they research.
are looking for.
How Determines the
methodology to be used
Chapter 3: Getting to Know the Market for the market research
3.1 MARKET RESEARCH (e.g., survey, focus group
discussion, observation,
Entrepreneur, know the market well! etc.).
• The entrepreneur must be alert all the time.
• The entrepreneur should exert all efforts to
Market Research Methodologies
know the market he or she wants to exploit.
HISTOGRAM
• The more you know about your market, the
better you will be able to determine customer • A histogram or bar graph consists of a series
needs and wants. of rectangles or “bars.”
Basic Questions in Market Research • Each bar is proportional in width to the range
of values within a class and proportional in
Why Purpose and objective height to the number of items falling in a class
for conducting the
market research FREQUENCY POLYGON
• is constructed by marking the frequencies
What Determines the scope on the vertical axis with a dot corresponding
and the limitations of the to the values on horizontal axis
market research to be
conducted. FOCUS GROUP DISCUSSION (FGD)
- It is one of the most common qualitative
Which Determines which research tools.
segment of the market
must be studied; this - It is effective in extracting consumer and
must be the market non-consumer experiences regarding
segment that the products, places, or programs.
entrepreneur is eyeing. - This method can also be used for
generating initial insights.
Who Identifies who among the
members of the selected FGD can be used to address substantive issues
market segment will such as:
participate in the market a) Understanding consumers’ perceptions,
research. preferences, and behavior concerning a
product category;
When Determines the time and
timing of the research. b) Obtaining impressions on new product
This is critical for concepts;
entrepreneurs whose c) Developing creative concepts and copy
product or service will be material for advertisements;
offered a time
constrained market such d) Securing price impressions; and
as office workers.
e) Obtaining preliminary consumer reaction to 4. Develop a participant screener
specific marketing programs. questionnaire.
f) Focus Group Discussion (FGD) 5. Recruit the participants.
• The FGD is an interview by a facilitator of a 6. Select a good facilitator. The key qualities
small group of people that normally lasts for of a good facilitator are:
an hour and a half up to three hours.
• kindness with fireness
• Four decisions to be made:
• involvement and encouragement
1. respondent selection
• complete understanding
2. sample size
3. data gathering • flexibility
4. data analysis
• Sensitivity
• Respondent selection includes:
7. Develop a facilitator’s discussion guide.
1. the definition of the respondents;
8. Arrange for the venue and logistics.
2. the classification of the respondents; and
9. Analyze the results of the focus group
3. the screening of respondents discussion.
• Data gathering methods in FGD involve: OBSERVATION TECHNIQUE
1. the selection and preparation of the - It is probably one of the best ways of gathering data
venue and equipment; about customers in their natural setting without
having to interact or talk to them.
2. the formulation of the discussion agenda;
and 1. The needed information must be
observable of inferable from the behavior
3. a facilitator who is very skilled in
that can be observed.
moderating and possesses the ability to
draw out significant insights from the 2. The subject matter contains some
participants. sensitivity that needs detached
observation.
• Data analysis includes:
3. The behaviors of interest must be
1. the integration of the information
repetitive, frequent, or predictable in
gathered;
some manner.
2. some observations on respondent
4. The behaviors of interest must be a
behavior; and
relatively short duration.
3. Listing of recommendations and report
• Advantages of Observation Research
writing.
1. It allows the researcher to see what
• 9 Steps in conducting a focus group
customers actually do rather than rely on
discussion
what they say they do.
1. Develop the research objectives. What is
2. It allows the researcher to observe
the research all about?
customers in their natural setting.
2. Determine the participants’ profile. Who
3. It does not subject the researcher to the
are the most knowledgeable or most
unwillingness of customers or their
relevant participants?
inability to reply to certain questions.
3. Determine the appropriate token or
“compensation” for the participants.
4. Some information are better gathered d. Other customer information?
quickly and accurately through
4. Observation proper:
observation.
a. Observe keenly and listen intently.
• Disadvantages of Observation Research
b. Be mindful of the surroundings.
The researcher can only see the outside behavior of
the customer, but cannot determine the inner c. Be alert for obvious movements.
motivation of the customer.
d. Be sensitive to subtle movements.
1. The research cannot get the reasons
behind the behavior. • Guidelines in conducting observation
research
2. The researcher can only focus on the
“here and now, it cannot cover the past e. Look at the customer when the customer
nor cover the future. is not looking
• The formula for computing the sample size: 3. Class C, the middle income class
4. Class D, the lower middle income class
5. Class E, the low income class
B. Psychographics
where:
• Psychographics - defines the customer’s
Z= 1.96 (The value of the normal variable for a
motivations, perceptions, preferences, and
confidence level of 0.95. This means that the
lifestyle.
• Motivation - goes to the roots of customer’s Market Segmentation
needs and wants.
Customers with similar needs and wants and
-can be classified into physiological similar willingness and ability to pay can be
and psychological grouped into one customer segment.
• Physiological - refers to the customer’s Within this customer segment, we can have
personal likes and dislikes and include the finer cuts.
satisfaction of thirst, hunger, and shelter.
We can have different customer sub-
• Perception - is the way a person chooses to segments.
receive or interpret information from the
With these sub-segments we can even have
external world.
finer and finer cuts.
C. Technographics
Therefore we can produce products and
• classifies people according to their level of services that are highly specialized for any
expertise in using a product or a service type of customer segment.
For example: Market Aggregation
• Sports begginers might just want basic Some entrepreneurs prefer to appeal to
equipment. broader market if possible. They prefer to deal in
commodities like rice, bread, and water that appeal
• Sports regulars may be looking for more
to market aggregrates rather than market segments.
sophisticated equipment.
Market Mapping
• Finally, sports professionals would want the
best of the best for competitive purposes. -refers to grouping customers and products
according to certain market variables
Application of Customer Profiling
- an entrepreneur can use one or a combination of
The entrepreneur can use or apply customer
demographics, psychographics, and technographics
profiling in two ways.
to create a market map
1.The first way is to develop a product or service to
test out in the marketplace.
a. The customers most attracted to the
product or service can then be profiled.
b. After profiling, the next step is to find out
how huge this market is for exploitation purposes.
2. The second way is to profile the different types of
customers in a given industry or areas 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 services can be developed by
the entrepreneur to match this chosen
customer group.