RECOGNIZING THE POTENTIAL MARKET Flashcards by Lyka Ramento

is a step-by-step procedure in establishing any kind of business that an entrepreneur has to undergo

The entrepreneurial process

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4 Aspects of entrepreneurial process

Opportunity Spotting and Assessment
Developing Business Plan
Determining the Capital Needed
Running the Business

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the beginning of the whole process.

Opportunity spotting and assessment

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the most DIFFICULT step in the whole entrepreneurial process.

Opportunity spotting and assessment

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Entrepreneurs at this point take note of interesting trends in their environment.

Opportunity spotting and assessment

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Entrepreneurs can get their information through_____

CUSTOMERS

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Opportunity spotting and assessment

Evaluate the identified opportunity
Conceptualize and measure the opportunity
Identify the perceived value of the opportunity to the company and the customers.
Do cost-benefit analysis of the opportunity including risk analysis
Match the opportunity with the entrepreneur’s skills and objectives
Scan the strengths and weaknesses of competitors

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is a comprehenshive paper that details the marketing, operational, human resource, financial, strategic direction, and tactics of the business.

BUSINESS PLAN

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Entrepreneurs should formulate a _______when they have already spotted and assessed the opportunities for a market.

business plan

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Developing a business plan

Come up with a business description and analysis
Perform industry analysis
Come up with the marketing plan
Prepare the operations plan including the organizational plan
Come up with the financial plan
Identify strategies and tactics
Perform monitoring and control

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This is an important and crucial step in the entrepreneurial process. Caution must be applied in computing the complete set of resources needed; and
include only those items that are considered as the real needs in venture creation .

Determining the capital needed

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Calculate the______ and ______ capital needed

intrinsic, extrinsic

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Calculate the existing capital
Calculate the difference between the needed capital and the existing capital. Choose the most cost efficient suppliers or service providers
Develop contact and relationship with suppliers and service providers

Determine the capital needed

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This is the part where the entrepreneur should use the resources allocated for the new venture.

Running the business

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The entrepreneur should have a _____ and ________ to serve as a checck and balance of the formulated plans. (Running the business)

control , monitoring system

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Running the business

Practice the leadership as a way of life
Recognize critical success factors
Identify existing and foreseeable problems and issues
Employ risk-mitigating controls and monitoring systems
Devise an expansion sustainability strategy

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Also known as Opportunity Spotting Assessment.

Scanning the market enviroment

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With this process of scanning the general environment, an entrepreneur can ______ and at the same time understand thoroughly the arena where the future business will operate.

recognize various opportunities

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where the future business will operate.

Arena

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is an entrepreneur’s business idea that can potentially become a commercial product or service in the future

Opportunity

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this is the framework that most of the promising entrepreneurs use to finally come up with the ultimate product or service suited for a specific opportunity.

3S of Opportunity spotting and assessment

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3S of Opportunity spotting

Seeking
Screening
Seizing

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It involves the development of new ideas from various sources.

Seeking

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It is the first step in Opportunity Spotting and Assessment

Seeking

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Considered as rhe most difficult step

Seeking

Macroenvironment

STEEPLED Industry New discovery or Knowledge Futuristic Opportunities

Microenviroment

Consumer preferences, interests, and perception Competitors Unexpected opportunities from customers Talents, hobbies, skills, and expertise Irritants in the marketplace such as deterrents, problems, complains, and delays Location

This is a mnemonics that represents the general environment where the entrepreneur can identify business opportunities.

STEEPLED

``` S - ociocultural T - echnological E - conomic E – nvironmental or ecological P - olitical L - egal E - thical D - emographic ```

This factors represent a general view of a locality’s traditions, customs, beliefs, norms, and perceptions

Sociocultural factors

Some sociocultural factors to take note

``` Health consciousnesses Educational level Attitude towards imported goods and services Attitude towards the person’s lifestyle Attitude towards product quality and customer service Attitude towards savings and investing Emphasis on safety Buying habits Regional and beliefs ```

These are composed of innovations of an existing technology or an invention of a new one mostly on applied science and engineering research areas.

Technological factors

Some Technological factors to take note

``` Basic infrastructure level Rate of technological change Spending on research and development Technological incentives Legislation regarding technology Communication infrastructure Access to newest technology internet infrastructure and penetration. ```

These factors play a vital role in the scanning of marketing environment because economic factors directly affect any business venture.

Economic factors

Some Economic factors to take note

``` Growth rates Inflation rates Interest rates Exchange rates Unemployment trends Labor costs Stages of business cycle Trade flows and patterns Monetary policies Fiscal policies Price fluctuations ```

These factors should be given much importance in conducting a business especially when the world has already suffered severely from human-induced calamities.

Environmental or Ecological factors

Some Environmental or Ecological factors to take note

``` Weather Climate change Laws regulating environmental pollution Air and water pollution Recycling Waste management Attitudes toward “green” or ecological products ```

These factors mostly induced by government policies and administrations, which can have a strong effect in the entrepreneur’s business.

Political factors

Some Political factors to take note

``` Bureaucracy Corruption level Tax policy (rates and incentives) Freedom of press Rule of law Government effectiveness Political rights ```

Related with political factors, legal factors are government laws and regulations that can restrict or allow business activities.

Legal Factors

Some Legal factors to take note

``` Anti-trust law Discrimination law Copyright, patents/ intellectual property rights Consumer protection Employment law Health and safety law Data protection law ```

are regulations that monitor the distribution of economic power in business, making sure that healthy competition is allowed to flourish and economies can grow. also referred to as competition laws, are statutes developed by the U.S. government to protect consumers from predatory business practices. They ensure that fair competition exists in an open-market economy.

Antitrust laws

These are the factors that will serve as an entrepreneur’s guide on how to be ethical in running the business.

Ethical Factors

Some Ethical factors to take note

Ethical advertising and sales practices Accepted accounting, management, and marketing standards Attitude toward counterfeiting and breaking patents Attitude toward development and well-being of employees.

These are the characteristics of the people in the target market.

Demographic Factors

Some Demographic factors to take note

``` Population growth rate Age distribution and life expectancy rates Gender distribution Social classes Family size and structure Minorities ```

This is the source of current trend on what is happening in the industry where the future business will belong to.

industry

These are new trends that can be the core business model of a new venture.

New discovery or knowledge

These are projected new opportunities that can possibly affect the new business while it is running.

Futuristic opportunities

micromanagement

attention to small details in management

macro management

bigger scope

These are the current needs and wants of potential customers that should be discovered right away by a budding entrepreneur

Consumer preferences, interests, and perception

something needed to survive

needs

something that people desire to have

wants

Recognizing and understanding potential competitors will aid the entrepreneur to develop a product or service that is unique and will surely stand out from the competition

Competitors

Oftentimes, the most brilliant ventures come from the most unexpected opportunities.

Unexpected opportunities from customers

The sticky toy was originally marketed as a wall cleaner

Play doh

an annoying customer kept asking a restaurant to make his French fries thinner and crispier. George Crum, the chef, sliced them wafer thin as a joke

Potato chips

Spencer Silver discovered a 'low tack' adhesive in 1968 for which he found no use. Art Fry was frustrated with not having sticky notes for his church books.

Post-its

John and Will Kellogg (Yeah, they were actual people) discovered the staple breakfast cereal when they accidentally left a pot of boiled grain on the stove for a number of days.

Cornflakes

British Pharmacist John Walker was stirring his chemicals when he noticed a dried lump on the end of his stirring stick.

Matchsticks

can be a source of business opportunity.

Talents, hobbies, skills, and expertise

Generally, entrepreneurs see ____in situations where there is a recurring problem or sometimes where there is no more hope in solving the problem

opportunities

Often, entrepreneurs just have to look at their ecosystem and they will be able to spot a business opportunity right away.

Location

These are the methods that will help entrepreneurs to come up with new business products and services

Methods of Generating Ideas

in this method, a moderator handles a very open, free-flowing, and in-depth discussion with a group of people who can provide insights.

Focus Group Discussion

This is an activity that allows the participants to share creative ideas by following lenient rules.

Brainstorming

Lenient rules that should be followed in Brainstorming

* No destructive criticism or judgment is allowed; * Wilder ideas are accepted; * More ideas are preferred; and * Improvement of other’s idea is allowed.

This is exactly the same as brainstorming except that the channel used is not face-to-face, but writing or online.

Brainwriting or Internet brainstorming

this method is similar to the FGD except the participants are already given an inventory of product or service problems. The participants will just identify from the list given the potential product or service instead of generating the ideas from them.

Problem inventory analysis

It is the process of cautious selecting the best opportunity through the following:Entrepreneur’s internal and external intent, The entrepreneur should take note of the time and learn to say “no”

SCREENING

The entrepreneur should say no if the opportunity doesn’t have the following characteristics:

Has superior value to customers * Solves a compelling problem, issue, a need, or want * Is a potential cash cow * Matches with the entrepreneur’s skills, resources, and risk appetite

refers to the entrepreneur’s tolerance of business risks.

Risk appetite

This is the last step in opportunity spotting and assessment.

SEIZING

This is the “pushing through” with the chosen opportunity.

SEIZING

This is the step where innovations and inventions are born

SEIZING

What are innovations?

is the process of positively improving an existing product or service.

“it is a key for economic growth”

innovations

3 types of innovations

BreTechOrd Breakthrough innovations Technological innovations Ordinary innovations

May include inventions

Breakthrough innovations

Occur infrequently as these establish the platform on which innovations in an area are developed

Breakthrough innovations

Must be protected by a patent, a trade secret, or a copyright.

Breakthrough innovations

These innovations are technological advancements of the existing product.

Technological innovations

Occurs more frequently than breakthrough innovations.

Technological innovations

Must be protected as well. | EXAMPLES: WiFi, THE LAPTOP, AND THE JET AIRPLANE

Technological innovations

They are commonly originated from the market analysis and technology pull instead of a technology push.

Ordinary Innovation

Market has a strong influence in implementation of innovation.

Ordinary Innovation

These innovations occur ordinarily | EXAMPLES: INTERNET PLANS OF TELECOMMUNICATIONS COMPANIES, A WIRELESS MOUSE, AND AN AIRBUS OR ECONOMIC TRAVELERS

Ordinary Innovation

Product or Service Planning and Development Process:

Idea Stage Concept Stage Product development Stage Test marketing Stage

involves refining and development process.

seizing process

In this stage, the entrepreneur determines what are the feasible products and/ or services that will perfectly suit the opportunity.

Idea Stage

In this stage, the developed idea will undergo a consumer acceptance test. * This test includes getting the initial reactions of the primary target market and distribution channel.

Concept Stage

In this stage, the entrepreneur leverages on the information generated from the prospective customers.

Product development Stage

work done from the first three stages to measure success in the commercialization of the product or service.

Test marketing Stage