CHAPTER II • Level of consumers’ disposable income

Marketing plan • Interest rates

It is a business’s operational document
• Monetary policies
for outreach and advertising to generate leads
and reach its target market. • Exchange rates
• Fiscal policies
A. Macro-Market Analysis (STEEPLED) • Unemployment trends
• Price fluctuations
STEEPLED
This represents the general environment where • Labor costs
the entrepreneur can identify business • Stock market trends
opportunities from and where the future • Stages of business cycle
business is about to operate.
4. ENVIRONMENTAL FACTORS
1. SOCIO- CULTURAL FACTORS
The scan of these factors will help the
These factors represent a general view
entrepreneur determine if the business he or
of a locality’s traditions, customs, beliefs, norms
she is entering into will comply with environment
and perceptions. These factors affect how a
standards or will just be hazard to people,
person of the locality behaves and reacts to
animals and nature.
marketing and selling activities.
• Weather
• Health consciousness;
• Climate Change
• education level
• Laws regulating environment pollution
• Attitude toward: imported goods and
services, person’s lifestyle, product • Attitudes toward “green” or ecological
quality and customer service, saving and products
investing; emphasis on safety • Air and water pollution
• buying habits • Recycling
• religion and beliefs • Waste management
2. TECHNOLOGICAL FACTORS • Endangered species
These are composed of innovations of • Attitudes toward and support for
an existing technology or an invention of a new renewable energy
one mostly applied science and engineering 5. POLITICAL FACTORS
areas. These factors are mostly induced by
• Basic infrastructure level government policies and administrations, which
• Rate of technological change can have strong effect in the entrepreneur’s
business.
• Spending on research and
• Government stability and likely
development
changes
• Technology incentives
• Bureaucracy
• Legislation regarding technology
• Tax policy (rates and incentives)
• Communication infrastructure
• Freedom of press
• Access to newest technology
• Rule of law
• Internet infrastructure and penetration
• Government effectiveness
3. ECONOMIC FACTORS
• Political rights
These factors include income, expenses,
and resources that can influence the cost of 6. LEGAL FACTORS
doing business and generating income. Related with political factors, these are
• Growth rates government laws and regulations that can
restrict or allow business activities.
• Trade flows and patterns
• Anti-trust Law
• Inflation rates
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 • Discrimination Law
• Copyright, patents/ intellectual property Market intelligence
rights It includes customer profiling, drives the
• Consumer protection entrepreneur on what correct strategies and
tactics to employ.
• Employment law
• Health and safety law Market Segmentation
• Data protection law It is the process of grouping similar or
7. ETHICAL FACTORS homogenous customers according to
These are factors that will serve as an demographic, psychographic, geographic, and
entrepreneurs guide on how to be ethical in behavior.
running the business. A. Demographic/ Socioeconomic
• Ethical advertising and sales practices Segmentation
It is the process of grouping customers
• Accepted accounting, management,
according to relevant socioeconomic variables
and marketing
for the business venture. These data help the
Attitude toward counterfeiting and
entrepreneur target customers accurately and
breaking patents
classify their respective needs, wants, and
• Attitude toward development and well- desires.
being of employees 1. Income Range and Social Class
8. DEMOGRAPHIC FACTORS These represent the purchasing power
These are the characteristics of the of the market. These are extent to which the
people in the target market. customers can buy or avail of the service.
• Population growth rate 2. Occupation
• Age distribution and life expectancy It determines the customers’ income and
rates their daily routine where goods and services can
be properly positioned.
• Gender distribution
3. Gender and age group
• Social classes These are data that must be mined
• Family sizes and structure because the life cycle of customers and their
• Minorities genders influence their buying behavior.
B. Micro-market Analysis 4. Religion and Ethnicity
1. Customer It also should be taken to account
1.1. Primary Target Market because these affects the way they products or
1.2. Secondary Target Market avail of services.

Market size B. Psychographic

It is simply the size and the arena where It is a process of grouping customers
the entrepreneur’s business will play. according to their perceptions, way of life,
Customers motivations, and inclinations.
They said to be the lifeblood of the 1. Perception
business. These are the people who buy the It is a process wherein an individual
product or avail the service of the entrepreneur. receives external stimuli using the five senses.
Customer Requirements The customers’ way of life will give an
These are specific features and characteristics entrepreneur an overview of what products or
that the customers need from a product or services can best suit the problems that
service. happening on the daily basis.

“Entrepreneurs must know who buys, and 2. Motivation

what, when, where, how, and most
importantly why they buy.”
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  Physiological motivations involve the
needs of the person; they seek to avoid Market Aggregation
pain and give pleasure. This happens when an entrepreneur
 Psychological motivations involve wants to target a broader market as possible
customer’s preferences. because the product or service that the
 Aspirations are what the customers want business offers is suited for an undifferentiated
to achieve. market.
 Deprivation involves the customer’s C. Supplier
recognition of certain voids to fill.
It is a person, company, or organization
3. Customer’s inclinationIt involves preferring that sells or supplies something such as goods
one product over another as a result of gaining and equipment to customer. (business) –
a refreshing experience when using the product, www.globalnegotiator.com
possibly due to the product’s unique features or
due to it giving more value than the other It is an entity that supplies goods and
product. services to another organization. It is a part of
the supply chain of a business, which may
C. Geographic provide the bulk of the value contained with its
It is simply grouping customers products. –www.accountingtools.com
according to their location. This is critical in the
analysis of the target market as this  Who will be the main supplier? Why?
encompasses the cultures, beliefs, preference,
politics, and lifestyle of a certain geography.  Where is the supplier located at?
 Who will be the alternative supplier?
D. Behavioral
It is the process of grouping the D. Competition
customers according to their actions.
1. Occasions drastically affect the customers’ It is identifying your competitors and
buying behavior. evaluating their strategies to determine their
Example: strengths and weaknesses relative to those of
• Christmas season your own products or service. –
• Valentines www.entrepreneur.com
• summer season “It is any person or entity which is a rival
2. Desired benefits determines the exact needs
against another. In business, it is a company in
of the customers and offer the most suited
product or service for them. the same industry or a similar industry which
Example: offers a similar product or service. Competition
• Offering 3-in-1 coffee for budget also requires companies to become more
conscious customers efficient in order to reduce costs.”
Direct Competition
3. Loyalty is the result of maintaining satisfied
customers. It is a situation in which two or more
businesses offer products or services that are
4. Usage of products or availment of service essentially the same; as such, the business are
describes how often a product is being used or
competing for the same potential market.
the service is being availed. Entrepreneurs can
group customers as light users, medium users, Indirect Competition
or heavy users.
“Indirect competition is competition
between companies that make slightly different
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products but target the same customers. We can Refer to favorable external factors that an
also use the term for providers of services. Apart organization can use to give it a competitive
from targeting the same group of customers, they advantage.
also aim to satisfy the same needs.”
 Social Media
E. SWOT ANALYSIS  Customer
 Few Competitors
» Its purpose is to present routes for a
 Location
company.
THREATS
» A company can use a SWOT for overall
business-strategy sessions or for a Refer to factors that have the potential to
specific segment like marketing, harm an organization.
production or sales.
 Cost of Inputs
» It is a foundational assessment model  Competition
that measures what an organization can  Economy
and cannot do, and its potential  New Technology
opportunities and threats.
STRENGTHS
Describe what an organization excels at
and separates it from the competition; a strong
brand, loyal customer base, a strong balance
sheet, unique technology.
Examples:
 Production
 Staff
 Products
 Branding
 Profit F. MARKETING MIX (7P’s)
WEAKNESSES It is a widely accepted strategic
Stop an organization from performing at marketing tool that combines original 4P’s with
its optimum level. They are areas where the the additional 3P’s in formulating marketing
business needs to improve to remain competitive: tactics for a product or service.
high level of debt, an inadequate supply chain or Purpose of creating 7Ps model:
lack of capital.
• for conducting situation analysis
Example:
• for setting objectives
 Marketing
 Cash Flow • for conducting a strength,
 Fund weakness, opportunity and threat
 Cost SWOT or competitive analysis
 Financial 1. Product
OPPORTUNITIES

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Entrepreneurship
 What product or service is the most Three Level-Concept
appropriate for the opportunity, and why will
Level 1: Core Benefits of the Product or
customers buy or avail them?
Service
2. Place
▫ These are NOT tangible physical
What location is best suited for the products.
business where there are more potential
▫ These are the major factors why a
customers? Can they conveniently transact on-
costumer buys a product or avails of a
site or online? How is the process of distribution
service.
of products or performance of services?
Level 2: Physical Characteristics of a
3. Price
Product or Service
What is the most appropriate price, and
It is the second layer of selection once
what pricing strategies will be used to the target
the core benefit has been satisfied and opinions
markets?
are available to the costumers
4. Promotion
i.e. better packaging for products or a better
What is the most effective advertisement physical evidence or costumer experience for
or combination of advertisements, and which services.
advertising tool should be used to drive
Level 3: Augmented Benefits of a Product or
awareness and increase sales?
Service
5. People
These are only additional benefits; a
What type of people need to be hired? costumer will still get the core benefits of a
What are the basic skills needed for the job? product or service even without the augmented
What leadership style will be applied by the benefits.
entrepreneur?
2. PLACE
6. Packaging
Refers to a location or the medium of
What is the best packaging for the transaction.
product that is attractive enough to customers
STRATEGIC LOCATION
and cost-efficient at the same time? What
physical evidence does the entrepreneur need 1. strategic location
to set up so as to ell the service?
2. primary target market
7. Process
Physical Location
What is the most compelling feature of
the product or the business that will make a  Area’s Population
difference in the lives of the customers? What  The Traffic
sets the product or service from the rest?  The People’s Common Paths
 Their Buying Behavior
1. PRODUCT  Their Preferences for the Location
It is any physical good, service, or idea Cyber Location
that is created by an entrepreneur or an
innovator in serving the needs of costumers and The entrepreneur must use Web
addressing their existing problem. analytics data to understand Web site
performances.
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Entrepreneurship
Logistics of Products 2. Penetration Pricing
This refers to setting low prices to
 Production
increase market share, but the entrepreneur will
 Ordering and Receiving Raw materials
eventually increase the price once the desired
or Finished Goods from the Suppliers
market share is achieved.
 Storage 3. Skimming
 Reorder Points
This is the opposite of penetration
 Transportation System
pricing where prices are initially high and then
they are lowered to offer the product or service
Logistics of Service to a wider market.
4. Competitive Pricing
 Physical Evidence/ Servicescape This refers to benchmarking prices with
 Service Providers and Service Delivery the competitors.
Process 5. Product Line Pricing
 Policies and Procedures of the Business This refers to pricing different products
Major Objective or services within a parallel product array using
varying price points.
To provide customers with pleasant 6. Psychological Pricing
experience in buying the product or availing of This considers the psychology and
the service so that they will keep on coming positioning of price in the market.
back whether on – site or online. 7. Premium Pricing
This refers to setting a very high price to
Characteristics of PLACE
reflect elitism and superiority.
 Presentable 8. Optional Pricing
 Appealing This refers to adding an extra product or
 Catchy service on top of the original to generate more
CRITERIA/ OBJECTIVES IN CHOOSING revenue.
RIGHT LOCATION 9. Cost-based Pricing
√ Suitability to the target market The basis of markup is the cost of sales.
√ Condition of the neighborhood 10. Cost Plus Pricing
√ Potential area for future developments The markup is based on a certain
percentage of cost.
√ Laws and Regulations in the area
√ Direct and indirect competitors The profit of an entrepreneur can be
√ Foot traffic determined only if there is a proper computation
√ Cost of doing business of costs associated with the product or service.
Two Classification of Costs
3. PRICE
Price is the peso value that the Variable Costs or Controllable Costs
entrepreneur assigns to a certain product or These costs are directly proportional to
service after considering its costs, competition, the number of products manufactured or to the
objectives, positioning, and target market. number of services performed.
It is the only P in the 7Ps that generates Fixed Costs or Uncontrollable Costs
revenue for the business. • These are costs not directly proportional
Most Common Pricing Strategies to the manufacturing of a product or to
1. Bundling the performance of the service.
This refers to two or more products or
services in one reduced price.
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Entrepreneurship
 • There are usually the cost of equipment, Objectives of Advertising
employee remuneration, rental cost, and 1. Informing, educating, and familiarizing
utilities. the public with the product and service
• These are considered fixed costs offerings
because the business will still incur 2. Building a trustworthy image
these costs whether or not they provide 3. Increasing sales
more or less. Advertising Channel
• Therefore, if the entrepreneur produces  Television- regular channels, cable TV
more products and perform more  Radio- AM and FM radio
services, his or her fixed cost per unit will  Internet- e-mails, websites, blogs, social
be lover because the fixed cost will be media
allocated to the number of units  Mobile phones- text messages, mobile
produced or number of services applications, mobile Internet
performed (Sim, 2009).  Print- newspapers, magazines, flyers,
The entrepreneur must follow these general signages, posters
pricing guidelines to make the business  Out-of-home- billboards, buses, bus
sustainable and thriving: stops, trains, taxis, street advertisements
1. Do not price the product or service below its B. Selling
cost. It is an act of trading a product or service
2. Monitor competitors’ prices, and ensure that for a price or a fee. The entrepreneur must
your prices are at par with them unless the identify the target customers who will likely buy
product or service is really way superior to the the product or service. He or she must monitor
competitors’. the customer’s satisfaction, which is called the
3. Align prices with the other 6Ps (product, after sales.
place, promotion, people, packaging, and C. Sales Promotions
processing). These are short- term promotional
4. Implement price strategies that are relevant to gimmicks wherein practical incentives and
your market segment. appealing activities are incorporated to entice
5. Align prices with your business objectives. the customers to buy the product or avail of the
service. These are also called “below-the-line”
4. PROMOTION promotions.
It involves presenting the product or Common examples of sales promotions in the
services to the public and how these can Philippines:
address the public needs, wants, problems, or  Sales discounts or discount coupons
desires.  Raffles
Main Goal: gain attention  Contests and games
Key Marketing Messages for Promotion  Promo items
 value proposition or unique selling  Product or service bundles
proposition of the product or service  Trade fairs or exhibits
 Product or service image  Sample distributions or free taste/free
 business image trials
 business values and philosophy  Premiums
Promotional Tools  Point-of-purchase promotions
A. Advertising  Advertising specialties
This type of communication influences  Rewards
the behavior of a customer to choose the D. Public relations
product or service of the entrepreneur over the These are image-building initiatives of the
competitors. entrepreneur to make the name of the business
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Entrepreneurship
reputable to stakeholders, such as the target service. This will determine the uniqueness of the
customers, government agencies, business product from competitors. This is the first element
partners, media, and the public. Unlike that customers see because they don’t know
advertisements, public relations (PR) do not what’s inside yet. Aside from this, packaging
directly promote products or services. preserves the shelf life of the product or service.
Examples of PR strategies Packaging is very important in selling
 Press conferences physical products or goods, as it establishes the
 Launching events brand’s identity, as well as its unique selling
 Lobbying proposition. Therefore, elements such as color
 Web public relations (which has different meanings on the customer
 Social responsibility events segment and culture), shape,size, materials,
product must be put into several test , such as
5. PEOPLE packaging, and graphics tests ,to ensure that
 What type of people need to be hired? the packaging is attractive and of high quality.
 What are the basic skills needed for the In selling services, the term
job? servicescape was used to refer to the overall
 What leadership style will be applied by ambiance of the place where the service is
the entrepreneur? performed
Example: in spa business, the
People servicescape should be cozy, service staff should
 One of the 3 additional Ps in the be friendly, the massage bed should be
marketing mix. comfortable and clean, and relaxing music and
 Plays a vital role in servicing customers. the aromatic smell of nature should be evident.
 Have a major influence in the customer’s Packaging services often involve bundling to
buying behavior. make them look attractive.
ENTREPRENEURS ROLE:
7. PROCESS
 Hire people or employees because it is a
Process is the last addition in the
core job as strategy implementation.
marketing mix as marketers began to realize the
 Identify the specific, necessary job roles
importance of the internal and external
of employees and their descriptions to
operations of the business to serve customers
know the precise purpose and serve
better.
customers glowing.
 List the criteria of the following job offers Process is defined as a step by step
and requirements. procedure or activity workflow that the
Employees Benefits: entrepreneur or employees follow to effectively
 SSS and efficiently serve customers.
 GSIS
 Pag-Ibig Fund
 Withhold taxes from employees’
paychecks and providing employees with
retirement and disability benefits.
 Comply with the Federal and Medical
Leave.
6. PACKAGING
It is how the product or service is
presented to customers. It is the overall
identification (look and feel) of the product or
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Entrepreneurship