Understanding

the Market
 01
Concept of
Environment
and Market
 Understanding
Environment and Market
To be a successful entrepreneur, you have to
have a business plan and know the concepts
of environment and market. An entrepreneur
should always evaluate the
environment/market, watch for
opportunities, and calculate risks
Know about your customers, your
competitors, and your industry by doing a
research market. Market research is the
process of analyzing data to help you
understand which products/ services are
in demand, identify sales opportunities,
how to be competitive, determine current
problems that will affect the business to
help you reduce business risks.
 Concepts of Environment
and Market
In order to operate a business, you
have to know your industry, the
customers and competitors. You can
generate business ideas based on the
analysis of environment and market by
doing the following:
 1. Identify and compare the different
products/ services available in the
market – know the available
products/services and improve on them.
You should have your own unique
selling proposition that will make you
different from the existing
products/services. Create a new
product/service if there is none yet in the
 2. Determine the profile potential
customers- recognize customers'
needs, wants, interests. Determine your
target market so you will know if there
is enough potential customers or
demand for your product/service.
a. DEMOGRAPHICS – identify who
has a need for your
product/service.
b. BUYING HABITS OF
CUSTOMERS- determine how
your product or service will fit into
your target’s lifestyle.
c. Consumer analysis through
observation, interviews, focus
group discussion, survey, data
 3. Determine the profile of potential
competitors – know your competitor to
see what they are selling. You should be
able to offer more value, quality, speed,
warranty or guaranty.
 4. Conduct SWOT analysis – it is an
acronym for Strength, Weaknesses,
Opportunities, and Threats. This is used
to gather important information to be
used in planning and operating the
business.
 02
Identify the
Market
Problem
You have to identify the market problem
or the market need to be meet. Market
problems are your target market’s stated
or silent problems. This could refer to
existing inefficiencies or frustrations.
You must first identify the market
problems for you to be able to provide
products that can solve your target
customers’ problems.
An entrepreneur mentality sees a need,
an idea to fill the need, then an
opportunity to enter into the market.

To identify the market problems, you

can interview potential users of your
product and evaluate their common
problems.
 Steps in evaluating the identified market
problems:
1. Determine if the market problem is urgent
- once you identify a problem that applies to
the market, ensure that potential and existing
customers actually care about the problem.
Is the perceived problem actually urgent?
Will customers care if the problem is not
solved? Do they have another way to solve
 2. Know if the market problem is
pervasive - determine if the identified
market problem applies to a significant
percentage of your target market. Use
quantitative research to collect the data.
Methods of data collection include
surveys, census, information and market
research.
3. Recognize if the buyers will pay to
have this problem solved - if the
problem is significantly urgent and
pervasive, chances are good that
customers would agree to pay for a
solution. The next step would be to
determine how much they would be
willing to pay for a solution.
 4. Identify if somebody is solving the
problem - investigate whether your
competition is already solving this
problem, otherwise you might not have a
competitive edge in your market.
 03
Opportunity
Seeking,
Screening, and
Seizing
You have to determine solutions in terms
of products and services that will meet
the need using techniques on seeking,
screening, and seizing opportunities.
People are in business because they
provide solutions to market problems.
Opportunities can be found in many
ways like work, experience, hobbies, and
social environment.
Entrepreneurship is defined by three
distinct but co-dependent process of
opportunity seeking, opportunity
screening, and opportunity seizing.
 1. Seeking - An entrepreneur should be constantly
seeking new opportunities that could improve the
business. Recognize customers needs, wants, and
interests. You have to find the opportunity that is right
for you. Business idea comes when you see inefficiency
in the market, and you have an idea on how to correct
that inefficiency, and you have the resources and
capability or ability to bring together the resources and
capability needed to correct that inefficiency. Business
idea also comes from an existing business in one market
that is not available in your market, then you can start
that business in your market.
 2. Screening- new opportunities should
then be screened, tested, and analyzed for
its potential to become viable, feasible, and
sustainable. Understand the unmet needs of
customers. Evaluate whether you will be
able to supple those needs, deliver
how/when they want a product or service,
at the price customers want to pay, and if
you can still make a profit.
To minimize the risks when pursuing the
business opportunity:
 Conduct a customer analysis to
determine if there is a real market by
conducting surveys. Answer the W
questions.
  Conduct a competitor analysis by
knowing who else is supplying that
particular market. Answer the W
questions.
 Conduct an industry analysis to
understand the attractiveness of the
industry you are going to enter. Know if
the industry is growing or falling, power
of the suppliers in this industry, substitute
products, regulations that affect that
 3. Seizing — The selected opportunities
have to be prepared for successful
implementation by understanding the factors
that need to be prioritized. If you have the
experience, knowledge, skill, financial
ability, interest, then grab the opportunity.
Many people see opportunities but only
enterprising minded persons act on them
 04
Analyze the
Market Need
You can analyze the market need through
the following:
1. Observations data is gathered by
observing and recording the respondents'
actions in activity.
2. Experiments -- product sampling.
3. Interviews — field research with
customers, suppliers, competitors, industry
experts via telephone or personal interview.
4. Surveys development of a short
questionnaire with respect to the targeted
product.
5. Data collection and research - gathering
data that have already been compiled and
are available such as information from the
library, internet, newspaper, magazine.
 05
Determine the
Possible Products
or Services
 Two ways to determine the possible
product/service that will meet the need.
1. You can create a unique or new product.
2. You can get ideas from existing
businesses by improving or adding your
own creativity to the
concept/product/service and customize it.
 It is risky to develop a new product or
service. To minimize risks and allocate
investment and resources wisely, you should
consider the following factors:
 1. The product or service should meet
customers' needs and specifications like
design, ease of use, and performance.
Market research, using techniques such as
surveys and focus groups, will help you
determine the need.
 2. Not only must you meet your customers'
needs, you have to do so in a way that is
better than the alternatives offered by the
competition. Your new product or service
needs a unique selling proposition (USP).
USP is a feature or property that makes your
product/service stand out in the marketplace.
3. The product or service should be
technologically feasible to produce. You should be
able to meet the design, resource and
manufacturing requirements.
4. Establishing a pricing strategy for a new product
or service is an important part of the development
process. You should consider pricing the moment
you decide to take an idea forward as it will
determine how much you can afford to invest in
 06
Select the Best
Products/ Services
You must develop the ability to select and offer
the right or best products/services to meet the
market need. For a product or service to
succeed, it must be the right product, being sold
at the right time, to the right customer, in the
right market, It must be produced and sold by
the right company, and the right people.
To select the best product, you have to answer
the following questions:
What kinds of products do you like, enjoy,
consume and benefit from?
What is the product to be sold or service to
be rendered? Describe it in terms of what it
does for the customer.
To whom is the product going to be sold?
Describe your ideal customer.
How does the product improve your
customer's life or work?
Would you buy it and use it yourself, your
relatives, friends?
Is there a real need for the product at the
price you'll have to charge?
 Is the demand large enough for you to make
a profit?
 What price will you have to charge for the
product for it to be profitable?
 Who's going to sell the product?
 Can you see yourself selling this product or
service for the next five to 10 years?
 Stages of an effective product development
process:
1. Idea generation — to capture new ideas.
2. Idea distillation — to screen out those ideas
not worth taking forward.
3. Concept definition — to consider
specifications such as technical& feasibility
and market potential. This is also the time to
design the new product.
4. Strategic analysis — to ensure your ideas fit
into your business' strategic plans.
5, Concept development — to create a
prototype product or pilot service.
6. Test marketing and finalizing the concept to
ensure your product or service can be modified
according to customer, manufacturer and
support organization's feedback. This means
deciding the best timing and process for
piloting your new product or service.
 7. Product launch --- before setting a date you
must determine how to sell, promote and
support your product or service. Getting it right
the first time is essential.
You must plan any investment carefully and
strictly plan, manage and control your costs.
Before making investment decisions, consider
how much your business will gain from a
completed product or service.
 Every new product or service requires a
dedicated development team. In creating your
team you need to include people with a variety
of skills. All team members should understand
your business' objectives and be committed to
them.
 07
Screen the
Proposed Solution
 The proposed solutions should be screened
based on variability, profitability, and
customers’ requirements. Idea screening is the
process of comparing related ideas in order to
select the most appropriate one for your
business. There will come a time when you
have to reduce the number of ideas because not
all ideas are relevant for your company.
After considering various solutions, strategies
or ideas, you have to screen and evaluate them
based on the following criteria:
1. Viability — whether the idea will have a
reasonable chance of success
2. Profitability — possible return on investment
and profit
3. Customer requirements — the product will
meet customer needs
 There are two ways to screen the proposed
solutions. The first way is to give the attributes
an importance score. Rate and score them from
1-10. The ideas with the highest scores are
chosen. The second way is to define outcomes
and rate them for probability and importance.
Give each idea a score on probability for the
outcome, and the importance if it happens. The
ideas with the highest scores are chosen.