Module 2: Recognizing

the Potential Market

The Entrepreneurial
Process
 The Entrepreneurial Process

The entrepreneurial process - is a

step-by-step procedure in establishing
any kind of business that an
entrepreneur has to undergo. It is
composed of four aspects.
 Entrepreneurial Process
1. Opportunity spotting and assessment - this is the beginning of the
process and is considered the most difficult. Entrepreneurs at this
point take note of interesting trends in their environment.

2. Developing a business plan - Entrepreneurs should formulate a

business plan when they have already spotted and assessed the
opportunities for a market.

A business plan - is a comprehensive paper that details the

marketing, operational, human resource, financial, strategic
direction, and tactics of the business. The business plan will be the
core guide and direction of the entrepreneur in calculating the
resources needed, assessing how to obtain these resources
efficiently, and running the business sustainably
 Entrepreneurial Process
3. Determining capital needed – It estimate
required resources vs. current ones, include
allowance

4. Running the business - This is the part where the

entrepreneur should use the resources allocated for
the new venture. This implement plan, monitor all
areas: operations, HR, marketing, finance. Use
control and monitoring systems.
Scanning the Marketing
Environment
Scanning the Marketing Environment
- Scan macro, micro, and internal
environments.

- Recognize opportunities before creating

product/service.

- Avoid mistake of making product first.

3S Framework for Spotting and
Assessing Opportunities.
 3S Framework for Spotting and
Assessing Opportunities.
• Seeking
• Screening
• Seizing

-The 3S of opportunity spotting and assessment 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. An opportunity
is an entrepreneur's business idea that can potentially
become a commercial product or service in the future.
 S1 - Seeking the Opportunity
• Opportunity seeking is the first step
and is the most difficult process of
all due to the number of options
that the entrepreneur will have to
choose from.
 S1 - Seeking the Opportunity
Sources:
• Macroenvironment: STEEPLED, industry,
new knowledge, futuristic opps.

• Micromarket: consumers, competitors,

unexpected opps., skills, irritants,
location.
1. Macroenvironmental Sources
 S1 - Macroenvironmental Sources
a. STEEPLED – Mnemonic for sociocultural,
technological, economic, environmental,
political, legal, ethical, and demographic
factors. Represents general environment
where business opportunities originate.

b. Industry – Source of current trends.

Entrepreneurs must understand the
industry where their business will belong.
S1 - Macroenvironmental Sources
c. New discovery or knowledge – These are
the new trends and innovations that can be
the core of a business model (e.g., mobile
apps).

d. Futuristic opportunities – These are the

projected new opportunities affecting
future business (e.g., sari-sari stores with
financial services).
2. Micromarket Sources
 Micromarket Sources
a. Consumer preferences, interests, and
perception - these are the current needs and
wants of potential customers that should be
discovered right away by a budding
entrepreneur.

b. Competitors -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.
 4Ps of Marketing
• The 4Ps of marketing (product,
place, price, and promotion) will be
competitively positioned if the
entrepreneur is familiar with his or
her competitors.
 Micromarket Sources
c. Unexpected opportunities from customers -
oftentimes, the most brilliant ventures come
from the most unexpected opportunities. It may
happen in unlikely situations, unlikely places,
and with unlikely people.

d. Talents, hobbies, skills, and expertise -

business opportunities do not just come from
outside forces, but also from within the
entrepreneur.
 Micromarket Sources

e. Irritants in the marketplace – Problems,

complaints, delays that present opportunities
when no solution is seen.

f. Location – Observing local ecosystem for

opportunities (e.g., near schools: eateries,
computer shops).
 Micromarket Sources

e. Irritants in the marketplace – Problems,

complaints, delays that present opportunities
when no solution is seen.

f. Location – Observing local ecosystem for

opportunities (e.g., near schools: eateries,
computer shops).
Methods in Generating Ideas
 Methods of Generating Ideas
1. Focus group discussion (FGD)
2. Brainstorming
3. Brainwriting/Internet brainstorming
4. Problem inventory analysis
 Method: Focus Group Discussion (FGD)

Definition: In this method a moderator

facilitates an open and in-depth discussion.

Factors to consider: Group diversity,

moderator skills, discussion topic relevance.
 Method: Brainstorming
Definition: Creative sharing of ideas in a
free-flowing environment.

Factors to consider: No criticism, accept wild

ideas, encourage quantity, build on others'
ideas.
 Method: Brainwriting/Internet
Brainstorming
Definition: Like brainstorming but responses are
written or submitted online.

Factors to consider: Participant availability, clear

instructions, asynchronous feedback.
 Method: Problem Inventory
Analysis
Definition: Participants are given
product/service problem lists to identify
compelling problems.

Factors to consider: Clarity of inventory,

relevance to market, participant insight.
2. Micromarket Sources
 STEEPLED Analysis
STEEPLED Analysis - the result of the
STEEPLED scan will aid the entrepreneur in
deciding what product or service to set up
and whether this new venture will succeed
or not. The focus of this scan is only on the
macroenvironment. Again, not all factors can
have an effect on the new venture.
 STEEPLED: Sociocultural Factors

Sociocultural factors - these factors represent a

general view of a locality's traditions, customs,
beliefs, norms, and perceptions.

Factors to consider:
• Health consciousness
• Education level
• Attitudes toward imported goods and services
Attitudes toward the person's lifestyle
 STEEPLED: Technological Factors
2. Technological factors - these are composed of
innovations of an existing technology or an invention of
a new one mostly on applied science and engineering
research areas.

Factors to consider:
• Basic infrastructure level
• Rate of technological change
• Spending on research and development Technology
incentives
• Legislation regarding technology
• Communication infrastructure
• Access to newest technology
 STEEPLED: Economic Factors
3. Economic factors - these factors include income,
expenses, and resources that can influence the cost of
doing business and generating income.

Factors to consider:
• Level of consumers' disposable income
• Interest rates
• Monetary policies
• Exchange rates
• Fiscal policies
• Unemployment trends
• Price fluctuations
 Environmental or Ecological Factors
Environmental factors - these are important for compliance
with standards and safety.

• Factors to consider:
•Weather
• Climate change
•Environmental pollution laws
• Air and water pollution
• Recycling, waste management
• Green product attitudes
• Endangered species
• Support for renewable energy
 Political Factors
Political factors – these is related to government
policies affect business.

• Factors to consider:
• Government stability and changes
• Bureaucracy, corruption
• Tax policy and incentives
• Freedom of press, rule of law
• Government effectiveness, rights
 Legal Factors
Legal factors – these goverment laws impact
business operations.

• Factors to consider:
• Anti-trust, discrimination laws
• Intellectual property rights
• Consumer protection
• Employment, health, safety laws
• Data protection
 Ethical Factors
Ethical factors – it guides for running an ethical
business.

• Key considerations:
• Ethical advertising and sales
• Standards in accounting and marketing
• View on counterfeiting and patents
• Employee well-being
 Demographic Factors
Demographic factors – these factors target
market characteristics.

• Key factors:
• Population growth
•Age distribution and life expectancy
S2 – Screening the Opportunity
 Opportunity Screening
Opportunity screening -is the process of
cautiously selecting the best opportunity.
The selection will depend on the
entrepreneur's internal intent, i.e., the
main objective that the business will
accomplish in the entrepreneur's life, and
the external intent, which will address the
compelling needs of the target market.
 S2 - Screening the Opportunity
• Opportunity screening is selecting the best idea.
• Consider internal intent and risk appetite.
• Use time wisely for worthwhile opportunities.
• Say no to weak ideas, yes to one strong idea.

• Compelling opportunities must:

1. Have customer value
2. Solve a real problem
3. Be a cash cow
4. Match entrepreneur's skills/resources
Opportunity Attractiveness Test (OAT)

• A framework to evaluate business

opportunities.
• Helps break down aspects to decide
feasibility.
• Designed to support sound
entrepreneurial decisions.
S3 – Seizing the Opportunity
 Opportunity Seizing
Opportunity seizing - is the last step in
opportunity spotting and assessment. This is
the"pushing through" with the chosen
opportunity.

Innovation - is the process of positively

improving an existing product or service. It is a
key driver for economic growth. Innovation is
inevitable as the world constantly changes.
 S3 - Seizing the Opportunity
• Push through with the chosen opportunity.
• Innovation is key and constant.

• Types of innovation:
1. Breakthrough: Internet, computer, airplane
2. Technological: Wi-Fi, laptop, jet airplane
3. Ordinary: Unlimited plans, wireless mouse
 Product/Service Planning and
Development
-Refining the opportunity into a product/service.

Stages include:
1. Idea stage: market evaluation
2. Concept stage: acceptance test
3. Product development: consumer panel feedback
4. Test marketing: validate through sales
5. Commercialization: product launch
 Preparing the Business Plan
-Identify the real market through research.
-After completing 3S steps, prepare full plan:
• Marketing Plan
• Operations Plan
• Financial Plan
Thank You 🙂