FOREWORD This module is an innovative tool produced to meet the standards of the Most Essential Learning Competencies of the K to the 12 curriculums in providing our teachers and learners relevant and localized content. It serves as a supplementary material to current K t o12 resources where contextualization is a priority. This module is dedicated to our learners who are the central figure of the educative process. They are the author’s inspiration in putting this endeavor into fruition amidst the challenges in times of pandemic assuring that content is rightfully delivered. Every activity in this module is carefully designed bearing in mind the best interest of the learners. May this module be of great value in addressing the need of the learners to become a young entrepreneur in helping the economy of the country.
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Table of Contents Foreword Introduction QUARTER 1 Lesson 1. Career Opportunities in Entrepreneurship ............................................................................ 6 Define Entrepreneurship Qualities of an Entrepreneur ....................................................................................... 7 Disciplined Confidence Open minded Competitive Creativity Determination Strong people skills Strong work ethic Passion Activity ....................................................................................................................... 9 Importance of an entrepreneur ............................................................................... 11 Functions of an entrepreneur .................................................................................. 12 Risk bearing functions Administrative and decision-making function Distributive functions Test Yourself ............................................................................................................. 14 Jobs opportunities for entrepreneurship as a career ............................................... 14 What kind of education I need? What are the different careers in Entrepreneurship? Test Yourself ............................................................................................................. 16 Remembering what you’ve learned? ....................................................................... 16 Lesson 2. Recognizing a potential market ........................................................................................... 17 Setting up a small business ...................................................................................... 17 Who can start a business? How can I arrange my capital? How can I select the line of right business for me? What is the right location of my business? How to select your business workforce? Test Yourself ............................................................................................................. 19 Importance of potential market ............................................................................... 20 Value Proposition ..................................................................................................... 20 Understanding a value proposition Requirements of a value proposition How to develop a value proposition? 7 Proven templates for writing a value proposition that work Activity ...................................................................................................................... 27 Business model canvass ........................................................................................... 28 The traditional approach to a business model 9 building blocks of a business model canvass Activity ...................................................................................................................... 34 3
What to sell: How to select the right product for your business .............................. 35 Activity ...................................................................................................................... 38 Remembering what you’ve learn? ........................................................................... 39
Lesson 3. Recognizing the importance of marketing mix in the development of marketing strategy ........................................................................................................................................................ 41 Marketing mix defined ............................................................................................. 41 4P’s of Marketing mix ............................................................................................... 42 Product Price Place Promotion Test yourself.............................................................................................................. 47 7P’s of Marketing mix ............................................................................................... 49 People Process Physical Evidence Developing a Brand Name ........................................................................................ 53 Activity ...................................................................................................................... 56 Remembering what you’ve learn? ........................................................................... 64
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INTRODUCTION
To make a living we need to earn. We may be engaged in different activities through which we earn a livelihood for
our family. What will you do to make a livelihood for your family? Will you apply in a company or organization to earn a living or you would like to start having your own business to earn for a living? The activity of setting up a business or businesses, taking on financial risk in the hope of profit is called entrepreneurship (Oxford Dictionaries). Can you give different work from the members of your family that earns a living? Sir Wacks and his wife Ma’am Mary Eresa Venzon is a Teacher that teaches in school, a lawyer works in a law firm, an accountant practices in an accounting firm, a doctor in a government and private hospital, a waiter serves in a restaurants, Mang Jun is a utility/guard that works at New Cabalan Senior High School. A President/CEO works in a business concern to earn for their living. These are the different examples of people who are employed to earn through wages or salaries given by their employers. This is what we called a wage-employment. On the contrary, a store owner, online selling, doctor and dentist having their own clinics. These are an example of what we called a self-employed. Lucio Tan’s Philippine Airlines and PNB, Henry Sy and Family who owns biggest mall in Asia and other popular and known people earn money by running their own business. They are several self-employed individuals who create jobs not just for themselves but for others. They may be termed as “Entrepreneurs”, a person who organizes and operates a business or business, taking on greater than normal financial risk to do so. From this lesson you will learn in detail about the subject entrepreneurship. What is the importance and its function? You will learn the different qualities of an entrepreneur and their ability to set up a small-scale business that may be useful in the future especially in these times of pandemic.
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QUARTER 1
CONTENT STANDARDS: The learner demonstrates understanding of key concepts, underlying principles, and core competencies in Entrepreneurship PERFORMANCE STANDARDS: The learner independently creates/provides a quality and marketable product and/or service in Entrepreneurship as prescribed in the TESDA Training Regulation.
Lesson 1. Career Opportunities in Entrepreneurship Objectives: In this lesson, student will be able to: 1.
Explain the concept of entrepreneurship;
2.
Describe the essential qualities of a successful entrepreneur;
3.
Recognize the importance of being an entrepreneur;
4.
Identify the functions of an entrepreneur;
5.
Explore the job opportunities for entrepreneurship as a career
The activity of setting up a business or businesses, taking on financial risk in the hope of profit is called
ENTREPRENEURSHIP
entrepreneurship (Oxford Dictionaries). It is an act of
DEFINED
being an entrepreneur which define as a person who organizes and operates a business or businesses, taking on greater than normal financial risk to do so. It can also be defined as “one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods�. This makes form part of creating a new business opportunity that they willingly
undertake
conception,
organization, and management of a productive activity with
all the
possibility of taking risk and seeks profit as a compensation. As an entrepreneur you must be a creative innovator who accepts risk in losing profit by investing your capital. 6
He should know how to generate business and job opportunity, easy to think of a solution and know how to value its customers. As an entrepreneur you need to possess some qualities to be successful. Let us now know about the qualities of a successful entrepreneur. There may be many qualities needed to successfully run an enterprise. However, the following qualities are considered important. 1. Disciplined
QUALITIES OF AN ENTREPRENEUR
These individuals are focused on making their businesses work and
eliminate any hindrances or distractions to their goals. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives. 2. Confidence The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success. They are confident with the knowledge that they will make their businesses succeed. They exude that confidence in everything they do. 3. Open Minded Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being generated about workflows and efficiency, people skills and potential new businesses. They have the ability to look at everything around them and focus it toward their goals. 4. Self-Starter Entrepreneurs know that if something needs to be done, they should start it themselves. They set the parameters and make sure that projects follow that path. They are proactive, not waiting for someone to give them permission.
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5. Competitive Many companies are formed because an entrepreneur knows that they can do a job better than another. They need to win at the sports they play and need to win at the businesses that they create. An entrepreneur will highlight their own company’s track record of success. 6. Creativity One facet of creativity is being able
to
make
connections
between seemingly unrelated events
or
situations.
Entrepreneurs often come up with solutions which are the synthesis of other items. They will repurpose products to market them to new industries. 7. Determination Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They are determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneurs do not believe that something cannot be done. 8. Strong people skills The entrepreneur has strong communication skills to sell the product and motivate employees. Most successful entrepreneurs know how to motivate their employees, so the business grows overall. They are very good at highlighting the benefits of any situation and coaching others to their success. 9. Strong work ethic The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. They will come in on their days off to make sure that an outcome meets their expectations. Their mind is constantly on their work, whether they are in or out of the workplace. 8
10. Passion Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They are willing to put in those extra hours to make the business succeed because there is a joy their business gives which goes beyond the money. The successful entrepreneur will always be reading and researching ways to make the business better. Successful entrepreneurs want to see what the view is like at the top of the business mountain. Once they see it, they want to go further. They know how to talk to their employees, and their businesses soar as a result. Entrepreneurial competencies refer to the characteristics of an entrepreneur. It requires certain qualities or characteristics for establishing and running a business enterprise. In your own words, explain the different qualities you need to acquire to become a successful entrepreneur. 1._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 2._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 3._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 4._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________
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5._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 6._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 7._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 8._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 9._________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 10.________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________
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The role of entrepreneurship and
an
entrepreneurial
culture in economic and
IMPORTANCE OF AN ENTREPRENEUR
social development has often been underestimated. Over the years, however, it has become increasingly apparent that entrepreneurship does indeed contribute to the economic development. Transforming ideas into economic opportunities is the crux of entrepreneurship. History shows that economic progress has been significantly advanced by pragmatic people who are entrepreneurial and innovative, able to exploit opportunities and willing to take risks. Entrepreneurs produce solutions that fly in the face of established knowledge, and they always challenge the status quo. They are risktakers who pursue opportunities that others may fail to recognize or may even view as problems or threats. Whatever the definition of entrepreneurship, it is closely associated with change, creativity, knowledge, innovation, and flexibility-factors that are increasingly important sources of competitiveness in an increasingly globalized world economy. Thus, fostering entrepreneurship means promoting the competitiveness of businesses. Its importance can be expressed in the form mentioned below: 1) Provides employment to the people. People often hold a view that all those who do not get employed anywhere jump into entrepreneurship, but in reality, now a days most of the business are set by those who have other options available with them. 2) Contributes towards research and development system. Almost 2/3rd of all innovations is due to the entrepreneurs. Without the boom of inventions, the world would have been a much dry place to live in. Inventions provide an easier way of getting things done through better and standardized technology. 3) Creates wealth for the nation and for the individuals as well. All individuals who search business opportunities usually, create wealth by entering entrepreneurship. The wealth created by them plays a significant role in the development of the nation. The entrepreneurs contribute to the economy, in the form of products, and services Their ideas, thoughts, and inventions are also of a great help to the nation.
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An entrepreneur frequently has to wear many hats. He has
FUNCTIONS OF AN ENTREPRENEUR
to perceive opportunity, plan, organize resources, and oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk.
The main functions of an entrepreneur are grouped in three categories: 1. Risk bearing functions, 2. Administrative and decision-making functions, and 3. Distributive functions (responsibility of the organizer). 1. Risk Bearing Function It is the most important and specific function of an entrepreneur. Every business involves some amount of risk. The production of goods and services is always related to future demands. The future demand is uncertain and unpredictable because it is influenced by the changes in fashion or taste and liking of the consumers. The price structure, value of money, climatic conditions and government policies are some other important factors that affect the demand of a commodity. All these factors are variable and as such an exact estimation of future demand is a difficult exercise to work out. Since this unpredictable task is undertaken by the entrepreneur; he has to bear the risk. If his estimations prove to be wrong, then in the entire business sphere, no other factor of production shares the loss incurred by the entrepreneur. It is the main reason why the entrepreneur becomes entitled for the surplus that is remaining with him from the sale proceeds of the product, after distributing the shares to other factors. This surplus is termed as profit of the business. 2. Administrative and Decision-Making Functions a. Conceiving the Idea of Business The entrepreneur conceives the idea of a business which suits their nature, skill and resources. They make a thorough (intensive and extensive) study of the condition of market and business prospects. After making a thorough study of economic viability, they decides the business that they has to start. b. Estimation of Details of Business and Implementation of the Same After arriving at a conclusion about the nature of business, the entrepreneur works out the details of business, i.e., what, how and when to produce and from where the resources are to 12
be arranged. With all these estimations, they make an all-out effort to give a practical shape to his plans, organizes various factors of production and sets them to function in proper harmony. c. Supervision and Control of Business Activities The entrepreneur has to supervise and control the day-to-day business activities to accomplish the business objectives. For this they properly coordinate between various factors of production. As the risk (success or failure) of business operations directly affect the economy, they keep a vision and control on the business affairs and avoids unnecessary expenditures. They are required to take a numerous decision and has to get these decisions properly implemented. d. Innovation Innovation is one of the most important functions of an entrepreneur. An entrepreneur uses information, knowledge, and intuition to come up with new products, new methods of reducing costs of a product, improvement in design or function of a product, discovering new markets or new ways of organization of industry. Through innovation, an entrepreneur converts a material into a resource or combines existing resources into new and more productive configurations. It is the creativity of an entrepreneur that results in invention (creation of new knowledge) and innovation (application of knowledge to create the new products, services, or processes). 3. Distributive Functions The entrepreneur organizes different factors of production and sets them to work. It, therefore, becomes his responsibility to make proper allocation of funds for each factor of production, i.e., each factor of production must be properly remunerated. The remuneration here refers to an important decision as to what should be the share of each factor of production in the sale proceeds of the entire product. The remuneration should be just and equitable and the payment to each factor should be commensurate, so that each factor is fully satisfied. If the factors of production remain dissatisfied, they will not be able to deliver their best to the entrepreneur. So, it is the entrepreneur, who has to ultimately suffer. Hence, it is very essential for the entrepreneur to perform distributive functions with extreme care and caution.
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Which of the following statement is TRUE and which are FALSE? ___________1. Entrepreneur is not a risk-taker. ___________2. Entrepreneur plays the role of a business leader ___________3. Entrepreneur plays the role of an innovator ___________4. Entrepreneur promotes capital formation ___________5. Entrepreneur creates large-scale employment opportunities ___________6. Entrepreneur promotes unbalanced regional development ___________7. Entrepreneur reduces concentration of economic power ___________8. Entrepreneur does not help in wealth creation and distribution. ___________9. Entrepreneur contributes to the increase of gross national product ___________10. Entrepreneurial initiatives improve the general standard of living.
JOB OPPORTUNITIES FOR ENTREPRENEURSHIP AS A CAREER
The challenging field of entrepreneurship focuses on developing and implementing modern techniques in a business environment, to efficiently run an organization, manage employees, develop new products, and improve the overall delivery of goods and services to customers around the world. Most of the businesses that exist today started out as entrepreneurial activities, with ambitious individuals capitalizing on a novel business idea they had. Several colleges offer traditional on-campus and online degrees in entrepreneurship including Bachelor’s, Master’s and Doctoral degrees. Students can specialize in an area such as industrial management, establishing new ventures and arranging finance, international business management, strategy development, marketing, venture capital, mergers and acquisitions and technological innovation. The core curriculum includes subjects such as microeconomics, entrepreneurship theory, economics of technological change and organizational theory. WHAT KIND OF EDUCATION DO I NEED
The field of entrepreneurship presents unique opportunities, each with its individual challenges and benefits. A career in WHAT ARE THE entrepreneurship can be made in virtually any field, DIFFERENT CAREERS depending on your interests. Entrepreneurship graduates IN ENTREPRENEURSHIP can find work as commercial bankers, franchise operators, research and development executives and business consultants. Most entrepreneurs, however, remain self-employed, preferring to be their own bosses. Over 14
the recent years, opportunities have also been growing in IT and engineering, presenting a varied set of growing prospects to entrepreneurship majors. How long does it take to start a career in entrepreneurship? The amount of time it takes to make it as an entrepreneur depends on the field you choose to venture into. Since entrepreneurs can exist in any sector of the economy, there is a vast and almost never-ending list of paths to choose from. Therefore, you cannot define a single timeframe for careers in entrepreneurship. What are the requirements for a career in entrepreneurship? The first thing you need to do is find the right business idea and get education according to it. You will then need to make a business plan and define your target market. Once you have established these, you should start networking and selling your idea into your targeted market. How much can I make with a career in entrepreneurship? The salary figures for entrepreneurs vary according to the field they venture into and how well their idea sells in the market. If your idea is unique and useful, you might end up making a lot of money.
Reference: Careers in Entrepreneurship, Entrepreneurship Careers. (n.d.). Retrieved July 21, 2020, from http://www.excite.com/education/business/entrepreneurship/careers
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1. Define Entrepreneurship _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 2. State the importance of entrepreneur _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 3. Choose one of the qualities of an entrepreneur that you think best describes you. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 4. Explain the various functions of an entrepreneur _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 5. What are the factors that you would like to consider in putting up your own business? _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 1. Entrepreneurship is an activity of setting up a business and taking financial risk to earn profit. 2. An entrepreneur is a person who organizes and operates a business. 3. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives. 4. The entrepreneur has strong communication skills to sell the product and motivate employees. 5. Entrepreneurship provides employment, contributes development to the economy of the country and creates wealth to individuals. 6. Entrepreneur conceives the idea of a business which suits their nature, skills, and resources. 7. Innovation is one of the most important functions of an entrepreneur 8. Commercial bankers, Franchise operators, Research and Development executives and Business consultants are among the career pathway in studying entrepreneurship 16
QUARTER 1
CONTENT STANDARDS:
Lesson 2. Recognizing a potential market
K to 12 GC Code: (TLE_ICTAN11/12PC-Ia-1)
The learner demonstrates understanding of key concepts, underlying principles, and processes of developing a business plan PERFORMANCE STANDARDS: The learner independently or with his/her classmates
Objectives: In this lesson, student will be able to: 1. Analyze the market need; 2. Determine the possible product or services that will meet the need; 3. Screen the proposed solution/s based on viability, profitability, and customer requirements; and 4. Select the best product or service that will meet the market need.
presents an acceptable detailed business plan
You have learned that in entrepreneurship a person (entrepreneur) who set up a business must recognize its
SETTING UP A SMALL BUSINESS
financial risk. One must make their business work by eliminating any hindrances or distractions to their goals. They must overarch strategies and outline the tactics to accomplish entrepreneurs
them.
Successful
are
disciplined
enough to take steps every day toward the achievement of their objectives. If you possess the quality of an entrepreneur to perform a business venture you may now start having your small business. But before you start your business let us study various factors required to be considered while setting up any small business. 17
WHO CAN START A BUSINESS?
Anyone can start a small business unit. He may be an existing entrepreneur or a new one, having a business background or not educated or uneducated from rural area or urban area.
The entrepreneur has to analyze and find out the amount and the duration of finance required as well as the duration for such finance is needed in the business. The entrepreneur
HOW CAN I ARRANGE MY CAPITAL?
requires money to buy machinery, building, raw material, pay wages to labor, etc. Money spent on buying machinery, building, equipment, etc. is known as fixed capital. On the other hand, money spent on buying raw materials and paying wages and salaries, rent, telephone and electricity bills, etc. is known as working
capital.
The
entrepreneur has to arrange for both fixed as well as working capital for his business. The finance can be raised by selfcontribution or by borrowing from banks and other financial institutions. Money can also be borrowed
from
friends
and
relatives.
HOW CAN I SELECT THE LINE OF RIGHT BUSINESS FOR ME?
The process of launching a business begins when the entrepreneur start thinking about a line of business, which can be undertaken by him. He may consider business opportunities as per the market demand. He may go for an
existing product or a new product. But before taking any step he has to ascertain the profitability of the business and the amount of capital investment. Having estimated the profitability and risk involved, the entrepreneur has to decide which line of business could be desirable to pursue.
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Special care should be taken while selecting the location of the business. An entrepreneur can start business in his own premises or in a rented premises. It can be located at a marketplace or in a commercial complex or in an industrial estate. While deciding
WHAT IS THE RIGHT LOCATION OF MY BUSINESS?
the location, the entrepreneur should consider various factors like sources of supply of raw material, nearness to the market, availability of labor, transportation, banking and communication facilities, etc. Factories should be preferably located near the source of raw material and at a place that is well connected with rail and road transport facility. A retail business should be started near residential area or in a market place.
HOW TO SELECT YOUR BUSINESS WORKFORCE?
An entrepreneur cannot run the business alone. He has to employ people to help him. Skilled and Semi-skilled workers have to be recruited particularly for manufacturing work. Before starting the business, the entrepreneur must find out
whether he will be able to get the right type of employees for the activities involved.
Which of the following statements are True and which are False? 1. A capital is needed in setting up a business. 2. A business can be started in his residence or rented premises. 3. An entrepreneur should have its business far away from the location of customers. 4. There is no need for a business to have its workforce. 5. A business can only be run by individuals. 6. Only the rich people can have a business. 7. Sole proprietorship is run by many people. 8. Skilled workers are needed to have a successful business. 9. A retail business should be started near residential area or in a marketplace. 10. The entrepreneur requires money to buy machinery, building, raw materials and pay wages.
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IMPORTANCE OF POTENTIAL MARKET
Now that you’re familiar on how to set up your small business. It is now time for you to identify and recognize your potential market by studying its definition and importance. A potential
market is the part of the market you can capture in the future. It includes the demographic groups of customers that will purchase your product or services in the future who might become your regular customers from the expansion of your business. A target customer that make up its share in the available market is to be set by every business owner. The best ways to grow your business is to identify your potential market that you can begin to target. The potential market allows you to: 1. Identifying new customers to ensure the future of your business. 2. Think proactively about ways for your business to grow and change. 3. Show the potential of your business to investors or collaborators. 4. Increase your profit. 5. Create a strategic plan when there will be changes in the economy or market. In identifying your potential markets, you are not just increasing your share for today but ensuring the increase of your profit in the future. If you are an ambitious entrepreneur with a promising product, you probably can’t wait to show it to potential customers. But before you go into “sales mode,” you might want to sit down at your desk, take a look at your value proposition and do some research. A value proposition refers to the value a company promises to deliver to customers should they choose to buy their product. A
VALUE PROPOSITION
value proposition is part of a company's overall marketing strategy. The value proposition provides a declaration of intent or a statement that introduces a company's brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business. A value proposition can be presented as a business or marketing statement that a company uses to summarize why a consumer should buy a product or use a service. This statement, if worded compellingly, convinces a potential consumer that one particular product or service the company offers will add more value or better solve a problem for them than other similar offerings will.
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UNDERSTANDING A VALUE PROPOSITION
A value proposition stands as a promise by a company to a customer or market segment. The proposition is an easy-tounderstand reason why a customer should buy a product or
service from that business. A value proposition should clearly explain how a product fills a need, communicate the specifics of its added benefit, and state the reason why it is better than similar products on the market. The ideal value proposition is to-the-point and appeals to a customer's strongest decision-making drivers.
A company's value proposition communicates the number one reason why a product or service is best suited for a customer segment. Therefore, it should always be displayed
REQUIREMENTS OF A VALUE PROPOSITION
prominently on a company's website and in other consumer touch points. It also must be intuitive, so that a customer can read or hear the value proposition and understand the delivered value without needing further explanation. Value propositions that stand out tend to make use of a particular structure. A successful value proposition typically has a strong, clear headline that communicates the delivered benefit to the consumer. The headline should be a single memorable sentence, phrase, or even a tagline. It frequently incorporates catchy slogans that become part of successful advertising campaigns. Often a sub headline will be provided underneath the main headline, expanding on the explanation of delivered value and giving a specific example of why the product or service is superior to others the consumer has in mind. The subheading can be a short paragraph and is typically between two and three sentences long. The subheading is a way to highlight the key features or benefits of the products and often benefits from the inclusion of bullet points or another means of highlighting standout details. This kind of structure allows consumers to scan the value proposition quickly and pick up on product features. Added visuals increase the ease of communication between business and consumer. In order to craft a strong value proposition, companies will often conduct market research to determine which messages resonate the best with their customers.
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A good value proposition should allow companies to increase HOW TO DEVELOP A VALUE PROPOSITION?
their conversion rates which in turn lift revenue. However, the value proposition creation process is not something that can be hastily done. It should loosely follow a series of actions that flesh out what the company can offer to customers.
1. Understand the benefits customers receive To start creating a value proposition, leaders need to understand how they create value. Therefore, the benefits the company provides to the consumers should be listed. Everything from the product’s use, customer service, delivery processes, and any other component should be on the list. The benefits the company and its products and services provided to consumers should be something each employee should be able to pinpoint easily. 2. Connect benefits to the value Once leaders have a complete grasp on the benefits offered, they should then link these benefits to the value the company creates for customers. - How do the benefits help the customer? - Does the product address a problem or need? - Does the buying process significantly reduce the purchase time? - How can customers expect to benefit from what the company offers? 3. Target your audience Every businesses product is not for every consumer. Leaders need to sharpen the focus and decide who is the target segment for the product or service. This information can include location, demographics, income, occupation, hobbies, and many other factors. Knowing who the audience is will help leaders decide which benefits should be mentioned and which might be best to leave out. It also creates a way to better link benefits to value. 4. Differentiate the Product and Service This might be one of the most critical components of all. At this point, leaders need to work with their teams to see how they are different from competitors. This step revolves around 22
the question of why consumers should pick this company over someone else’s. It is a good idea to look at direct competitors and note what they do similarly, and how the company either does it better or more efficiently. Consumers need to know why they should look over another brand for someone else’s. 5. Put everything into a clear and easy to read sentence Through research and analysis, leaders should emerge with an idea of what to include in their value proposition. The purpose of this statement is not to become a long and arduous read, but it should quickly inform customers of who the company is. Customers should be able to read over the value proposition in five seconds to get a feel for the benefits and value the business offers. If the statement cannot be whittled down to a sentence, then leaders should go back to the drawing board to cut out features that may not be needed. 6. Place it everywhere Once the leader and the team agree on a value proposition, then leaders need to work with marketing to get this statement as many places as possible. It should be included in a website, logos, email newsletter signatures, on a company brochure, and everywhere possible. 7. Test its effectiveness Leaders need to assess how the value proposition is adding in increasing revenue and bringing in new customers. Also, leaders should be aware of how the value proposition is changing the perception of the company. - Have conversions increased? - Are more people visiting the website? - Are more email newsletters being opened? - How are competitors responding?
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7 PROVEN TEMPLATES FOR WRITING A VALUE PROPOSITION THAT WORK
You already know that getting your value proposition right is critical to your business model. You can have the best features, the most perfectly executed presentation, the most stunning price, but no one will ever know of it if they don’t get past your high-level value proposition. Here are among the 7 proven templates that are designed to help you create a clear, compelling value proposition in minutes.
1. Geoff Moore's Value Positioning Statement Probably the most popularized - in his seminal book Crossing the Chasm - Geoff Moore suggests a specific template for outlining your value positioning. In addition to the first part below, Moore also introduces a second statement focused on competitive positioning. Template For ____________ (target customer) who ____________ (statement of the need or opportunity) our (product/service name) is ____________ (product category) that (statement of benefit) ____________ . Sample(s) For non-technical marketers who struggle to find return on investment in social media our product is a web-based analytics software that translates engagement metrics into actionable revenue metrics. 2. Venture Hacks' High-Concept Pitch In Made to Stick, Dan and Chip Heath point to how high-concept pitches such as 'Jaws on a spaceship' (Alien) and 'Die Hard on a bus' (Speed) convince movie executives to invest vast sums of money in a project on the basis of almost no information. In Pitching Hacks Nivi and Navel from Venture Hacks share examples of this technique applied to startups. Template [Proven industry example] for/of [new domain]. 24
Sample(s) Flickr for video. Friendster for dogs. The Firefox of media players. 3. Steve Blank's XYZ Steve Blank writes that a Value Proposition is a ten-dollar phrase describing a company’s product or service. It’s the “what are you building and selling?" He suggests the following format for creating a value proposition statement that other people understand. Template “We help X do Y doing Z”. Sample(s) We help non-technical marketers discover return on investment in social media by turning engagement metrics into revenue metrics. 4. Vlaskovits & Cooper's CPS In their Cheat Guide to Customer Development Cooper and Vlaskovits use what they call a Customer-Problem-Solution presentation. Template Customer: ____________ (who your customer is). Problem: ____________(what problem you're solving for the customer). Solution: ____________ (what is your solution for the problem). Sample(s) Customer: I believe my best customers are small and medium-sized business (SMB) markets. Problem: Who cannot easily measure campaign ROI because existing solutions are too expensive, complicated to deploy, display a dizzying array of non-actionable charts. Solution: Low cost, easy to deploy analytics system designed for non-technical marketers who need actionable metrics. 5. Dave McClure's Elevator Ride In his How to Pitch a VC presentation Dave McClure presents a 3-step check list for creating positioning statements. Template
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•
Short, simple, memorable; what, how, why.
•
3 keywords or phrases
•
KISS (no expert jargon)
Sample(s) •
"Mint.com is the free, easy way to manage your money online."
6. David Cowan's Pitchcraft Although a more elaborative one David Cowan shares some useful guidelines in Practicing the Art of Pitchcraft. I've put together a summary. Template 1. Highlight the enormity of the problem you are tackling. 2. Tell the audience up front what your company sells. 3. Distill the differentiation down to one, easy-to-comprehend sentence. 4. Establish credibility by sharing the pedigree of the entrepreneurs, customers, or the investors. Sample(s) One person dies of melanoma every 62 minutes. We offer a dermatoscope app for iPhone that enables people to easily diagnose their skin, leveraging patented pattern recognition technology trusted by the World Health Organization.
7. Eric Sink's Value Positioning Eric Sink writes that marketing is somewhat like an iceberg - the part sticking out of the water is highly visible. For this Eric suggests the following format for positioning. Template Superlative ("why choose this product"). Label ("what is this product"). Qualifiers ("who should choose this product"). Sample(s) The easiest operating system for netbook PC's. The most secure payment gateway for mobile e-commerce.
26
Think of a possible product/service that you want to introduce in the market. Using the template above choose and write at least 3 design templates to help you create a clear, compelling value proposition. Value Proposition 1. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Value Proposition 2. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________
Value Proposition 3. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________
27
A business model describes how a company creates, delivers, BUSINESS MODEL CANVASS
and captures value. Everyone has their way of viewing the business model. A business model canvass, developed by Alexander Osterwalder, is a visual representation of current or
new business model, generally used by strategic managers. The canvass provides a holistic view of the business as a whole and is especially useful in running a comparative analysis on the impact of an increase in investment may have on any of the contributing factors. The business model canvass gives people a common language through which they can evaluate traditional processes and bring innovation into their business models.
28
Most startups fail because entrepreneurs put all their faith in the
THE TRADITIONAL APPROACH TO A BUSINESS MODEL
idea of the product the organization exists to create. In their loyalty to this product or service, they fail to give in depth consideration to the business model their organization will follow. Usually the business model is either a one-size-fits-all model,
common in the industry or it is a random amalgamation of systems and processes, created at the spur of the moment to further the main goal; sell the product or service. Successful new ventures do not go to market with their first idea; instead, the product/ service has usually gone through several iterations before arriving at the final version. Similarly, organizations are more sustainable if they have considered several business models before deciding on a particular one
THE 9 BUILDING BLOCKS OF A BUSINESS MODEL CANVASS
The Business Model Canvas categorizes the processes and internal activities of a business into 9 separate categories, each representing a building block in the creation of the product or service. These categories represent the four major aspects of a
business; customers, offer, infrastructure, as well as financial viability. All 9 categories are listed and explained below. 1. Customer Segments The total customer pie is divided into segments based on the manner in which an organization’s products or services address a specific need for the segment. The customer segment is an essential part of an organization’s business model and is key to ensuring that the product features are aligned with the segment’s characteristics and needs. To carry out an effective customer segmentation, a company must first know its customers, both through their current and future needs. Then the organization must list its customers in terms of priority, including a list of potential future customers. Finally, the company should do a thorough assessment of its customers by understanding their strengths and weaknesses and exploring other kinds of customers who may benefit the company more if they are to focus on them. Various customer segments are as below: 1. Mass Market: An organization opting for this type of customer segment gives itself a wide pool of potential customers because it feels that its product is a relevant need amongst the general population. A potential product for such an organization could be Flour. 29
2. Niche Market: This customer segment is based on highly specific needs and unique traits of its clients. An example of an organization with a niche customer segment is Louis Vitton 3. Segmented: Organizations adopting the segmented approach create further segmentation in their main customer segment based on slight variations in the customer’s demographics and resultantly, their needs. 4. Diversify: An organization with a Diversified Market Segment is flexible in the iterations of its product or service tweaking it to suit the needs of segments with dissimilar needs or traits. 5. Multi-Sided Platform/ Market: This kind of segment serves customers who have a relationship to each other, i.e. blogging sites need a large group of active bloggers to attract advertisers. And they need advertisers to create cash flow. Hence, only by creating a pull with both segments will the blogging site be able to have a successful business model 2. Value Propositions An organization’s value proposition is the combination of products and services it provides to its customers. Osterwalder stated that these offerings need to be unique and easily differentiated from competition. Value propositions can be divided into two categories: 1. Quantitative: this stresses the price or efficiency of the product or service 2. Qualitative: this value proposition highlights the experience and results the product and its use, produce. The value proposition provides value through a number of attributes such as customization, performance, “getting the job done”, brand/ status, design, newness, price, cost and risk reduction, accessibility, as well as convenience/ usability. When creating your product’s value proposition, the first question an entrepreneur must ask himself is, what problem he is solving through his offered product or service. Then one needs to look into how the product, service or overall experience can be improved so that it provides greater value than the competition. Finally, it is imperative to identify the core value that your business provides. One way to identify this value is for an owner to specify what he/ she wants customers to remember about their interaction with the company. 30
3. Channels The medium through which an organization provides its value proposition to its customer segment is known as a channel. There are various options for channels available to an organization, and the selection is based on the channel that is the quickest, most efficient with the least amount of investment required. There are two basic kinds of channels; Company owned channels such as store fronts or Partner Channels such as Distributors. A company can opt to choose either one or employ a combination of both. For an entrepreneur, the first step in dealing with channels is to identify the customer channels. Touch points with customers can be limited or diverse depending on company strategy. Then he/ she needs to evaluate the strength of the channel by conducting an SWOT analysis on the channel. Finally, the company can identify and build new customer channels. 4. Customer Relationships An organization must select the kind of relationship it will have with its customer segment to create financial success and sustainability. Customer Relationships can be categorized as follows: 1. Personal Assistance: In this kind of relationship the company interacts with the customer directly through an employee who provides the human touch by assisting the customer presale, during the sale and even may provide after sales services. 2. Dedicated Personal Assistance: This kind of relationship is characterized by a very close interaction between the customer and the company through a dedicated representative who is assigned a set of clients and is personally responsible for the entire experience the customer has with the company. 3. Self-Service: Self-Service places the onus of the customer experience on the tools the company provides for the customer to serve him or herself. 4. Automated Services: These are customized self-service relationships where the historical preference of the customer is considered to improve the overall experience. 5. Communities: In today’s electronic age creating communities of clients allows organizations to communicate with them directly. This allows for an enhanced client experience because the community allows clients to share their experiences and come up with common challenges and solutions. 6. Co-creation: The customer has a direct hand in the form the company’s product or service will take. 31
For an entrepreneur, the priority is to identify the type of relationship he/ she has with the customer. Then the value of the customer must be evaluated in terms of the frequency of his expenditure on the firm’s product and services. Loyal customers are relationships that the company should aim to invest in as they will yield steady revenue throughout the year. 5. Revenue Streams A revenue stream is the methodology a company follows to get its customer segments to buy its product or service. A revenue stream can be created through the following ways: 1. Asset Sale: the company sells the right of ownership over the good to the customer. 2. Usage Fee: the company charges the customer for the use of its product or service. 3. Subscription Fee: the company charges the customer for the regular and consistent use of its product or service. 4. Lending/ Leasing/ Renting: the customer pays to get exclusive access to the product for a time-bound period. 5. Licensing: the company charges for the use of its intellectual property. 6. Brokerage Fees: companies or individuals that act as an intermediary between two parties charge a brokerage fee for their services. 7. Advertising: a company charges for others to advertise their products using their mediums. When setting up revenue streams, it is important to recognize that an effective price for the product and/or service will be arrived at through the process of elimination. Different iterations of prices should be listed and evaluated. It is important, in the end to take a break ad reflect on possible avenues open to you as a business. 6. Key Resources These are the assets of the organization fundamental to how it provides value to its customers. Resources can be categorized as human, financial, physical and intellectual. For an entrepreneur, it is important to begin with listing your resources. This gives you a clear idea of what final product or service your company needs to create for the customer and which resources are dispensable, resulting in cost savings for your company. Once the final list of resources is available, the company can decide on how much it needs to invest in these key resources to operate a sustainable business. 32
7. Key Activities Activities that are key to producing the company’s value proposition. An entrepreneur must start by listing the key activities relevant to his/her business. These activities are the most important processes that need to occur for the business model to be effective. Key activities will coincide with revenue streams. Now it is important to evaluate which activities are key by adding or removing some and evaluating their impact. 8. Key Partnerships To create efficient, streamlined operations and reduce risks associated with any business model, an organization forms partnerships with its high-quality suppliers. Key partnerships are the network of suppliers and partners who complement each other in helping the company create its value proposition. Partnerships can be categorized as follows: •
Strategic alliance between competitors (also known as coopetition),
•
Joint ventures and
•
Relationships between buyers and suppliers. An entrepreneur must begin by identifying its key partners followed by making future partnership plans. This can be done through an evaluation of the partnership relationship to judge which characteristics of the relationship need improvement and what kind of future partnerships will be required.
9. Cost Structure This defines the cost of running a business according to a particular model. Businesses can either be cost driven i.e. focused on minimizing investment into the business or value driven i.e. focused on providing maximum value to the customer. Following are some traits of common cost structures: 1. Fixed Costs: costs that remain the same over a period of time 2. Variable Costs: as the name suggests, these costs vary according to a variance in production 3. Economies of Scale: costs decrease as production increases 4. Economies of Scope: costs are decreased by investing in businesses related to the core product. The first step for an entrepreneur is to obviously identify all costs associated with the business. A realistic understanding of the costs of the business is one of the 33
hallmarks of a good business model. After identification, it is important to list all the costs on the canvas, so they are visually present and then create plans for each cost. Some costs may be decreased through certain measures while others may go up if you decide that an investment in a particular section will result in future gains
A business model describes how a company creates, delivers, and captures value. Everyone has their unique way of viewing the business model. From the given business model canvass below design and describe your own business idea that will meet the market need.
34
WHAT TO SELL: HOW TO SELECT THE RIGHT PRODUCT FOR YOUR BUSINESS break
your
A key question often asked by start-up entrepreneurs is what to sell in the business. What products or services could you sell that will make you money? The selection of the right product or service is critical. In fact, the choice of a product or service for your business can make or
business.
Choose a product that requires
significant
production capital when you
have
none
and
couldn’t find any, and your business is compromised from the start. Offer a service that a hundred other entrepreneurs offer in your locality and you may find it hard to get noticed above your competitors. Or select a product with an extremely specialized market yet you do not know how to reach the potential customers, and your business can go kaput. Your products or services define your business. Your products are your business! If you want to turn your business into an income-generating machine, the first step is to choose the right product or services to sell. With the right products, you even stand a better chance at keeping your customers. The idea is to keep your customers forever by continually offering them a valuable product or service, thereby diminishing your costs of reaching and appealing to them. Wise product selection is therefore critical to your business success. How do you choose the right product to sell? Here are a few questions to help you narrow your focus and hopefully select the product that will work for you: 1. What are your primary considerations for choosing a particular product? Make a list of your selection criteria, and what you think are important to you in identifying what business to engage in. There are a myriad reasons for selecting a product, and these reasons can include: financial benefit to your business, relatively low investment requirements, positive return
on investment, fit with present strategy, feasible to develop and produce, easy to source and procure, relatively low risk, and time to see intended results. 2. Can you meet the needs of the customer and solve a specific problem? Your product must address a need or an opportunity. You need to know how your products or services can assist customers. It must have a real value that customers can recognize, want and need. Include in your product information and sales materials how your products can benefit the customers, e.g. help reduce time, effort and expense. 3. How capable are you to produce the product? Just as an athlete needs to know his physical condition before he enters a race, you must also know if you have the time, resources and capability to produce your product. Many entrepreneurs make the mistake of going forward with a business idea only to find that they cannot afford the manpower required, or do not have the resources to outsource the product development. As a result, many experience slippage in release dates making the mistake of launching half-finished web sites. You must also evaluate at the onset how you can scale up the production if there is a strong demand for the product. 4. What is the size of your potential reachable market? You need to at least get an idea of the size of your market. Know who are likely to use or benefit from your products. If you are selling an information product on how to sell at Lazada or Shoppe, define who will be your potential customers you think will be interested in your product. Many small and home business entrepreneurs view market research as an unnecessary and expensive cost but understanding who and how big your market can pay off in the long run. 5. Would you need to comply with government rules and regulations? New laws or government rules and regulations can impact your product. Some products can be sold immediately without the need for government approval. Others, however, require permits, licenses and approval from the government. 6. If a similar product exists, can your product be superior in its functionality, presentation or marketing?
This entails knowing and understanding your Unique Selling Proposition. Your unique selling proposition is the one thing that makes that your product different than any other. It’s the one reason they think consumers will buy the product even though it may seem no different from many others just like it. It may be that the product has a lower price or more convenient packaging, or it may taste or smell better, or last longer. 7. What barriers must be overcome for a potential new product entry? Barriers to entry include high research and development expenditure, high presence of start-up or sunk costs, and international trade restrictions such as tariffs and quotas. Patents are likewise important barriers for many small and home-based businesses, where your competitor may hold legal protection for an integral component of your product and hence may prevent you from manufacturing your product. Other barriers to entry include predatory pricing of competitors that will force you to operate at a loss, high advertising and marketing costs to compete with established brands in the industry, and the cost advantages enjoyed by your competitor that allows them to set lower prices. 8. What are the potential sales, growth, profits, and time for payback? Before starting your business, run your numbers first. Get a clear idea of your cost structure, how much sales you need to have to breakeven and post a profit, and what your return on investment will be.
To succeed as an entrepreneur, you must develop the ability to select and offer the right products or services to your customers in a competitive market. More than any other factor, your ability to make this choice will determine your success or failure. Using the guided questionnaire below analyze your prepared product/services to begin with. 1. What particular product do you think will be visible and be accepted by consumer in the market today? Explain. _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________
2. In meeting the need of the customers, what specific activity plan will you do to improve it? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________ 3. How capable are you to produce the product? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________ 4. What are your potential market? _______________________________________________________________________________ _______________________________________________________________________________
_______________________________________________________________________________ _______________________________________________________________ 5. Enlist the different government permit you need to comply for you to open a business. How will you comply to each of their requirements? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________ 6. What barriers needed for you to overcome for a potential new product entry? _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ ______________________________________________________________
1. A company's value proposition tells a customer the number one reason why a product or service is best suited for that particular customer. 2. A value proposition should be communicated to customers directly, either via the company's website or other marketing or advertising materials. 3. Value propositions can follow different formats, as long as they are "on brand," unique, and specific to the company in question. 4. A successful value proposition should be persuasive and help turn a prospect into a paying customer. 5. Anyone can start a small business unit. He may be an existing entrepreneur or a new one. 6. Special care should be taken while selecting the location of the business. 7. A potential market is the part of the market you can capture in the future.
8. A business model describes how a company creates, delivers and captures value. It is develop by Alexander Osterwalder to visualize representation of current or new business generally used by the strategic managers. 9. A business model are composed of 9 building blocks of a business model canvass namely: Customer segments, value proposition, Channels, Customer relationships, Revenue Streams, Key resources, Key activities, Key partnership, and cost structure 10. Evaluate carefully what kind of product/services you should sell in the market.
QUARTER 1
CONTENT STANDARDS: The learner demonstrates understanding of environment and market in one’s locality/town. PERFORMANCE STANDARDS: The learner independently creates a business vicinity map reflective of potential market in one’s locality/town.
Lesson 3. Recognizing the importance of marketing mix in the development of marketing strategy K to 12 GC Code: (TLE_ICTAN11/12EM-Ia-1)
Objectives: In this lesson, student will be able to: 1.
Describe the Marketing mix (7P’s) in relation to the business
opportunity vis-à-vis: 1.1 Product 1.2. Place 1.3. Price 1.4. Promotion 1.5. People 1.6. Packaging 1.7. Positioning 2. Develop a Brand Name
MARKETING MIX DEFINED
Marketing may refer to the process of value exchange that is facilitated
by the 4P’s. The term marketing mix is a foundation model for businesses, historically centered around the product, price, place and promotion. The marketing mix has been defined as the “set of marketing tools that the firm uses to pursue its marketing objectives in the target market”. Thus, the marketing mix refers to four broad levels of marketing decision.
4P’S OF MARKETING MIX
A marketing expert named E. Jerome McCarthy created the Marketing 4Ps in the 1960’s. This classification has been used throughout the world. It is the foundation of the idea of marketing mix. Let us now describe the 4P’s of Marketing mix.
PRODUCT A Product is a tangible or intangible item that is built or produced to satisfy the needs of a certain group of people. It is in the form of a service or goods. To ensure the right product, an entrepreneur must know the demand of their consumer in the market. They must also know how to create the right product mix by expanding and diversifying the depth of your product line. A product has a certain life cycle that includes the growth phase, the maturity phase and the sales decline phases. During the product development phase, the entrepreneur must do an extensive research of the product that they are creating. Another product must be developed to maintain the progress and its life cycle to gain more profit even there will be changes in the economy. In developing the right product for your business, you must answer the following questions: •
What does the client want from the service or product?
•
How will the customer use it?
•
Where will the client use it?
•
What features must the product have to meet the client’s needs?
•
Are there any necessary features that you missed out?
•
Are you creating features that are not needed by the client?
•
What’s the name of the product?
•
Does it have a catchy name?
•
What are the sizes or colors available?
•
How is the product different from the products of your competitors?
•
What does the product look like?
PRICE
The Price of the product is the amount that the customer pays for
them to satisfy. It is the important component of a marketing plan to determine if the business will gain profit and survive. It gives an impact on the entire marketing strategy affecting the sales and demand of the product. If a company is not yet popular and does not yet make a name in the market your target customer will unlikely pay a high price for the product being sold. The value of the product depends on its price. A low price of the product usually means an inferior good in the consumers eyes as they may compare your product to your competitor. Making it affordable with good quality may encourage customer to purchase and share it with others to buy. On the contrary, a too high price of the product will make the cost outweigh the benefits in customers eyes, and they will therefore value their money instead of having your product purchased. Be sure to know and examine your competitors pricing so that you may adjust and benefited to price competition. When setting the product price, marketers should consider the perceived value that the product offers. There are three major pricing strategies, and these are: •
Market penetration pricing – It is a pricing strategy where the price of a product is initially sent low to rapidly reach a wide fraction of the market and initiate word of mouth.
•
Market skimming pricing – It is a pricing strategy in which a marketer sets a relatively high initial price for a product or service at first, then lowers the price over time.
•
Neutral pricing -Generally a default strategy to minimize the role of pricing in the marketing mix, not utilizing price to gain or restrict market share.
Here are some of the important questions that you should ask yourself when you are setting the product price: •
How much did it cost you to produce the product?
•
What is the customers’ perceived product value?
•
Do you think that the slight price decrease could significantly increase your market share?
•
Can the current price of the product keep up with the price of the product’s competitors?
PLACE A Place is the position and distribution channel of the product to make it accessible to the potential buyers. An entrepreneur must examine and study the location of its buyer to easily deliver the product
that
the
customer
needs.
An
entrepreneur must also know the nearest suppliers to reduce the cost of transportation for the raw materials to be used in making the product or services. There are many distribution strategies, including: •
Intensive distribution – It mainly means a distribution on a large-scale and displaying the product in as many ways and places as possible so that the customer sells in high volume due to large scale distribution.
•
Exclusive distribution – It is an agreement between supplier and retailer that grants the exclusive rights within a specific geographic area to carry the supplier’s product.
•
Selective distribution – It is a retail strategy that involves making a product or group of products available only in certain markets.
•
Franchising – An agreement where one party (the franchiser) grants another party (the Franchisee) the right to use its trademark or trade-name as well as certain business system and processes, to produce and market a good or service according to certain specifications.
Here are some of the questions that you should answer in developing your distribution strategy: •
Where do your clients look for your service or product?
•
What kind of stores do potential clients go to? Do they shop in a mall, in a regular brick and mortar store, in the supermarket, or online?
•
How do you access the different distribution channels?
•
How is your distribution strategy different from your competitors?
•
Do you need a strong sales force?
•
Do you need to attend trade fairs?
•
Do you need to sell in an online store?
PROMOTION
Promotion is a very important component
of marketing as it can boost brand recognition and sales. It comprises the various
elements
organization,
like
public
sales relations,
advertising, and sales promotion. Sales Organization – is a part of the total business organization of a firm. This unit of the firm is concerned with distribution of goods or services. It may be produced by the organization itself or may be purchased from manufacturers for resale. Public relation – It is the practice of deliberately managing the release and spread of information between an individual or an organization and the public to generate awareness and positive responses to products and services of the business. Advertising – It is the activity or profession of producing advertisement for commercial products or services. It is a marketing tactic involving paying for space to promote a product, service, or a cause. The goal of advertising is to reach out people most likely to be willing to pay for a company’s product or services and entice them to buy. Sales promotion – It is the process of persuading a potential buyer to buy the product designed to be used as a short-term tactic to boost sales. In a contemporary time, there seems to be a shift in focus from offline to the online world. Promoting a product or services using the social media is beneficial to the business owner to reach out more customers and suppliers. An extremely good example of this is online social media and managing a firm's online social media presence.
In creating an effective product promotion strategy, you need to answer the following questions: •
How can you send marketing messages to your potential buyers?
•
When is the best time to promote your product?
•
Will you reach your potential audience and buyers through television ads?
•
Is it best to use the social media in promoting the product?
•
What is the promotion strategy of your competitors?
Your combination of promotional strategies and how you go about promotion will depend on your budget.
MULTIPLE CHOICE Directions: Circle or darken the letter that corresponds to the BEST answer. 1. A manager of Venezia Hotel must make marketing decisions to help it stand out from its competition. To make these decisions, they must determine all but which of the following? o
A. What customers want
o
B. When customers want their services
o
C. How to provide services to customers
o
D. How to persuade customers to patronize the hotel
2. Raven Fredric decides that Lighthouse Hotel is going to offer a free Sunday brunch to weekend guests in an attempt to increase the weekend business. What pricing approach is he using? o
A. Loss leader
o
B. Cost-plus pricing
o
C. Customer-based pricing
o
D. Yield management
3. When discussing marketing, what does “product” refer to? o
A. The location on which the hotel is built
o
B. The hotel’s concept
o
C. The hotel’s advertising
o
D. The price at which rooms are sold
4. Which of the following is not a category into which promotional activities are classified? o
A. Personal selling
o
B. Public relations
o
C. Point-of-purchase communications
o
D. Yield management
5. It can be a meal or some other tangible item that a hotel or restaurant provides to its guest. It can also be an intangible service or a hotel or restaurant’s concept. o
A. Product
o
B. Price
o
C. Place
o
D. Promotion
6. Is the amount that a hotel charges for its product. o
A. Product
o
B. Price
o
C. Place
o
D. Promotion
7. Is the physical location of a business and the site where the reservation for the hotel is made. o
A. Product
o
B. Price
o
C. Place
o
D. Promotion
8. Is the decisions made about how to communicate the product, place, and price of the hotel. It is made up of several promotional activities. o
A. Product
o
B. Price
o
C. Place
o
D. Promotion
9. It is the process of persuading a potential buyer to buy the product designed to be used as a short-term tactic to boost sales. o
A. Sales organization
o
B. Advertising
o
C. Public relation
o
D. Sales promotion
10. It is an agreement between supplier and retailer that grants the exclusive rights within a specific geographic area to carry the supplier’s product. o
A. Intensive distribution
o
B. Exclusive distribution
o
C. Selective distribution
o
D. Franchising
The 7P’s model is a marketing model that modifies the 4P’s model. It is generally used in the service industries. 7P’S OF MARKETING MIX
Here are the additional elements that transition the 4P’s to the 7P’s marketing mix model. People makes the business run. PEOPLE
Looking for the right person in the business is one of the
important elements in marketing mix model. They are the employees who do the work, produce the product, and the ones who deliver the product or services. A selection of skilled personnel is needed to make the business run smoothly and successful. It is important to hire and train the right people to deliver superior service to the clients. When business finds people, who believe in the product or services that the particular business creates, it’s highly likely that employees will perform the best they can. They are the internal competitive advantages a business can have over other competitors which can inherently
affect
a
position in the market.
business’s
PROCESS
Process refers to the flow of activities or
mechanism that take place when there is an interaction between customers and the businesses. It is a systems and processes of the organization that affects the execution of the service. A combination of some consecutive things or objects that may enable an entrepreneur to achieve a certain goal in a structured way. They develop some of the processes regarding marketing needs,
marketing
decisions
segmentation, identification,
like
customer promotional
campaign designing, and some other essential process.
Example of the
process would be when a customer decides to subscribe to a telecommunication company to install telephone and internet equipment. The customer will apply by submitting its requirements and pay the necessary fees. After processing its application, the company then install the telephone and modem for them to access the internet service. It is now a relationship for a given time that the customer will be paying monthly, and the company will give its service according to their contract plan.
TYPES OF PROCESS
1.Technological processes. The process of creating tangible products is called technological process. The objectives to ensure that the customers feel
the product to be theirs. The manufacturer should ensure that he creates the product that is wanted by the customers and should also make the products that he as a businessman would want to sell in the market. The balance between both would ensure that the technological process would run smoothly.
2. Electronic processes. Use of receipts or barcodes or forms or other methods of information about a product of a company that manufactures them is called an electronic process. This also includes the course which is used to scan with the help of an application using a mobile phone. 3. Direct activities. Direct activities, as the name suggests, is about the reactions of the customers regarding the process. How did they feel about the process that they just underwent through is known thereby making any changes if necessary, in order to make the process more smoother. Direct activities are occurred and recorded in present time 4. Indirect activities. When the interaction does not take place in person and it happens before or after the product has been bought is termed as an indirect activity.
MIXING PROCESS set of customers.
Processes in something as a tool to create something enormous or monumental. For example, the combination of telemarketing and internet marketing is used to promote a certain service or a product to the targeted
CONCEPTS RELATED TO PROCESS
1. Workflow. Movement of information or tasks for material from one participant to the other is termed as workflow. This includes but is not limited to people and tools procedures that are involved in every step of the marketing mix process.
The workflow may be sequential that is the consequent step is begin only when the prior step is completed or parallel that is multiple steps may occur at the same time. Single workflows may be combined in multiple ways to have an overall process. 2. Business process reengineering. Business process reengineering commonly abbreviated as BPR is a means to enhance or improve the effectiveness of the organization along with its productivity. It consists of starting right from the beginning or from scratch and creating a major business process along with the application of IT or information technology in order to achieve significant improvement of performances. 3. Business process management. Business process management is commonly abbreviated as BPM. It is defined as a discipline which has a mix of different business activities and their flows and which strives to support the vision and mission of business within and also beyond many boundaries which one was people customers internal the employee’s external stakeholders as well as external partners.
4. Total quality management. Commonly abbreviated as TQM, Total Quality management is sought in order to improve the quality of the product. Six sigma method was used by Motorola in order to find out about total quality management. It consists of methods to improve the processes in the business and thereby reduce the problems in the output increase the output and thereby maximize the profits. PHYSICAL EVEIDENCE
In
the
service
industries,
there
should be physical evidence that the service was delivered. It pertains on how a business and its products are perceived in the marketplace. It is the physical evidence
of
a
business’
presence
and
establishment. They are generally market leaders that establishes a physical evidence that the customer will go when buying things that they need. Example of a physical evidence is when you think of a place where all the things you need are already in that place like SM City Olongapo Central in Olongapo City is a much-awaited supermall that put excitement to the people for their spin on shopping, dining and entertainment. The mall is a unique mix of local, national, and global brands that suit every mall-goer’s need. This physical evidence is where you immediately know exactly what their presence in the marketplace. So when you think of a branding concept, if asked of a place to go, you think of a “Mall”, you would probably say of SM because “They got it all, for You”. This manipulated their customers perception when asked for a different brand it is already inside in that place.
A Brand is name, term, DEVELOPING A BRAND NAME
design, symbol, or any other features that identifies one
seller’s good or service as distinction from those of other sellers. If you are ready to brand yourself or your business, you need to have a clear understanding of what developing a brand involves before you really get started. Your brand-development process should always follow these steps: 1. Decide what you’re going to brand. Are you branding a product or a service? A company or an individual? If a product, think of something that you think your target will be interested. It might be tangible or intangible item that is easy to make and available with the supplier. If it is a service, think of a demand in the market today. As we are experiencing pandemic what do you think is a possible service that you could provide to your target market. Are you establishing a company? Who will compose your team or your workforce? Do they have enough funding to establish your company? An individual? Are you ready to create your own business alone? 2. Do your research. First, find out everything there is to know about your market. Then, find out everything there is to know about your product or service. Research and Development is an important factor to be successful in putting up a business. It is a way of knowing what product or service will be a demand in the market? In your years of stay in Senior High School you were taught on how to write and develop your own research. This will be a great help for you to start with. 3. Position your product or service. Find and win a place for your offering in the marketplace and in consumer’s mind by providing unique solutions to problems or need that aren’t already being addressed by competing products. A Place is the position and distribution channel of the product to make it accessible to the potential buyers. You must examine and study the location of your buyer to easily deliver the product that your customer needs. In the customers perspective, they will choose a product or service nearest to their residence so when they encounter problem to the product or service it will be easy for them to return for a replacement.
4. Write your brand definition. Your brand definition describes what you offer, why you offer it, how your offering is different and better, what unique benefits your customers can count on, and what promise or set of promises you make to all who work with and buy from your business. In writing your brand, it is important that you know your mission, vision, and objectives. Describe your brand that is easy to remember and catchy messages to your target customers. 5. Develop your name, logo, and tagline. Your name is the key that unlocks your brand image in your consumer’s mind. Your logo is the brandmark or symbol that serves as the face of your brand. Your tagline is the memorable phrase that provides consumers with a quick indication of your product, brand, and market position. Your business name refers to a name that is different from a true name of an individual which is to be used or signed in connection with your business on any written or printed receipts, including business taxes duties and fees collected to the business owner. A logo is a symbol, designed to represent your organization or to identify your products used to aid and promote public identification and recognition. It is an abstract or figurative design with text. Make sure to make it easy for the customer to remember the images. A tagline on the other hand, is a phrase or slogan used in advertising to impress and encourages the customer to patronize your product or service offered to them. 6. Launch your brand. Your brand goes public when you unveil your name, logo, and slogan, and when you begin to tell your market the story of how your brand reflects what you stand for. A new brand must get to make a splash in the market if it’s going to be successful. You’ve got to stand out in the crowd to present your product or service. Make sure to allot enough time to prepare your presentation to the public. Giving yourself more time also helps to develop hype for your brand while giving you ample time to make sure that all is ready. Your goal is to develop a marketing strategy for launching your product or service. Make sure that your presentation belongs to your target audience. It’s no use promoting it to people who are not interested, so get to know your potential buyers. In addition, make a research to your competitor to find out what niche they might be missing out on, then go after the market. 7. Manage, leverage, and protect your brand. This is the “care and feeding” phase of the branding process; it’s the step that leads to a strong, healthy, resilient brand. Just like good parenting, good branding management can be summed up in a single word — consistency. Your brand image is an
important factor in determining your success, which is why it is absolutely necessary to make sure it’s protected at all cost. Knowing how to prevent it from being diluted, damaged or taken advantage if misused by competitors, counterfeiters, or unrelated companies. Managed to apply and register your brand to the right agency for trademarking is one of the important things to remember to protect it. 8. Realign your brand to keep it current. Occasionally, you can (and should) change how your brand is presented. From time to time, you need to update your brand presentation (the face of your brand) to keep it relevant to the market in which it lives. Perhaps the most obvious reason to refresh a brand is that it’s image has simply outgrown its effectiveness. An update to visual elements is necessary to build upon the brand structure that is already known and loved.
Personal Branding Worksheet and Instruction Guide By: Brooke Webb Smith Adapted: Wilbert C. Venzon, LPT, MBA.
Instructions for Completing the Personal Branding Worksheet Part A: Inspiration 1. Who are the people you admire most in your industry? Who are the market leaders? Do you have any role models? Who are the most successful people? The Industry Influencers? (Note: You can also include people in other industries who you admire and who may also serve as role models.) 2. What are the characteristics of their personal brand? For example, do they have a background story that everyone knows such as a turning point in their life? A signature phrase which everyone associates with that person (like Nike’s, Just Do It)? Or Emeril Lagasse, “BAM!” Even if you don’t care for his cooking or watch his show, chances are you have heard that phrase and if you say it most people will hear him saying in their head. What about Industry Influencers? Do you have a few that you keep up with? They could have a nickname that describes their brand, such as The Jerk (obviously not someone known for their compassion). They may even have a style that distinguishes them, such as always wearing a baseball hat and sandals. List the things that distinguish the people you listed in Step 1. 3. Where are these people seen most often? The places where you are seen most often are the places where you will have the greatest opportunities to build your personal brand. Where are your market leaders hanging out and promoting their brand? For example, do they do frequent seminars or speak at large conferences? Do you often see them on Facebook, Twitter, YouTube, LinkedIn or Google+? Their blog may be their biggest source of branding, or podcast and advertisements.
Conduct online searches to see where their name appears most often. Your goal is to determine where the Industry Influencers spend the most marketing time. Locate the trend-setters. Follow the moversand-shakers. Emulate the strategies that may work well for your business. By all means, do not try to replicate their brand. Remember, your brand is about the essence of you – not anyone else. 4. What do you admire most about these people? Make a list of some of the characteristics you would want to model or adapt to your own brand. For example, they may have a very personal way of communicating with their market in which they share their own pains and heartaches. Or they might have a very no-nonsense attitude and be known most for their guerilla-style, aggressive marketing tactics. 5. What makes them unique? How do they stand out from the rest of their industry and the world? Why are people so attracted to them? For example, do they meet a specific need that no one else does quite as well? What impression are they leaving on their audience? How are they making them feel? One of the things that intrigue me about comedians who use self-degrading humor; they are often the most popular. Louis C.K. and Jim Gaffigan illustrated this beautifully. There is something about sharing their pain of being lonely, tired, overweight or single that makes others not only burst out in laughter but also resonate with their pain. How many comedians can you think of who had a rise to fame because they talked about how broke they are or how they, “get no respect.� ~Rodney Dangerfield, yes, you remember!
Part B: Brainstorm Your Brand 1. Who are the people you want to appeal to? What is the target market for your personal brand? Is it primarily your buyers? Or are you targeting your ideal future employers? What are some of the characteristics of your market? For example, how old are they, are they more conservative or liberal, what other brands appeal to them? Are they Target or Walmart? Are they on team Android or iPhone? Do they prefer a bottle of beer, a bottle of wine or a glass of champagne? Are they Jimmy Choo, Calvin Kline, Tory Burch or Kate Spade? Talk to people in your target market and get a feel for what makes them tick. Hang out in forums where they are and listen in. Study their likes as well as their dislikes. 2. How do other people see you now? Ask some people who know you to describe the way they see you. What do they see as your strengths and weaknesses? Ask them what stands out most about you. If possible, do an anonymous questionnaire so you can get honest feedback on the way you’re seen now. Please note: prepare yourself for the unexpected feedback you may receive. It is a good starting point to close the gap in between, how you think you are and how others perceive you. It is not uncommon for our words, actions, behavior and habits not to be in accord with our intentions. This may prove to give you some valuable insight. Consider a learning experience and an opportunity for self-reflection. 3. What do you want to be known as? (e.g., the person who does X) What are the key traits you want people to associate with you? For example, do you want to be known as the ‘one-step marketing solutions’ expert? Or perhaps your reputation is for ’10-minute sales guru or ‘compassion-based coaching’. Brainstorm different possibilities based on the people you want to appeal to as well as your own strengths. Your natural skills, talent and extraordinary gifts are your first clue. Another way to think about it, imagine, two people are talking and one says, “I am in desperate need of (insert your thing here!)” And the other says, Oh I know! You absolutely must call, (insert your name here) because she is the go-to person for
! Fill in the blank. What are you the go-to
person for? You are the leader in this arena. When you are doing this thing, you get in a zone. You are on FIRE and no one can touch you with a ten-foot pole! It’s inspires you. It motivates you. It
excites you. You would do it for free if money were not a factor. You absolutely love it and want to share it with the world. Sit still for a bit. Sit in silence and allow your gifts and talents come to you. As you reflect, answer the above questions. Soon you will be confident that you for sure can be a leader in
or doing
. 4. What’s your story? Why do you do what you do? Write down some of the details of your background that have impacted your life. Is there a good story, which you can use as part of your brand? Of course, it is. We all have one. Whether it’s an integral part of your brand or not, people will always want to know your story, they want to identify with you. Think about the journey to your current space. Your obstacles, your challenges, your persistence, your determination, your fear, your faith…each of these elements is what a good story makes. Share openly how you arrived at your current state. Not only will you inspire others; but also some or all parts of your story will undoubtedly resonate with your ideal buyer. When this happens, you have created brand loyalty. 5. What’s your style? (e.g., casual, professional, grunge, etc.) Write down the specifics of your current style. For example, do you tend to be more casual or professional? Are you more of a 60’s throwback or a futuristic trend-setter? Are you predominately Forever 21 or Banana Republic? At the same time, note which of these style elements would most appeal to your target market. Your style may not be a direct reflection of your target market. For example, I tend to be very closely identified with the style of Tory Burch, Land’s End, Soma, Kate Spade, Burberry, Chanel and Nordstrom. Yet, many of my peers and members of my tribe are very like me preferring a chic, sophisticated image; they do tend to lean more toward the trendy side.
They prefer to be fashionable in the styling of Gucci, Michael Kors, Juicy Couture, Prada, True Religion and BCBG. Although I wear items from each of those brands, I tend to be less about staying up-to-date with the latest but rather have timeless classic pieces. I give this illustration to make the point, my communication, marketing and public relations each must speak to the importance of beauty and image in their lives. I must make a note of this in my language, graphics and presentations. If I ignore that critical part of their identity, they will no doubt tune me out and ignore me. I am in business to serve them, not meet my own needs. I must get my needs met with another service provider who has me in their target market. Think about your preference and that of your target market, Capitalize on the similar. 6. The skills you want people to know you have (natural, valuable talents) Make a list of the skills your think are most important to the target market for your personal brand. These should include the natural talents that would provide the biggest impact and value for your market, such as a keen problem-solving ability. If you work in branding and marketing, you are probably both creative and have a thing for studying human behavior. A systems engineer probably doesn’t rely on creativity so much to persuade their prospects. 7. Signature phrase or value proposition (just a few words): Do you have a signature phrase, value proposition or personal tag line? This would just be a few words. For example, the phrase “Elementary, my dear Watson” was Sherlock Holmes’ signature catchphrase. One of Steve Jobs’ famous lines was, “Design is not just what it looks like and feels like. Design is how it works.” You may not become as famous as Steve Jobs, but you should have a short phrase that describes you and the essence of your service. 8. What’s unique about you? Finally, brainstorm all the different ways that you are unique from others in your market. What makes you stand out? If you’re not sure, go back to what other people have said about you. You can also think about ways that you would like to be unique, even if you aren’t right now.
Part C: Define Your Brand 1. Your story What is your background story? What are some of the key events in your life that have made you who you are today? What are some of your key accomplishments or turning points in your life that you want to share with others? 2. Personal Values What are your most important personal values? Some sample values could be around seeing the best in all people, laughing about something every day, learning something new every day, striving for excellence, helping others be their best etc. List your top 5. 3. Personal brand statement (state who you are in 1 sentence) Write out your unique, personal brand statement in one sentence or phrase. This should reflect the element that defines you as a person. For example, Helen of Troy was, “The Face That Launched a Thousand Ships”. 4. Your USP - unique value proposition (how you uniquely provide value to your market) Now write out a short sentence or two that describes how you provide value to your market in a unique way, different from others in your market. For example, Scott Tousignant’s value proposition is, “I lead by example and encourage others to sculpt their body into a work of art while living their life to their fullest potential.” 5. Mission (why you do what you do) Your mission statement tells the world a little bit more about why you do what you do. It’s not your story. Instead, it combines the elements of your personal values, brand, and value proposition all into one statement that describes your personal mission for your life. This doesn’t have to be about your whole life. If you are developing a personal brand primarily around your business, then your personal mission statement can be focused more on those aspects.
WORKSHEET: CREATING YOUR PERSONALBRAND
PART A: INSPIRATION
1. PEOPLE YOU ADMIRE IN YOUR INDUSTRY:
2. WHAT ARE THE CHARACTERISTICS OF THEIR PERSONAL BRAND? (E.G., BACKGROUND STORY, SIGNATURE PHRASE, NICKNAME, STYLE, ETC.)
3. WHERE ARE THEY SEEN MOST OFTEN? (ONLINE SITES, OFFLINE, SEMINARS, ETC.)
4. WHAT DO YOU ADMIRE ABOUT THEM?
5. WHAT MAKES THEM UNIQUE?
PART B. BRAINSTORM YOUR BRAND WHO ARE THE PEOPLE YOU WANT TO APPEAL TO? (CHARACTERISTICS)
HOW DO OTHER PEOPLE SEE YOU NOW?
WHAT DO YOU WANT TO BE KNOWN AS? (E.G., THE PERSON WHO DOES X)
WHAT’S YOUR STORY? (E.G., WHY YOU DO WHAT YOU DO)
WHAT’S YOUR STYLE? (E.G., CASUAL, PROFESSIONAL, GRUNGE, ETC.)
THE SKILLS YOU WANT PEOPLE TO KNOW YOU HAVE (NATURAL, VALUABLE TALENTS)
SIGNATURE PHRASE OR VALUE PROPOSITION (JUST A FEW WORDS):
WHAT’S UNIQUE ABOUT YOU?
DEFINE YOUR BRAND
YOUR STORY
PERSONAL VALUES
PERSONAL BRAND STATEMENT (STATE WHO YOU ARE IN 1 SENTENCE)
YOUR UNIQUE VALUE PROPOSITION (HOW YOU UNIQUELY PROVIDE VALUE TO YOUR MARKET)
MISSION (WHY YOU DO WHAT YOU DO)
1. Marketing mix refers to the process of value exchange that is facilitated by the 4P's. It is the foundation model for business. 2. 4P's was develop by a marketing expert named E. Jerome McCarthy 3. 4P's of Marketing mix refers to four broad levels of marketing decision 4. Product, Price, Place and Promotion are the 4-broad level of marketing mix decisions 5. 7P's model is a marketing model that modifies the 4P's model. 6. People, Process and Physical evidence are the 3 added marketing mix decision. 7. A brand is a name, term, design, symbol, or any other features that identifies one seller's good or service as distinction from those of other sellers.