ENVIRONMENT AND MARKET

TLE_EM9-12-I0-1
 Aspiring entrepreneur need to explore the
economic, cultural, and social conditions prevailing in
an area. Needs and wants of the people in a certain
area that are not met may be considered business
opportunities. Identifying the needs of the community,
its resources, available raw materials, skills, and
appropriate technology can help a new entrepreneur
seize business opportunities.
 To be successful in any kind of business venture,
potential entrepreneurs should look closely at the
environment and market. They should always be
watchful of existing opportunities and constraints, and
to take calculated risks. The opportunities in the
business environment are factors that provide
possibilities for a business to expand and make more
profit. Constraints, on the other hand, are factors that
limit business growth, hence reduce the chance of
generating profit. One of the best ways to evaluate
opportunities and constraints is to conduct a Strengths,
Weaknesses, Opportunities and Threats (SWOT)
Analysis.
 SWOT Analysis is a managerial tool used to
assess the environment. It is used to gather important
information which is then used in strategic planning.
Strengths and weaknesses are internal in an
organization. They relate to resources owned by an
organization that you have control over and also the
extent of its marketing.
 Opportunities and threats exist in the external
environment. Opportunities relate to the market, new
technologies, and the external factors such as
government policies, climate, and trends. Threats
replace what the competitors are doing. It also includes
legal and other constraints.
 Now that you have read some important
considerations to explore to be successful in any
business, you are now ready to explore more about the
environment and market.
To begin with, let’s find out the competencies
that you will master as you finish this module.
Pre-Assessment (Multiple Choice)
DIRECTIONS: Choose the letter of the best
answer. Write your answer on a separate sheet
of paper.
1. It is generated by examining the goods and services sold in the community.
A. business creation C. business concept
B. business pricing D. business idea
2. It is a process of making new products which will be sold to the customers.
A. product analysis C. product development
B. product conceptualization D. product implementation
3. These are luxuries, advantages and desires that every individual considers
beyond necessary.
A. wants C. requirements
B. desires D. needs
4. It is a factor or consideration presented by a seller as the reason that a product
or service is different from and better than that of the competition.
A. unique selling plan C. unique pricing policy
B. unique selling proposition D. finding value-added
5. A stage in which the needs of the target market are identified, reviewed, and
evaluated.
A. concept development C. project development
B. economic analysis D. refine specification
6. It is the introduction of new ideas to make the product and services more
attractive and saleable to the target customers.
A. new idea C. product development
B. creativity D. innovation
7. It is a managerial tool used to assess the environment and to gather important
information that can be used for strategic planning.
A. scanning C. WOTS Analysis
B. SWOT Analysis D. survey analysis
8. It is creating names, symbol, or designs that identifies and differentiates a
product from the other products.
A. product naming C. branding
B. unique selling proposition D. tagline
9. It is a meaningful and unforgettable statement that captures the essence of the
brand.
A. product naming C. branding
B. unique selling proposition D. tagline
10. These are things that people cannot live without.
A. wants C. requirements
B. desires D. needs
 Guide Questions
Directions: Read and study the guide questions
below. Use a separate sheet of paper to write
your answer.
1. How does one determine the product or services to be produced
and/or to be provided to the target customers?
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2. How does one select an entrepreneurial activity?
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3. When can one say that a certain product has “value?”
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4. Does applying creativity to your product or services important?
Why?
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5. How can one effectively respond to the needs of the target
customer?
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6. From the viewpoint of business owner, discuss the importance of
scanning the environment and market in generating business ideas.
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7. Using self-assessment, explain the level of your confidence in
formulating a business idea.
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The process of product
development follows the
following stages:
1. Identify customer needs: Using survey forms, interviews, researches, focus group
discussions, and observations, an entrepreneur can easily identify customers’ needs
and wants. In this stage, the information that can be possibly gathered are product
specifications (performance, taste, size, color, shape, life span of the product, etc.).
This stage is very important because it would determine the product to be produced
or provided.

2. Establish target specifications: Based on customers' needs and reviews of

competitive products, you can now establish target specifications of the prospective
new product and/or services. A target specification is essentially a wish-list.

3. Analyze competitive products: It is imperative to analyze existing competitive

products to provide important information in establishing product or service
specifications. Other products may exhibit successful design attributes that should be
emulated or improved upon in the new product or service.

4. Generate product concepts: After having gone through with the previous processes,
you may now develop a number of product concepts to illustrate the types of products
or services that are technically feasible and will best meet the requirements of the
target specifications. .
5. Select a product concept: Through the process of evaluation between attributes, a
final concept is selected. After the final selection, additional market research can be
applied to obtain feedback from certain key customers.

6. Refine product specifications: In this stage, product or services specifications are

refined on the basis of input from the foregoing activities. Final specifications are the
result of extensive study, expected service life, projected selling price among others
are being considered in this stage.

7. Perform economic analysis: Throughout the process of product development, it is

very important to always review and estimate the economic implications regarding
development expenses, manufacturing costs, and selling price of the product or
services to be offered or provided.

8. Plan the remaining development project: In this final stage of concept

development, you can prepare a detailed development plan which includes list of
activities, necessary resources and expenses, and development schedule with
milestones for tracking progress.
Finding Value
 People buy for a reason. There should be
something in your product or service that would give
consumers a good reason to go back and buy more. There
must be something that will make you the best option for
target customers; otherwise, they have no reason to buy
what you are selling. This implies further, that you offer
something to your customers that will make them value
your product or service.

The value you incorporate in your product is called

value proposition. Value proposition is a believable
collection of the most persuasive reasons why people
should notice you and take the action you’re asking for. It
is what gets people moving, what makes people spend
for your product or service.
Innovation
 Innovation is the introduction of
something new in your product or service. This
may be a new idea, a new method, or a new
device. If you want to increase your sales and
profit, you must innovate. Some of the possible
innovations for your products are change of
packaging, improvement of taste, color, size,
shape, and perhaps price. Some of the possible
innovations in providing services are application
of new and improved methods, additional
featured services, and possibly freebies.
Unique Selling Proposition (USP)
 Unique Selling Proposition is the factor or
consideration presented by a seller as the reason
that one product or service is different from and
better than that of the competition. Before you can
begin to sell your product or service to your target
customers, you have to sell yourself in it. This is
especially important when your product or service
is similar to your competitors.
USP requires careful analysis of other
businesses' ads and marketing messages. If you
analyze what they say or what they sell, not just
their product or service characteristics, you can
learn a great deal about how companies distinguish
themselves from competitors.
Here's how to discover your USP and how to use it to increase your sales and
profit:
Use empathy: Put yourself in the shoes of your customers. Always focus on
the needs of the target customers and forget falling in love with your own
product or service. Always remember, you are making/providing this product
not for yourself but for the target customers to eventually increase sales and
earn profit. Essential question such as what could make them come back and
ignore competition, should be asked to oneself. Most possible answers may
be focused on quality, availability, convenience, cleanliness, and reliability of
the product or service.

Identify customer’s desires. It is very important for you to understand and

find out what drives and motivates your customers to buy your product or
service. Make some effort to find out, analyze and utilize the information that
motivates the customers in their decision to purchase the product or service.

Discover customer’s genuine reasons for buying the product. Information is

very important in decision making. A competitive entrepreneur always
improve their products or services to provide satisfaction and of course
retention of customers. As your business grows, you should always consider
the process of asking your customers important information and questions
that you can use to improve your product or service.
 Agreement
Directions: Select a successful entrepreneur or
practitioner. Conduct an interview using the set
of questions below. Document the interview and
present it to the class. Use a separate sheet of
paper.
1. How did you identify your customers?
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2. What were your considerations in selecting your customers?
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3. Explain how your product or service became unique to other
products.
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4. Did you consult somebody before you engaged in this business? Cite
/ give sample insights that you gained from the consultation.
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5. What were your preparations before you started the actual
business?
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6. What creative and innovative techniques did you adapt in the
development of your product or service? What was the effect of the
innovative techniques to the sales and profits of your business?
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7. What strategy did you consider to create a unique selling
proposition to your product or service?
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 Assignment
Directions: To deepen your understanding of the
lesson, perform the following tasks:
1. Browse the internet and view the topics related to:
a. customers’ needs and wants
b. techniques in identifying customers’ needs and wants
c. creativity or innovations in products and services
d. unique selling proposition
e. product development

2. Prepare a short narrative report about these topics and

discuss it to the class. You can highlight the aspect that
intensifies your knowledge of product development.
 Product Conceptualization
Directions: In a separate sheet of paper or in
your notebook. Develop your own concept of
your product or service by using the figures on
this page. Use bullets in every stage of product
conceptualization in listing important key ideas.
 Generating Ideas for Business
The process of developing and generating a
business idea is not a simple process. Some people come
up with a bunch of business ideas that are not really
feasible. There are two problems that arise; first is the
excessive generation of ideas that can forever remain as a
dreaming stage and the second is when they don’t have
ideas and don’t want to become entrepreneurs.
The most optimal way is to have a systematic
approach in generating and selecting a business idea that
can be transformed into a real business. Here are some
basic yet very important considerations that can be used
to generate possible ideas for business:
1. Examine existing goods and services. Are you satisfied
with the product? What do other people who use the
product say about it? How can it be improved? There are
many ways of improving a product from the way it is
made to the way it is packed and sold. You can also
improve the materials used in crafting the product. In
addition, you can introduce new ways of using the
product, making it more useful and adaptable to the
customers’ many needs. When you are improving the
product or enhancing it, you are doing an innovation. You
can also do an invention by introducing an entirely new
product to replace the old one.
Business ideas may also be generated by examining
what goods and services are sold outside the community.
Very often, these products are sold in a form that can still
be enhanced or improved.
2. Examine the present and future needs. Look
and listen to what the customers, institutions,
and communities are missing in terms of goods
and services. Sometimes, these needs are
already obvious and identified right away. Other
needs are not that obvious because they can
only be identified later on, in the event of
certain development in the community. For
example, a province will have its electrification
facility in the next six months. Only by that time
will the entrepreneur could think of electrically-
powered or generated business such as photo
copying, computer service, digital printing, etc.
3. Examine how the needs are being satisfied. Needs for
the products and services are referred to as market
demand. To satisfy these needs is to supply the products
and services that meet the demands of the market. The
term market refers to whoever will use or buy the
products or services, and these may be people or
institutions such as other businesses, establishments,
organizations, or government agencies.
There is a very good business opportunity when
there is absolutely no supply to a pressing market
demand.
Businesses or industries in the locality also have
needs for goods and services. Their needs for raw
materials, maintenance, and other services such as selling
and distribution are good sources of ideas for business.
4. Examine the available resources. Observe what materials or skills
are available in abundance in your area. A business can be started out
of available raw materials by selling them in raw form and by
processing and manufacturing them into finished products. For
example, in a copra-producing town, there will be many coconut husks
and shells available as “waste” products. These can be collected and
made into coco rags or doormats and charcoal bricks and sold
profitably outside the community.
A group of people in your neighborhood may have some
special skills that can be harnessed for business. For example, women
in the Mountain Province possess loom weaving skills that have been
passed on from one generation to another. Some communities set up
weaving businesses to produce blankets, decorative, and various
souvenir items for sale to tourists and lowlanders.
Business ideas can come from your own skills. The work and
experience you may have in agricultural arts, industrial arts, home
economics, or ICT classes will provide you with business opportunities
to acquire the needed skills which will earn you extra income should
you decide to engage in income-generating activities. With your skills,
you may also tinker around with various things in your spare time.
Many products are invented this way.
5. Read magazines, news articles, and other
publications on new products and techniques
or advances in technology. You can pick up new
business ideas from magazines such as
Newsweek, Reader’s Digest, Business
Magazines, “Go Negosyo”, Know About Business
(KAB) materials, and Small-Industry Journal. The
Internet also serves as a library where you may
browse and surf on possible businesses. It will
also guide you on how to put the right product
in the right place, at the right price, and at the
right time.
Key Concepts of Selecting a Business Idea

Once you have identified business opportunities,

you will eventually see that there are many possibilities
available for you. It is very unlikely that you will have
enough resources to pursue all of them at once.
You have to select the most promising one among
hundreds of ideas. It will be good to do this in stages. In
the first stage, you screen your ideas to narrow them
down to about few choices. In the next stage, trim down
the choices to two options. In the final stage, choose
between the two and decide which business idea is worth
pursuing.
In screening your ideas, examine each one
in terms of the following guide questions:
1. How much capital is needed to put up the business?
2. Where should the business be located?
3. How big is the demand for the product? Do many
people need this product and will continue to need it for
a long time?
4. How is the demand met? Who are processing the
products to meet the needs (competition or demand)?
How much of the need is now being met (supply)?
5. Do you have the background and experiences needed
to run this particular business?
6. Will the business be legal and not against any existing
or foreseeable government regulation?
7. Is the business in line with your interest and expertise?
 Branding
Branding is a marketing practice of creating a
name, a symbol or design that identifies and
differentiates product or services from the rest. It is also a
promise to your customers. It tells them what they can
expect from your product or service and it differentiates
your offerings from other competitors. Your brand is
derived from who you are, who you want to be and what
people perceive you to be.
Branding is one of the most important aspects in
any business. An effective brand strategy gives you a
major edge in increasingly competitive markets.
A good product can:
- deliver message clearly,
- confirm credibility,
- connect to target prospect,
- motivate buyers, and
- concretize user loyalty.
Here are simple tips to publicize your brand:
• Develop a tagline. Write a statement that is meaningful,
impressive, and easy to remember to capture the essence
of your brand.

• Design a logo. Create a logo symbolic of your business and

consistent with your tagline and displace it strategically.

• Write a brand message. Select a key message to

communicate about your brand.

• Sustain a brand quality. Deliver a promise of quality

through your brand.

• Practice consistency. Be reliable and consistent to what

your brand means in your business.
 In generating a business idea, you should first identify the type of business
suited to your business idea. You should analyze and scan the potential environment,
study the marketing practices and strategies of your competitors, analyze strengths,
weaknesses, opportunities, and threats in your environment to ensure that the
products or services you are planning to offer will be patronized and within easy reach
of target consumers.

How to conduct SWOT Analysis:

• Be realistic about the strengths and weaknesses of your business when conducting
SWOT Analysis.

• SWOT Analysis should distinguish between where your business is today, and
where it can be in the future.

• SWOT Analysis should always be specific. Avoid any gray areas.

• Always apply SWOT Analysis in relation to your competition, i.e. better than or
worse than your competition.

• Keep your SWOT Analysis short and simple. Avoid complexity and over analysis.

• SWOT Analysis is subjective.

 SWOT Analysis
Directions: In a separate sheet of paper or in
your notebook list down all your observations
for your business idea. Categorize your
observations according to strengths, weakness,
opportunities and treats. After carefully listing
them down, use the stated strategies to come
up with a sound analysis, activities and best
business idea.
Strategies:
• SW - Maximize on the Strengths to overcome the
internal Weakness.
• OW - Capitalize on the Opportunities to eliminate
the internal Weakness.
• ST - Maximize on your Strengths to eliminate the
external Threats.
• OT - Take advantage of the available
Opportunities to eliminate the external Threats.
Analysis:
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Activities:
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My Best Business Idea:
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 Extra Reading and Video Viewing
Reading books and watching videos have been
considered as some of the most effective educational
activities that can help learners broaden their understanding
on a certain topic. In this particular task, you will be asked to
conduct extra reading and video viewing on the Internet with
the following topics:
A. Steps in selecting a business idea
B. Criteria of a viable business idea
C. Benefits of a good brand
D. Ways on developing a brand

After successfully performing the assigned task, make a

narrative report about it and share it with the class.
 Designing a Logo
Directions: In a separate sheet of paper or in
your notebook draw a logo that you will use in
your business. Provide a simple statement to
describe your logo.
 Making My Own Vicinity Map
Directions: In a separate sheet of paper or in
your notebook draw a vicinity map reflective of
potential market in Computer Hardware
Servicing in your province. Provide a simple
statement to describe your map.