Recognize and

Understand the
Market
Lesson 3
What is Unique Selling Proposition (USP) and
Value Proposition (VP)? This part allows the
entrepreneur to prepare himself on how to
advertise and sell his product even if it is similar
to others. In this lesson, you will find out the
answers and understand more about the market.
Value Proposition (VP) - is a business or
marketing statement that summarizes why a
consumer should buy a company's product or
use its service. This statement is often used to
convince a customer to purchase a particular
product or service to add a form of value to their
lives. In creating Value Proposition,
entrepreneurs will consider the basic elements:
There are many competitors in the market who
establish superiority over other entrepreneurs.
Entrepreneurs should think of other
alternatives to make their products better. An
important aspect in Value Proposition is that it
must be truthful and that it should establish
credibility to the consumers.
Example: Potential value proposition is most
common in small businesses of your locality.
Aling Charing Sari-Sari Store opens only from
6:00 am to 6:00 pm, but Aling Charing noticed
that there are customers who go to a nearby town
to look for a convenience store at around 10:00
pm to 6:00 am. She believes that this is a great
opportunity for her store to operate 24/7. In this
example, the proposed value proposition is:
“Charing sari-sari Store, open 24/7”.
The business describes a sari-sari store – a basic
retail store. The assurance from this value
proposition is because of the phrase “open 24/7”,
Aling Charing’s sari-sari store opens 24/7, which
makes it different from other competitors.
Unique Selling Proposition (USP) – refers to
how you sell your product or services to your
customer. You will address the wants and desires
of your customers
As an entrepreneur, you should think of
marketing concepts that persuade your target
customers. You may ask the following questions
in doing this:
What do the customers want?
What brand does well?
What does your competitor sell well?
Some tips for the entrepreneur on how to create
an effective unique selling proposition to the
target customers are:
 Identify and rank the uniqueness of the
product or services character
 Be very Specific
 Keep it Short and Simple (KISS)
As an entrepreneur, present the best feature of your
product or service that is different from other
competitors. Identifying the unique selling
proposition requires marketing research that you will
learn from the other modules. In promoting your
products or services, make sure that it is very
specific and put details that emphasize the
differentiator against the competitors. Keep it
short and simple and think of a tagline that is easy to
remember. Right now, the proposed unique selling
proposition is: “Charing sari-sari store, open 24/7”
Readers get confused between value proposition
and unique selling proposition.
The two propositions are used to differentiate the
products from competitors.
For example, Jollibee is known to have a
Filipino taste burger. This brand has a unique
selling point because of its tagline “Langhap
Sarap”
The two propositions are valuable for the
entrepreneurs.
Make sure that you're focusing on a solution that
is a need, and make sure that you are targeting
a customer segment that's large enough and
cares enough about your solution so that you
can build a viable business.
Understanding your market is critical in building
your business model. There are three factors that
will determine your customers.
A. Target Market
B. Customer Requirements
C. Market Size
A. Target Market
-Market Targeting is a sage in market identification
process that aims to determine the buyers with
common needs and characteristics.
In targeting a specific market, it will exclude people
if it will not fit your criteria. Rather, target marketing
allows you to focus your marketing money and brand
message on a specific market that is more likely to
buy from you than other markets. Choose a product
that is more affordable, efficient, and effective to
reach potential clients and generate business.
Commonly used methods for segmenting the markets
are follows.:
1. Geographic segmentation – the total market is
divided according to geographical
location.
 Variables to consider
a. Climate
b. Dominant ethnic group
c. Culture
2. Demographic Segmentation – divided based on
consumers
 Variables to consider
a. Gender
b. Age
c. Income
d. Occupation
e. Education
f. Religion
g. Ethnic group
3. Psychological Segmentation – divided in terms of
how customers think and believe
 Variables to consider
a. Needs and wants
b. Attitudes
c. Social class
d. Personality traits
e. Knowledge and awareness
f. Brand concept
4. Behavioral Segmentation – divided according to
customers’ behavior pattern as they interact with a
company.
 Variables to consider
a. Perceptions
b. Knowledge
c. Reaction
d. Benefits
e. Loyalty
B. Customer Requirements
Customer requirements are the specific
characteristics that the customers need from a
product or a service.
There can be two types of customer
requirements:
1. Service Requirement
2. Output Requirement
Service Requirement:
An intangible thing or product that cannot be
touched but the customer can feel the
fulfillment. There are elements in service
requirement like on-time delivery, service with a
smile, easy-payment etc. It includes all aspects of
how a customer expects to be treated while
purchasing a product and how easy the buying
process goes.
Output Requirements:
Tangible thing or things that can be seen.
Characteristic specifications that a consumer
expects to be fulfilled in the product. Costumers
will avail services as a product, then various
service requirements can take the form of output
requirements. For example, if the consumer hires
a multi cab, then on-time arrival becomes an
output requirement. Customer buys gadgets
(phone speaker) the specification like the loudness
C. Market Size
The entrepreneur’s most critical task is to
calculate the market size, and the potential value
that market has for their start-up business.
Market research will determine the
entrepreneurs’ possible customers in one locality.
What is Market Size?
Market size is like a size of the arena where the
entrepreneurs will play their business. It is the
approximate number of sellers and buyers in a
particular market. Companies are interested in
knowing the market size before launching a
new product or service in the area. In
determining the market size, the entrepreneur
will conduct a strategic marketing research from
reliable sources using the following method.
The first step is to estimate the potential market –
approximate number of customers that will buy the
product or avail your services.
The second step is to estimate the customers who
probably dislike to buy your product or avail the
services.
The third step is for the entrepreneur to estimate the
market share, that means plotting and calculating of the
competitor’s market share to determine the portion of the
new venture.
Market size becomes the most important factor if you
As an entrepreneur, you are planning to have a business.
Using the
following guide questions, answer them so you can now
start drafting your
business plan.
1. What product do you want to sell?
2. How will you apply the concept of value proposition
and unique selling
proposition?
3. What is the best tagline of your chosen product?
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