RECOGNIZE A

POTENTIAL
MARKET
In this module, you will know the following:

• Associate the market problem to be

solved or the market need to be met;
• Look for solution/s in terms of
product/s and service/s that will
meet the need using techniques on
seeking, screening, and seizing
opportunities:
• Break down the market needs;
• Detect the possible product/s or
service/s that will meet the need
of your locality.
• Screen the proposed solution/s
based on viability, profitability,
and customer need in developing
a Business Plan.
• Choose the best product or
service that will meet the market
needs.
Entrepreneurial Ideas
 Identification
Creation of of Opening of
entrepreneur entrepreneur entrepreneur
ial ial ial
Ideas Opportunitie Venture
s

Figure 1. The Entrepreneurial Process of Creating New Venture

(Aduana, 2017)
 Essentials in Entrepreneur’s Opportunity
Seeking

Entrepreneurial mind frame

• This allows the entrepreneur to see
things in a very positive and
optimistic way in the midst of
difficult situation. Being a risk -
taker, an entrepreneur can find
solution when problems arise.
Entrepreneurial heart flame
Entrepreneur's driven passion,
they are attracted to discover
satisfaction in the act and process
of discovery. Passion is the great
desire of an entrepreneur to
achieve his/her goals.
Entrepreneurial gut game
This refers to the ability of the
entrepreneur of being intuitive. This
also known as intuition. The gut game
also means confidence in one’s self
and the firm believes that everything
you aspire can be reached.
 Sources of Opportunities
1. Changes in the environment

External environment refers

to the physical environment,
societal environment, and
industry environment where
the business operates.
1.1 The physical environment includes
a. Climate- the weather conditions.
b. Natural resources- such as minerals,
forests, water, and fertile land that
occur in nature and can be used for
economic gain.
c. Wildlife- includes all mammals,
birds, reptiles, fish, etc., that live in the
wild.
1.2 The Societal environment includes
the various forces like
a. Political forces- includes all the
laws, rules, and regulations that
govern business practices as
well as the permits, approvals, and
licenses necessary to operate the
business.
 b. Economic forces- such as income
level and employment rate.
c. Sociocultural forces- customs,
lifestyles and values that characterize a
society.
d. Technological environment- New
inventions and technology innovations.
1.3 The industry environment of the
business includes:
a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
f. Suppliers
3. Government’s thrust, programs,
and policies
• The priorities, projects, programs, and
policies of the government are also good
sources of ideas.
For example, the use of firecrackers to celebrate New Year’s Eve
is strictly prohibited. People without entrepreneurial interest will
view the ordinance as a plain restriction. However, for an
entrepreneur, it is a business opportunity to come up with a
new product that will serve as a substitute for firecrackers.
4. People’s interest
The interest, hobbies, and preferences
of people are rich source of
entrepreneurial ideas. Like the
increasing number of Internet Café at
present could be lead to the strong
attachment of young people to
computers.
5. Past experiences
• The expertise and skills developed by a
person who has worked in a particular field
may lead to the opening of related business
enterprise.
For example an accountant who has learned the
appropriate accounting and management skills and
techniques in a prominent accounting firm can start
his/her business venture by opening his/her own
 Forces of Competition Model

It is also known as the “five forces

of competition,” An industry
environment is a competitive
environment. Regardless of what
product or services you have,
competition is always present.
Competition – it is the act or
process of trying to get or win
something.
For example, the prices are lower
when there is a competition among
the stores.
These are the five forces competing
within the industry:
• Buyers
• Potential new entrants
• Rivalry among existing firms
• Substitute products
• Supplier
 1. Buyers

The buyers are the one that

pays cash in exchange to
your goods and services.
For example, the influenced of the
price or in the bargaining strategy.
The buyer has a strong and magnified
bargaining power. The threat of its
bargaining power will be less if the
following factors notice:
a. There are several suppliers available in
the market.
b. The buyer has the potential for backward
integration.
c. The cost of switching the supplier
cost is minimal.
d. The product represents a high
percentage of the buyer’s cost.
e. The buyer purchases large portions
of the seller’s product or services.
 2. Potential New Entrants

A new entrant is defined as the one

who enters something.
For example, the level of capital
requirements, if the business requires huge
capital, new entrants should decline to join
the business. This gives a threat to the
business.
This can be notice if there is the presence of
the following factors:
a. Substantial capital requirement.
b. Strict government policy.
c. Difficulty in accessing distribution
channels.
d. Economies of scale.
e. High cost of product differentiation.
 3. Rivalry among Existing Firms

Rivalry is a state or situation in

which people or groups are
competing with each other.
For example it depends on the Marketing
strategy of your competitor, like giving
freebies and special offers.
.
The intensity of rivalry among existing firms
is characterized to the following factors:
a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or
services.
d. Increased capacity.
e. Amount of fixed costs.
 4. Substitute Products

Substitute means anything that

takes the place or function of
another.
For example the consumers decide to use
margarine as a substitute for butter. In case
the price of butter increases, preferably the
consumer will gradually switch to
margarine.
A substitute product can give a big threat in
the industry environment if the following
factors are notice:
a. Switching cost is low.
b. Preferences and tastes of the customers
easily change.
c. Product differentiation is highly
noticeable
d. The quality of substitute products
 5. Suppliers

The Suppliers are the one that

provide something that is needed
or wanted.
For example if the supply and services being
offered is unstable or keep. The intensity of
the threat is strong in this kind of the
competitive force in the industry.
This can be notice if there is the presence of
the following factors:
a. The supplier has the ability for forward
integration.
b. Suppliers in the industry are few, but the
sales volume is high.
c. Substitute products are not readily
available in the market
d. The switching cost is very high.
 Definition of Terms
Opportunity seeking - Process of
considering, evaluating, and pursuing
market based activities that are
accepted to be beneficial for the
business.
Entrepreneurial process - can be
defined as the steps taken in order to
begin a new enterprise. It is a step-by-
Entrepreneurial ideas - an innovative
concept that can be used for financial gain
that is usually centered on a product or
service that can be offered for money.
Essentials of entrepreneur’s
opportunity seeking - These are the
basic foundation that the entrepreneur
must have in seeking opportunities, such as
entrepreneurial mind frame, heart flame
Sources of opportunity - can be attain by
assessing and looking at changes in the
environment; technological discovery and
advancement; government’s thrust,
programs, and policies; people’s interest,
and past experiences.
External environment - refers to the
physical environment, societal environment,
and industry where the business operates.
Government - refers to the local
government (municipality, city, or
provincial) or the national government
and its branches.
Competition – it is the act or process
of trying to get or win something.
Substitute – anything that takes
the place or function of another.
New entrants – the one who
enters something.
Suppliers – are the one that
provide something that is needed or
wanted.
Buyers – are the one that pays
cash in exchange to your goods
and services.
Rivalry – is a state or situation in
which people or groups are
competing with each other.
ASSESSMENT
 PERFORMANCE TASK
Conduct a short interview of any successful
entrepreneur in your locality. Ask the following
question:
• What is the nature of your business?
• Who are your customers?
• What industry are you operating?
• How much was your starting capital?
• How many years in operation?
• How many manpower involved from the start of
operation until now?
Great job! You have completed Module 2.

Learn more about Recognizing and

Understanding the Market in Module 3.
Thank You!