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Academic Year 2025-2026

COLLEGE OF ENGINEERING AND COMPUTER STUDIES

EngSci 328
Technopreneurs
hip

Schedule/Time:
Room :
Class Code :
Consultation Schedule: W- 1 p.m. – 3:00 p.m.

Teacher’Information: 09675429504
Name: Engr. Yeneza S. Dormitorio Yeneza Dormitorio

solibio_yeneza@[Link]
 PRELIM
Introduction to

Objectives:
At the end of this lesson the students can be able to:
1. Focus on creating value for clients and stakeholders through their projects and services.
2. Think outside the box and develop innovative solutions to complex engineering challenges.
3. Recognize unmet needs and potential business opportunities.
4. Design platforms and services with flexible, cloud-based infrastructure to accommodate user
growth and data volume
5. Build network effects and viral marketing strategies to organically reach new users and expand
user base.
6. Describe the technopreneurship and entrepreneurship, cyberpreneurship
7. Explain the importance of technoprenuership
8. Discuss the characteristics of the technopreneur and entrepreneur
9. Identify difference between technopreneur and entrepreneur

technopreneurship
Introduction
Technopreneurship is, by a large part, still entrepreneurship. The difference is that
technopreneurship is more involved in delivering innovative hi-tech, value added products and the
creation scalable business ventures. It is the practice of consistently converting good ideas into
profitable commercial business ventures. Through its courses, it inculcates amongst students the
philosophy of technopreneurship and develops values responsible for a mind-set shift from the
traditional expectation of employment by government, industry and commerce. Under the
Technopreneurship ethos, graduates are capacitated to start innovative and high tech enterprises
that address key macro-economic objectives and make an impact on the national economy

WHO IS ENTREPRENEUR?
 An innovator or developer who recognizes and seizes opportunities
 Converts these opportunities into workable/marketable ideas
 Adds value through time, effort, money, or skills
 Assumes the risks of the competitive marketplace to implement this ideas.
 Realizes the rewards from these efforts.

WHAT IS ENTREPRENEURSHIP?
Entrepreneurship is the practice of embarking on a new business or reviving an existing business
by pooling together a bunch of resources in order to exploit new found opportunities

WHO IS TECHNOPRENEUR?
 An entrepreneur who uses cutting-edge technology to develop new business.
 Is an entrepreneur who involves himself in technological changes in producing goods and
services for his organization.
 They are entrepreneurs who used “technology” as their driven factor in transforming
resources into goods and services, creating an environment conducive to industrial growth”
 DEFINITION OF TECHNOPRENEURSHIP
1. Technology Developers are those who develop a unique technology capable of driving a
new business(inventors)
2. Technology Users are those who see a new technology development and understand how
it can be applied to meet market need.

GLOBAL TECHNOPRENEURS
 Bill Gates: Co-founder of Microsoft (1975), which revolutionized the personal computer
industry with software like MS-DOS and Windows.
 Steve Jobs: Co-founder of Apple (1976), instrumental in the development of the
personal computer, iPod, iPhone, and iPad.
 Jeff Bezos: Founder of Amazon (1994), who transformed e-commerce and cloud
computing.
 Elon Musk: Founder of Tesla (electric vehicles), SpaceX (space exploration), and The
Boring Company.
 Mark Zuckerberg: Co-founder of Facebook (2004), who led the rise of social media
networking.
 Larry Page and Sergey Brin: Co-founders of Google (1998), who revolutionized
internet search and digital advertising.
 Jack Dorsey: Co-founder of Twitter and Square.
 Kevin Systrom: Co-founder of Instagram.
 Evan Spiegel: Co-founder of Snapchat.
 Andrew Houston: Co-founder of Dropbox.
Nathan Blecharczyk: Co-founder of Airbnb.

Key Female Technopreneurs

 Weili Dai: Co-founder of Marvell Technology Group, a leader in the semiconductor
industry.
 Judy Faulkner: Founder and CEO of Epic Systems, a major electronic health record
software company.
 Hooi Ling Tan: Co-founder of Grab, a leading Southeast Asian ride-hailing and mobile
payments app.
 Arianna Huffington: Founder of The Huffington Post and Thrive Globa

PHILIPPINE TECHNOPRENEURS
 Diosdado "Dado" Banatao: Known for developing foundational PC technologies, including the
first single-chip 16-bit microprocessor-based calculator and the first Windows Graphics
Accelerator chip.
 Winston Damarillo: A leader in open-source software and cloud infrastructure (Exist Software
Labs, Morphlabs).
 Raymond Racaza: Co-founder of Xurpas Inc., a leading technology company specializing in
mobile consumer products and digital services.
 RJ David: Co-founder of [Link] (now [Link]), one of the top online classifieds platforms
in the Philippines.
 Orlando Vea: Founder of Smart Communications and a key figure in Philippine mobile
technology.
 Joey Gurango: A veteran in software development who worked at Apple and Microsoft before
starting his own ventures.
 Earl Martin Valencia: Co-founder of IdeaSpace Foundation, which supports tech startups.

DEFINITION OF TECHNOPRENEURSHIP
 It is simply entrepreneurship in a technology-intensive context
 It is a process of merging technology prowess and entrepreneurial talent and skills

 Technopreneurship is defined as the strategic process of using advanced technological

innovation as the core engine for a business venture. It is a fusion of "technology" and
"entrepreneurship.“

 While a traditional entrepreneur might open a restaurant or a retail store, a technopreneur

builds a business around a technological breakthrough or uses tech to disrupt a traditional
industry (like how Uber used an app to disrupt the taxi business).

EXAMPLES OF TECHNOPRENEURSHIP
E-commerce platforms:
Online stores selling products directly to consumers through websites.

Social media companies: Platforms that connect users and facilitate communication.
Ride-sharing services: Apps that connect passengers with drivers.

Streaming services: Platforms providing on-demand access to content.

Fintech companies: Businesses offering innovative financial services through
technology.
SIMILARITY BETWEEN TECHNOPRENEUR AND
ENTREPRENEUR
 Able to determine risk and has the courage to take risks.
 Independent and self-confident, yet knows where to get help
 Likes a challenge
 Hardworking and willing to stick with a project
 Not easily discouraged
 Robust, very energetic and can handle stress
 Has a strong sense of self-worth

DIFFERENCE BETWEEN TECHNOPRENEUR AND

ENTREPRENEUR

An Entrepreneur An Technopreneur
Likes to compete Likes to innovate
Is a self-starter or pioneer Is part of a team
Is able to do many things at once Is able to do many things at once, but
chooses to delegate
Is creative, and has dreams and goals Is innovative and has a greater vision
Likes to work for him or herself and be inLikes to be the one to control innovation
control and be part of an evolution
Is motivated by a strong desire toIs motivated by a strong vision and the
achieved and attain financial success passion to innovate
Focus his/her attention on the chance ofTakes failure in stride and knows it will
success rather than the possibility oflead success if correction can be made
failure

CHARACTERISTIC OF TECHNOPRENEUR
1. Leadership –This means that as a person, you serve as the spark to a bright idea and transform the
dream into a reality.
2. Flexibility - Technopreneurs know that not everything produces great results and adapt to such
circumstances easily.
3. Discipline - You need to structure your work so that you and everyone know their roles and
responsibilities. Great discipline within the business will help you find out and tackle problems that
arise with the venture.
4. Strategist - you need to be able to come up with unique products every time and have the magic to
push your products to the market and let consumers see the real value it can bring into their lives.
5. Focus - you must know how to prioritize your tasks and responsibilities. You should learn to drop
down distractions and focus on success oriented things.

KEY CHARACTERISTIC OF SUCCESSFUL TECHNOPRENEURS

 1. Entrepreneurs excel at identifying business opportunities and staying focused on opportunities,
not problems.
2. They learn from their mistakes.
3. They are action-oriented. They like to get things done and love to turn their ideas into reality.
4. They understand what it takes to succeed and often have a high physical stamina to carry them
through their lives and work.
5. Successful entrepreneurs seek outside help to supplement their expertise and their enthusiasm
attracts people to their ideas, especially employees, creditors, investors and partners.

ELEMENTS OF TECHNOPRENEURSHIP
1. Human Capital - the skill, capabilities, and knowledge of the firm's people.
2. Organizational Capital - the patents, technologies, processes, databases and networks.
3. Social Capital - The quality of the relationships with customers, suppliers and partners

ADVANTAGES OF ENTREPRENEURSHIP
1. Learning to See Possibilities Everywhere. An entrepreneur has to develop the skill and train his
or her mind to stay open and receptive to potential ideas and possibilities.
2. Defining Your Income. You create the relationship between your efforts and your income.
3. Flexibility in Your Schedule - an entrepreneur you can ditch the rigid schedule.
4. Enjoying Your Work - you can create your own schedule, it doesn’t necessarily mean there won’t
be long hours.
5. Learning to be in the Moment - you plan and schedule your day, set regular goals and work to
achieve them.

IMPORTANT ENTREPRENEURIAL TRAITS

 Self-Awareness Courage
 Self-Motivation Confidence
 Patience Risk-taking
 Decisiveness Hard work
 Experience Vision
 Knowledge Optimism
 Perseverance Creativity
 Drive resourcefulness
 Total commitment innovation
 Maturity Emotional Balance
 Integrity

ROLES OF AN ENTREPRENEUR
 Perceive opportunities in the environment
 Takes Risks
 Introduces innovations
 Organizes labor and production
 Makes decision
  Plans ahead
 Sells his products at a profit.

CATEGORIES OF AN ENTREPRENEUR
INTRAPRENEUR – he is an entrepreneur within an existing organization, referred as the corporate
entrepreneur.
SOLO SELF- EMPLOYED INDIVIDUAL – includes all agents, repairman, brokers, accountants and
physician who operate alone or with only few employees ad perform work personally.
DEALERS TO DEALERS – include highly knowledgeable businessmen engaged to various forms of
trades frequently, directly or indirectly related to their line of work.
Examples
A. Automotive Industry:
 Wholesale Auto Auctions – These companies specialize in facilitating the sale of
used vehicles between dealerships. They provide a platform where dealers can
buy and sell inventory.
 Auto Parts Wholesale Distributors - These businesses supply auto parts to
dealerships and repair shops. They act as intermediaries between
manufacturers and the businesses that need those parts
 Automotive Software Providers - Companies that develop and sell software
solutions for dealership management, inventory tracking, and customer
relationship management (CRM).
B. Construction Materials Suppliers - Companies that provide building materials like
lumber, concrete, and steel to construction companies. This is a classic example of
dealer-to-dealer, or business to business sales.
C. Food Distribution - Wholesale food distributors that supply restaurants, grocery
stores, and other food service businesses.
D. Technology Distribution - Companies that distribute computer hardware, software, and
other technology products to resellers and other businesses.
TEAM BUILDERS – individuals who go on building larger companies using hiring and delegation.
INDEPENDENT INNOVATORS –include persons who hit upon ideas for better products or services
and then create companies to develop, produce, and sell these products. PARTNER MULTIPLIERS-
entrepreneurs who spot an effective business patterns quite possibly originated by someone else,
and multiply it to realize profits.
ECONOMY OF SCALE EXPLOITERS- Entrepreneurs who locate their business in lower rent and tax
areas.
CAPITAL AGGREGATORS – Smart entrepreneur who use their experience and expertise in pooling a
group of financiers to engage in a business.
ACQUIRERS- Entrepreneurs who acquire businesses.
INDEPENDENT INVENTORS –They include pure inventors who really develop their own product or
invention and take care of marketing them.
BUY AND SELL ARTISTS – they include wise guys referred to as corporate raiders and brokers who
turn around, sell and liquidate.
OTHERS CATEGORIESD OF ENTREPRENEUR – Immigrant Entrepreneurs, corporate Castoffs,
Copreneurs, Cyber Entrepreneurs, Part Time entrepreneurs, Home-based Business Owners.
PROS AND CONS OF AN ENTREPRENEUR
PROS OF AN ENTREPRENEUR

1. Control Your Own Destiny - You certainly may not have control over all the cards you are dealt, but
you decide what you do with them. The worse the hand, the more amazing the win.
2. You Get to Do What You Love - You might not love every task and hour of the journey, but overall
you get to choose to work on something you love and care about.
3. Maximize Your Contribution - Freeing yourself from working for someone else means you really
get to maximize the impact you can have. When you make a huge contribution on a broad scale, in
turn, the rewards will show up in increasing your own income and wealth.
4. Leading Others - you can create a great legacy and leave your mark on the world as an
entrepreneur. More notably, you get to lead and inspire others by your example.
5. There’s Nothing You’ll Want to Do More - Whether you win or fail on your first or next venture,
the journey will be your own reward. You’ll be compelled to go at it again and again.

CONS OF AN ENTREPRENUER

1. You’re Responsible for Your Own Destiny - You’ll be responsible for your employees and their
retirement. You’ll be responsible for your impact on your customers.
2. Lack of a Road Map - You’re figuring out much of it as you go along on a daily basis. Your flashlight
lets you see just far enough ahead to take the next few steps.
3. it’s not going To Be Easy - Your start-up might be bought for hundreds of millions of dollars in the
next couple of years, but you need to buckle in and expect it to take the next 7 to 10 years to make
an overnight success story.
4. You have to create your own 401k Plan - You’re responsible for figuring out your own retirement
plan. Making the money, setting enough aside, and reinvesting it in other things for balance.
5. One Day You’ll Have to Say Goodbye - If things go well, one day you’ll have to sell your company or
free it to the public market. It’s going to be harder than you think.

SUMMARY OF VARIOUS ECONOMIES VIEW OF

ENTREPRENEURSHIP
ECONOMIST CONTRIBUTION

JEAN BAPTIST SAY (1800) Entrepreneurship refers to the shifting of economic Resources out of an area of
lower and into high Productivity and greater yield.

CARL MENGER (1871) Entrepreneurship involves obtaining information calculation, an act of will and
supervision.

JOSEPH SCHUMPETER (1910) Entrepreneurship is, in the essence, the finding and promoting new
combinations of productive factors.

HARVEY LIEBENSTEIN (1970) Entrepreneurship is the reduction of organizational Inefficiency.

ISRAEL KIRZNER (1975) Entrepreneurship is the identification of market arbitrage opportunities.

 ALBERT SHAPIRO (1957) Entrepreneurship involves a kind of behaviour that includes initiative taking,
organizing and recognizing social mechanism to turn resources and situations
to practical account, and the acceptance of risks and failure.

KARL VESPER (1980) Entrepreneurship is the dynamic process of creating incremental wealth.

HOWARD STEVENSON (1992) Entrepreneurship is the pursuit of opportunity beyond the resources currently
under one’s control.

JEFFREY TIMMONS (1994) Entrepreneurship is the ability to create and build a vision from practically
nothing.

PETER DRUCKER (1998) Entrepreneurship is the process of starting one’s own, new and small business.
It is also the process of innovation and new venture creation through four
major dimensions- individual, organizational, environmental, process – aided
by collaborative networks in government, education and institutions.

ROBERT HISRISCH (2001) Entrepreneurship involves the creation process, requires the devotion of the
necessary time and effort, assumes the accompanying financial, psychic and
social risks, and receive the resulting rewards of monetary and personal
satisfaction and independence.

REFERENCE
Azarcon, Areola, Arguelles, Pablo-Barlis et al. Entrepreneurship Principles and Practices. First Edition. 2005,
Valencia Educational Supply.

Carson, David. Marketing and Entrepreneurship in SME’s: An innovative Approach First Edition. 2002.
Pearson Education.

Lambing, Peggy A.: Entrepreneurship. Third Edition, 2002. Prentice Hall.

Medina, Roberto G. Entrepreneurship in Small Business Management. First Edition. 1996. Rex Printing
Company. Inc.

Vaughn, Donald E. Financial Planning for the Entrepreneur. First Edition. 1997. Prentice Hill.

[Link]
 Creativity and Innovation
Objectives:
At the end of this lesson the students can be able to:
1. Identify the importance of creativity and innovation
2. Describe the importance of creativity and innovation
3. Discuss the components, benefits and types of creativity and innovation.
4. Explain the characteristics of creativity and innovation

DEFINITION OF CREATIVITY
Creativity is the act of turning new and imaginative ideas into reality. Creativity is characterised by the
ability to perceive the world in new ways, to find hidden patterns, to make connections between seemingly
unrelated phenomena, and to generate solutions.

IMPORTANCE OF CREATIVITY IN BUSINESS

Creativity in business is a way of thinking that inspires, challenges, and helps people to find innovative
solutions and create opportunities out of problems. It’s the reason some companies wow us with new,
amazing ideas, whilst others merely follow the beaten path. It’s the source of innovation and inspiration.

SPECIFIC BENEFITS OF CREATIVITY IN THE WORKPLACE INCLUDE

•Better teamwork and team bonding
•Increased workplace engagement and interaction
•Improved ability to attract and retain quality employees
•Increased staff morale, fun and happiness
•Increased workplace problem solving and productivity.

COMPONENTS OF CREATIVITY

1) Originality - The method or idea must be new and unique. It should not be the extension of
something, which already exists.
2) Functionality - A creative idea must work and produce results, otherwise, the whole effort will be in
vain. Kinds of people called creative:
• People who are thought-provoking, curious and have a variety of uncommon thoughts
are known to be creative people.
• People who had important self- discoveries, who view the world with a fresh perspective
and have insightful ideas. These people make unique discoveries which they don’t share
with the outer world.
• People who make great achievements which are known to the world. Inventors and
artists fall under this category.

QUALITIES OF CREATIVE PEOPLE

 1. They are Energetic - Creative people tend to have a great amount of physical as well as mental
energy. They utilize their energy to invent new ideas.
2. They are intelligent - It is believed that intelligence plays a key role in creativity. o become creative,
people should be smart and they should also have a child-like attitude to view things.
3. Discipline – They people have the practice of making people obey rules or standards of behaviour,
and punishing them when they do no.

Creative Domain Discrete Processing Modes

• Emotional
• Cognitive
• Deliberate
• Spontaneous

4 TYPES OF CREATIVITY
1. Deliberate and Cognitive creativity- They have a great amount of knowledge about a particular
subject and combine their skills and capabilities to prepare a course of action to achieve
something.

2. Deliberate and Emotional Creativity - These types of creative people are very emotional and
sensitive in nature. These individuals prefer relatively quiet and personal time to reflect and they
usually have a habit of diary writing. However, they are equally logical and rational in decision
making.

3. Spontaneous and Cognitive creativity - By indulging in different and unrelated activities, the
unconscious mind gets a chance to connect information in new ways which provide solutions to
the problems. Therefore, to let this type of creativity happen one should take a break from the
problem and get away to let conscious mind overtake.

4. Spontaneous and Emotional Creativity - Spontaneous ideas and creativity happen when
conscious and Prefrontal brain is resting. This type of creativity is mostly found in a great artist
Spontaneous and emotional creativity is responsible for a scientific breakthrough, religious and
also philosophical discoveries. Such as musicians, painters, and writers etc. This type of creativity
is also related to “epiphanies”. Epiphany is a sudden realization of something.

5 STAGES OF CREATIVE PROCESS

1. Preparation - the idea that you are immersing yourself in the domain. During this stage, she may
perform research, creates goals, organize thoughts and brainstorm as different ideas formulate
2. Incubation - While the individual begins to process her ideas, he begins to synthesize them using his
imagination and begins to construct a creation. Gabora states that during this step, the individual
does not actively try a find a solution, but continues to mull over the idea in the back of his head.
3. Illumination - As ideas begin to mature, the individual has an epiphany regarding how to piece her
thoughts together in a manner that makes sense. The moment of illumination can happen
 unexpectedly. For example, an individual with the task of putting together an office party may have
an idea for a theme while driving home from work.
4. Evaluation - After a solution reveals itself in an epiphany, the individual then evaluates whether the
insight is worth the pursuit. He may make changes to his solution so it is clearer. He may consult
with peers or supervisors regarding his insights during this step before pursuing it further. If he
works with clients, he may seek a client’s input and approval before moving on to the next step.
5. Implementation - The implementation of an idea or solution in the creative process model is when
an individual begins the process of transforming her thoughts into a final product. According to
Gabora, an individual may begin this step more than once in order to reach the desired outcome.

RECOGNIZING CREATIVE TECHNIQUES

1. Brainstorming – probably one of the most popular creative techniques. The basis of brainstorming is
a generating ideas in a group situation based on the principle of suspending judgment – a principle
which scientific research has proved to be highly productive in individual effort as well as group
effort.
2. Negative brainstorming - It uses brainstorming to generate bad solutions to the problem and then
see how those could be transformed into good solutions. The method is a two-step process that
consists of generating the worst ideas first and then transforming them into good solutions.
3. The Insights Game - Actually, it is a personal method, but you can do it with your friends or team on
different boards simultaneously supporting each other.
4. Mood boards - Mood board is a type of collage that may consist of images, text, videos and samples
of objects in a composition of the choice of the mood board creator.
5. Random Words (Random Input) - encourages your imagination to create different perspectives and
new angles on your idea or the problem you are facing. It is by far the simplest of all creative
techniques and is widely used by people who need to create new ideas.
6. Storyboarding example for new products Go back to the very beginnings of cinema and animation.
Managing the thousands of drawings and the progress of a project was nearly impossible.
7. Metaphorical thinking - A metaphor is a thinking method which connects two universes of meaning.
A road map is a model or metaphor of reality and useful for explaining things.
8. Mind mapping - Mind Maps has been developed by Tony Buzan are an effective technique of
structuring information and note-taking. Start in the center of the board with the main idea, invite
your team and work in all directions, producing a growing and organized structure using key
words/phrases and key images/videos.
9. Brain shifter- is one of creative techniques that is similar to mind mapping, but you should act as if
you were someone else. The purpose is to create new ideas that you never thought about before. Get
in to character by changing your mind set and try to think like another person.

CHARACTERISTICS OF CREATIVITY
1. Flexibility - it involves a mind-set that suggests that there may be more than a single answer or
solution to any particular issue or problem. Flexible thinkers are not hemmed in by being overly-
focused on one way of doing things and tend to be open to innovation.
2. A sense of intense curiosity - They ask lots of questions, and tend to develop a very intense focus
that takes them into almost a reverie as they try to discover how something works, or the detail of
a beautiful structure, or anything else they set their mind on.
 3. Positive attitude - is essential for thinking creatively as it is this positivity that spurs the mind on to
seek detail, wonder, and, indeed, solutions. This is linked strongly to my previous point about
intense curiosity.
4. Strong motivation and determination - creativity requires the follow-through that can only come
from strong motivation and determination. Without this, creative ideas will only reside within the
mind of the individual without having the opportunity to influence society and/or the community.
5. Fearlessness - highly creative people tend to believe in the VALUE of the ideas they come up with.
Remember, they are also flexible, so they are willing to change; however, they do not seem to be
worried about whether their idea is right or wrong because they believe that their idea brings value
to the field in which it resides, even if it may later be debunked.

DEFINITION OF INNOVATION
The creation, development and implementation of a new product, process or service, with the aim of
improving efficiency, effectiveness or competitive advantage.

TYPES OF INNOVATION
1. Incremental Innovation - It utilizes your existing technology and increases value to the customer
(features, design changes, etc.) within your existing market.
2. Disruptive Innovation - involves applying new technology or processes to your company’s current
market. It is stealthy in nature since newer tech will often be inferior to existing market technology.
This newer technology is often more expensive, has fewer features, is harder to use, and is not as
aesthetically pleasing.
3. Architectural Innovation - is simply taking the lessons, skills and overall technology and applying
them within a different market. This innovation is amazing at increasing new customers as long as
the new market is receptive. Most of the time, the risk involved in architectural innovation is low
due to the reliance and reintroduction of proven technology. Though most of the time it requires
tweaking to match the requirements of the new market.
4. Radical innovation - It gives birth to new industries (or swallows existing ones) and involves
creating revolutionary technology. The airplane, for example, was not the first mode of
transportation, but it is revolutionary as it allowed commercialized air travel to develop and
prosper.

BENEFITS OF INNOVATION IN BUSINESS

1. Solve Problems Easily - You need to come up with creative answers to solve certain problems in
your business. Many times you’ll face problems that don’t seem to go away. You need to think
outside the box to find an answer you’ve never come up with.
2. Increase Your Productivity - In order to work smarter, think creatively. Focus on what things you
should streamline and what things you need to cut out. Also, focus on the programs and workflows
that you can use to increase productivity.
 3. Market Your Business - In order to make people remember your business, you need innovative
ideas. You can create a new brand, develop a quirky business or can work with any non- profit
organization.
4. Beat Your Competitors - You just need to put in a little creativity and you can easily come up with
better ways to design products and connect with customers. Along with this, creativity will help you
figure out the right marketing techniques that will help your business grow.

IMPORTANT ROLE OF INNOVATION

1. Economic growth - Economic growth refers to the increase in the inflation-adjusted market value of
the goods and services produced by an economy over time. It is conventionally measured as the
percent rate of increase in real gross domestic product, or real GDP. The purpose of innovation is to
come up with new ideas and technologies that increase productivity and generate greater output
with the same input.
2. Innovation and the future of jobs - Technological advancement and increased productivity means
major changes for careers today as well. The world economy could more than double in size by
2050 due to continued technology-driven product improvements.
3. Increased well-being - In general, innovation and economic growth increases well-being because
living standards rise. According to the Brookings Institution, average life satisfaction is higher in
countries with greater GDP per capita. Another research also shows that there’s a link between
innovation and subjective wellbeing.
4. Reduced sickness, poverty and hunger - As already mentioned, developing countries depend on
innovation as new digital technologies and innovative solutions create huge opportunities to fight
sickness, poverty and hunger in the poorest regions of the world.
5. Environmental sustainability - Sustainability and environmental issues, such as climate change, are
challenges that require a lot of work and innovative solutions now and in the future. Although new
greener technology solutions, such as eco vehicles aren’t necessarily more competitive alternatives
to petrol-powered vehicles just yet, they will definitely offer many advantages for the future.

INNOVATION AND EDUCATION

Since we live in an age of innovation, a practical education must prepare a man for work that does not yet
exist and cannot yet be clearly defined. – Peter Drucker Knowledge, information and innovation Innovation
is fostered by information gathered from new connections; from insights gained by journeys into other
disciplines or places; from active, collegial networks and fluid, open boundaries. Innovation arises from
ongoing circles of exchange, where information is not just accumulated or stored, but created. Knowledge
is generated anew from connections, that weren’t there before. – Margaret J. Wheatley

MONEY AND INNOVATION

Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac,
IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have,
how you’re led, and how much you get it. – Steve Jobs Ideas and innovation Just as energy is the basis of
life itself, and ideas the source of innovation, so is innovation the vital spark of all human change,
improvement and progress. – Ted Levitt

IDEA EXECUTION AND INNOVATION

Innovation is the process of turning ideas into manufacturable and marketable form. – Watts Humprey

PATIENCE, PERSISTENCE AND INNOVATION

Innovation by definition will not be accepted at first. It takes repeated attempts, endless demonstrations,
and monotonous rehearsals before innovation can be accepted and internalized by an organization. This
requires “courageous patience. – Warren Bennis

IMPORTANCE OF CREATIVE AND INNOVATION IN

ENTREPRENEURSHIP
Creativity improves the process of solving problems. It doesn't matter if we're talking about developing a
new strategy or an innovative way to stay ahead of the competition. Creative problem solving gives that
competitive edge that any business is striving to achieve.

PRINCIPLES OF INNOVATION
1. Be action oriented - a cross-disciplinary learning-by-doing approach to problem solving is
necessary. It helps your team identify challenges you face and come up with multiple ideas to solve
problems. Actions speak louder than words.
2. Start Small - By appealing to a small, limited market, a product or service requires little money and
few people to produce and sell it. As the market grows, the company has time to fine-tune its
processes and stay ahead of the emerging competition.
3. Aim High - Raise awareness and build a shared understanding of the possibilities and challenges of
legislation in creating markets for innovation and innovative business ecosystems.
4. The rules of try, test and revise - Innovation creates novel products, processes, or business models
that generate economic value. Trying anything new inevitably entails experimentation and failure.
Simple rules, however, add discipline to the process to boost efficiency and increase the odds that
the resulting innovations will create value.
5. Learn from failures - admitting to mistakes and taking the time to learn from them will reward
companies with deeper insights into their businesses and markets. Getting employees to talk about
previous errors can foster innovative thinking in a way that successes cannot. Mistakes offer us new
portals of discovery, and that is their unique value. Without mistakes, we can’t really learn.
6. Follow a milestone schedule - provides an estimated timeline for the life of the project. The
schedule should include milestones for the planning, development, construction, evaluation and
reporting of the project's implementation.
7. Reward heroic activity - Provide financial / tangible incentives through bonus, cash, shares,
additional holiday, and the like. Importantly though remember that not all are of equal value in the
eyes of your employees. Some will appreciate the time off, for example, more than pay whilst
others may prefer pay and even like to work extra hours.
8. Work, work, work - Working is living, and exceptional living standards attract exceptional people.
Creating a workplace that is conducive to a happy lifestyle will attract top talent and keep your
employees motivated. More than this, though, a truly great and innovative workplace can actively
work to inspire employees, helping them to explore new ideas and blend old ones together for
innovative solutions.

IMPORTANCE OF CREATIVITY AND INNOVATION TO:

 A. Technopreneur
• Its ability to develop new ideas and to discover new ways of looking the problems and
opportunities.
• It is defined as the tendency to generate or recognize new ideas, alternatives, possibilities that
may be useful in solving problems, communicating with others, and entertaining ourselves and
others.
• It is also any act, idea or product that changes an existing domain or that transform an existing
domains into a new one
B. Business Organization
Innovation is the process of creating and implementing a new idea. It is the process of taking
useful ideas and converting them into useful products; services or processes or methods of
operation. These useful ideas are the result of creativity, which is the prerequisite for innovation.
Creativity in the ability to combine ideas in a unique way or to make useful association among
ideas. Creativity provides new ideas for quality improvement in organizations and innovation puts
these ideas into action

FACTORS SUPPORT CREATIVITY AND INNOVATION

1. Management practices that support creating a culture of innovation. Specific actions and practices
on the part of management that impact a culture of innovation include allowing freedom and
autonomy in the practice of work; providing challenging work; specifying clear strategic goals; and
forming work teams comprised of individuals with diverse skills and perspectives.
Specific actions and practices on the part of management that impact a culture of innovation
include allowing freedom and autonomy in the practice of work; providing challenging work;
specifying clear strategic goals; and forming work teams comprised of individuals with diverse skills
and perspectives.

Factor as part of work environment

• Freedom: People need the autonomy to determine the optimal way to carry out their
tasks. This gives them a sense of control over their work and a feeling of responsibility for
the final product (or process).

• Challenging Work: Challenging assignments give employees an opportunity to work hard

and feel challenged — and to feel that their work is important and valuable. Employees
need to understand why their work contributes to the organization’s competitive
advantage and long-term sustainability.

• Managerial Encouragement: A boss should set and communicate clear innovation goals
that are ambitious, yet achievable. He or she should serve as a good work model, support
the work group, value individual contributions, and exude confidence in the team. Support
employees when they speak up, take risks, and try new things.

• Support for Teamwork: Because innovation is a team effort, people need to work on a
team where diverse skillsets are represented. Team members should communicate well
and remain open to new ideas, constructively challenge each other’s work, trust and help
each other, and feel committed to the work they’re doing.

2. Organizational motivation and encouragement of innovation.

 Creating a culture of innovation requires collaboration and communication.
•Organizational Encouragement: This is a culture that encourages creativity through the
fair, constructive judgment of ideas; reward and recognition for creative work; mechanisms
for developing new ideas; and an active flow of ideas and a shared vision.
•Lack of Organizational Impediments: A culture of innovation doesn’t impede creativity
through internal political problems, harsh criticism of new ideas, destructive internal
competition, avoidance of risk, or an overemphasis on the status quo.

3. Resources to support an innovative culture

In order to innovate, people have to balance the tension between managing the day-today while
driving for improvement and reinvention.
• Sufficient Resources: Innovation doesn’t happen in a silo, so employees need access to
appropriate resources, including funds, materials, facilities, and information.
• Realistic Workload Pressures: Extreme time pressures, unrealistic expectations for
productivity, and distractions from creative work are counterproductive when creating a
culture of innovation.

REFERENCE
Azarcon, Areola, Arguelles, Pablo-Barlis et al. Entrepreneurship Principles and Practices. First Edition. 2005,
Valencia Educational Supply.

Carson, David. Marketing and Entrepreneurship in SME’s: An innovative Approach First Edition. 2002.
Pearson Education.

Lambing, Peggy A.: Entrepreneurship. Third Edition, 2002. Prentice Hall.

Medina, Roberto G. Entrepreneurship in Small Business Management. First Edition. 1996. Rex Printing
Company. Inc.

Vaughn, Donald E. Financial Planning for the Entrepreneur. First Edition. 1997. Prentice Hill.
 Business organization
Objectives:
At the end of this lesson the students can be able to:
1. Describe the different business organization forms and nature.
2. Explain the registration of the business organization
3. Discuss the importance and purpose of business organization.
4. List the different kind of organization advantages and disadvantages

DEFINITION OF BUSINESS ORGANIZATION

Business organization is an entity formed for the purpose of carrying on commercial enterprise. Such an
organization is predicated on systems of law governing contract and exchange, property rights, and
incorporation.

3 TYPES OF BUSINESS
1. Service Business -A service type of business provides intangible products (products with no
physical form). Service type firms offer professional skills, expertise, advice, and other similar
products Examples of service businesses are: salons, repair shops, schools, banks, accounting
firms, and law firms.
2. Merchandising Business- This type of business buys products at wholesale price and sells the
same at retail price. They are known as "buy and sell" businesses. They make profit by selling
the products at prices higher than their purchase costs. A merchandising business sells a product
without changing its form. Examples are: grocery stores, convenience stores, distributors, and
other resellers.
3. Manufacturing Business: Unlike a merchandising business, a manufacturing business buys
products with the intention of using them as materials in making a new product. Thus, there is a
transformation of the products purchased. A manufacturing business combines raw materials,
labor, and factory overhead in its production process. The manufactured goods will then be sold
to customers

Hybrid Business Hybrid businesses are companies that may be classified in more than one type of
business. A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a
cold bottle of wine (merchandising), and fills customer orders (service).

FORMS OF BUSINESS ORGANIZATION

1. Sole Proprietorship is a business owned by only one person. It is easy to set-up and is the least costly
among all forms of ownership. The owner faces unlimited liability; meaning, the creditors of the business
may go after the personal assets of the owner if the business cannot pay them. The sole proprietorship
form is usually adopted by small business entities.
2. Partnership is a business owned by two or more persons who contribute resources into the entity. The
partners divide the profits of the business among themselves. In general partnerships, all partners have
unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited
partners.

3. Corporation is a business organization that has a separate legal personality from its owners. Ownership in
a stock corporation is represented by shares of stock.

The owners (stockholders) enjoy limited liability but have limited involvement in the company's operations.
The board of directors, an elected group from the stockholders, controls the activities of the corporation.

In addition to those basic forms of business ownership, these are some other types of organizations that
are common today:

Limited Liability Company are hybrid forms of business that have characteristics of both a corporation and
a partnership. An LLC is not incorporated; hence, it is not considered a corporation. Nonetheless, the
owners enjoy limited liability like in a corporation. An LLC may elect to be taxed as a sole proprietorship, a
partnership, or a corporation.

Cooperative is a business organization owned by a group of individuals and is operated for their mutual
benefit. The persons making up the group are called members. Cooperatives may be incorporated or
unincorporated

Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative banking, credit
unions, and housing cooperatives.

BUSINESS ORGANIZATION ADVANTAGES & DISADVANTAGES

A. Sole Proprietorship
A sole proprietorship is the common business structure. It makes sense if you're in a business where
personal liability is not a concern. From a legal standpoint, the owner and the proprietorship are the
same.
Advantages
• It's the easiest to set up because it doesn't require the filing of any papers.
• States do not require the registration of proprietorships.
• Profits are only taxed once on the owner's personal tax returns.
• The owner has complete control of the business and makes all the decisions.
• Tax forms are not complicated.
• Assets are easy to liquidate upon the death of owner.

Disadvantages
• The owner is exposed to unlimited legal liabilities. If you lose a lawsuit, you could lose your home,
car and other personal assets.
• Proprietorships cannot accept capital from outside investors.
• Borrowing money is more difficult. Banks are reluctant to make business loans to sole
proprietorships. You will have to rely on savings, home equity loans or loans from family members.
• Business will be liquidated when owner passes away.
B. Partnerships
A partnership is a sole proprietorship that allows the business to have more than one owner.
Advantages
• They're easy to form.
• A partnership can bring together a group of individuals with different talents to share in the
responsibilities of running a business.
• If the partnership agreement permits, a partnership could continue to exist if one of the partners
dies.

Disadvantages
• Partners are exposed to unlimited liabilities.
• Owners will not always agree on decisions. This could lead to management conflicts.
• Partners share in the profits of the business, but will not always feel they are being adequately
compensated for their contributions and services.
C. Limited Liability Companies
Advantages
• The owners have limited liability. The owner's personal assets are protected from judgments and
defaults on company debts.
• Owners can choose how the business pay taxes. It could be a proprietorship, a partnership or a
corporation.
• Most states don't require LLCs to have annual meetings.
• An LLC is not required to have a board of directors.
• The number of shareholders is unlimited.

Disadvantages
• Legal and accounting costs are higher than proprietorships.
• LLCs must file articles of incorporation with the state of domicile.
• Owners must create an operating agreement that defines management authority and limits to
making decisions.
• In some cases, an LLC will cease to exist upon the death of a member, unless otherwise specified
in the operating agreement.
D. Corporations
A corporation is a legal entity that's completely separate from the shareholders who own stock in the
company. It has the authority to enter into contracts and buy and sell property. A corporation can sue
other parties but can also be sued.
Advantages
• Owners do not have personal liability for debts of the corporation. A shareholder only risks the
amount of the investment in the company.
• Has more access to financial resources. A corporation can sell stock to raise capital, obtain bank
loans or issue bonds for long-term financing.
• Corporations are better able to attract more talented and skilled employees than proprietorships.
• The corporation continues to exist separately from the lives of its stockholders. Disadvantages
• A C Corp is the most complex business structure and requires a lawyer to set up.
• Earnings could be subject to double taxation.
E. S Corporations
S Corporations combine the tax benefits of proprietorships and LLCs with the liability protection of C
Corps.
Advantages
 • Avoids double taxation by passing income through to the owners.
• The structure of an S Corp protects the personal assets of the shareholders.
• Lenders are more willing to make loans to S Corps.

Disadvantages
• Articles of incorporation must be filed with the state.
• An S Corp is limited to 100 shareholders.
• It can only have one class of stock.
• Fringe benefits provided by the company to shareholder-employees are taxable as compensation.
The choice of which business structure to use demands thought about your type of business and
what you want it to look like. If the business is just yourself, a sole proprietorship could be enough. But, if
you're worried about personal liability and risking personal assets and taxes, consider an LLC, a C Corp or an
S Corp.

5 CHARACTERISTICS OF ORGANIZATION
1. Division of Work - the breakdown of labor into its components and their distribution among different
persons, groups, or machines to increase.

2. Coordination - the process of organizing people or groups so that they work together properly and well.

3. Plurality of Persons - excess of votes received by the leading candidate, in an election in which there are
three or more candidates, over those received by the next candidate (distinguished from majority)

4. Common Objectives - A specific result that a person or system aims to achieve within a time frame and
with available resources.

5. Organization is a Machine of Management - This picture of an organization implies routine operations,

well-defined structure and job roles and efficient working inside and between the working parts of the
machine i.e. the functional areas.

IMPORTANCE IN ORGANIZING A BUSINESS

1. Benefits of Specialisation - For all the sub works, competent people are appointed who become
experts by doing a particular job time and again. In this way, maximum work is accomplished in the
minimum span of time and the organisation gets the benefit of specialisation.

2. Clarity in Working Relationship - Organising clarifies the working relations among employees. It
specifies who is to report to whom. Therefore, communication becomes effective. It also helps in fixing
accountability.

3. Optimum Utilisation of Resources - there is optimum utilisation of all the available resources (e.g.,
material, machine, financial, human resource, etc.) in the organisation.
4. Adaptation to Change - Organising process makes the organisation capable of adapting to any change
connected with the post of the employees. This becomes possible only because of the fact that there is
a clear scalar chain of authority for the manager’s right from the top to the lower level.

5. Effective Administration - The process of organising makes a clear mention of each and every activity of
every manager and also of their extent of authority. It is also made clear as to whom a manager order
for a particular job shall. Everybody also knows to whom they are accountable. In this way, the
confusion on authority is put to an end. Consequently, effective administration becomes possible.
6. Development of Personnel - Under the process of organising, delegation of authority is practiced. This
is done not because of the limited capacity of any individual, but also to discover new techniques of
work. It provides opportunities of taking decisions to the subordinates. By taking advantage of this
situation, they try to find out the latest techniques and implement them. Consequently, it helps them
to grow and develop.

7. Expansion and Growth – The process of organising allows the employees the freedom to take decisions
which helps them to grow. They are always ready to face new challenges. This situation can help in the
development of the enterprise. This helps in increasing the earning capacity of the enterprise which in
turn helps its development.

MAIN PURPOSE OF THE BUSINESS ORGANIZATION

The primary purpose of a business is to maximize profits for its owners or stakeholders while maintaining
corporate social responsibility. It is the motivating force moving, guiding, and delivering the organisation to
a perceived goal. It is the driving force, the fuel, the bond, the intangible link that pulls the organisation
together to achieve success.

HOW TO REGISTER YOUR BUISNESS

Sole proprietorship
 Register your business name with the Bureau of Domestic Trade, Department of Trade and Industry
(BDT-DTI).
 Obtain a business clearance from the barangay captain of your place of business.
 Obtain a permit to do business from the local government (your city or municipal government’s
business licensing office)
 Get a Tax Identification Number (TIN) from the Bureau of Internal Revenue (the branch nearest to
you).
 Register your business and employees with the Social Security System for social benefits.
 Register with the Department of Labor and Employment (DOLE) office nearest to you, if you have five
or more employees.
Cooperative
 Register with the Cooperative Development Authority (CDA) office nearest you.
 Register the name of your cooperative with the Department of Trade and Industry (DTI) office nearest
you.
 Obtain a permit to operate the cooperative from the local government unit.
 Get a Tax Identification Number (TIN) from the Bureau of Internal Revenue.
 You may also register the employees of your cooperative with the Social Security System and the
Department of Labor and Employment
REGISTERING WITH THE DTI
For Sole Proprietorship For Partnerships andFor Cooperatives
Corporations

• Applicant must be 18 years old • Certified true of photocopies • Certifies true or photo
or more. of articles of incorporation or copies of articles of
partnership, by-laws and cooperation, by-laws and CDA
• Two recent passport-sized registration certificate registration certification.
photos of applicant. approved by the SEC.
• Certification issued by CDA,
• Proof of Filipino citizenship, if • If foreigners own 40% or in case of increase of
applicant acquired this by more of the capital, the SEC capitalization.
naturalization, election or other certificate must specify that
means provided by law. this is in accordance with the
Foreign Investments Act of
• Proof of Filipino citizenship 1991.
(e.g. birth certificate, voter’s ID)
if applicant’s name is suggestive • In case there is an increase
of foreign nationality. in capital, a certificate issued
by the SEC.

REGISTERING WITH THE MAYOR’S OFFICE (THE LOCAL GOVERNMENT

UNIT)

For Sole Proprietorship For Partnerships andFor Cooperatives

Corporations

• DTI registration certificate of • Location map of business • Location map of business

business name establishment establishment
• Location map of business • Barangay clearance • Barangay clearance
establishment • SEC registration certificate • CDA registration certificate
• Barangay clearance • Articles of partnership or
• Community Tax Certificate of incorporation
proprietor • Current Class “C” certificate
• Community Tax Certificate of
the partners

Plus, depending on type of Plus, depending on type of Plus, depending on type of

business, any of the following: business, any of the following: business, any of the following:
• Building occupancy permit • Building/occupancy permit • Building occupancy permit
• Mechanical permit • Mechanical permit • Mechanical permit
• Electrical inspection • Electrical inspection • Electrical inspection
• Pollution clearance • Pollution clearance • Pollution clearance
• Location clearance • Location clearance • Location clearance
 • Sanitary/health certificate • Sanitary/health certificate • Sanitary/health certificate
• Police clearance • Police clearance • Police clearance
REGISTERING WITH THE BIR
For Sole Proprietorship For Partnerships andFor Cooperatives
Corporations

• Photocopy of DTI registration • Photocopy of SEC registration • Photocopy of CDA registration or

business permit
• Photocopy of mayor’s permit • Mayor’s permit

REGISTERING WITH THE SSS

For Sole Proprietorship For Partnerships andFor Cooperatives
Corporations

• Photocopy of mayor’s permit • Photocopy of articles of• Cooperatives, as a rule, do not

partnership or incorporation have to register with the SSS, but
• Employer’s data record their employees do.
• Employer’s data record
• Initial or subsequent list of
employees • Initial or subsequent list of
employees (The last two
requirements should be signed by
the managing partner of a
partnership or the highest ranking
officer of a corporation,)

REFERENCE
Azarcon, Areola, Arguelles, Pablo-Barlis et al. Entrepreneurship Principles and Practices. First Edition. 2005,
Valencia Educational Supply.

Carson, David. Marketing and Entrepreneurship in SME’s: An innovative Approach First Edition. 2002.
Pearson Education.

Lambing, Peggy A.: Entrepreneurship. Third Edition, 2002. Prentice Hall.

Medina, Roberto G. Entrepreneurship in Small Business Management. First Edition. 1996. Rex Printing
Company. Inc.

Vaughn, Donald E. Financial Planning for the Entrepreneur. First Edition. 1997. Prentice Hill.

Products and Services

Objectives:
At the end of this lesson the students can be able to:
1. Analyze the interrelationships between product, service, and branding decisions.
2. Apply the concepts of product and service marketing to real-world scenarios.
3. Evaluate the effectiveness of different branding strategies.
4. Develop marketing plans for new products or services, considering the various decision areas.
WHAT IS A PRODUCT?
Product: Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a
need or want.

WHAT IS A SERVICE?
Service: Any activity or benefit that one party can offer to another that is essentially intangible and does not
result in ownership of anything.

PRODUCTS, SERVICES AND EXPERIENCES

Market offerings, product - tangible goods - (soap, toothpaste), services in intangible - (financial services),
experiences in memorable –

LEVELS OF PRODUCTS AND SERVICES

Core benefit, actual product, and augmented product.
- The most basic level is the core benefit, which addresses the question: what is the buyer really
buying?
- Product planners must turn the core benefit into an actual product.
- Product planners must build an augmented product around the core benefit and actual product by
offering additional consumer services and benefits.

PRODUCT AND SERVICE CLASSIFICATION

 Consumer product: are product and services bought by final consumers for personal consumption.
Convenience product: customer usually buys frequently, immediately and with a minimum
of comparison and buying efforts. Convenience product usually low priced and market
placed them in many locations. (Soap, candy, newspaper)
Shopping products: Less frequent purchases requiring more shopping effort and price,
quality, and style comparisons. Higher than convenience good pricing. Selective distribution
in fewer outlets. Advertising and personal selling by producer and reseller. (Major
appliances, TV's, furniture, clothing).
 Specialty product: Strong brand preference and loyalty, requires special purchase effort,
little brand comparisons, and low price sensitivity. High price. Exclusive distribution.
Carefully targeted promotion by producers and resellers. (Specific brands and types of cars,
high-priced photographic equipment)
Unsought products: Little product awareness and knowledge (or if aware, sometimes
negative interest). Pricing varies. Distribution varies. Aggressive advertising and personal
selling by producers and resellers. (Life insurance, cemetery plots)
 Industrial Products: products bought by individuals and organizations for further processing or for
use in conducting a business.
 Materials and parts include raw materials and manufactured materials and parts.
 Capital items: are industrial products that aid in the buyer's production or operations
including installations and accessory equipment.
 Supplies and services: include operating supplies (paper, pencils) and repair and
maintenance items (paint, nails, brooms)
 Organizations, persons, places, and ideas:
 Organizational marketing makes use of corporate image advertising.
 Person marketing applies to political candidates; entertainment sports figures, and
professionals.
 Place marketing relates to tourism.
 Social marketing campaigns promote ideas.

PRODUCT AND SERVICE DECISIONS

 Individual product and service decisions:

 Branding: is a name, term, sign, symbol, or design that identifies the market or seller of a
product or service.
1. Branding can add value to a product.
2. Branding has become so strong. ! Branding helps buyers in many ways.
3. Branding also gives seller several advantages.
4. Building and managing brands is perhaps the marketer's most important task
 Packaging: the activities of designing and producing the container or wrapper for product.
 The primary function of the package was to contain and protect the product.
 Important marketing tool.
 Attracting attention.
 Describing the product.
 Labeling:
A product line: is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of outlets,
or fall within given price ranges.
 Product line length: the line is too short if the manger can increase profit by adding
items; the line is too long if the manger can increase profit by dropping items.
 Line stretching: adding products that are higher or lower priced than the existing line.
 Line filling: adding more items within the present price range.
  Product mix decisions:
Product mix (or product assortment): the set of all product lines and items that a particular
seller offers for sale. A company's product mix has 4 important dimensions:
1. Width: the number of different product lines in the company carries.
2. Length: the total number of items the company carries within the product line.
3. Depth: the number of version offered of each product in the line.
4. Consistency: how closely related the various product lines are in end use, production
requirements, or other way.

BRANDING STRATEGY
Brand equity

Brand equity: is the positive differential effect that knowing the brand name has on customer
response to product or service.

 Brands are powerful assets that must be

carefully developed / managed.
 Brands with strong equity have many
competitive advantages:
 High consumer awareness
 Strong brand loyalty
 Helps when introducing new products
 Less susceptible to price competition
 Brand valuation is the process of estimating the total financial value of a brand.
 Customer equity the value of the customer relationship that the brand creates.

Brand development

 Line extensions occur when a company introduces additional items in a given product category
under the same brand name, such as new flavors, forms, colors, ingredients or package size.
 Minor changes to existing products
 Brand extensions involve the use of a successful brand name to launch new or modified products in
a new category.
 Successful brand names help introduce new products
 Multibrands companies often introduce additional brands in the same category. multibranding
offers a way to establish different features and appeal to different buying motives
 Multiple product entries in a product category
 New brands a company may create a new brand name when it enters a new product category for
which none of the company's current brand names is appropriate.
 New product category

SERVICE MARKETING
 Governments offer service through courts, employment services, hospitals, police and fire
department.
 Not-for-profit organization offer services through museums, colleges and hospitals.
 Business organizations offer service trough airlines, banks, hotels and firms.
A. The nature and characteristics of a service :
 Intangibility means that services cannot be seen, tasted, felt or smelled before they are
bought. - Consumers look for service quality signals
 Inseparability means that the service cannot be separated from their providers, whether the
providers are people or machines. - Services canít be separated from providers
 Variability means that the quality of services depends on who provides them as well as when,
where, and how they are provided. - Employees and other factors result in variability
 Perishability means that services cannot be stored for later sale or use. - Services canít be
inventoried for later sale

B. Marketing strategies for service firms :

 The service-profit chain: the chain that links service firm profits with employee and customer
satisfaction. this chain consists of 5 links:
1. Internal service quality:
- Employee selection and training.
- Quality work environment.
- Strong support for there dealing with customer.
2. Satisfied and productive:
- More satisfied, loyal, and hardworking employee.
3. Greater service value:
- More effective and efficient customer value.
4. Satisfied and loyal customers:
- Loyal, satisfied, repeat purchase.
5. Healthy service profit and growth:
- Superior firm performance.

Internal marketing: marketing by service firm to train and effectively motivate its customer
contact employees and all the supporting service people to work as a team to provide customer
satisfaction.

Interactive marketing: marketing by a service firm that recognizes that perceived service quality
depends heavily on the quality of buyer-seller interaction

 Managing service differentiation:

 Managing service quality:
 Managing service productivity:
REFERENCE
[Link]
 Costumers

Objectives:
At the end of this lesson the students can be able to:
1. Equip civil engineering students with the knowledge and skills necessary to understand and
engage with customers in the context of technology entrepreneurship within the construction
industry.
2. Explore effective strategies for reaching, engaging, and acquiring customers for technology
solutions in the construction industry.
3. Understand the importance of providing excellent customer support and building long-term
relationships with customers in the construction industry.
4. Analyze the relationship between customer understanding and business success.
5. Develop strategies for building strong customer relationships and fostering customer loyalty.
6. Apply the concepts of customer and consumer behavior to real-world marketing scenarios.
7. Evaluate the effectiveness of different customer service and marketing initiatives.

WHAT IS COSTUMERS?
A customer is an individual or business that purchases another company's goods or services. Customers
are important because they drive revenues. Businesses can neither survive nor thrive without them.

Costumer is an individual, group or organization that purchases goods or services from a company in
exchange for value, typically monetary payment. They provide valuable feedback and insights that
businesses can use to improve their products, services, and overall operations. They are not just
transactional entities but also form the basis of relationships with businesses

2 Categories of Costumers

 Trade Customer- These are customers who buy the product, add value and resell it. Like a
reseller, wholesaler, and distributor, etc.
 Final Customer– These are the customers who buy the product to fulfil their own needs or
desires

UNDERSTANDING COSTUMERS
Understanding customers is the key to giving them good service. To give good customer care you must
deliver what you promise. But great customer care involves getting to know your customers so well that
you can anticipate their needs and exceed their expectations.

Ways To Understand Your Customers

1. Understand customer behavior patterns in real-time
2. Identify and categorize your Customers
 The segregation may depend on factors such as the type of products or services your
customers have bought, how frequently they are buying, their physical location, etc.
3. Leverage Social Media for Better Customer Engagement
Given that social media is a prominent tool in today’s digital landscape, your team must
actively engage with your target audience on these platforms. Develop comprehensive
social media strategies to reach and connect with your customers where they spend
most of their time.
4. Utilize customer interactions effectively
Device a questionnaire strategically and interact with the customers based on it.
For example, questions of such types can let you gain a deeper understanding of your
customer psyche:
 How they are using the product or service?
 Are they satisfied using the product/service?
 What are the changes they would like to see in the product/service?

5. Develop a deep understanding of customer behaviour

Understanding and catering to broader customer interests can significantly enhance
brand perception. By demonstrating genuine care for customers’ overall well-being,
your business can foster stronger connections and build trust.
6. Build Comprehensive Contact Information
By consolidating contact information into a single platform, businesses can easily
access and update customer records.

COSTUMERS VS. CONSUMERS

A customer is a person who buys goods and services regularly from the seller and pays for it to satisfy
their needs. Many times when a customer who buys a product is also the consumer, but sometimes it’s
not. For example, when parents purchase a product for their children, the parent is the customer, and
the children are the consumer. They can also be known as clients or buyers.

A consumer is someone who purchases the product for his/her own need and consumes it. A consumer
cannot resell the good or service but can consume it to earn his/her livelihood and self-employment.
Any person, other than the buyer who buys the product or services, consumes the product by taking
his/her permission is categorized as a consumer. In simple word, the end-user of the goods or services is
termed as a consumer.
COSTUMER CONSUMER
Definition Customer is the one who is Consumer is the one who is the
purchasing the goods. end user of any goods or
services.
Ability to Resell Customer can purchase the Consumers are unable to resell
good and is able to resell any product or service.
Need for Purchase Customers need to purchase a For a consumer purchasing a
product or service in order to product or service is not
use it. essential.
Motive of Buying The motive of buying is either The motive of buying is only for
for resale or for consumption consumption
Is Payment Necessary Must be paid by customer May or may not be paid by the
 consumer
Target Group Individual or Company Individual, family or
group

TYPES OF COSTUMERS

1. Loyal Customer- They are less in numbers but increase more profit and sales as they are
completely satisfied with the product or service. Customers that make up a minority of the
customer base but generate a large portion of sales.
2. Discount Customers- They also regular visitors but buy when they are offered discounts or they
purchase only low-cost goods. Customers that shop frequently but base buying decisions
primarily on markdowns.
3. Impulsive Customers- These types of customers are hard to convince, as they don’t go for a
specific product, but buy whatever they feel is good and fruitful at that particular point of time.
Customers that do not have a specific product in mind and purchase goods when it seems good
at the time.
4. Need-Based Customers- These customers buy only those products which they are in need of or
habituated with. Customers with the intention of buying a specific product.
5. Wandering Customers- These are the least valuable customers as they themselves don’t know
what to purchase. Customers that are not sure of what they want to buy

TYPES OF CONSUMERS
1. Commercial Consumer- They buy goods in large numbers whether they need the product or not
and sometimes associate special needs with their purchase orders.
2. Discretionary Spending Consumers- They have unique buying habits and purchase a lot of
clothes and electronic gadgets.
3. Extroverted Consumer- They prefer brands that are unique and become a loyal consumer once
they gain that trust as a customer.
4. Inferior Goods Consumer- Consumer having low-income buy goods having low price.

The importance of consumers in various avenues is presented below:

1. Encourage Demand- They are the main root for the demand of any product. All manufacturers
of goods and services produce various things according to the demand in the market.
2. Create Demand for Various Products- Different consumers have several varieties of demand or
an individual consumer can also demand various types of goods. These encourage the
manufacturer to deliver various products in the market.
3. Increase Demand for Consumer Goods- It creates demand for various consumer goods, like
long-lasting, semi-durable and biodegradable goods.
4. Enhance Service Diversification – Consumers not only utilise different types of products but also
use diversified services to support the standard of living. Such as educational service and health
service, transport and communication service, and banking and insurance service, etc. This will
direct the development or improvement of the service sector in the economy.
REFERENCE
[Link]
[Link]
[Link]
 Value Propositions
Objectives:
At the end of this lesson the students can be able to:
1. Critically evaluate existing value propositions from diverse technology companies, identifying
their strengths, weaknesses, and alignment with target customer needs.
2. Design and develop compelling value propositions for a new technology product or service,
justifying their choices based on market research and customer segmentation.
3. Differentiate between perceived value and actual value, and explain how these concepts
influence customer decision-making and the development of effective value propositions.
4. Integrate the concept of a value proposition within the broader business model canvas,
demonstrating an understanding of how it interacts with other key elements such as customer
segments, channels, and revenue streams.
5. Evaluate the effectiveness of different value proposition types (product-based, service-based,
experience-based) and justify the selection of the most appropriate type for a given business
context.
6. Apply customer feedback methods to test and refine a value proposition, demonstrating an
understanding of the iterative nature of value proposition development.
7. Analyze future trends in technology and customer expectations, and predict how these
trends will impact the development and communication of value propositions in the
technology sector.
8. Analyze the role of technology in shaping product and service value, and evaluate how emerging
technologies can be leveraged to enhance value propositions.

VALUE PROPOSITIONS
In technology entrepreneurship, a strong value proposition clearly communicates the unique benefits your
product or service offers to customers, differentiating it from competitors and highlighting why they should
choose you. A value proposition is a simple statement that summarizes why a customer would choose your
product or service. A value proposition defines the benefits your company’s products and services offer to
the customer.

DEFINITION OF VALUE
 From a customer's perspective, "value" is the perceived benefit of a product or service, weighed
against its cost, encompassing both tangible and intangible aspects like quality, functionality,
convenience, and customer service.
 A value proposition is a statement which identifies clear, measurable and demonstrable benefits
consumers get when buying a particular product or services.
 It should convince a consumer that this product or service is better than others on the market.
 A value proposition is a statement that answer the “why” someone should do business with you. It
should convince a potential customer why your service or product will be done of more value to
them than similar offerings from your competition.
 A good value proposition can give you an advantage over your competitors and is often what your
prospects use to evaluate you. And for many consumers, your value proposition is the first they
encounter when exploring your brand. So, having clear, concise value proposition is more
important ever.
  Value proposition forms the core of a business model canvas by articulating the unique benefits a
company offers to its customers.
 Serves as a critical element in differentiating a business from competitors and attracting target
customers.
 Bridges the gap between customer needs and the company's products or services

PERCEIVED VALUE VS. ACTUAL VALUE

Perceived value is all about perception. More decisively, it is what a consumer thinks a product or service is
worth.
Actual value is what a product or service is actually worth.

HOW TO WRITE A UNIQUE VALUE PROPOSITION

A compelling value proposition meets three criteria:
1. Specific: What are the unique benefits that will benefit our target customer?
2. Pain-focused: How can our product solve the dilemma of the client or enhance his/her life?
3. Exclusive: How is it attractive as well as exclusive? How well does it stress our competitive
advantage and differentiate us from rivals?

COMPONENTS OF VALUE PROPOSITION

PRODUCT
BENEFITS
A benefit is what your product does for the
costumer. The benefits are the ways that the
features make your costumer’s life easier by
increasing pleasure or decreasing pain. The
EXPERIENCE
benefits of your product are the really core of
The product experience is the way that owning
your value proposition. The best way to list out
your own product makes the costumer feel. It’s
the benefits of your product is to imagine all the
the sum total of the combined features and
ways that your products makes your costumer’s
benefits. Product experience is different to
life better.
features and benefits because it’s more about the
FEATURES
emotional reasons why people buy your product
A feature is a factual description of how your
and what it means for them in their own lives.
product works. The feature are the functioning
The product experience is the kernel that will
attributes of your product the features also
help identify the market positioning And brand
provide the ‘reason to believe’. Many marketers
essence that is usually built out of the value
derides the importance of features because
proposition
features are no longer a point of difference in
most marketing. But for marketing products and
innovative new services the features on offer
can still be an important part of your value
proposition.

COSTUMER
WANTS
 The emotional drivers of decision making are things that we want to be, do or have. Our wants are
usually conscious (but aspirational) thoughts about how we’d like to improve our lives. They
sometimes seems like daydreams but they can be powerful motivators of actions. The wants speak
more to the pull of our hearts and our emotions.
NEEDS
The costumer’s need are the rational things that the costumer need to get done. Interestingly, needs
are not always conscious. Customers can have needs that they may not know about yet. Designers call
these “latent needs”. The needs speaks more to pull off our heads and rational motivations.
FEAR
Fears can be a strong driver of purchasing behaviour and can be the hidden source of wants and
needs. For any product there is a secret “pain of switching”. Even if your product is better than the
competition, this might not be a big enough improvement to overcome the inertia of the status quo.

VALUE CREATION PROCESS

 Value creation process forms the foundation of a compelling value proposition within the business
model canvas.
 Involves identifying and developing unique ways to deliver value to customers that set the
company apart from competitors.
 Requires continuous innovation and adaptation to changing market conditions and customer needs

Unique Selling Proposition

 Identify core competencies that give the company a competitive advantage in the market
 Develop a clear and concise statement that communicates the company's unique value
 Focus on specific benefits or features that are difficult for competitors to replicate
 Align the unique selling proposition with target customer needs and preferences
 Continuously refine and update the proposition based on market feedback and changing conditions
Differentiation From Competitors
 Conduct thorough competitor analysis to identify gaps in the market
 Develop innovative products or services that address unmet customer needs
 Implement superior customer service practices to enhance the overall customer experience
 Utilize cutting-edge technology or processes to improve efficiency or quality
 Create a strong brand identity that resonates with target customers on an emotional level

BENEFITS VS. FEATURES

Features are product attributes or product aspects and capabilities. The key thing to know about features is
that features are 100% focused on your product or service offering.

Example: I picked a product or company feature from Apple, Amazon, and Blue Apron.
Apple: All devices sync up with each other.
Amazon: Amazon Prime purchases are delivered in 2 days.
Blue Apron: Step-by-step recipes and fresh ingredients are delivered weekly.

Unlike features, which are 100% focused on your service or product, benefits bridge the conversation to
focus in on the customer by demonstrating the advantage or gain the customer will get from the specific
feature. To get to this information, try answering “so that” after each feature statement.
Example
Blue = Feature
Green = Benefit
Orange = Value Statement
Black (Bold) = Frameworks inserts for exercise purposes

Apple: All apple devices sync up with each other so that you have a seamless access to all your information
from any apple device. Because you have seamless access to all your information from any device, it
makes it really easy and simple for you to stay connected and have access to all your information at all
times-no matter where you are or what devices you are using.
Amazon: Amazon Prime purchases a delivered in 2 days, so that you can get your items quickly. Because
your items arrive quickly, you can skip the store and eliminate the hassle of driving and waiting in long
lines.
Blue Apron: Blue Apron delivers step-by-step recipes and fresh ingredients weekly, so that you don’t have
to plan out your meals. Because you don’t have to plan your meals each week and go the grocery store,
making home-cooked meals is easy and hassle-free.

Once you went through the exercise, you can rephrase the sentences to concisely convey your product’s
benefit and value in one sentence. It’s also a good idea to put the feature towards the end, so you can lead
with a ‘you statements’.

Final Value Proposition

Apple: Apple makes it simple and easy to stay connected with seamless access to all your data and
information across all your apple devices.

Amazon: Get your items quickly and skip the hassle of driving and waiting in long lines at the store with
Amazon Prime 2-Day shipping.

Blue Apron: Blue Apron delivers recipes and all ingredients weekly making home-cooked meals easy and
hassle-free since there’s no grocery or meal planning involved.

TYPES OF PROPOSITION
 Value propositions come in various forms within the business model canvas, each tailored to
specific customer needs and business models
 Understanding different types of value propositions helps businesses choose the most appropriate
approach for their target market
 Effective value propositions often combine elements from multiple types to create a
comprehensive offering
Product-based value propositions
 Focus on unique features or functionalities that set the product apart from competitors
 Emphasize superior quality or performance compared to alternative solutions
 Highlight innovative design or technology that enhances user experience
 Stress cost-effectiveness or long-term savings associated with the product
 Showcase customization options that allow customers to tailor the product to their specific needs

Service-based value propositions

  Emphasize exceptional customer support or personalized assistance
 Highlight time-saving or convenience aspects of the service
 Stress expertise or specialized knowledge that enhances service quality
 Focus on flexibility or scalability of the service to meet changing customer needs Showcase
comprehensive solutions that address multiple customer pain points

Experience-based value propositions

 Focus on creating memorable or unique customer experiences
 Emphasize emotional connections or aspirational aspects of the brand
 Highlight community or social elements that enhance customer engagement
 Stress personalization or customization of the overall customer journey
 Showcase immersive or interactive elements that differentiate the experience

CRAFTING EFFECTIVE VALUE PROPOSITIONS

 Crafting effective value propositions is a critical skill in developing a successful business model
canvas
 Requires a deep understanding of customer needs, market dynamics, and company capabilities
 Involves iterative refinement based on customer feedback and market testing

Clear and concise messaging

 Use simple, jargon-free language that resonates with the target audience
 Develop a concise elevator pitch that communicates the value proposition in 30 seconds or less
 Create a memorable tagline or slogan that encapsulates the core value proposition
 Use visual elements or infographics to enhance understanding and retention of the message
 Tailor the messaging to different customer segments or communication channels as needed

Highlighting customer benefits

 Focus on outcomes rather than features by emphasizing how the offering improves customers' lives
 Quantify benefits whenever possible (saves 30% on energy costs)
 Use storytelling techniques to illustrate real-world applications of the value proposition
 Address both rational and emotional benefits to create a comprehensive value proposition
 Prioritize the most impactful benefits based on customer research and feedback

VALUE PROPOSITION CANVAS

 Value proposition canvas serves as a visual tool within the business model canvas framework
 Helps businesses align their value proposition with customer needs and expectations
 Facilitates a structured approach to developing and refining value propositions

Customer profile segment

 Identify customer jobs describing the tasks or problems customers are trying to solve
 List customer pains outlining the negative experiences, risks, or obstacles customers face
 Enumerate customer gains highlighting the positive outcomes or benefits customers desire
 Prioritize jobs, pains, and gains based on their importance to the customer
 Develop customer personas to represent different segments within the target market

Value map segment

 List products and services that the company offers to address customer jobs
  Identify pain relievers describing how the offering alleviates customer pains
 Enumerate gain creators outlining how the offering delivers customer gains
 Prioritize pain relievers and gain creators based on their impact and feasibility
 Ensure alignment between the value map and customer profile segments

TESTING VALUE PROPOSITION

 Testing value propositions is a crucial step in the business model canvas development process
 Involves gathering real-world data to validate assumptions and refine the value proposition
 Enables businesses to optimize their offerings and messaging before full-scale implementation

Customer feedback methods

 Conduct A/B testing of different value proposition statements to measure customer response
 Implement landing page tests to gauge interest in proposed offerings
 Use prototypes or minimum viable products (MVPs) to gather early user feedback
 Conduct customer interviews or focus groups to gain in-depth insights
 Utilize online surveys or questionnaires to gather quantitative data on customer preferences

Iterative refinement process

 Analyze feedback data to identify strengths and weaknesses in the current value proposition
 Develop hypotheses for improvements based on customer insights and market trends
 Create multiple iterations of the value proposition to test different approaches
 Implement small-scale pilots to test refined value propositions in real-world conditions
 Continuously monitor and adjust the value proposition based on ongoing feedback and market
changes
ALIGNING VALUE PROPOSITION
 Aligning value propositions ensures consistency and effectiveness across all aspects of the business
model canvas
 Involves integrating the value proposition with other key elements of the business strategy
 Requires coordination across different departments and touchpoints to deliver a cohesive customer
experience

Integration with business strategy

 Ensure the value proposition aligns with the company's overall mission and vision
 Develop key performance indicators (KPIs) that measure the success of the value proposition
 Allocate resources and budget to support the delivery of the promised value
 Align product development roadmaps with the evolving value proposition
 Incorporate the value proposition into long-term strategic planning and decision-making processes

Consistency across channels

 Develop channel-specific messaging that maintains the core value proposition
 Ensure consistent branding and visual elements across all customer touchpoints
 Train customer-facing staff to effectively communicate and deliver on the value proposition
 Implement omnichannel strategies to provide a seamless experience across digital and physical
channels
 Regularly audit and update all customer communications to maintain alignment with the value
proposition
COMMUNICATING VALUE PROPOSITIONS
 Effective communication of value propositions is essential for successful implementation of the
business model canvas
 Involves both internal alignment within the organization and external messaging to customers and
stakeholders
 Requires tailored approaches for different audiences and communication channels

Internal communication strategies

 Develop a comprehensive internal communication plan to educate all employees about the value
proposition
 Create visual aids or infographics to help employees easily understand and remember the value
proposition
 Conduct regular training sessions or workshops to reinforce the importance of the value
proposition
 Implement internal feedback mechanisms to gather insights and suggestions from employees
Integrate the value proposition into performance evaluations and incentive structures

External marketing approaches

 Develop a multi-channel marketing strategy to communicate the value proposition to target
customers
 Create compelling content (blog posts, videos, infographics) that showcases the value proposition
in action
 Utilize social media platforms to engage with customers and reinforce the value proposition
 Implement targeted advertising campaigns that highlight key aspects of the value proposition
 Leverage customer testimonials and case studies to provide social proof of the value proposition

MEASURING VALUE PROPOSITION EFFECTIVENESS

 Measuring the effectiveness of value propositions is crucial for ongoing optimization of the business
model canvas
 Involves tracking both quantitative and qualitative metrics to assess performance
 Enables data-driven decision-making for refining and evolving the value proposition over time

Key performance indicators

 Track conversion rates to measure how effectively the value proposition drives customer action
Monitor customer acquisition costs to assess the efficiency of value proposition communication
 Analyze customer lifetime value to evaluate long-term impact of the value proposition
 Measure market share growth to gauge competitive advantage derived from the value proposition
 Track revenue and profitability metrics to assess overall business impact of the value proposition

Customer satisfaction metrics

 Implement Net Promoter Score (NPS) surveys to measure customer loyalty and likelihood to
recommend
 Conduct regular customer satisfaction surveys to gauge overall contentment with the offering
 Track customer retention rates to assess long-term value delivery
 Monitor customer support metrics (response times, resolution rates) to evaluate service quality
 Analyze customer feedback and reviews to identify areas for improvement in value delivery
COMMON PITFALL IN VALUE PROPOSITIONS
 Understanding common pitfalls helps businesses avoid critical mistakes in developing their business
model canvas
 Recognizing these issues enables proactive measures to ensure value proposition effectiveness
 Addressing pitfalls often requires a combination of customer research, market analysis, and internal
alignment

Overpromising vs underdelivering
 Conduct thorough capability assessments to ensure the company can consistently deliver on
promises
 Implement quality control measures to maintain high standards of product or service delivery
 Develop clear communication guidelines to prevent exaggerated claims in marketing materials
 Establish feedback loops with customers to quickly identify and address any gaps in value delivery
 Regularly review and update the value proposition to ensure it remains realistic and achievable

Lack of specificity
 Avoid generic statements that could apply to any company in the industry
 Use concrete examples or case studies to illustrate specific benefits or outcomes
 Quantify claims whenever possible to provide tangible evidence of value
 Tailor value propositions to specific customer segments rather than using a one-size-fits-all
approach
 Regularly test and refine messaging to ensure it resonates with the target audience

FUTURE TRENDS IN VALUE PROPOSITION

 Future trends in value propositions shape the evolution of business model canvases across
industries
 Anticipating and adapting to these trends helps businesses maintain competitive advantage
 Requires ongoing market research, technological awareness, and customer insight gathering

Impact of technology
 Artificial intelligence and machine learning enable more personalized and predictive value
propositions
 Internet of Things (IoT) facilitates data-driven value propositions based on real-time usage insights
 Blockchain technology enables new value propositions centered around transparency and security
 Augmented and virtual reality create opportunities for immersive experience-based value
propositions
 5G connectivity enables new value propositions based on ultra-fast, low-latency communication

Evolving customer expectations

 Increasing demand for sustainability and ethical practices in value propositions
 Growing preference for subscription-based models and flexible ownership options
 Rising importance of data privacy and control in customer value propositions
 Shift towards holistic well-being and work-life balance in lifestyle-related value propositions
 Increasing expectation for seamless omnichannel experiences across all customer touchpoints
ROLE OF TECHNOLOGY IN A PRODUCT AND SERVICE VALUE
1. Increased choice and accessibility to products and services
2. Technology has made products cheaper
3. Increased self-service giving customers more control
4. An increase in convenience through mobile technology
5. Information access is helping customers make more informed decisions
6. Increased automation saves time and improves customer satisfaction

What technology do customers prefer?

1. Phone support
2. Email
3. Live Chat
4. Social Media

5. Online Support Portals

REFERENCE
[Link]
Ckzjre0OHpcjvXKV
 Market Identification and Analysis
Objectives:
At the end of this lesson the students can be able to:
1. Identify the classes of competitors.
2. Classify the product differentiation and positioning.
3. Define market structures, its characteristics and types.
4. Define Market Segmentation & Size.
5. Explain the beachhead market and creating your market
6. Understand the strategy of marketing strategy and environment
7. Describe the process of marketing plan
8. Explain the marketing strategies and marketing plan
9. Discuss the features of marketing and marketing customer behaviors

DEFINITION OF MARKETING
Marketing is the process of planning, and executing the conception, pricing, promotion, and distribution of
ideas, goods and services to create exchanges that satisfy individual and organizational objectives.
A market is any place where sellers of particular goods or services can meet with buyers of those goods and
services.
The marketing concept is the strategy that firms implement to satisfy customer’s needs, increase sales,
maximize profit and beat the competition.

MARKET IDENTIFICATION
The process of selecting the groups of customers to focus on in a firm’s marketing mix. It involves finding
out why customers would buy from you, dividing the market into segments according to demographics and
other characteristics, and then finding the most profitable segments to include in your target market. It
affords a more effective marketing mix that maximizes your reach and profits.

UNDERSTANDING THE MARKETPLACE AND COSTUMER NEEDS

There are five different core customer and marketplace concepts.
1. Customer needs, wants and demands. Human needs are states of felt deprivation and can include
physical, social and individual needs. Wants are the form human needs take as they are shaped by
culture and individual personality. Demands are human wants that are backed by buying power.

2. Market offerings are a combinations of products, services and experiences offered to a market to
satisfy a need or want. These can be physical products, but also services – activities that are
essentially intangible. The phenomenon of marketing myopia is paying more attention to company
products, than to the underlying needs of consumers.

3. Value and satisfaction are key building blocks for customer relationships.

4. Exchanges are the acts of obtaining a desired object form someone by offering something in return.
Marketing consists of actions trying to build an exchange relationship with an audience.

5. A market is the set of all actual and potential buyers of a product or service. Marketing involves
serving a market of final consumers in the face of competitors.
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY
Marketing management is the art and science of choosing target markets and building profitable
relationships with them. The aim is to find, attract, keep and grow the targeted customers by creating and
delivering superior customer value. The target audience can be selected by dividing the market into
customer segments (market segmentation) and selecting which segments to go after (target marketing). A
company must also decide how to serve the targeted audience, by offering a value proposition. A value
proposition is the set of benefits or values a company promises to deliver.

There are five alternative concepts that companies use to carry out their marketing strategy.
1. The production concept: the idea that consumers will favour products that are available and
highly affordable and that the organisation should therefore focus on improving production
and distribution efficiency.
2. The product concept: the idea that consumers will favour products that offer the most
quality, performance, and features and that the organisation should therefore devote its
energy to making continuous product improvements.
3. The selling concept: the idea that consumers will not buy enough of the firm’s product, unless
it undertakes a large-scale selling and promotion effort.
4. The marketing concept: the idea that achieving organisational goals depends on knowing the
needs and wants of target markets and delivering the desired satisfactions better than
competitors do. It can be regarded as an “outside-in view”.
5. The societal marketing concept is the idea that a company’s marketing decisions should
consider consumer wants, the company’s requirements, consumers’ long-term interests and
society’s long-term interests. Companies should deliver value in a way that maintains
consumers and society’s well-being.

Constructing an integrated marketing plan

A marketing strategy outlines which customers it will serve and how it will create value. The
marketer develops an integrated marketing plan that will deliver value to customers. It contains the
marketing mix: the tools used to implement the strategy, which are the four Ps: product, price, place and
promotion.
A. Building customer relationships
 Customer relationship management (CRM) is the overall process of building and
maintaining profitable customer relationships by delivering superior customer value
and satisfaction.
 Customer-perceived-value, which is the customer’s evaluation of the difference
between all the benefits and all the costs of a marketing offer, in relation to those of
competing offers.
 Customer satisfaction, which is the extent to which a product’s perceived performance
matches a buyer’s expectations. Customer delight can be achieved by delivering more
than promised.
 Customer-managed relationships: marketing relationships in which customers,
empowered by today’s new digital technologies, interact with companies and with each
other to shape their relationships with brands.
 Consumer-generated marketing: brand exchanges created by consumers themselves,
by which consumers are playing an increasing role in shaping their own brand
experiences and those of other consumers.
  Partner relationship management means working closely with partners in other
company departments and outside the company to jointly bring greater value to
customers. These partners can be inside the company, but also outside the firm.
 Supply chain is a channel, from raw material to final product, and the companies
involved can be partners through supply chain management.
B. Capturing customer value
 Customer lifetime value is the value of the entire stream of purchases that the
customer would make over a lifetime of patronage.
 Share of customer, the portion of the customer’s purchasing that a company gets in its
product categories.
 Customer equity is the total combined customer lifetime values of all of the company’s
customers. It is the future value of the company’s customer base.

When building relationships, it is important to build the right relationships with the right customers.
Customers can be high- or low-profitable and short-term or long-term oriented. When putting these on two
axes, a matrix of four terms appears.
1. Butterflies are profitable, but not loyal and have a high profit potential.
2. True friends are both profitable and loyal and the firm should invest in a continuous relationship.
3. Barnacles are loyal, but unprofitable. If they can’t be improved, the company should try to get rid of
them.
4. Strangers are not loyal and unprofitable, the company should not invest in them.

STRATEGIC MARKETING PARTNERS

Strategic planning is the process of developing and maintaining a strategic fit between the organisation’s
goals and capabilities and its changing marketing opportunities. It is the base for the long term planning of
the firm. At a corporate level, the firm starts defining the company’s mission.
A mission statement is a statement of the organisation’s purpose. The mission leads to a hierarchy of goals.

Management Business Plan

 Business Portfolio: the collection of the businesses and products that make the company.
 Portfolio analysis is the process by which management evaluates the products and businesses that
make up the company. The first step is identifying the strategic business units (SBU) that are vital to
the company.
 Product/market expansion grid is a portfolio-planning tool for identifying company growth
opportunities through:
 Market penetration: company growth by increasing sales of current products to current
market segments without changing the product.
 Market development: company growth by identifying and developing new market segments
for current company products.
 Product development: company growth by offering modified or new products to current
market segments.
 Diversification: company growth through starting up or acquiring businesses outside the
company’s current products and markets.

Company needs strategies such as:

 Downsizing, which means reducing the business portfolio by eliminating products or business units that
are not profitable or that no longer fit the company’s overall strategy.
 Value chain: the series of internal departments that carry out value-creating activities to design,
produce, market, deliver and support a firm’s products.
 Value delivery network is the network composed of the company, its suppliers, its distributors and
ultimately its customers who partner with each other to improve the performance of the entire system.

MARKETING STRATEGY
Marketing strategy is the marketing logic by which the company hopes to create customer value and
achieve profitable customer relationships. The company must choose which customers to serve and how to
serve them. It is a process or model to allow a company or organization to focus limited resources on the
best opportunities to increase.

This process involves four steps:

1. Market segmentation: dividing a market into distinct groups of buyers who have different, needs,
characteristics or behaviour and who might require separate products or marketing programmes. A
market segment is a group of consumers who respond in a similar way to a given set of marketing
efforts.
A market segment is a group of people in a homogeneous market who share common
marketable characteristics such as interests, geography, age, demographic, or lifestyle. Commonly used
in marketing strategies, market segments help companies optimize their product or service to suit a
given segment’s needs. Often, market segments are used to identify a target market.
Market Segmentation the process of separating, identifying, and evaluating the layers of a
market to identify a target market. Seeks to identify targeted groups of consumers to tailor products
and branding in a way that is attractive to the group. Helps companies minimize risk by figuring out
which products are the most likely to earn a share of a target market and the best ways to market and
deliver those products to the market.

Three (3) Criteria to Identify Different Market Segments

1. Homogeneity –common needs within a segment
2. Distinction –being unique from other groups
3. Reaction –a similar response to the market

Market Segmentation Strategies

 Geographic Segments –customers are targeted locally, state wide, regionally, or nationally
 Demographic Segments -customers are targeted by their age, gender, race, income, and education
level
 Psychographic Segments -identification based on attitudes, beliefs, emotions, lifestyle, and hobbies
 Behavioural Segments -identification based on various patterns such as purchasing occasion and
loyalty status

Market Size
The "market size" is made up of the total number of potential buyers of a product or service within a
given market, and the total revenue that these sales may generate.

TYPES OF TARGET MARKETS BASED ON SEGMENTATION

a. Age
b. Gender
c. Race
d. Income
 e. Religion
f. Occupation
g. Family size
h. Geographic location
i. Zip code
2. Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or
more segments to enter.
COMMON TYPES OF TARGET MARKETING
a. Customers Need
b. Customer preferences
c. Values
d. Demographics
e. Location
f. Behavior
g. Lifestyles
h. Price Sensitivity
i. Competitive targeting
3. Positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to
competing products in the minds of consumers.
Positioning is a strategic process that marketers use to determine the place or niche an offering
should occupy in a given market, relative to other customer alternatives. It is a marketing moves to
figure out ways to situate the product favourably in potential consumers' minds in relation to its
competitors. The marketing and promotional plan manipulate symbols, such as in displays and
packaging, and communicates tailored messages targeted to people most likely to value what is being
marketed.

FOUR TYPES OF PRODUCT

1. Valuable but not Undifferentiated
2. Differentiated but not Valuable
3. Undifferentiated and not Valuable
4. Differentiated and Valuable

4. Differentiation is actually differentiating the market offering to create superior -customer value.

Marketing mix is the set of tactical marketing tools: product, price, place and promotion that the firm
blends to produce the response it wants in the target market.

The Marketing Mix P’s is a significant tool to help you select and create the right marketing strategies for
your business. It forces you to think about which areas of your business you can change or improve on, to
help you meet the needs of your target market, add value and differentiate your product or service from
your competitors.
The areas you need to make decisions about are:
1. PRODUCT/SERVICE
The Product should fit the task consumers want it for, it should work and it should be what the
consumers are expecting to get. The product or service element refers to what you are offerings
awhile to your customers. Product decisions include functionality, branding, packaging, service,
quality, appearance and warranty terms.
 2. PRICE.
The Product should always be seen as representing good value for money. This does not necessarily
mean it should be the cheapest available; one of the main tenets of the marketing concept is that
customers are usually happy to pay a little more for something that works really well for them. The
price element refers to the way you set prices for your products or services. It should include all the
parts that make up your overall cost, including the advertised price, any discounts, sales, credit
terms or other payment arrangements.
3. PROMOTION
Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all
key communication tools for an organization. These tools should be used to put across the
organization’s message to the correct audiences in the manner they would most like to hear,
whether it be informative or appealing to the emotion. Promotion refers to all the activities and
methods you use to promote your products/services to your target market. It includes sales, public
relations, direct marketing, advertising, sponsorship and social media.
4. PLACE
The product should be available from where your target consumer finds it easiest to shop. The
place element refers to how you get your product or service to your customers at the right time, at
the right place, and in the right quantity. It includes distribution channels location, logistics, service
levels and market coverage.
5. PEOPLE
All companies are reliant on the people who run them from front line Sales staff to the Managing
Director. Having the right people is essential because they are as much a part of your business
offering as the products/services you are offering. The people element refers to your customers,
yourself and your staff. You need to consider both your staff and customers if you’re thinking of
growing your business. It includes understanding what your customers’ needs and wants are,
setting targets and measuring your customer service levels so that you attract and keep loyal
customers.
6. PROCESSES
The delivery of your service is usually done with the customer present so how the service is
delivered is once again part of what the consumer is paying for.
7. PHYSICAL EVIDENCE
Almost all services include some physical elements even if the bulk of what the consumer is paying
for is intangible. For example a hair salon would provide their client with a completed hairdo and an
insurance company would give their customers some form of printed material.

FOUR MARKETING MANAGEMENT FUNCTION

 Marketing analysis, starting with a SWOT analysis. SWOT analysis is an overall evaluation of the
company’s strengths (S – internal capabilities), weaknesses (W – internal limitations), opportunities (O –
external factors that can be profitable) and threats (T – external factors that might challenge the
company).
 Marketing planning involves choosing the right marketing strategies.
 Marketing implementation: turning marketing strategies and plans into marketing actions to accomplish
strategic marketing objectives.
 Marketing control: measuring and evaluating the results of marketing strategies and plans and taking
corrective action to ensure that the objectives are achieved.
➢ Operating control refers to checking the performance against the annual plan
➢ Strategic control involves looking at the match between strategies and opportunities.
THE 7 FUNCTIONS OF MARKETING: A FIELD GUIDE
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MARKETING ENVIRONMENT
Marketing environment consists of the actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers. It consists both
of the micro and macro environment.
 Microenvironment consists of the actors close to the company that affect its ability to serve its
customers, such as: the company itself and its subdivisions and suppliers that provide the resources
the firm needs to produce its products.
• Marketing intermediaries, which are firms that help the company to promote, sell and distribute its
goods to final buyers.
➢ Resellers are distribution channel firms.
➢ Physical distribution firms help the company stock goods
➢ Marketing service agencies are marketing research firms.
➢ Financial intermediaries include banks and credit companies.

Public is any group that has an actual or potential interest in or impact on an organisation’s ability to
achieve its objectives. These can be financial publics, media publics, government publics, local publics,
general public and internal publics.
Customers are the most important actors. Consumers markets consist of individuals that buy goods for
personal consumption. Business markets buy goods for usage in production processes, while reseller
markets buy to resell at a profit. Government markets consist of buyers who use the product for public
service, and international markets consist of all these types of markets across the border.
 Economic environment consists of economic factors that affect consumer purchasing power and
spending patterns. Countries vary in characteristics, some can be considered industrial economies,
while others can be subsistence economies, consuming most of their own output.
 Natural environment involves natural resources that are needed as inputs by marketers or that are
affected by marketing activities. Changes in this environment involve an increase in shortage of raw
materials, increased pollution and increased governmental intervention.
 Environmental sustainability involves developing strategies and practices that create a world
economy that the planet can support indefinitely.
 Technological environment consists of forces that create new technologies, creating new product and
market opportunities. It can provide great opportunities, but also comes with certain danger.
 Political environment consists of laws, government agencies and pressure groups that influence and
limit various organisation and individuals in a given society. Current trends in our world today are
increasing legislation affecting businesses globally and thus an increase in governmental influence
over businesses.
 Cultural environment involves instructions and other forces that affect society’s basic values,
perceptions, preference and behaviour. Cultural factors influence how people think and consume.
 Core beliefs are fundamental and passed on by parents and reinforced by the environment.
Secondary beliefs are more open to change. People can vary in their views of themselves, of others,
of organisation, but also in their views of society, nature and the universe.

COSTUMERS INSIGHT
Customer insights are fresh understanding of customers and the marketplace derived from marketing
information that become the basis for creating customer value and relationships. To gain this information,
companies must design.

Marketing information systems (MIS), which are people and procedures for assessing information needs,
developing the needed information and helping decision makers to use the information to generate and
validate actionable customer and market insights. A MIS helps to assess information needs, develop needed
information and analyse the right information to form customer insights.

Internal databases are electronic collections of consumer and market information obtained from data
sources within the company network. Internal data can be a strong base for a competitive advantage,
because of the potential of this information.

Competitive marketing intelligence is the systematic collection and analysis of publicly available
information about consumers, competitors and developments in the marketing environment. Good
marketing intelligence helps gain insights in how consumers think of and connect with the brand.

BENEFITS OF TARGET MARKET IDENTIFICATION

1. More effective marketing mix.
2. Helps you choose the right marketing channels.
3. Uses limited time, money, and resources more efficiently
4. Maximizes sales and profits.

STEPS FOR THE IDENTIFICATION OF THE TARGET MARKET

1. Assess product or service characteristics
2. Identify why customers would buy from you.
3. Identify the most relevant dimensions of segmentation.
4. Segment the market according to specific criteria.
5. Choose the most profitable segments to include in the target market.

EXAMPLE OF MARKET IDENTIFICATION OF LEADING FIRMS

1. Nike Target Market
Nike sells apparel, equipment, shoes, and accessories to athletes and people who play sports. Their
products are good quality and last for a long time, driving the price range up enough so that only
people with disposable income can afford to purchase their products. They specifically target young
aspiring athletes and runners, two groups of people who rely on motivation to continue pushing
themselves beyond their normal limitations.
2. Netflix Target Market
 A lesson to be learned from Netflix has less to do with its actual target market, which is constantly
evolving, and more to do with their approach to reaching their target market. They continuously
conduct research on their audience and meticulously provide them with what they want. From
mail-in DVD rentals to a behemoth online streaming service, Netflix has notoriously leaned into its
audience and pivoted when needed. And in doing so, they let word-of-mouth marketing fuel their
sales.

MARKET ANALYSIS
A large part of market research and an important component of business plan. A quantitative and
qualitative assessment of a market. It looks into the size of the market both in volume and in value, the
various customer segments and buying patterns, the competition, and the economic environment in terms
of barriers to entry and regulation. Forms the basis of the development of a marketing strategy and
concrete marketing measures

WHY CONDUCT A MARKET ANALYSIS

 With market analysis, you can back up your business idea with figures, data, and facts, and
therefore provide a convincing business plan.
 You can recognize market potential at an early stage and avoid making the wrong decisions.
 You can identify any existing knowledge gaps and fill them in on time.
 A market analysis shows you which competing products are already on the market.

HOW TO DO A MARKET ANALYSIS

The objectives of the market analysis section of a business plan are to show to investors that:
 you know your market
 the market is large enough to build a sustainable business
In order to do that follow the plan
1. Demographics and Segmentation
The first step of the analysis consists in assessing the size of the market. When assessing the size of
the market, your approach will depend on the type of business you are selling to investors.
2. Target Market
Once you have estimated the market size you need to explain to your reader which segment/s of
the market you view as your target market. The target market is the type of customers you target
within the market. For example, if you are selling jewellery you can either be a generalist or decide
to focus on the high end or the lower end of the market. This section is relevant when your market
has clear segments with different drivers of demand. In my example of jewels, value for money
would be one of the drivers of the lower end market whereas exclusivity and prestige would drive
the high end
3. Market Need
Now it is time to focus on the more qualitative side of the market analysis by looking at what drives
the demand (divers of demand factors impact each consumer's decision to buy something). This
section is very important as it is where you show your potential investor that you have an intimate
knowledge of your market. You know why they buy. Here you need to get into the details of the
drivers of demand for your product or services.

THE 5 DRIVERS OF DEMAND

 1. PRICE of the good or service-the law of demand states that when prices rise, the quantity of
demand falls.
2. INCOME OF BUYERS-when income rises, so will the quantity demanded.
3. PRICES OF RELATED GOODS OR SERVICES—either complementary and purchased along
with a particular item, or substitutes bought instead of a product
4. TASTES or preferences of consumers -when the public’s desires, emotions, or preferences
change in favour of a product, so does the quantity demanded.
5. CONSUMER EXPECTATIONS about whether prices for the product will rise or fall in the
future -when people expect that the value of something will rise, they demand more of it
4. Competition
The aim of this section is to give a fair view
of who you are competing against. You
need to explain your competitors'
positioning and describe their strengths
and weaknesses. You should write this part
in parallel with the Competitive Edge part
of the Strategy section. The idea here is to
analyse your competitor's angle to the
market in order to find a weakness that
your company will be able to use in its own
market positioning.

The figure shows an example of a furniture

shop in France. As you can see from the table all the actors on the market are currently focused on
the low medium range of themarket leaving the space free for a high end focused new player
5. Barriers to Entry
It protects your business from new competition.
Here are a few examples of barriers to entry:
1. Investment
2. Technology
3. Brand
4. Regulation
5. Access to resources
6. Access to distribution channels
7. Location
6. Regulation
Regulation refers to licenses and concessions in particular or requirements by the authority to start
a business, which is usually one of the barriers to entry. Explain the main regulations applicable to
your business and which steps you are going to take to remain compliant.

MARKETING RESEARCH
Marketing research is the systematic design, collection, analysis and reporting of data relevant to a specific
marketing situation facing an organisation. The process of marketing research has five steps:

1. Defining the problem and research objectives. The objective of exploratory research is to gather
preliminary information that will help define problems and suggest hypotheses. The objective of
 descriptive research is to better describe marketing problems, situations or markets. Causal
research aims to test hypotheses about cause-and-effect relationships.
2. Developing the research plan on how the information will be gathered.
Secondary data is information that already exists somewhere, having been collected for another
purpose. Secondary data can be accessed by using commercial online databases, which are
collections of information available from online commercial sources or accessible via the Internet.
Internet search engines can be used to locate secondary data, but the research must verify that the
found information is relevant, accurate, current and impartial. Primary data is information collected
for the specific purpose at hand. It can be collected via observational research, which gathers
primary data by observing relevant people, actions and situations. Ethnographic research is a form
of observational research that involves sending trained observers to watch and interact with
consumers in their “natural environments”.
Primary data can also be collected via survey research, which gathers information by asking people
questions about their knowledge, attitudes, preferences and buying behaviour.
Experimental research gathers primary data by selecting matched groups of subjects, giving them
different treatments, controlling related factors and checking for differences in group response.
Online marketing research collects primary data online through Internet surveys, online focus
groups, web-based experiments or tracking consumer’s behaviour online. Online focus groups
gather a small group of people online with a trained moderator to chat about a product, service or
organisation and gain qualitative insights about consumer attitudes and behaviour.
Customer relationship management (CRM) is managing detailed information about individual
customers and carefully managing customer touch points to maximise loyalty. It means capturing
and using consumer data to manage customer interactions and build customer relationships. Data
mining techniques can be used to access customer data. By using CRM to understand customers,
relationships with them can be deeper.
3. Collect Relevant Data and Information
In marketing research, most of the data you collect will be quantitative (numbers or data) versus
qualitative, which is descriptive and observational. Ideally, you will gather a mix of the two types of
data.
Quantitative research can be defined as a systematic investigation of phenomena by gathering
quantifiable data and performing statistical techniques. In other words, it is the collection of data
that is numerical in nature. It is ideal for identifying trends and averages, making predictions, and
generalizing results for large [Link] often start with a hypothesis, and then collect data
which can be used to determine whether the data supports the hypothesis.

Qualitative research is defined as a method that focuses on obtaining data through open-ended
and conversational communication. It is about gaining a better understanding of “what” people
think, and “why” they think so. This method goes more into depth into individuals in a population,
which is not necessarily representative for the whole population and cannot be generalized in the
same way as quantitative research. Qualitative research is an exploratory method, and can lead to
the generation of a hypothesis.

Data type: Quantitative research deals with numerical data, focusing on quantifiable variables,
while qualitative research deals with non-numerical data and information.

Purpose: Quantitative aims to identify patterns and trends in a data set, and the objective is to
provide precise answers and test hypotheses. Qualitative research aims to explore underlying
reasons, motivations and opinions. It delves into the depth of human behaviour.
 Sample size: Quantitative research often involves larger sample sizes to ensure statistical
significance and generalisability. Qualitative research involves smaller sample sizes, often in the
range of a dozen participants, or even less.

Data collection methods: Quantitative data is collected through structured surveys or observations
with closed-ended questions. Qualitative data is collected through methods like interviews, focus
groups, observations, and open-ended surveys.

4. Analyze Data and Report Finding

5. Put Your Research Into Action

MARKET IDENTIFICATION AND ANALYSIS

In Market Identification and Analysis we have to consider 5categories:
1. Classes of Competitors
2. Product Differentiation, Positioning
3. Market Structure
4. Market Segmentation & Size
5. Beachhead Market and Creating your market

COMPETITOR
A competitor is a person, business, team, or organization that competes against you or your company. If
somebody is trying to beat you in a race, that person is your competitor.

In business, we call a close a competitor a rival. In other words, rivals are the same size and make similar
products.

If two companies are leaders in their field, we refer to them as arch rivals.

Examples of Largest firms that are arch rivals

There are 5 types of competitors:

1. Direct competitors-a firm that sells the same and services as you in the same markets.
2. Potential competitors-a direct, indirect or replacement competitor that currently has no
distribution in our markets.
3. Indirect competitors-a firm that sells different of products and services but are in the same industry
and same markets.
4. Future competitors-a firm that has business capabilities that would allow them to quickly take
market share if they entered your markets.
5. Replacement competitors-a firm that sells products and services that are indifferent industry that
could be used as a substitute for your products.
Market Structure refers to how different industries are classified and differentiated based on their degree
and nature of competition for goods and services. Economic market structures can be grouped into four
categories: perfect competition, monopolistic competition, oligopoly, and monopoly.

MARKET SEGMENTATION AND SIZE

BEACHHEAD MARKET AND CREATING YOUR OWN MARKET

Beachhead is derived from a military strategy that advocates that, as you are approaching an enemy
territory, you should plan and focus all your resources on winning a small border area that become a
stronghold area from which to advance into the enemy territory.

Beachhead Market is a small market with specific characteristics that make it an ideal target to sell a new
product or service. The choice of the market is based on the compatibility between the resources available,
the product, and the market itself.

Conditions that Define a Beachhead Market

 Customers purchase similar products
 Customers have similar sales cycles
 Word of mouth communication between customers

Strategies for Creating New Markets

1. Sell the market concept before building a product.
2. Highlight positive social and environmental impacts.
3. Incentivize your team to think “outside-the-box” continually.
4. Work to build a compelling story around your new idea.
5. Use social media and traditional media to build demand for change

MAJOR TYPES OF MARKET

CONSUMER MARKET
Individuals and households who buy goods for their own use or benefit are part of the consumer
market.
 1. Fast-Moving Consumer Goods Sector
 Purchase low-value items regularly
 Goods with a relatively shorter self-life
 Low profits by distributing large volumes
 Intense price competition
2. Consumer Durables Sector
 A category of products that are designed to last a long time
 Purchased less frequently
3. Consumer Non-Durables Sector
 Purchased for immediate use
 Items typically have a lifespan of several minutes up to three years.
 Products that must be purchased regardless of the state of a country’s economy.

BUSINESS MARKET
All the organization that acquire goods and services used in the production of other products and
services that are sold, rented or supplied to others. The business market do not purchase for personal
consumption.
6. Industrial Market – Major criterion is keeping production satisfied in order to that material
and components are available for incorporation in production process
7. Resale Market – Principal criterion is the mark-up percentage that can be added to goods
that are purchased from manufacturers and wholesalers in bulk and then resold to
individual consumers.

GOVERNMENT MARKET
The government organizations are a major buyer of goods and services. Examples are major
infrastructural projects and production are government undertakings, government markets become a very
important part. Government organizations typically require suppliers to submit bids and normally they
award the contract to lower bidder.

INSTITUTIONAL MARKETS
This consists of schools, hospitals, nursing homes, prisons and other institutions that must provide
goods and services to people in their care.

DISTRIBUTION OF THE PRODUCT AND SERVICES

Distribution refers to how and when to move the product from the greenhouse to the customer’s home,
store display, or wholesaler. Distribution strategies are; intensive, selective, or exclusive.

1. Intensive Product Distribution

 Involves widespread placement of the product at low prices
 The aim is to saturate the entire market with the product.
 This strategy can be expensive and very competitive.
 Large-scale producers who market nationally or intentionally often employ this method
Example
Biscuits, Wheat, Chocolates, Soap, Soft Drinks, Cigarettes
2. Selective Product Distribution
 Selecting a small number of intermediate, usually retailers, to handle the product
  Offers the advantages of lower marketing costs and the ability to establish better working
relationships with customers and intermediaries.
Examples
Cars, Clothing, watches
3. Exclusive Distribution
 Extreme version of selective distribution
 Producer agrees not to sell to another buyer
 In exchange, the buyer may agree to buy that product only from the producer
 Carries promotional advantages
 Such as the creation of a prestigious image for your product, and oftern involves reduced
marketing cost
Examples
Automobiles, Women’s Apparel, Major Appliance, Furniture

PRODUCT PRICING STRATEGY

In

general, prices are set by determining how much it costs to produce the product and adding a fair price for
the benefits that the customer will enjoy.

Product Pricing Strategies for Differentiated Products

1. Competitive Pricing
 common among large companies and are aimed at undermining competition
 predatory pricing -where a company sets its price below cost to force its competitors out of the
market, is a typical competitive pricing strategy
2. Cost-Oriented Pricing
 most straightforward
 based on production costs plus mark-up
3. Flexible or Variable Pricing
 setting a range of prices for the product
 common when individual bargaining takes place
 prices may vary according to the individual buyer, time of year, or time of day
 4. Penetration or Promotional Pricing
 initially setting the product price below the intended long-termprice to help secure the market
5. Product Line Pricing
 limited range of prices for all of the products in that line
 a line of products may be promoted and priced as “affordable” while another line may be a
premium line with higher prices
6. Relative Pricing
 setting the price above, below, or at the prevailing market price
7. Price Skimming
 setting a high market-entry price to recover costs quickly before lowering the price to the long-
term price
 few or no [Link] Pricing
 are arrangements between the buyer and the seller in advance and usually include the price,
payment conditions, grower responsibilities, storage, and shipping arrangements
8. Contract Pricing
 are arrangements between the buyer and the seller in advance and usually include the price,
payment conditions, grower responsibilities, storage, and shipping arrangements

Common Pricing Mistakes:

 Pricing too high relative to customers’ existing value perceptions.
 Failing to adjust prices from one area to another based upon fluctuating costs and the customer’s
willingness and ability to pay from one market to another.
 Attempting to compete on price alone.
 Setting prices too low with the intention of raising the prices later.
 Discounting prices

CONSUMER BUYER BEHAVIOUR

Consumer buyer behaviour is the buying behaviour of final consumers: individuals and households that buy
goods and services for personal consumption. All these consumers add up to the consumer market: all the
households and individual that buy or acquire goods and services for personal consumption. Consumers
make buying decisions every day, but it can be difficult to determine why they make certain decisions.
Consumer purchases are influenced by different characteristics.

 Cultural Factors
Cultural factors have an influence on consumer behaviour. Culture is the set of basic values, perceptions,
wants and behaviours learned by a member of society from family and other important institutions. A
subculture is a group of people with shared value systems based on common life experiences and
situations. They are distinct, but not necessarily mutually exclusive. Social classes are relatively permanent
and ordered divisions in a society whose members share similar values, interests and behaviours.

 Social Factors
Another influence is social factors. Groups are two or more people who interact to accomplish individual or
mutual goals. Many small groups influence a person’s behaviour. Membership groups are groups in which a
person belongs, while reference groups serve as direct points of comparison.

Word-of-mouth influence of friends and other consumers can have a strong influence on buying behaviour.
An opinion leader is a person within a reference group who, because of skills, knowledge, personality or
other characteristics, exerts social influence on others. Marketers try to identify the opinion leader and aim
their marketing efforts towards this person. Buzz marketing involves creating opinion leaders to serve as
brand ambassadors. Online social networks are online communities, such as blogs, social networking sites
or even virtual worlds, where people socialize or exchange information and opinions.

Family can have a strong influence on buying behaviour as well. Buying role patterns in families change
with evolving consumer lifestyles. A person belongs to many groups beside the family, also clubs,
organisation and online communities. The position of a person in a group is defined in terms of role and
status. A role consists of the expected actions of a person. People usually choose products appropriate to
their role and status.

 Personal Factors
Personal characteristics also have an influence on consumer buyer behaviour. These characteristics can be
the person’s age and life-cycle stage, the person’s occupation and economic situation, but also lifestyle and
personality. Lifestyle is a person’s pattern of living as expressed in his or her activities, interests and
opinions. Personality is the unique psychological characteristics that distinguish a person or group.

A brand personality is the mix of human traits that may be used to describe the brand. There are five
general brand personality traits: sincerity, excitement, competence, sophistication and ruggedness.

 Psychological Factors
Buying behaviour is influenced by four major psychological factors: motivation, perception, learning and
beliefs and attitudes.
 Motive (drive) is a need that is sufficiently pressing to direct the person to seek satisfaction of the
need. Motivation research refers to qualitative research designed to find consumer’s hidden
motivations. Maslow’s hierarchy of needs categorizes needs into a pyramid, consisting of
psychological needs, safety needs, social needs, esteem needs and self-actualisation needs.
 Perception is the process by which people select, organise and interpret information to form a
meaningful picture of the world. People from different perceptions of the same stimulus because of
three perceptual processes: selective attention, selective distortion and selective retention.
 Learning describes changes in an individual’s behaviour arising from experience. A drive is a strong
stimulus that calls for action. Cues are minor stimuli that determine how a person responds.
 A belief is a descriptive thought that a person holds about something. An attitude is a person’s
consistently favourable or unfavourable evaluations, feelings and tendencies toward an object or
idea. Attitudes can be difficult to change, because they are usually part of bigger pattern.

There are different types of buying decision behaviour.

 Complex buying behaviour is characterized by high consumer involvement in a purchase and
significant perceived differences among brands. The buyer will pass through a learning process,
developing beliefs and attitudes and then a purchase choice will follow.
 Dissonance-reducing buying behaviour is consumer buying behaviour characterised by high
involvement, but few perceived differences among brands.

Habitual buying behaviour is consumer buying behaviour characterized by low consumer involvement and
few significantly perceived differences. Repetition of advertisements can create brand familiarity (but not
conviction), which can lead to habitual purchases. Variety seeking buying behaviour is consumer buying
behaviour characterised by low consumer involvement, but significant perceived brand differences.
FIVE STAGES OF BUYER BEHAVIOUR PROCESS
1. Need recognition is the first stage, in which the consumer recognises a problem or need.
2. Information search is the stage in which the consumer is aroused to search for more information, the
consumer may simply have heightened attention or may go into active information search.
Information can be obtained from personal sources, commercial sources, public sources and
experiential sources.
3. Evaluation of alternatives. Alternative evaluation is the process in which the consumer uses
information to evaluate alternative brands in the choice set.
4. Purchase decision is the buyer’s decision about which brand to purchase. Both the attitude of others
and unexpected situational factors can influence the ultimate decision.
5. Post-purchase behaviour is the stage of the buyer decision process in which consumers take further
action after purchase based on their satisfaction or dissatisfaction with a purchase. Cognitive
dissonance is buyer discomfort caused by post-purchase conflict.

The buyer decision process can be different for new products. A new product is a good, service or idea that
is perceived by some potential customers as new. The consumer must decide to adopt them or not. The
adoption process is the mental process through which an individual passes from first hearing about an
innovation to final adoption.

There are five stages in the adoption process: awareness, interest, evaluation, trial and adoption.

BUSINESS BUYING PROCESS

The business buying process has eight stages.
1. Problem recognition: someone in the company recognises a problem or need that can be met by
acquiring a good or a service.
2. General need description is the stage in the business buying process in which a buyer describes the
general characteristics and quantity of a needed item.
3. Product specification is the stage in the business buying process in which the buying organisation
decides on and specifies the best technical product characteristics for a needed item.
4. Supplier search is the stage in which the buyer tries to find the best vendors.
5. Proposal solicitation is the stage in which the buyer invites qualified suppliers to submit proposals.
6. Supplier selection is the stage in which the buyer reviews proposals and select a supplier or suppliers.
7. Order-routine specification is the stage in which the buyer writes the final order with the chosen
supplier(s), listing the technical specifications, quantity needed, and expected time of delivery, return
policies and warranties.
8. Performance review is the stage in which the buyer assesses the performance of the supplier and
decided to continue, modify or drop the arrangement.

E-procurement involves purchasing through electronic connections between buyers and sellers, usually
online. This can be via reverse auctions, trading exchanges, company buying sites and extranet links.
Benefits of e-procurement are lower transaction costs and efficient purchasing.
Institutional market consists of schools, hospitals, nursing homes, prisons and other institutions that
provide goods and services to people in their care. These markets can be extensive and are often
characterized by low budgets. Government markets consist of governmental units (federal, state and local)
that purchase or rent goods and services for carrying out the main functions of government.

MARKETING GOALS
• Building brand awareness.
• Generating a high volume of qualified leads.
• Establishing thought leadership.
• Attributing marketing activities to revenue generation.
• Increasing brand engagement.

MARKETING FEATURES
1. Customer focus
2. Customer satisfaction
3. Objective-oriented
4. Marketing is both art and science
5. Continuous and regular activity
6. Exchange process
7. Marketing environment
8. Marketing mix
9. Integrated approach:
10. Commercial and non-commercial organizations
11. Precedes and follows production
 BUSINESS MODEL
Objectives:
At the end of this lesson the students can be able to:
1. Learn time value of money.
2. Know how to generate revenue for business.
3. Know the price structure and price elasticity.
4. Identify the channels of distribution that represents a chain of businesses.
5. Have an idea what are the different types of strategic partnerships
BUSINESS MODEL
This refers to a company's plan for making a profit. It identifies the products or services the business plans
to sell, its identified target Business models help you develop strategies for customer acquisition, talent
recruitment, key partnership alliances, and business development market, and any anticipated expenses.

Figure — Triangle of Business Model

Development (own illustration based on
Business Model Navigator.)
 WHO are the target customers?
(Customer segments and
relationships)
 WHAT is offered to the customers?
(Value propositions)
 HOW is the value proposition created
and delivered to the customer? (Key
activities, partners, and resources)
 WHY is the business profitable? (Cost
structure & revenue model)

BUSINESS MODEL VS BUSINESS PLAN

A business model describes how an organization creates, delivers and captures value in economic, social,
cultural or other contexts.

A business plan is a document that details the organization’s strategy and expected financial performance
for years to come.

The business model and the business plan are both key elements to an organization’s development, growth
and succession planning and decision making. If the business plan is a road map that describes how much
profit the business intends to make in a given period of time, the business model is the vehicle that gets
you there.

For businesses on take-off, exploring potential business models can help you determine if your business
idea is viable, attract investors and guide your overall management strategy. For established businesses, it
serves as the basis for developing financial forecasts, setting milestones, and setting a baseline for
reviewing your business plan.
TWO SIDES OF BUSINESS MODEL
The front stage is everything to do with the customer-facing elements of the business, and backstage
handles all the aspects of the business process.

KEY COMPONENTS OF BUSINESS MODEL

In its simplest form, a business model can be broken down into three parts:
1. CREATING VALUE-everything it takes to make something: Design, Raw materials, Manufacturing,
Labor
2. DELIVERING VALUE -everything it takes to sell that thing: Marketing, Distribution. Delivering a
service, Processing the sale
3. CAPTURING VALUE –how and what the customer pays: Pricing strategy, Payment methods.
Payment timing
BUSINESS MODEL CANVAS
This Business Model definition was created by the Swiss Consultant Alexander Osterwalder as a result of his
PhD thesis, entitled The Business Model Ontology, in which he researched different business model
definitions to create a single one. It was this document that later gave birth to the popular Business Model
Canvas tool.

The 9 blocks of construction are:

1. Customer Segments
2. Value Proposition
3. Distribution Channels
4. Customer Relationship
5. Revenue Streams
6. Key-Resources
7. Key-Activities
8. Key-Partners
9. Cost Structure

TYPES OF BUSINESS MODEL

1. Freemium Business Model
Freemium is a combination of the words free and premium. Companies following the freemium
business model offer the most basic version of their product or service for free to entice consumers to
purchase the more advanced features, capabilities, or add-ons of the product or service in the future.
The freemium business model works for new companies by cultivating strong relationships with
customers. It also works best for internet-based service companies.
Example
Spotify
Linkin

2. Subscription-Based Model
The subscription-based model allows companies to charge consumers monthly or yearly subscription
fees to access their product or service. This model depends on these consumers continuing to love and
utilize the service. To keep consumers satisfied and paying monthly subscription fees, companies need
to continually improve their products or services to keep up with changing trends or competitors.
Example

3. Peer-to-Peer Business Model

In a peer-to-peer business model, a company acts as the go-between businesses and the customers
interested in purchasing their products or services. The companies using this model provide the
platforms, navigate the regulations, and set pricing for the products or services. A well-known example
of this business model would be ride-sharing services such as Uber. These platforms allow people to
receive rides to and from requested destinations by those who apply to be drivers for the service.

4. Franchise Model
It provides a sense of working for oneself with the added security of having a company’s backing with
familiar trademarks and products. There is a legal and commercial relationship between the franchisor,
the parent company owner (usually a corporation), and the franchisee. The franchisee (or business
owner) is allowed to sell the franchisor’s products or services in exchange for paying a royalty fee.
5. Direct Sales Business Model
In the direct sales model, a company’s employees will be the ones who demonstrate and sell the
products or services being offered directly to the intended consumers. This effectively eliminates steps
within the distribution process, such as wholesalers and the regional distribution centers. This model is
when a person is compensated for sales made by salespersons recruited by them and under their
authority.

6. Affiliate Marketing Business Model

People using the affiliate marketing business model promote and sell products from other companies
online to get paid a percentage of the sales they make. This business model is common with
“influencers” on Instagram or other leading social media apps. They will post about a company’s
product to entice their followers to buy it through them. Many of their followers will buy the product
through the supplied link. It is a win-win situation for both the influencer marketing the product and
the company selling it.

7. E-Commerce Business Model

Electronic commerce, or “e-commerce,” is a business model in which companies and individuals buy
and sell products and services online. Because the business is entirely online, the products and services
offered are nearly limitless. An e-commerce business offers companies the extra convenience of not
needing a physical store. This increases the selection of products available to consumers.

8. Drop-Shipping Business Model

Companies using the drop-shipping business model sell various products on their websites, but
supplying and shipping these products is done by a third-party wholesaler. The significant upside to this
business model is that you do not need to pay for or maintain inventory for any of the products you
sell. It can be costly to store, package, and mail out orders. In this model a third party will handle the
logistics of shipping and making sure the customers receive the products they ordered. The individual
who marketed the products gets a percentage of the sales.

9. Vertically Integrated Business Model

The vertically integrated supply chain business model is when the company controls both supply and
distribution. The company controls all costs of production, inventory stocked, marketing, and pricing.
Because the company has complete control of the product from start to finish, it can decrease
transportation costs and improve sales and profitability.

10. Consulting Business Model

There are two parts to the consulting business model. First, hiring experts or developing a list of
freelancing consultants, and second, charging a fee to provide access to these experts by your clients.
Typically, your experts will provide a service that speaks to the consumer’s needs. Hopefully, the
customer will return to you as further needs arise. Common examples of this could be online tutoring,
mentoring, and freelance work in several different fields.

11. Ad-Supported Business Model

Advertising is a significant component in why some companies are incredibly profitable and why some
will financially fail. Failure to advertise a product or service can lead to people not even knowing a
company exists. The ad-supported business model emphasizes the importance of advertising and the
 sales generated from it. Popular platforms to advertise products or services include print media, online
media, and television.

12. Enterprise Business Model

In the enterprise business model, specific aspects of a business are modelled, such as infrastructures
and asset groups. The company leaders will see what needs to be altered within the business to
maximize profits. The enterprise model is more about evaluating how the business is functioning than it
is about the overall structure of the business.

13. Lock-In Business Model or Lock-In Strategy

The lock-in business model takes customer loyalty and kicks it up a notch. This is done by essentially
locking customers into a company’s product or service by making it difficult to abandon the company
without dealing with negative consequences. Some of these consequences include increased costs or
making it difficult to switch.

14. Multi-Brand Business Model

With the multi-brand business model, a parent company will offer similar products with different brand
names to increase their market share. By doing this, the company effectively reduces any potential
competition. A company with many similar products at different price points will appeal to a significant
number of customers.

15. Razor and Blade Model

The razor and blade model works by selling products or services to consumers at a lower price. Then
later selling a related product or service to the consumer for increased profits. The name razor and
blade comes from King Gillette. Gillette effectively worked to overtake the men’s razor market by
offering a sturdy and reliable razor that required the use of blades only sold by Gillette. As a result, the
company cornered the market on razors for a time and is still dominate today.

16. Distribution Based Business Model

The distribution-based business model facilitates the distribution of products or services offered from
the manufacturers to the consumers. With this model, the business ensures that the mode of
distribution chosen to get the product or service to the consumer is the most direct, and more
importantly, the most cost-efficient manner possible

17. Direct-to-Consumers Business Model

With the direct-to-consumer business model, consumers buy products or services directly from a
company’s website, eliminating the middle-man. The model not only saves the company money but can
be convenient for the customer as well. Consumers would have to physically visit a store to purchase
the product they desire but know they can order the product directly from the company or
manufacturer.

18. Low-Touch Business Model

Some customers want the least amount of interaction with the company possible. Businesses that want
to meet that need should adopt a low-touch business model. Products sold using this model can be
consumed or used with little interference from salespersons or customer service. Due to the pandemic
of2020, many businesses learned to adapt to the threat. These businesses adopted low-touch
strategies to help keep their doors open.
19. Fractionalization Business Model
In this model, companies will sell partial usage of their product or service to consumers, such as offering
a timeshare deal for a condominium in a desirable location. Consumers will receive full benefits of the
timeshare when they are there, but they can only be there for a pre-determined time each year.

20. Pay-As-You-Go Model

As the name suggests, consumers will pay for the service or product as they use it. Meaning there is no
recurring bill or subscription necessary. This model should entice those who do not like to be tied
down. If the product or service is of high quality and worth the price paid, they will continue using it.

21. User-Generated Content Business Model

User-generated content business is a type of content distribution platform where the users create the
content. This model eliminates the need to create content as a primary way to engage visitors. This is
another type of business model that is often combined with the advertising model

TIME VALUE OF MONEY

TVM is the fundamental financial concept that revolves around the changing value of money over time. It
states how the present value of money is greater than its future value. The value that money holds
currently and in the future is assessed based on its potential earning capacity.

The three main reasons that make TVM an important concept are –inflation, risk or uncertainty, and
liquidity.
 INFLATION-is the loss of purchasing power caused by the deteriorating future value of money
 RISK OR UNCERTAINTY-is the difference between what is received as an outcome and expected
when the investment or expenditure was made
 LIQUIDITY-makes it easy for owners to sell their assets for cash as illiquid assets are difficult to sell

REVENUE GENERATION
Revenue generation refers to the process of creating sales of products and services, with the goal of
creating income.

PRICE STRUCTURE
A pricing structure is an approach in products and services pricing which defines various prices, discounts,
offers consistent with the organization goals and strategy. Price structure can affect how company grows
and is perceived by the customers.
Types of Pricing Structure
1. Market Penetration
Pricing the products lowest compared to other competitors to gain a penetration and anchoring in
the market. This attracts a large section of the market specifically the cost-conscious segment and
helps the company to make large profits.
 2. Price Skimming
Introducing a product or service with the highest possible price and slowly reducing the prices over
time. This targets almost every segment over a period of time.
3. Economy Pricing
These products are priced at an affordable rate compared to other competitor products. The target
for these products is the lower economic segment. The quality may or may not be compromised in
case of these products
4. Psychology Pricing
 Marking a Php1000 product as Php999.00 is psychology pricing. The feel of the price is
lower with a lower starting number is the technique used.
 Another variation of the same technique is to run discount pricing. To offer seasonal
discounts on limited products for a limited period of time
5. Premium Pricing
 The price tag for the product is highest amongst all the competitors. The elite pricing is
owing to the superior and unique quality of the product.
 Premium pricing generates assured profits and generally the first one to create a demand in
the market since either they have unique products or are first in the market.

PRICE ELASTICITY
A measure of how consumers react to the prices of products and services. Normally, demand declines when
prices rise, but depending on the product/service and the market, how consumers react to a price change
can vary.
Two Types of Price Elasticity
1. Price elasticity of demand-is a measure in economics to show how
demand responds to a change in the price of a product or service.
2. Price elasticity of supply-is a measure that shows how the quantity
of supply is affected by a change in the price of a good or service.

DISTRIBUTION CHANNEL
A distribution channel represents a chain of businesses or intermediaries through which the final buyer
purchases a good or service. Distribution channels include wholesalers, retailers, distributors, and the
Internet. In a direct distribution channel, the manufacturer sells directly to the consumer.
Types of Distribution Channel
 Direct Channel -when the producer sells goods directly to their
customer.
 Producer→Consumer
 Indirect Channel -when the producer produces goods on a large scale, it
is difficult to make direct selling of the goods to the customers. In this way,
middlemen come into the picture to ensure the availability of the goods to
its customers. It may include wholesalers and retailers.

Indirect Channel
▪One Level: Channel Producer → Wholesaler/Retailer → Consumer
▪Two Level: Channel Producer → Wholesaler → Retailer → Consumer
▪Three Level: Channel Producer → Merchantile Agent → Wholesaler → Retailer → Consumer
 Hybrid Channels -when the manufacturer uses more than one channel to reach the final consumer.
This attracts more consumers and facilitates more sales

STRATEGIC PARTNER
A strategic partner is another business entity with which you form an agreement to share resources with
the mission of growth and mutual success.

Different Types of Strategic Partnerships:

1. Horizontal Partnership: Businesses within the same field join alliances to improve their market
position. Example: Facebook and Instagram.
2. Vertical Partnership: Businesses team up with companies within the same supply chain (suppliers,
distributors and retailers), often to stabilize supply chains and increase sales. The close bond
between an auto manufacturer and its suppliers is an example
3. Equity Partnership: An investor acquires a percentage interest in a business, providing needed
capital and sharing in profits and losses.
4. Joint Venture: Two or more businesses form an entirely new legal entity in which the profits and
risks are shared, and the original companies continue to exist on their own
5. Merger: Two companies agree to go forward as a single new company and the original companies
no longer exist.
6. Acquisition: One company takes over another company and establishes itself as the new owner.
 EXECUTION & BUSINESS PLAN
Objectives:
At the end of this lesson the students can be able to:
1. Critically evaluate the key components of a business plan, differentiating between internal and
external plans, and assessing their suitability for various business contexts and audiences.
2. Develop a comprehensive business plan for a new venture, integrating all essential elements,
including an executive summary, market analysis, marketing strategy, financial projections, and
an execution plan.
3. Compare and contrast the purpose and function of a business plan with that of an execution plan,
explaining how they complement each other in achieving organizational goals.
4. Synthesize the elements of an execution plan, including objectives, strategies, tactics, timelines,
budgets, and resource allocation, and demonstrate how these elements translate a business
plan's strategic goals into actionable steps.
5. Evaluate the role of a SWOT analysis in the business planning process, and justify its use as a tool
for identifying internal strengths and weaknesses, as well as external opportunities and threats.
6. Analyze the importance of a communication plan within the execution process, and develop
strategies for effectively communicating information to both internal and external stakeholders.
7. Define success criteria for a business plan and its execution, and develop appropriate metrics for
measuring progress and evaluating overall effectiveness.

INTRODUCTION
Execution and business plan are two critical components of any successful venture. Without proper
execution, even the best business plan will fail. Similarly, without a well-thought-out business plan,
execution becomes directionless and ineffective. A business plan outlines the company's goals,
strategies, and tactics to achieve those goals. It also includes financial projections and market analysis.
Execution, on the other hand, involves putting the plan into action, monitoring progress, and making
necessary adjustments.

Business plans help you run your business. A good business plan guides you through each stage of
starting and managing your business. You’ll use your business plan as a roadmap for how to structure,
run, and grow your new business. It’s a way to think through the key elements of your business.
Business plans can help you get funding or bring on new business partners. Investors want to feel
confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince
people that working with you — or investing in your company— is a smart choice

BUSINESS PLAN DEFINITION

A business plan is a written document that describes in detail how a business — usually a start-up —
defines its objectives and how it is to go about achieving its goals. A business plan lays out a written
roadmap for the firm from each of a marketing, financial, and operational standpoint.

PURPOSE OF A BUSINESS PLAN

1. Maintaining Business Focus. A business plan contains all of your product information, manpower and
financial estimates and your plans for the future. As you look to grow your business, you should refer to
your business plan, according to the Small Business Administration.
 2. Securing Outside Financing. As you start your business, and even as your business moves along, you will
constantly need to concern yourself with financing your business. Financing concerns begin with the
start-up costs and then continue with business expansion and new product development.
3. Fuelling Ambitions and Mapping Growth. Starting your own business can seem like a daunting task if
you have never done it before. When you break down your business into a business plan, it can
motivate you because it presents the business in an organized fashion, according to the University of
Colorado. Following a business plan can help you to map out the growth of your company and give you
confidence when you need it.
4. Enlightening Executive Talent. As your business grows, you will need to consider adding executives to
your team that can help move your company in the right direction. A business plan will help executive
talent see your business vision and determine whether or not your company is a worthwhile
investment of time and resources.

TYPES OF BUSINESS PLAN

Internal business plan
 An internal business plan keeps your team in sync with your business strategy, sets financial goals and
budgets, and helps you track business performance so you can manage your business better. It’s a
document that can easily be distributed across multiple communications channels, encourages
employee engagement, and leans into uncovering issues and competitive advantages for your
business.
 An internal business plan is a tool that is built to serve you and make your business easier to manage.
It’s the most effective business plan for internal analysis and should be the focal point for regular
strategy sessions. Internal business plans are also frequently used to quickly explore new business
ideas to determine if they are viable. The audience for an internal business plan is typically your
business partners and employees. It is usually not shared beyond the close circle of people who are
involved in your business on a day-to-day basis. With the limited audience and the focus on business
strategy and management, internal business plans are typically less formal. They don’t include much of
what is included in an external business plan

External business plans

 It is used to present your business to people outside of your organization. They are typically part of the
fundraising process and are used to communicate your business strategies and your team to lenders
and investors. External business plans are also used when you are buying or selling a business. Because
of the focus on educating outsiders about your business, external business plans usually include more
detailed information about the team behind the business, the business history, and milestones that
have been achieved. The format is also more formal and typically a little longer than an internal
business plan.

Internal business plan - used to define your business strategy, define who your ideal customers are, outline a
more detailed marketing plan, and set your revenue goals and expense budgets.

External business plan - outlines financial projections, becoming a document designed to attract investors.

ELEMENTS OF A BUSINESS PLAN

1. Executive summary: This section details the business and what it wants toaccomplish.
2. Company description: This overviews the business’s plan and vision.
3. Products and services: This section details the products and services offered.
 4. Market analysis: A business needs to understand its industry and target market.
5. Marketing strategy: This part explains how the company plans to attract and retaincustomers, it
outlines a clear distribution channel, and defines planned advertising andmarketing strategies.
6. Financial plan: A business plan should include a company’s financial planning andprojections.
 Profit/Loss Statement - This answers the question of whether your business is currentlyprofitable.
 Cash Flow Statement - These details exactly how much cash is incoming and outgoingto provide
insight into how much cash a business has on hand.
 Balance Sheet - These outlines assets, liabilities, and equity, which gives insight intohow much a
business is worth.

PARTS OF THE PLAN

Here are the key pieces to a solid Business Plan.

 Title page or Cover page

The title, or heading, of the plan, and very brief description of the business.
The date
The name of the owner
The company name and location
A copyright or confidentiality notice

 Table of Contents
A list of the individual sections and their page numbers, starting with the Title Page and ending with
a section for Special Materials (references, etc.).

 Executive Summary/Overview
A brief, but focused statement (a few sentences or paragraphs) stating why the business will be
successful. This is the most important piece of a Business Plan because it brings everything
together.
Background of the study: History, Current conditions, the concept, over all Objectives, Specific
objectives.

 Description/ Definition of the Company

A close look at how the different components of the business fit together, such as:
Nature of business
Products and services offered by the company
Nature of the Industry
Opportunities available that can be exploited by services and products to be offered
The rationale for the creation of the company ‘=
The rationale for the catering to a specific Market

Information about the nature of the business and the factors that should make Successful. Special
business skills and talents that provide the business with a competitive advantage, such as a unique
ability to satisfy specific customer needs, special methods of delivering a product or service, and so
on.

 Market Analysis/ Market Research

 Identifies specific knowledge about the business and its industry, and the market (or customers) it
serves. An analysis that identifies and assesses the competition. Overall Market, competitive
Factors, other market influences, marketing orientation, market strategy and contingency plans.
1. Situational analysis and target markets;
2. Marketing objectives and goals
3. Marketing strategies
4. Marketing tactics
5. Schedule and budgets
6. Financial data and control

 Situational analysis is a detailed description of the environment or the company and the
product, product line, or services at the time the plan will be initiated and implemented.
 Marketing objective must be stated. To attain the objective, a goal or goals must be
established like being able to sell to a certain area or group of establishments.
 Strategies refer to the actions taken to reach the goals and objectives. An example of a
strategy is direct marketing.
 Marketing tactics refer to how strategy will be carried out. An example is recruiting sales
agents.
 A marketing plan schedule must be prepared showing in detail every marketing activity and
how much money must be allotted.
 Financial date section must contain the following: Sales estimates on a monthly basis Cash
flow requirement

 Development and Production plan

This portion of the business plan will show how the proposed products will be developed before it
is finally scheduled for production. A description of additional work needed or any other activity
must be provided.

 Manufacturing Plan
The quantity and quality of the company’s product or service as described in the marketing plan will
be produced through a well-conceived manufacturing plan. This aspect constitutes an important
portion of the business plan. The manufacturing plan includes a description of the following:
manufacturing facilities, location, size, rentals, purchases, required equipment, equipment costs,
labor requirements and costs, inventory requirements and control, and others.

 Distribution and service plan

The distribution and service plan provides the steps required to effectively bring the product or
service to the market. Pricing, sales, service policies, market penetration, and timing are indicated.
Also included are specific statement about when anticipated events are to take place, and the
assignments of specific responsibilities individual.

A detailed description of the product or service – from the customer’s point of view:
• How they will benefit from the product or service?
• Specific needs or problems that the business can satisfy or solve, focusing especially on
areas where the business has the strongest skills or advantages

 Organization Plan
 The organizational plan indicates how the total job is broken down into man-size jobs which are
provided with specific job titles. Each job title comes with a description of specific duties, and to
whom the person assigned to the job will report. However, in writing the organizational plan as a
part of the business plan, only the description of the exact duties and responsibilities of each of the
key members of management team must be provided. The functions must be matched with the
qualifications of the person assigned to do a specific job. In this regard, the qualification of the
management team must be described.

 Development Schedule
This portion of the business plan will provide information on the series of activities required to
make the business idea a fully operational undertaking. Each stage must indicate the amount of
time required for completion. The use of a Chart will depict the stages in the schedule.

 Financial plan
The financial plan is a document indicating the financing requirements necessary to support a given
set of plans in other areas.” Its main components are the projected income statement and balance
sheet, supported by a cash budget, personal budget, production budget, purchasing budget, and
break-even analysis. The projected income statement is a forecast of all items in the income
statement of the firm for a given period. The cash budget is a projection of future each receipts and
cash disbursement of the firm over various intervals of time.

Explains or projects how the company is expected to perform financially over the next several
years. (Sometimes called a “pro-forma projection.”) Because investors and lenders look closely at
this projection as a measure of your company’s growth potential, professional input is strongly
recommended.

 Funding
 The amount of current and future funding needed to start or expand the business. Includes the
time period that each amount will cover, the type of funding for each (i.e., equity, debt), and the
proposed or requested repayment terms.
 How the funds will be used: For equipment and materials? Everyday working capital? Paying off
debt?

 Appendix
Provides specific information that certain individuals (such as creditors) may want review. It allows
the addition and/or deletion of information as needed, such as:
 Credit histories (personal & business)
 Resumes of key personnel and partners
 Letters of reference
 Details of market studies
 Copies of licenses, permits, patents, leases, contracts, etc.
 A list of business consultants, attorneys, accountants, etc.

EXECUTION PLAN
An execution plan is a detailed roadmap that outlines how a company will achieve its goals and objectives.
It involves breaking down the strategic plan into specific action steps, timelines, and responsibilities for
each task. The execution plan takes the business plan's broad objectives and turns them into actionable
steps. The purpose of an execution plan is to provide a clear and concise framework for achieving the
company's goals. By breaking down the goals into specific action steps and assigning responsibilities and
timelines, the execution plan helps to ensure that everyone on the team understands their role and is
working towards the same objectives. The execution plan also helps to track progress and identify any areas
where adjustments may be needed.

COMPONENTS OF EXECUTION PLAN

The components of an execution plan typically include the following:
1. Objectives: Clear and specific goals that a business plan aims to achieve. Objectives should be
SMART (specific, measurable, achievable, relevant, and time-bound) and aligned with the
company's overall vision and mission.
2. Strategies: High-level approaches that will be used to achieve the business plan's objectives.
Strategies should be aligned with the company's mission and vision and consider factors such as
market trends, competition, and consumer needs.
3. Tactics: Specific actions or steps that will be taken to implement the strategies. Tactics should be
concrete, actionable, and measurable, and should be aligned with the strategies.
4. Timelines: A realistic timeline with deadlines for completing each tactic. Timelines should be
specific, achievable, and include milestones and deadlines for each task.
5. Budget: A financial plan that includes projected costs, revenue, and profit margins. The budget
should include all costs associated with executing the plan and should be regularly reviewed and
updated.
6. Resource allocation: Identifying and allocating the resources needed to execute the plan, including
personnel, equipment, and materials. Resource allocation should be aligned with the tactics and
budget and should consider the availability and capabilities of the resources.
7. Risks and opportunities: Identifying potential risks and opportunities and developing contingency
plans to address them. This component should include a thorough analysis of potential risks and
opportunities and the development of contingency plans to mitigate risks and capitalize on
opportunities.
8. Monitoring and evaluation: Establishing metrics for evaluating the effectiveness of the plan and
monitoring progress against these metrics. The monitoring and evaluation process should be
ongoing and should include regular review and updating of the plan as necessary.
9. Communication plan: Outlining how information will be shared and disseminated within the
organization and with external stakeholders, including investors, customers, and partners. The
communication plan should include clear and concise messaging and should consider the different
communication channels available.
10. Success criteria: Identifying how success will be defined and measured, including financial
metrics, market share, customer satisfaction, and other relevant indicators. Success criteria should
be aligned with the objectives and should be measurable, achievable, and regularly reviewed and
updated

SWOT ANALYSIS
A SWOT analysis is a strategic planning tool used to identify a company's internal and external factors that
influence its success. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It can help a
company to identify its strengths and weaknesses, identify opportunities for growth, and develop strategies
for addressing challenges and maximizing opportunities.
Strengths: Internal factors that the company excels at, such as its unique product or service, talented
employees, or strong brand recognition.
Weaknesses: Internal factors that the company struggles with, such as a lack of resources, ineffective
marketing strategies, or poor customer service.
Opportunities: External factors that the company can capitalize on, such as a growing market, new
technology, or favourable economic conditions.
Threats: External factors that can negatively impact the company, such as competition, regulatory changes,
or economic downturns.
 INTELLECTUAL PROPERTY
Objectives:
At the end of this lesson the students can be able to:
1. Categorize and classify the different types of intellectual property (patents, trademarks,
copyrights, etc.), explaining the unique characteristics, requirements, and scope of protection for
each type.
2. Analyze and evaluate the rationale behind intellectual property systems, explaining how they
balance the rights of creators with the public interest and promote innovation.
3. Compare and contrast the different routes to trademark registration (national, regional,
international), evaluating the advantages and disadvantages of each approach for businesses
operating in different markets.
4. Interpret and apply the legal principles governing trademark infringement, invalidity, and
revocation, and analyze the available defenses and exceptions.
5. Evaluate the strategic importance of trade secrets as a form of intellectual property protection,
and recommend best practices for businesses to safeguard their confidential information.
6. Analyze the role of geographical indications and appellations of origin in protecting the unique
qualities of products linked to specific geographical locations, and explain their importance in
promoting regional economies and cultural heritage.
7. Interpret the principles of copyright law, distinguishing between the protection of ideas and the
expression of ideas, and explaining the concepts of originality, authorship, and exclusive rights.

DEFINITION
Intellectual property (IP) is a creation of your mind or exclusive knowledge. Any new products, services,
processes or ideas you develop are your IP.
Products of the human mind, the fruits of human creativity and innovation: Inventions, Literary and Artistic
Works, Design, “Brands” symbols – Names, and Images used in Commerse
IP rights give IP owners the time and opportunity to commercialise their creations.

TYPES OF IP OR INTELLECTUAL PROPERTY SYSTEMS

There are many IP protection rights. The most common types are:

 patents, which protect inventions and new processes

 trade marks, which protect logos, words and other branding
 copyright, which protects art, writing, music, film and computer programs
 registered designs, which protect the visual design of a product
 circuit layout rights, which protect layout designs or plans of integrated circuits used in computer-
generated designs
 plant breeder’s rights, which protect the commercial rights of new plant varieties.
 Geographical Indications

What is the intellectual property system for?

It enables people to earn recognition and financial benefit from what they invent or create. It aims to foster
a balanced environment in which creativity and innovation can flourish.

THE INTELLECTUAL PROPERTY TREE

THE BASICS OF PATENTS
What is an invention?
A product or a process that provides, in general, a new way of doing something, or offers a new technical
solution to a problem.

What is a patent?
An exclusive right, that allows to prevent or stop others from commercially exploiting the patented
invention
granted by a State or by a regional office acting for several States applicable in the country or region in
which the patent has been filed and granted, in accordance with the law of that country or region for a
limited period, generally 20 years from the filing date of the application.

Three principal requirements for inventions to be protected

(Conditions of patentability)
1. Novelty: New characteristic not known in the body of existing knowledge (prior art) in its technical
field
2. Inventive step / non-obviousness: Cannot be deduced by a person with average knowledge in its
technical field
3. Industrial application /utility: The invention must be of practical use or capable of some kind of
industrial application
If these conditions are not met: A patent should not be granted. If this is discovered later, patents can be
revoked or invalidated.

THE BASICS OF TRADEMARKS

A trademark is a sign, capable of being presented graphically. Which is capable of distinguishing goods or
services of one undertaking from those of other undertakings.

What does a trademark do?

The proprietor of a registered trademark has exclusive rights in the trademark which are infringed by use of
the trademark in the given territory without his consent

Where to register a trademark?

Three possible routes to trademark registration
1. National registration
2. Regional system of registration (for example in Europe, registration of a Community Trade Mark)
3. International filing

What is a sign?
Very few restrictions on what can be a sign
Words, Designs, Letters, Numerals, The shape of goods or their packaging, Slogans, Colours, Sounds, Smells,
Gestures or Taste

What is a graphic representation?

A graphic representation is one which utilises images, lines or characters. In order to render a sign
registrable as a trademark, the graphic representation must be clear, precise, self-contained, easily
accessible, intelligible, durable and objective. In addition, a representation must be sufficiently accessible
and intelligible and not require excessive efforts to be taken for the public to understand it.

Word marks/Device or figurative marks

Shapes
Verbal description? This will rarely be satisfactory as it will not convey the precise appearance of the sign
Example: “A chewy sweet on a stick”

Shapes
Design drawings Photographs

Capacity to distinguish
The sign must be capable of distinguishing the goods or services of one undertaking from the goods or
services of another A failure to comply with this requirement constitutes an absolute ground for refusal of
registration

Absolute grounds for refusing to register a trademark

Categories of absolute grounds
Exclusion from registrability of signs that are:
- Non-distinctive (ex: single letters or numerals)
- Descriptive (ex: BABYDRY for nappies)
 - Generic (ex: aspirin, escalator, sellotape, hoover)
- Contrary to public policy or morality
- Likely to deceive the public
- Prohibited by law - Made in bad faith

Relative grounds for refusing to register a trademark

Here we compare the sign that is being applied for with signs that are already on the register.

 Trademark infringement
The proprietor of a registered trademark has exclusive rights in the trademark which are infringed by
use of the trademark in the given territory without his consent
- No requirement of knowledge or intention on the part of the defendant. Liability is strict
- No need to demonstrate damage

 Invalidity and revocation

A trademark may be declared invalid if it was registered in breach of one of the absolute or relative
grounds for refusal.
- A trademark may be revoked
- For non use
- For suspension of use
- If the trademark has become the “common name in the trade” (generic)
- If the trademark has been used in a way so that it is liable to mislead the public (deceptive)

Defences - use of name or address, descriptive use and intended purpose

Usually, a registered trademark is not infringed by:
- The use by a person of his own name or address
- The use of indications concerning the kind, quality, intended purpose, value, geographical origin,
the time of production of goods or of rendering of service, or other characteristics of goods and
services
- The use of the TM where it is necessary to indicate the intended purpose of a product or service
- In comparative advertising
Provided that the use is in accordance with honest practices in industrial and commercial matters.

THE BASICS OF TRADE SECRET

What are Trade Secret?
A secret commercial value subject to a reasonable steps to keep it secret.

Why trade secret?

No procedural formalities. Unlimited period of time.

What is the risk?

If discovered or leaked, it can be used by others.

THE BASICS OF GEOGRAPHICAL INDICATIONS

What’s in your mind when you hear:
Champagne Cognac Roquefort Chianti Pilsen Porto Sheffield Havana Tequila Darjeeling?
What are Geographical Indications?
A sign used on goods that have a specific geographical origin (the name of the place of origin of the goods
and/or symbols without literally naming its place of origin). Possess qualities, reputation or characteristics
that are essentially attributable to that place of origin. In short, to be distinct due to geographical location.

Why Geographical Indications?

Identify its source Indicate the unique qualities Promote the product with a distinguishing name Prevent
infringement and unfair competition

What are “Appellations of Origin”?

Stronger link with the place of origin exclusively or essential quality or characteristics due to geographical
origin the raw materials and the processing.

THE BASICS OF INDUSTRIAL DESIGNS

What is an industrial design?
It is the ornamental or aesthetic aspect of an article.
3-D → shape or surface of an article
2-D → patterns, lines or color

Why protect industrial designs?

A design is what makes a product attractive and appealing. It contributes to commercial value and
marketability, promotes fair competition and honest trade practices and helps economic development, by
encouraging creativity,

How can industrial designs be protected?

In most countries, must be registered in order to be protected. - unregistered design
Must be “new” or “original” - no identical or very similar design is known to have existed before

THE BASICS OF COPYRIGHT

Copyright rights over literary and artistic “works”

What is a work?
- Categories of works
- literary works
- dramatic works
- musical works
- artistic works
- cinematographic works
- sound recordings
- Broadcasts
- Performances

Conditions for protection

- Arises automatically
- No formalities

Idea/Expression
Ideas are not protectable in themselves, but the expressions of such ideas are protectable
- Copyright does not protect: ideas, procedures, processes, systems, methods of operation, concepts,
etc.
- It only protects the way ideas are expressed in a particular work
- What can be protected: the characteristics by which the author has made the theme personal
- Why? Would it be productive, efficient, fair, or morally justifiable to give exclusive rights to the first
person to write about an idea?

ORIGINALITY
The work must be original
“originates” from the creator not copied minimal degree of creativity

DURATION
Rights are limited in time ; Life of the author + min. 50 years

EXCLUSIVE RIGHTS
A “bundle”
Moral rights; attribution, integrity
Economic rights; reproduction, distribution, adaptation, translation, public performance/display, public
communication

VIOLATION - INFRINGEMENT
some myths we can copy as long as we don’t sell… …any copying is unlawful
anyone who without permission carries out one of the reserved acts

…Unless an exception or limitations applies

EXCEPTIONS AND LIMITATIONS

Certain acts which might otherwise constitute an infringement of copyright do not incur liability
- Fair use/fair dealing exceptions (research/private study, criticism/review, reporting current events)
- Incidental uses e.g. in a sound recording, film, broadcasting
 Financial Analysis and Accounting
Objectives:
At the end of this lesson the students can be able to:
[Link] flow statements and projection.
[Link] is Income (P&L) statements; depreciation, operating expenses.
[Link] relationship of Balance sheets; equity, liability
[Link] time

INTRODUCTION
Financial Analysisis the process of evaluating businesses, projects, budgets, and other finance-
related transactions to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a
monetary investment. Financial analysis is used to evaluate economic trends, set financial policy,
build long-term plans for business activity, and identify projects or companies for investment.

UNDERSTANDING FINANCIAL ANALYSIS

Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans
for business activity, and identify projects or companies for investment. This is done through the
synthesis of financial numbers and data. A financial analyst will thoroughly examine a company's
financial statements—the income statement, balance sheet, and cash flow statement. Financial
analysis can be conducted in both corporate finance and investment finance settings.

CORPORATE FINANCIAL ANALYSIS

In corporate finance, the analysis is conducted internally by the accounting department and shared
with management in order to improve business decision making. This type of internal analysis may
include ratios such as net present value (NPV) and internal rate of return (IRR) to find projects
worth executing.

INVESTMENT FINANCIAL ANALYSIS

In investment finance, an analyst external to the company conducts an analysis for investment
purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-down
approach first looks for macroeconomic opportunities, such as high-performing sectors, and then
drills down to find the best companies within that sector. From this point, they further analyze the
stocks of specific companies to choose potentially successful ones as investments by looking last
at a particular company's fundamentals.

TYPES OF FINANCIAL ANALYSIS

1. Fundamental Analysis - Fundamental Analysis uses ratios gathered from data within the
financial statements, such as a company's earnings per share (EPS), in order to determine the
business's value. Using ratio analysis in addition to a thorough review of economic and
financial situations surrounding the company, the analyst is able to arrive at an intrinsic value
for the security. The end goal is to arrive at a number that an investor can compare with a
security's current price in order to see whether the security is undervalued or overvalued.
2. Technical Analysis - Technical analysis uses statistical trends gathered from trading activity,
such as moving averages (MA). Essentially, technical analysis assumes that a security's price
already reflects all publicly available information and instead focuses on the statistical analysis
of price movements. Technical analysis attempts to understand the market sentiment behind
price trends by looking for patterns and trends rather than analyzing a security's fundamental
attributes.
WHY IS FINANCIAL ANALYSIS USEFUL?
The goal of financial analysis is to analyze whether an entity is stable, solvent, liquid, or profitable
enough to warrant a monetary investment. It is used to evaluate economic trends, set financial
policy, build long-term plans for business activity, and identify projects or companies for
investment.

HOW IS FINANCIAL ANALYSIS DONE?

Financial analysis can be conducted in both corporate finance and investment finance settings. A
financial analyst will thoroughly examine a company's financial statements—the income statement,
balance sheet, and cash flow statement. One of the most common ways to analyze financial data
is to calculate ratios from the data in the financial statements to compare against those of other
companies or against the company's own historical performance. A key area of corporate financial
analysis involves extrapolating a company's past performance, such as net earnings or profit
margin, into an estimate of the company's future performance.

1. Cash Flow Statement and Projection

Cash flow is the net amount of cash and cash equivalents being transferred into and out of a
business. Cash received represents inflows, while money spent represents outflows.

A cash flow statement is a financial statement that provides aggregate data regarding all cash
inflows a company receives from its ongoing operations and external investment sources. It also
includes all cash outflows that pay for business activities and investments during a given period.

A projected cash flow statement is used to evaluate cash inflows and outflows to determine
when, how much, and for how long cash deficits or surpluses will exist for a farm business during
an upcoming time period. That information can then be used to justify loan requests, determine
repayment schedules, and plan for short-term investments. This publication focuses on preparing
and using a projected cash flow statement in managing the farm business.

 Cash Flows From Operations - this is the first section of the cash flow statement covers
cash flows from operating activities (CFO) and includes transactions from all operational
business activities. The cash flows from operations section begins with net income, then
reconciles all noncash items to cash items involving operational activities. So, in other
words, it is the company's net income, but in a cash version.
  Cash Flows From Investing - this is the second section of the cash flow statement looks at
cash flows from investing (CFI) and is the result of investment gains and losses. This
section also includes cash spent on property, plant, and equipment. This section is where
analysts look to find changes in capital expenditures (capex). Capital expenditures(CapEx)
are funds used by a company to acquire, upgrade, and maintain physical assets such as
property, plants, buildings, technology, or equipment. ... This type of financial outlay is
made by companies to increase the scope of their operations or add some economic
benefit to the operation.

 ▪Cash Flows From Financing - Cash flows from financing (CFF) is the last section of the
cash flow statement. The section provides an overview of cash used in business financing.
It measures cash flow between a company and its owners and its creditors, and its source
is normally from debt or equity. These figures are generally reported annually on a
company's 10-K report to shareholders .

2. Operating Revenue / Expenses

Revenue realized through primary activities is often referred to as operating revenue. For a
company manufacturing a product, or for a wholesaler, distributor or retailer involved in the
business of selling that product, the revenue from primary activities refers to revenue achieved
from the sale of the product. Similarly, for a company (or its franchisees) in the business of offering
services, revenue from primary activities refers to the revenue or fees earned in exchange of
offering those services

▪Expenses and Losses

The cost for a business to continue operation and turn a profit is known as an expense.
Some of these expenses may be written off on a tax return if they meet the IRS guidelines.

▪Primary Activity Expenses

All expenses incurred for earning the normal operating revenue linked to the primary activity
of the business. They include the cost of goods sold (COGS), selling, general and administrative
expenses (SG&A), depreciation or amortization, and research and development (R&D) expenses.
Typical items that make up the list are employee wages, sales commissions, and expenses for
utilities like electricity and transportation.

▪Secondary Activity Expenses

All expenses linked to non-core business activities, like interest paid on loan money.

▪Losses as Expenses
All expenses that go towards a loss-making sale of long-term assets, one-time or any other
unusual costs, or expenses towards lawsuits.

3. Income Statement
Anincome statement is one of the three important financial statements used for reporting a
company's financial performance over a specific accounting period, with the other two key
statements being the balance sheet and the statement of cash flows. Also known as the profit and
loss statement or the statement of revenue and expense, the income statement primarily focuses
on the company's revenues and expenses during a particular period. The income statement is an
important part of a company's performance reports that must be submitted to the Securities and
Exchange Commission (SEC). While a balance sheet provides a snapshot of a company's
financials as of a particular date, the income statement reports income through a particular time
period and its heading indicates the duration This example is the simplest form of the income
statement that any standard business can generate. It is called the Single-Step Income Statement
as it is based on a simple calculation that sums up revenue and gains and subtracts expenses and
losses

Listed companies follow the Multiple-Step Income Statementwhich segregates the operating
revenues, operating expenses, and gains from the non-operating revenues, non-operating
expenses, and losses, and offers many more details through the income statement. Essentially,
the different measures of profitability in a multiple-step income statement are reported at four
different levels in a business's operations -gross, operating, pre-tax and after-tax.

WHAT IS EQUITY?
Equity, typically referred to as shareholders' equity (or owners' equity for privately held companies),
represents the amount of money that would be returned to a company's shareholders if all of the
assets were liquidated and all of the company's debt was paid off in the case of liquidation. In the
case of acquisition, it is the value of company sale minus any liabilities owed by the company not
transferred with the sale In addition, shareholder equity can represent the book value of a
company. Equity can sometimes be offered as payment-in-kind. It also represents the pro-rata
ownership of a company's shares. Equity can be found on a company's balance sheet and is one
of the most common pieces of data employed by analysts to assess the financial health of a
company.

WHAT IS LIABILITY?
A liability is something a person or company owes, usually a sum of money. Liabilities are settled
over time through the transfer of economic benefits including money, goods, or services. Recorded
on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages,
deferred revenues, bonds, warranties, and accrued expenses. In general, a liability is an obligation
between one party and another not yet completed or paid for. In the world of accounting, a financial
liability is also an obligation but is more defined by previous business transactions, events, sales,
exchange of assets or services, or anything that would provide economic benefit at a later date.
Current liabilities are usually considered short-term (expected to be concluded in 12 months or
less) and non-current liabilities are long-term (12 months or greater). Liability may also refer to the
legal liability of a business or individual. For example, many businesses take out liability insurance
in case a customer or employee sues them for negligence.

WHAT IS A BALANCE SHEET?

A balance sheetis a financial statement that reports a company's assets, liabilities and
shareholders' equity at a specific point in time, and provides a basis for computing rates of return
and evaluating its capital structure. It is a financial statement that provides a snapshot of what a
company owns and owes, as well as the amount invested by shareholders. The balance sheetis
used alongside other important financial statements such as the income statement and statement
of cash flows in conducting fundamental analysis or calculating financial ratios.

FORMULA USED FOR BALANCE SHEET?

The balance sheet adheres to the following accounting equation, where assets on one side, and
liabilities plus shareholders' equity on the other, balance out:

This formula is intuitive: a company has to pay for all the things it owns (assets) by either
borrowing money (taking on liabilities) or taking it from investors (issuing shareholders' equity).

WHAT IS BREAKEVEN TIME?

What is the break-even point for a business? A business's break-even point is the stage at which
revenues equal costs. Once you determine that number, you should take a hard look at all your
costs —from rent to labor to materials —as well as your pricing structure. Then ask yourself these
questions: Are your prices too low or your costs too high to reach your break-even point in a
reasonable amount of time? Is your business sustainable? The Break even time is the amount of
time required for the discounted cash flows generated by a project to equal its initial cost. For
example, if it takes two years for a project to generate 1,000 on a discounted basis to offset its
1,000 startup cost, the project's break-even time is two years. A shorter time period indicates that a
project has less risk of failure, and so would be a better investment. A possible risk when relying on
this method is over-optimism in making aggressive cash flow predictions. Ideally, you should
conduct this financial analysis before you start a business so you have a good idea of the risk
involved. In other words, you should figure out if the business is worth it. Existing businesses
should conduct this analysis before launching a new product or service to determine whether or not
the potential profit is worth the startup costs.

Return on investment (ROI) is a performance measure used to evaluate the efficiency or

profitability of an investment or compare the efficiency of a number of different investments.

WHAT IS DEPRECIATION?
Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its
useful life or life expectancy. Depreciation represents how much of an asset's value has been used
up. Depreciating assets helps companies earn revenue from an asset while expensing a portion of
its cost each year the asset is in use. If not taken into account, it can greatly affect profits.
Businesses can depreciate long-term assets for both tax and accounting purposes. For example,
companies can take a tax deduction for the cost of the asset, meaning it reduces taxable income.
However, the Internal Revenue Service (IRS) states that when depreciating assets, companies
must spread the cost out over time. The IRS also has rules for when companies can take a
deduction.

Types of Depreciation
▪Straight-Line Depreciating assets using the straight-line method is typically the most basic way to
record depreciation. It reports equal depreciation expense each year throughout the entire useful
life until the entire asset is depreciated to its salvage value. The example above used straight-line
depreciation.

▪Declining Balance The declining balance method is an accelerated depreciation method. This
method depreciates the machine at its straight-line depreciation percentage times its remaining
depreciable amount each year. Because an asset's carrying value is higher in earlier years, the
same percentage causes a larger depreciation expense amount in earlier years, declining each
year.

▪Double Declining Balance (DDB) The double-declining balance (DDB) method is another
accelerated depreciation method. After taking the reciprocal of the useful life of the asset and
doubling it, this rate is applied to the depreciable base, book value, for the remainder of the asset's
expected life. For example, an asset with a useful life of five years would have a reciprocal value of
1/5 or 20%. Double the rate, or 40%, is applied to the asset's current book value for depreciation.
Although the rate remains constant, the dollar value will decrease over time because the rate is
multiplied by a smaller depreciable base each period.

▪Sum-of-the-Year's-Digits (SYD) The sum-of-the-year's-digits (SYD) method also allows for

accelerated depreciation. To start, combine all the digits of the expected life of the asset. For
example, an asset with a five-year life would have a base of the sum of the digits one through five,
or 1+ 2 + 3 + 4 + 5 = 15. In the first depreciation year, 5/15 of the depreciable base would be
depreciated. In the second year, only 4/15 of the depreciable base would be depreciated. This
continues until year five depreciates the remaining 1/15 of the base.
▪Units of Production This method requires an estimate for the total units an asset will produce over
its useful life. Depreciation expense is then calculated per year based on the number of units
produced. This method also calculates depreciation expenses based on the depreciable amount.

References: [Link] Ventures: From Idea to Enterprise, Dorf, Richard, Byers, Thomas, and
Nelson, Andrew; ISBN 9780073380186; 3rd Edition, 2009
[Link]://[Link]/terms/f/[Link]
[Link]://[Link]/terms/i/[Link]
[Link]://[Link]/articles/2017/5/11/break-even-time
 RAISING CAPITAL
Objectives:
At the end of this lesson the students can be able to:
1. Analyze and evaluate the importance of financial planning for technology ventures,
differentiating between short-term and long-term financial goals, and assessing the impact of
financial decisions on various stakeholders.
2. Compare and contrast different types of capital (equity, debt, mezzanine, alternative),
evaluating their advantages and disadvantages in the context of technology ventures at
different stages of growth.
3. Evaluate various sources of capital (angel investors, venture capitalists, crowdfunding, etc.),
and select the most appropriate sources for a specific technology venture based on its stage
of development, financial needs, and strategic goals.
4. Analyze the capital-raising process, from preparing for fundraising to post-funding activities.
5. Assess the factors that affect the capital-raising process (market conditions, investor
preferences, etc.), and develop strategies to mitigate potential challenges and risks.
6. Evaluate the importance of strong capital-raising skills for technopreneur.
7. Analyze the stages of growth for technology ventures and predict the corresponding capital
requirements and funding sources at each stage.

FINANCIAL PLANNING
Financial planning may be defined as an activity that involves analysing the financial flows of the firm as a
whole, forecasting the consequences of various investments, financing, dividend decisions, and weighing
the effect of various alternatives.

IMPORTANCE OF FINANCIAL PLANNING

Financial planning helps you determine your short and long-term financial goals and create a balanced plan
to meet those goals.
1. Income: It's possible to manage income more effectively through planning. Managing income helps
you understand how much money you'll need for tax payments, other monthly expenditures and
savings.
2. Cash Flow: Increase cash flows by carefully monitoring you’re spending patterns and expenses. Tax
planning, prudent spending and careful budgeting will help you keep more of your hard earned
cash.
3. Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider
investments to improve your overall financial well-being.
4. Family Security: Providing for your family's financial security is an important part of the financial
planning process. Having the proper insurance coverage and policies in place can provide peace of
mind for you and your loved ones.
5. Investment: A proper financial plan considers your personal circumstances, objectives and risk
tolerance. It acts as a guide in helping choose the right types of investments to fit your needs,
personality, and goals.
6. Standard of Living: The savings created from good planning can prove beneficial in difficult times.
For example, you can make sure there is enough insurance coverage to replace any lost income
should a family bread winner become unable to work.
 7. Financial Understanding: Better financial understanding can be achieved when measurable
financial goals are set, the effects of decisions understood, and results reviewed. Giving you a
whole new approach to your budget and improving control over your financial lifestyle.
8. Assets: A nice 'cushion' in the form of assets is desirable. But many assets come with liabilities
attached. So, it becomes important to determine the real value of an asset. The knowledge of
settling or cancelling the liabilities, comes with the understanding of your finances. The overall
process helps build assets that don't become a burden in the future.
9. Savings: It used to be called saving for a rainy day. But sudden financial changes can still throw you
off track. It is good to have some investments with high liquidity. These investments can be utilized
in times of emergency or for educational purposes.
10. Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical to
achieving your goals. Your financial advisor will meet with you to assess your current financial
circumstances and develop a comprehensive plan customized for you.

BENEFITS OF FINANCIAL PLANNING

1. Forecast of cash flows. This involves forecasting of cash inflows and cash outflows from the
ordinary (regular transactions) and unexpected (irregular transactions such as bulk orders,
discounts, etc.) business opportunities.
2. Raising finances. Financial planning is important to plan for raising (mobilizing) finance from
different sources so that the requisite amounts of finance are made available to compensate the
requirement of business processes.
3. Managing internal funds. Financial planning is essential to keep a track of the realized surplus
available in the treasury. This is required to make certain that they are properly utilized to meet the
requirements of the business which will results in maintaining the liquidity position with a
minimum amount of external borrowings.
4. Facilitate cost control. Financial planning is beneficial to recognize the cost of production (material,
labor, factory overhead, etc.), cost of administration (salary, legal expenses, office overhead, etc.)
and cost of sales (advertisement, marketing and other promotional expenses). Cost control is
analysed by comparing the actual cost with standard (pre-determined) cost.
5. Facilitate pricing of product. Financial planning is necessary for pricing of a product since pricing is
the mode of determining, “How much a business will swap (in exchange) for its products? “ Price is
the only revenue generating tool of the business. Pricing has a direct relationship with demand and
supply of a product.
6. Forecasting profits. Financial planning is a model demonstrating comprehensive and forecasted
analysis of profitability for the particular business in a specific market condition, with a pre-
determined projected financial-plan. A forecasted profitability plan is required to estimate the
course of action. A profit is the residual result of the agreed business operations.
7. Measuring required returns. Financial planning is required to evaluate the required returns from
the project. This may results in acceptance or rejection of a business proposal. It depends on
whether the expected return from the proposed business is equal to or more than the required
returns.
8. Managing assets. Financial planning is required to manage the assets (owned and leased) of the
business. Such assets shall be properly maintained to avoid any break-down (failure). It shall assist
to determine the total investment in assets to carry out business operations properly and promptly.
9. Managing funds. Financial planning is required to manage the funds of the investors and to conduct
the activities of the business in the interest of the organization. Funds are the liquid assets of the
 company. Therefore, Funds should be managed (evaluated) with dual virtual (imaginary) vision, i.e.
w.r.t. liquidity and profitability.
10. Managing cost. Financial planning is also required to manage the cost of operations of the business.
If the costs of operations are not measured carefully, then it may result in paying excessive money
with a subsequent decline in profits.
11. Miscellaneous importance. Financial planning may have a strategy to convert idle equipment into
cash. It may also have a strategy to reduce the cost (for e.g. by not giving increments to employees,
by not upgrading technology, etc.

RAISING CAPITAL
Raising capital is a critical aspect of technopreneurship that requires careful planning and execution.
Raising capital essentially means getting the money you need to grow your business from investors. Raising
capital is another way of talking about financing your business. You can raise capital through investors, or
you can take out debts, like loans or credit cards, to finance your business venture.

TYPES OF CAPITAL
Non-Dilutive (Liability) – loans, government grants, Tax Credits
Dilutive (Equity) – Convertible notes, Business Angels, Family and friends, Venture Capital, Family Office

Types of Capital
3. Equity financing - Involves selling a portion of the company in exchange for funding.
Advantages: does not require repayment, provides access to experienced investors who can
provide guidance
Disadvantages: dilutes ownership, may require a high valuation of the company

4. Debt financing - Involves borrowing money that must be repaid with interest
Advantages: does not require repayment, provides access to experienced investors who can
provide guidance
Disadvantages: dilutes ownership, may require a high valuation of the company

5. Mezzanine financing- a hybrid of equity and debt financing

Advantages: flexible repayment terms, may provide higher returns for investors than traditional
debt financing
Disadvantages: may be expensive due to high interest rates or equity warrants, may require
collateral

6. Alternative financing - Includes options like revenue-based financing, crowd funding, and crypto-
currency
Advantages and disadvantages depend on the specific type of alternative financing

SOURCE OF CAPITAL
 Angel Investors - Wealthy individuals who provide early-stage funding in exchange for equity
 Venture Capitalist - professional investors who provide larger amounts of funding in exchange for
equity
 Crowd Funding - involves raising small amounts of funding from a large number of people
 Grants - non-dilutive funding provided by governments, foundations, or other organizations
  Incubators and Accelerators - provide mentorship, resources, and funding to start-ups in exchange
for equity
 Boots Trapping - involves self-funding the business using personal savings, revenue, or other
sources
 Family and Friends - can provide early-stage funding without the need for complex legal
agreements

THE CAPITAL RAISING PROCESS

1. Preparing for fundraising
2. Pitching to investors
3. Due diligence
4. Negotiating deal terms
5. Closing the deal
6. Post-funding activities

STAGES OF RAISING CAPITAL

Stage 1: Pre-Seed
Developing and validating the idea
Stage 2: Seed
Develop MVP, test the market
Stage 3: Pre-Series A
Initial commercialization to first level of breakeven
Stage 4: Series A
Commercialization
Stage 5: Series B
Growth

STAGES OF GROWTH

6 EASY WAYS TO RAISE CAPITAL

4. Bootstrap your business
 Provided that your business isn’t operating in an industry that requires lots of start-up capital, like
manufacturing or transportation, you can potentially fund your own venture—and it may be more
feasible than you think. For instance, even if you don’t have enough in savings to run the operation, you
could get a 0% / low interest APR business credit card, offering you the chance to borrow cash for a
period of time without incurring interest. Perhaps you think funding the business you carries lots of risk
—and it does. But it’s important to consider your potential. Brent Gleeson, a leadership and team
building coach specializing in organizational transformations, states, “if you believe in your vision and
have an absolute refusal to accept failure as an option, you should feel comfortable investing your own
money into the business.” Investing some of your own money will usually make investors and lenders
more willing to partner with you down the line.

5. Launch a crowd funding campaign

There are many crowd funding success stories out there. And with the right product and pitch, you can
be one of them.

6. Apply for a loan

Even as technology creates new ways of raising capital, traditional financing products remain the
primary way small businesses fund their operations. According to the Small Business Administration
(SBA), almost75% of financing for new firms comes from business loans, credit cards, and lines of
credit .Generally speaking, the small business loans with the most favourable rates and terms are going
to be SBA loans and term loans from banks and other financial institutions.

7. Raise capital by asking friends and family

Raising capital through friends and family is a viable option for many.

8. Find an angel investor

9. Get investment from venture capitalists

Venture capitalists (VCs) typically want to invest in slightly more mature companies than angel
investors and sometimes want to have more of a say in managing the day-to-day operations. Since VCs
have a responsibility to achieve certain returns for the firm or fund, they want scalable and cash-flow
positive companies with proven and scalable products and businesses. If your company satisfies these
requirements, you could apply for an investment with a VC firm. It’s not the easiest thing to accomplish,
but plenty of small businesses have done it successfully. Your pitch is crucial to obtaining funding.
Sequoia, one of the most successful VC firms on the planet, stresses, “You need to convey the main
reasons why an investor should love your business in the first 5 minutes.”

Sequoia partners state you can do this in three simple steps, which are:
 Explain what’s changed. Detail the innovation, industry shift, or problem that presents substantial
opportunity for your company.
 Explain what you do. In one sentence, show how your company can capitalizeon this opportunity.
 Explain the facts. Get to your company’s story and financials quickly. Lay outthe opportunity with
numbers.

FACTORS AFFECTING CAPITAL RAISING PROCESS

 Market Condition
 Investor Preferences
  Business Model
 Financial Performance
 Management Team
 Competition
 Legal and Regulatory environment
 Intellectual Property Protection

TIPS FOR SUCCESSFUL CAPITAL RAISING

 Developing a compelling business plan
 Build a strong team
 Have a clear value proposition
 Demonstrate transactions
 Be realistic in financial projection
 Build relationships with investors
 Be prepared for rejection
 Learn from failures

IMPORTANCE OF CAPITAL RAISING
Having an idea is useless if one does not have enough capital to translate it into a reality. It is believed that
a business is almost impossible to start without money. Yet, ironically enough, you cannot get money until
your business is successful enough. Using up your savings is one option but savings will typically run out.
Therefore, raising funds through other sources is important in order to finance all the business activities.
Choosing the right sources is, however, the next critical step in the process of capital-raising because it is
invariably the determinant of the success and growth of any business. Extraordinary capital raising skills are
required for obtaining funds quickly and efficiently, through the most appropriate sources.

Following are some tips that might prove helpful for improving one’s capital raising skills:
 •Be realistic about the amount of capital required. Optimism is a trait commonly found in
entrepreneurs. However, the real world is often quite different than the record sales of the ‘unique’
product as well as the slow competitors that they envision. Therefore, the estimates about required
capital should be made as realistic as possible so that enough money can be obtained. Otherwise,
you are likely to make the usual mistake of asking for too little money for having a chance at
success.
 •Determine the value of your company. Since debt and equity capital are both costly in their own
ways, and determining the right mix of both is the ultimate way of improving one’s capital raising
capabilities, it is important to begin by determining the value of one’s company. This is an
important step in determining the cost of new capital when equity additions to the capital structure
are sought. Ensure a mix of debt and equity such that greater ownership of the company is
retained.
 Network as much as possible. When you seek investors, make sure that everyone in your social
circle is aware of the fact that you need money and how much. Find people who have managed to
raise capital prior to you, discuss with them your needs, and ask for introductions. Getting
introduced through a network is usually preferred by investors as well because it means they have
a trusted connection

CONCLUSION
 Raising capital is a crucial aspect of technopreneurship that requires careful planning and
execution. Different types and sources of capital should be considered based on factors like ownership, risk,
and cost. The capital raising process involves preparing for fundraising, pitching to investors, due diligence,
negotiating deal terms, closing the deal, and post-funding activities. Various factors like market conditions,
investor preferences, business model, financial performance, management team, legal and regulatory
considerations, and competition can impact the capital raising process.