Business Plan

Business plan
 is a comprehensive paper that details the
situation, analysis, objectives, strategies, and
tactics, and how to monitor and control the
enterprise.
 Basic Elements of a Business Plan
1. Executive Summary
2. Mission and Objectives
3. Market Analysis
4. Competition/Competitive Advantage
5. Operations Plan
6. Financial Plan
7. Marketing plan
8. Organizational chart
Objectives:
• Describe the unique selling proposition and
value proposition that differentiates one’s
product/service from existing products/service.
• Determine who the customers are in terms of
the following:
a. Target market;
b. Customer requirements
c. Market size
Marketing is all about customer…
In marketing process
 Identify the customer’s needs
(where you are tasked to create a
meaningful value proposition)
 Study what customers want or desire
(for you to build a unique selling
proposition)
Value proposition (VP)

 simply states why customer should buy a

certain product or service.
 Is the major driver in customer purchase or
service availment.
 It has direct addressing the problems of the
customers, should have quantifiable benefits,
an should differentiate itself from the
competitors.
Tips on how to create an effective value
proposition to the target customers:

1. Prepare a situation analysis that details the

problem(s) of the customers.
2. Make your value proposition straight to point,
simple, and specific.
3. Highlight the value of your product or service so
that the customers will easily to get what benefits
you can provide.
4. Adapt to the language of your market.
5. Add credibility-enhancing elements such
as actual testimonials from customers,
partners, and other stakeholders, putting
specific assurance elements and social
acceptability metrics found in social media
or press materials.
6. Differentiate your value proposition with
your competitors.
Example:
Aling Tere’s Sari-sari Store
Open 24/7
Value Proposition:
“Tindahang maasahan, bukas kahit anong oras!”
Unique Selling Proposition (USP)
 refers to how you will sell the product or
service to your customers.
 It addresses the customers’ wants and desires
Tips on how to create an effective unique selling
proposition:

1. Identify and rank the uniqueness of the

product or service attribute.
2. Be very specific
3. KISS (Keep It Short and Simple)
Remember:

The Value Proposition and Unique

Selling Proposition will only work
effectively when customer feel the
benefits of the product or service
being offered.
Activity: Group Activity
Create a USP and VP in your product/service you
are chosen in your group.
Know your customer…
Marketing research
 is a comprehensive process of understanding
the customers’ intricacies and the industry
they revolve in.
 aims to scrutinize the target market, their
specific requirements, and the market size
where the business operates.
I. MARKET SIZE

 is simply the size the arena where the

entrepreneur’s business play.
 It is the approximation of the number of
buyers and sellers in a particular market.
Methods/Steps:
1. Estimate the potential market.
 the approximate number of customers that will
buy the product or avail service. (market
universe or market space because this the total
market)
2. Eliminate the customers who are probably
unlikely to buy the product or avail service.
3. Estimate the market share
 which is plotting and calculation of
competitors’ market share to determine the
remaining portion for the new venture.
Market share computation illustration
• Mr. Alvin Antonio – Budding entrepreneur
• Rice retailing business
• Barangay San Isidro
• 500 families
• Average members per family 5
• Only 475 family eat rice
• Consume an average of I kilo per day
• 4 other rice retailers in the area for 10 years already
• They have an equal market shares of 20% each
• The average net profit per kilo of rice is P10.
How big is the market size and what could be the
potential market share of Alvin’s rice retail
business?
Market size of San Isidro = Number of families who
eat rice X average consumption per annum

Market size = 475 families x I kilo per day x 365 days

= 173, 375 kilos of rice
Market size profit = 173, 375 kilos x P10
= P 1, 733, 750 per annum
 The objective of Mr. Antonio in the first year is
to capture 20% of the market by implementing
marketing strategies.

 pricing ( reduced mark up of P2)

 Promotion ( free delivery of rice for 5 kilos and up)
through text message or phone call

Potential market share profit = market size x estimated market share

= P1,733, 750 x 20%
= P346, 670
However, because Mr. Antonio will reduce the
mark up price by P2, the net profit per kilo only
become P8.

Potential Market share Profit = 173,375 kilos x 20% x

P8
= P277,400
II. CUSTOMER REQUIREMENT
 are the specific features and characteristics
that customer need from a product or a
service.
 They must know who buys, and what, when
where, how, and most importantly, why they
buy.
Example:

In restaurant, business
 Some customers will prefer cheaper prices or
a bundled menu
 Some will prefer a cozy ambiance
 Some prefer a place with relaxing music
 Some prefer to have food served fast
 Some will prefer to pay using their credit card,
and not cash
As an entrepreneur…
 Must group them together, calculate their size,
and come up with products and services that
suit to them.
 III. TARGET MARKET
Most entrepreneurs believe in the misconception
that they can serve all types of customers. Little
they know that this may lead to failure.

Entrepreneurs must focus only on customers

whom they can serve beneficially because they will
be wasting resources if they will target all, or worse,
target none.
The entrepreneur can tap primarily target market
and a secondary target market as resources are
limited during the star up stage.

Market Intelligence
 which includes customer profiling, drives the
entrepreneur on what correct strategies and
tactics to employ.
 Market segmentation
 is the process of grouping similar or
homogeneous customers according to
demographic, psychographic, geographic
(location), and behavior.
Demographic
Demographic segmentation also called
socioeconomic segmentation
 is the process of grouping customers
according to relevant socioeconomic variables
for the business venture.
These socioeconomic variables include:
a. Income range and the social class of
customer
 are very important factors for the
entrepreneur to consider because these
represent the purchasing power of the
market.
b. Occupation
 should also be considered not just to
determine the customers’ income but also
their daily routine where goods and services
can be properly positioned.
c. Gender and age group
 data must be mined because the life cycle of
customers and their gender influence their
buying behavior.
d. Religion and ethnicity

 should also be taken into accounts because

these affect the way they buy the products or
services.
 For example are food choices, events, and
holidays, tradition and beliefs, spending
habits, and conservativeness.
Psychographic
Psychographic segmentation
 is a process of grouping customers according to their
perceptions, way of life, motivations, and
inclinations.

Perceptions – is a process wherein an individual

receives external stimuli using the five senses.

Way of life – give an entrepreneur an overview of

what products or services can be best suit the problems
of the customers that happening in daily life.
Motivations – can be either physiological or
psychological.
• physiological motivations – involves needs of the
person (food, clothing, shelter); they seek to
avoid pain and give pleasure.
• Psychological motivations – involves customer’s
preferences ( what the customer likes and
dislikes)
Motivations can also affected by their aspirations
and deprivations.
• Aspirations – are what customer wants to achieve
( inner peace, financial stability, work-life
balance).
• Deprivations – involves the customer’s
recognition of certain voids to fill ( lack of
financial security, lack of love, lack of knowledge)
Customers’ Inclination
 involve preparing one product over another
as a result of gaining a refreshing experience
when using the product, possibly due to the
product’s unique features or due to it giving
more value than other products.
Geographic
Geographic segmentation
 is simply grouping customers according to
their location.
 This is critical analysis of target market as this
compasses the cultures, beliefs, preferences,
politics, and lifestyle of a certain geography.
Geographic segmentation can be as
• Small street
• A village
• Barangay
• Municipality
• City
• Province
• Region
• It can be as big as country depending on the
entrepreneur’s business objectives.
So therefore, entrepreneur should be able
to analyze the intricacies of the locations
being targeted and group of places that
have similar profiles depending on what is
relevant to the product or service to be
offered.
Behavioral
Behavioral segmentation
 is the process of grouping the customers
according to their actions.
 These behaviors are instigated by occasions,
desired benefits, loyalty, and usage of
products or availment of services.
Occasions – directly affect the customer’s
behavior.
Examples:
• Christmas
• Valentines
• Summer
• Birthdays
• Graduation
Desired benefits
 is efficient because entrepreneur determines
the exact needs of the customers and offer the
most suited products or service for them.
examples:
• offering wash, dry and press services
• offering 3-in-1 coffee budget
Loyalty
 is the result of maintaining satisfied customers.
 the goal of every entrepreneur is inform,
persuade, and remind customers to buy the
product or avail of the service consistently.

Therefore, behavioral segmentation through

loyalty is a major key result area of the
entrepreneur as it is more expensive to sell new
customer than to maintain customers.
Usage of products or availment of service
 that describe to the entrepreneur how often
a product is being used or service is being
availed.

Therefore, you can group the customers as light

users, medium users, or heavy users.
Example:
There are women who are occasional users of
make up, and there are women who wear make
up everyday. Likewise for the men who
occasional users of hair products and others
they used it everyday.
Although segmentation is a strategic and an
efficient way of classifying and grouping
customers, there is also a term in marketing called
market aggregation.

Market Aggregation happens when entrepreneur

wants a target a broader market as possible
because the product or service that the business
offers is suited for an undifferentiated market such
as fruits, vegetables, rice, water and bread as a
services such as haircut, plumbing, or
transportation.