Nature and Relevance of
Entrepreneurship
Concept of Entrepreneurship
• It is a foundation and catalyst for
economic growth and innovation
across nations (globalized economy).
• It thrives in societies with supportive
government policies.
• They give importance to
innovativeness and risk taking to turn
new ideas into solutions.
Here are some definition of
entrepreneurship:
• Schumpeter (1934) – Carrying out of
new combinations of firm
organization – new products, new
services, new sources of raw
material, new methods of
production, new markets, new forms
of organization
• Drucker (1985) – behavior rather
than personality trait. Its foundation
lies in concept and theory rather than
in intuition.
• Kuratko (2009) – dynamic process of
vision, change, and creation that
requires an application of energy and
passion toward the creation and
implementation of new ideas and
creative solutions
Small and Medium enterprises (SMEs) are
concrete manifestations of
entrepreneurship.
Elements of Entrepreneurship:
• Innovation
• Opportunity seeking
• Resource mobilizing
• Encountering risks and
uncertainties
• Economic and personal rewards
Factors that influence the
friendliness of a country to
entrepreneurs
 Employment regulations
• Bankruptcy laws
• Tax policies of a country
Brief History on Entrepreneurship in the
Philippines
PH is an entrepreneurial country, where
99.7% of all firms operating in the country
are SMEs employing 69% of the labor
force; 47% of registered establishments
are owned by women.
SMEs and large enterprises are
predominantly found in and around Metro
Manila, while micro enterprises are
relatively less geographically
concentrated.
One of the government strategies is
focused on promoting entrepreneurship
with the right environment
Lesson 2
Development of Entrepreneurship
Evolution on the field of
Entrepreneurship - the evolution of the
field of entrepreneurship has been
formulated by scholars based on theories
that are rooted in economics, psychology,
sociology, anthropology and
management.
Periods
The Earliest Period
- A person who sells goods on behalf
of the goods’ owner. It was exhibited
by Marco Polo (the Merchant from
Venice)
The Middle Ages
- The term was used to describe both
an actor and a person who was in
charged of and managed large
production projects. This person
managed the resources from the
government. Entrepreneur in this
stage did not took the risks at all. It is
the person who is in charge of
architectural works.
The 17th Century
- Entrepreneurship has become
associated with risk. Someone who
would enter into a formal agreement
with the gov’t.
- Agreeing in the price as part of the
terms in the agreement. So the
entrepreneur is either reaps profits
or bear losses.
- Cantillon an Economist viewed
entrepreneur as a risk taker and a
bearer of uncertainty.
The 18th Century
- Entrepreneur was distinguished from
the capitalist who simply provides
money for the creation of products
to be sold.
- Jean-Baptiste described
entrepreneur as a person who plays a
central coordinating role both in
producing and selling goods.
19th and 20th Century
- Little distinction between manager
and entrepreneur. However,
Schumepeter refused that idea and
espoused the concept of
entrepreneur as an innovator who
seeks opportunities and leads
“existing means of production into
new channels”.\
21st Century
- Hailed as DotCom era. They are now
considered as hero of enterprise.
- Creativity and innovation made
entrepreneurs able to exploit high
growth potentials.
- Revolutionizing businesses through
the use of internet.
Evolution of Entrepreneurship in the
Philippines
- It has existed since the interaction of
early Filipinos with foreign traders.
- But colonizers change the structure
of the society, economy, education,
and political system.
- We became predominantly family-
centered, Catholic, capitalistic, and
democratic country.
- SMEs became the embodiment of
entrepreneurship in the country.
- Regulatory framework and policies
started in 1935.
- Intensification of development
started in the 1970s. SMEs was given
an emphasis in the Philippine
Development Plan.
- 1987 Philippine Constitution
reinforced for the development of
private sector and provided a wide
range of government reforms and
reorganization
Lesson 3
Relevance of Entrepreneurship and
Entrepreneurs in Economic Development
and Society
Entrepreneurship has an enormous
impact on the economy and in the society.
specifically entrepreneurship has these
contributions to the economy and society.
1. Creates employment – when they
put up businesses, they employ
people who possess different
competencies and personal values to
help them operate the enterprise.
2. Develops new markets –
entrepreneurs seeks for new buyers
or customers of their product or
services. They go beyond the existing
places where their products are sold
and look for other people who will be
interested.
3. Introduces innovation - innovations
can be something ordinary or
technological or breakthrough. This is
done for the product, service, or
technology towards
commercialization and generates
economic wealth.
4. Generates new sources of materials
- entrepreneurs always search for
better and cheaper sources of
materials they need. Finding new
material providers help economic
growth.
5. Stimulate investment interest in the
new business ventures being
created - when entrepreneurs
engaged in a new business, it stirs
curiosity for other people to invest in
the business because of the benefits
it offers.
6. Improves the quality of life – new
products contribute to the increase
in the personal benefit and
convenience of people in the society.
7. Serves as role models –
entrepreneurs are people to be
emulated by younger generations in
the community and society at large.
The attitude, behavior, and
personality traits will also make them
successful.
8. Brings social benefits to the people -
Entrepreneurs pay taxes, permits and
licenses to operate their business.
And these taxes are being used by
the government to provide the needs
of poor Filipino people.
9. Utilizes and mobilizes indigenous
resources – SMEs will always look for
cheaper and local materials to supply
their needs. Local enterprises
patronize local products.
10. Provides more alternatives for
consumer – the competition in the
market for quality and cheaper
products and services requires the
entrepreneurs to come up with more
products and services consumers can
choose from. Concerning about
welfare and ethical way of
production to gain more customers.
2.1 Concepts of entrepreneurs today
(Competencies)
• From an economist: someone who
bring resources, labor, materials and
other assets; one who introduces
changes, innovations and a new
order.
• To a psychologist: a person typically
driven by certain forces such as the
need to obtain or attain something,
to experiment, to accomplish or
perhaps to escape the authority of
others
• From a management’s perspective:
someone who identifies
opportunities, plans, mobilizes
resources, manages and assumes the
risks of a business.
21st century is considered as the
entrepreneurial era
Globalization is coupled with changes in
the social, economic, political and
technological environment
Personal characteristics
 Calculated risk-taking is doing
everything possible to get the odds in
their favor; and they often avoid
taking unnecessary risk.
 Commitment is the unwavering
dedication to work for the common
good of the society through one’s
business.
 Feed-back seeking is the taking of
steps to know how well they are
doing and how they might improve
their performance
 Perseverance is the determination to
succeed by overcoming obstacles and
setbacks.
 Drive to achieve is the internal desire
to pursue and attain challenging
goals.
 Self-confidence is the belief that
together with other people, things
can be done in the business.
Entrepreneurs seldom waver in their
conviction.
 Opportunity orientation is the
constant awareness of opportunities
that exist in everyday life.
 Innovativeness is the ability to come
up with something different or
unique every time – creativity or
“thinking-out-of-the-box”.
 Responsibility is their willingness to
put themselves in the situation
where they are personally
responsible for the success or failure
of the business operation.
 Tolerance for failure using it as a
learning experience
How Entrepreneurs Think
• Actuate self-assessment and choose
course of action
• Generate Multiple decision models
• Learn from failure
Entrepreneurial Competencies Portfolio
(Camuffo, Gerli and Gubitta 2012)
• FUNCTIONAL – enable to manage
the organization
• Personal computing
• Procurement
• Business English
• Managerial Communication
• Production and logistics
• Project Management
• Total Quality management
• Organization
• Strategy
• HR management
• Information Technology
• Marketing and Sales
• Finance
• Accounting
• EMOTIONAL – specific behaviours
• Self-awareness
• Self management
• Social Awareness
• Relationship to management
• Cognitive
• CROSS-FUNCTIONAL – over-all skills
• Action and attainment skills
• People management skills
• Analytical reasoning skills
Six competencies Man and Chan(2002)
• Opportunity competencies
• Relationship competencies
• Conceptual competencies
• Organizing competencies
• Strategic competencies
• Commitment competencies
DEVELOPMENT OF A BUSINESS PLAN
• A business concept is a clear and
concise description of an
opportunity.
1. IDENTIFY THE PRODUCT OR SERVICE
• What is the product or service being
offered? This is the solution to the
problem the customer is having.
Ex. Karen wanted to offer a wide variety
of group fitness programs to teenagers,
and also wanted to offer them a selection
of nutrition classes.
2. IDENTIFY THE CUSTOMERS
• Who is the customer? The customer
is the person who pays for the
product or service.
Ex. Karen’s customers are the parents of
the teens for whom she is providing the
service or the teens themselves.
3. TALKING TO CUSTOMERS – the
market
• Understanding the target market and
testing the customer is very
important to measure the interest to
your product and to better define the
benefits and features.
4. BENEFIT AND FEATURE
• A benefit is something that promotes
or enhances the value of the product
or service to the customers. A
feature is quality or characteristic of
a product or service.
5. TESTING PRODUCT OR SERVICE
REQUIREMENT
 In this part, you consider what it will
take to develop your product or
service into a prototype. A prototype
is a working model of the new
product.
 Read about your competitors, visit
their businesses and websites, buy
their products and talk to their
customers and suppliers.
8. ANALYZING THE VALUE CHAIN
 The value chain is the distribution
channel which your product or
service flows from the producer to
the customer. The value chain
includes manufacturers, distributors
and retailers.
IDENTIFYING BUSINESS OPPORTUNITIES
To begin the entrepreneurial process, you
must take the steps to recognize an
opportunity. One way to identify an
opportunity is to study the current trends
1. INTERNET BUSINESSES
• An online business is a business that
conducts business by means of
internet. Online businesses have the
potential to attract a huge number of
customers because anyone with an
internet connection can purchase
from this type of business
2. SERVICE BUSINESSES
• Services are intangible things that
businesses do for us that enhances
our lives.
3. HOME-BASED BUSINESSES
• Many people who lose their jobs due
to cutbacks choose to work from
home in the field where they were
once employed. Homesourcing refers
to the transfer of service industry
employment from offices to home-
based employees.
4. FOCUS ON TECHNOLOGY

HOW DO YOU PLAN A BUSINESS? • An increase reliance on technology is

6.
Factors to Consider in Starting a business
 An effective founding team can get a
• Once you have an idea for a new
business, you need to turn it into a
business concept.
7.
EVALUATING THE FOUNDING TEAM
new business launched. It is
important to have a team with a
variety of knowledge and experience
STUDYING THE COMPETITION
the main trend that affects
businesses today.
5. OUTSOURCING
• Outsourcing is contracting with other
companies for services. Business
process outsourcing is the most
 common type such as accounting,
benefits and finance.
TYPES OF BUSINESSES AVAILABLE
1. SOLE TRADER
• This type of business is owned and
managed by one individual. There's
no legal distinction between the
owner and the company, meaning
that all debts and after-tax profits are
personally yours.
Ex: bookkeeping; catering company,
landscaper, freelance writer, printing
services
2. PARTNERSHIP
• Partnerships differ in that they
involve two or more people pooling
their expertise to own and manage
the business.
3. CORPORATION
• A corporation is established under
the Corporation Code and registered
with the SEC. It must be created by or
composed of at least 5 natural
persons (up to a maximum of 15),
technically called “incorporators.”
• General partner – is participant in a
partnership who has unlimited
liability and takes full responsibility of
the business
• Limited partner – is a partner whose
liability is limited to his or her
investment
Business plan – is a document that
presents a complete and detailed picture
of the new business and the strategy to
launch the business
LESSON 4
GOVERNMENT SUPPORT AND LEGAL
REQUIREMENTS
(Filler notebook)
LESSON 5 : Market / Key concepts of
market
• The concepts of exchange and
relationship lead to the concept of a
market
• A market is the set of actual and
potential buyers of a product. These
buyers share a particular need or
want that can be satisfied through
exchange relationship
• However, creating these
relationships takes works.
• Sellers must search for buyers,
identify their needs, design good
market offerings, set prices for them,
promote, store and deliver them.
• Buyers search for products and
interact with companies and obtain
information and make their
purchases.
There are skills you need to acquire that
will help you understand the market:
• how to group (or segment) the
market,
• how to identify which segment to
focus on (target), and how to be
more familiar with your target
• who else are making similar products
or offering similar services
(competition) and how to estimate
the size of the target market that will
buy your product or use your service.
• Another skill that the entrepreneur
must develop is the ability to
estimate (estimation) potential
market demand.
Market segmentation refers to the
process of dividing prospective buyers
into groups that have common needs and
will respond similarly to a marketing
action.
• It is a process in marketing of
grouping a market (customers) into
smaller subgroups.
A market can be grouped according to
these variables: geographic (region of the
world or country, size of country, climate),
demographic (population - age, gender,
sexual orientation, income, occupation,
education, etc.), psychographic
(personality, lifestyle, values, attitudes),or
behavioral (product, benefit sought, rate
of usage, brand loyalty, readiness-to-buy
stage, etc.).
Targeting
• After grouping the market into
different segments, you must be able
to choose which among the
segments or groups to target as your
market.
• targeting is to select from among the
big group of possible buyers or users,
a specific group or type of buyers to
cater to.
• The discipline in marketing is to
target one segment at a time. The
goal of a business may, however, be
to serve all segments if it wants to.
• When you target, you are going to
decide which among these groups or
segments you want to serve. In
effect, you are narrowing down the
market from a very wide universe
Analyzing the Competition
• When trying to understand your
target market, do not neglect to look
at the other businesses that are
making similar products or offering
the same services as yours
(competitors).
• What is important here is not the
competition but your target market
in relation to your competitors.
• It will help you understand your
target market further by looking and
analyzing as to why the target market
buys or might buy from the
competition –
• Competitor analysis is, first, knowing
what your competitor’s marketing is.
• This includes: the competitor’s
products or services, how much they
cost, how they are distributed, and
how they are made known to the
target market.
• The best way to do this is to go out
there and see the competition
yourself. Some entrepreneurs even
go to the extent of buying the
products or using the services of
competitors and ride with the market
Estimation is an educated guess. The best
way to be very certain and confident
about estimates for potential market
demand is to look for facts about the
industry where the entrepreneur intends
to enter.
• Estimating potential market demand
is a marketing skill that has an impact
on projecting sales, sales growth, and
capital, machine, and manpower
requirements.
• Ex: Let us assume that you want to
produce garments for women. The
national census indicates that there
are 10million women in the country.
Assuming that these women will buy
two blouses in one year, the market
demand for blouses would be 20
million blouses per year.
Lesson 6 - Products And Services
Available In The Market
Looking Within
Begin by looking for products, processes,
or services about which you already know
something.
Ex: Carpenters would be confident going
into construction, furniture making or
sash-making.
Seamstresses would have a best chance
going into garment making or stuffed toy
manufacturing, or setting up a modista or
tailoring shop.
Cooks would be good in starting a
carinderia, a tapsilog stall, or a small
restaurant.
Similarly, a hobby could become the basis
for a full-time successful enterprise
• Bonsai plants and desktop garden-
fountains are very much in demand.
• A commercial garden on an idle lot
which you can rent for a small fee
would also be a good possibility.
• There was this housewife who loved
collecting ornaments and home
accessories. Her friends liked her
taste and convinced her to sell them
some of her items.
Study import-export movement
Perhaps a number of products are being
supplied by producers or suppliers outside
the community or imported from other
countries.
Study these imports. Possibly, given the
resources, you can produce these.
For example, locally cured ham, corned
beef, tocino and longganisa have become
acceptable substitutes for imported
processed meats.
SOME OPTIONS:
BUY A BUSINESS, TAKE A FRANCHISE
• Buying an already established
business is not as easy as it sounds.
• Chances are you will have to conduct
a search. It can be slow and time-
consuming. The average time
required to find the right one runs
about a year. The resources you can
use are: newspaper classified ads
under the heading ‘business for sale,’
industry and trade associations, and
lawyers specializing in corporate
matters.
• Taking a franchise has been called
the “business with the least fears
and tears.” A franchise is a legal and
commercial relationship between the
owner (franchisor) of a trademark,
service mark, brand name, or
advertising symbol, and an individual
or small business (the franchisee)
wishing to use that identification in a
business.
A manufacturer produces a product and
sells it. Making new jewelry from beads,
baking cookies, making quilted linen are
some examples of a manufacturing
activity.
A service-oriented business offers a
specialized kind of service to customers.
The service can either be creative and
technical or professional in nature. An
auto repair shop, a music lounge, laundry
shop, internet café, and a tailoring shop
are among the more popular businesses in
the first category. A medical clinic, an
accounting firm, and a law office are
examples of professional service providers
A trading business, on the other hand, is
basically a buy-and-sell type. One can be a
retailer, wholesaler, or even both. The
sari-sari store still remains to be the most
common form of a trading business.
Another example that is fast gaining
popularity is the distribution of goods.
The following were identified by the DTI
as export winners
• Processed fruits o Marine products
(fresh/frozen fish, shrimps)
• Carrageenan and seaweeds
• Electronics (components and parts)
• Metals (automotive and parts)
• Garments o Furniture o Jewelry (fine
and custom)
• Holiday decor (Christmas, Easter,
Halloween)
• Ceramics (decorative and tableware)
• Basketware
• Marble and marblecraft
• Construction services
• Information technology services
• Professional consulting services
Creating your Product or Service
• Process - Think about the different
steps or stages, materials, and tools
necessary to produce the product or
render the service
• Machines and equipment. Use these
things to help you make a product or
complete a service in an organized
way and with the least cost. The kind
of machines to use will depend on
the product or service you will offer.
• Materials - You will certainly need
materials to make the product or run
the service.
• Workers - As a new small business
owner, one of the first decisions you
 will have to make is whether to hire
someone to help you out in making
the product or in completing the
service.
SWOT ANALYSIS
SWOT stands for Strengths, Weaknesses,
Opportunities, and Threats. Strengths
and weaknesses refer to the factors
internal to the company while
opportunities and threats are the
conditions in the external business
environment.
• Strengths. They represent the
positive factors that contribute to the
success of your business. They
include the skills of your employees
and workers, your expertise,
availability of the resources you need
(such as materials, information,
machines and equipment, money,
etc.), a strong demand for your
product or service, low capital
requirement, brand (if a franchise),
among others.
• Weaknesses - These are the negative
factors that may cause your business
to stagnate or be sluggish. They
consist of having unclear goals and
targets, poor leadership, inadequate
skilled workers, low morale among
workers, inefficient processes and
equipment, unstable supply of
materials, seasonal demand, lack of
capital, etc.
• Opportunities - These are conditions
in the environment that will allow
your business to earn more income.
Government support particularly in
terms of loans, good infrastructure,
technical and marketing assistance,
incentives, etc., technological
innovations specifically in
communications technology, cost-
saving devices, software programs
for business application, etc., are
some of the opportunities that you
can seize to make your business
grow.
• Threats - These refer to the
conditions in the environment that
will have a negative effect on your
business. They include an emerging
and strong competition, entry of
cheap imports, flight of skilled labor
in favor of overseas jobs, declining
market, shortage of raw materials,
political crisis, too much legislation,
and others.
Players in the market (competitors)
• Competitor. Any person or entity
which is a rival against another. In
business, a company in the same
industry or a similar industry which
offers a similar product or service.
The presence of one or
more competitors can reduce the
prices of goods and services as the
companies attempt to gain a
larger market share.
• The Philippine Competition Act (PCA)
or R.A. 10667 is the primary
competition policy of the Philippines
for promoting and protecting
competitive market.
• Enforcement of this law will help
ensure that markets are open and
free, challenging anticompetitive
business practices while maintaining
an environment where businesses
can compete based on the quality of
their work.
• A competitive market means a
market with multiple buyers and
multiple sellers, driving market prices
lower and offering consumers more
choices. A truly competitive market
encourages efficiency and
innovation, and forces businesses to
excel.
• In perfect competition, there aren’t
barriers to entry and exit in the
market place, there are a large, even
infinite, number of buyers and
sellers, and every buyer and seller is
a “price taker,” meaning no one has
the power to set prices.
• Monopoly- is the exact opposite
form of market system as perfect
competition. In a pure monopoly,
there is only one producer of a
particular good or service, and
generally no reasonable substitute. In
such a market system, the
monopolist is able to charge
whatever price they wish due to the
absence of competition, but their
overall revenue will be limited by the
ability or willingness of customers to
pay their price.
• Oligopoly - is similar in many ways to
a monopoly. The primary difference
is that rather than having only one
producer of a good or service, there
are a handful of producers, or at least
a handful of producers that make up
a dominant majority of the
production in the market system.
• Monopolistic competition - is a
market model in which competitors
provide products or services that are
similar but can be differentiated from
each other. In this model, competing
companies sell products that are all
similar to each other but are not
perfect substitutes.
LESSON 7 - Recognize the Importance of
Marketing Mix in the Development of
Marketing Strategy
• a MARKETING STRATEGY is a plan of
action required to realize the main
objective of marketing, which is to
influence the target market to buy
the product or service being offered
by a business.
• Marketing strategies revolve around
the 4Ps of marketing, so-called
because they all start with the letter
P. Collectively referred to as the
marketing mix
• The four Ps of marketing – are
normally set apart as: getting the
right product to the market, at the
right price, ensuring that promotion
in terms of advertising and marketing
for the product or service is right,
and ensuring that the product or
service is distributed to the most
convenient place for the customers
to buy it.
1. PRODUCT STRATEGIES Product
strategies involve using the properties of
the product to influence the target market
into buying a product or using a service.
1.1 Branding - A “brand” is a name, term,
sign, symbol or design, or a combination
of these, that aims to identify the goods
or services of one seller and to
differentiate them from the other sellers.
The simplest example of a brand is the full
name of a person. A person’s full name
distinguishes him from another person
1.2 Packaging In deciding how you are
going to present your product, you can
follow this simple concept – “what the
package should be or should do for the
product.” In other words, the package
should convey what it is and what it does
for the product.
1.3 Labeling After the brand and
packaging comes the label. A label is used
to identify, grade, describe, and promote
a product. In the perfume example, the
name POISON etched on the backside of
the jar is a label.
For customers to know that POISON is a
perfume and not a toxic substance, the
entrepreneur can put the word,
“perfume” below the label, or a
description of the perfume, or a
description on how to use it, or put a
“non-toxic” grade symbol on the jar.
1.4 Product Support Product-support is
the collective term for services that add to
the marketability of the actual product.
Some examples would be: credit and
financing services, fast and reliable
delivery, and a quick installation.
1.5 Product Attributes Another product
strategy is changing the attributes of an
actual product, based on how the target
market would want it. An actual product
has three attributes that you can change
or modify: quality, features, and design
Usually, products of very high quality
target people in the higher income
brackets. However, when quality is a
standard, you should find another
strategy to influence your target market.
2. PLACE STRATEGIES are concerned with
the ways of bringing one’s product or
service to the target market. One of the
major decisions an entrepreneur must
make is where to sell the product or offer
the service, more particularly, how the
product or service will get into the hands
of or be availed by the target market.
2.1 Traditional channels are avenues that
allow for a personal interaction for the
buyer and seller. Having this kind of a
direct human interaction enhances buyer-
seller relationship. The more common
examples of traditional distribution
channels are:
• Distributors
• Sari-sari stores
• Malls
• Shops
• Kiosk
2.2 New distribution channels - These so-
called new channels are avenues where
the buyer and the seller communicate,
interact, and do business without
necessarily meeting in person. They are
best for target markets that put a
premium on information and interaction.
Popular examples are:
• Television
• Telephone
• Internet
2.3 Designing Places Locate in a place that
provides opportunities for you to interact
and do business. If you have to put up a
storefront, design your place in such a
way as to accommodate the delivery,
guaranteed supply, convenience,
information, and interaction needs that
today’s market is looking for.
3. PRICE STRATEGIES One of the most
obvious ways of influencing the target
market to buy a product or service is by
setting a low price. However, not all goods
and services can be priced low. An
entrepreneur must see to it that the price
is “right” in order to make a profit, sustain
the business, and let it grow, and continue
serving the needs of the target market.
• Value is a perception of worth. That
value can be quantified. The question
to ask is, “How much is this product
or service worth to you?” People
value one thing differently, or put a
price tag for the same items
differently depending on their
background, character, experience,
and many other factors
3.1 Factors Affecting Price These factors
include: the cost of the product,
competitors’ prices, the supply and
demand situation, the ability of your
target customers to pay, and the image of
your company (high prices are associated
with good quality and low prices with low
quality
3.2.1 Cost Factor: cost-plus strategy
Cost-plus pricing is quite simple to do:
1. Add all the costs you incurred in
producing your product.
2. Divide the sum of all these costs by
the number of products you made.
The result of that division is the cost
of each unit that you made or the
unit cost.
3. Then, come up with a percentage of
the cost per unit to represent your
markup. Try to ensure that your
mark-up is sufficient to cover your
unit production cost and selling and
operating expenses, and leave you
with some profit.
4. Add the markup and the cost per unit
to arrive at your selling price per unit.
3.1.2 Competition-based pricing This
strategy means that the main factor for
determining the price of your product or
service is your competitor’s price. You can
set a price that is either higher than your
competitors, the same as your
competitors, or lower than your
competitors.
• You can price your product higher
to establish in your target market’s
mind that your product or service is
far better or more superior and is of
higher value. This has been used in
building product credibility and
reliability in the long term.
• You can price your product or service at
the same level to show your market that
for the same amount of money, they can
get a better product. This will push your
competitors to lower the price of the
similar product and/or create a product
that is the same as yours or a better one
for the same price.
• You can price your product lower as an
introductory offer and create short-term
sales or a long-term offer to capture the • To inform
market. • To build an image

3.1.3 Demand-oriented pricing • Personal Selling

The factors you considered when you Sales force or distributors

computed the potential market demand
are the keys for determining the price for Used in cases when persuasion and
your product or service through time. immediate feedback are necessary

This dynamic approach allows you to set a • Direct Marketing

high price when demand is strong and a
low price when the demand is weak. Direct mail (mailing lists), interactive TV,
Demand can be strong when there is telemarketing, catalogs, postcards,
growth in population, when only you or a inserts
few number of businesses are making that
• Minimedia
type of product, and when a competitor
discontinues making the product. The
Business cards, brochures, banners,
reverse could mean that the demand is
newsletters, posters, takeone-boxes,
weak.
circulars, gift certificates, order forms,
stationery
4. PROMOTIONS STRATEGIES Promotions
is the collective term for all the tools or
• Internet Company
media that a business uses to
communicate a message to the target Web page, web page ads, viral
market. The tools and media are many as advertising, referrals, spamming,
they are also very diverse. Some examples Egroups, blog sites, bidding sites, chat,
would be the familiar television forums
commercials and the unfamiliar Internet
or viral ads in the worldwide web.

4.1 Promo Tools

Advertising TV, radio, newspapers,

magazines, classifieds, yellow pages,
billboards

• For items bought repeatedly

through self-service facilities
• Best used for a large group
• Low cost per exposure and non-
personal
• To build awareness
• To persuade
• To reinforce
• To remind

Sales Promotions

• Sampling, coupons, refund offers,

continuity programs, bonus packs,
trade allowances, tradeshows
• To encourage short term sales
boosts by providing temporary price
reductions or value added
incentives to spur demand
• Public Relations
• News stories and press releases