Entrepreneurship

Unit 2
Module 2
New Venture Planning and Creation
Motivational Quote
GENERAL OBJECTIVES
On completion of this Module, students should:
1. understand the importance of a market
research and feasibility analysis;
2. appreciate the process of determining the
viability of a venture;
3. be aware of the components of a business
model and a business plan;
4. understand the importance of start-up capital
and financial statements in venture creation;
5. understand the importance of a business
model and a business plan.
SPECIFIC OBJECTIVES

Students should be able to:

1. Define the term market

2. explain market research;
3 explain the importance of market
research
4. conduct a market research for a
venture;
5. Explain the elements of a market
research
What is a Market ?
What is a Market ?
A market is a group of customers or
potential customers who have
purchasing power and unsatisfied
needs.
What is a Market Research ?
Nackeila
A market research involves the collection
and analyzing of data and the interpreting
of information about a particular market
such as its needs, size, trends , demand
potential and competition.

Consumer's tastes and the factor that

influence their buying behaviour are
identified and a assessment is made of
the level of competition in the industry.
 Market Research

Market Research must be differentiate

from Marketing Research which focuses
not just on the market but on all the
activities that make up the Marketing
Mix.

The Market Research will form a part of

the marketing Research of an enterprise.
The Purpose of the Market
research ?
❖ A market research investigates the viability
of a product or service in the market place.

❖ It allows the marketer to discover the needs

of the target market and to understand
just how to satisfy these needs in the most
efficient and effective manner.

It also gives him/her knowledge of the

operations of the main competitors.
Benefits of conducting market
research.
A proper Market Research:
Allows you to understand the nature and
needs of existing customers so that you can
continually devise strategies that will be
effective in maintaining satisfaction.
Assist the business in identifying and
understanding potential customers.
Reveals the current position of the firm in the
marketplace.
 Sources of data in Market
Research
There are two types of data that can be used in the research
process. Based on the type of information the entrepreneur may
require, there is the option of using primary or secondary data.
Both can be used depending on the research objective. These are
described as:

1) Primary data – collection of new data for a specific purpose

and target market. This information can be sourced through
interviews, focus groups, surveys and observation of potential or
existing customers.

2) Secondary data – the usage of data collected in a previous or

other purpose and not the proposed research investigated.
Secondary data can be sourced from magazines, business
reports, government offices, and journals.
 Lets RECAP What you just
learnt!!!!
Key Elements of Market
Research
(i)product characteristics;
(ii) definition of market;
(iii) expected sales trends;
(iv) customer analysis;
(v) promotional strategy; and,
(vi) nature and level of competition.
1.Product Characteristics
Product Characteristics are attributes or
features that clearly describe the ability of the
product to satisfy the needs of consumers.
These features should differentiate an
enterprise’s product from other products in
the market.
Each product is made up of both tangible
and intangible features which help to define
the product.
1.Product Characteristics
Features of the product can be used to
determine price, promotional and distribution
strategies.

A marketer must communicate to the

market, the benefits that will be derived
from the use of the product rather than
just the tangibles.
Let us Explore this !!!
Justin is interested in buying a motor car. He has been
selling insurance policies' for 3 years and depended on
public transport to take him around. His supervisors spoke
to him about the required profile for insurance agents .
What is the supervisor really saying ?

Justin needs to acquire a motor vehicle that will create an

image of success for himself. There is a certain car that
insurance agents will drive, that will say to customers : I
am successful. If you buy my insurance you will be
successful too. So Justin may love the colour blue and may
really life the shape of a Camrys but more importantly
to him he must choose a car that will build the image
that is required to carry the ethos of his organization and
positively influence his sales.
Which aspect speak to intangibles ?
Which aspect speak to Tangible ?
Basic benefits that a product
provide (Product Characteristics)

1.Functionality – The product must fulfil its

purpose. It should perform the task it was designed
to perform.

2. Durability –The product must last for the stated

time of use; maintaining its strength and form
throughout all types of pressure.

3. Quality- Quality is a very important feature. It

tells the value of the product. Customers will match
the quality with the price in order to make the
decision to buy a good or service.
Product Characteristics
4. Usability – The usability of a product
speaks to the extent to which and ease with
which a product can be used by the target
market to effectively satisfy needs.
5. Safety- The product must not pose a threat
to humans and the environment when used in
the prescribed way.
2. Definition of Market;

The entrepreneur must determine the market

size and should know the opportunities for
growth and the potential threats.

The size and nature of the market set the

parameters within which the firm operates.
It is important to determine whether the
product has mass appeal or serves a niche.
Is it a local phenomenon or something that
might have global appeal?
3.Expected Sales Trends
An analysis of the sales patterns of the various
market segments will provide very useful
information for the marketer.

Trends in Sales can be identified when sales data

for a number of years are carefully analyzed.

The Sales pattern that are discovered helps to

make predictions of how the product may
perform in the coming year. They may also have
implications for the expected cash inflow. Any
short fall or problem foreseen can be planned
for.
3.Expected Sales Trends

Research is also important to understanding

spending patterns and factors affecting demand.

Understanding trends can help to improve

accuracy of forecasts and planning.

Potential yearly Sales is found by

multiplying the number of potential
customers by the average amount expected
to be spent.
4.Customer Analysis
The entrepreneur must know who the customer is.
Having a customer profile is essential to
developing appropriate marketing campaigns and
continuing to seek ways to please the customer.
This helps the entrepreneur in achieving marketing
success and avoid wastage

The customer analysis will :

❖ Identify the target market
❖ Look at the needs of the target customer
❖ Show how the customers’ needs are satisfied by
the products and services that the business is
offering.
 4.Customer Analysis
Identifying the target market :The business must
know who its customers are .
Is the business selling its goods or services to
another businesses or to customers ? Customers
must be placed in to their respective market
segments and customer profile must be prepared for
each group.

Customers may be divided according to

1. Demographics : age , gender , marital status,
income, geographical location ect.)
2. Psychographics : (lifestyle , interest , buying habits
, opinions )
5.Promotional Strategy
The Promotional Strategy is devised to make
the customers and prospective customers
aware of the products and services of a
business. It will also be geared towards
motivating them to buy. The main aim is to
attract and retain customers.

Producing successful promotional tools will

required an accurate knowledge of the
target market and the promotional tools
that are available that will be effective.
 5. Promotional Strategy
Social media is a powerful tool that can be used to attract
customers . It allows for opportunities for communities to
be developed and the number of persons within each
have the ability to be multiplieD| ast a faster rate.
Promotional Tools include:
➢ Social Media-- Facebook . Twitter , Instagram , Google
+ ect.
➢ Mass Media
➢ Sales Promotion
➢ Personal Selling
➢ Contest & Product Giveaway
6.Nature and Level of
Competition
Competitors may already be present in the
market. The entrepreneur should observe and
become knowledgeable of competitors. This will
assist the organization in decision making in
developing sustainable business strategies.

A competitor analysis will provide information

on the impact or influence the competitor may
have on the venture. Develop and incorporate
proper strategic planning to place your business
ahead of the competitor in the market.
6. Nature and Level of
Competition
The business needs to investigate:
❑ Who their competitors are

❑ The Size of their market share

❑ Their strength and weaknesses

❑ If they are likely to move into the firm’s market

share.
❑ If the industry is fragmented, concentrated or
both.

❑ The business needs to know if they are facing

direct competition or indirect competition
Cost-benefit analysis approach
to market research
A cost -benefit analysis approach will show a
comparison of the value of the cost of the
market research with the value off the benefits
that the market research will provide .Once the
benefits exceed the cost, the entrepreneurial
venture is worthwhile.
As entrepreneur one should consider cost
associated with market research:
▪ Time spent by research staff and consultants on
research activities.
▪ Resources of the firm used in the process
▪ Cost of each research location
▪ Opportunity cost of market research in terms
of using the resources in another area
▪ Cost per research participants
Importance of CBA
1.CBA is important because it provides
decision-makers with a way to compare the costs
and benefits of different options and make
informed decisions
.2 It helps to ensure that resources are allocated
efficiently and that the benefits of a project or
decision outweigh its costs.

3.It's a useful tool when you want to avoid bias in

your decision-making process—especially when
you're faced with a big decision that will impact
your team or project success
Conducting the Market
Research
Both Primary data and secondary data may be
used in the market research.

Primary data is the new data that is derived

through interviews , focus groups, observations
and the conducting of surveys.

Secondary data is existing data such as

research done by others on the area being
investigated, other published work in the form
of journals and books found at the physical
library or online and statistical data prepared
by government departments .
Stages in the market Research
Process.
(1) Identify the problem/aim ;

(2) Formulate Research objective;

(2) Determine your research design;- research methods;

(3 ) Determine sampling technique / method ;

(4) data collection;

(5) Do data analysis and presentation;

(6) Prepare conclusion

(7) Reporting.
 END OF
PRESENTATION