SHS ENTREPRENEURSHIP -Q1MODULE 3 - RECOGNIZE AND UNDERSTAND THE MARKET
Understanding Unique Selling Proposition and Value Proposition
Overview of Module 3
- This module focuses on recognizing and understanding the market, divided into two main topics: unique selling proposition (USP) and value proposition (VP), as well as identifying target customers.
- The previous lesson covered entrepreneurial ideas leading to opportunities for opening a venture, emphasizing the need to determine USP and VP for products.
Unique Selling Proposition (USP) Explained
- USP differentiates a product or service from competitors by addressing customer wants and desires effectively. Entrepreneurs must consider what their target customers want compared to competitors.
- An example of USP is Jollibee's tagline "langhap sarap," which highlights its unique flavor profile appealing to Filipino tastes.
Value Proposition (VP) Defined
- A value proposition summarizes why consumers should buy a product or use a service, aiming to add value to their lives. It is crucial for convincing customers of the benefits offered.
- For instance, Aling Charing's sari-sari store operates 24/7, providing convenience that sets it apart from other local stores that have limited hours. This operational model serves as an effective VP.
Identifying Target Market and Customer Requirements
Importance of Target Market
- Target marketing involves identifying buyers with common needs and characteristics, allowing entrepreneurs to focus their efforts on specific segments likely to purchase their products or services.
- Effective targeting excludes non-relevant demographics while optimizing marketing resources towards those most likely to convert into customers.
Methods of Market Segmentation
- Geographic Segmentation: Divides the market based on geographical locations such as climate, culture, and urban vs rural settings.
- Demographic Segmentation: Considers unchangeable consumer variables like age, gender, income level, education, religion, ethnicity, and family size when segmenting markets.
- Psychological Segmentation: Focuses on customer beliefs and attitudes including needs/wants, social class, personality traits, brand awareness, and lifestyle choices that influence purchasing behavior.
- Behavioral Segmentation: Analyzes customer behavior patterns in relation to how they interact with companies based on perceptions about products/services offered by competitors.
Customer Requirements Breakdown
- Customer requirements can be categorized into service requirements (intangible aspects like delivery speed or customer service quality) versus output requirements (specific tangible product features).
- Understanding these requirements helps businesses tailor offerings that meet consumer expectations effectively while enhancing satisfaction during the buying process.
Calculating Market Size
Significance of Market Size
- Determining market size is critical for entrepreneurs as it influences business strategy decisions including funding opportunities before launching new products or services.
Steps in Estimating Market Size
- Estimate potential market size by calculating the number of prospective customers who might buy your product.
- Identify potential customers who may not prefer your offering.
- Analyze competitor market shares to understand your position within the marketplace.