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CHAPTER 1: INTRODUCTION TO ENTREPRENEURSHIP

LEARNING OUTCOMES:
1. Discuss the relevance of the course.
2. Explain the key concepts of common competencies.
3. Explain the core competencies in entrepreneurship
4. Explore job opportunities for entrepreneurship as a career.

INTRODUCTION TO ENTREPRENEURSHIP

Entrepreneurial activities today have become very important and are the keys to economic development.
Entrepreneurs are the reason for a large quantity of highly developed industries which result to greater employment opportunities for
unemployed.

RELEVANCE OF ENTREPRENEURSHIP TO AN ORGANIZATION

1. DEVELOPMENT OF MANAGERIAL CAPABILITIES
Entrepreneurship helps in identifying and developing managerial capabilities of entrepreneurs.
These managerial capabilities are used in creating new technologies and products in place of older technologies and products
resulting in higher performance.
2. CREATION OF ORGANIZATIONS
Entrepreneurship results in the creation of organizations when entrepreneurs assemble and coordinate physical, human and
financial resources and direct them towards achievement of objectives through managerial skills.
3. IMPROVING STANDARD OF LIVING
By creating productive organizations, entrepreneurship helps in making a wide variety of goods and services available to the
society which results into higher standard of living for the people. (possession of luxury cars, computers, mobile phones, rapid
growth of Shopping malls)
4. MEANS OF ECONOMIC DEVELOPMENT
Entrepreneurship involves creation and use of innovative ideas, maximization of output from given resources, and
development of managerial skills. All these factors are essential to the economic development of a country.

CONCEPT OF ENTREPRENEURSHIP

The word “entrepreneurship” was derived from the French verb enterprendre, which means “to undertake.”
This refers to those who undertake the risk of new enterprises. An enterprise is created by an entrepreneur and the
process of its creation is called entrepreneurship.
Entrepreneurship is a process of actions of an entrepreneur who is always in search of something new to exploit new ideas
into gainful opportunities by accepting the risk and uncertainty of an enterprise.
Entrepreneurs are innovators, willing to take risk and generate new ideas to create unique and potentially profitable solutions
to modern-day problems.
Intrapreneurship describes activities within a firm or large organization (includes corporate venturing)
“Gale of creative destruction” by Schumpeter - wholly or partly destruction creates new products and new business
models across industries.
Entrepreneurial activities can be incremental or disruptive.

FACTORS AFFECTING ENTREPRENEURSHIP

1. PERSONALITY FACTORS
a. Initiative
b. Proactive
c. Perseverance
d. Problem-solver
e. Persuasion
f. Self-confidence
g. Self-critical
h. Planner
i. Risk-taker

2. ENVIRONMENTAL FACTORS
a. Political climate
b. Legal system
c. Economic and social conditions
d. Market situations
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CORE COMPETENCIES IN ENTREPRENEURSHIP

1. ECONOMIC AND DYNAMIC ACTIVITY - involves the creation and operation of an enterprise with a view to creating value or
wealth
2. INNOVATION - continuous search for new ideas
3. PROFIT POTENTIAL - level of compensation or return
4. RISK-BEARING - willingness to assume risk

FUNCTIONS OF AN ENTREPRENEUR

The following are important functions performed by an entrepreneur:

1. INNOVATION – develop new technologies, products, and markets.

2. ASSUMPTION OF RISK - a risk taker not a risk shirker
3. RESEARCH – practical dreamer and does a lot of ground-work
4. DEVELOPMENT OF MANAGEMENT SKILLS – develops while planning, organizing, staffing, directing, controlling and
coordinating activities of the business
5. OVERCOMING RESISTANCE TO CHANGE – paves the way for the acceptance of his/her ideas by others.
6. CATALYST OF ECONOMIC DEVELOPMENT – accelerating the pace of economic development of a country

TYPES OF ENTREPRENEURS

Depending upon the level of willingness to create innovative ideas, here are the following types of entrepreneurs:

1. Innovative entrepreneurs - pioneers

2. Imitating entrepreneurs - copycat
3. Fabian entrepreneurs – before they try, someone else should have tried it first
4. Drone entrepreneurs – contented on what they have
5. Social entrepreneurs – up for the social welfare more than profit

CAREER OPPORTUNITIES FOR ENTREPRENEURSHIP GRADUATES

Given below is only a small snapshot of what can be done by some with an entrepreneurial degree.

1. MID-LEVEL MANAGEMENT – tactical planning

2. BUSINESS CONSULTANT – fix problems
3. SALES
4. RESEARCH AND DEVELOPMENT
5. NOT-FOR-PROFIT FUNDRAISER
6. TEACHER
7. RECRUITER
8. BUSINESS REPORTER

SOME MYTHS ABOUT ENTREPRENEURSHIP

Over the years, a few myths about entrepreneurship have developed.

1. Entrepreneurs, like leaders, are born, not made.
2. Entrepreneurs are academic and social misfits.
3. To be an entrepreneur, one needs money only.]
4. To be an entrepreneur, a great idea is the only ingredient.
5. One wants to be an entrepreneur as having no boss is great fun.

CHAPTER 2: OPPORTUNITY SEEKING, SCREENING, AND SEIZING

LEARNING OUTCOMES: To know the importance of opportunity seeking, screening, and seizing in entrepreneurship

OPPORTUNITY SEEKING
1. The entrepreneurial mind frame allows the entrepreneur to see things in a very positive and optimistic light in the midst of crisis
or difficult situations.
2. The entrepreneurial heart flame, also known as surging passion, refers to the entrepreneur’s fulfillment in the act and process
of discovery.
3. The entrepreneurial gut game, also known as intuition, refers to the ability of the entrepreneur to sense without using the five
senses.
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SOURCES OF OPPORTUNITIES (Opportunity Seeking)

A. Macro Environmental Sources of Opportunities

The macro environment refers to the big forces that affect the area, the industry, and the market, which the enterprise
belongs to.
1. Socio-cultural Environment – includes the demographics and cultural dimensions that govern the relevant entrepreneurial
endeavor
2. Political Environment – governance system of the country or the local area of business
3. Economic Environment - supply and demand forces mainly drive the macro-economic environment
4. Ecological Environment – includes all natural resources and the ecosystem, habitat of men, animal, plants, and minerals.
5. Technological Environment – new scientific and technological advancements and discoveries.

B. Industry Sources of Opportunities

Participants in and industry include:

a. Rivals or competitors in a particular type of business. True rivals or competitors are those competing for the same or
similar markets.
b. Suppliers of input to rivals as well as suppliers of machinery and equipment, suppliers of manpower and expertise,
and supplies of merchandise.
c. Consumer market segments being served by rivals or competitors.
d. Substitute products or services, which customers shift or
e. All other support and enabling industries.
C. Micromarket

Micromarket - refers to the specific target market segment of a particular enterprise. These are the target customers that
represent the immediate customers of an enterprise, meaning those who are currently buying the goods or services offered by
the enterprise and its direct competitors. It likewise pertains to a clearly defined location or specific customer group that an
enterprise wishes to serve.

D. Consumer Preferences, Piques, and Perceptions

Consumer preferences refer to the tastes of particular groups of people. In contrast, consumer dislikes refer to the things
that irritate customers. Either way, the entrepreneur can explore opportunities brought about by consumer preferences or
dislikes.

E. Other Sources
Another potential source of opportunity is the entrepreneur’s own set of skills or expertise, or hobby.
New knowledge as well as new technology can be the source of highly innovative opportunities.
a. Customer preferences change over time.
b. People’s tastes in clothes, music, shoes, entertainment, dance, sports, hobbies, and even careers have evolved over
the years.
c. What piques customers is a great source of opportunities.
d. Before the customer is won over, there is first a battle for the mind. Next, there is a battle for the heart. Finally, there
is a battle for the wallet
e. The longer the customer wants to use the product, the greater the chances of creating lasting loyalty.
f. Opportunities abound in shaping consumer perceptions or occupying spaces in their minds or places in their hearts
that have not yet been filled.
g. New inventions, new systems and work processes, new insights about the human psyche, new applications for old
knowledge, new revelations about how the physical world works, new interpretations, new combinations based on the
convergence of previous technologies, new outlooks about how life should be led, and a host of other new things are
tremendous sources of opportunities.
h. Determining personal preferences and competencies lay the foundation for a new business venture.
i. Unexpected occurrences in both the external and internal environment of the enterprise indicate that significant
changes are happening and opportunities are sprouting
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OPPORTUNITY SCREENING

After opportunity seeking, comes the rigorous process of Opportunity Screening. Because of the many opportunities possible
for the entrepreneur, it is important to come up with a short list of a few very promising opportunities, which could be
scrutinized in detail.

In screening opportunities, the entrepreneur first has to consider his or her preferences and capabilities by asking three basic
questions:

1. Do I have the drive to pursue this business opportunity to the end?

2. Will I spend all my time, effort, and money to make the business opportunity work?

3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forego my usual comforts to succeed in this
business opportunity?

If “YES” is your answer to all of the above, then you can begin your earnest pursuit of that opportunity.

THE 12 RS OF OPPORTUNITY SCREENING

1. Relevance to vision, mission, and objectives of the entrepreneur. The opportunity must be aligned with what you have as your
personal vision, mission, and objectives for the enterprise you want to set up.

2. Resonance to values. Other than vision, mission, and objectives, the opportunity must match the values and desired virtues
that you have or wish to impart.

3. Reinforcement of Entrepreneurial Interests. How does the opportunity resonate with the entrepreneur’s personal interests,
talents, and skills?

4. Revenues. In any entrepreneurial endeavor, it is important to determine the sales potential of the products or services you
want to offer. Is there a big enough market out there to grab and nurture for growth?

5. Responsiveness to customer needs and wants. If the opportunity that you want to pursue addresses the unfulfilled or
underserved needs and wants of customers, then you have a better chance of succeeding.

6. Reach. Opportunities that have good chances of expanding through branches, distributorships, dealerships, or franchise
outlets in order to attain rapid growth are better opportunities.

7. Range. The opportunity can potentially lead to a wide range of possible product or service offerings, thus, tapping many
market segments of the industry.

8. Revolutionary Impact. If you think that the opportunity will most likely be the “next big thing” or even a game-changer that will
revolutionize the industry, then there is a big potential for the chosen opportunity.

9. Returns. It is a fact that products with low costs of production and operations but are sold at higher prices will definitely yield
the highest returns on investments. Returns can also be intangible; meaning, they come in the form of high profile recognition
or image projection.

10. Relative Ease of Implementation. Will the opportunity be relatively easy to implement for the entrepreneur or will there be a
lot of obstacles and competency gaps to overcome?

11. Resources Required. Opportunities requiring fewer resources from the entrepreneur may be more favored than those
requiring more resources.

12. Risks. In an entrepreneurial endeavor, there will always be risks. However, some opportunities carry more risks than others,
such as those with high technological, market, financial, and people risks.

FACTORS THAT ARE CONTAINED IN A PRE-FEASIBILITY STUDY

Market potential and prospects

Availability and appropriateness of technology
Project investment and detailed cost estimates
Financial forecast and determination of financial feasibility

THINGS TO CONSIDER IN WRITING THE FEASIBILITY STUDY

1. A more in-depth study of market potential to ensure that the business proposal will reach the forecasted sales figures
2. Proof that the product or services being offered has the right design, attributes, specifications and preferred features
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3. Proof that the entrepreneur and his or her team have the necessary experience, skills, and capabilities to maximize the
venture’s chances of success
4. Legal visibility
5. More detailed costing on the different assets and more justification for the production and operating expenses
6. More thorough analysis of the technology and its sustainability

OPPORTUNITY SEIZING
After Opportunity Seeking and Screening, the entrepreneur is ready for Opportunity Seizing, the final stage. At this stage, the
entrepreneur must be able to determine the critical success factors that enable other players in the same industry to succeed
while, at the same time, be vigilant about those factors that cause other businesses to fail.

The question for the entrepreneur in Opportunity Seizing is…

“Will I be able to manage, to my advantage, the critical success factors and avoid the critical failure factors?”

KEY POINTS IN GOING ABOUT THE “QUESTIONING” TO CRAFT A POSITIONING STATEMENT

1. What are the main customer segments?

2. What are the different product attributes and features of each of the competitors?
3. What are the existing marketing practices of the various competitors?
4. What are the market preferences of consumers when it comes to the products being offered?

OPTIONS OR DIRECTIONS IN COMING UP WITH A PRODUCT/SERVICE CONCEPT

1. The first is to create a concept similar to the winning products in the marketplace and ride with the obvious market trends
2. The second is to find a market niche that has not been filled by the competitors.
3. The third is to conceptualize a product in a positioning category where the participants are rather weak.
4. The fourth is to conceptualize a product that would change the way customers think, behave, and buy, thus making existing
products “obsolete” and “old-fashioned.”

DESIGNING, PROTOTYPING, AND TESTING THE PRODUCT

Designing means that the entrepreneur must render the concept and translate it into its very physical and very real dimensions
(measurement). This entails building a prototype of the product that will be ready for actual testing by the entrepreneur and then, later
on, subject to testing by potential customers through focus group discussions (FGD), surveys, product demonstration sessions, and the
like.

CHAPTER 3: GETTING TO KNOW THE MARKET

LEARNING OUTCOMES:

1. Describe the unique selling proposition and value

proposition that differentiate one’s product/service
from existing products/services.
2. Determine who the customers are in terms of:
a. Target Market
b. Customer requirements
c. Market size
3. Validate customer-related concerns through:
a. Interview
b. Focused Group Discussion
c. Survey

MARKET SURVEY
To start a business, the first thing to do is find out
what is the demand for the product by conducting a short
market survey.
It is better to do market survey (if necessary with
assistance from partners or advisers) because they will
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properly understand their customer’s needs and how their business should operate.
It is better to think in advance about the type of information that is needed and to ask people the same questions each time, so
that their answers can be compared and summarized.

SOURCES OF NEW PRODUCTS/SERVICE

1. Consumer – Monitor potential ideas and needs from customers and formally arrange for consumers to express their
opinions.
2. Existing products and services – analysis of products and services uncovers ways to improve offerings that may result
in a new product or service\
3. Distribution Channels - Channel members can help suggest and market new products
4. Government (Patent Office) – Files of Patent Office can suggest new product possibilities
5. Research and Development – Conduct research on your market and your customer needs. This results to the
development and identification of new and improved product and services.

METHODS OF GENERATING NEW PRODUCTS/SERVICES

1. Focus Group – A moderator leads a group of 8 to 14 participants through an open, in-depth discussion in a directive or
nondirective manner. This is an excellent method of generating and screening ideas and concepts. It allows people to be
stimulated to greater creativity.
2. Brainstorming – Good ideas emerge when the brainstorming effort focuses on a specific product or market area.
Rules of brainstorming:
a. No criticism of ideas or suggestions.
b. Freewheeling discussion is encouraged.
c. Quantity of ideas desired.
d. Combinations and improvements of ideas are encouraged.
3. Problem Inventory Analysis
Consumers are provided with a list of problems and are asked to identify products that have those problems. Results
must be carefully evaluated as they may not actually reflect a new business opportunity.

METHODS OF CUSTOMER PROFILING

• Demographics
• Psychographics
• Technographics

1. In demographic classification, we categorize customers into the following:

1. Age
2. Income classes
3. Social classes/Reference groups
4. Ethnic backgrounds
5. Religious beliefs
6. Occupations
7. Domiciles
2. Psychographics defines the customer’s:
1. Motivations
2. Perceptions
3. Preferences
4. Lifestyle
3. Technographics classifies people according to their level of expertise in using a product or a service.
For example:
1. Sports beginners might just want basic equipment.
2. Sports regulars may be looking for more sophisticated equipment.
3. Finally, sports professionals would want the best of the best for competitive purposes.

GENERATING NEW PRODUCTS /SERVICES FOR CONVENTIONAL OR INNOVATIVE BUSINESSES

Conventional ideas can be taken from tried and tested business models like opening up a snack bar in competition with
almost 100 others in a particular city. For the innovative businesses, however, a product can be introduced that is not yet known to
the market.

1. Conventional business scenario

Below are ways to start conventional business
A. Start a business that you are familiar with,
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B. Start a business due to the needs of existing business contacts.

C. Gain business inspiration from your hobby or interest.
D. Gain inspiration from an imported item.
E. Explore the possibility of import business.
2. Innovative business scenario
Here are some ways to introduce an innovative business.
a. Gain inspiration from the needs and wants of customers.
b. Gain an inspiration from the problems and issues that bothered you and your peers.
c. Study the usual or existing solutions and ventures in the alternative solutions.
d. List down existing products and find out their uses aside from what was stated.

SURVEY OF MARKET SIZE AND VALUE

A different set of questions is needed when assessing the size of the market for a particular type of product and the value of the
market (the amount of money spent on that product each month year).

This involves making a number of assumptions and it is important to consider the following:

1. Are the people interviewed really representative of all potential consumers?

2. Was the number of people interviewed enough?
3. Were people giving accurate information?

MARKET SIZE AND COMPETITION

Market surveys and the calculation of market size and value are important to find out whether the demand for a product really exists.
Market share – the proportion of the total market that a new business could reasonably expect to have
It is difficult to estimate a realistic market share. The figure depends on a large number of variables. In many cases,
new entrepreneurs over-estimate the share that they could expect, with the result that production operates at only small proportion of
the planned capacity.

COMPETITORS

Competitors are very important to the success or failure of a new business. The entrepreneur should recognize that there are different
types of competitors.
 General competitors
 Type competitors
 Brand competitors

New entrepreneurs must therefore assess the new business by using (SWOT) Analysis – strengths, weakness, opportunities and
threats.

CHAPTER 4: LET THE MARKET KNOW YOU BETTER

LEARNING OUTCOMES:

1. Describe the Marketing Mix (7 Ps) in relation to the business opportunity vis-à-vis:
0.1 Product
0.2 Price
0.3 Promotion
0.4 Place
0.5 Packaging
0.6 Positioning
0.7 People
2. Develop a brand name

INTRODUCTION

A start up or a company’s strategy combines all of its marketing goals into one comprehensive plan. A good marketing strategy
can be drawn from market research and focus on the product mix in order to achieve maximum profit and sustain the business.
The marketing strategy is the foundation of a marketing plan.
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A marketing strategy is a business's general scheme for developing a customer base for the product or service the business
provides.

After developing a marketing strategy, there is a “Seven P Formula” that can be used to continually evaluate and re-evaluate the
business activities.

THE MARKETING MIX (7 Ps)

1. PRODUCT
 A product is the tangible good or the intangible service that the enterprise offers to its customers in order to satisfy their
needs and to produce their expected results. Products are often identified with their brand names to distinguish them from
other products in the market.
 To begin with, develop the habit of looking at the product as an outside marketing consultant brought it to help the
company decide whether or not it’s in the right business at this time. Ask critical questions like “Is the current product or
service, or mix of products and services, appropriate and suitable for the market and for the customers today?”

General Types of Products

1. Breakthrough products - Offer completely new performance benefits

2. Differentiated products - Try to claim a new space in the mind of the customer different from the spaces occupied by
existing product
3. Copycat products - Copycat products look very similar to the brand leader. In fact, their success relies wholly on our
familiarity with the original. ‘living dangerously’ with intellectual property’
4. Niche products - Are products with lower reach, lower visibility, lower prices, and lower top of mind

2. PRICE
 The second P in the formula is Price. Develop the habit of continually examining and re-examining the prices of the
products and services to sell for making sure they’re still appropriate to the realities of the current market.
 Simplistically, price is the value measured in money term in the part of the transaction between two parties where the
buyer has to give something up (the price) to gain something offered by the other party or the seller.

Different Pricing Strategies

1. Profit maximization - A process that companies undergo to determine the best output and price levels in order to maximize
its return. The company will usually adjust influential factors such as production costs, sale prices, and output levels as a way
of reaching its profit goal. Profit is the amount of value that remains after you subtract the expenses your business incurs during the
year from the amount of revenue it produces.
2. Revenue maximization - Revenue is essentially another word for sales, or how much of the good or service that your
business produces is sold to consumers. Revenue does not take into consideration the costs necessary to produce or market
your business’s product, so it does not reflect what the owners ultimately receive. A revenue maximization strategy dictates
that a business should do whatever is required to sell as much of its product at as high a price as possible.
3. Market share maximization- Market share represents the percentage of an industry, or a market's total sales that is earned
by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period
and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a
company in relation to its market and its competitors.

Understanding Market Share

A company's market share is its portion of total sales in relation to the market or industry in which it operates. To calculate a
company's market share, first determine a period you want to examine. It can be a fiscal quarter, year or multiple years.
Next, calculate the company's total sales over that period. Then, find out the total sales of the company's industry.
Finally, divide the company's total revenues by its industry's total sales.
For example, if a company sold $100 million in tractors last year domestically, and the total amount of tractors sold in the U.S.
was $200 million, the company's U.S. market share for tractors would be 50%.

4. Attainment of the desired prestige or quality leadership

5. Penetration, survival, or liquidation - Penetration pricing includes presenting a low price for a new product or service
during its initial offering. The lower price helps to lure customers away from competitors. This marketing strategy relies on the
idea of low prices making a customer aware of a new product.
6. Scarcity pricing or market skimming - Skimming is the opposite pricing strategy to penetration pricing. With penetration
pricing, companies advertise new products at low prices, with modest or nonexistent margins. Using skimming, they market
products at high prices with relatively high margins. This strategy works well for innovative or luxury products where early
adopters have low price sensitivity and are willing to pay higher prices. Effectively, producers are skimming the market to
maximize profits. Over time, prices will reduce to levels comparable to market prices in order to capture the rest of the market.
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7. Cost recovery - defined as the method to recovering an expenditure which a business takes on, is both a specific and
general term.
8. Subsidy pricing - A subsidy is a benefit given to an individual, business, or institution, usually by the government. It is
usually in the form of a cash payment or a tax reduction. The subsidy is typically given to remove some type of burden, and it
is often considered to be in the overall interest of the public, given to promote a social good or an economic policy.
9. Marginal pricing - is when a business sells a product at a price that covers its manufacturing costs but not its overhead

Profit, Revenue, and Market Share Maximization

3. PLACE – The last element of the marketing mix is the place. Also called placement or distribution, this is the process and
methods used to bring the product or service to the consumer.

• In the marketing mix, the process of moving products from the producer to the intended user is called place.
• This movement could be through a combination of intermediaries such as distributors, wholesalers and retailers. In
addition, a newer method is the internet which itself is a marketplace now.
• Through the use of the right place, a company can increase sales and maintain these over a longer period of time. In turn, this
would mean a greater share of the market and increased revenues and profits.
• Correct placement is a vital activity that is focused on reaching the right target audience at the right time. It focuses on where
the business is located, where the target market is placed, how best to connect these two, how to store goods and how to
eventually transport them

DISTRIBUTION CHANNEL

What is a Distribution Channel?

A distribution channel can be defined as the activities and processes required to move a product from the producer to the
consumer. Also included in the channel are the intermediaries that are involved in this movement in any capacity. These
intermediaries are third party companies that act as wholesalers, transporters, retailers and provide warehouse facilities.

TYPES OF DISTRIBUTION CHANNELS

1. DIRECT
In this channel, the manufacturer directly provides the product to the consumer. In this instance, the business may
own all elements of its distribution channel or sell through a specific retail location. Internet sales and one on one meetings are
also ways to sell directly to the consumer. One benefit of this method is that the company has complete control over the
product, its image at all stages and the user experience.
2. INDIRECT
In this channel, a company will use an intermediary to sell a product to the consumer. The company may sell to a
wholesaler who further distributes to retail outlets.
3. DUAL DISTRIBUTION
A company may use a combination of direct and indirect selling. The product may be sold directly to a consumer,
while in other cases it may be sold through intermediaries.
4. REVERSE CHANNELS
The last, most non tradition channel allows for the consumer to send a product to the producer. This reverse flow is
what distinguishes this method from the others. An example of this is when a consumer recycles and makes money from this
activity.

DISTRIBUTION CHANNEL INTERMEDIARIES

Distribution channel intermediaries are middlemen who play a crucial role in the distribution process. These middlemen facilitate the
distribution process through their experience and expertise. There are four main types of intermediaries:

1. Agents
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The agent is an independent entity who acts as an extension of the producer by representing them to the user. An agent never actually
gains ownership of the product and usually makes money from commissions and fees paid for their services.

2. Wholesalers

Wholesalers are also independent entities. But they actually purchase goods from a producer in bulk and store them in warehouses.
These goods are then resold in smaller amounts at a profit. Wholesalers seldom sell directly to an end user. Their customers are
usually another intermediary such as a retailer.

3. Distributors

Similar to wholesalers, distributors differ in one regard. A wholesaler may carry a variety of competition brands and product types. A
distributor however, will only carry products from a single brand or company. A distributor may have a close relationship with the
producer.

4. Retailers

Wholesalers and distributors will sell the products that they have acquired to the retailer at a profit. Retailers will then stock the goods
and sell them to the ultimate end user at a profit.

INITIAL LOCATION SCREENING

• The number of customers residing or working in the area, and the number of customers who frequently pass through the area

• The density or number of customers per unit area

• The access routes to alternative locations and their traffic count in those routes

• The buying habits of customers or where they buy, at what time and how frequent

• Locational features such as parking spaces, foot access, creature comforts and the like

FACTORS TO CONSIDER THAT COMES WITH THE LOCATION

• Cost of buying, renting, renovating and operating the location

• Customer volume, drop-in (percentage of customer traffic that stop by the store) and sales conversion ratios (percentage of
drop-ins that actually purchase from the store)

FACTORS TO CONSIDER IN FINAL CHOICE OF LOCATION

• Image and location conditions. Refers to the physical look of location.

• Exact fit to target costumer. If the location generally composed your target costumer.
• Clustering of competitor establishments. Drawing a bigger market in the location
• Future area development. It might not have the most customers in the short term but might become a central hub within the
next few years.
• Fiscal and regulatory requirements
RELEVANT LOCATION DRIVERS
• Physical proximity to target market
• Customer traffic flow
• Industry clustering
• Convergence of Multiple industries
• Population concentrations
• Activity hubs
• Growth potential
• Business Climate
• Cost of Doing business and producing goods and services
LOCATIONS WITH A GOOD BUSINESS CLIMATE
• High economic growth
• Stable political condition
• Effective social services
• Good infrastructures
• Cheap utilities
• Efficient transportation and logistics
• Availability of skilled labor force
• Low crime rates
• Trusted public officials