Entrepreneurial training manual

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The teaching of entrepreneurial skills is to offer opportunities to students. This would create avenues for them to generate feasible and sustainable income for themselves while make a meaningful contribution to the country. This course aims to motivate these young people to stay in school; to recognize business opportunities and to plan for a successful future.

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Entrepreneurial training manual

  1. 1. ENTREPRENEURIALTRAINING“OWNING YOUR FUTURE”©JR 21012 No content from this manual should be reproduced with consent Page 1
  2. 2. Table of Contents What is a Business? ........................................................................................................ 5 Functions of a Business .............................................................................................. 5 Who is an entrepreneur ................................................................................................... 6 Role of an entrepreneur ............................................................................................... 6 How employees and entrepreneurs differ ................................................................... 7 Characteristics of an Entrepreneur .............................................................................. 8 Rewards of being an entrepreneur .............................................................................. 9 Risk of being an Entrepreneur .................................................................................. 10 Skills ............................................................................................................................. 10 Skills Programs ......................................................................................................... 11 REVISION .................................................................................................................... 12 Idea vs. Opportunity...................................................................................................... 15 Turning ideas into opportunities ............................................................................... 16 Start with what you know ......................................................................................... 16 Thinking creatively ................................................................................................... 17 Make Your Hobby Your Business ............................................................................ 18 Evaluating a business opportunity ............................................................................ 19 REVISION .................................................................................................................... 22 Is entrepreneurship for you ........................................................................................... 24 Summary ....................................................................................................................... 25 Are You Prepared?........................................................................................................ 27 Types of Business ......................................................................................................... 28 Types of Business Ownership ....................................................................................... 28 Three Major types of Business Entities ........................................................................ 31 Revision ........................................................................................................................ 32 Contracts ....................................................................................................................... 36 Business Communications ............................................................................................ 37 Product Development.................................................................................................... 44 Packaging and Labelling ........................................................................................... 44 Pricing Strategies ...................................................................................................... 44 Types of Pricing Policies .......................................................................................... 45©JR 21012 No content from this manual should be reproduced with consent Page 2
  3. 3. Marketing ...................................................................................................................... 46 Market Research ....................................................................................................... 46 Marketing Mix .......................................................................................................... 47 Competition Analysis................................................................................................ 47 Market Niche ............................................................................................................ 50 How to study the target market ..................................................................................... 51 Survey ....................................................................................................................... 51 Conducting the Survey .............................................................................................. 53 Analyze the results .................................................................................................... 54 REVISION .................................................................................................................... 56 Promotion...................................................................................................................... 58 Promotion Strategies ................................................................................................. 58 Print Messages .............................................................................................................. 59 Logo .......................................................................................................................... 61 Written Message ....................................................................................................... 61 An effective Ad ............................................................................................................. 63 REVISION .................................................................................................................... 64 Business Plan Format .................................................................................................... 68 Finance Options ............................................................................................................ 71 REVISION .................................................................................................................... 74 Financial Management .................................................................................................. 76 Leadership today ........................................................................................................... 77 Qualities that define a leader ..................................................................................... 77 Human Resource Management ..................................................................................... 77 Government Regulations .............................................................................................. 79 Ethical and Social Responsibility Issues ....................................................................... 79 Business Registration Process....................................................................................... 80 Tax Consequences ........................................................................................................ 80 Income Tax ............................................................................................................... 81 Social Security .......................................................................................................... 82 Medical Benefits ....................................................................................................... 83 Education Levy ......................................................................................................... 83©JR 21012 No content from this manual should be reproduced with consent Page 3
  4. 4. Customer Service/Customer Relations ......................................................................... 84 REVISION .................................................................................................................... 86 Niche ......................................................................................................................... 93©JR 21012 No content from this manual should be reproduced with consent Page 4
  5. 5. Unit 1 - Who is an EntrepreneurObjectivesUpon completion of this unit students should be able to: 1. State what is a business 2. Identify functions of a business 3. State who is an entrepreneur 4. Identify the role of an entrepreneur 5. Identify the characteristics of an entrepreneur 6. Understand the risk of becoming an entrepreneur 7. Recognize the benefits of being a successful business owner 8. Differentiate between an opportunity and an idea 9. Identify business opportunities 10. Asses the reason why you are thinking about starting a businessWhat is a Business?A business is all activity concerned with the production andconsumption of goods and services that satisfy human wants andneeds.Functions of a Business 1. to create employment and incomes 2. to maintain and expand markets and the economy 3. to compete by producing goods/services 4. to maintain social status as a corporate citizen 5. to satisfy the need or greed of making more money 6. to take risks 7. to maximize profitsBefore you begin, what is your answer to these questions?©JR 21012 No content from this manual should be reproduced with consent Page 5
  6. 6. Have you ever dream of starting your own business?  Yes  NoIf Yes, what kind/type of business?________________________________________________________________________________________________________________________________________________________________________If No, why not________________________________________________________________________________________________________________________________________________________________________What would be the best or worst thing about owning your ownbusiness?________________________________________________________Who is an entrepreneurAn entrepreneur (on-tra-prih-NER) is someone that creates a newbusiness. This can carry a high risk because it requires money to setup a new business without knowing if it will give a return oninvestment. A good understanding of the market is needed and findingout what customers want and modify their products in line withmarket requirements. Every entrepreneurship business started with anidea of how to solve a particular problem or add value to a presentproduct. This is the first phase of any business. This is where youtest your idea for a business by doing research to find out if anyoneelse has had the same idea.The production and sale of new products and services are sparked byentrepreneurial energy, creativity and motivation.Role of an entrepreneurEntrepreneurs seek disequilibrium – a gap between the wants andneeds of customers and the products and series that are currently©JR 21012 No content from this manual should be reproduced with consent Page 6
  7. 7. available. The entrepreneur then brings together the factors ofproduction necessary to produce, offer, and sell desired products andservices. They invest and risk their money – and other people’smoney- to produce a product or service that can be sold at a profit.The role of an entrepreneur includes the following: Innovators who create new products or process They are risk takers They people who take an idea and make it a success Combines the other three factors of production (land, labour, capital) to produce a good or service Takes the risk of losing investment if business fails Class DiscussionDo you know any entrepreneurs? What do entrepreneurs do and howdo they differ from employees?How employees and entrepreneurs differEmployees work for someone else and entrepreneurs work forthemselves, entrepreneurs risk more than employees. Employees mayrisk losing a job if they do not perform their work well but they arepaid for their work. Entrepreneurs risk not being able to pay theiremployees or themselves if business is “slow.”The rewards employees and entrepreneurs get from their work canalso be different. A reward can involve money, but it also might bepersonal satisfaction or independence. As business owners,entrepreneurs are in control of the money made by the business. Theyalso have the final say in all business decisions. As a result,entrepreneurs are ultimately responsible for the success or failure oftheir businesses. (Mariotti, 2010)©JR 21012 No content from this manual should be reproduced with consent Page 7
  8. 8. Characteristics of an EntrepreneurEvaluating your strengths and weaknesses is an important part ofbecoming an entrepreneur. Self-assessment helps you maximize yourstrong points and strengths and weaknesses. Everybody has strengthsand weaknesses - it’s what you do with what you have that counts.Also, entrepreneurs who are self-aware are able to focus on hiringemployees with characteristics that complement their own.An aptitude is a natural ability to do a particular type of work oractivity well. An attitude is a way of viewing or thinking aboutsomething that affects how you feel about it. Entrepreneurs tend to bepeople with positive attitudes. Instead of seeing a situation as aproblem, they look at it as an opportunity. This helps them findsolutions more easily than people who think negatively.An entrepreneur needs to have self-esteem. They need to viewthemselves in a positive way. A positive attitude can mean thedifference between failure and success. Someone with a strongaptitude but a negative attitude will probably achieve less thansomeone who has less natural ability but a positive attitude.No one is born with all the characteristics needed to be successfulentrepreneur. But if you keep a positive attitude and believe inyourself, you can develop many of them. Notice the personality traitsyou already possess then focus on the one you think you need todevelop.  Courage: a willingness to take risks in spite of possible losses  Creativity: inventing new ways of doing things; thinking outside of the box  Curiosity: the desire to learn and ask questions  Determination: refusing to quit in spite of obstacles  Discipline: the ability to stay focused and follow a schedule to meet deadlines  Empathy: being sensitive to the thoughts and feelings of others©JR 21012 No content from this manual should be reproduced with consent Page 8
  9. 9.  Enthusiasm: being passionate about something; the ability to see problems as opportunities.Rewards of being an entrepreneurSome of the rewards of being an entrepreneur:1. Money - When you are self employed, your earning potential isonly limited by your own brains and motivation to build a successfulbusiness. The more effort and smart planning you put into yourbusiness, the more you will directly benefit from your own work.2. Opportunities - entrepreneurs launched their business in order tocreate opportunities for themselves that they could not find intraditional jobs within their local labour market. When you build yourown business, you can build opportunities and working conditions thatare a good fit for your needs in ways that you may not find intraditional employment.3. Accomplishment - Building a successful business can provide youwith a sense of pride that you have created something yourself basedon something you value. You get to build something from the groundup that is your own and a reflection of your values, and any businesssuccess is always your success.4. Time - While you will invest a lot of time in building yourbusiness, depending upon the type of business you launch, being anentrepreneur can provide you with a lot of flexibility and freedomwith your schedule that you would not often have with a traditionaljob.5. Making your own rules – when you own your own business, youget to be your own boss. You can decide what type of schedule youwork, where you work and how and when you get paid.©JR 21012 No content from this manual should be reproduced with consent Page 9
  10. 10. 6. Doing what you enjoy – people tend to stay more focused andmotivated when they are passionate about their work.7. Helping your community - being an entrepreneur opens upopportunities that help make your community and world a better placein which to live.8. Be your own boss – an entrepreneur makes the decisions for theenterprise and takes full responsibility for them. Being your own bossmeans you are in control of your future.Risk of being an Entrepreneur1. Money2. Skill and Knowledge3. Feedback4. Time5. Risk of Failure6. Unpredictable business conditions7. Long Hours of Work8. Unwanted or unexpected responsibilitiesSkillsA skill is an ability that’s learned through training and practice. Someof the basic skills entrepreneurs needs are:  Business skills: understanding how to create and manage a business  Communication skills: the ability to listen well, write well and speak well.  Computer skill: the ability to use technological tools effectively.  Decision-making and Problem-solving skills: knowing how to apply logic, information, and past experiences to new decisions and problems.  Mathematical skill: using math to create budgets, keep accurate records, and analyze financial statement©JR 21012 No content from this manual should be reproduced with consent Page 10
  11. 11.  Organizational skill: the knack of keeping task and information in order; the ability to plan well and manage your time.  People skill: the ability to persuade and motivate people; knowing both how to be a leader and work in a team.Skills ProgramsAn internship or apprenticeship are short term programs where atechnical or trade skill is taught. These programs proved practical,on-the-job training in a business setting. The apprentice may or maynot be paid but the experience grained is helpful for either anemployee or an entrepreneur. Critical ThinkingWhy do you think an entrepreneur might choose to keep a businesssmall rather than expand it? ActivityInstructionsForm a panel of 6 to 8 students. Take a survey of the class before thediscussion to see whether students feel the rewards outweigh the risk.Students who are not on the panel can participate by asking questionsor commenting on the points made. After the discussion, take a surveyagain to see if anyone position changed.The discussion panel will debate whether the rewards ofentrepreneurship outweigh the risks. Half of the panel should focuson the rewards of entrepreneurship and the other half on the risks.©JR 21012 No content from this manual should be reproduced with consent Page 11
  12. 12. REVISION1. What is an entrepreneur?________________________________________________________________________________________________________________________________________________________________________2. How do employees and entrepreneurs differ? Which would you rather be?________________________________________________________________________________________________________________________________________________________________________________________________________________________________3. What are some risks that entrepreneurs face?________________________________________________________________________________________________________________________________________________________________________4. Should an entrepreneur give up if the business fails? Briefly explain your answer.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 12
  13. 13. 5. Why is it important to do a self-assessment before becoming an entrepreneur?________________________________________________________________________________________________________________________________________________________________________6. What is the difference between an aptitude and an attitude?________________________________________________________________________________________________________________________________________________________________________7. Why is a positive attitude important to being entrepreneurial?________________________________________________________________________________________________________________________________________________________________________8. What are some of the personal characteristics that an entrepreneur needs to possess?________________________________________________________________________________________________________________________________________________________________________9. Name some skills that an entrepreneur needs to possess.________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 13
  14. 14. 10. List six areas on which a person should focus to build his or her entrepreneurial potential.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________CHECK YOURSELFFill in the blanks with the correct answer.1. A (n) ____________________ is someone who creates and runs his or her own business.2. A small business is one that has fewer than ________________ employees.3. A program that provides on-the-job training is called a (n) _____________________ a (n) ________________________.4. Before starting your business weigh the ___________________ vs. the __________________________.Circle whether each statement is true or false.5. True False an employee works in a business owned by someone else.6. True False making money is a major reward of being an entrepreneur.7. True False all entrepreneurs want their businesses to become big.©JR 21012 No content from this manual should be reproduced with consent Page 14
  15. 15. 8. True False Becoming an entrepreneur is best tried when one is young.9. True False anyone can become an entrepreneur.10. True False Entrepreneurs need to pay attention to social trends to be successful.Idea vs. Opportunity IF YOU HAVE NOT YET DECIDED ON A BUSINESS, DO THIS Activity On the top of a blank sheet of paper, write an activity you like to perform (make this the heading). Do a separate page for each activity or interest you have. On those same sheets list as many businesses you can think of that are related to that activity. On the same sheets, list all the products or services you can think of that are related to that activity. Use your imagination and think of every possible product or service you can perform.A business idea is only a good business opportunity if it fills a need orwants in a particular market.A business opportunity is a consumer need or want that canpotentially be met by a new business. A need is defined as somethingthat people must have to survive, such as water, food, clothing orshelter. A want is a product or service that people desire.No every business idea is a good business opportunity. If that idea hasno commercial potential, if it can’t make a profit, it isn’t anopportunity.©JR 21012 No content from this manual should be reproduced with consent Page 15
  16. 16. Business ideas are ways to meet needs. So you have to look for whatneed first, and then look for the ways to answer those needs. The keyto doing this is to be observant of all that is going on around you. Soget out there and observe – everything. You are sure to findsomething that can be used to start a business.Turning ideas into opportunitiesAfter you’ve generated a number of business ideas, the next step is tocompare options for applying them. Here are four common ways toturn ideas into opportunities:1. Start a new business – the good thing about starting your ownbusiness is that you can build it your own way. However, you mustmake decisions and complete many task before your business can runeffectively.2. Buy an independent business – starting a business from theground up, becoming successful can take a long time. That one reasonsome entrepreneurs prefer to purchase a business that already exists.3. Buy a franchise – this legal agreement gives franchisee orfranchise buyer the right to sell the company’s products or services inparticular location and for a specified length of time. The franchiseseller is a franchisor.4. Become an inventor – some entrepreneurs invent new products,designs or processes. They may choose to sell or license theirinventions to someone else.Start with what you knowWhat are you familiar with? What do you like? These are all sourcesof business ideas. You might take something that you really like to doand make a business of it.©JR 21012 No content from this manual should be reproduced with consent Page 16
  17. 17. ChecklistCan you think of things that you like or know about?Is it possible that anyone of these things might be a good businessopportunity in Antigua and Barbuda?Start by making a list of all the things you know about and anotherlist of the things you are familiar with. Make a third list of thethings you like.Are there any similarities on these lists?Does something stand out to you?Could that something be developed into a business in Antigua andBarbuda?Can you see a need for this product or service that you’ve identified?Just because you start with a certain business idea doesn’t meanthis is going to be where you will end up.Thinking creativelyEntrepreneurs are constantly coming up with business ideas bythinking creatively.Creatively thinking is a thought process that involves looking at asituation or object in new ways. It is called lateral thinking. Thephrases “Think outside the box” and “Use your imagination” refer tocreative thinking. You can also define creative thinking as have anattitude that “plays” with many possibilities.Critical thinking is also called vertical thinking, but it doesn’t meanyou are being negative. Critical thinking refers to logical thoughtprocess that involves analyzing and evaluating a situation or object.©JR 21012 No content from this manual should be reproduced with consent Page 17
  18. 18. Creative and critical thinking are both important, but they tend toproduce different results. Creative thinking works well for generatingideas and recognizing opportunities. Critical thinking works well inevaluating business opportunities.Make Your Hobby Your BusinessSo what is your hobby? Are you a gardener? You could grow plants tosell at the markets. Maybe you could grow some exotic plants thatyou could wholesale to your local florist or greenhouses. That wayyou are not a competitor, but a collaborator instead.Is it possible you might be interested in biology? You could start aworm ranch raising bait for fishermen. Of course, this would only beviable if you are located near a good fishing area.Many people have gone on to produce items to protect theircollections. These range from cases to sleeves to envelopes. If youwere to develop a new way to protect something that you collect, awhole business could be made out of that one item.This is how many businesses start, by taking a hobby and turning itinto a business. You might also combine hobbies or interest to createa business.For instance a love of dogs plus a desire to stay physically fit mightcombine into a dog-walking service. That is producing there is a needfor such a service in your country.There a number of businesses that has started this way.©JR 21012 No content from this manual should be reproduced with consent Page 18
  19. 19. Test your idea1. Does the idea fill a need or want that is not currently being met?2. Will the idea work in the location or in the way that you plan tosell it?3. Can you put the idea into action with a reasonable amount of time?This concept is called the window of opportunity: the period of timeyou have to act before the opportunity is lost.4. Do you have the resources and skills to create the business?5. Can you provide the product or service at price that will attractcustomers but still earn a reasonable profit?Evaluating a business opportunityOnce you have gathered your ideas, tested them to see if theyappeared to be opportunities, and compared various ways of activatingthem you will need to make a more detailed evaluation. Start with thebusiness ideas you like best. Then use critical thinking to logicallyevaluate the feasibility of each idea. Feasibility refers to how possibleor worthwhile it is to pursue your idea, to see if it is actually anopportunity. You can use three practical methods for determining thefeasibility of your business ideas:Cost/benefit analysisIt is necessary to take risks as an entrepreneur; successful people takea calculated risk. This means carefully considering the potential costand benefits. One method used to determine a calculated risk is calledcost/benefit analysis. It is the process of adding up all the expectedbenefits of an opportunity and subtracting all the expected costs. Ifthe benefits outweigh the costs, the opportunity may be worthwhile.Opportunity –Cost AnalysisAn important factor when evaluating ideas is the opportunity cost.This is the value of what you will give up to get something. An©JR 21012 No content from this manual should be reproduced with consent Page 19
  20. 20. opportunity-cost analysis examines the potential benefits that youforfeit when you chose ne course of action over others.SWOT AnalysisA SWOT analysis is a business evaluation method that draws its namefrom the four areas it evaluates (Strengths, Weaknesses, Opportunitiesand Threats).Strengths: What skills do you have that would enable you to do wellwith this specific opportunity? What resources do you haveavailable? Do you have any unique knowledge or experiences thatcould give you an edge?Weaknesses: In what skill or knowledge areas do you need toimprove? What resources are you lacking? What might potentialcustomers see as a weakness in your product or service?Opportunities: Does this business idea fill an unmet need or want?Are there any trends or changes happening in your community thatyou could use as an advantage? What could you do better than othercompanies already in the same type of business? Does the proposedbusiness location give you any advantage?Threats: What obstacles stand in the way of pursuing thisopportunity? What current trends could potentially harm yourbusiness? How fierce is the competition in this business area? Doesthis business idea have short window of opportunity?©JR 21012 No content from this manual should be reproduced with consent Page 20
  21. 21. Evaluate Your IdeaAttractive to customers □Yes □NoWill it work in your business environment? □Yes □NoDo you have the skills and resources to createthe business? □Yes □NoIf not, do you know someone who has the skillsand resources that might want to help you bringit into existence? □Yes □NoA significant portion of your business plan is the financial analysis ofyour endeavour. Stated in very basic terms, the following questionsshould be addressed:  How much money will I need to support myself and my business for a minimum of six to nine months?  Where will that money come from?Failure to correctly assess financing issues can lead to financing issuescan lead to financial destruction. To avoid this, accurately analyzemoney issues and if necessary consult a financial professional foradditional assistance.©JR 21012 No content from this manual should be reproduced with consent Page 21
  22. 22. REVISION1. If you started a business, what would it be?________________________________________________________________________________________________________________________________________________________________________________________________________________________________2. Why do you believe that there would be demand from customers for this business?________________________________________________________________________________________________________________________________________________________________________________________________________________________________3. What skills and resources do you have that could make this business successful?________________________________________________________________________________________________________________________________________________________________________________________________________________________________4. What should you do to determine if this is a good business opportunity for you?________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 22
  23. 23. 5. What is a business opportunity?________________________________________________________________________________________________________________________________________________________________________________________________________________________________6. What are the five questions that begin the process of determining whether or not an idea might be a good business opportunity?________________________________________________________________________________________________________________________________________________________________________7. Given these hypothetical situations, name a business that you would consider starting or investing in:a. A 100% increase in the price of gasoline_________________ __________________________________________________b. A going-out- of-business sign in the window of a local grocery store _______________________________________________c. A new airport being built near your home _________________ ___________________________________________________d. Government provides money to parents to spend as they wish on education for their children __________________________ ___________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 23
  24. 24. CHECK YOURSELFFill in the blank spaces with the correct answer.1. A business should fill a ________________ or ____________ that is not currently being met.2. A business must provide a product or service at a price that will attract customers but still earn a reasonable _____________________3. Critical thinking is a logical thought process that involves _____________________ and _______________________ a situation or object.4. Creative thinking works well for generating _______________ and recognizing ____________________.Circle whether each statement is true or false.5. True False Every business idea is a good opportunity.6. True False Creative thinking must be done alone, not in a group.7. True False Buying a new business usually requires a large amount of money.8. True False Inventors create new products or significantly change existing products.Is entrepreneurship for youNow that characteristics have been described, it logically follows thatyou ask yourself the following question, “Is entrepreneurship for me?”You must be able to rate yourself in an objective fashion, since youwill be your most important employee. Evaluate your strengths andyour weaknesses. In all likelihood, you will be strong in certaincharacteristics and weak in others.©JR 21012 No content from this manual should be reproduced with consent Page 24
  25. 25. This is all in the natural order of things. NO ONE PERSON CANBE GOOD AT EVERYTHING!It is important to be able to acknowledge that you are not as strong incertain areas, and compensate for this deficiency by retrainingyourself, hiring someone with that particular skill, or having someonewho you can consult.SummaryIt is common for individuals to want to be their own boss. Aforewarning: YOU WILL NEVER ENTIRELY BE YOUR WONBOSS!No matter which sector you choose, you will always need to satisfyyour customers. If customers are not getting what they want fromyour business, they will go elsewhere and you will be out of businessvery quickly. Every customer and potential customer should beconsidered your boss.In addition to satisfying the needs of the customers, there are creditorsand competitors who may force you into making decisions you wouldnot otherwise make. Government laws and regulations will come intoplay. They will compel you to follow the rules and regulationsrelevant to your business.While you will not entirely be your own boss, you are the boss in thesense that you cannot be fired, thought there may be days when thatwould be a welcome event! You will need to work long hours,particularly in the beginning of your business. On the positive side,you will be engaged in an enterprise of which you are proud, and thusachieve a tremendous sense of accomplishment form offering yourproduct and/or service in the marketplace.If an idea does not work, you can adopt another one. Flexibility isinherent in the economics of entrepreneurship, and is one of itsgreatest assets.©JR 21012 No content from this manual should be reproduced with consent Page 25
  26. 26. AssignmentsBusiness in your communityTake a walk around your community and note any possible ideas oropportunities that might be a viable business.Business CommunicationsCreate a poster using collage techniques that illustrates the vision youcurrently have for your life.Business MathStudies show that about 18 percent of all businesses are minority-owned. Brian lives in Parham, a town with a population of 25,000and 200 businesses. Assuming that the nation percentage holds truefor businesses in Parham, how many of these are minority-owned?©JR 21012 No content from this manual should be reproduced with consent Page 26
  27. 27. Unit 2 – What is a businessObjectivesUpon completion of this unit students should be able to: 1. Identify different types of businesses ownership 2. Identify different types of businesses 3. Appreciate their ethical and social responsibilities 4. State what is business communications 5. Identify different means of communicationsAre You Prepared?One of the main reasons a high percentage of new businesses failannually is the lack of adequate planning. It has been said that peoplespend more time researching the purchase of a new car than they doplanning their own businessMake sure that you do not become one of the failed business statistics.Take the time to prepare a detailed business plan to ensure youunderstand the business and the degree of risk associated with it. DISCUSSIONWhat idea or opportunity did not note during your walk around yourcommunity. Did you observe any opportunities to add to an existingbusiness or to fill a need?©JR 21012 No content from this manual should be reproduced with consent Page 27
  28. 28. Types of BusinessBusinesses are divided into four broad categories, depending on theirprimary function and the kinds of products they sell.1. Manufacturing businesses – converts materials into goods suitable for use and then sells those goods to others. Manufactured products typically fall into two categories: industrial and consumer. Industrial goods are sold to other manufacturing businesses. Consumer goods are products that are eventually bought by the public.2. Wholesaling business – buys goods in large quantities, typically from manufactures, and then resells them in smaller batches to retailers. Wholesalers are also known as middlemen, go-betweens, distributors, or intermediaries because they provide a link between manufactures and retailers, who sells goods to consumers. Wholesalers do not generally sell directly to the public.3. Retailing businesses – buys goods, often from wholesalers and resells them directly to consumers, who are the end buyers. Retailing businesses include traditional stores that people visit in person and online stores that sell form the internet. Some retailers also sell through catalogues. A business that is either a wholesale or retail business is commonly referred to as trade business.4. Service businesses – provides services to the customers for a fee. A service business provides a wide variety of professional, technical and every day services that people need and want.Types of Business Ownership  Sole trader – owned by one person who provides all the capital form personal savings, private loans or loans from financial institutions.  Partnerships – owned by two or more persons.©JR 21012 No content from this manual should be reproduced with consent Page 28
  29. 29.  Private Limited Company – owned by shareholders. Shares are issued to family, friends and employees but not to the public.  Public Limited Company – financed by the sale of shares to the public.  Co-operatives – owned by a group of people who pool their resources.  Conglomerates: is the merger of two or more companies engaged in the production of different goods and services, thereby becoming subsidiaries of the major companies.  Franchise – is viewed as less risky than creating a completely new business idea. It is the purchase of exclusive rights to sell goods and services under specified trade names within a specified geographic area.  State Corporation – owned and operated by the government.  Government Departments – have specialized functions such as health, finance, education.Limited Liability means that the liability of owner is limited to theamounts invested and do not extend to personal assets.Unlimited Liability means that you stand to lose all your assets to payoff debts if your business fails or closes down.©JR 21012 No content from this manual should be reproduced with consent Page 29
  30. 30. ASSIGNMENTCan you identify two examples of the following types of business inAntigua and Barbuda?Types of Business Example 1 Example 2OwnershipSole TraderPartnershipPrivate LimitedCompanyPublic LimitedCompanyCo-operativesFranchiseState CorporationGovernmentDepartments©JR 21012 No content from this manual should be reproduced with consent Page 30
  31. 31. Three Major types of Business EntitiesThere are three major types of Business Entities1. Sole Trader (Proprietorship)The Sole Proprietorship is the simplest form of business organizationfor an entrepreneur. There are no formalities for establishing a soleproprietorship. The owner is the business. The owner has solediscretion on management decisions and is personally liable forbusiness debts.All income and expenses are reported on the personal income tax ofthe owner. Business growth depends on the owner’s credit worthinessand financial strength.2. PartnershipIn a general partnership two or more parties share all documentsunless the partnership uses a name other than the name of the partners.Partners share responsibility for management and for business debts inproportion to their share unless specified otherwise in a partnershipagreement.Business creditors may seek to recover personally form each or one ofthe partners personally, if there are not sufficient partnership assets tosatisfy the debt. Profits or losses are passed through to partners whoreport their share on their personal income tax.Business growth is supported by the creditworthiness and credit of thepartners and may be accomplished by adding more partners.3. CorporationThe corporation is a separate legal entity from its owners who arecalled shareholders.A country’s laws govern how a corporation is formed. Articles ofIncorporation or Charter must be filed with the state in which thebusiness is located. Shareholders elect a Board of Directors that isresponsible for the management and operation of the business. TheBoard elects or hires the officers who handle the day-to-day affairs ofthe corporation. Shareholders are not liable for corporate business©JR 21012 No content from this manual should be reproduced with consent Page 31
  32. 32. debts, even if the corporate assets are not sufficient to pay thecreditor’s claim. Critical ThinkingWhat are two differences between the three major business entities? ActivityWhat type of business would you like to own? Can you come up witha name for that business?Revision1. When you think of a “business,” what type of business do you think of first?________________________________________________________________________________________________________________________________________________________________________________________________________________________________2. What is a good definition of “business”?________________________________________________________________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 32
  33. 33. 3. Do you think most businesses sell their goods or services to other businesses or to the general public? Explain.________________________________________________________________________________________________________________________________________________________________________________________________________________________________4. What does a service business do?_______________________________________________________________________________________________________________________________________________________________________________________________________________________________5. Name some services that service businesses provide.________________________________________________________________________________________________________________________________________________________________________________________________________________________________6. What is a franchise?________________________________________________________________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 33
  34. 34. 7. If a business fails, should the owner be responsible for paying its debts, even if it means selling a home or car? Explain.________________________________________________________________________________________________________________________________________________________________________________________________________________________________8. What is a liability?________________________________________________________________________________________________________________________________________________________________________________________________________________________________9. What is the difference between limited liability and unlimited liability?________________________________________________________________________________________________________________________________________________________________________________________________________________________________10. What are some advantages and disadvantages of forming a sole proprietorship?________________________________________________________________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 34
  35. 35. CHECK YOURSELFFill in the blanks with the correct answers.1. Wholesalers provide a link between ____________________ businesses and ______________________ businesses.2. Stores, shops, and boutique are examples of ____________________ businesses.3. Wholesaling and retailing businesses are also known as ________________________ businesses.4. Babysitting and music lessons are examples of ___________________ businesses.5. A _____________________ is a business that purchases the right to use an established company’s name and operating plan to sell products and services.6. A business owner with _____________________________ liability might have to pay off business debts using his or her personal money and possessions.7. Liability is a __________________________ obligation.8. The ______________________________________ is the simplest options for business ownership.Circle whether each statement is true or false.9. True False Most wholesalers sell directly to the public.10. True False A retailer might sell products from a store or over the internet.11. True False Large manufacturing companies typically sell products to wholesalers.12. True False Retailers resell products purchased from wholesaling businesses.©JR 21012 No content from this manual should be reproduced with consent Page 35
  36. 36. 13. True False Most service businesses are also manufacturers.14. True False Entrepreneurs with limited liability put their personal assets at risk.15. True False A sole proprietorship provided limited liability to the business owner.ContractsA contract is a legally binding promise or agreement between partiesthat can result in the payment of damages if one part fails to adhere toits terms or breaches the contract.Entrepreneurs’ form and sign contracts every day. A store or officelease is a type of contract. When a business agrees to sell and apurchaser agrees to buy a specific item at an agreed upon price andother conditions, a contract is made. Most contracts can be oral or inwriting.For a contract to exist, certain elements have to be proven:1. That the parties intended to form a legally binding contract, so that the essential terms of the agreement have to be present.2. The subject of the contract has to be legal; it cannot be for illegal activities.3. The parties making agreement have to be legally capable of entering into a contract.4. There must be consideration for the contract, which means the parties have given something of value. Consideration can be money paid, or an agreement to be legally bound, or giving up a right in return for the promise.Entrepreneurs need to make sure their rights and interest in atransaction are protected. Business owners should consult attorneys©JR 21012 No content from this manual should be reproduced with consent Page 36
  37. 37. when they need a contract for a specific purpose such as a contract forspecially manufactured goods that can’t be sold easily to anyone else.Prepared forms can be used, but it is best to have an attorney reviewthem and make sure they are tailored to the business’ needs. Thereare many pitfalls if things aren’t done carefully.Business CommunicationsEven if you are your business’s only employee, you’ll need tocommunicate to share information, thoughts, or opinions withsuppliers, customers, family members, friends, business colleaguesand may others. Not only do you need to share information, you mustalso have the right tone when you share it. An informal tone isusually not appropriate, nor is one that is either too aggressive or toounassertive. The six qualities of good communication are:  Briefness. “Keep it short and simple.” This means identifying yourself and the reason for the communication.  Organization. Give information in an easy-to-follow format  Clarity. Include all the details your audience needs to understand to act on your message.  Relevance. Supply the right information to the right audience.  Courtesy. Communicate respect and a positive attitude.  Suitability. Different kinds of communication are required for different situations.Once you’ve learned these qualities, you can apply them to differentsituations and purposes.Oral CommunicationA person’s tone of voice or emotional state can influence a message assignificantly as the words used.Written communicationWriting gives you the chance to review and edit your message. It isoften a good idea to ask someone to review written communicationbefore you send it. If that isn’t possible, take a break before you sent©JR 21012 No content from this manual should be reproduced with consent Page 37
  38. 38. it and then re-read it to make sure the information is correct and thetone is right. Written communication can take the form of:  Memoranda  Letters  Agenda and Notices of Meeting  Reports  Bulletins and NoticesMemorandaMEMORANDUMTO: All Secondary School PrincipalsFROM: Jacqueline RichardsonREF: AM/DMDATE: 19th July 2012SUBJECT: Business Plan CompetitionThe School Business Plan Competition Committee will be hosting its2nd Annual Business Plan Competition at the end of Term 1 of2012/13 Academic School Year. Principals are asked to select amember of staff as the School Rep and to work along with theplanning committee.All students interested in participating in this year’s competitionshould complete the registration form and submit to the School Rep.The forms will be collected at the first meeting in September. MemorandumThese are used in business as a means of communication within anorganisation. Memoranda usually indicate the sender or initiator ofthe memo, the recipient, the date, a reference and a subject heading.©JR 21012 No content from this manual should be reproduced with consent Page 38
  39. 39. They do not usually have a salutation or a complimentary close. Thesender normally signs or initials them.Business LettersBusiness letters are used for longer more official messages. Abusiness letter should be typed in an easy-to-read font, not a fancyscript. The well developed business letter included the followingelements;  Letterhead: Most businesses have printed stationery showing the organisation’s address, telephone number, fax number and email address.  Reference: This may take any one of three forms  File or Account Number  The writer’s initials, followed by those of the typist  Name of department, followed by typist’s initials  Date: The date the letter is written  Recipient’s name and address  Salutation: This is typed at the left margin at least two lines below the recipient’s address and begin ‘Dear Mr...’  Subject heading: Types below the salutation. It states the subject of the letter and helps when the letter is opened and when it is being filed.  The Body: This is normally set out in paragraphs and typed in single line spacing with an extra line between paragraphs.  Complimentary Close. This is the closing remarks. The salutation governs the choice of the complimentary close, which is in turn governed by the relationship between the two correspondents. The normal form is ‘Yours sincerely’ in a letter to a named person and ‘Yours faithfully’ or ‘Yours truly’ if the letter begins ‘Dear Sir’.  Signature: At least five line spaces are left after the complementary close for the writer’s signature.  Enclosure: When additional material such as photographs, reports, etc. are enclosed with the letter.©JR 21012 No content from this manual should be reproduced with consent Page 39
  40. 40. Entrepreneurial Skills Training Government Complex Letterhead Queen Elizabeth Highway St. John’s Antigua Reference Ref: AC/BM Date 20th April 2011 Addressee notation URGENT Yolanda Peters Recipient’s Name Manager and Address Training Cooperation London Hill St. John’s Antigua Salutation Dear Ms. Peters Subject heading Community Development Questionnaire The Country Development Committee is attempting to assess its performance over the last five years. We hope to measure our progress, identify areas that need attention, and strengthen the bond between us and the community. Body Please complete the enclosed questionnaire. Your candid and thoughtful reply will help our evaluation. Most people are able to complete the questionnaire in less than one hour. Your response and any comments will be treated with utmost confidentiality. After the results are tabulated and compiled, we will issue a report. Please return the completed questionnaire to us by July 27. A self-addressed, stamped envelope is included for your convenience. Thanks again for your help. Complementary close Yours sincerely Signature of writer Name of writer Jacqueline Richardson Job title Education Officer Enclosure notation Enc. Business Letter©JR 21012 No content from this manual should be reproduced with consent Page 40
  41. 41. Agenda and Notice of MeetingAn agenda list the order in which it is proposed to conduct business ata meeting. The usual order for an agenda is:  Apologies for absence.  Reading of the minutes of the last meeting - a written record of what took place.  Matters arising from the last meeting such as unfinished business or follow up action taken on any matter(s) raised at the meeting.  Correspondence  Reports and general business – anything that interested parties have indicated that they wish to raise or be raised.  Any other business – time in which matters not previously notifies can be raised.  Date, time and place of the next meeting.A notice of a meeting notifies or reminds the people concerned of thedate, time and place of the meeting.ReportsReports should present well planned and impartial communication offactual information or advice. They should always be confined tofacts and be free of any suggestion of bias, emotion or self-interest.They vary in format, style, content and length, depending upon theirpurpose and the audience.Bulletins and NoticesNotices and bulletins are used to announce forthcoming events,changed in policy and other matters to all interested parties. Bulletinsare often several pages long and refer to several topics while noticesare much shorter and usually refer to one topic.©JR 21012 No content from this manual should be reproduced with consent Page 41
  42. 42. Visual CommunicationVisual communication is a means of transmitting information using:  Charts  Videos  Graphs  Photographs  Tables  Statistical data  Posters  DiagramsThese often relay complex, technical information in a form that ismore easily understood than a long, written report.Electronic CommunicationMotivating work teams that are spread across the country or the worldcan be challenge to any manager. With the right technology on yourside, the whole group can stay synchronised.Using the speed of electronic mail, voice mail, facsimile, videoconferences and teleconferences, information can be gathered anddisseminated more effectively despite colleagues’ differing schedulesand locations.©JR 21012 No content from this manual should be reproduced with consent Page 42
  43. 43. Unit 3 – Product DevelopmentObjectivesUpon completion of this unit students should be able to: 1. State the steps in product development 2. State the reasons for packaging and labelling products 3. Identify steps in setting prices 4. List types of pricing strategies 5. Define marketing 6. State what is market research 7. State what is competitive advantage 8. Identity different promotional strategies 9. Study the target market 10.Define competitive analysisThe production and sale of new products and services are sparked byentrepreneurial energy, creativity and motivation. When starting abusiness and selecting a product/service the following should beconsidered Is this a new idea? Is my idea feasible? Who am I targeting? Who are my competitors? Would I be able to compete in the market? Is the market saturated? How will I offer a better product/service than my competitors?Once these questions have been answered you can work ondeveloping your product.©JR 21012 No content from this manual should be reproduced with consent Page 43
  44. 44. Product DevelopmentA viable product or service is one that meets a need, satisfy a want orsolve a problem of consumers. Once you have made a decision onyour product or service it would then have to be tested for it viabilityor ability to meet the needs of your potential customers. You wouldthen have to do a market test to review the public’s response to yourproduct.There are seven (7) steps: 1 Idea Generation 2 Idea Screening 3 Concept Development and Testing 4 Business Analysis 5 Product Development 6 Test Marketing 7 CommercializationPackaging and LabellingThe main purposes of packaging are protection, convenience,economy promotion, and product safety. Decisions must be madeabout colour, shape, materials, responses, and the competitors’packaging designs.Labelling is required for identification, promotion of the product,grading, and for giving certain minimum information on labels toinform the public.Pricing StrategiesThe main aim is to achieve the targeted return on investment.Before setting prices, consider the following 1. the expected return on investment 2. the cost of production, shipping, storing and stocking, wholesalers, and retailers margins©JR 21012 No content from this manual should be reproduced with consent Page 44
  45. 45. 3. the competitors prices 4. the consumers’ perception of the product and pricing 5. maintaining market share 6. production quality leadership 7. maximum and minimum pricing set by the government 8. the survival of the business, product/serviceTypes of Pricing PoliciesCost plus pricing – Sellers set the price of the product/serviceintending to cover their cost of production, distribution, andpromotion of the product (as well as to make a profit).Stock turnover pricing – The number of times that a seller sells off agiven stock of goods. Stock turnover = cost of goods sold Average stockGoing rate pricing – After covering basic costs, producers priceproducts according to the competitors’ rate.Penetration pricing – A seller may temporarily reduce prices to gainmarket share. The aim is to gain and maintain the consumers’ loyaltyeven after prices return to their normal level.Price Lining – Prices are set according to market segmentation.Perceived value pricing - Prices are set according to how much valuethe seller thinks that the consumer places on having the product.Scaled-bid pricing – Prices are set in anticipation of the competitors’undisclosed prices.Negotiable pricing – Sellers expect some degree of bargainingbetween themselves and prospective buyers.©JR 21012 No content from this manual should be reproduced with consent Page 45
  46. 46. MarketingMarketing is a game of getting your product or service to the rightperson. It is an exciting, fun and creative process. There are twostages to marketing, and should be followed in order!1. Detective WorkInvestigations are made regarding the people who need and want yourproduct or serviceAdditional investigations are made regarding other businesses thatwant the same customer as you.2. Creative WorkBased completely on an understanding of what you have learned as adetective, you then begin the process of developing a message thatgets your prospective customers’ attention and then persuades them toeither learn about or use your product or serviceIt is essential that we always begin by doing the detective work.Focused entrepreneurs are always playing detective.Market ResearchAlways start with the big picture. Read as much as you can about theindustry you want to be in. You are looking for where your businessfits in the big picture of things.In economics lingo, you are trying to determine where your concept isin its economic life cycle. Is it brand new and few people know aboutit or is a product or service that has been around for some time? Orpossible has it been around so long that it is reaching the end of itspopularity. Determining where your concept shows up in thiseconomic life cycle will ultimately affect how you will try tointroduce it to the customer.©JR 21012 No content from this manual should be reproduced with consent Page 46
  47. 47. Marketing MixEvery marketing plan has five main strategy areas, sometime referredto as the “Five P’s.” How a company chooses to combine these areasis called its marketing mix.People: Your target customers are key to defining all the otherstrategies in the marketing plan.Product: What item(s) can your business provide that will best meetthe needs of your target market?Place. How and where will customers be able to buy or receive yourproduct or service?Price: What prices will your target market feel is seasonable or idealfor your product or service?Promotion: The process you use to make potential customers awareof your product or service.Competition AnalysisThe next type of detective work requires much more nerve andpersistence. It is where you check what is actually happening in theneighbourhood you plan to operate your business. A thoroughinvestigation gets business owners information they need to find theirniche in the market place. It is impossible to positions yourself in themarket unless you fully understand what everyone else is doing.The following are common competitive factors. Depending on thetype of business you are starting, the factors can vary. Here are thebig competitive factors most often used to check out the other guy.Locations – get the addresses of competitors and put a star on a mapto show where everyone is.©JR 21012 No content from this manual should be reproduced with consent Page 47
  48. 48. Price – look at the key items to compare. Compare the price forbuying or renting the product.Hours of operation – sometimes this is a major niche factor.Expertise – do the people at the business know their stuff?Credit – if you sell to an institution, you must have a credit policy, oryou won’t capture that part of the market.Quality – it’s important to note that quality means meetingexpectations.Advertising – identity every type of advertising the competition isengaged in. Study it, analyze it and then plot out how you willrespond to it.Employees – how many, who are they what is their knowledge level.Customer service – what do people on the street say about this?Weaknesses – outline what the competition is doing poorly. Lookvery carefully at the mistakes and missed opportunities.An entrepreneur needs to know who the direct and indirectcompetition is. Study the competitions’ strengths and weaknesses.Improve on these areas making your business the one that customersneed and want.©JR 21012 No content from this manual should be reproduced with consent Page 48
  49. 49. Activity1. On the map of Antigua put an X to highlight where your possible competitors are located.2. As part of your market research, visit three of your competitors and enquire about the products and /or service they offer.3. Use this opportunity to compare their prices, the operation hours, and how well they know their products.4. Identify three strengths and weaknesses of one of your major competitors.©JR 21012 No content from this manual should be reproduced with consent Page 49
  50. 50. Market NicheOnce you have studied the competition and laid it out in writing,something very interesting happens. You line up your business againstthe others and start to work out a way to position yourself. This isknown as your niche.Finding the ‘right’ niche is a very critical step in marketing yourbusiness.The target market must: 1. Need or want your product or service. 2. Have the ability to access your product/service. 3. Have the ability to pay.If any of these are missing, it is not your target market. Small business waste huge amounts of money Misunderstanding this concept The following are the “BIG TEN MISTAKES” most often made in marketing:1. You think everyone loves 6. You think everyone can afford you (your business). your product or service.2. You think everyone will 7. You think everyone will know come to your store just about your business the day because it is there you open.3. You think everyone needs 8. You think that people who you (your product or need you don’t need to be service reminded about your business.4. You think you are the only 9. You think that your one selling this product or product/service will sell itself. service.5. You think that people of 10. You think that if you advertise all ages want your product to everyone you will be and or service. successful.This is worth reviewing – the target market is the individual whoneeds or wants your service/product the most and has the ability topay.©JR 21012 No content from this manual should be reproduced with consent Page 50
  51. 51. How to study the target marketA survey is a very popular tool for gathering lots of useful andinteresting information. For example, you plan to start a doggie daycare. Your business provides fun, exercise and daylong activities ofdogs.You have determined that the target market probably includes peoplewho love their dog, can afford such a luxury, do not have a bigbackyard and maybe is a person who works a very long day.Now you want to know more about this prospective owner – otherquestions arise, such as:  How much will they pay for this service  Do they need their dog to be picked up?  How often do they want their dog walked?  How many days a week would they typically need the service  Is there any need for a weekend service?  Do they want their dog to avoid (not play with) some breeds of dogs?  Will some people want more than one dog cared for?  What type of food do they want the dog to eat during the day?The more you can learn before you open the better service you willprovide. Plus, the message you communicate to the prospective clientwill be much more on target.SurveyIf you try to write your own survey, have several people look at it The Survey strategy has before using it. A highly recommended three big components: type of question is one that offers a range of responses. A. Writing the Survey Savvy business owners know that B. Conducting the Survey marketing should begin long before their product hit the stores. Marketing should C. Analyze the results. begin with the product itself and with an in-depth understanding customer’s needsand preferences.©JR 21012 No content from this manual should be reproduced with consent Page 51
  52. 52. Market research surveys can help a business rethink product design ormaybe just fine tune it a bit. In simple terms, these surveys can help abusiness give people what they want. Sample SurveyThis survey is about a product concept that is described as follows?[INSERT PRODUCT CONCEPT DESCRIPTION HERE]Below are lists of features that are part of the product. How importantis each feature to you? 1 2 3 4 5 Not at all extremely ImportantFeature 1 □ □ □ □ □Feature 2 □ □ □ □ □Feature 3 □ □ □ □ □Feature 4 □ □ □ □ □Feature 5 □ □ □ □ □Whether or not you know about [product], how favourable is youroverall reaction?□ Poor □ Fair □ Good □ Very Good □ ExcellentWhat is it that you like most about [product]?What do you like least about [product]?©JR 21012 No content from this manual should be reproduced with consent Page 52
  53. 53. Based on the product description, how interested would you be inbuying this new product if it were within your budget?□ not at all interested□ not very interested□ not sure□ somewhat interested□ extremely interestedAbout what you would expect to pay for this new product?How often do you use [product category]?□ once a week or more often□ 2-3 times a month□ once a month□ every 2-3 months□ 2-3 times a year□ once a year or less□ do not useThank you for your feedback.Conducting the SurveyConducting the survey can be done in more than one way. There arethree methods: 1. Personal interview 2. Mail Survey 3. Telephone SurveyEach one has its advantages and disadvantages. Each has its costs andall take some time and patience.©JR 21012 No content from this manual should be reproduced with consent Page 53
  54. 54. Personal InterviewThe personal interviews are great when you need to show the personwhat you are talking about. It helps if you have a complex product orservice. Plus you can respond to questions for clarification.The big negative to this strategy is cost and time. You are limited bytravel and personal costs. Also, the person being interviewed is lesslikely to not tell the truth than in the other methods of being surveyed!Phone SurveysPhone surveys do not allow for any “show and tell,” but they do allowyou to cover a very wide geographic area in a short amount of time. Itis often viewed as the most cost effective means of surveying.Results are greatly enhanced if the caller doing the survey has someconnection to the person being surveyed, such as “Hi, I live in yourneighbourhood.... or Hi, I am a graduate of the same school as you.....Mail SurveyThe last method is the mail survey. This can offer the greatest reach.Often you can carefully target who get the survey. The problem isgetting the person to send the survey back. Even before that, youmust get the person to open the survey and read it.The survey envelope will need to look interesting to encouragesomeone to open it. It is helpful if there is a “reward” for filling outthe survey and mailing it back. This might include a cash gift, movietickets, discount coupons, or something else that this target marketwould value.Analyze the resultsThe analysis of all the information is the last step. Your detectivework is over. Your creative work must begin.©JR 21012 No content from this manual should be reproduced with consent Page 54
  55. 55. Experiment ExerciseMarket Research ActivityObjectives: To design and implement a simple market research survey. To create anew product based on the results of the survey.Materials: Regular-sized chocolate bars (1 per group), student handout (withdirections) markers, poster board or easel paper, scissors and tape.Teacher Preparation1. Divide the class into teams of 4-5 students2. Instruct the teams to generate market research survey questions to ask potential customers and then implement the survey3. List the data finding of each group on the board. Draw conclusions regarding the key results.4. Instruct students to design a new product and marketing strategy based on the results of the survey.5. Give each team a regular-sized milk chocolate bar to enjoy while they work.6. All the students the opportunity to present their product to the class.Student Instructions1. Make sure every member of our team participates equally in this project! A company that makes chocolate bars wants to invest in a new chocolate bar that caters to the tastes of young people ages 12-18, and needs to conduct market research about its feasibility.2. Based on the market research that you conduct; design a new chocolate bar; design a brand name, logo, and slogan; identify your differentiators, and explain the reasoning behind your overall strategy.3. Create a commercial advertisement for the new bar.4. Present your product and commercial to the (board of directors) your classmates.Evaluation:Vote for the best product and overall strategy. Invite other instructors to join in thevoting.©JR 21012 No content from this manual should be reproduced with consent Page 55
  56. 56. REVISION1. What are your three favourite ways to spend your free time?________________________________________________________________________________________________________________________________________________________________________2. Describe any products or services that are involved in your three favourite free-time activities.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________3. Could knowing how your classmates like to spend their free time be useful information to business owner in your area? Explain.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________©JR 21012 No content from this manual should be reproduced with consent Page 56
  57. 57. 4. What is market research?________________________________________________________________________________________________________________5. What three key areas should you research to help you understand your market?________________________________________________________________________________________________________________________________________________________________________6. What are some costly mistakes that you can avoid by doing market research?________________________________________________________________________________________________________________________________________________________________________CHECK YOURSELFFill in the blanks with the correct answers.1. Market research helps you determine very specific _______________ about potential customers.2. One of the purposes of market research is to help you avoid _____________________________________.3. To be successful, businesses must satisfy their customers while making a _________________________________.Circle whether each statement is true or false.4. True False Market research only needs to be done before starting a business.5. True False Market research helps you identify who your competitors are.©JR 21012 No content from this manual should be reproduced with consent Page 57
  58. 58. 6. True False A target market is smaller than a mass market.7. True False Gathering market research data can help you choose your target market. Activity Write a survey as a market research of your product. Distribute your survey to twelve persons in your community.PromotionCommunication to the target market is always a thrill for businessowners. They like seeing their message in the market place. Theyenjoy influencing someone’s decision to choose them. This is a newpart of the game.Promotion Strategies 1 Advertising – any paid form of non-personal presentation to inform, persuade, and remind consumers of your product/service. The promotional media used depends on the nature of the product. Types of media a) mass media – radio, television, newspaper b) bill boards c) flyers/posters d) magazines e) direct mail f) Signs post on street benches, bus stops commercial vehicles, and buildings. 2 Sales promotion – short-term deals to encourage sales. This includes a) samples©JR 21012 No content from this manual should be reproduced with consent Page 58
  59. 59. b) coupons c) premiums d) price packs e) cash refund f) point of sale advertising g) contests h) games, contest and sweepstakes3 Personal Selling/SalesmanshipResearch has shown that for the target market (remember who that is– someone who needs/wants the product/service and can pay for it) toreact to a communication, they often need to be exposed to yourmessage for a period of six months or more.You significantly increase the chance of their seeing and believingyour message if they receive the message in at least 3 different formsover the same period.You may decide to take out a weekly ad in the local newspaper, takeout an ad in local television, use of text messages, face book, twitteror conduct a full public relations campaign. Additionally, you willwant to make the outside of your facility (if it is one that people visit)look very inviting.Print MessagesOne of the most popular methods of communicating with andreaching your prospective customer is sending messages in print. Theprinted message has hundreds of forms. The simplest is a businesscard. The most complex and expensive form is the catalogue. Therea many other written forms of communicating about your business.The following are just a few:  websites  flyers  banners flown from an  buttons airplane  messages on hats, pens,  signage in front of a store plates, etc.  billboards  Letters©JR 21012 No content from this manual should be reproduced with consent Page 59
  60. 60.  Post cards  Handwritten notes  Grand opening invitations  Brochures  Newspaper ads  Phone book ads  Bookmarks  Signs on trucks, cars and bus  Coffee mugs  Magazine  Coupons  T-shirts©JR 21012 No content from this manual should be reproduced with consent Page 60
  61. 61. Developing your written message and deciding what form to present the messageinfluences that your target market is. Your form should be decided by the wayyour potential customer receives their information, not on how you receiveinformation. Remember, you must find a media that your customer will see. ActivityCreate a print message to be used to advertise your product and/or serviceLogoYour logo includes the name of your business and sometime it also includes a photo, drawing or a symbol. It can also include a catch line or tag line. Your logo should be carefully planned. It is often worthwhile to engage a professional designer when developing your logo. Logos should be used for the life of a business. It becomes the ID for a business. It will be usedon almost every form of print communication a company employs. This includeseverything from your phone book ad to speciality t-shirts.Logos often serve as the foundation from which other print media/communicationis built. Some designers’ keep the font (type of lettering) used in the logo as thefont utilized in all other written communication.Written MessageA written message to a prospective customer should also be prepared with greatcare. First and foremost you must get the targets’ attention. If you fail to get theirattention, the best information, or best offer, will never reach their brains. How doyou get the target’s attention? There are a variety of strategies, and sometimesseveral of them are used together.
  62. 62. The following are often used to get the target’s attention:  Clever headline  Provocative headline  Funny headline  Headline that identifies the reader. Examples include: “new mother....headache sufferers....Jennings residents...  The most popular words in advertising can get attention. They include the words: free, new, improved.  Photographs  Drawings  Headlines that warn or describe a threatening situationBusiness owners who have not studied these rules often make the huge mistake ofjust using the name of their business as a headline to an ad. This is an opportunity.If you write your message according to the rules, the target market will anxiouslylook forward t the name of the business.The best ads typically list the name of the business or product at the end of a printad. Once an ad does get someone’s attention there are four more steps the tillmake it a truly successful ad;1. Describe a benefit to the reader. Now that you have their attention, explain one reason why they will benefit by knowing more about this product or service2. Explain in more detail what the product/service is all about and more information on the benefits3. Provide evidence that what the product/service states it will do, it will do. This is an important step, because at some point in reading an ad the readers often think, “This is too good to be true.” Thus you must overcome the natural instinct for people not to believe what is being touted in an ad. Ways to overcome disbelief include:  Testimonials of happy users  Product guarantees©JR 21012 No content from this manual should be reproduced with consent Page 62
  63. 63.  Full refund policies if the customer is not happy  Listing of awards won by the product or by the business owners  Identifying famous users of the product or service4. The final step is “the call to action”. The call to action is where you tell you reader what to do, now that they have read the ad. DO NOT ASSUME THAT they will act in a certain way. Calls to action come in many forms. The following are some examples of common calls to action: o Call today o Visit our store between 9 am and 5 pm every day of the week o Come and see our latest inventory o Come while the supply last o Be the first one to see our spring collection o Further information, call....... o Operators are waiting to take your order, call now o We would be happy to answer any questions that you have. Call today o This sale ends on Tuesday. Come while supplies last.Once the message is concluded the following must be placed in the ad:  The name and address of the business  The method of contact: phone number, website, fax number  Hours of operations  Instructions on how to get to the business.An effective AdAn effective Ad attracts the attention of the target market and positively affects thebehaviour of the target market as the ad intended. The ad must have intent such asthe following:  Educate the target market about a new product  Motivate the target market to call the business  Motivate the target market to visit the business  Motivate the target market to consider using the product or service©JR 21012 No content from this manual should be reproduced with consent Page 63

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