CULMINATING ACTIVITY: BUSINESS SIMULATION

1. Republic of the Philippines
Department of Education
Region III-Central Luzon
Schools Division of Bulacan
Asian Institute of Science and Technology
Plaza Naning Victoria Bldg. Baliwag, Bulacan
SENIOR HIGH SCHOOL DEPARTMENT
Module
In
CulminatingActivity: Business
Simulation
First Quarter Second Semester
SY 2021-2022
Ms. Ma. Alleli B. Chua

2. The key concept of Accounting, Business and Management through identification in potential
business opportunities:
ACCOUNTING CONCEPT
It refers to the basic assumptions and rules and principles which work as the basis of recording of business
transactions and preparing accounts. This concept assumes that, for accounting purposes, the business
I. INTRODUCTION
The "lead" pencil (which contains no lead) was invented in 1564 when a graphite
(black carbon) mine was discovered in Borrowdale, Cumbria, England. The pure graphite
was sawn into sheets and then cut into square rods. The graphite rods were inserted into hand-
carved wooden holders, forming pencils. They were called lead pencils by mistake -at the
time, the newly discovered graphite was called black lead or "plumbago," from the Latin
word for lead ore - it looked and acted like lead, and it was not known at the time that graphite
consisted of carbon and not lead. The English had a monopoly on the production of pencils
since no other pure graphite mines were known and no one had yet found a way to make
graphite sticks.
In the world of business, these are called products. A product may be in form of good,
service, place, person, or idea. Products also provide non-tangible benefits. Holiday Inn's
product is service, since it provides people the benefit of a comfortable accommodation at a
reasonable price. Boracay’s product is place, for relaxation, sun, and sand. The Philippine
Pediatric Society is selling ideas. The benefits of polio vaccination for children.
WEEK 1

3. enterprise and its owners are two separate independent entities.
The main objective is to maintain uniformity and consistency in accounting records. These concepts
constitute the very basis of accounting. All the concepts have been developed overthe years from experience
and thus they are universally accepted rules. There are a number of conceptual issues that one must
understand in order to develop a firm foundation of how accounting works.
These basic accounting concepts are as follows:
• Accruals concept.Revenue isrecognized when earned, and expenses are recognized when assets
are consumed. This concept means that a business may recognize revenue, profits and losses in amounts
that vary from what would be recognized based on the cash received from customers or when cash
is paid to suppliers
and employees. Auditors will only certify the financial statements of a business that have been prepared
under the accruals concept.
• Conservatism concept. Revenue is only recognized when there is a reasonable certainty that it
will be realized, whereas expenses are recognized sooner, when there isa reasonable possibility that they
will be incurred. This concept tends to result in more conservative financial statements.
• Consistency concept. Once a business chooses to use a specific accounting method, it should
continue using it on a go-forward basis. By doing so, financial statements prepared in multiple periods
can be reliably compared.
• Economic entity concept. The transactions of a business are to be kept separate from those of its
owners. By doing so, there is no intermingling of personal and business transactions in a company's
financial statements.
• Going concern concept. Financial statements are prepared on the assumption that the business
will remain in operation in future periods. Under this assumption, revenue and expense recognition may
be deferred to a future period, when the company is still operating. Otherwise, all expense recognition
in particular would be accelerated into the current period.
• Matching concept. The expenses related to revenue should be recognized in the same period in
which the revenue was recognized. By doing this, there is no deferral of expense recognition into later
reporting periods, so that someone viewing a company's financial statementscan be assured that all aspects
of a transaction have been recorded at the same time.
• Materialityconcept.Transactions should be recordedwhen not doing so might alterthe decisions
made by a reader of a company's financial statements. This tends to result in relatively small-size
transactions being recorded, so that the financial statements comprehensively represent the financial
results, financial position, and cash flows of a business.
BUSINESS AND MANAGEMENT CONCEPT
Business Management refers to functions that aim in effective utilization of people and resources in an
organization to achieve business goals. So, it is a means to achieve an end.
5 functions in business management, and they are:
Planning is the starting point. In this phase,you create your business plan and how you are going to achieve
it. But it is not as easy as it sounds. You need to make a realistic assessment of your business goals and
chart out the detailed strategies (with full back up plans in case if those strategies fail) through which your
company can achieve its business objectives.
Organizing follows planning. Here you organize all your resources like employees, machines and finance
into a well-oiled unit. You need to get all these combination and
synchronization right. Organizing helps you to define “who is going to do what”. It set well demarcated job
roles, organizational hierarchies and streamlines co-ordination between them.
Staffing deals with acquiring, deploying, and retaining the right skilled workforce to getthe business results.
The objective of staffing is to create the right positive impacts on the organization’s effectiveness. Through
staffing you get the right people at the right positions doing the right things. In short, it’s about right
delegation.
Leading is the most important function of the management process. Without motivated workforce,you can
never you achieve your business goals. Leading is all about how you can align employees’ tasks with the
overall organizational goals. Leading is how you can motivate, influence and inspire your employees to

4. give their best performance at work. Leading is how you can make your employees participate willingly in
the growth and development of the company.
Controlling is active and constant monitoring of people, process and other resources of your company.
Here you track the performance of all the resources of your company and ensure that they are on the right
track. Through controlling you can accurately evaluate whether all the resources of the company are
optimally utilized for desired business goals. And making corrections whenever and wherever there are
deviations, mistakes and loopholes.
Opportunity Identification
What ideas can be turned into good business ideas?
● To generate and conceptualize useful and good business ideas a student needs idea that will last
long. This means that the solution he conceptualizes will not be good only for a short time the
idea should be able to solve the problem in a more permanent way rather than only for a short
while. Longer or more permanent solutions will work better than short-term solutions.
● On the other hand, market needs can also be fluctuating and therefore the solution should be
flexible to satisfy these needs. This means that the entrepreneur should balance between long-
term solutions and the fads or whims of a market segment.
● Changing fashions and requirements provide opportunities for entrepreneurs to respond to
demands with new ideas, products, and services.
● One needs to stay ahead of the competition. Remember, there are other people who may think of
the same solutions. One has to beat them at the game and market ideas, products, and services
ahead of time. The challenge is to be differentfrom the rest.
● It is important to exploit technology. One can do things better with the use of the recent
discoveries in technology. Ideas will be easier to implement with the use of new technology.
● Remember that there is such a thing as product life cycle. Even new products grow old and
become outmoded. It all depends on the ability of the product to grow andsatisfy more needs for
the intended markers.
● As an entrepreneur, one must also be open to suggestions. Other people are also agood source of
bright business ideas.
Active search in the environment can bring about
amazing results
Productconceptualizationis the creation of new products based on the human needs, wants,and demands.
Product modification involves the physical change of existing productsin the market in terms of design,
color, size, package, and purpose. Innovation and creativityare key factors in the development of products
to satisfy human wants. Ideas come to us at anytime, anywhere, and in any situation. But to become good
business ideas there must bea match between what the environment presents and needs and what the
entrepreneurcando.There are limitations in both. Finding the right "fit" will help the would-be entrepreneur
start on something with better chances to survive in the business world.
Turning ideas into opportunities
If an idea is not an opportunity, what is an opportunity? When does an idea become an opportunity? A
business opportunity is simply defined as an attractive investment idea or proposition that provides the
possibility of a return for the person taking the risk. Such opportunities are represented by customer
requirements and lead to the prov1s1on of a product or service that creates or adds value for its buyer or
end-user.
Be guided by the following facts that can tell you when an idea becomes an opportunity. Anopportunity
has the following qualities:
● attractive

5. ● durable
● timely
● anchored in a product or service
● capable of creating or adding value to what it can offer to its buyers orend-users.
Now, let us look for that opportunity. How do we start? As aspiring entrepreneurs,let us askourselves:
1. How do I find a good business opportunity?
2. What business can I start with what I have?We can
see two sources of opportunities. These are:
● Internal sources ofopportunities come from the inner motivation of the person,
the mind, and heart of the person.
a) Mind -knowledge, talents, and skills one may have. These are the things
that one knows, that one is good at and that one values or believes in.
b) Heart-one's interests and passion, things one loves to do andwhat one
enjoys doing most.
● External sources of opportunities come from the environment andother
external possibilities. These include trends, crises, threats, irritants, festivals,
seasons, credit programs, and other business support services from government andprivate sources,
etc.
In the business sense, it is:
a) an idea that has commercial potential;
b) something you can give value to, make money with, and develop a businessventure on.
This is why ideas and opportunities need to be screened and assessed for viability once theyhave been
identified or generated. This is not an easy task but is very important. It can makethe difference between
success and failure, between making a fortune and losing everythingthat you had.
In practice, to be more thorough, one can use the Inside-out and Outside-in Tactics below:
a) Inside-out • Involves pulling all the skills one has and searching for a problem or
market to which one can apply those skills.
b) Outside-in • Involves looking at the larger picture, evaluating the market where one
wantsto operate,isolating a neglected problem, designing a creative and profitable way
to solve the problem, and locating the appropriate skills, talent, and resources to get it
started
Opportunity identification
The emergence of different technologies, the changing attitudes, behaviors, and preferences of the
consumers and the changes that occur within the environment generate new opportunities to entrepreneurs.
The need to understand individual capabilities, skills, network, and other people to identify opportunity can
become the foundation of a new business to be built. However, all business opportunities are tied-up with
danger.
Listening to customers can be a promising source of ideas too. Businesses should continuously listen and
get feedback from them in order to understand what they want, where they want it, how the business can
supply the product or service, when it will be provided and at what price.
According to Peter Drucker, ten specific areas of the business need to be constantlymonitored for
changes, which can be converted into new opportunities. These are:
1. unexpected success
2. unexpected failure
3. unexpected externalevents
4. process weakness
5. industry/market structure changes
6. high-growth areas
7. converging technologies
8. demographic changes
9. perception changes
10. new knowledge
There are multitudes of business opportunities within the environment; however, not all opportunities are

6. worth pursuing. Assess the opportunities and rank them in terms of their potential in the organization.
From the strategic management literature, we learn about "environmental scanning" asa technique for being
alert to newevents, trends, and changesthatmay result from legislation and regulation, competitor initiatives
and reactions, customer tastes, technological developments, and many other occurrences. Some business
executives look at environmental disruptions as threat, but those disruptions are invariably viewed as
opportunities for entrepreneurial small and medium business owners. Rita McGrath and Ian MacMillan
proposed formalizing the scanning procedure by devising a register in which opportunities could be
categorized as one or other of the following:
• redesigning of products or services
• re-differentiating of products or services
• re-segmenting of the market
• reconfiguring of the market
• developing breakthrough competencies
Not all ideas will be good opportunities. Most of the time, the new entrepreneur will try to venture into
business only to fail. But others will succeed,and a few will excel. The question is when is an opportunity
a good business venture? Ideally, the discerning entrepreneur should:
1. Create or add significant value to customer or end-user.
2. Solve a significant problem, or meet a need or want for which someone is willing to pay.
3. Have a robust market and big profit margin; yearly growth of at least 20%, at least 40%
margin, strong and easy cash flow, at least 10-15% profit after taxes.
4. Have a good fit with the owner and management team at the time and in the market place
and with the risk/reward balance.
Test Yourself!
ACTIVITY1: Select the appropriate answer for each question. (Each question Is worth 2 points).
1. Inside- out: ; Outside- in:
a) designing a creative and profitable way to solve the problem; Involvespulling all
the skills one has.
b) searching for a problem or market to which one can apply those skills.;locating the
inappropriate skills, talent, and resources to get it started.
c) Involves pulling all the skills that others have and searching for a problem; isolating a
neglected problem, designing a creative and profitable way to solve the problem
d) Involves pulling all the skills one has and searching for a problem or market ;locating the
appropriate skills, talent, and resources to get it started
2.Which of the following is proposed by Rita McGrath and Ian MacMillan in formalizing the scanning
procedure by devising a register in which opportunities could be categorized as one or other?
a) Reconfiguring of products or services
b) Re-segmenting of the market
c) Re-differentiating of the market
d) Re-developing breakthrough competencies
3. Which explains an idea of Product Conceptualization?
a) Innovation and creativity are key factors in the creation of underdeveloped products to
satisfy human wants.
b) Product modification involves the psychological change of existing products in the market
in terms of design, color, size, package, and purpose.
c) Ideas come to us at anytime, anywhere, and in any situation. But to become good business
ideas there must be a difference between what the environment presents and needs and
what the entrepreneur can do.
d) There are limitations in both. Finding the right "fit" will help the would-be entrepreneur
start on something with better chances to survive in the business world.

7. 4.All are part of the ten specific areas of the business need to be constantly monitored for changes, which
can be converted into new opportunities according to Peter Drucker, except:
a) unexpected failure
b) perception failure
c) high- areas
d) converging technologies
5. Opportunity identification statesthat
a) The emergence of different technologies, the changing attitudes, behaviors, and
preferences of the consumers and the changes that occur within the environment generate
the same opportunities to entrepreneurs.
b) The emergence of same technologies, the retaining attitudes, behaviors, andpreferences
of the consumers and the changes that occur within the environment generate new
opportunities to entrepreneurs.
c) Listening to customers can be a promising source of ideas too. Businesses should
continuously not listen and get feedbackfrom them in order tounderstand what they want,
where they want it, how the business cannot supply the product or service, when it will be
provided and at what price.
d) Listening to customers can be a promising source of ideas too. Businesses should
continuously listen and get feedback from them in order to understand what they want,
where they want it, how the business cansupply the product or service, when it will be
provided and at what price.
6. The discerning entrepreneur should:
a) Have a robust market and big profit margin; yearly growth of at least 21%, atleast 40%
margin, strong and easy cash flow, at least 10-15% profit after taxes.
b) Have a good fit with the owner and management team at the time and in the market place
and with the risk/reward balance.
c) Have a good fit with the owner and management team at the time and in the market place
and without the risk/reward balance.
d) Have a robust market and big profit margin; yearly growth of at least 20%, atleast 40%
margin, strong and easy cash flow, at least 10-15% profit before taxes
7. Which includes the Internal sources of Opportunities?
a) Mind -knowledge, talents, and skills one may have. These are the things thatone knows,
that others are good at and that one values or believes in.
b) Mind -knowledge, talents, and skills one may have. These are not the thingsthat one
knows, that one is good at and that one values or believes in.
c) Heart-one's interests and passion, things one loves to do and what one enjoysdoing most.
d) Heart-one's interests and passion, things others love to do and what oneenjoys doing
most.
8. Which is the best example of an External source ofopportunities?
a) Cardo realizes he cannot die after getting shot multiple times and uses hisabilities to
join the X-men to gain a huge payroll.
b) Buknoy uses his ability to make Starbucks tea made of Iced tea to create avaccine for
the on-going COVID-19 pandemic.
c) Xander sings very well and decides to make albums and sell it to the public.
d) Mar rides bicycle faster than Noy, he decides to start a cycling gym.
9. Which is the best example of an Outside-in tactic?
a) Cora is fluent in sign languages and starts to open a sign language school, which started a
revolution in the world of sign language.
b) Jejo is shy because he is short and dark but fast and agile, he reluctantly opens a ninja
school to recruit people like him.
c) While in the club, Bong shows his dancing skills. He decides to use hisdancing skills in

8. opening a business, where he magically earned Php 124.5 Measily.
d) Manny sees a lot of garbage floating in the nearby beach,he decides to use his swimming
skills to open a Beach Cleaning business to clean the nearby waters.
10. An opportunity has the following qualities, except.
a) unattractive
b) durable
c) timely
d) anchored in a product or service
MarketingResearch
Assessing the market
The market is a good place to look for business opportunities. By observing how people in the market
behave, the entrepreneur can spot dozens of opportunities that can lead to countless ideas. The following
methodologies would be helpful in assessing the micro-market environment for business.
Analyzing the environment
Conducting environmental analysis means looking at the factors inherent in an environment that may have
some impact on the business. This qualitative analysis involves identifying, scanning, analyzing, and
forecasting environmental variables, which requires gathering, reviewing relevant data to determine trends,
growth opportunities, and areas of weakness.
Environmental analysis considers a vast array of macro environmental forces that affect the actors in the
micro-market including demographic, economic, natural, technological, politico-legal, and sociocultural. It
is important for the firm to observe how the environment changes for them to adapt their strategies
appropriately.
Assessing the competition
Partof environmental analysis is assessingpotential competitors In order to help plan strategiesand achieve
competitive advantage. Today's competition is increasingly global in scope and it is important for the firm
to recognize that competition can happen at different
levels. Conducting an ocular survey of the area, observation and interviewing key informantscould assist in
identifying the direct and indirect competitors.
Recognizing the strengths and weaknesses of competitors can allow managers to exploit weaknesses,
emulate strengths, or avoid competing in areas where other companies are especially strong. Failure to
account for the presence of competitors can result in bad business decisions. The data gathered in the
assessment of the competitors can be used as benchmark for projecting possible number of potential
customers. The easiest and most common method of assessing competitor is through observation.
Determining buyer behavior
In today's economic and competitive environment, it's important to understand customers' buying behavior
because it helps firms improve their marketing strategies. Questions such aswho,what, when, where,why,
and how are important issues to be considered. This means that producers must ask who0 will buy the
products they will offer and why they will buy it. They should also find out when will consumers be
interested in purchasing the products, where they can avail and what are the factors that will motivate them
to buy, and how they choose among competing products available in the market.
The firm needs to understand the people who buy the product and their characteristics. A study conducted
by Susan Powell Mantel focused on analyzing the roles of "attribute-based processing" and "attitude-based
processing" when analyzing consumer preference. According to the study, product attributes (qualities such
as price, size, nutritional value, durability, etc.) are often compared disproportionately, i.e., one is the more
focal subject of comparison, thus eliciting more consideration when the consumer decides which brand is
the “best”.
WEEK 2

9. Conducting a traffic count and estimating demand
In every organization, sales are a series of small step working towards increased profitabilityand examining
these steps will help improve productivity. Increase in production sales be measured but finding out the
effectiveness of different promotional tools are difficult to measure. Conducting a traffic count can be a
good forecasting tool to gauge the volume of transactions and the besttime of day for customer transactions
at particular location. The presence of retail centers, malls office buildings, recreational facilities, tourist
attractions, public transport systems and housing developments all impact traffic counts as these are
considered 'traffic generators'.
Most companies improve the performance of their business by conducting a traffic count i.e., observing
and optimizing the number of customers who passthrough the business doors. Companies cangain accurate
insights into traffic flow to better balance the market demand and understand the market potential.
A small market research program, based on a questionnaire given to present customers and/or prospective
customers, can point out the problems and areas of dissatisfaction that can be easily remedied, or new
products or services that could offered successfully. Market research should also identify trends that may
affect sales and profitability levels. Increase in
population, political developments, and the local economic situation can affect one’s marketat any time.
One should also keep abreast of competitors' activities; competitors may be entering or leaving the market.
For example, it is very useful to know what competitors' strategies are (for example, what are the ways by
which they complete?)
Preparing a market research study starts with getting information or data on who will want aparticular
product or service, what the preferences of these people are, how much they are willing to pay for the
product or service, and what will make them want to patronize the shop or the store. Market research,
therefore, is finding out in as systematic way as possibleanswers to those questions above.
Positive indications from a market research will tell that there are enough numbers in the market segment
who will be willing to buy the product or avail of the services. Another goodindication is the presence of a
few competitors in the same area where one plans to operate.It is also good if the business is close enough
or is accessible to the sources of raw materials,buyers, suppliers, banks, and other places frequented by the
business owner. Finally, the most important indicator of a good potential market is to have channels or
ways to reach market segments easily.
WHAT IS A MARKETING STRATEGY?
Marketing strategy includes identifying customer groups (target markets) which a small business can
serve better than its large competitors, and making its product offers, prices, distribution, promotional
effortsand service towardsthat particular market segment(managing the marketing mix). Ideally, a strategy
should address customer needs which are not currently being met in the market and which represent
adequate potential size and profitability. A small business cannot be all things to all people, so it must
analyze its marketand its own capabilities to focus on a target market.
What is target marketing?
Owners of small businesses have limited resources to spend on marketing activities. Concentrating their
marketing efforts on one or two key market segments is the basis of target marketing.
The major ways to segment a market are:
Geographical segmentation: Serving the needs of Customers in a particular geographical area (for
example, a neighborhood shop may send advertisements only to people living within one and a half
kilometers of the shop).
Customersegmentation:Identifying groups of people who are most likely to buy the product before trying
to attract new customers. What is the marketing mix? The marketing
mix is used to describe how the entrepreneurcancombine the following four areasinto an overall marketing
program.
Products and services: Effective product strategies for a business may small include concentrating on a

10. narrow product line, developing a highly specialized product or service, or providing a product-service
package providing containing an unusual amount of service.
Promotion: This marketing decision area includes advertising, salesmanship and otherpromotional
activities. In general, high-quality salesmanship is a must for small businesses because of their limited
ability to advertise heavily.
Place/distribution: The manufacturer and wholesaler must decide how to distribute their products.
Working through established distributors or manufacturer's agents is generally more feasible for small
manufacturers. Small retailers should consider cost and traffic flow astwo major factors in location site
selection. In other words, low-cost, low-traffic location meansspending more on advertising to build traffic.
Price:Determining price levels and/or pricing policies (including credit policy) is the major factoraffecting
total revenue. Generally, higher prices mean lower volume and vice-versa; however, small businesses can
often command higher prices because of the personalized service they can offer.
The nature of the product/service is also important in location decisions. If people buy largely on impulse
(e.g., soda or candy), then you can locate where there is high traffic and visibility. On the other hand,
location is less important for products or that customers are willing to go out of their way to find (for
example, appliances or clothes).
ANALYZE THE COMPETITORS
Before an entrepreneur commits her resources to the business, she should measure whether there is a
sufficiently large unsatisfied market left for her to satisfy.
● Is the market growing at a rate that allows another new business to enter?
● In a declining market, how will she capture business from competitors?
● How do her products or services differ from those of her competitors?
● Has she identified a market segment that needs servicing?
The information sources can be divided into the following:
Secondary data sources: These data already exist and may be used by the entrepreneur in the research.
This information may not have been collected for a specific purpose. It may beobtained from trade or
manufacturer's associations or published data.
Primary data sources: The information here originates from direct search or interviews conducted by the
entrepreneur. For a furniture survey, for example, information obtained from furniture manufacturers or
wholesalers would be primary data sources.
TestYourself!
ACTIVITY2: Select the appropriate answer for each question. (Each question Is worth 2 points).
1. Which best describes Customer segmentation?
a) Identifying groups of people who are most likely not to buy the product before tryingto attract
new customers.
b) Identifying groups of people who are most likely to buy the product after trying toattract new
customers.
c) Identifying groups of people who are most likely to buy the product before trying notto attract
new customers.
d) Identifying groups of people who are most likely to buy the product before trying toattract new
customers.
2. Marketingstrategystatesthat:
a) Identifying customer groups (target markets) which a small business can serveweaker than its
large competitors
b) Identifying customer groups (target markets) which a small business can’t servebetter than
its large competitors
c) Making its product offers, prices, distribution, promotional efforts and servicetowards that
particular market segment (managing the marketing mix).

11. d) Making its product offers, prices, distribution, promotional efforts and servicetowards another
market segment (managing the marketing mix).
3. Which of the following affects the actors in the Micro-market?
a) Astronomical
b) Catatrophical
c) Developmental
d) Natural
4. How does a business owner determine a good area for Distribution of their products?
a) Working through established distributors or manufacturer's agents is generally morefeasible for
small manufacturers.
b) Small retailers should be able to consider cost and traffic flow as two minor factors inlocation site
selection.
c) Identification of low-cost, low-traffic location means spending less on advertising tobuild
traffic.
d) Small retailers should find a big store where they can sell their products easilywithout paying
taxes.
5. All are examples of Primary data sources,except:
a) Questionnaires
b) Exams
c) Surveys
d) News
6. How do we determine the Price levels properly?
a) Lower prices mean lower volume and Higher prices mean lower volume
b) Higher prices mean higher volume and Lower prices mean higher volume
c) Lower prices mean equal volume and Higher prices mean higher volume
d) Lower prices mean higher volume and higher prices mean lower volume
7. All are not examples of major ways to segment a market, except:
a) Customer segmentation
b) Productssegmentation
c) Geographical Price
d) Place/Services
8. Promotionstatesthat:
a) This marketing decision area discloses advertising, salesmanship and otherpromotional
activities.
b) This marketing decision area includes advertising, salesmanship and otherpromotional
activities.
c) This marketing decision area doesn’t include advertising, salesmanship and otherpromotional
activities.
d) This marketing decision area includes advertising, salesmanship and otherpromotional
activities.
9. A small market research program, based on a questionnaire given to present customers and/or
prospective customers, can point out the problems and areas of dissatisfaction that can be easily
remedied, or new products or services that could offered successfully.
a) True
b) False
10. Most companies improve the performance of their business by conducting a traffic count i.e., observing
and optimizing the number of customers who passthrough the business doors. Companies cangain accurate
insights into traffic flow to better balance the market demand and to not understand the market potential.
a) True
b) False
MarketingResearch Methodology
WEEK 3

12. Market Survey
One of the main ways to gather information which includes surveys, questionnaires and test. It is an
investigation into the state of the market for a particular product or service, including an analysis of
consumers' needs and preferences.
TIPS FOR CONDUCTING A MARKET SURVEY
The following tips can help your students to conduct a market Survey effectively and systematically.
1. Personal bias can be a negative factor in collecting information from various types ofpeople.
2. Be patient and persistent in gathering information during the survey.
3. Do not pass information to others.
4. Write down the information immediately after visiting someone.
5. Sequencing of questions, involvement, and commitment to get information are the key factors in
conducting a successful market survey.
6. Ask questions about your competition; for example, why the interviewee patronizes ordoes not
patronize the competition, satisfaction over products or services of the competition, etc.
When the survey is completed, write a detailed report on your findings. The market survey report will help
you to assess the feasibility of marketing your product. It may also be an important document to convince
financial institutions to lend to you if you need credit.
Steps to get to knowyour competitors.
Step 1: identify possible competitors.
1. Direct competitors: List each by name, address, and type of business.
2. Indirect competitors: List the name, address,and type of business of eachfirm that provides products
and/or services that, while not the same as yours, can be a substitute for yours.
Step 2. Analyze businesses that have recently been set up and those that recently failed.
1. List competitive businesses that have started within the past two years.
2. List competitive businesses that have gone out of business within the past two years.
3. Analyze the possible reasons for the businesses that have failed in the last two years. What factor or
combination of factors explains the optimism or the new businesses that have succeeded? What
factor or combination of factors explains why the othersfailed?
Step 3: Analyze competitors' business
1. Estimate the sales and turnover of each of your competitors.
2. Hate your competitors in terms of price, quality of product or service, facilities, advertising,
promotion and sales. What prices do they charge? What is the quality of their merchandise? How
much do they advertise? What extra services do they offer?Are their sales terms liberal? Is their
location expensive, moderate, or cheap? Are their production processes and equipment modern?
Are their employees well- trained? Are their employees well paid?
3. Determine if there is a correlation between the firms that have high sales and their methods of
operation. That is, do these firms have similar pricing, selling. and/or production methods? A
thorough analysis of the methods of operation based on the firm's sales should yield valuable
information.
Step 4: Compare proposed business operations against the competition
1. Indicate the advantages your products and/or services will have in terms of price, performance,
quality, durability, and visibility over the competition.
2. Be able to explain why your method of operating your business will be more successfulthan that of
your competitors.
3. If you plan to operate in businesses in a manner similar to other businesses, you should be explained
why.
4. Determine whether the market is enough to profitably support you and the other firms.
5. Determine if your business will be more efficient and/or more effective than your competitors.

13. 6. If you plan to operate in a manner completely different from the competition, you should be able to
why no one else is operating that way. Are other they businesses not aware or the opportunity? or,
do they know something that you don't?
DEVELOPING THE SALES FORECAST
An important element of the market survey report is the sales plan. An entrepreneurwho is in business must
have a realistic idea as to how many products or services her business can sell in the near future. If the
business offers several products or services with different prices, the forecast should be made for each
product or service individually. However, a wholesaler or a retailer with a large number of products will
make the sales plan for the main groups of products with an average price. A sales plan contains three
elements: the quantity of products to be sold, the price of the product per unit and in volume (e.g by the
dozen or by the ream), and the price of the turnover. The turnover is the amount of money that a business
receives from its sales duringa month (monthly turnover) or during a year (yearly turnover). Here is an
example of a salesforecast for Company XYZ:
The sales plan will also reflect seasonal variations of the business, e. a restaurant on the beach will have
more customers in summer than in winter; a tailoring shop will sell more school uniforms when the school
year starts.
From the sales plan, an entrepreneur will know when she needs to buy raw materials or goods and how
much money she can expect every month. An entrepreneur who has been in
business for a long time will know from the past how the business will function during a year.
However, a market survey should be done regularly, in particular when the planned sales arenot reached or
the entrepreneur wants to expand the business and offer new products. Someone who wants to start a new
business must pay a great deal of attention to the market survey because she must be quite sure that the
products or services can be sold in the number and for the prices that were set in view of the development
of a realistic sales plan.
Remember, the whole business depends on the money from the sales.
THE MARKET STUDY
Which comes first, the market or the product?
A product is a manifestation of created utility and intrinsic value added with a corresponding market value
or price. A marketis the potential group of people who will buy and use the product or service. It is essential
that the entrepreneur who has identified a businessopportunity zero in on a specific market that would need
and Welcome the product. Without a prospective market, the product will not move or sell. One of the first
things a would-be entrepreneur should ask herself is, "Who or what is my perfect customer or client?". The
would-be entrepreneur has to figure out an answer to this question as she continues developing her product
or service
.
In starting a business, one cannot rely on the statement,"Shoot for the moon; if you miss, you'll land among
the stars." It just doesn't work that way in business. The entrepreneur will land in the black expanses of
space--where no one exists. The best initial advice is, "Sit downand look at what the market needs and see
if what you are offering will match or serve this specific market." With a match between market and
product, the Chances of success will be great.
The entrepreneur needs to know exactly (or as exact as she can possibly make it) who her customers are. It
is called demographics and the entrepreneur needs to find it out early in the business planning stage. It will

14. not do well for the entrepreneur if she has no idea who she will be talking to about her product and service
in the first place, that is, who she is sure will buy her product or service.
Geographic, demographic, and psychographic approaches are the three main ways theentrepreneurcanfind
her target market. Geography has something to do with the place or location where the business will be set
up to reach the target market. Demography describesthe vitalexternalcharacteristics of the target market as
human beings: where they live, howthey live, how much money they earn, where they studied, where they
send their childrento school, where they worship. Psychographic details say what the target market feels
and thinks about the kind of product or service the entrepreneur plans to offer.
Once the would-be entrepreneur knows whom she is going after, then she can begin to design a plan on
how her product will reach this particular group or market segment. She can plan on how the members of
the target market can see her product, begin to learn and like both the entrepreneur and her product or
service so they come and buy from her.
If the entrepreneur tries to cover everyone and imagine they will buy simply because her product is
available, she may lose in the short- or long-run because she will have no steady buyers or consumers. If
the entrepreneur knows her target market, she will know how to reach it easier and find that she will not
have to risk so much to get the results she wants.
More about the product
The product's name and properties
A commodity can be introduced by discussing its purpose and existence, and how it contributes to the well-
being of the customer or client who patronizes it.
The product's distinctive featuresoruniqueness
Another way of describing the product is through its distinctive features, uniqueness, and degree of
differentiation. Here the entrepreneur compares its novelty and its higher value- added components with
the other offerings available in the market. The entrepreneurfocuses on the physical aspect of the product
(e.g.,weight, height, design, color, and the like) if the commodity is tangible. If the commodity is intangible,
the entrepreneur can describe it through its unique contribution to the welfare of the market segment,
through itsinnovativeness in answering the market segment's needs and desires.
The benefits that the product brings
Presenting the product can also be done through a comprehensive discussion on the benefits it brings to the
intended end-user. It is on this partthat benefits canbe enumeratedandarticulated as well. These dimensions
can be described separately or in combination so the market can be convinced about the essence,
functionality, and purpose of the product orservice and thus support or buy it.
There are two kinds ofproducts:
Tangible product
This referstoproducts thatcan be seen, touched, tasted, and smelled. Physicalexistence is aprimary criterion
(e.g., automobiles, white board markers, computers, etc.).
Intangible product
This finds itself. refers to products that are unseen but felt. Here, the focus is on the concept,processes,
procedures, and service performed by the product (e.g., spa, cargo-forwarding business, tourism-related
business, etc.).
The market entrepreneur's aim is to find the best "fit" between the segment and the product she is offering.
This is a major requirement to attain a sound best financial position
in business. The "fit" refers to the right product for the right target market. This synchronicity must be
established in order to realize the objectives of the business plan and the actualbusiness profits of the once
it has started operating.
Location of the business
The choice of location for business and operation (both for office production purposes) mustbe articulated
with justification on the parameters of:

15. Proximity
The would-be entrepreneur must make the business right choice of location, considering the to the
accessibility and distance to the suppliers, raw materials, labor skills required and the target market. Costs
required and the in the transportation and the product to delivery of the market can pull the properly taken
into account. profits down if not properly taken into account.
Office and plant layout
The office and plant layout must have the right technical measurements and dimensions. Cost implications
should be determined and, which should then be integrated both to the technical/operation plan and to the
financial plan. A sketch of the office and plant layout providing the landmark sites and thoroughfares is an
important part of the business plan. Foot traffic aswell as parking spaces forstores or point of sales location
should be considered carefully. If structural infrastructure is not part of the plan, lease (rent) cost should be
indicated properly to account for all costs in building the capacity of the proposedorganization.
Environmentalanalysis
As the cliché goes, "when one goes to battle, one should be prepared at all times”. Such a mindset is critical
for anyone to win over one's obstacles. One should acknowledge the importance of knowing the terrain of
the battlefield through intelligent surveillance of the environment. ASuccessfulentrepreneur must be adept
at gathering information and interpreting it.
The intelligent entrepreneur knows how to scan the environment for best results. Knowing the depth and
extent of the market its quirkiness, and patterns is essential before the business idea could be pushed
forward. Most often, the failure of a business is caused by a poor comprehension of the environment where
it finds itself.
Test Yourself!
ACTIVITY 3: Select the appropriate answer for each question. (Each question Is worth 2 points).
1. Which best describes a Tangible product?
a) Unseen but felt
b) Tastedbut not seen
c) Seen but not smelled
d) Seen and touched
2. An example of a tangible product is while Intangible product is
a) A computer; Tourism
b) In-game purchase;stock market
c) Chairs; ATMcredits
d) Shopee points; bike
3. The choice of location for business and operation (both for office production purposes)
a) Proximity
b) Geographical position
c) Office Layout
d) Business location
4. Potential group of people who will buy and use the product or service.
a) Company
b) Market
c) Businessmen
d) Corporate Officers
5. The will also reflectseasonalvariations of the business, e.g a restauranton the beachwill have
more customers in summer than in winter; a tailoring shop will sell more school uniforms when the school
year starts.
a) Sales Market
b) Sales Process
c) Sales Plan
d) Sales List

16. Marketing Research: Conclusions and Recommendation
Formulation
Reaching conclusions
Your data analysis provides the basis for drawing conclusions. Ultimately, market research provides
information that reduces risk and uncertainty and increases your chance of business success. The final
conclusions should meetyour initial objectives; consider what options you have discovered in your analysis
to best meet your larger business objectives. Toreach conclusions about your research:
 examine the major themes and trends
 review the tables you created when processing your data and refer toyour objectives to be sure
you have enough information to reach informed conclusions
 assess and separately list the strengths, weaknesses, opportunities and threats you have
identified
 look for gaps in your information that make it difficult to draw adefinitive
conclusion from the results of your research
 review your initial research plan and consider what you need tochange to provide more
comprehensive results.
Also consider...
 Find market researchinformation for small businesses.
 See the research resources for business and industry to find out howto make the most
of your research.
 Watcha free business webinar to help improve your business.
 Consider reviewing and updating your business vision and businessplan.
Test Yourself!
WEEK 4

17. What is the importance of the Research Method in the realm of Business and our
Economy?
(20 points)
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ACTIVITY 4