Business Plan

- a blue print of the business that the

entrepreneur would like to start
- aims to establish if a business idea will bring in
a fair return to one’s investment, will be
beneficial to the society, and will bring no
harm to the environment when it is operated
- roadmap of the new business and
entrepreneur that provides a clear direction to
any uncertain business endeavors
 Business Plan
- a detailed and integrated written document
that describes the various activities involved in
opening and operating a new entrepreneurial
venture
Major Parts of the Business Plan
1. Introduction 6. Production Plan
2. Executive Summary 7. Operation Plan
3. Environmental Analysis 8. Marketing Plan
4. Business Description 9. Financial Plan
5. Organizational Plan 10. Appendix
 Reasons why an entrepreneur still needs
to make a business plan
*accdg to DTI through Bureau of Small and Medium
Enterprise Development (BSMED)
1. Reduce, if not remove, the risk of losing money
invested in a poorly researched or unstudied
business idea.
2. Avoid costly mistakes.
3. Anticipate the financial requirements.
4. Organize the activities beforehand.
5. Assess actual performance against set goals.
6. Apply for financing from lending institutions.
Parties who benefit from a business plan

1. management team
2. shareholders
3. bankers or creditors
4. customers
5. suppliers
6. employees
 Value of the Business Plan to Selected
Users
Users of Business Plan Why the business plan is important to this user
- serves as a roadmap for managing the business
ENTREPRENEUR - identifies the resources needed to operate and grow
the business
- allows the entrepreneur to anticipate potential
business risk

- allows the lender to assess whether the entrepreneur

LENDER will be able to meet debt and interest payments
- provides information about collateral or tangible
assets that can be secured for the loan

- Allows the investor to gauge whether projected

INVESTOR returns are acceptable
- Provides information about the character of the
entrepreneur and about the capability of the venture’s
management team
 GOVERNMENT SUPPORT
The Small and Medium Enterprise Development
Council (SMEDC) was created in 1991 to integrate and
synchronize the various efforts of the government in
the following areas:
*FINANCE
*MARKETING
*TRAINING and HUMAN RESOURCE DEVELOPMENT
*PRODUCT DEV’T and TECHNOLOGY ASSISTANCE
 VISION STATEMENT
- a description of what the organization aspires
to be in the long term
- is more general than a mission statement
which communicate the very purpose or
reason why the organization exist
- something that we set our sights to and what
we want to achieve
- worded to inspire the reader to go for the gold
- it answers the question “Where I am headed?
or “ What do I want to be?”
 - it acts much as the same way an inspirational
message or pep talk would
- a motivational statement that is time-bound

Example:
Vision 2020: Inspire the World, Create the Future
- Samsung Electronics
 MISSION STATEMENT
- is a written declaration of an organization’s
core purpose and focus
- pertains to what it wants to accomplish in the
larger environment
- acts as an “invisible hand” that guides people
and provides direction to the whole
organization
- it should be market oriented that it
defines the business in terms of satisfying basic
customer needs
Reasons for creating mission statement
1. Statement of Purpose
*Purpose is the motivation why something is
done or why something exists
Ex. To bring inspiration and innovation to every athlete in the world.
If you have a body you are an athlete. – NIKE
2. Statement of Focus
*Focus tells us what the center of interest or
attention is. It maybe a service, product or
goals and objectives
Ex. To organize the world’s information and make it universally
accessible and useful – GOOGLE
3. Statement of Transparency
-revolves on 4 key words: CLARITY, SHEERNESS,
OBVIOUSNESS and TRUTH
- openly declared so as not to cause ambiguity
or confusion for the members of your
organization and people outside it

Ex. We provide safe, affordable and sustainable water solutions that

enable those we serve to lead healthier, more comfortable lives
-MAYNILAD
4. Statement of Direction
- this is where you begin and from here you will
know where and how to move forward

The mission statement answers the questions

1. Why am I here?
2. What I am here for?
3. Who am I?
4. What do I do?
5. Why do I do it?
6. Who am I serving?
 To inspire the world with innovative technologies,
products and designs that enrich people’s lives and
contribute to a socially responsible, sustainable future
- SAMSUNG
SM Foundation sees itself as a channel for its
employees, customers, tenants, suppliers and service
providers, media, local and international government units,
government and non-government organizations, national
and foreign agencies, civic organizations and corporate and
private sectors to extend immediate and long-range
assistance to deprived communities in areas served by the
SM Group of Companies
- SM Foundation
Mission Statement Vision Statement
Who am I? Where am I headed?
What am I here for? Where do I want to go?
Why am I here? How do I get there?
What am I doing?
Why am I doing this?

It looks at your present It acknowledges the present

situation with the future in but looks forward into the
mind future
Illustrates goals, purpose and Illustrates goals, purpose and
values values
Aims to inform Aims to inspire
GOALS and OBJECTIVES
- statements which outline specific actions in
line with the mission that an organization
would like to achieve
 SCANNING the MARKET
(Sources of Business Opportunities)
1. Socio-cultural Environment
E
2. Political Environment
3. Macro-Economic Environment X
4. Ecological Environment T
5. Technological Environment E
R
6. Industry trends
7. New discovery or new knowledge
8. Competitors N
9. Societal Problems or irritants in the marketplace A
L
10. Physical Location of the entrepreneur
CASE STUDY #1
Mr. Marvin Magdangal is a fresh graduate of
Marketing Management. He has observed that the
current administration has brought about a number
of drastic changes, including the implementation in
Baguio City of a curfew for minors and a 1:00 AM liquor
ban. Marvin believes that a number of bars in Baguio
City might be affected by these new policies.
Additionally, he has also noticed that most of the
coffee and tea shops in Baguio City are always full. An
aspiring entrepreneur since he was young, Marvin
wants to tap the market which he believes he knows
the most – the Youth.
External Source of Specific External Potential Business
Business Source of Opportunity
Opportunity Business
Opportunity
• POLITICAL Coffee shops • Coffee and tea
FACTORS and tea shops shop
are immensely
• LEGAL popular among • Alcohol-free
FACTORS the youth of restaurant
today
• COMPETITORS • Gym and
sports
business
1. Talents, hobbies, skills, expertise or
academic background I
2. Financial capacity N
3. Processes/Operational Capacity T
4. Leadership and people
management skills
E
5. Entrepreneurial attitude/character R
6. Vision and strategy N
A
L
CASE STUDY #2
Ms. Regine Cruz , whose mother was a
musician, started singing when she was 5. Since
then, singing has become a way of life for
Regine. She is a member of the church choir and
a consistent performer in school. Regine also
happens to be a afresh graduate with a degree
in business management. So, she is thinking of
ways on how to combine her interests in both
music and business.
External Source of Specific Internal Potential Business
Business source Of Business Opportunity
Opportunity Opportunity
• Talent • Ms. Regine • HARANA
started singing online booking
• Academic when she was
Background 5 • Restaurant
• She is a singer with live band
with an
interest in • Coffee shop
business and a with live band
degree in
business
management
 12 R’s of Opportunity
Screening
1. Relevance to Vision, Mission and Objectives of
the Entrepreneur
What is your personal vision of what you will be
ten years after schooling?
How do you see yourself as an entrepreneur by
then or do you simply want to be a millionaire?
*Whatever your long term goals, will chasing
the opportunity you are considering bring you
closer to achieving them?
2. Resonance to Values
What do you value the most?
What virtues do you want to possess?
* It is important that the opportunities you
choose to pursue matches with your values and
desired virtues.
3. Reinforcement of Entrepreneurial Interests
* It is best to choose an opportunity that is close
to your interests and hobbies and enhances
your competencies
Ex. If you like computers, why not start a computer
enabled business
4. Revenues
What are the revenues and sales potentials of
the opportunity?
*dependent on the quality of the opportunity
and capability of the future enterprise to
strategize and develop a saleable product or
service
5. Responsiveness to Customer Needs and Wants
Will your business address customer needs or
wants that are currently not being fulfilled?
6. Reach
Will the opportunity allow your enterprise to
have a wider market reach or geographic
coverage?
7. Range
Will the opportunity allow the entrepreneur to
come up with a wide range of related products
and services that could target different
segments or the same industry?
8. Revolutionary Impact
Is the opportunity likely to be the “next big thing” in the market?
Will it be a game-changer? Or will it take market by storm?
9. Returns
Low cost of production or servicing < higher prices
= Higher Returns on sales and ROI
Intangibles in terms of awards received, fame attained
and recognition gotten by the entrepreneur

10. Relative ease of Implementation

The best opportunities are ones that are easy for you to
implement but very difficult for others.

Ex. If you come from a family of tailors, then you would have
an easier time than most in setting up a tailoring shop.
11. Resources Required
novice entrepreneur = limited resources
* this put a practical limit on the opportunities
one can pursue
* start small

12. Risks
* some opportunities carry more risks than others
because they are untested or have very small market
base which make sales highly seasonal or cyclical
* the more risks there are , the less attractive it will be
The Million Peso Investment
Take a look at your municipality and the surrounding
towns. What are notable customer, market, industry
and other sources of opportunities?
Now imagine that an investor gave your group
₱1 Million to start a business in response to these
opportunities. What would you do?
1.List at least five(5) opportunities that can be
found in your surrounding area.
2.Brainstorm on several possible businesses for
each opportunity.
3. Compile the listed opportunities and proposals
 4. Be as creative as you can be! Don’t be afraid to
tackle difficult opportunities or come up with
expensive ideas. Assume you have ₱ 1 Million to
invest.
OPPORTUNITY Business Proposal
1. Lack of Internet access in most 1.1 Establish an internet café
barangays/ towns 1.2 Set up low-cost Wi-fi hotspots
for restaurants and eateries

2. Growing demand for 2.1 establish a repair and

motorcycles vulcanizing shop specializing in
motor cycles
2.2 establish a motorcycle
distributorship
2.3 establish a motorcycle rental
shop
 The Opportunity Screening Matrix
Criteria Very High High Average Low Very Low Sample wt. Score
Opportunity Scree ning Grid for each Opportu nity
Rating 5 4 3 2 1 Weight Score
Relevance 2
Resonance 1
Reinforcement 1
Revenues 2
Responsiveness 1
Reach 1
Range 1
Rev. Impact 2
Returns 4
Relative 1
Rating 1 2 3 4 5
Resources Req 1
Risks 20
TOTAL SCORE
Instructions
1. Provide a weight for each R. The more importance you
give to a criterion, the higher the weight.
2. Rate the quality of each opportunity in relation to the 12
criteria. For the last two R’s, the scoring is reversed. Very
High mean a score of 1, while very low mean a score of 5.
The more resources needed, the less attractive the
opportunity.
3. Multiply the rating fro each criterion with assigned
weights to come up with the sore.
4. Total the weighted score
5. Repeat the process for all of your listed opportunities
*the opportunities with the highest total scores are likely
the best ones for you
 How to Register Your Business
1. Register your business name with DTI
2. Obtain a business clearance from the barangay
office of your place of business
3. Obtain a permit to do business from the local
government unit (municipal gov’t licensing office)
4. Get a Tax Identification Number (TIN) from the
Bureau of Internal Revenue (BIR)(nearest branch)
5. Register your business and employees with the
Social Security System for social benefits
ENVIRONMENTAL ANALYSIS
MACROENVIRONMENT (External)
*PESTEL Analysis
-gives rise to opportunities and threats for the
enterprise
OPPORTUNITIES
- are external possibilities or chances that may
occur and benefit the business
1. Possibility of getting business offers from the external communities
2. Changes in market trends due new developments such as additional
grade levels in the school community
 THREATS
-are undesirable occurrences in the market and
are disadvantageous to the business

1. Changing customer/buyer needs and tastes

2. Rise in the sale of substitute goods
3. Inflation and tax rates

*PESTEL data maybe derived from the school or

community where the students locate their businesses. Data
collection may include student or community demographics
and competitor enterprises situated in the chosen locations
MICROENVIRONMENT (Internal)
*Porter Model (5 forces of competition)
1. Potential new entrants
2. Buyers
3. Substitute products
4. Supplier
5. Rivalry among existing firms
STRENGTHS and WEAKNESSES
- presence or absence of internal resources in a
given enterprise
- management, manpower, money, materials
and machinery
STRENGTHS
- high quality products
- affordable but profitable prices
- ability to meet the customer’s tastes
- efficiency and effectiveness in serving
customers
- ability to attract customers
- good business location
- good and well-trained marketing staff
- high entrepreneurial spirit
WEAKNESSES
- being new in the market and having a weak
market image
- weak distribution channels
- below average marketing skills
- high overall unit costs relative to competitors
- narrow product line
- inaccessible location to customers
 SWOT ANALYSIS
STRENGHTS WEAKNESSES OPPORTUNITIES THREATS

Good Below Increase in Rise in sale

business average consumption of substitute
location marketing patterns goods
skills

High quality Narrow Increasing Change in

products product disposable tastes and
line income preferences
Market Identification

MARKET
MARKET TARGETING MARKET POSITIONING
SEGMENTATION

Who is the
market?
Market Segmentation
-strategy designed primarily to divide the market
into small segments w/ distinct needs, characteristics
or behavior (Kotler & Armstrong,2014)
*Entire market cannot be readily served because the customers
are heterogeneous, the entrepreneur has to find ways to cater to
homogenous customers only
Points to consider
1. accessibility of the market segment
2. size of the market segment
3. distinction of the market segment
Market Targeting
- aims to determine the set of buyers with
common needs and characteristics
- the market segment that the venture intends
to serve
*Market Segment Evaluation
1. size of the segment and its expected growth
2. existing & probable structure of the segment
3. capability of the business
*Market Segment Selection
1. Individual or 1-on 1 Marketing (customization)
2. Differentiated/ Concentrated Marketing
3. Mass/ Undifferentiated Marketing
Market Positioning

Positioning
- refers to the act of occupying a certain place
-it may either refer to the act of placing the
business in a specific place in the industry or
placing the product in a certain place in the
market
Business Positioning
- process of determining
the place of the business in the
industry
- analysis of the different
forces that are strong in the
industry in order to determine the
correct position of the proposed
venture
Market Positioning
- process of arranging a
product to occupy a clear, distinct
and desirable place in relation to
other competing products in the
mindset of target customers
(Kotler& Armstrong, 2014)
- to have a distinct place in
the minds of the target customers
- determine the difference
of the product from competitors in
terms of value and benefits that the
customers will gain from it
- price and benefits/quality
Criteria that maybe considered in identifying the attributes
or benefits to be promoted

1. Identifiable - easily associated with the product

2. Beneficial - provides valuable benefits
3. Distinctive Advantage - distinct to the product
4. Efficient and rewarding - the cost is not higher
than the expected benefits in terms of profit
 Deciding on the market position
2 Dimensions
1. Price 2. Quality

3 Steps in determining the market position

1. The entrepreneur determines whether the market
position is distinct from others
2. The entrepreneur evaluates the advantages or
benefits of every possible position
3. The entrepreneur decides on the market position
Business Model
- defines the perspective of the business in
terms of its structure, production, operation, and
financial activities that will lead to the achievement of
the VMGO
- description of the means and methods a firm
employs to generate sales revenue, profit and cash
flow, while providing a template for the business to
scale up
 How do you
How do you
interact?
Who will help do it? Who do you
What do you do? help?
you?
KEY Customer
ACTIVITIES Relationship
Key OFFER Customer
Partner Segments
VALUE How do your
What do you
Networks need? reach them?
PROPOSITI
KEY ON Distribution
RESOURCES
Channels

What will it cost? How much will you make?

How will you make profit?
COST STRUCTURE
REVENUE STATEMENTS
VALUE PROPOSITION
- the relevant and unique benefit
that the consumer gets from
buying or owning the firm’s
product or services
GANTT CHART
- a horizontal chart developed as a production
control tool in 1917 by Henry L. Gantt, an American
mechanical engineer and social scientist
- frequently used in project management, it
provides a graphical illustration of a schedule that
helps to plan, coordinate and track specific tasks in a
project
- a type of bar chart that is used to visually
display the schedule of a project
 PRODUCTION PLAN
1. Production Schedule
- total number of goods to be produced and
expected time to produce them
* market demand
* timing
2. Production Process
- different process or stages involved in the
production of goods
*procedural steps which also include waste
disposal system
3. Processing plant and equipment
- it describes the manufacturing plant,
machinery and equipment, and the various
tools to be used including their respective
estimated cost
4. Sources of materials
a. Capacity of the plant or machinery
b. Payment terms and conditions
c. Discounts and damages
d. Terms of shipment
5. Production Cost
- labor, direct materials and factory overhead
must be properly described and accounted for
*selling price > production cost
 PRODUCTION SYSTEM
3 ELEMENTS
1 . INPUT
- manpower, materials, machine, design, instructions
2. PRODUCTION PROCESS
- transformation or conversion process
3. OUTPUT
- final products from the production process and
distributed to the customers
 6 M’s of Production
1. MANPOWER - human workforce
2. METHOD - production technique in conversion
3. MACHINE - equipment
4. MATERIALS - raw materials
5. MONEY
- amount needed to operate the production
6. MANAGEMENT
- departments in charge with duties to fulfill
 PRODUCTS UNIT UNIT PRICE AMOUNT

Coffee Vending 1 unit 12,000.00 12,000.00

Machine

Barista Choi 1 kilo pack 180.00 180.00

Coffee Powder

Barista Choco 1 kilo pack 180.00 180.00

Powder

Barista Choi 1 kilo pack 180.00 180.00

Caramel Powder

Barista Choi 6.5 300 pieces 210.00 210.00

oz paper cups
Consumables Costing Cost per cup
Barista Choi 180/kilo makes at 2.25
Powder least 100 cups

Barista Choi 6.5 oz. 210 for 300 pieces 0.70

paper cups paper cups

5 gallons of water 25/ 5 gallons makes 0.15

151 cups 0f 120 ml

Electricity ( 11/ 100 cups 0.10

Variable) dispensed
Selling Price ₱5.00 ₱1.80 profit per
cup

Estimated cups 100 units ₱180 profit per

sold per day day

Number of 30 days ₱5,400 profit per

days per month
month
 OPERATION PLAN
- outlines the various activities from the
acquisition of raw materials to the delivery of the
products to the target customers

- details the effective ways business resources

should be utilized that will satisfy customers
 Advantages of Effective Operation
System
1. Reducing costs and being efficient
2. Increasing revenue by increasing customer
satisfaction through good quality and service
3. Increasing the capacity of the business operation
4. Providing the basis for future innovation, by
building a solid base of operations skills and
knowledge
 Production/Operations Management
Practices
*Plan and control
*Adopt the standard models
*Design plant layout for better efficiency
*Choose the right machines and equipment
*Purchase based on needs and on time
*Maintain machines and equipment properly
*Manage inventory/stock well
*Ensure quality control
 Legal requirements in putting up a
new business
1. Registering with the Department of Trade and
Industry (DTI)
2. Registering with the Securities and Exchange
Commission (SEC) – for partnerships and
corporation
3. Registering with Social Security System(SSS),
PhilHealth, Pag-ibig
- for employees
4. Registering with the Bureau of Internal Revenue
(BIR) – for taxation purposes
5. Registering with the Local Government
- for mayor’s permit or municipal license from
the city or municipality where they are located

Other Agencies
• Bureau of Food and Drugs (BFAD)
- for manufacturers of drugs, cosmetics and food products
• Bureau of Product Standards (BPS)– for commodity
clearance for producers, manufacturers or exporters their products
will be tested to ensure that they meet established standards
• Intellectual Property Office of the Philippines
- for firms wanting to register patents and trademarks
 Laws that Affect Business
Labor Code of the Philippines ( PD No.442)
- protects labor, promotes employment and
human resources development and ensures industrial
peace based on social justice

Consumer Act of the Philippines ( RA No. 7394 )

- protects the interests of the consumer,
promotes his general welfare and establishes
standards of conduct for business and industry
Magna Carta for Micro, Small and Medium Enterprises
( RA No. 9501)
- aims to promote entrepreneurship, help
entrepreneurs and support the growth of and
development of MSME’s

Go Negosyo Act (RA No. 10644)

- aims to reduce business and bureaucratic
constraints in creating MSME’s
- provide incentives and benefits MSME’s and
strengthen MSMED Council
Equal Opportunity for Employment Act (RA No.10524)
- ensures that people with disability are given
equal job opportunities

Anti-Age Discrimination in Employment Act (RA No. 1011)

- protects individuals against discrimination
because of their age
 ABM Strand Days
Achieving Environmental Sustainability
thorough Business Innovations
SUSTAINABILITY
is based on a simple principle: Everything that
we need for our survival and well-being depends,
either directly or indirectly, on our natural
environment
it creates and maintains conditions under which
humans and nature can exist in productive harmony,
that permit fulfilling the social, economic and other
requirements of present and future generations
* U.S Environmental Protection Agency
SUSTAINABILITY
*It means living in harmony with our world-
keeping our world alive to keep us alive

In relation to business, it means you are not

abusing our natural resources in the production or
operation of your business.
It ties up with cost effectiveness in the sense
that if we use readily available, local and renewable
materials properly as well as create less waste or
buy-product in the process, we won’t spend as
much.
 MARKETING MIX
PRODUCT
-consumers must understand its value and must
perceive it as something that is worth buying
- the value offered pertains to the benefits that
consumers look for in a product
*WHAT product is the most appropriate for the
opportunity
*WHY will customers buy or avail them
PLACE
-LOCATION.LOCATION. LOCATION
- where the target customers are and how to
maximize the potential of that location
-put your business where your consumers are
willing to buy the product
* what location is best suited for the business
where there are more potential customers
* can they conveniently transact on site
*how is the process of distribution of products
 Relevant location drivers for location
selection
1. Physical Proximity to target market
2. Customer traffic flow
3. Industry Clustering
4. Convergence of Multiple Industries
5. Population Concentrations
6. Activity hubs
7. Growth Potential
8. Business Climate
9. Cost of doing business and producing goods and
services
PRICE
- refers to the peso value assigned to a certain
product after considering costs, competition,
objectives, positioning and target market
* what is the most appropriate price, and what
pricing strategies will be used for the target
customers
 General Pricing Guidelines
1. Do not price the product below its cost
2. Monitor competitor’s prices and ensure that your
prices are at par with them unless it is really way
superior to the competitor’s
3. Align prices with other 6P’s
4. Implement price strategies that are relevant to
your market segment
5. Align prices with your business objectives
Variables that highly influence the
setting of prices of products
1. Availability of the competing products
2. Cost of making the product
3. Type of product
4. Presence of substitute products
5. Stages of the product in the market
6. Demographic profile of the target consumers
 3 Parts of Product Cost
1. Direct Materials
- material inputs that become part of the
product
2. Direct Labor
- includes workers whose outputs are closely
related to or associated with the making of the
product
3. Factory Overhead
- all other costs incurred in the making of the
product but do not become part of the product
Ex.
* the use of buildings, machines and equipment
and their maintenance and replacement
* power, fuel, water and supplies used to keep
the manufacturing process running
* salaries or wages of all workers who are not
directly involved in the making of products
such as the owner, manager or foreman
* office costs such as stationery, printing,
internet etc.
Phases in Product Life Cycle
Stage 1 – Introduction
* a period of slow development as the market
gradually becomes aware of the product. Money
earned from sales is small

Stage 2 – Growth
* a period of rapid market acceptance for the
product as earnings increase due to substantial
improvement in sales
Stage 3 - Maturity
* a period of gradual slowdown in the growth of
sales because the product has been tried and
accepted by the target buyers

Stage 4 – Decline
* a period when sales drop as a result of product
obsolescence or the firm’s inability to meet strong
competition
 SALES
(in pesos)

Introduction Growth Maturity Decline

TIME
 BREAK-EVEN ANALYSIS
- a means of determining the break- even point
- needs an estimation of fixed cost, variable cost
and revenue (sales)
Break even point
- the point at which the total sales is equal to
the total cost, there is neither profit nor loss

Total Sales = Selling Price x no. of units sold

Total Cost= Total Fixed Cost + Total Variable Cost
Total Variable cost = Variable cost per unit x units sold
Fixed Cost
- usually expressed in terms of pesos per month,
per day or per year
- remains the same regardless of the number of
units produced or sold
ex. Rent, electricity, water, equipment,
advertising expense
Variable Cost
- costs that vary with the number of units
produced or sold
ex. Direct materials, packaging, shipping
 TOTAL SALES = TOTAL COSTS
Unit Selling Price x Volume = TFC + (UVC x Volume)

Unit Selling Price (USP) = TFC + (UVC x Volume)

Volume
In units = TFC ÷ (USP- UVC)

In Pesos (Total) = BE (in units) x USP

= TFC ÷ ( 1 -
1. The cost of producing product A consists of ₱ 54
for materials, ₱45 for shipping and other variable
cost of ₱ 1. Product A is priced at ₱ 150 each. The
total fixed cost is ₱ 150,000 per month. Determine
how many units of product A must be sold to
break even and in pesos?
2. The unit variable cost in producing a potato ball is
₱ 4.00. Fixed cost will amount to ₱24,000 and
12,000 pieces target production in a month.
a. How much should it be priced to break even?
b. If the selling price set for each potato balls is
₱8.00 , what is the break even quantity in
units and in pesos per month?
3. Mang Pilong plans to sell bananaque in his
neighborhood. He estimates that it will cost him
Variable Cost Fixed Cost
Stick .50₵ Rent ₱3,000
Sugar .20₵ Electricity 300
Banana ₱ 4 ( 2 pcs at ₱2 each) Labor 4500
Cooking Oil .15₵ Water 175
LPG .35₵ ₱ 7,975
₱ 5.20

1. Compute for his break even price if he plans to sell 1,500 units.
2. If he decided to sell it for ₱ 15, what should be his break even in units
and in sales?
PROMOTION
- mode of conveying the presence and attributes
of the product to the target customers
- pertinent information about the product
including its benefits, price and position in the
market is communicated to the target
customers
- presents how it can address public’s needs,
wants, problems, desires
- primary target market should be identified
- to build and improve consumer demand
 - main goal is to gain attention
* What is the most effective advertisement or
combination of advertisements and
advertising tool should be used to drive
awareness and increase sales?

Key marketing messages for promotion

1. Value proposition or unique selling position
2. product image
3. business image
4. business values and philosophy
• Whatever method of marketing and sales is being
used today will, sooner or later, stop working.

When is promotional activities necessary?

1. Competing products in your target area are
alike
2. Buyer’s awareness of your product and its
features are minimal
3. Your products are to be sold on self-service or
shipping basis
 PROMOTIONAL TOOLS
1. Advertising
- influences the behavior of the customer to
choose the your product over competitors
- objective is to
(1) inform, educate, familiarize
(2) build a trustworthy image
(3) increase sales
* choose the most cost-effective and targeted
channel to relay the key marketing message to
the target market
* television - regular channels, cable tv
* radio - AM and FM radio
* internet - emails, websites, blogs, social media,
search engines, podcasts
* mobile phones - text message, mobile app
* print - newspapers, magazines, flyers, signage,
posters
* out-of-home – billboards, bus stops, trains, taxis
2. Sales promotion - to convince customers to buy
immediately
- sales discount or discount coupons
- raffles
- contests and games
- promo items
- product bundles
- trade fairs
- sample distribution or free taste/ free trials
- premiums ( ex. Free toys for fast food meals)
- rewards
3. Public Relations
- offer a positive image of the company and the
brand, as well as promote an advocacy
4. Personal Selling
- involves face-to-face selling through oral
conversation
5. Point of purchase or product display
- enabling buyers to see, feel and smell a
product to convey good qualities
PEOPLE
-refers to individual employees or workers who
are directly involved in the execution (service),
production, marketing and sale of the product
-living representation of what the brand promise
* what type of people need to be hired, basic
skills needed for the job, and leadership style
of the entrepreneur
RIGHT person for the position
- educational qualifications
- expertise of the person
PACKAGING
- process of putting the product in a package or
container
- the way the good or service appears from the
outside
- protection for spillage, damage, spoilage
* what is the best packaging for the product that
is attractive enough to customers and cost-
efficient at the same time
* what physical evidence does the entrepreneur
need to set up so as to sell the service
POSITIONING
- how the products are occupied in the hearts
and minds of the consumers
- product must be defined from the perspective
of a consumer driven position
* what is the most compelling feature of the
product that will make a difference in the lives
of the customers and what sets it apart from
the rest
 “..how products are seen and thought about by
the customers is the critical determinant of the
success in a competitive marketplace.”
Positioning, Al Reis and Jack Trout

Attribution Theory says that most customers

think of the products in terms of a single attribute,
either positive or negative.
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