Entrepreneurial training manual

ENTREPRENEURIAL
TRAINING
“OWNING YOUR FUTURE”

©JR 21012 No content from this manual should be reproduced with consent Page 1

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


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


Customer Service/Customer Relations ......................................................................... 84
REVISION .................................................................................................................... 86
Niche ......................................................................................................................... 93


Unit 1 - Who is an Entrepreneur

Objectives

Upon 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
business

What is a Business?

A business is all activity concerned with the production and
consumption of goods and services that satisfy human wants and
needs.

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 profits

Before you begin, what is your answer to these questions?


Have you ever dream of starting your own business?  Yes  No

If Yes, what kind/type of business?
________________________________________________________
________________________________________________________
________________________________________________________

If No, why not
________________________________________________________
________________________________________________________
________________________________________________________

What would be the best or worst thing about owning your own
business?
________________________________________________________

Who is an entrepreneur

An entrepreneur (on-tra-prih-NER) is someone that creates a new
business. This can carry a high risk because it requires money to set
up a new business without knowing if it will give a return on
investment. A good understanding of the market is needed and finding
out what customers want and modify their products in line with
market requirements. Every entrepreneurship business started with an
idea of how to solve a particular problem or add value to a present
product. This is the first phase of any business. This is where you
test your idea for a business by doing research to find out if anyone
else has had the same idea.

The production and sale of new products and services are sparked by
entrepreneurial energy, creativity and motivation.

Role of an entrepreneur

Entrepreneurs seek disequilibrium – a gap between the wants and
needs of customers and the products and series that are currently


available. The entrepreneur then brings together the factors of
production necessary to produce, offer, and sell desired products and
services. They invest and risk their money – and other people’s
money- 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 Discussion

Do you know any entrepreneurs? What do entrepreneurs do and how
do they differ from employees?

How employees and entrepreneurs differ

Employees work for someone else and entrepreneurs work for
themselves, entrepreneurs risk more than employees. Employees may
risk losing a job if they do not perform their work well but they are
paid for their work. Entrepreneurs risk not being able to pay their
employees or themselves if business is “slow.”

The rewards employees and entrepreneurs get from their work can
also be different. A reward can involve money, but it also might be
personal satisfaction or independence. As business owners,
entrepreneurs are in control of the money made by the business. They
also have the final say in all business decisions. As a result,
entrepreneurs are ultimately responsible for the success or failure of
their businesses. (Mariotti, 2010)


Characteristics of an Entrepreneur

Evaluating your strengths and weaknesses is an important part of
becoming an entrepreneur. Self-assessment helps you maximize your
strong points and strengths and weaknesses. Everybody has strengths
and weaknesses - it’s what you do with what you have that counts.
Also, entrepreneurs who are self-aware are able to focus on hiring
employees with characteristics that complement their own.

An aptitude is a natural ability to do a particular type of work or
activity well. An attitude is a way of viewing or thinking about
something that affects how you feel about it. Entrepreneurs tend to be
people with positive attitudes. Instead of seeing a situation as a
problem, they look at it as an opportunity. This helps them find
solutions more easily than people who think negatively.

An entrepreneur needs to have self-esteem. They need to view
themselves in a positive way. A positive attitude can mean the
difference between failure and success. Someone with a strong
aptitude but a negative attitude will probably achieve less than
someone who has less natural ability but a positive attitude.

No one is born with all the characteristics needed to be successful
entrepreneur. But if you keep a positive attitude and believe in
yourself, you can develop many of them. Notice the personality traits
you already possess then focus on the one you think you need to
develop.

 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


 Enthusiasm: being passionate about something; the ability to
see problems as opportunities.

Rewards of being an entrepreneur

Some of the rewards of being an entrepreneur:

1. Money - When you are self employed, your earning potential is
only limited by your own brains and motivation to build a successful
business. The more effort and smart planning you put into your
business, the more you will directly benefit from your own work.

2. Opportunities - entrepreneurs launched their business in order to
create opportunities for themselves that they could not find in
traditional jobs within their local labour market. When you build your
own business, you can build opportunities and working conditions that
are a good fit for your needs in ways that you may not find in
traditional employment.

3. Accomplishment - Building a successful business can provide you
with a sense of pride that you have created something yourself based
on something you value. You get to build something from the ground
up that is your own and a reflection of your values, and any business
success is always your success.

4. Time - While you will invest a lot of time in building your
business, depending upon the type of business you launch, being an
entrepreneur can provide you with a lot of flexibility and freedom
with your schedule that you would not often have with a traditional
job.

5. Making your own rules – when you own your own business, you
get to be your own boss. You can decide what type of schedule you
work, where you work and how and when you get paid.


6. Doing what you enjoy – people tend to stay more focused and
motivated when they are passionate about their work.

7. Helping your community - being an entrepreneur opens up
opportunities that help make your community and world a better place
in which to live.

8. Be your own boss – an entrepreneur makes the decisions for the
enterprise and takes full responsibility for them. Being your own boss
means you are in control of your future.

Risk of being an Entrepreneur

1. Money
2. Skill and Knowledge
3. Feedback
4. Time
5. Risk of Failure
6. Unpredictable business conditions
7. Long Hours of Work
8. Unwanted or unexpected responsibilities

Skills

A skill is an ability that’s learned through training and practice. Some
of 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


 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 Programs

An internship or apprenticeship are short term programs where a
technical or trade skill is taught. These programs proved practical,
on-the-job training in a business setting. The apprentice may or may
not be paid but the experience grained is helpful for either an
employee or an entrepreneur.

Critical Thinking

Why do you think an entrepreneur might choose to keep a business
small rather than expand it?

Activity

Instructions

Form a panel of 6 to 8 students. Take a survey of the class before the
discussion to see whether students feel the rewards outweigh the risk.
Students who are not on the panel can participate by asking questions
or commenting on the points made. After the discussion, take a survey
again to see if anyone position changed.

The discussion panel will debate whether the rewards of
entrepreneurship outweigh the risks. Half of the panel should focus
on the rewards of entrepreneurship and the other half on the risks.


REVISION

1. 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.

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________


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.

________________________________________________________

________________________________________________________

________________________________________________________


10. List six areas on which a person should focus to build his or her
entrepreneurial potential.

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

CHECK YOURSELF

Fill 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.


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 or
wants in a particular market.

A business opportunity is a consumer need or want that can
potentially be met by a new business. A need is defined as something
that people must have to survive, such as water, food, clothing or
shelter. A want is a product or service that people desire.

No every business idea is a good business opportunity. If that idea has
no commercial potential, if it can’t make a profit, it isn’t an
opportunity.


Business ideas are ways to meet needs. So you have to look for what
need first, and then look for the ways to answer those needs. The key
to doing this is to be observant of all that is going on around you. So
get out there and observe – everything. You are sure to find
something that can be used to start a business.

Turning ideas into opportunities

After you’ve generated a number of business ideas, the next step is to
compare options for applying them. Here are four common ways to
turn ideas into opportunities:

1. Start a new business – the good thing about starting your own
business is that you can build it your own way. However, you must
make decisions and complete many task before your business can run
effectively.

2. Buy an independent business – starting a business from the
ground up, becoming successful can take a long time. That one reason
some entrepreneurs prefer to purchase a business that already exists.

3. Buy a franchise – this legal agreement gives franchisee or
franchise buyer the right to sell the company’s products or services in
particular location and for a specified length of time. The franchise
seller is a franchisor.

4. Become an inventor – some entrepreneurs invent new products,
designs or processes. They may choose to sell or license their
inventions to someone else.

Start with what you know

What are you familiar with? What do you like? These are all sources
of business ideas. You might take something that you really like to do
and make a business of it.


Checklist

Can you think of things that you like or know about?

Is it possible that anyone of these things might be a good business
opportunity in Antigua and Barbuda?

Start by making a list of all the things you know about and another
list of the things you are familiar with. Make a third list of the
things 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 and
Barbuda?

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 mean
this is going to be where you will end up.

Thinking creatively

Entrepreneurs are constantly coming up with business ideas by
thinking creatively.

Creatively thinking is a thought process that involves looking at a
situation or object in new ways. It is called lateral thinking. The
phrases “Think outside the box” and “Use your imagination” refer to
creative thinking. You can also define creative thinking as have an
attitude that “plays” with many possibilities.

Critical thinking is also called vertical thinking, but it doesn’t mean
you are being negative. Critical thinking refers to logical thought
process that involves analyzing and evaluating a situation or object.


Creative and critical thinking are both important, but they tend to
produce different results. Creative thinking works well for generating
ideas and recognizing opportunities. Critical thinking works well in
evaluating business opportunities.

Make Your Hobby Your Business

So what is your hobby? Are you a gardener? You could grow plants to
sell at the markets. Maybe you could grow some exotic plants that
you could wholesale to your local florist or greenhouses. That way
you are not a competitor, but a collaborator instead.

Is it possible you might be interested in biology? You could start a
worm ranch raising bait for fishermen. Of course, this would only be
viable if you are located near a good fishing area.

Many people have gone on to produce items to protect their
collections. These range from cases to sleeves to envelopes. If you
were to develop a new way to protect something that you collect, a
whole business could be made out of that one item.

This is how many businesses start, by taking a hobby and turning it
into a business. You might also combine hobbies or interest to create
a business.

For instance a love of dogs plus a desire to stay physically fit might
combine into a dog-walking service. That is producing there is a need
for such a service in your country.

There a number of businesses that has started this way.


Test your idea

1. 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 to
sell 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 time
you 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 attract
customers but still earn a reasonable profit?

Evaluating a business opportunity

Once you have gathered your ideas, tested them to see if they
appeared to be opportunities, and compared various ways of activating
them you will need to make a more detailed evaluation. Start with the
business ideas you like best. Then use critical thinking to logically
evaluate the feasibility of each idea. Feasibility refers to how possible
or worthwhile it is to pursue your idea, to see if it is actually an
opportunity. You can use three practical methods for determining the
feasibility of your business ideas:

Cost/benefit analysis

It is necessary to take risks as an entrepreneur; successful people take
a calculated risk. This means carefully considering the potential cost
and benefits. One method used to determine a calculated risk is called
cost/benefit analysis. It is the process of adding up all the expected
benefits of an opportunity and subtracting all the expected costs. If
the benefits outweigh the costs, the opportunity may be worthwhile.

Opportunity –Cost Analysis

An important factor when evaluating ideas is the opportunity cost.
This is the value of what you will give up to get something. An

opportunity-cost analysis examines the potential benefits that you
forfeit when you chose ne course of action over others.

SWOT Analysis

A SWOT analysis is a business evaluation method that draws its name
from the four areas it evaluates (Strengths, Weaknesses, Opportunities
and Threats).

Strengths: What skills do you have that would enable you to do well
with this specific opportunity? What resources do you have
available? Do you have any unique knowledge or experiences that
could give you an edge?

Weaknesses: In what skill or knowledge areas do you need to
improve? What resources are you lacking? What might potential
customers 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 that
you could use as an advantage? What could you do better than other
companies already in the same type of business? Does the proposed
business location give you any advantage?

Threats: What obstacles stand in the way of pursuing this
opportunity? What current trends could potentially harm your
business? How fierce is the competition in this business area? Does
this business idea have short window of opportunity?


Evaluate Your Idea

Attractive to customers □Yes □No

Will it work in your business environment? □Yes □No

Do you have the skills and resources to create
the business? □Yes □No

If not, do you know someone who has the skills
and resources that might want to help you bring
it into existence? □Yes □No

A significant portion of your business plan is the financial analysis of
your endeavour. Stated in very basic terms, the following questions
should 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 issues
can lead to financial destruction. To avoid this, accurately analyze
money issues and if necessary consult a financial professional for
additional assistance.


REVISION

1. 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?

________________________________________________________

________________________________________________________

________________________________________________________


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 __________________________

___________________________________________________


CHECK YOURSELF

Fill 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 ____________________.


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 you

Now that characteristics have been described, it logically follows that
you ask yourself the following question, “Is entrepreneurship for me?”
You must be able to rate yourself in an objective fashion, since you
will be your most important employee. Evaluate your strengths and
your weaknesses. In all likelihood, you will be strong in certain
characteristics and weak in others.


This is all in the natural order of things. NO ONE PERSON CAN
BE GOOD AT EVERYTHING!
It is important to be able to acknowledge that you are not as strong in
certain areas, and compensate for this deficiency by retraining
yourself, hiring someone with that particular skill, or having someone
who you can consult.
Summary

It is common for individuals to want to be their own boss. A
forewarning: YOU WILL NEVER ENTIRELY BE YOUR WON
BOSS!
No matter which sector you choose, you will always need to satisfy
your customers. If customers are not getting what they want from
your business, they will go elsewhere and you will be out of business
very quickly. Every customer and potential customer should be
considered your boss.
In addition to satisfying the needs of the customers, there are creditors
and competitors who may force you into making decisions you would
not otherwise make. Government laws and regulations will come into
play. They will compel you to follow the rules and regulations
relevant to your business.
While you will not entirely be your own boss, you are the boss in the
sense that you cannot be fired, thought there may be days when that
would 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 thus
achieve a tremendous sense of accomplishment form offering your
product and/or service in the marketplace.
If an idea does not work, you can adopt another one. Flexibility is
inherent in the economics of entrepreneurship, and is one of its
greatest assets.


Assignments

Business in your community

Take a walk around your community and note any possible ideas or
opportunities that might be a viable business.

Business Communications

Create a poster using collage techniques that illustrates the vision you
currently have for your life.

Business Math

Studies show that about 18 percent of all businesses are minority-
owned. Brian lives in Parham, a town with a population of 25,000
and 200 businesses. Assuming that the nation percentage holds true
for businesses in Parham, how many of these are minority-owned?


Unit 2 – What is a business

Objectives


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 communications

Are You Prepared?

One of the main reasons a high percentage of new businesses fail
annually is the lack of adequate planning. It has been said that people
spend more time researching the purchase of a new car than they do
planning their own business

Make sure that you do not become one of the failed business statistics.
Take the time to prepare a detailed business plan to ensure you
understand the business and the degree of risk associated with it.

DISCUSSION

What idea or opportunity did not note during your walk around your
community. Did you observe any opportunities to add to an existing
business or to fill a need?


Types of Business

Businesses are divided into four broad categories, depending on their
primary 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.


 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 the
amounts invested and do not extend to personal assets.

Unlimited Liability means that you stand to lose all your assets to pay
off debts if your business fails or closes down.


ASSIGNMENT

Can you identify two examples of the following types of business in
Antigua and Barbuda?

Types of Business Example 1 Example 2
Ownership

Sole Trader

Partnership

Private Limited
Company

Public Limited
Company

Co-operatives

Franchise

State Corporation

Government
Departments


Three Major types of Business Entities

There are three major types of Business Entities

1. Sole Trader (Proprietorship)

The Sole Proprietorship is the simplest form of business organization
for an entrepreneur. There are no formalities for establishing a sole
proprietorship. The owner is the business. The owner has sole
discretion on management decisions and is personally liable for
business debts.
All income and expenses are reported on the personal income tax of
the owner. Business growth depends on the owner’s credit worthiness
and financial strength.
2. Partnership

In a general partnership two or more parties share all documents
unless the partnership uses a name other than the name of the partners.
Partners share responsibility for management and for business debts in
proportion to their share unless specified otherwise in a partnership
agreement.
Business creditors may seek to recover personally form each or one of
the partners personally, if there are not sufficient partnership assets to
satisfy the debt. Profits or losses are passed through to partners who
report their share on their personal income tax.
Business growth is supported by the creditworthiness and credit of the
partners and may be accomplished by adding more partners.

3. Corporation

The corporation is a separate legal entity from its owners who are
called shareholders.
A country’s laws govern how a corporation is formed. Articles of
Incorporation or Charter must be filed with the state in which the
business is located. Shareholders elect a Board of Directors that is
responsible for the management and operation of the business. The
Board elects or hires the officers who handle the day-to-day affairs of
the corporation. Shareholders are not liable for corporate business


debts, even if the corporate assets are not sufficient to pay the
creditor’s claim.

Critical Thinking

What are two differences between the three major business entities?

Activity

What type of business would you like to own? Can you come up with
a name for that business?

Revision

1. When you think of a “business,” what type of business do you
think of first?

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

2. What is a good definition of “business”?

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________


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?

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________


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?

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________


CHECK YOURSELF

Fill 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.


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.


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.

Contracts
A contract is a legally binding promise or agreement between parties
that can result in the payment of damages if one part fails to adhere to
its terms or breaches the contract.

Entrepreneurs’ form and sign contracts every day. A store or office
lease is a type of contract. When a business agrees to sell and a
purchaser agrees to buy a specific item at an agreed upon price and
other conditions, a contract is made. Most contracts can be oral or in
writing.

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 a
transaction are protected. Business owners should consult attorneys


when they need a contract for a specific purpose such as a contract for
specially manufactured goods that can’t be sold easily to anyone else.
Prepared forms can be used, but it is best to have an attorney review
them and make sure they are tailored to the business’ needs. There
are many pitfalls if things aren’t done carefully.

Business Communications

Even if you are your business’s only employee, you’ll need to
communicate to share information, thoughts, or opinions with
suppliers, customers, family members, friends, business colleagues
and may others. Not only do you need to share information, you must
also have the right tone when you share it. An informal tone is
usually not appropriate, nor is one that is either too aggressive or too
unassertive. 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 different
situations and purposes.

Oral Communication

A person’s tone of voice or emotional state can influence a message as
significantly as the words used.

Written communication

Writing gives you the chance to review and edit your message. It is
often a good idea to ask someone to review written communication
before you send it. If that isn’t possible, take a break before you sent


it and then re-read it to make sure the information is correct and the
tone is right. Written communication can take the form of:

 Memoranda
 Letters
 Agenda and Notices of Meeting
 Reports
 Bulletins and Notices

Memoranda

MEMORANDUM

TO: All Secondary School Principals

FROM: Jacqueline Richardson

REF: AM/DM

DATE: 19th July 2012

SUBJECT: Business Plan Competition

The School Business Plan Competition Committee will be hosting its
2nd Annual Business Plan Competition at the end of Term 1 of
2012/13 Academic School Year. Principals are asked to select a
member of staff as the School Rep and to work along with the
planning committee.

All students interested in participating in this year’s competition
should complete the registration form and submit to the School Rep.
The forms will be collected at the first meeting in September.

Memorandum

These are used in business as a means of communication within an
organisation. Memoranda usually indicate the sender or initiator of
the memo, the recipient, the date, a reference and a subject heading.


They do not usually have a salutation or a complimentary close. The
sender normally signs or initials them.

Business Letters

Business letters are used for longer more official messages. A
business letter should be typed in an easy-to-read font, not a fancy
script. The well developed business letter included the following
elements;
 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.


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


Agenda and Notice of Meeting

An agenda list the order in which it is proposed to conduct business at
a 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 the
date, time and place of the meeting.

Reports

Reports should present well planned and impartial communication of
factual information or advice. They should always be confined to
facts and be free of any suggestion of bias, emotion or self-interest.
They vary in format, style, content and length, depending upon their
purpose and the audience.

Bulletins and Notices

Notices and bulletins are used to announce forthcoming events,
changed in policy and other matters to all interested parties. Bulletins
are often several pages long and refer to several topics while notices
are much shorter and usually refer to one topic.


Visual Communication

Visual communication is a means of transmitting information using:

 Charts  Videos
 Graphs  Photographs
 Tables  Statistical data
 Posters  Diagrams

These often relay complex, technical information in a form that is
more easily understood than a long, written report.

Electronic Communication

Motivating work teams that are spread across the country or the world
can be challenge to any manager. With the right technology on your
side, the whole group can stay synchronised.

Using the speed of electronic mail, voice mail, facsimile, video
conferences and teleconferences, information can be gathered and
disseminated more effectively despite colleagues’ differing schedules
and locations.


Unit 3 – Product Development

Objectives

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 analysis

The production and sale of new products and services are sparked by
entrepreneurial energy, creativity and motivation. When starting a
business and selecting a product/service the following should be
considered

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 on
developing your product.


Product Development

A viable product or service is one that meets a need, satisfy a want or
solve a problem of consumers. Once you have made a decision on
your product or service it would then have to be tested for it viability
or ability to meet the needs of your potential customers. You would
then have to do a market test to review the public’s response to your
product.

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 Commercialization

Packaging and Labelling

The main purposes of packaging are protection, convenience,
economy promotion, and product safety. Decisions must be made
about 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 to
inform the public.

Pricing Strategies

The 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


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/service

Types of Pricing Policies

Cost plus pricing – Sellers set the price of the product/service
intending to cover their cost of production, distribution, and
promotion of the product (as well as to make a profit).

Stock turnover pricing – The number of times that a seller sells off a
given stock of goods.

Stock turnover = cost of goods sold
Average stock
Going rate pricing – After covering basic costs, producers price
products according to the competitors’ rate.

Penetration pricing – A seller may temporarily reduce prices to gain
market share. The aim is to gain and maintain the consumers’ loyalty
even 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 value
the 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 bargaining
between themselves and prospective buyers.


Marketing

Marketing is a game of getting your product or service to the right
person. It is an exciting, fun and creative process. There are two
stages to marketing, and should be followed in order!

1. Detective Work

Investigations are made regarding the people who need and want your
product or service

Additional investigations are made regarding other businesses that
want the same customer as you.

2. Creative Work

Based completely on an understanding of what you have learned as a
detective, you then begin the process of developing a message that
gets your prospective customers’ attention and then persuades them to
either learn about or use your product or service

It is essential that we always begin by doing the detective work.
Focused entrepreneurs are always playing detective.

Market Research

Always start with the big picture. Read as much as you can about the
industry you want to be in. You are looking for where your business
fits in the big picture of things.

In economics lingo, you are trying to determine where your concept is
in its economic life cycle. Is it brand new and few people know about
it or is a product or service that has been around for some time? Or
possible has it been around so long that it is reaching the end of its
popularity. Determining where your concept shows up in this
economic life cycle will ultimately affect how you will try to
introduce it to the customer.


Marketing Mix

Every marketing plan has five main strategy areas, sometime referred
to as the “Five P’s.” How a company chooses to combine these areas
is called its marketing mix.

People: Your target customers are key to defining all the other
strategies in the marketing plan.

Product: What item(s) can your business provide that will best meet
the needs of your target market?

Place. How and where will customers be able to buy or receive your
product or service?

Price: What prices will your target market feel is seasonable or ideal
for your product or service?

Promotion: The process you use to make potential customers aware
of your product or service.

Competition Analysis

The next type of detective work requires much more nerve and
persistence. It is where you check what is actually happening in the
neighbourhood you plan to operate your business. A thorough
investigation gets business owners information they need to find their
niche in the market place. It is impossible to positions yourself in the
market unless you fully understand what everyone else is doing.

The following are common competitive factors. Depending on the
type of business you are starting, the factors can vary. Here are the
big competitive factors most often used to check out the other guy.

Locations – get the addresses of competitors and put a star on a map
to show where everyone is.


Price – look at the key items to compare. Compare the price for
buying 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, or
you won’t capture that part of the market.

Quality – it’s important to note that quality means meeting
expectations.

Advertising – identity every type of advertising the competition is
engaged in. Study it, analyze it and then plot out how you will
respond 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. Look
very carefully at the mistakes and missed opportunities.

An entrepreneur needs to know who the direct and indirect
competition is. Study the competitions’ strengths and weaknesses.
Improve on these areas making your business the one that customers
need and want.


Activity

1. 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.


Market Niche

Once you have studied the competition and laid it out in writing,
something very interesting happens. You line up your business against
the others and start to work out a way to position yourself. This is
known as your niche.
Finding the ‘right’ niche is a very critical step in marketing your
business.

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 who
needs or wants your service/product the most and has the ability to
pay.


How to study the target market

A survey is a very popular tool for gathering lots of useful and
interesting information. For example, you plan to start a doggie day
care. Your business provides fun, exercise and daylong activities of
dogs.
You have determined that the target market probably includes people
who love their dog, can afford such a luxury, do not have a big
backyard and maybe is a person who works a very long day.
Now you want to know more about this prospective owner – other
questions 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 will
provide. Plus, the message you communicate to the prospective client
will be much more on target.

Survey

If 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 needs
and preferences.


Market research surveys can help a business rethink product design or
maybe just fine tune it a bit. In simple terms, these surveys can help a
business give people what they want.

Sample Survey

This 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 important
is each feature to you?
1 2 3 4 5
Not at all extremely
Important
Feature 1 □ □ □ □ □
Feature 2 □ □ □ □ □
Feature 3 □ □ □ □ □
Feature 4 □ □ □ □ □
Feature 5 □ □ □ □ □

Whether or not you know about [product], how favourable is your
overall reaction?

□ Poor □ Fair □ Good □ Very Good □ Excellent

What is it that you like most about [product]?

What do you like least about [product]?


Based on the product description, how interested would you be in
buying this new product if it were within your budget?

□ not at all interested
□ not very interested
□ not sure
□ somewhat interested
□ extremely interested

About 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 use

Thank you for your feedback.

Conducting the Survey

Conducting the survey can be done in more than one way. There are
three methods:
1. Personal interview
2. Mail Survey
3. Telephone Survey
Each one has its advantages and disadvantages. Each has its costs and
all take some time and patience.


Personal Interview
The personal interviews are great when you need to show the person
what you are talking about. It helps if you have a complex product or
service. Plus you can respond to questions for clarification.
The big negative to this strategy is cost and time. You are limited by
travel and personal costs. Also, the person being interviewed is less
likely to not tell the truth than in the other methods of being surveyed!
Phone Surveys
Phone surveys do not allow for any “show and tell,” but they do allow
you to cover a very wide geographic area in a short amount of time. It
is often viewed as the most cost effective means of surveying.
Results are greatly enhanced if the caller doing the survey has some
connection to the person being surveyed, such as “Hi, I live in your
neighbourhood.... or Hi, I am a graduate of the same school as you.....
Mail Survey
The last method is the mail survey. This can offer the greatest reach.
Often you can carefully target who get the survey. The problem is
getting the person to send the survey back. Even before that, you
must get the person to open the survey and read it.
The survey envelope will need to look interesting to encourage
someone to open it. It is helpful if there is a “reward” for filling out
the survey and mailing it back. This might include a cash gift, movie
tickets, discount coupons, or something else that this target market
would value.
Analyze the results

The analysis of all the information is the last step. Your detective
work is over. Your creative work must begin.


Experiment Exercise
Market Research Activity

Objectives: To design and implement a simple market research survey. To create a
new product based on the results of the survey.

Materials: Regular-sized chocolate bars (1 per group), student handout (with
directions) markers, poster board or easel paper, scissors and tape.

Teacher Preparation

1. Divide the class into teams of 4-5 students
2. Instruct the teams to generate market research survey questions to ask
potential customers and then implement the survey
3. 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 Instructions

1. 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 the
voting.


REVISION

1. 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.
________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________
________________________________________________________________________


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 YOURSELF
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 _________________________________.
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.


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.

Promotion

Communication to the target market is always a thrill for business
owners. They like seeing their message in the market place. They
enjoy influencing someone’s decision to choose them. This is a new
part 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


b) coupons
c) premiums
d) price packs
e) cash refund
f) point of sale advertising
g) contests
h) games, contest and sweepstakes

3 Personal Selling/Salesmanship

Research has shown that for the target market (remember who that is
– someone who needs/wants the product/service and can pay for it) to
react to a communication, they often need to be exposed to your
message for a period of six months or more.

You significantly increase the chance of their seeing and believing
your message if they receive the message in at least 3 different forms
over the same period.

You may decide to take out a weekly ad in the local newspaper, take
out an ad in local television, use of text messages, face book, twitter
or conduct a full public relations campaign. Additionally, you will
want to make the outside of your facility (if it is one that people visit)
look very inviting.

Print Messages

One of the most popular methods of communicating with and
reaching your prospective customer is sending messages in print. The
printed message has hundreds of forms. The simplest is a business
card. The most complex and expensive form is the catalogue. There
a 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

 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


Developing your written message and deciding what form to present the message
influences that your target market is. Your form should be decided by the way
your potential customer receives their information, not on how you receive
information. Remember, you must find a media that your customer will see.

Activity

Create a print message to be used to advertise your product and/or service

Logo

Your 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 used
on almost every form of print communication a company employs. This includes
everything from your phone book ad to speciality t-shirts.

Logos often serve as the foundation from which other print media/communication
is built. Some designers’ keep the font (type of lettering) used in the logo as the
font utilized in all other written communication.

Written Message

A written message to a prospective customer should also be prepared with great
care. First and foremost you must get the targets’ attention. If you fail to get their
attention, the best information, or best offer, will never reach their brains. How do
you get the target’s attention? There are a variety of strategies, and sometimes
several of them are used together.

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 situation

Business owners who have not studied these rules often make the huge mistake of
just 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 anxiously
look forward t the name of the business.

The best ads typically list the name of the business or product at the end of a print
ad. Once an ad does get someone’s attention there are four more steps the till
make 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
service

2. Explain in more detail what the product/service is all about and more
information on the benefits

3. 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


 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 service

4. 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 Ad

An effective Ad attracts the attention of the target market and positively affects the
behaviour of the target market as the ad intended. The ad must have intent such as
the 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


 Persuade the target market to buy the product or service

TV and Radio Ads

Many of the elements in print advertising need to be followed. You still must get
the target markets attention. You still need to describe a benefit and tell the listener
or viewer what to do. TV and Radio ads need to be “produced” by persons who
have technical expertise in TV and Radio technology.

Always review the criteria for an effective ad. Remember, just because an ad
looks good, sounds, good, and feels good, it won’t work for you unless it reaches
your target market and motivates them to the intended action.

REVISION

1. Building a product image involves attracting _______________ customers
and building ____________________ among existing customers.

2. Appearance and scent are examples of the _________________ of a product

3. The price of your product should be based on your ___________and the
potential _____________ for your business.

4. The purpose of promotion is to build a _________________________
awareness about your product and business and to influence people to
___________________________ your product.

5. True False All businesses have the same
marketing goals.

6. True False Marketing goals should have a time
frame.


7. True False Product features and benefits can
attract customers to your product.
8. True False The benefits of a product are based on
how it appears to the senses.
9. True False Cost-based pricings focuses on your
competitors’ price for a product.
10. True False Advertising helps build a brand’s
image.

11. True False The internet cannot be used to
promote a product.
12. True False Publicity is an expensive type of
advertising.


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