Mod 4

• Product Development is the process of developing, testing, and commercializing a product or service with the ultimate objective of solving the problem of the primary target market
• Product or service description should:

  • Directly address the primary target market in a personal manner using everyday language
  • Highlight features that cater to customer needs or address customer problems
  • Use realistic superlatives
• Creating a prototype of the product or service:

  • Prototype is a preliminary model or sample created to test a product concept or service process
• Testing the prototype includes:

  • Focus group discussion
  • Legality and ethical test
  • Safety test
  • Product costing test
  • Component test
  • Competitors’ product/service test
• Validation of Market Acceptability:

  • Process of finding out if the intended primary target will buy the product or service
  • Market acceptability is critical for business success
• The 4Ms of Operations:

  • Methods: day-to-day operations including manufacturing, service delivery, distribution, logistics, and inventory management
• Manufacturing process includes:

  • Inputs (materials)
  • Process (transformation phase)
  • Output (final product)
  • Manufacturing sites: home-based, commercial space for rent, commercial space purchase
• Service Delivery Process:

  • Service blueprint: detailed flowchart of the service business
  • Bottleneck: part of the process with inefficiency where customers wait longer
• Distribution Method:

  • Distribution brings products or services to customers
  • Supply chain or distribution channel involves manufacturers and distributors
• Manpower:

  • Human resources are instrumental to business success
  • Job description includes duties, responsibilities, scope, limitations, and terms of employment
• Job Offer:

  • Offer made once credentials and interview answers are convincing
• Job Contract includes:

  • Rank or position
  • Responsibilities and limitations
  • Salary, benefits, work schedule
  • Probationary period, duration of contract, resignation procedure
• Employee Development:

  • Training investments
  • Employee orientation, buddy system, mentor-mentee program
• Materials:

  • Used in creating a product or performing a service
  • Outsourcing, patent, trademark, logistics, warehousing, transportation, distribution hub, inventory management
• Machines:

  • Equipment and facilities, telecommunications, IT, phones, computers, POS machines, software, website
• Business Model:

  • Target high-value customers
  • Offer products or services with great value and reasonable profits
• Customer satisfaction cost includes warranty and after sales costs
• Being a market leader is difficult to sustain when:

  • Major customers purchase the entrepreneur's product or services
  • Major players in the industry control the majority of the distribution network
  • Technology changes the way the entrepreneur operates the business, leading to investment in product research and development
  • Technology replaces the need for the entrepreneur's product or service
  • Competitors can easily tap into the entrepreneur's market
• Return on investment (ROI) is too long and too small
• Capital is the money allocated by the entrepreneur to establish a business
• Collateral is a high-value asset submitted by the business to the bank when applying for a loan, subject to repossession if the business defaults
• Revenue is the output of a sale where the sales price exceeds the cost to produce the product or render the service

  • Revenue is earned when the product is sold or service is rendered, regardless of payment method
  • Revenue is deferred when the product or service has not yet been delivered or sold, but the customer has paid in advance
• Direct competitors offer exactly the same product/product lines or services as the entrepreneur
• Indirect competitors do not offer exactly the same products or services but influence or affect the entrepreneur's market share