SOURCES OF NEW
IDEAS
A sound idea for a new product or service, properly
evaluated, is essential to successfully launch a new venture. Some of the more
frequently used ideas for new entrepreneur include consumers, existing companies,
distribution channels, the federal government and research and development.
Consumers- Potential
entrepreneurs should pay close attention to the final focal point of a new
product-the customer. This can be an informal or formal survey of consumers expressing
their opinions. Care should be taken to ensure that the idea represents a large
enough market.
Existing
Companies- Entrepreneurs should establish a formal method for
monitoring and evaluating the products and services in the market. This may
uncover ways to improve on present products, resulting in new product ideas.
Distribution
Channels- Because they are familiar with the needs of the
market, channel members often have suggestions for new products. These channel
members can also help in marketing the new product.
Government
Offices- The
files of the Patent Office contain numerous new product possibilities. The
patents can suggest other new product ideas. Several government agencies and
publications are helpful in monitoring patent applications. New product ideas
can also come in response to government regulations.
Research and
Development- The largest source for new ideas is the
entrepreneur's own research and development. This can be a formal endeavor
connected with one's current employment.
Important Weblink for Methods of Generating New Ideas
Product Planning
and Development Process
Once idea emerges from idea sources or creative
problem solving, they need further development and refinement in to final
product or service to be offered. This refining process- the product planning
and development process is divided in to five major stages. Idea stage,
concept stage, product development stage, test marketing stage and
commercializing; it result in the product life cycle.
Establishing
evaluation criteria
At each stage of product planning and development
process, criteria for evaluation need to be established. These criteria should
be broad, yet quantitative enough to screen the product carefully in the
particular stage of development. Criteria should be developed to evaluate the
new product in terms of market opportunity, competition the marketing system,
financial factors and production factors. A market opportunity and adequate
market demand must exist. Current competing producers, prices, and policies should
be evaluated in their impact on market share.
The new product should be compatible with existing
management capabilities. The product should be able to be supported by and
contribute to the company's financial structure. The compatibility of new
product's production requirements with existing plant, machinery, and personnel
should be determined. Entrepreneurs should formally evaluate an idea throughout
its evolution.
Idea Stage
Promising new product ideas should be identified and
impractical ones eliminated in the idea stage allowing maximum use of company's
resources. In the systematic market evaluation checklist method, each new product
idea is expressed in terms of its chief values, merits, and benefits. This
technique can be used to determine which new products should be pursued. The
company should also determine the need for the new product and its value to the
company. Need determination should focus on the type of need, its timing, the
users involved, the importance of marketing variables, and the overall market
structure and characteristics. In determining the product's value to the firm,
financial scheduling should be evaluated.
Concept Stage
In the concept stage the refined idea is tested to
determine consumer acceptance without manufacturing it. One method of testing
is the conversational interview in which respondents are exposed to statements
that reflect attributes of the product. Features, price, and promotion should
be evaluated in comparison to major competitors to indicate deficiencies or
benefits. The relative advantages of the new product versus
competitors should be determined.
Product
Development Stage
In this stage, consumer reaction is determined, often
through a consumer panel. The panel can be given samples of the product and
competitors' products to determine consumer preference. Participants keep the
record of their use of product and comment on its virtues and deficiencies. The
panel of consumers is also given a sample of product and one or more
competitive product simultaneously. One test product may already be on the
market, whereas the other test product is new.
Test Marketing
Stage
Although the results of product development stage
provide the basis of the final marketing plan, the market test can be done to
increase the certainty of successful commercialization. The last step in the evaluation
process, the test marketing stage, provides actual sales results which indicate
the acceptance level of consumers. Positive test results indicate the degree of
probability of a successful product launch and company formation.
E-Commerce and
Business Start-Up and Growth
The Internet
The Internet started in the 1970s with a U.S. Defense
Department program named ARPA. In the early 1990s the concept of World Wide Web
pages was developed. The Internet is a channel for the creation of profitable
companies. Electronic business (e-business) is any process that a business
organization conducts over a computer-mediated network.
Electronic commerce (e-commerce) is any transaction
completed over a computer-mediated network that involves the transfer of
ownership or rights to use goods or services. Factors that facilitate the
growth of e- commerce are:
·
The widespread use of personal computers.
·
The adoption of intranets in companies.
·
The acceptance of the Internet as a business
communications platform.
Starting an
E-Commerce Company
The Internet is especially important for small and
medium-sized companies as it lets them minimize marketing costs while reaching
broader markets. An entrepreneur starting an Internet commerce venture needs to
address many of the same strategic and tactical questions as other companies
plus some specific online issues. One decision is whether to run the Internet
operations within the company or outsource these operations. If handled
in-house, expensive equipment and software have to be maintained. There are numerous
possibilities for outsourcing the Internet business. The two major components
of Internet commerce are front-end and back-end operations.
·
Front-end operations are encompassed in the website's
functionality, such as search capabilities, shopping cart, and secure payment.
·
Back-end operations involve integrating customer
orders with distribution channels and manufacturing capabilities.
Website
A website is an online connection between the company
and its customers and can be developed in-house or outsourced. There are
several important features of every website.
·
Each website should have search capabilities.
·
Other functions include shopping cart, secure server
connection, credit card payment, and customer feedback features.
·
Orders and other sensitive customer information
should be transferred only through secure servers.
·
An Internet company should also obtain a merchant
account, which will allow the acceptance of major credit cards.
A successful website has three characteristics:
speed, speed, and speed. Short download time should be the primary concern of
website developers. A website should be easy to use, customized for specific
market target groups, and compatible with different browsers. If the company is
targeting international markets, then translation and cultural adaptation need
to be considered. Probably the most difficult aspect of setting
up an online business is advertising and promoting
the web pages. A company can advertise its website through search engines,
banner ads, e-mail, and classifieds. Banner ads can be targeted to the exact audience
of the firm. The entrepreneur should collect e-mail addresses from customers
for targeted e-mail campaigns.
The Internet offers many low-cost or free services
for small businesses, including Internet access, unlimited e-mail accounts, online
calendar, instant messaging, and online conference rooms.
Tracking
Customer Information
Electronic databases support personal marketing
targeted at individual clients. The online company can capture customers'
information in many ways. The U.S. government has generally maintained a policy
of noninvolvement with Internet regulation, but the Federal Trade Commission
has also pressed for new laws to protect minors.
Relationships
and Endorsements by Other Companies
The company needs to establish strong connections
with other companies in the supply chain to create an end-to-end value stream.
The entrepreneur should protect its innovations and its relationship with other
companies. Another type of relationship is endorsements by prominent Internet
companies and associations. Participation in merchant networks can bring needed
credibility.
Doing E-Commerce
as an Entrepreneurial Company
·
The decision to go online should be made on a
case-by-case basis.
·
The products should be able to be delivered
economically and conveniently.
·
The product has to be interesting for a large number of
people.
·
Online operations have to bring significant cost
reductions compared with brick-and-mortar operations.
·
The company must have the ability to economically
draw customers to its website. Conflict between traditional and online
marketing channels can lead to a hostile, competing position of once partnering
companies.
KEY TERMS
Product
development stage- In this stage, the new product is further developed
into a prototype and tested
Product life
cycle- This
cycle is generally divided into four major stages: product introduction, market
growth, market maturity, and sales decline
Product planning
and development process- Generally divided into five major stages: idea
stage, concept stage, product development stage, test marketing stage, test
marketing stage, and commercialization stage
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