Chapter 4 Creativity and the Business Idea

SOURCES OF NEW IDEAS Consumers Existing Products and Services Distribution Channels Federal Government Research & Development

Sources of New Ideas Consumers Informally monitor potential ideas and needs. Formally arrange for consumers to express their opinions. Existing Products and Services Analysis uncovers ways to improve offerings that may result in a new product or service. Distribution Channels Channel members can help suggest and market new products.

Sources of New Ideas (cont. Federal Government New product ideas can come in response to government regulations. Ex. first aid kits has to contain specific item, responding to the safety and health act , Entrepreneur get a new idea for the first aid kits . B. the files of the Patent Office contain numerous new product possibilities.

Research and Development A formal endeavor connected with one’s current employment. A more formal research and development department is often better equipped and enables the entrepreneurs to conceptualize and develop successful new product ideas

METHODS OF GENERATING IDEAS Focus Groups: Groups of individuals providing information in a structured format. 2. Brainstorming: A group method for obtaining new ideas and solutions without criticize anyone. 3. Brain-writing: Writing Brainstorming 4. Problem Inventory Analysis: A method for obtaining new ideas and solution by focusing on problems Results must be carefully evaluated as they may not actually reflect a new business opportunity.

INNOVATION Types of Innovation Breakthrough Innovation The use of a new idea or method Types of Innovation Breakthrough Innovation Technological Innovation Ordinary Innovation

Classification of New Product Continuous innovation: products are upgraded and updated regularly in relatively small ways that make no great changes to the customer's buying behavior. ex. (autmobiles style changes, fashion style changes, product size or color changes) Dynamically continuous innovation: the introduction of new products with an element of significant innovation that could require major reassessment of the product within customers' buying behaviour. (CDs, iPod, Sony Walkman)

Cont. Discontinuous innovation: represents a completely new product concept unlike anything the customer has yet experienced, and thus involves a major learning experience for the customer with much information searching and evaluation. These are rare and require a great deal of new learning by the consumer because these products perform either a previously unfulfilled function or an existing function in a new way. Example Internet

The major distinction between new product and new markets The major distinction between new product and new markets is: New Products are defined in terms of the amount of improved technology, whereas market development is based on the degree of new segmentation

Product Planning and Development Process The product planning and Development is divided into 5 major stages Idea Stage Concept Stage Product Development Stage Test Marketing Stage Commercialization Stage (PLC) Establishing Evaluation Criteria.

Establishing Evaluation Criteria At each stage of the product Planning and Development process, Criteria should be established to evaluate the new idea in terms of market opportunity, competition, the marketing system, financial factors, and production factors.