CH#5

Sources of New Ideas

Informal monitoring potential ideas and needs. of Formally arrange for consumers to express their opinions.

Consumers 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 market the newly developed products. Federal government Files of the Patent Office contain numerous new product possibilities. New product ideas can come in response to government regulations. Research and development Largest source of new ideas is the entrepreneurs own research and development efforts. May be: An informal lab A formal endeavor connected in a basement or garage. with ones current employment.

Methods of Generating New Ideas

Focus groups Moderator focuses discussion of the group in a directive or nondirective manner. An excellent method for initially screening ideas and concepts. Brainstorming Allows people to be stimulated to greater creativity. Though most ideas generated have no basis for further development, sometimes a good idea emerges. Problem inventory analysis Analogous to focus Can be used to test a Results must be carefully evaluated as groups. new product idea. they may not actually reflect a new business opportunity.

Creative Problem Solving

Creativity: an important attribute of a successful entrepreneur. 1. Creativity tends to decline with: Age, education, lack of use, and bureaucracy. Latent creative potential of an individual can be stifled by perceptual, cultural, emotional, and organizational factors.

Brainstorming o Used in creative problem solving and idea generation. o Creative problem solving: a method for obtaining new ideas focusing on the parameters. Reverse brainstorming: A group method for obtaining new ideas focusing on the negative. Brain writing o Form of written brainstorming. o It is a silent, written generation of ideas by a group of people. Gordon method: Method for developing new ideas when the individuals are unaware of the problem. Checklist method: Developing a new idea through a list of related issues. Free association: Developing a new idea through a chain of word associations. Forced relationships: Developing a new idea by looking at product combinations I. Isolate the elements of the III. Find the friendship between these problem. elements. II. Record the relationship in IV. Analyzing the relationship to find orderly form. ideas. V. Develop new ideas from these patterns.

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Collective Notebook Method: Developing a new idea by group members regularly recording ideas. Attribute Listing: Developing a new idea by looking at the positives and negatives. Big-Dream Approach: Developing a new idea by thinking without constraints. Parameter Analysis: Developing a new idea by focusing on parameter identification and creative synthesis.

Types of Innovation
Breakthrough I. Fewest innovations. I. II. Establishes the platform on which future innovations in an area are developed. II. III. E.g. penicillin, steam engine, computer. III. Technological Ordinary Not at the same level of scientific I. Occurs most frequently. discovery and advancement as II. Usually come from market breakthrough inventions. analysis and pull not Offer advancements in the technology push. product/market area. E.g. personal computer, voice and text messaging.

Defining a New Innovation (Product or Service)

Newness can
be: o In the concept. consumer o Change in container. the package or o Change in packages. colors of

In the industrial market: Products are called new when only slight changes or modifications have been
made in its appearance.

Companies also add products to their product line that are already marketed by other companies.

Opportunity Analysis Plan

An opportunity analysis plan is not a business plan.
It focuses on the idea and the market (the opportunity) for the idea. A typical opportunity analysis plan has four sections: Description of the idea and its competition. Assessment of the domestic and international market for the idea. Assessment of the entrepreneur and the team. Discussion of the steps needed to make the idea the basis for a viable business venture.

The Idea and Its Conception Create a prototype or schematic of the product. Identify and list all competitive companies in the product (service) market space. Compared with at least three competitive products/services most similar in filling the identified market need. This indicates its unique selling propositions (USP). Entrepreneur needs to reevaluate if the idea does not have at least 35 unique selling propositions.

The Market and the Opportunity Addresses the size and the characteristics of the market. Market data should be collected for at least three years. Can be done through gathering as much secondary (published) data as possible. Entrepreneur can determine if the market is large enough and suitable to warrant time and effort required to further develop a business plan and actually enter the market.

Entrepreneur and The Next Steps Team Assessment Entrepreneur Steps need and the to be identified entrepreneurial and put in team need to be sequential assessed. order. At least Time and one person on the money needed team needs to for each step have experience needs to be in the industry determined. area of the new If the idea idea. cannot be self Allows the financed, then entrepreneur to sources of determine if he is capital need to really suited to be identified. successfully move his idea into the market.

Product Planning and Development Process

Establishing Evaluation Criteria Criteria for evaluation need to be established at each stage of the product planning and development process. Criteria should be: All inclusive and quantitative to screen the product carefully. Established to evaluate the new idea in terms of:
a. Marketing system b. Financial factors c. Production factors d. Market opportunity e. Competitio n

Divided into five major stages: Idea stage

Promisin g new product/service ideas should be identified. Impractic al ones eliminated. Evaluatio n method systematic market evaluation checklist.

Concept stage
Refined idea is tested to determine consumer acceptance. Consum er acceptance can be measured through the conversational interview method.

Product development stage

Determines reaction to the product/service. consumer physical

Test marketing stage

Increa ses certainty of successful commercialization. Provid es actual sales results, which indicate the acceptance level of consumers.

A tool frequently used consumer panel. Consumer preference is determined through: Multiple brand comparisons, risk analysis, level of repeat purchases, or intensity of preference analysis.

E-commerce and Business Start-up

E-commerce offers entrepreneurs an opportunity to be creative and innovative. Factors that facilitate a high-growth in electronic commerce:

Widespread use of Adoption of intranets in Acceptance of the Internet as a Faster and more secure personal computers. companies. business communications platform. systems. Using E-Commerce Creatively: Entrepreneurs starting an Internet commerce venture need to address the same strategic and tactical questions as any other entrepreneur Entrepreneurs have to decide to: Run Internet operations within the company, or Outsource these operations to Internet specialists. Another option is to use the packages for e-commerce.