People who aspire to start a business need to explore the economic, cultural, and social conditions prevailing in an area. Needs and wants of the people in a certain area that are not met may be considered as business opportunities. Identifying the needs of the community, its resources, available raw materials, skills, and appropriate technology can help a new entrepreneur in seizing a business opportunity.
To be successful in any kind of business venture, potential entrepreneurs should always look closely at the environment and market. They should always be watchful on the existing opportunities and constraints. The opportunities in the business environment are those factors that provide possibilities for a business to expand and make more profits. Constraints, on the other hand, are those factors that limit the business to grow, hence reduce the chance of generating profit. One of the best ways to evaluate the opportunities and constraints is to conduct Strengths, Weakness, Opportunities and Threats (SWOT) Analysis.
SWOT Analysis is a managerial tool used to assess the environment. It is used to gather important information which is then used in strategic planning. Strengths and weaknesses are internal in an organization. They relate to resources owned by an organization that you have control over and also the extent of its marketing.
Opportunities and threats exist in the external environment. Opportunities relate to the market, new technologies, and the external factors such as government policies, climate, and trends. Threats replace what the competitors are doing. It also includes legal and other constraints.
Now that you have read some important considerations to explore to be successful in any business, you are now ready to explore more about the environment and market.
When we talk of product development, we are referring to a process of making a new product to be sold by a business or enterprise to its customers. Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly-defined customer’s needs, wants and/or a market place. The term development in this module refers collectively to the entire process of identifying a market opportunity, creating a product to appeal to the identified market, and testing, modifying, and refining the product until it becomes ready for production.
There are basic, yet vital questions that you can ask yourself about product development. When you find acceptable answers to them, you may now say that you are ready to develop a product and/or render services.
These questions include the following:
For whom are the product/services aimed at?
What benefit will the customers expect from product/service?
How will the product/service differ from the existing brand? From its competitor?
In addition, needs and wants of the people within an area should also be taken into big consideration. Everyone has his/her own needs and wants. However, each person has different concepts of needs and wants. Needs in business are the important things that an individual cannot live without in a society. These include:
basic commodities for consumption,
clothing and other personal belongings,
shelter, sanitation and health, and
Basic needs are essential to an individual to live with dignity and pride in a community. These needs can obviously help you generate business ideas and subsequently to product development. Wants are desires, luxury and extravagance that signify wealth and expensive way of living. Wants or desires are considered above all the basic necessities of life. Some examples of wants or desires are: fashion accessories, expensive shoes and clothes, travels, eating in an expensive restaurant, watching movies, concerts, having luxurious cars, wearing expensive jewelry and perfume, living in impressive homes, among others. Needs and wants of people are the basic indicators of the kind of business that you may engage in because it can serve as the measure of your success. Some other points that might be considered in business undertakings are the kind of people, their needs, wants, lifestyle, culture and tradition, and their social orientation. To summarize, product development entirely depends on the needs and wants of the customers. Another important issue to deal with is the key concepts of developing a product. The succeeding topic shall enlighten you about the procedure in coming up with a product.
Concepts of Developing a Product
Concept development is a critical phase in the development of a product. In this stage, the needs of the target market are identified, and competitive products are reviewed before the product specifications are defined. The product concept is selected along with an economic analysis to come up with an outline of how a product is being developed. Figure 3 shows the stages of concept development of a product.
Stages of Concept Development The process of product development follows the following stages: 1. Identify customer needs:Using survey forms, interviews, researches, focus group discussions, and observations, an entrepreneur can easily identify customers’ needs and wants. In this stage, the information that can be possibly gathered are product specifications (performance, taste, size, color, shape, life span of the product, etc.). This stage is very important because it would determine the product to be produced or provided.
2. Establish target specifications: Based on customers' needs and reviews of competitive products, you can now establish target specifications of the prospective new product and/or services. A target specification is essentially a wish-list.
3. Analyze competitive products: It is imperative to analyze existing competitive products to provide important information in establishing product or service specifications. Other products may exhibit successful design attributes that should be emulated or improved upon in the new product or service.
4. Generate product concepts:After having gone through with the previous processes, you may now develop a number of product concepts to illustrate the types of products or services that are technically feasible and will best meet the requirements of the target specifications.
5. Select a product concept: Through the process of evaluation between attributes, a final concept is selected. After the final selection, additional market research can be applied to obtain feedback from certain key customers.
6. Refine product specifications: In this stage, product or services specifications are refined on the basis of input from the foregoing activities. Final specifications are the result of extensive study, expected service life, projected selling price among others are being considered in this stage.
7. Perform economic analysis: Throughout the process of product development, it is very important to always review and estimate the economic implications regarding development expenses, manufacturing costs, and selling price of the product or services to be offered or provided.
8. Plan the remaining development project: In this final stage of concept development, you can prepare a detailed development plan which includes list of activities, necessary resources and expenses, and development schedule with milestones for tracking progress.
Finding Value People buy for a reason. There should be something in your product or service that would give consumers a good reason to go back and buy more. There must be something that will make you the best option for target customers; otherwise, they have no reason to buy what you are selling. This implies further, that you offer something to your customers that will make them value your product or service.
The value you incorporate in your product is called value proposition. Value proposition is a believable collection of the most persuasive reasons why people should notice you and take the action you’re asking for. It is what gets people moving, what makes people spend for your product or service.
Innovation is the introduction of something new in your product or service. This may be a new idea, a new method, or a new device. If you want to increase your sales and profit, you must innovate. Some of the possible innovations for your products are change of packaging, improvement of taste, color, size, shape, and perhaps price. Some of the possible innovations in providing services are application of new and improved methods, additional featured services, and possibly freebies.
Unique Selling Proposition (USP)
Unique Selling Proposition is the factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition. Before you can begin to sell your product or service to your target customers, you have to sell yourself in it. This is especially important when your product or service is similar to your competitors. USP requires careful analysis of other businesses' ads and marketing messages. If you analyze what they say or what they sell, not just their product or service characteristics, you can learn a great deal about how companies distinguish themselves from competitors. Here's how to discover your USP and how to use it to increase your sales and profit:
Use empathy: Put yourself in the shoes of your customers. Always focus on the needs of the target customers and forget falling in love with your own product or service. Always remember, you are making/providing this product not for yourself but for the target customers to eventually increase sales and earn profit. Essential question such as what could make them come back and ignore competition, should be asked to oneself. Most possible answers may be focused on quality, availability, convenience, cleanliness, and reliability of the product or service.
Identify customer’s desires. It is very important for you to understand and find out what drives and motivates your customers to buy your product or service. Make some effort to find out, analyze and utilize the information that motivates the customers in their decision to purchase the product or service.
Discover customer’s genuine reasons for buying the product. Information is very important in decision making. A competitive entrepreneur always improve their products or services to provide satisfaction and of course retention of customers. As your business grows, you should always consider the process of asking your customers important information and questions that you can use to improve your product or service.
Generating Ideas for Business
The process of developing and generating a business idea is not a simple process. Some people come up with a bunch of business ideas that are not really feasible. There are two problems that arise; first is the excessive generation of ideas that can forever remain as a dreaming stage and the second is when they don’t have ideas and don’t want to become entrepreneurs. The most optimal way is to have a systematic approach in generating and selecting a business idea that can be transformed into a real business. Here are some basic yet very important considerations that can be used to generate possible ideas for business:
Examine existing goods and services. Are you satisfied with the product? What do other people who use the product say about it? How can it be improved? There are many ways of improving a product from the way it is made to the way it is packed and sold. You can also improve the materials used in crafting the product. In addition, you can introduce new ways of using the product, making it more useful and adaptable to the customers’ many needs. When you are improving the product or enhancing it, you are doing an innovation. You can also do an invention by introducing an entirely new product to replace the old one.
Business ideas may also be generated by examining what goods and services are sold outside the community. Very often, these products are sold in a form that can still be enhanced or improved.
Examine the present and future needs. Look and listen to what the customers, institutions, and communities are missing in terms of goods and services. Sometimes, these needs are already obvious and identified right away. Other needs are not that obvious because they can only be identified later on, in the event of certain development in the community. For example, a province will have its electrification facility in the next six months. Only by that time will the entrepreneur could think of electrically-powered or generated business such as photo copying, computer service, digital printing, etc.
Examine how the needs are being satisfied. Needs for the products and services are referred to as market demand. To satisfy these needs is to supply the products and services that meet the demands of the market. The term market refers to whoever will use or buy the products or services, and these may be people or institutions such as other businesses, establishments, organizations, or government agencies.
There is a very good business opportunity when there is absolutely no supply to a pressing market demand. Businesses or industries in the locality also have needs for goods and services. Their needs for raw materials, maintenance, and other services such as selling and distribution are good sources of ideas for business.
Examine the available resources. Observe what materials or skills are available in abundance in your area. A business can be started out of available raw materials by selling them in raw form and by processing and manufacturing them into finished products. For example, in a copra-producing town, there will be many coconut husks and shells available as “waste” products. These can be collected and made into coco rags or doormats and charcoal bricks and sold profitably outside the community.
A group of people in your neighborhood may have some special skills that can be harnessed for business. For example, women in the Mountain Province possess loom weaving skills that have been passed on from one generation to another. Some communities set up weaving businesses to produce blankets, decorative, and various souvenir items for sale to tourists and lowlanders. Business ideas can come from your own skills. The work and experience you may have in agricultural arts, industrial arts, home economics, or ICT classes will provide you with business opportunities to acquire the needed skills which will earn you extra income should you decide to engage in income-generating activities. With your skills, you may also tinker around with various things in your spare time. Many products are invented this way.
Read magazines, news articles, and other publications on new products and techniques or advances in technology. You can pick up new business ideas from magazines such as Newsweek, Reader’s Digest, Business Magazines, “Go Negosyo”, Know About Business (KAB) materials, and Small-Industry Journal. The Internet also serves as a library where you may browse and surf on possible businesses. It will also guide you on how to put the right product in the right place, at the right price, and at the right time.
Key Concepts of Selecting a Business Idea
Once you have identified business opportunities, you will eventually see that there are many possibilities available for you. It is very unlikely that you will have enough resources to pursue all of them at once. You have to select the most promising one among hundreds of ideas. It will be good to do this in stages. In the first stage, you screen your ideas to narrow them down to about few choices. In the next stage, trim down the choices to two options. In the final stage, choose between the two and decide which business idea is worth pursuing. In screening your ideas, examine each one in terms of the following guide questions:
How much capital is needed to put up the business?
Where should the business be located?
How big is the demand for the product? Do many people need this product and will continue to need it for a long time?
How is the demand met? Who are processing the products to meet the needs (competition or demand)? How much of the need is now being met (supply)?
Do you have the background and experiences needed to run this particular business?
Will the business be legal and not against any existing or foreseeable government regulation?
Is the business in line with your interest and expertise?
Your answers to these questions will be helpful in screening which ones among your many ideas are worth examining further and worth pursuing.
Branding Branding is a marketing practice of creating a name, a symbol or design that identifies and differentiates product or services from the rest. It is also a promise to your customers. It tells them what they can expect from your product or service and it differentiates your offerings from other competitors. Your brand is derived from who you are, who you want to be and what people perceive you to be. Branding is one of the most important aspects in any business. An effective brand strategy gives you a major edge in increasingly competitive markets.
A good product can:
deliver message clearly,
connect to target prospect,
motivate buyers, and
concretize user loyalty.
Here are simple tips to publicize your brand:
·Develop a tagline. Write a statement that is meaningful, impressive, and easy to remember to capture the essence of your brand.
·Design a logo. Create a logo symbolic of your business and consistent with your tagline and displace it strategically.
·Write a brand message. Select a key message to communicate about your brand.
·Sustain a brand quality. Deliver a promise of quality through your brand.
·Practice consistency. Be reliable and consistent to what your brand means in your business.
Reference: Computer Hardware Servicing –Grade 10 Learner’s Material First Edition, 2013
Authors: Rosalie P. Lujero Teacher III / School ICT Coordinator Dasmariñas East National High School
Ronaldo V. Ramilo Education Program Specialist Division of Tanauan
Michael Angelo C. Gatchalian Teacher III / School ICT Coordinator Dagupan City National High School
Editors: Joemar A. Garraton
Reviewers: Romeo B. Gacutan, Simfroso C. Robles II and Marion I. Alinas
Illustrator and Layout Artists: Subject Specialist: Owen M. Milambiling
Management Team: Dr.Lolita M. Andrada, Jocelyn DR Andaya, Bella O. Mariñas, Dr. Jose D. Tuguinayo, Jr.