Chapter 4: Product/Service Development

CHAPTER 4: PRODUCT/SERVICE DEVELOPMENT
INTRODUCTION
In Entrepreneur’s business, product/service development is the term used to describe the
complete process of bringing a new product or service in the market and it's an ongoing practice
in which the entire business is looking for opportunities as new products provide growth promise
to businesses that allow them to strengthen their market position.
The Concept of Product/Service Technology
Many entrepreneurs find it difficult to identify a new product/service or a new market
opportunity. To start and expand a small venture, an entrepreneur needs to identify opportunities
for domestic and/or international expansion.
Product/Service Development Process
These stages can be referred to as:
1. Idea Generation : The new product development process starts with search for ideas.
Companies have to encourage any new idea coming. The key to successful domestic and
international entrepreneurship is to develop an idea that has a market for the new product/service
idea conceived.
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2. Idea Screening : In the 2nd stage, the purpose is to lessen the number of ideas to few
vital/valuable ideas. The ideas should be written down and reviewed each week by an idea
committee who should sort the ideas into three groups- Promising Ideas, Marginal Ideas, and
Rejects: Each promising idea should be researched by committee member.
3. Concept Development and Testing : Attractive ideas must be refined into fast able product
concepts since people do not purchase ideas but they buy concepts. Any product idea can be
turned into several product concepts.
4. Marketing Strategy Development : After testing the new product the concerned body must
develop a preliminary marketing strategy plan for introducing the new product into the market.
The marketing strategy will undergo further refinement in subsequent stages.
The marketing strategy plan consists of three parts: (1) Market size, structure, behavior ;( 2)
Planned price, distribution strategy, and marketing budget of the 1st year; and (3) Long run sales
and profit goals, marketing mix strategy.
5. Business Analysis : After management develops product concept and marketing strategy, it
can evaluate the proposals’ business attractiveness. Management needs to prepare sales, cost and
profit projections to determine whether they satisfy the company's objective or not.
6.Product Development
If product concept passes the business test, it moves to R&D or engineering to be developed to
one or more physical version of the product concept.
7. Market Testing: After management is satisfied with the products’ functional and
psychological performance, the product is ready to be dressed up with the brand name.
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The goals are to test the new product is more authentic consumer/customer settings and to learn
how large the market is and how consumers/customers and dealers react to handling, using and
repurchasing the actual product.
Commercialization : When (Timing):- In commercializing, market entry timing is critical. If the
company hears about a competitor nearing the end of its development work, it will face three
choices. The 1st choice is First Entry. Under this category, the firm usually enjoys the "first
mover advantage" of locking up key distributors & gaining reputation.
Legal and Regulatory Frameworks for Entrepreneurs
Since there are many options that an entrepreneur can choose in setting up an organization, it
will be necessary to understand all the advantages and disadvantages of each regarding such
issues as liability, taxes, continuity, transferability of interest, costs of setting up, and
attractiveness for raising capital. Legal advice for these agreements is necessary to ensure that
the most appropriate decisions have been made.
Intellectual Property Protection/Product/Service Protection
What is Intellectual Property?
Intellectual Property which includes patents, trademarks, copyrights, and trade secrets represents
important assets to the entrepreneur and should be understood even before engaging the services
of an attorney. Too often entrepreneurs, because of their lack of understanding of intellectual
property, ignore important steps that they should have taken to protect these assets.
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Patents
An entrepreneur who invents a new thing or improves an existing invention needs to get legal
protection for her invention through a patent right. A patent is a contract between an inventor and
the government. in which the government, in exchange for disclosure of the invention, grants the
inventor the exclusive right to enjoy the benefits resulting' from the possession of the patent.
.What Can Be Patented
 Processes: Methods of production, research, testing, analysis, technologies with new
applications.
 Machines: Products, instruments, physical objects.
 Manufactures: Combinations of physical matter not naturally found.
 Composition of matter: Chemical compounds, medicines, etc.
Trademarks
A trademark may be a word, symbol, design, or some combination of such, or it could be a
slogan or even a particular sound that identifies the source or sponsorship of certain goods or
services.
Benefits of a Registered Trademark
 It provides notice to everyone that you have exclusive rights to the use of the mark
throughout the territorial limits of the country.
 It entitles you to sue in federal court for trademark infringement, which can result in
recovery of profits, damages, and costs.
 It establishes incontestable rights regarding the commercial use of the mark.
 It establishes the right to deposit registration with customs to prevent importation of
goods with a similar mark.
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 It entitles you to use the notice of registration (®).
 It provides a basis for filing trademark application in foreign countries
Copyrights
Copyright is a right given to prevent others from printing, copying, or publishing any original
works of authorship. Copyrights provide exclusive rights to creative individuals for the
protection of literary or artistic productions. It protects original works of authorship including
literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer
software, and architecture. They pertain to intellectual property. Usually copyrights are valid for
the life of the inventor plus a few decades.
The Intellectual Property System in Ethiopia
Ethiopia became a party to the convention establishing the world Intellectual Property
Organization (WIPO) in February 1998 right after some time the Country had joined the Nairobi
Treaty on the Protection of the Olympic Symbol in 1981. It is a member of the Treaty
establishing the Common Market for Eastern and Southern Africa (COMESA) which was
formed in 1994, the Partnership Agreement between members of the African, Caribbean and
Pacific (ACP) Group of States and the European Union (EU). The Ethiopian Government
established the Ethiopian Intellectual Property Office in the year 2003 .

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CHAPTER 4: PRODUCT/SERVICE DEVELOPMENT

In Entrepreneur’s business, product/service development is the term used to describe the

to businesses that allow them to strengthen their market position.

The Concept of Product/Service Technology

Many entrepreneurs find it difficult to identify a new product/service or a new market

for domestic and/or international expansion.

Product/Service Development Process

These stages can be referred to as:

Rejects: Each promising idea should be researched by committee member.

turned into several product concepts.

The marketing strategy will undergo further refinement in subsequent stages.

and profit goals, marketing mix strategy.

one or more physical version of the product concept.

repurchasing the actual product.

Commercialization : When (Timing):- In commercializing, market entry timing is critical. If the

mover advantage" of locking up key distributors & gaining reputation.

Legal and Regulatory Frameworks for Entrepreneurs

the most appropriate decisions have been made.

Intellectual Property Protection/Product/Service Protection

What is Intellectual Property?

of an attorney. Too often entrepreneurs, because of their lack of understanding of intellectual

.What Can Be Patented

 Processes: Methods of production, research, testing, analysis, technologies with new

 Machines: Products, instruments, physical objects.

 Manufactures: Combinations of physical matter not naturally found.

 Composition of matter: Chemical compounds, medicines, etc.

A trademark may be a word, symbol, design, or some combination of such, or it could be a

Benefits of a Registered Trademark

throughout the territorial limits of the country.

recovery of profits, damages, and costs.

 It establishes incontestable rights regarding the commercial use of the mark.

 It establishes the right to deposit registration with customs to prevent importation of

goods with a similar mark.

 It provides a basis for filing trademark application in foreign countries

protection of literary or artistic productions. It protects original works of authorship including

the life of the inventor plus a few decades.

The Intellectual Property System in Ethiopia

established the Ethiopian Intellectual Property Office in the year 2003 .

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