Comprehensive

Discussions about:
Developing a Product Description
Determining Market Acceptability
Selecting Potential Suppliers
Checking the Value Chain of a Business
Enterprise
Learning Competencies:
The learners can:
1. Validate the service description of the product with
potential customers to determine its market
acceptability;
2. Select/pinpoint potential suppliers of raw materials and
other inputs necessary for the production of the product
or service; and
3. Discuss the value/supply chain in relation to the business
enterprise.
 Developing a Product Description
To project the durability craftsmanship, and superiority of
a product, the business plan normally includes:

• A picture or sketch of the product with a brief

description of the parts;
• The edge of the product over those offered by
competitors;
• The availability of raw materials or parts;
• After-sales service; and
• Product warranty.
What is a product or service
description?
A product or service description can be defined as
marketing copy that tells the visitor why they
should buy. This description can include details,
features, and benefits.
Note 1:
When developing product or service
descriptions, put yourself in the position of a
possible buyer. What would this person want
to know? How can you highlight what makes
you unique or what your competitors lack?
Note 2:
Many of these can be written by looking at the tenets of a
unique selling proposition (USP). A USP is a specific factor
or consideration of why your product is better. Its focus is
on what’s unique. While your company as a whole may have
a USP, each product or service should as well. Every detail
that comes after the USP in the description should support
it.
Why are these descriptions so important?

Ultimately, they can be the difference between a

sale or no sale. In fact, an ecommerce study found
that 20% of purchase failure is related to unclear or
missing product information. No matter what you
sell online, you have to make it clear what it is, who
it’s for, and why it matters to them.
Why are these descriptions so important?

With better descriptions that are strategic in

nature versus written off the cuff, you could see
an increase in your conversions.
Determining Market Acceptability
A logical step that entrepreneurs take before
launching a product is to determine the market
acceptability to potential customers. Some
common practices include:

• Inviting government officials and celebrities to a

free ride on a new airplane or cruise ship;
• Offering motorists, a free test drive of a new car;
• Conducting free demonstrations on the use of a
sophisticated equipment;
Determining Market Acceptability

• Distributing free samples of grocery items

like coffee, candies and chocolate and
• Inviting potential buyers for a free taste of
cakes, hotdogs, juices, fruits or native
delicacies.
After these activities, participants are interviewed and asked for
their comments on the product. The results are analyzed to determine
whether or not potential consumers or end users found the product
acceptable.
SELECTING POTENTIAL SUPPLIERS

The entrepreneurs must include the

following:
• A list of raw materials and other inputs
necessary for the production of goods;
• The names and addresses of potential
suppliers of raw materials and inputs.
 Choosing suppliers for your business
Criteria for selecting a supplier
Suppliers play a critical role in helping companies succeed. In
order to find the right ones, businesses need to consider a
number of critical factors, including:
• price
• value for money
• quality
• reliability
• responsiveness
• flexibility
Value for money

If you are a start-up, a key consideration in

choosing a supplier may be affordability. However,
cheap suppliers don't always represent the best
value for money. If you want reliability and quality
from your suppliers, you'll have to decide how
much you're willing to pay for your supplies. It is
important to strike a balance between cost,
reliability, quality and service.
Quality and reliability

The quality of your supplies needs to be consistent

- your customers associate poor quality with you,
not your suppliers. Equally, if your supplier lets
you down with a late delivery or faulty supplies,
you may let your customer down.
Speed and flexibility

Being able to place frequent, small orders lets you avoid

tying up too much working capital in stock. Flexible
suppliers help you respond quickly to changing customer
demands and sudden emergencies. If you want to cut down
the time it takes you to serve your customers, suppliers that
offer you a quick delivery service will rate higher than those
that compete on other factors - for example, on price alone.
Strong service and clear communication

Communication is important in ensuring a good working

relationship with your supplier. From the initial briefing,
through continual feedback and routine meetings, your
supplier should communicate openly and regularly. You
need your suppliers to deliver on time, or to be honest and
give you plenty of warning if they can't.
Financial stability

It's always worth making sure your supplier has sufficiently

strong cash flow to deliver what you want, when you need it.
A credit check will help reassure you that they won't go out
of business when you need them most.
 How many suppliers do you need?
It's well worth examining how many suppliers you really need.
Buying from a carefully targeted group could have a number of
benefits:
• it will be easier to control your suppliers
• your business will become more important to them
• you may be able to make deals that give you an extra competitive
advantage
Checking the Value Chain of a Business
Enterprise
The value chain refers to a series of activities undertaken
during production and distribution. This starts with the
acquisition of raw materials and inputs, followed by the
processing of inputs into finished products, packaging,
storage and distribution of the final product to consumers
or end users.
 A disruption in one stage of the value chain may
stall the entire process. Below are some
illustrations:
• The absence or lack of raw materials can halt production or lead
to limited production.
• If a machine used in one or more stages of production breaks
down, operations may be stalled.
• Errors in the methods of production may interrupt the conversion
process or result in a substandard product.
• Poor or inaccurate packaging may fail to entice customers to buy
the product even if it is good and fairly priced.
• Delays or lapses in the delivery of the product may result to
customers’ dissatisfaction and even prompt them to shift to other
producers or manufacturers.
 Primary Activities:

1. Inbound logistics — receiving, storing and distributing of raw

materials used in the production process
2. Operations — raw materials turned into the final product
3. Outbound logistics — distribution of final product to consumers
4. Marketing & sales — advertising, promotions, pricing, distribution
channels, sales force, sales processes, and managing the final
product to ensure it targets the right consumer.
5. Service — maintaining product’s performance including
installation, training, repairs, warranty and after-sales services.
Supporting Activities:

1. Procurement — how raw materials are obtained

2. Tech development — how new products are developed,
research & development as well as process automation
3. HR management — hiring & retaining proper employees
4. Firm infrastructure — organizational structure,
management, planning, accounting, finance and quality
control mechanisms.
What Is a Value Chain Analysis?

Essentially, value chain analysis is a strategy tool

used to analyze a business’ primary & supportive
activities. The goal is to recognize, which activities
are the most valuable and which ones could be
improved to provide competitive advantage,
improve efficiency, and increase profit margins.
When doing a value chain analysis, there are
three paramount goals:
1. Achieve the best/lowest costs, including
process, transactional and handling costs for
the entire supply chain.
2. Pursue the fastest cycle time performance
3. Identify and implement “best in class” practices
for each core activity or process.
How Do You Do an Analysis?

• A value chain analysis requires research and can take time

to develop. Below are the general steps it takes to create a
value chain analysis:

1. Determine the business’ primary and support activities.

Together, the primary and support activities make up the
value chain. So the first step is to map out your current
value chain.
How Do You Do an Analysis?

2. Analyze the value and cost of the activities.

Take a look at the cost of each activity in your value chain.

Is the activity labor intensive? How much does your raw
material cost? Asking questions similar to these will help
identify which activities are cost-effective and which are
not. This where areas for improvement can be identified.
 How Do You Do an Analysis?
3. Choose your competitive advantage

A business can gain a competitive advantage in one of the following areas:

Cost Leadership — The goal of a cost leadership strategy is to become the

lowest-cost provider in your industry or market. Companies who excel with a
low-cost strategy have extreme operational efficiency and use low-cost
materials and resources to reduce the overall price of their product or
service.

Differentiation — With a differentiation strategy, the competitive advantage is

gained by offering a unique or highly specialized product or service. The
business needs to dedicate time and resources to innovation, research, and
development. A successful differentiation strategy allows the business to set
a premium price for its product or service.
How Do You Do an Analysis?

4. Identify opportunities to gain the chosen competitive

advantage.
Once the value chain analysis is complete, you’ll have an
overview of where the business is excelling and where
improvements can be made operationally. Begin with the
improvements that take minor changes and provide high-
impact results. After the easy wins are identified and
actioned, you and your team can tackle the bigger
challenges that might be hindering efficiency.