• SOURCES OF NEW IDEAS

• Some of the more fruitful sources of ideas for entrepreneurs include

• consumers,
• existing products and services,
• distribution channels,
• and research and development.
• Consumers
• Potential and nascent entrepreneurs should always pay close attention to
potential customers. This can take the form of informally monitoring potential
ideas and needs or formally arranging for consumers to have an opportunity to
express their opinions. The idea or need has to have a large enough market to
support a new venture.
• Existing Products and Services
• Potential entrepreneurs should also establish a method for monitoring and evaluating
competitive products/services on the market. Frequently, this analysis uncovers ways to
improve on these offerings that may result in a new product/service that has more market
appeal and sales and profit potential
• Distribution Channels
• Members of the distribution channels are also excellent sources for new ideas reflecting their
familiarity with the needs of the market. Not only do channel members frequently have
suggestions for completely new products, but they can also help in marketing the
entrepreneur’s newly developed products.
• One entrepreneur found out from a salesclerk in a large departmental store that the reason
his hosiery was not selling well was its color. By heeding the suggestion and making the
appropriate color changes, his company became one of the leading suppliers of non brand
hosiery in that region of the United States.
• Research and Development
• The largest source of new ideas is the entrepreneur’s own “research and development”
efforts, which may be a formal endeavor connected with one’s current employment or an
informal one in a basement or garage
 • METHODS OF GENERATING IDEAS
• Even with a wide variety of sources available, coming up with an idea to serve as
the basis for a new venture can still pose a problem, particularly since the idea is
the basis for the business. The entrepreneur can use several methods to help
generate and test new ideas, such as
• focus groups,
• brainstorming,
• Brain writing,
• problem inventory analysis.
• Focus Groups
• Focus groups have been used for a variety of purposes since the 1950s. In a focus group, a
moderator leads a group of people through an open, in-depth discussion rather than
simply asking questions to solicit participant response. For a new product area, the
moderator focuses the discussion of the group in either a directive or a nondirective
manner.
• The group of frequently 8–14 participants is stimulated by comments from each other in
creatively conceptualizing and developing a new product/service idea to fill a market need.
• One company interested in the women’s slipper market received its new product concept
for a “warm and comfortable slipper that fits like an old shoe” from a focus group of
12 women from various socioeconomic backgrounds.
• The concept was developed into a new women’s slipper that was a market success. Even
the theme of the advertising message came from the comments of the focus group
members.
• In addition to generating new ideas, the focus group is an excellent method for initially
screening ideas and concepts. The results can be analyzed more quantitatively, making the
focus group an even more useful method for generating new product ideas
• Brainstorming
• The brainstorming method stimulates people to be creative by meeting with
others and participating in an organized group experience.
• Although most of the ideas generated by the group have no basis for further
development, sometimes a good idea emerges. This has a greater frequency of
occurrence when the brainstorming effort focuses on a specific product or market
area. When using brainstorming, four rules need to be followed:
• 1. No criticism is allowed by anyone in the group—no negative comments.
• 2. Freewheeling is encouraged—the wilder the idea, the better.
• 3. Quantity of ideas is desired—the greater the number of ideas, the greater the
likelihood of the emergence of useful ideas.
• 4. Combinations and improvements of ideas are encouraged;
• ideas of others can be used to produce still another new idea.
• The brainstorming session should be fun, with no one dominating or inhibiting
the discussion
• . A large commercial bank successfully used brainstorming to develop a journal that would provide quality
information to its industrial clients.
• The brainstorming among financial executives focused on the characteristics of the market,
• the information content,
• the frequency of issue,
• and the promotional value of the journal for the bank.
• Brain writing
• Brain writing is a form of written brainstorming.
• It was created by Bernd Rohrbach at the end of the 1960s under the name Method 635 and differs from
classical brainstorming by giving participants more time to think than in a brainstorming session, where the
ideas are expressed spontaneously.
• Brainwriting is a silent, written generation of ideas by a group of people.
• . The participants write their ideas on special forms or cards that circulate within the group, which usually
consists of six members.
• Each group member generates and writes down three ideas during a five-minute period.
• The form is passed on to the adjacent person who writes down three new ideas, and so on, until each form
has passed all participants.
• A leader monitors the time intervals and can reduce or lengthen the time given to participants according to
the needs of the group. Participants can also be spread geographically with the sheets rotated electronically.
• Problem Inventory Analysis
• Problem inventory analysis uses individuals in a manner analogous to focus
groups to generate new product ideas.
• However, instead of generating new ideas themselves, consumers in the group
are provided with a list of problems in a general product category.
• They are then asked to identify and discuss products in this category that have
the particular problem.
• This method is often effective since it is easier to relate known products to
suggested problems and arrive at a new product idea than to generate an entirely
new product idea by itself. Problem inventory analysis can also be used to test a
new product idea.
• Once a complete list of problems is developed, individuals can usually associate
products with the problem.
• Results from product inventory analysis need to be carefully evaluated as they
may not actually reflect a new business opportunity.
• OPPORTUNITY RECOGNITION
• Some entrepreneurs need the ability to recognize a business opportunity; this is fundamental
to the entrepreneurial process as well as growing a business.
• A business opportunity represents a possibility for the entrepreneur to successfully fill a large
enough unsatisfied need that enough sales and profits result.
• As is indicated, recognizing an opportunity often results from the knowledge and experience of
the individual entrepreneur and, where appropriate, the entrepreneurial business.
• This prior knowledge is a result of a combination of education and experience, and the relevant
experience could be work related or could result from a variety of personal experiences or
events.
• The entrepreneur needs to be aware of this knowledge and experience and have the desire to
understand and make use of it. The other important factors in this process are entrepreneurial
alertness and entrepreneurial networks.
• There is an interaction effect between entrepreneurial alertness and the entrepreneur’s prior
knowledge of markets and customer problems.
• Those entrepreneurs who have the ability to recognize meaningful business opportunities are
in a strategic position to successfully complete the product planning and development process
and successfully launch new ventures.
• PRODUCT PLANNING AND DEVELOPMENT PROCESS
• Once ideas emerge, they need further development and refinement. This
refining process— the product planning and development process—is divided
into five major stages:
• idea stage,
• concept stage,
• product development stage,
• test marketing stage, and
• commercialization, which starts the product life cycle
• Establishing Evaluation Criteria At each stage of the product planning and development process, criteria for
evaluation need to be established.
• These criteria should be all-inclusive and quantitative enough to screen the product carefully in the particular
stage of development.
• So a go forward or stop the decision process can be made.
• Criteria should be established to evaluate the new idea in terms of
• market opportunity,
• competition,
• the marketing system,
• and financial and development factors.
• A market opportunity in the form of a new or current need for the product/service idea needs to exist.
• The determination of market demand is by far the most important criterion of a proposed new product idea.
• Assessment of the market opportunity and size needs to consider
• the characteristics and attitudes of consumers or industries that may buy the product,
• the size of this potential market in Rupees and units,
• the nature of the market with respect to its stage in the life cycle (growing or declining),
• and the share of the market the product could reasonably capture.
•
• Competing products/services, prices, and marketing efforts should also be
evaluated, particularly in terms of their impact on the probable market share of
the proposed idea.
• FEATURES OF NEW IDEA
• The new idea should be able to compete successfully with products/services
already on the market by having features that will meet or be better than
current and anticipated competition.
• The new idea should have some unique selling propositions when compared to
the competitive products/services filling the same consumer needs.
• The new idea should have synergy with existing management capabilities and
marketing strategies.
• The firm should be able to use its marketing experience and other expertise in
this new product effort.
•
• For example, General Electric would have a far less difficult time adding a new lighting device to
its line than Procter & Gamble.
• Several factors should be considered in evaluating the degree of fiT(Product/market fit, also
known as product-market fit, is the degree to which a product satisfies a
strong market demand).
• the degree to which the ability and time of the present sales force can be transferred to the
new product;
• the ability to sell the new product through the company’s established channels of distribution;
• the advertising and promotion required to introduce the new product on the existing
promotional activities.
• The proposed product/service idea should be able to be supported by and contribute to the
company’s sales and profits.
• The manufacturing cost per unit, the marketing expense, and the amount of capital needs to
be determined along with the break-even point and the long-term profit outlook for the
product.
• The compatibility of the new product/service production requirements with existing plant,
machinery, and personnel should also be evaluated
• . If the new product idea cannot be integrated into existing manufacturing processes,
more costs such as plant and equipment are involved that need to be taken into
account.
• All required materials for the production of the product/service need to be available
and accessible in sufficient quantity.
• When dealing with competition and competitive situations, concerns regarding ethics
and ethical behavior frequently arise
• . Entrepreneurs need to be concerned with formally evaluating an idea throughout its
evolution.
• Care must be taken to be sure the idea can be the basis for a new venture.
• This can be done through careful evaluation that results in a go or no-go decision at
each of the stages of the product planning and development process:
• the idea stage,
• the concept stage,
• the product development stage,
• and the test marketing stage.
• Idea Stage Promising new product/service ideas should be identified and
impractical ones eliminated in the idea stage, allowing maximum use of the
company’s resources.
• One evaluation method successfully used in this stage is the systematic market
evaluation checklist, where each new idea is expressed in terms of its chief
values, merits, and benefits.
• Consumers are presented with clusters of new product/service values to
determine which, if any, new product/servicealternatives should be pursued and
which should not.
• Many potential new idea alternatives can be evaluated with this method, with
only the promising ideas further developed; resources are then not wasted on
ideas that are incompatible with the market’s values.
• It is also important to determine the need for the new idea as well as its value to
the entrepreneur/company.
• If there is no need for the suggested product, its development should not be
continued.
• Similarly, the new product/service idea should not be developed if it does not have
any benefit or value to the entrepreneur or firm.
• To accurately determine the need for a new idea, it is helpful to define
• the potential needs of the market in terms of timing,
• satisfaction,
• alternatives,
• benefits and risks,
• future expectations,
• price-versus-product performance features,
• market structure and size,
• and economic conditions.
• This comparison with competitive products/services will indicate the proposed idea’s
strengths and weaknesses.
• The need determination should focus on
the type of need,
 its timing,
the users involved with trying the product/service,
 the importance of controllable marketing variables,
 the overall market structure,
 and the characteristics of the market.
• Each of these factors should be evaluated in terms of the characteristics of the new idea being
considered and the aspects and capabilities of present methods for satisfying the particular need.
• This analysis will indicate the extent of the opportunity available.
• In the determination of the value of the new product/service to the firm, financial scheduling—
such as cash outflow, cash inflow,
contribution to profit,
 and return on investment—
needs to be evaluated in terms of other product/service ideas as well as investment alternatives.
• Concept Stage
• After a new product/service idea has passed the evaluation criteria in the idea stage, it
should be further developed and refined through interaction with consumers.
• In the concept stage, the refined idea is tested to determine consumer acceptance.
• Initial reactions to the concept are obtained from potential customers or members of
the distribution channel when appropriate.
• One method of measuring consumer acceptance is the conversational interview in
which selected respondents are exposed to statements that reflect the physical
characteristics and attributes of the product/service idea.
• Where competing products (or services) exist, these statements can also compare their
primary features.
• Favorable as well as unfavorable product features can be discovered by analyzing
consumers’ responses, with the favorable features then being incorporated into the new
product/service.

•
• Features, price, and promotion should be evaluated for both the concept being
studied and any major competing products by asking the following questions:
• How does the new concept compare with competitive products/services in
terms of quality and reliability?
• Is the concept superior or deficient compared with products/services currently
available in the market?
• Is this a good market opportunity for the firm?
• Similar evaluations should be done for all the aspects of the marketing strategy
• Product Development Stage
• In the product development stage, consumer reaction to the physical
product/service is determined.
• One tool frequently used in this stage is the consumer panel, in which a group of
potential consumers is given product samples.
• Participants keep a record of their use of the product and comment on its virtues
and deficiencies.
• This technique is more applicable for product ideas and works for only some
service ideas.
• The panel of potential customers can also be given a sample of the product and
one or more competitive products simultaneously. Then one of several methods
—such as multiple brand comparisons, risk analysis, level of repeat purchases, or
intensity of preference analysis—can be used to determine consumer preference.
• Test Marketing Stage
• Although the results of the product development stage provide the basis of the
final marketing plan, a market test can be done to increase the certainty of
successful commercialization.
• This last step in the evaluation process, the test marketing stage, provides actual
sales results, which indicate the acceptance level of consumers. Positive test
results indicate the degree of probability of a successful product launch and
company formation.