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8/8/2019 Entrepreneurship III
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EntrepreneurshipEntrepreneurship
16 October, 200816 October, 2008
SURJYA B. GOHAINSURJYA B. GOHAIN
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Entrepreneur vs. ManagerEntrepreneur vs. Manager
ManagersManagers EntrepreneursEntrepreneurs
PrimaryPrimary
MotivesMotives
Promotion,Promotion,
rewards/perks, viz. office,rewards/perks, viz. office,
staff, powerstaff, power
Independence,Independence,
opportunity to create,opportunity to create,
moneymoney
TimeTime
OrientationOrientation
ShortShort--termterm--meetingmeeting
budgets, weekly, monthly,budgets, weekly, monthly,quarterly, annual planningquarterly, annual planning
horizonshorizons
Survival and achievingSurvival and achieving
5 to 10 year growth of5 to 10 year growth ofbusinessbusiness
ActivityActivity Delegates & supervisesDelegates & supervises Direct involvementDirect involvement
RiskRisk CarefulCareful Moderate risk Moderate risk--takertaker
StatusStatus Concerned about statusConcerned about statussymbolsymbol
No concern aboutNo concern about
status symbolstatus symbol
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Entrepreneur vs. ManagerEntrepreneur vs. Manager
ManagersManagers EntrepreneursEntrepreneurs
Failure &Failure &
MistakesMistakes
Tries to avoid mistakesTries to avoid mistakes
and surprisesand surprises
Deals with mistakesDeals with mistakes
and failuresand failures
DecisionsDecisions Usually agrees with thoseUsually agrees with thosein the upper managementin the upper management
positionspositions
Follows dreams withFollows dreams with
decisionsdecisions
Serves whomServes whom OthersOthers Self and customersSelf and customers
Family HistoryFamily History Family members workedFamily members worked
for large organizationsfor large organizations
Small business orSmall business or
professionalprofessionalbackgroundbackground
RelationshipRelationship
with Otherswith Others
Hierarchy as basicHierarchy as basic
relationshiprelationship
Transactions & dealTransactions & deal
making as basicmaking as basic
relationshiprelationship
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Entrepreneurial FeelingEntrepreneurial Feeling
EntrepreneursEntrepreneurs comecome fromfrom aa variety variety ofofeducational,educational, familyfamily andand work work experienceexperiencebackgroundsbackgrounds
CertainCertain commoncommon denominatorsdenominators areareLocusLocus ofof controlcontrol
NeedNeed ofof independenceindependence
NeedNeed forfor achievementachievementRiskRisk takingtaking
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Locus of ControlLocus of Control
WhetherWhether aa personperson isis drivendriven byby anan innerinner needneed toto succeedsucceed
andand winwin WillWill sheshe bebe ableable toto sustainsustain thethe drivedrive andand energyenergy requiredrequired
toto overcomeovercome thethe inertiainertia inin formingforming somethingsomething newnew
toto managemanage thethe newnew enterpriseenterprise andand makemake itit growgrow PeoplePeople with with externalexternal locuslocus ofof controlcontrol maymay inhibitinhibit
entrepreneurialentrepreneurial tendenciestendencies
ResearchResearch isis notnot conclusiveconclusive aboutabout locuslocus ofof controlcontrol
somesome studiesstudies indicatedindicated thatthat entrepreneurialentrepreneurial intentionsintentions werewere
associatedassociated withwith internalityinternality
otherother studiesstudies showedshowed somesome entrepreneursentrepreneurs underunder stressstress shiftedshifted
towardtoward greatergreater externalityexternality
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Need for Independence & AchievementNeed for Independence & Achievement
BeingBeing onesones ownown bossboss oneone ofof thethe strongeststrongestneedsneeds ofof anan entrepreneurentrepreneur generallygenerally needsneeds toto dodo thingsthings inin his/herhis/her ownown wayway
hashas aa difficultdifficult timetime workingworking forfor someonesomeone elseelse
NeedNeed forfor achievementachievement entrepreneursentrepreneurs havehave aastrongstrong desiredesire toto bebe recognizedrecognized individualindividual responsibilityresponsibility forfor problemproblem solving,solving, settingsetting
goals,goals, andand reachingreaching thesethese goalsgoals throughthrough theirtheir ownownefforteffort
moderatemoderate riskrisk takingtaking asas aa functionfunction ofof skill,skill, notnot chancechance
knowledgeknowledge ofof resultsresults of of decision/taskdecision/task
accomplishmentaccomplishment
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Risk TakingRisk Taking
RiskRisk takingtaking whether whether financial,financial, social,social, ororpsychological,psychological, isis partpart ofof thethe entrepreneurialentrepreneurial
processprocess
ManyMany studiesstudies ofof riskrisk takingtaking inin entrepreneurshipentrepreneurshiphavehave focusedfocused onon thethe riskrisk--takingtaking propensitypropensity
HoweverHowever notnot yetyet empiricallyempirically establishedestablished thatthat riskrisk
takingtaking propensitypropensity isis aa distinguishingdistinguishing characteristiccharacteristicofof entrepreneursentrepreneurs
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Entrepreneur BackgroundEntrepreneur Background
Childhood Family Environment
researchresearch conductedconducted onon birthbirth order,order, parentsparents occupationoccupation andand socialsocial
status,status, andand relationshiprelationship withwith parentsparents
moremore femalefemale entrepreneursentrepreneurs areare foundfound toto bebe firstbornfirstborn;; nono
establishedestablished relationshiprelationship withwith entrepreneurshipentrepreneurship soso farfar
beingbeing thethe firstbornfirstborn oror anan onlyonly childchild isis postulatedpostulated toto resultresult inin thethechildchild receivingreceiving specialspecial attentionattention andand therebythereby developingdeveloping moremore selfself--
confidenceconfidence
strongstrong evidenceevidence thatthat entrepreneursentrepreneurs tendtend toto havehave selfself--employedemployed oror
entrepreneurialentrepreneurial fathersfathers independentindependent naturenature andand flexibilityflexibility ofof selfself--employmentemployment exemplifiedexemplified
byby thethe fatherfather isis ingrainedingrained atat anan earlyearly ageage
encouragementencouragement forfor independence,independence, achievementachievement andand responsibilityresponsibility
byby parentsparents establishestablish thethe desirabilitydesirability ofof entrepreneurialentrepreneurial activityactivity
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Entrepreneur BackgroundEntrepreneur Background Education
researchresearch indicatesindicates thatthat educationeducation relatedrelated toto thethe fieldfield ofof thethe ventureventure
helpshelps thethe entrepreneurentrepreneur toto confrontconfront problemsproblems
educationeducation usefuluseful inin thethe areasareas ofof finance,finance, strategicstrategic planning,planning,
marketingmarketing andand managementmanagement
abilityability toto dealdeal withwith peoplepeople andand communicationcommunication skillsskills (verbal(verbal &&
written)written) areare alsoalso importantimportant
Personal Values
studiesstudies indicateindicate thatthat anan entrepreneurentrepreneur hashas aa differentdifferent setset ofof attitudesattitudes
aboutabout thethe naturenature ofof thethe managementmanagement processprocess andand businessbusiness
naturenature ofof thethe enterprise,enterprise, opportunism,opportunism, institutioninstitution andand individualityindividuality
ofof thethe entrepreneurentrepreneur makesmakes him/herhim/her differentdifferent fromfrom managermanager
ethicsethics andand ethicalethical behaviourbehaviour onon thethe partpart ofof thethe entrepreneurentrepreneur asas wellwell
asas stockstock holdersholders areare alsoalso importantimportant
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Entrepreneur BackgroundEntrepreneur Background
Age
therethere isis differencedifference betweenbetween entrepreneurialentrepreneurial ageage (the(the
ageage ofof thethe entrepreneurentrepreneur reflectedreflected inin thethe experience)experience)
andand chronologicchronologic ageage
mostmost entrepreneursentrepreneurs initiateinitiate theirtheir entrepreneurialentrepreneurialcareerscareers betweenbetween thethe agesages ofof 2222 andand 4545
anan entrepreneurentrepreneur requiresrequires
experienceexperience financialfinancial supportsupport
andand aa highhigh energyenergy levellevel inin orderorder toto launchlaunch andand managemanage aanewnew ventureventure successfullysuccessfully
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Entrepreneur BackgroundEntrepreneur Background
Work History
maymay bebe aa negativenegative displacementdisplacement inin thethe decisiondecision toto
launchlaunch aa newnew entrepreneurialentrepreneurial ventureventure
previousprevious workwork inin thethe areasareas ofof finance,finance, productproduct oror
serviceservice development,development, manufacturing,manufacturing, developmentdevelopment ofofdistributiondistribution channelschannels andand preparationpreparation ofof aa marketingmarketing
planplan isis importantimportant
inin anan establishedestablished ventureventure managerialmanagerial experienceexperience andandskillsskills becomebecome importantimportant
asas ventureventure increasesincreases entrepreneursentrepreneurs areare exposedexposed toto
moremore newnew ventureventure opportunitiesopportunities
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MotivationMotivation
IndependenceIndependence notnot workingworking forfor anybodyanybody elseelse MoneyMoney
Job satisfactionJob satisfaction
AchievementAchievement
OpportunityOpportunity
Work and family situation as well as the roleWork and family situation as well as the rolemodel of the entrepreneur are also importantmodel of the entrepreneur are also important
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Role ModelRole Model
IndividualsIndividuals influenceinfluence anan entrepreneursentrepreneurs careercareer
choicechoice andand stylestyle
RoleRole modelsmodels supportsupport asas mentorsmentors duringduring andand afterafter
thethe launchlaunch ofof aa newnew ventureventure
AnAn entrepreneurentrepreneur mustmust establishestablish connectionsconnections toto
supportsupport resourcesresources earlyearly inin thethe newnew ventureventure
formationformation processprocess
NetworkingNetworking betweenbetween entrepreneurentrepreneur andand otherother
individualsindividuals dependdepend onon frequency,frequency, levellevel andand
reciprocityreciprocity ofof thethe relationshiprelationship
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Support SystemsSupport Systems Moral Support Network
cheeringcheering squadsquad ofof familyfamily andand friendsfriends
Professional Support Network
EntrepreneurEntrepreneur needsneeds adviceadvice andand counselcounsel throughoutthroughout thethe
establishmentestablishment ofof thethe newnew ventureventure
AdviceAdvice cancan bebe obtainedobtained fromfrom
aa mentormentor
businessbusiness associatesassociates selfself--employedemployed individualsindividuals withwith experienceexperiencestartingstarting aa business,business, clients,clients, oror buyersbuyers ofof thethe ventures ventures product/product/
service,service, expertsexperts suchsuch asas consultants,consultants, lawyerslawyers oror accountantsaccountants andand
thethe venturesventures supplierssuppliers
tradetrade associationsassociations
personnelpersonnel affiliationsaffiliations thoughthough hobbies,hobbies, sportingsporting events,events, clubs,clubs,
civiccivic involvementsinvolvements andand schoolschool alumnialumni groupsgroups
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The New Business IdeaThe New Business Idea
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Sources of
New Ideas
R & D
--helps conceptualizehelps conceptualize
& develop new ideas& develop new ideas
Government
--patent officepatent office
--govt. regulationsgovt. regulations
Existing Companies
--establish formal methodestablish formal method
for monitoring &for monitoring &evaluating competitiveevaluating competitive
Ps & SsPs & Ss
Consumers
-informal monitoringinformal monitoring
--formal forumformal forum
--market sizemarket size
Distribution Channels--have ideas/familiarityhave ideas/familiarity
with customer needswith customer needs
--can help in marketingcan help in marketing
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Focus Groups
Problem Inventory Analysis
Brainstorming
Methods for
Generating Ideas
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Idea Generating MethodsIdea Generating Methods
FocusFocus GroupsGroups
aa moderatormoderator leadsleads aa groupgroup ofof peoplepeople ((88--1414)) throughthrough anan open,open,inin--depthdepth discussiondiscussion
BrainstormingBrainstorming
basedbased onon thethe factfact thatthat peoplepeople cancan bebe stimulatedstimulated toto greatergreatercreativitycreativity byby meetingmeeting with with othersothers andand participatingparticipating inin
organisedorganised groupgroup experiencesexperiences
nono criticismcriticism allowedallowed;; nono negativenegative commentscomments
freewheelingfreewheeling -- thethe wilderwilder thethe ideaidea thethe betterbetter
greatergreater thethe numbernumber ofof ideas,ideas, greatergreater thethe likelihoodlikelihood ofof usefuluseful
ideasideas emergingemerging
combinationscombinations andand improvementsimprovements ofof ideasideas areare encouragedencouraged
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Idea Generating MethodsIdea Generating Methods
ProblemProblem InventoryInventory AnalysisAnalysis consumersconsumers areare providedprovided withwith aa listlist ofof problemsproblems inin aa
generalgeneral productproduct categorycategory
theythey areare askedasked toto identifyidentify andand discussdiscuss productsproducts inin thatthat
categorycategory thatthat havehave thethe particularparticular problemproblem
knownknown productsproducts cancan bebe relatedrelated toto thethe suggestedsuggested
problemsproblems
newnew productproduct ideaidea cancan bebe generatedgenerated forfor furtherfurtherevaluationevaluation
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CREATIVE PROBLEM SOLVINGCREATIVE PROBLEM SOLVING
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Creative Problem SolvingCreative Problem Solving
AA methodmethod forfor obtainingobtaining newnew ideasideas focusingfocusing onon
thethe parametersparameters
CreativityCreativity isis anan importantimportant attributeattribute ofof aa successfulsuccessful
entrepreneurentrepreneur
declinesdeclines withwith age,age, educationeducation andand lacklack ofof useuse
stifledstifled byby perceptual,perceptual, cultural,cultural, emotionalemotional andand
organizationalorganizational factorsfactors
CreativityCreativity cancan bebe unlocked,unlocked, creativecreative ideasideas andand
innovationsinnovations generatedgenerated byby usingusing variousvarious problemproblem--
solvingsolving techniquestechniques
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Creative Problem Solving TechniquesCreative Problem Solving Techniques
Brainstorming Reverse Brainstorming
similarsimilar toto brainstormingbrainstorming butbut criticismcriticism isis
allowedallowed involvesinvolves identificationidentification ofof everythingeverything wrongwrong
withwith anan ideaidea
followedfollowed byby aa discussiondiscussion ofof waysways toto overcomeovercomethosethose problemsproblems
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Creative Problem Solving TechniquesCreative Problem Solving Techniques
Gordon Method
beginsbegins withwith groupgroup membersmembers notnot knowingknowing thethe exactexact
naturenature ofof thethe problemproblem
entrepreneurentrepreneur startsstarts byby mentioningmentioning aa generalgeneral conceptconcept
associatedassociated withwith thethe problemproblem
groupgroup respondsresponds byby givinggiving ideas,ideas, aa conceptconcept isis
developed,developed, followedfollowed byby relatedrelated concepts,concepts, throughthrough
guidanceguidance byby thethe entrepreneurentrepreneur actualactual problemproblem revealedrevealed andand groupgroup makesmakes suggestionssuggestions
forfor implementationimplementation oror improvementimprovement ofof thethe finalfinal
solutionsolution
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Creative Problem Solving TechniquesCreative Problem Solving Techniques
Checklist Method
aa newnew ideaidea isis developeddeveloped throughthrough aa listlist ofof relatedrelatedissuesissues oror suggestionssuggestions
aa listlist ofof questionsquestions oror statementsstatements cancan bebe usedused toto guideguide
thethe directiondirection ofof developingdeveloping aa newnew ideaidea Free Association
aa wordword oror phrasephrase relatedrelated toto thethe problemproblem isis writtenwrittendowndown
thenthen anotheranother andand another,another, with with eacheach newnew wordwordattemptingattempting toto addadd somethingsomething newnew toto thethe ongoingongoingthoughtthought processesprocesses
chainchain ofof ideasideas endend withwith aa newnew productproduct ideaidea emergingemerging
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Creative Problem Solving TechniquesCreative Problem Solving Techniques
Scientific Method
definingdefining thethe problemproblem
analysinganalysing thethe problemproblem
gatheringgathering andand analysinganalysing datadata
developingdeveloping andand testingtesting potentialpotential solutionssolutions choosingchoosing thethe bestbest solutionsolution
Collective Notebook Method
groupgroup membersmembers regularlyregularly recordrecord ideas,ideas, possiblepossiblesolutionssolutions toto aa problemproblem atat leastleast onceonce butbut preferablypreferably 33timestimes aa dayday
atat thethe endend ofof thethe month,month, aa listlist ofof thethe bestbest ideasideas isis
developed,developed, alongalong withwith anyany suggestionsuggestion
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PRODUCT PLANNING &PRODUCT PLANNING &
DEVELOPMENT PROCESSDEVELOPMENT PROCESS
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Product Planning & DevelopmentProduct Planning & Development
OnceOnce ideasideas emerge,emerge, theythey needneed furtherfurtherdevelopmentdevelopment andand refinementrefinement intointo thethe finalfinalproductproduct oror serviceservice
TheThe productproduct planningplanning andand developmentdevelopmentprocessprocess resultsresults inin thethe startstart ofof thethe productproduct
lifecyclelifecycle
thethe stagesstages eacheach productproduct goesgoes throughthrough fromfromintroductionintroduction toto declinedecline
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INTRODUCTIONINTRODUCTION
GROWTHGROWTH
MATURITYMATURITY
DECLINEDECLINE
P
R
O
DU
C
T
LI
F
E
CY
C
L
E
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Product Planning & DevelopmentProduct Planning & Development
CriteriaCriteria shouldshould bebe developeddeveloped toto evaluateevaluate thethenewnew productproduct inin termsterms ofof
marketmarket opportunityopportunity
competitioncompetitionthethe marketingmarketing systemsystem
financialfinancial factorsfactors
productionproduction factorsfactors
AA marketmarket opportunityopportunity inin thethe formform ofof aa newnew ororcurrentcurrent needneed forfor thethe productproduct ideaidea mustmust existexist
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Product Planning & DevelopmentProduct Planning & Development
AssessmentAssessment ofof thethe marketmarket opportunityopportunity andand sizesizeneedsneeds toto taketake intointo accountaccount suchsuch factorsfactors asas
characteristicscharacteristics andand attitudesattitudes ofof consumersconsumers
marketmarket sizesize inin dollarsdollars andand centscents
naturenature ofof thethe marketmarket wrt wrt stagestage inin thethelifecyclelifecycle
thethe shareshare ofof thethe marketmarket thethe productproduct couldcouldcapturecapture
CurrentCurrent competingcompeting producers,producers, prices,prices, marketingmarketingpoliciespolicies shouldshould alsoalso bebe evaluatedevaluated
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Product Planning & DevelopmentProduct Planning & Development
TheThe newnew productproduct shouldshould
havehave somesome uniqueunique differentialdifferential advantageadvantage basedbased onon anan
evaluationevaluation ofof allall competitivecompetitive productsproducts fillingfilling thethe samesame
consumerconsumer needsneeds
bebe compatiblecompatible withwith existingexisting managementmanagement capabilitiescapabilitiesandand marketingmarketing strategiesstrategies
bebe ableable toto bebe supportedsupported byby andand contributecontribute toto thethe
companyscompanys financialfinancial structurestructure bebe evaluatedevaluated byby estimatingestimating manufacturingmanufacturing cost/unit,cost/unit,
salessales && advadv expense/unit,expense/unit, amountamount ofof capitalcapital andand
inventoryinventory requiredrequired
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Product Planning & DevelopmentProduct Planning & Development
TheThe breakbreak--eventevent pointpoint andand thethe longlong--termterm profitprofitoutlookoutlook forfor thethe productproduct needneed toto bebe determineddetermined
CompatibilityCompatibility ofof thethe newnew productsproducts productionproduction
requirementsrequirements withwith existingexisting plantplant && machinerymachinery
personnelpersonnel shouldshould bebe determineddetermined
LegalLegal andand ethicalethical issuesissues hashas alsoalso toto bebe consideredconsidered
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IDEA STAGEIDEA STAGE
CONCEPT STAGECONCEPT STAGE
TESTMARKETING STAGETESTMARKETING STAGE
PRODUCT DEVELOPMENT STAGEPRODUCT DEVELOPMENT STAGE
COMMERCIALISATION STAGECOMMERCIALISATION STAGE
PRO
DUCT
PLANNING
A
N
D
DEVE
LOP
MENT
S
T
A
G
E
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Product Planning & DevelopmentProduct Planning & Development
Idea Stage
promisingpromising ideasideas compatiblecompatible withwith thethe marketsmarkets valuesvalues
cancan bebe furtherfurther developeddeveloped
systematicsystematic marketmarket evaluationevaluation checklistchecklist methodmethod
expressesexpresses eacheach newnew ideaidea inin termsterms ofof itsits chiefchief values,values,merits,merits, andand benefitsbenefits
thethe newnew productproduct shouldshould alsoalso havehave value value toto thethe
companycompany cashcash outflow,outflow, cashcash inflow,inflow, contributioncontribution toto profit,profit,
ROIROI needsneeds toto bebe evaluatedevaluated
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Value ConsiderationsValue Considerations Cash outflow
R&DR&D costscosts
MarketingMarketing costscosts CapitalCapital equipmentequipment costscosts
OtherOther costscosts
Cash inflow
SalesSales ofof newnew productproduct
EffectEffect onon additionaladditional salessales ofof existingexisting productsproducts
Profit
FromFrom newnew productproduct
AffectingAffecting additionaladditional salessales ofof existingexisting productsproducts
Relative return ROIROI
PVPV
DCFDCF
ROEROE
Compared to other investments
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Product Planning & DevelopmentProduct Planning & Development
Concept Stage
the refined product idea is tested to determinethe refined product idea is tested to determine
consumer acceptance with out necessarily incurringconsumer acceptance with out necessarily incurring
the cost of manufacturingthe cost of manufacturing
initial reactions to the concept are obtained frominitial reactions to the concept are obtained frompotential customers or members of the distributionpotential customers or members of the distribution
channelchannel
selected respondents are exposed to statements thatselected respondents are exposed to statements thatreflect the physical characteristics and attributes ofreflect the physical characteristics and attributes of
the product areathe product area
compare the primary features with existing orcompare the primary features with existing or
competing products, if anycompeting products, if any
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Product Planning & DevelopmentProduct Planning & Development
Concept Stage
favourable as well as unfavourable product featuresfavourable as well as unfavourable product features
can be uncovered from analysing consumerscan be uncovered from analysing consumers
responsesresponses
features, price, and promotion should be evaluatedfeatures, price, and promotion should be evaluatedfor the product conceptfor the product concept
R&D can be directed to develop a more marketableR&D can be directed to develop a more marketable
productproduct
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Product Planning & DevelopmentProduct Planning & Development
Product Development Stage
tools like the consumer panel, is used to determinetools like the consumer panel, is used to determineconsumer reaction to the physical productconsumer reaction to the physical product
a group of potential consumers is given producta group of potential consumers is given product
samplesample participants keep a record of their use of the productparticipants keep a record of their use of the productand comment on its virtues and deficienciesand comment on its virtues and deficiencies
one or more competitive products can also be givenone or more competitive products can also be given
simultaneouslysimultaneously multiple brand comparisons, risk analysis, level ofmultiple brand comparisons, risk analysis, level of
repeat purchases, can be used to determine consumerrepeat purchases, can be used to determine consumerpreferencepreference
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Product Planning & DevelopmentProduct Planning & Development
Test Marketing Stage
finalfinal stagestage beforebefore commercialisationcommercialisation ofof thethe newnew
productproduct
aa marketmarket testtest cancan bebe donedone toto increaseincrease thethe certaintycertainty ofof
successfulsuccessful commercialisationcommercialisation itit providesprovides actualactual salessales results,results, whichwhich indicateindicate thethe
acceptanceacceptance levellevel ofof consumersconsumers
positivepositive testtest resultsresults indicateindicate thethe degreedegree ofof probabilityprobabilityofof aa successfulsuccessful productproduct launchlaunch andand companycompany
formationformation