UNIT 2

In general sense, the term opportunity implies a good chance or a favourable situation to do
something offered by circumstances. In the same vein, business opportunity means a good or
favourable change available to run a specific business in a given environment at a given point of
time. The term ‘opportunity’ also covers a product or project. Hence, the identification of an
opportunity or a product or project is identical and, therefore, all these three terms are used as
synonyms. The Government of India’s “Look East Policy” through North East is an example of
‘opportunity’ to do business in items like tea, handicrafts, herbals, turmeric, etc. Opportunity
identification and selection are like comer stones of business enterprise. Better the former, better is
the latter. In a sense, identification and selection of a suitable business opportunity serves as the
trite saying ‘well begun is half done.’ But, it is like better said than done. Why? Because if we ask any
intending entrepreneur what project or product he/she will select and start as an enterprise, the
obvious answer he/she would give is one that having a good market and is profitable. But the
question is how without knowing the product could one know its market? Whose market will one
find out without actually having the product? Whose profitability will one find out without actually
selling the product? There are other problems, besides. While trying to identify the suitable product
or project, the intending entrepreneur passes through certain processes. The processes at times
create a situation, or say, dilemma resembling ‘Hen or Egg’ controversy. That is, at one point, the
intending entrepreneur may find one product or project as an opportunity and may enchant and like
it, but at the other moment may dislike and turn down it and may think for and find other product or
project as an opportunity for him/her. This process of dilemma goes on for some intending
entrepreneurs rendering them into the problem of what product or project to start. Then, how to
overcome this problem of product identification and selection?

One way to overcome this dilemmatic situation is to know how the existing entrepreneurs identified
the opportunity and set up their enterprises. An investigation into the historical experiences of
Indian small enterprises in this regard reveals some interesting factors. To mention the important
ones, the entrepreneurs selected their products or projects based on:

1.Their own or partners’ past experience in that business line;

2.The Government’s promotional schemes and facilities offered to run some specific business
enterprises;

3.The high profitability of products;

4.Which indicate increasing demand for the market?

5.The availability of inputs like raw materials, labour, etc. at cheaper rates;

6.The expansion or diversification plans of their owner any other ongoing business known to them;
7. The products reserved for small-scale units or certain locations.

Now, having gained some idea on how the existing entrepreneurs selected products/projects, the
intending entrepreneur can find a way out of the tangle of which opportunity/product/project to
select to finally pursue as one’s business enterprise. One of the ways employed by most of the
intending entrepreneurs to select a suitable product/project is to firstly generate ideas about a few
products/ projects. Accordingly, what follows next is a discussion idea generation about products.

Idea Generation:
Sources of Ideas:

In a sense, opportunity identification and selection are akin to, what is termed in marketing
terminology, ‘new product development.’ Thus, product or opportunity identification and selection
process starts with the generation of ideas, or say, ideas about some opportunities or products are
generated in the first instance. The ideas about opportunities or products that the entrepreneur can
consider for selecting the most promising one to be pursued by him/her as an enterprise, can be
generated or discovered from various sources- both internal and external.

These may include:

(i)Knowledge of potential customer needs,

(ii) Watching emerging trends in demands for certain products,

(iii) Scope for producing substitute product,

(iv) Going through certain professional magazines catering to specific interests like electronics,
computers, etc.,

(v) Success stories of known entrepreneurs or friends or relatives,

(vi) Making visits to trade fairs and exhibitions displaying new products and services, (vii) Meeting
with the Government agencies,

(viii)Ideas given by the knowledgeable persons,

(ix) Knowledge about the Government policy, concessions and incentives, list of items reserved for
exclusive manufacture in small-scale sector,

(x)A new product introduced by the competitor, and

(xi) One’s market insights through observation. In nutshell, a prospective entrepreneur can get ideas
for establishing his/ her enterprise from various sources. These may include consumers, existing
products and services presently on offer, distribution channels, the government officials, and
research and development.

A brief mention about each of these follows in turn:

Consumers:

Consumers’ wants can be known through their feedback about the products and services they have
been using and would want to use in future.

Existing Products and Services:

One way to have an enterprise idea may be to monitor the existing products and services already
available in the market and make a competitive analysis of them to identify their shortcomings and
then, based on it, decide what and how a better product and service can be offered to the
consumers. Many enterprises are established mainly to offer better products and services over the
existing ones.

Distribution Channels:

Distribution channels called, market intermediaries, also serves as a very effective source for new
ideas for entrepreneurs. The reason is that they ultimately deal with the ultimate consumers and,
hence, better know the consumers’ wants. As such, the channel members such as wholesalers and
retailers can provide ideas for new product development and modification in the existing product.
For example, an entrepreneur came to know from a salesman in a departmental store that the
reason his hosiery was not selling was its dark shade while most of the young customers want
hosiery with light shade. The entrepreneur paid heed to this feedback and accordingly changed the
shade of his hosiery to light shade. Entrepreneur found his hosiery enjoying increasing demand just
within a month.

Government:

At times, the Government can also be a source of new product ideas in various ways. For example,
government from time to time issues regulations on product production and consumption. Many a
times, these regulations become excellent sources for new ideas for enterprise formation. For
example, government’s regulations on ban on polythene bags have given new idea to manufacture
jute bags for marketing convenience of the sellers and buyers. A prospective entrepreneur can also
get enterprise idea from the publications of patents available for license or sale. Besides, there are
some governmental agencies that assist entrepreneurs in obtaining specific product information.
Such information can also become basis for enterprise formation.

Research and Development: The last but no means the least source of new ideas is research and
development (R&D) activity. R&D can be carried out in-house or outside the organization. R&D
activity suggests what and how a new or modified product can be produced to meet the customers’
requirements. Available evidences indicate that many new product development, or say, new
enterprise establishments have been the outcome of R&D activity. For example, one research
scientist in a Fortune 500 company developed a new plastic resin that became the basis of a new
product, a plastic molded modular cup pallet. Most of the product diversifications have stemmed
from the organization’s R&D activity.

Methods of Generating Ideas:

As seen above, there could be variety of sources available to generate ideas for enterprise
formation. But, even after generating ideas to convert these into enterprise is still a problem for the
prospective entrepreneur. The reason is not difficult to seek. This involves a process including first
generating the ideas and then scrutinizing of the ideas generated to come up with an idea to serve
as the basis for a new enterprise formation.

The entrepreneur can use several methods to generate new ideas. However, the most commonly
used methods of generating ideas are: focus groups, brainstorming, and problem inventory analysis.
These are discussed as follows:

1. Focus Groups: A group called ‘focus group’ consisting of 6-12 members belonging to various socio-
economic backgrounds are formed to focus on some particular matter like new product idea. The
focus group is facilitated by a moderator to have an open in-depth discussion. The mode of the
discussion of the group can be in either a directive or a non-directive manner. The comment from
other members is supplied with an objective to stimulate group discussion and conceptualize and
develop new product idea to meet the market requirement. While focusing on particular matter, the
focus group not only generates new ideas, but screens the ideas also to come up with the most
excellent idea to be pursued as a venture.

2. Brainstorming:

Brainstorming exercise involving four basic guidelines:

a. Generate as many ideas as possible.

b.Be creative, freewheeling, and imaginative.

c.Build upon piggyback, extend,or combine earlier ideas. 4.Withhold criticism of others’ ideas.

There are two principles that underlie brainstorming. One is differed judgment, by which all ideas
are encouraged without criticism and evaluation. The second principle is that quantity breeds
quality. The brainstorming session to be effective needs to work like a fun, free from any type of
compulsions and pressures. Each member needs to have willingness and capacity to listen to others’
thoughts, to use these thoughts as a stimulus to spark new ideas of their own, and then feel free to
express them. As such, efforts are made to keep the brainstorming session free from any sort of
dominance and obstruction derailing and inhibiting discussion to proceed in a desired manner to
serve its purpose. A normal brainstorming session lasts for from ten minutes to one hour and does
not require much preparation. Here is an example of brainstorming used to generate ideas to make
the organizations presence noticed. A national level institute of the Government of India took its
faculty to a resort in Himachal Pradesh for a brainstorming session for two days to generate ideas on
what it can do to be known, noticed and recognized at the national and international arena. The
seven major ideas generated were to: (i) Open courses like PGDM for the general public,
(ii)Introduce new courses to meet the emerging market requirements, (iii)Introduce research activity
in terms of research projects and fellow programme, (iv) Sign Memorandum of Understanding
(MOUs) with reputed national and international academic institutions, (v) Start courses in
collaboration with the Government and industry, (vi) Nominate especially young faculty members to
join the Faculty Development Programmes conducted by the Indian Institute of Management,
Ahmedabad (IIMA), and (vii) Publish the Institute’s research journal.

3. Problem Inventory Analysis:

Problem Inventory analysis though seems similar to focus group method, yet it is somewhat
different from the latter in the sense that it not only generates the ideas, but also identifies the
problems the product faces. The procedure involves two steps: One, providing consumers a list of
specific problems in a general product category. Two identifying and discussing the products in the
category that, suffer from the specific problems. This method is found relatively more effective for
the reason that it is easier to relate known products to a set of suggested problems and then arrive
at a new product idea. However, experiences available suggest that problem inventory analysis
method should better be used for generating and identifying new ideas for screening and evaluation.
The results derived from product inventory analysis need to be carefully screened and evaluated as
they may not actually reflect a genuine business opportunity. For example, General Foods’
introduction of a compact cereal box in response to the problem that the available boxes did not fit
well on the shelf was not successful, as the problem of package size had little effect on actual
purchasing behaviour. Therefore, to ensure the better if not the best results, problem inventory
analysis should be used primarily to generate product ideas for evaluation.

4. Mindmapping:

Mindmapping is a graphical technique for imagining connections between various pieces of

information or ideas. Each fact or idea is written down and then connected by curves or lines to its
minor or major (previous or following) fact or idea, thus building a web of relationships. It was Tony
Buzan, a UK researcher, who developed the technique “mind mapping” discussed in his book ‘Use
your Head’ (1972). Mind mapping is utilized in brainstorming, project planning, problem solving and
note taking. As is the case with other mapping methods, the intention behind brain mapping too is
to capture attention and to gain and frame information to enable sharing of concepts and ideas.

To get started with mindmapping, the participant just has to write a key phrase or word in the
middle of the page. Then, he must write anything else that comes to his mind on the very same
page. After that, he must try to make connections as mentioned in the previous paragraph.

5. Storyboarding

Storyboarding has to do with developing a visual story to explain or explore. Storyboards can help
creative people represent information they gained during research. Pictures, quotes from the user,
and other pertinent information are fixed on cork board, or any comparable surface, to stand for a
scenario and to assist with comprehending the relationships between various ideas.

6. Role playing

In the role playing technique, each participant can take on a personality or role different from his
own. As the technique is fun, it can help people reduce their inhibitions and come out with
unexpected ideas.

7. Attribute listing

Attribute listing is an analytical approach to recognize new forms of a system or product by

identifying/recognizing areas of improvement. To figure out how to enhance a particular product, it
is broken into parts, physical features of each component are noted, and all functions of each
component are explained and studied to see whether any change or recombination would damage
or improve the product.

8. Visualization and visual prompts

Visualization is about thinking of challenges visually so as to better comprehend the issue. It is a

process of incubation and illumination where the participant takes a break from the problem at hand
and concentrates on something wholly different while his mind subconsciously continues to work on
the idea. This grows into a phase of illumination where the participant suddenly gets a diversity of
solutions and he rapidly writes them down, thereby creating fresh parallel lines of thought.

9. Reverse brainstorming

While the process of brainstorming is the generation of ideas to identify problem-solving methods,
reverse brainstorming starts with thinking about the causes of that problem. Focusing on the causes
of the problem may sometimes be more efficient than focusing on the solution. By finding potential
causes, you can work proactively to resolve or prevent the cause of the problem. Often, teams use
reverse brainstorming to improve products and services.

10. Brainwriting

A brainwriting activity is typically most effective in a group setting. Start by writing a topic on a piece
of paper. Then, pass the paper around the group so that everyone has a turn to write on it and
contribute their ideas to the central topic or question. The ideas of one group member can inspire
the ideas of another, or someone may choose to improve upon an existing one.

11. Forced relationships

The forced relationships method introduces two random and seemingly unrelated items and forces
you to create a connection between them. This technique encourages innovative thinking in order to
build those relationships and possibly develop a new product. You can conduct forced relationship
activities in group settings or individually.

12. S.C.A.M.P.E.R.

S.C.A.M.P.E.R. stands for substitute, combine, adapt, modify, put to another use, eliminate and
reverse. This acronym is essentially a question checklist to prompt your ideas. It asks you to consider
factors like substituting a variable for another, combining one with another or adapting a variable to
a different context. This method helps you think critically and consider creative approaches from
several angles.

Innovation

Innovation is a collaborative process by which organizations abandon old paradigms and make
significant advances. Innovative ideas come from several sources, including “unreasonable”
demands or goals and time pressures. However, there are many blocks to innovation. An innovative
idea is not helpful to an organization unless it is tested and implemented. This article presents the six
steps in the innovation process.

TYPES OF INNOVATION :

1. Incremental Innovation: According to Entrepreneur, 98% of all innovation is incremental. While

the buzz is around disruptive innovations, incremental innovation is an age-old strategy that has
enabled many established companies to remain competitive for decades. Incremental innovation is
the process of minor, steady improvements to your business operations, tools, marketing, and
products. A relatively low-risk approach, incremental innovation focuses on improving existing
offerings to align with current consumer trends.

This approach allows companies to maintain their current business model and avoid cannibalizing
their existing products or services. Let's take a look at some incremental innovation examples:

TVs: Televisions are a prime example of incremental innovation. These products started as heavy
boxes needing wired antennae to bring shows to consumers' living rooms. Modern TV still serves the
same purpose, but manufacturers now offer slimmer, higher-quality screens.

Shaving Razors: What started as a single-blade safety razor has evolved into a myriad of product
variations. Customers can choose from various blade counts, handles, and motorized or non-
motorized razors. The features may have changed, but this product’s basic purpose has remained
consistent over time.

2. Sustaining Innovation:

Sustaining innovation focuses on creating networks of value and customer satisfaction within the
current market. This approach is opposed to disruptive innovation, which creates a new value
network. Companies seek to improve product performance each time to reduce defects. The newer
product version may be more expensive but also carries higher profit margins. This step-change
approach makes the product more appealing to consumers who demand better performance and
are willing to pay a premium.

Sustaining innovation can also help companies create cheaper products, as the companies identify
areas to reduce production costs and leverage a more efficient production process.

Let’s look at some sustaining innovation examples:

iPhone: The original iPhone was disruptive, but every new model is an example of sustaining
innovation. Each year, a new version comes out. It features incremental, sustainable improvements
without reinventing the phone altogether.

Automobiles: The car industry predominantly practices sustainable innovation. For instance, each
version of an SUV becomes slightly more advanced. Perhaps new features and technology are
added, but the fundamental design and market remain the same.

3. Architectural Innovation

Architectural innovation is a process that takes methodologies, technologies, or approaches from

one field and applies them to a different area.Also known as recombination innovation, this is the
underlying approach behind 40% of registered patents since the 1850s. And this trend will
undoubtedly continue to grow as the rate of invention slows down.

Let’s look at some architectural innovation examples:

Uber: This app combines freelance work, geolocation, and ride-sharing. Uber brought the ideas
together, to create something groundbreaking. Not only did Uber shake up the taxi industry, but it
effectively founded the “gig” economy.

3D Printers: Three-dimensional printing technology grew in popularity throughout universities in the

early 2000s. But with advances in technology, the capabilities of 3D printers are now driving massive
changes in many industries. We can already print product prototypes, and research is underway on
the best way to print human organs!

4. Rapid Innovation

Rapid innovation uses speed as the most critical innovation component in order to respond to a
sudden shift in market conditions or consumer demands, such as a pandemic or economic crisis.

In 2020, many companies had to innovate this way, even if they preferred to continue business as
usual. Let's explore some rapid innovation examples:

Pharmaceutical Positioning: Big pharma companies understand that it is more profitable to meet
existing consumer demand than to create it. Pharma companies repositioned their products to help
identify and treat symptoms of COVID-19, so they could tackle the crisis and handle new demand for
medicines.

Hand Sanitizer Hayday: Most will recall the early days of the pandemic when hand sanitizer was in
short supply. Whiskey and cosmetic companies took note, beginning to produce the coveted product
in batches to open additional revenue streams.

5. Disruptive Innovation

Disruptive innovation is the launch of a new business model, concept, product, or service that
creates a new market segment and value-drivers. Often, disruption comes from a new company,
which eventually displaces established market leaders and products.

This approach focuses on meeting consumer demands in ways that no other product or service has
done before. Disruptive innovation often creates entirely new markets or a fundamental shift in how
the consumers interact with the current market after the disruptive product is introduced.

Let's look at some disruptive innovation examples:

Aldi: The grocery chain Aldi created a new type of supermarket, offering a no-frills experience.
Customers must bring their bags (or pay for them) and place their food in their bags themselves. This
model cuts down on expenses for Aldi without reducing the quality of their produce.

Netflix: In the past few years, streaming has become the default way to view movies and television
shows. Since Netflix rose to become a $243B giant, renting physical copies of games, TV shows, or
films is all but in the past.

TOPIC - BUSINESS PLAN

MEANING AND NATURE OF BUSINESS PLAN

Business Plan is a written document that describes the business idea and all the relevant internal
and external elements involved in launching a new venture. It describes the nature and context of
the business opportunities and the plans to exploit the opportunity. It is usually an integration of
functional plans in finance, marketing, manufacturing, and human resources. It serves as a road map
for the entrepreneur. The business plan is prepared by the entrepreneur in consultation with
lawyers, accountants, consultants, engineers, etc.

Investors, venture capitalists, bankers, and suppliers read the business plan. Each group reads it for a
different purpose. The focus and contents of the business plan
will differ from one venture to another depending on its nature and size. Three main perspectives
must be considered in every business plan. (1)The perspective of the entrepreneur who must
articulate what the venture is all about.

(2)Marketing perspective.

(3)Investors perspective.

Business plan is the blue print that provides a clear view of what the entrepreneur wants to do and
key variables influencing success. It must describe where you are, where you want to go and how
you propose to get there. A business plan is a blue print or roadmap for building a business. It is a
word picture of what the entrepreneurial dream is, why the dream can be economically viable for
those involved and how the dream will be realized. A business plan is an operating document.
Starting a new enterprise is highly risky. If the venture fails, it can spoil career, wealth, reputation,
family and even life. Therefore, through thinking and planning is needed before starting.

IMPORTANCE OF BUSINESS PLAN

The business plan is a valuable document for the entrepreneur, potential investors and even for the
employees. The business plan is important to these people due to the following reasons:

1. It helps determine the viability of the venture in a target market.

2. It guides the entrepreneur in starting the enterprise.

3. The thinking involved in the preparation of the business plan makes the

entrepreneur aware of the issues that could impede the venture’s success.

4. It serves as a guide to investors and thereby helps in obtaining finance.

5. Writing the business plan forces the founders to think about all aspects of the venture.

6. A clear business plan articulates the vision and goals of the founders.

7. A business plan communicates to all stakeholders. They can judge the venture’s future on the
basis of the business plan.

8. The business plan helps identify the important variables that will determine the success or failure
of the firm.

9. The business plan is used as a selling document to outsiders.

SIGNIFICANCE OF WRITING THE BUSINESS PLAN/PROJECT PROPOSAL

Business Plan is a formal documentation which contains the set of business goals which are
attainable for the business. It can be regarded as significant because of the following reasons:

1. Helps in Setting Objectives for Managers: A detailed business plan helps in setting short and long
range objectives for the business. Specific objectives can be set and appropriate strategies can be
built around within a limited time frame.

2. Managing Workforce: With business plans the managers have the luxury to pre-determine the
requirements of the organizations in terms of the total manpower required. The rationale for hiring
people should be there in the business plan.
3. Creating a New Business: A business plan is a must have document when an entrepreneur is
planning to have an entirely new business in place. What could be the right steps in starting a
business, what are the pre-requisites and what are the resources which need to be arranged should
be necessary part of a business plan.

4. Providing Credibility: A good business plan converts a good business into a credible,
understandable and attractive business.

5. Makes Prospects Familiar: The business world is dynamic and diverse at the same time. A good
business plan brings in familiarity for people who do not know much about the business.

CONTENTS OF BUSINESS PLAN /PROJECT PROPOSAL

The content of business plan depends upon the objectives and goals set for the business
undertaking. A business plan should include a market plan, financial plan, human plan, resource
plan, etc.

1. Title Page and Table of Contents: A business plan is a professional document and should contain a
title page with the company’s name, logo, and address as well as the name and contact information
of the company’s founders. Many entrepreneurs also include the copy number of the plan and the
date on which it was issued on the title page.

2. Executive Summary/Management Summary: It will usually contain a brief statement of the

problem or proposal covered in the major documents, background information, concise analysis and
main conclusions. It is intended as an aid to decision making by managers. Executive summary
should be concise a maximum of two pages and should summarize all of the relevant points of the
business venture.

3. Business Description, Vision & Mission Statement: Business description summarizes the key
technology, concept, or strategy on which the business is based. The mission statement clearly
states the company’s long- term mission. In the mission statement the use words should be such
that which would help direct the growth of the company. For example McDonald’s mission
statement reads like this- “To provide the fast food customer food prepared in the same high-quality
manner would world-wide that has consistent taste, serving time, and price in a low-key décor and
friendly atmosphere.

4. Business and Industry Profile: In industry analysis future outlook and trends of the industry needs
to be looked into. A proper analysis of the competitors in the market and industry should also be
carried out properly and the results should reflect in the business plan drafted.

5. Description of the Company’s Product or Service: The business plan should include the overall
description of what the company is going to offer to its customers in terms of product/services on
offer. Product/service detail should be written in a terminology-free style so that it is easy for others
to understand.

6. Market Analysis: The most important section in the business plan, the market analysis section
should include conclusive information of how the company will react to changes in the market,
generate sales, and explain why the company should be invested in. The market analysis section
should include:

(a)Market opportunity

(b)Competition analysis
©Marketing strategy

(d)Market research

(e)Sales forecasts

7. Management Team: The management team section should share in detail the management team,
as investors usually invest in people not their ideas.

Included within this section should be:

(a) Management Talent and Skills

(b)Organizational chart

(c) Policy and strategy for employees

(d)Board of Directors and Advisory Board

8. Managerial and Structural Aspects: In this the entrepreneur needs to decide which kind of
organization structure should be adopted. Further, the authority responsibility relationship also
needs to be planned out. It is also necessary for the organization to specify the type of business
process being

followed.

9. Technical Analysis: In technical analysis the results of the technical feasibility carried out earlier is
drafted. In this generally the requirements of the plant and machinery, plant capacity utilization,
location of the plant etc. is analyzed and drafted.

10. Production Analysis: In this a comprehensive budgetary proposal with sub-budgets for all
necessary elements is drafted. In addition to this the quality control system of the organization and
inventory control systems detail should be there in the business plan.

11. Financial Plan: In this the source of capital whether it be fixed or working capital is elaborated.
Secondly, the capital structure in a broad based manner should also be a part of the financial plan.
Thirdly, schemes and strategies to ensure financial control and financial discipline needs to be
drafted firsthand. Other details such as agreements or Memorandum of Undertakings (MOU) with
banks, financial institutions, underwriters etc. should also be a part pf the financial plan.

12. Human Resource Plan: The manpower planning and the need of human resource for the
organization should be analyzed and assessed. Business would do well to draft the procedures for
recruitment, selection, placement, career advancement plans, training and development
programmes, system of personnel compensation etc. in the business plan to draw in clarity about
the priorities of the business.

BUSINESS PLAN FORMAT

Every business plan is unique, reflecting its own elements and circumstances.

However, certain elements are universal and commonly followed.

1. Executive Summary (should not exceed 2 pages)

A. Name, Address, Contact Information of the Company,

B. Contact details of key people of the organization

C. Description of the business, its products and services, and the customer problems being solved

D. Description of the market for the products and services on offer

E. Overview of the venture’s competitive advantages

F. Mentioning the brief description of managerial and technical expertise of key people

G. Highlighting financial forecasts through charts and graphs

2. Vision and Mission Statement

3. Company history (if venture is existing)

4. Business and Industry Profile

A. Industry Analysis

• Industry background and overview

• Significant trends

• Rate of growth

• Essential success factors in the industry

B. Outlook of the Future stages of growth

C. Goals and objectives of the venture

• Operational Goals

• Financial Goals

• Other Goals

5. Business Strategy

A. Desired Image and Position in the Market

B. SWOT Analysis

• Strengths

• Weaknesses

• Opportunities

• Threats

C. Competitive Strategy

• Cost Leadership

• Differentiation

• Focus

6. Company Products and Services

A. Description
B. Patent or Trademark Protection

C. Description of Production Process

D. Future Product Offerings

7. Marketing Strategy

A. Target Market

B. Customers motivation to buy

C. Market Size and Trends

D. Advertising and Promotion

E. Pricing

F. Distribution Channel

8. Location and layout of the Plant (if applicable)

9. Analysis of the Competitor

10. Management Team Description

11. Plan of Operation

12. Financial Forecasts

13. Loan or Investment proposal

14. Appendices (supporting documents etc.)

New Product Life Cycle Development Process

Building new products and services can be a process filled with uncertainty. However, following the
systematic New Product Development process can help businesses gain clarity and confidence in
what they are building.

Overview of seven stages of new product-development

Stage 1: Idea Generation

The goal should be to generate many worthy ideas that can form the foundation for the New
Product Development strategy. The major focus for stage 1 should be to arrange brainstorming
sessions where solving customer problems is given precedence.

This phase is not about generating foolproof ideas that are ready for implementation. Instead, raw
and unproven ideas that can be shortlisted later should be discussed.

Here’s how a business can do that:

1. Emphasize on Customer Problems

The problem that is well described is a problem half-solved. Here’s how to identify the issues that
the target audience is facing:
a. Personal Problems

It is a good idea to look at problems that the business is itself facing to come up with the idea. All a
business needs to do is focus on that specific problem and build a solution that can be tagged a “one
for all” solution to the common problem.

b. Qualify Each of the Listed Problems

The 4U stands for:

Unworkable: Figure out whether the brainstormed product concepts will address some real
problems. Will the product be able to fill the existing customer experience gaps and will the product
achieve product-market fit?

Unavoidable: Is the problem the product will address unavoidable to the extent that it becomes
mandatory to comply? It is necessary to find out whether solving that problem is a choice or a
compulsion.

Urgent: Is the problem urgent and is a solution highly demanded by the target market? If the answer
is affirmative, this could be a chance to cover the white space in the market with the original
product.

Underserved: Are there no available products that address the existing user problems? Look for the
whitespace in the market and hold on to the idea that looks promising.

c. Coming Up With Possible Solutions

If a problem has been identified, it’s time to look for possible solutions. For every user problem,
there ought to be potential New Product Development opportunities.In all, no matter how common
or uncommon the problem is, the solution should be unique. Even if a product already exists, ensure
that the product can solve problems differently.

For instance, Slack and Zoom are both SaaS products that focus on promoting communication and
collaboration. Zoom, however, does this differently by also enabling the conducting of webinars. In
other words, webinars are their unique selling point (USP).

Stage 2: Idea Screening

This New Product Development stage revolves around choosing the one idea that has the highest
potential for success. Put all the ideas available on the table for internal review. That is, turn to
people with industry knowledge and experience in the field for idea screening.

For a new product development idea, having a proof of concept (POC) should hold precedence as it
helps check the feasibility of the idea. There is no point in zeroing in on an idea that is not technically
feasible to build.

Consult the Agile Development team. Their expertise can help with understanding the technical side
of things, which, in turn, can assist with shortlisting ideas worth building a PoC for.

SWOT ( Strengths, Weaknesses, Opportunities, and Threats) analysis can be another good practice to
consider when shortlisting New Product Development ideas.
In a SWOT analysis, the Agile Development team, the product owner, the scrum master, and the
product manager conduct a detailed analysis of the idea to identify an idea where strengths and
opportunities overpower threats and weaknesses.

Conducting a SWOT is relatively simple. Getting started only requires a simple 2×2 grid:

SWOT analysis template

In conclusion, the New Product Development idea should be unique so that people do not need to
be convinced to pay for it.

Stage 3: Concept Development & Testing

Before starting with the New Product Development process, building a detailed version of the idea
and the user stories should be given priority.

This value proposition evaluation is the first step towards concept development and testing. At the
very least, it ensures that problems in the approach are discovered sooner and the team can course-
correct earlier. That helps to ensure that technical debts will not accumulate.

2. Conducting a Competitor Analysis

Knowing about existing market players is a critical strategic step to consider. Understanding the
competition makes it easier to infer:

Where the competitor lacks

Where is the scope for improvement

Existing white space in the market

3. Enlisting the Major Product Features

The user stories involved in the New Product Development software project will make or break a
business. When creating a list of such features, it is imperative to know — how is it an innovative
feature, and how is it going to solve a problem?

4. Create a Value Proposition Chart

Even after being convinced of the wisdom & the utility of an idea, being able to state it clearly to the
end-user, in their context, is quite a different story altogether. The end-user needs to be given a
clear picture of what the new product is capable of doing.
 5. Concept Testing

Once the value proposition is ready, it is time to present it to the set of selected customers. How
they perceive the idea is the test of the efforts so far. If the idea doesn’t look promising, it is wise to
repeat the idea screening steps to develop a new product.

Meaningful insight can be gained by focusing on four critical aspects:

Identification of the focus group, i.e., people who would benefit from the new product under
development.

Assessment of other alternatives that can be presented to the focus group.

Development of a fool proof plan for the New Product Development that includes all stages from
feature development, marketing, pricing, and distribution.

Positioning of the product’s unique features into the customers’ minds to enhance findability and
discoverability.

Stage 4: Market Strategy/Business Analysis

Marketing strategy is all about drafting a way to reach out to the targeted audience. Perhaps the
best and most straightforward method is to follow McCarthy’s 4Ps of marketing for a New Product
Development project.

Category Meaning Purpose

Product Finalizing the software

Product Design
product based on the
 concept testing report
Branding Strategy

Level of services
offered

Price Strategizing around

Pricing Strategy
product licensing cost,
estimating profit Discounting Policies
margins, and creating
Payment Modes
an unbeatable
marketing strategy

Promotion Distinguishing the new

solution from others by
highlighting the hero
point or unique feature
Balancing advertising,
marketing, and public
relations strategy

The mediums to reach

out to the target
audience

Maintaining a fair to-

and-fro customer
communication
frequency limit

Placement Communicating how it

Finalizing product
solves the key problems
distribution strategies
of the customer
Defining the product’s
scope, i.e., local vs
Global

Stage 5: Product Development

When the New Product Development idea is in place, the market strategy is documented, and the
business analysis is completed, it is time to move on with the product life-cycle development
process. The New Product Development starts with developing the prototype followed by MVP.

1. Prototype

This focuses on creating the UI/UX for the product, which is then shared with the stakeholders. This
helps in visualizing how the product will look and whether it complies with ergonomics best
practices.

2. Minimum Viable Product (MVP)

This focuses on working on the user stories in Agile for the New Product that will set it apart from
others. Once the design, development, and testing are done, the MVP is launched in the market with
minimal features. The future iterations depend on the initial response.
The best way to approach New Product Development is to rely on Agile Product Development that
focuses on incremental and iterative development while promoting collaboration and
communication.

Stage 6: Deployment

Manual testing of the new product to validate its overall performance and efficiency of output
considering all input scenarios.

The product is pushed into the live environment, i.e., the product is available and ready to use by the
end-users.

Stage 7: Market Entry/Commercialization

Commercialization is an umbrella term that entails varied strategies to ensure the success of the
new product. Here is what commercialization includes: