CHAPTER FOUR

PRODUCT/SERVICE DEVELOPMENT

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 Learning Objectives

Upon the completion of this unit you can:-

 Describe the Concept of Product and Services;

 List Product/Service Development Process; and

 Discuss the Intellectual Property Protection

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 4.1 The Concept of Pdt./Service Technology

• Organization's success is dependent on

customer satisfaction and delight.
• Customer satisfaction is achieved through the
development of product and service, which
have all attributes required by the customer.
• A success product or services do not only have
an attractive package design but should be
also able to provide robust/healthy
performance.
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 ….continued
• Thus, product design must be practical
enough for production and powerful enough
to provide a competitive advantage.
• The essence of product design is to satisfy
customer and maximizes the value for the
customer at minimum cost.
• This may not require development of new
product, but an enhancement to existing
product or service.
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 ….continued
• Most companies apparently are
introducing a wide variety of smaller,
more efficient, and more intelligent products,
coupled with a leaner, more efficient
approach to operation, by eliminating an
existing pain or adding significant tangible
benefits.
• Goal: to create products and services by
identifying an emerging trend and to match
that trend with the right technology and
understanding of the purchasing dynamics.
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 4.3 Product/Service Dev’t Process
• Once the opportunity is selected,
and a business model has been
designed, the next step is to develop
a commercial version of the
opportunity which in most cases is
either a product or a service.

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 ….continued

• Product development is the

process through which companies
react to market signals, respond
to changes in customer demand,
adopt new technologies, foray
into new areas, and ensure
continuous growth.
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 ….continued

• Product/service development process

involves the following four distinct stages.
1. New Idea Generation
• starts with search for ideas.
• Some of the more fruitful sources of ideas
for entrepreneurs include consumers,
existing products and services, distribution
channels, the federal government, and
research and development.
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 ….continued

2. Idea Screening
• the purpose is to lessen the number of ideas
to few vital/valuable ideas.
• The ideas should be written down and
reviewed each week by an idea committee
who should sort the ideas into three groups-
Promising Ideas, Marginal Ideas, and Rejects:
• Each promising idea should be researched by
committee member.
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 ….continued
3. Concept Development and Testing
• Refining attractive ideas into fast able product
concepts since people do not buy ideas but
concepts.
• Concept Testing: - calling target consumers/
customers for testing product concepts and
then getting the consumers’ reactions.
• At this stage, the concepts can be in words or
picture description.
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 ….continued

4. Marketing Strategy Development

• Developing plan for introducing the new
product into the market.
• undergo further refinement in subsequent
stages.
• Consists of three parts:
• (1) Market size, structure, behavior ;
• ( 2) Planned price, distribution strategy, and
marketing budget of the 1st year; and
• (3) Long run sales and profit goals, marketing mix
strategy.
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 ….continued

5. Business Analysis
• evaluate the proposals’ business
attractiveness.
• prepare sales, cost and profit
projections to determine whether
they satisfy the company's objective
or not.
• Estimated Total Sales
• Estimating Cost and Profits
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 ….continued

6. Product Development
• Develop one or more physical version of the
product concept.
• Find a proto type that the
consumers/customers see as embodying the
key attribute described in the product
concept statement.
• Functional tests are conducted under laboratory &
field conditions (Durability, Speed, Cost, saftey,
etc)
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 ….continued

7. Market Testing
• The stage of launching the sample
product/service with the brand name.
• The goals are to test authentic of
consumer/customer settings, the market is
and how users react to handling, using and
repurchasing the actual product.
• It yields several benefits include more reliable
forecast of future sale, and pretesting of
alternative of future sale.
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 ….continued

8. Commercialization
• When (timing), Market entry timing is critical.
• it will face three choices.
1. 1st choice:- is First Entry. To enjoys the "first mover
advantage" of locking up key distributors & gaining
reputation.
2. 2nd choice:- goes with Late Entry Strategy-which
has three advantages include:-
less cost of educating the market;
Can see product fault and
can learn the size of the market.
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 ….continued

3. 3rd strategy- Parallel Entry:- can take the advantage

of opting for the latest technology and production
process and operate at higher volume of operation.
 This leads to reduced production cost and
production of quality goods and services.
 A new businessman can thus provide improved
quality goods and services at lower cost and further
tap the market with an innovative marketing
approach.
• Where (Geographical Strategy):-scope of
market area.
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 4.3 Product/Service Protection

4.3.1 What is Intellectual Property?

• It is a legal definition of ideas, inventions, artistic works and
other commercially viable products created out of one's
own mental processes.
• protected by such legal means as patents, copyrights, and
trademark registrations.
4.3.2 Patents
• A patent is a contract between an inventor and the
government in which the government, in exchange for
disclosure of the invention,
• the exclusive right to enjoy the benefits resulting' from the
possession of the patent.
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 ….continued
• Utility Patent: protects any new invention or
functional improvements on existing inventions.
• Design Patent: protects the appearance of an
object and covers new, original, ornamental,
and unobvious designs for articles of
manufacture.
• A patent provides the owner with exclusive
rights to hold, transfer, and license the
production and sale of a product/process.

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 ….continued
• What Can Be Patented Then?
• Processes: Methods of production, research,
testing, analysis, technologies with new
applications.
• Machines: Products, instruments, physical
objects.
• Manufactures: Combinations of physical
matter not naturally found.
• Composition of matter: Chemical compounds,
medicines, etc.
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 ….continued
4.3.3 Trademarks
• word, symbol, design, or some
combination of such, or it could be a
slogan or even a particular sound that
identifies the source or sponsorship of
certain goods or services.
• These are distinctive names, marks,
symbols or motto identified with a
company’s product or service and
registered by government offices.
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 Benefits of a Registered Trademark
• notice your exclusive rights
• to sue in federal court for trademark
infringement, which can result in recovery of
profits, damages, and costs.
• establishes incontestable rights to use the
mark.
• prevent importation of goods with a similar
mark.
• It entitles you to use the notice of
registration.
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 4.3.4 Copyrights
• Copyright is a right given to prevent others
from printing, copying, or publishing any
original works of authorship.
• Copyrights provide exclusive rights to
creative individuals for the protection of
literary or artistic productions.
• It protects original works of authorship
including literary, dramatic, musical, and
artistic works, such as poetry, novels, movies,
songs, computer software, and architecture.
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 4.4 The Intellectual Property System in
Ethiopia
• Ethiopia became a party to the convention establishing the
world Intellectual Property Organization (WIPO) in
February 1998
• The Country had joined the Nairobi Treaty on the
Protection of the Olympic Symbol in 1981.
• It is a member of the Treaty establishing the Common
Market for Eastern and Southern Africa (COMESA) which
was formed in 1994,
• the Partnership Agreement between members of the
African, Caribbean and Pacific (ACP) Group of States and
the European Union (EU).
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 ….continued
• The Ethiopian has established Intellectual Property Office
in the year 2003 containing the understated Objectives:-
• To facilitate the provision of adequate legal protection for
and exploitation of intellectual property in the country;
• To collect, organize and disseminate technological
information contained in patent documents and encourage
its utilization;
• To study, analyze and recommend policies and legislation
on intellectual property to the government; and
• To promote knowledge and understanding of intellectual
property among the general public;

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 ….continued
• According to the proclamation a patent, an
invention must fulfill three conditions to be
granted-
(1) it must be new-
(2) It should be capable of industrial application-
industrially manufactured or used; and
(3) It must be "non-obvious”- occurred to any
specialist working in the relevant field.
• The proclamation excludes the following from
patentability:-
• Inventions contrary to public order or morality;
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 Services

• Are a form of product that consists of

activities, benefits, or satisfactions offered for
sale that are essentially intangible and don’t
result in the ownership of anything.
• There are many types of service, ranging from
local beauty salons to international consulting
groups.
• Some rely on individual skills of entrepreneurs
and grow only to the extent that owners can
work longer hours or individually become
more productive.
 Type of Service Firms

• Professional Service: personal skills and knowledge of individuals

• E.g. physicians, lawyers, certified public accountants, and
architects.
• Personal Service: individual service and relies on individual skill,
• E.g. software engineers, tailors, barber, travel counselor, and
management consultants.
• Merchandising:
• E.g. retail stores, restaurants, video rental shops.
• Distributive service:
• E.g. Wholesalers, contract warehouse, export-import agents,
transport firms, mail or express companies.
• Information service:
• E.g. private schools, banks, newspapers, research labs, Medias,
counseling centers, clinics, and travel agencies.
 The nature and Characteristics of Service
• Service Intangibility: service cannot be seen, tasted,
felt, heard, or smelled before they are bought.
• Service inseparability: means that service cannot be
separated from their providers, whether the providers
are people or machine. If a service employee provides
the service, then the employee is a part of the service.
• Service Variability: means that the quality of the
services depends on who provides them as well as
when, where, and how they are provided.
• Service Perishability: service cannot be stored for late
sale or use.