PRODUCT

DEVELOPMENT,
OPERATIONS, AND
FINANCIAL PLAN
MS. HANNAH LINESES REY
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F U N D A M E N TA L S O F P R O D U C T
DEVELOPMENT
Before commercializing a new product or service, the entrepreneur must focus first on
refining the product or service and validate its market acceptability. This new product does
not have to be a totally new product. It can be a new product line from the existing business
of the entrepreneur, a product line extension, an enhancement, or a repositioning of an
existing product. Product development is the process of developing, testing, and
commercializing a product or service with the ultimate objective of solving the problem of the
primary target market. It is composed of four sequential steps: (1) developing a product or
service description, (2) creating a prototype, (3) testing the prototype, and (4) validating the
market.
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 P R O D U C T O R S E RV I C E
DESCRIPTION
It simply describes how a product or service works and how it
benefits the customers.
1. It should directly address the primary target market in personal
manner using everyday language.
2. It should highlight the features that will cater to the customer’s
needs or address the customer’s problems.
3. Realistic superlatives should be used for the product description
 C R E AT I N G A P R O T O T Y P E
OF THE PRODUCT OR
SE RVI CE
Prototype is a preliminary model or sample of a new product or service that is created to
test a product concept or service process. According to Entrepreneur, creating a prototype
lessens implementation/commercialization risks and provides the entrepreneur a bunch of
advantages as follows:
1. Creating a prototype enables the entrepreneur to engage in trial-and-error, provides
room for improvement, and refines the functionality of the product design or service
process.
2. Creating a prototype provides the entrepreneur a window to test the performance and
specifications of various materials and service processes.
3. A prototype helps the entrepreneur effectively describe the product or service to the
product team.
4. Creating a prototype elicits respect from key stakeholders and customers
 TESTING THE
PROTOTYPE
It is mandatory to ensure that the product or service will not fail the
customers and will deliver its definitive purpose. This will elicit
customer satisfaction and, eventually, customer loyalty and
retention.
1. Focus group discussion
2. Legality and ethical test
3. Safety test
4. Product costing test
5. Component test
6. Competitors’ product/service test
VA L I D AT I O N O F M A R K E T
- A C C E P TA B I L I T Y A P R O C E S S O F
FINDING OUT IF THE INTENDED
P R I M A R Y TA R G E T W I L L B E B U Y I N G
T H E P R O D U C T O R AVA I L I N G T H E
SERVICE

Market Acceptability
- is a critical factor that the entrepreneur must validate before
launching the product or service, because this can strongly
suggest if the business will be successful or not.
 THE 4MS OF
OPERATIONS
(METHODS,
MANPOWER,
MACHINES, AND
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