IDEA TO BUSINESS MODEL (KOE060)

UNIT I

BUSINESS
 Business is the act of providing goods or services to customers in
exchange for money.
 The main aim of business is to earn a profit by satisfying the needs
and wants of customers.
 It can be a small enterprise, such as a local shop or a large organization
like a multinational corporation.
 To run a successful business, it requires careful planning,
management, and investment in order to achieve its goals.

BUSINESS IDEA
 A business idea is a creative or innovative concept that can be turned
into a profitable business venture.
 It's something that identifies a problem or gap in the market and has
the potential to meet the needs of a specific target audience.
 A successful business idea can lead to the creation of a new product,
service, or business model that can generate revenue and profit.

SEARCH FOR A BUSINESS IDEA

Here are some steps you can follow to search for a business idea:
 Identify problems or gaps in the market: Look for areas where
there is a need for a solution. This could be in industries that you have
experience or interest in, or areas where you see a lack of options.
 Research current market trends: Keep up to date with what's
happening in the market by reading industry publications, attending
trade shows or conferences, and conducting online research. This will
help you identify emerging trends and opportunities.
 Assess your skills, passions, and interests: Consider what you are
good at and what you enjoy doing. This will help you identify
potential areas where you can start a business.
 Look for inspiration from your own experiences: Consider your
personal experiences and challenges you've faced. Is there a product
or service that you wish existed to make your life easier? This could
 be an opportunity to create a business that addresses a need that you
and others have.
 Identify emerging technologies: Stay on top of emerging
technologies and consider how they can be applied to create new
products or services. For example, the rise of artificial intelligence
and machine learning has led to the development of chatbots and
virtual assistants, which can be used to improve customer service and
sales.
 Evaluate your resources: Consider your available resources such as
time, money, and skills when evaluating potential ideas. Choose an
idea that you can realistically pursue with the resources you have.
 Evaluate potential ideas: Analyze each idea by considering the
market size, target audience, competition, and potential profitability.
Narrow down your list to the ideas that have the greatest potential.
 Test your ideas: Before committing to an idea, test it with potential
customers. This could involve conducting market research or creating
a prototype to get feedback.

Remember, the key to a successful business idea is identifying a need in the

market and creating a unique solution that meets that need. With thorough
research and analysis, you can find a business idea that has the potential to
be profitable and sustainable.

HOW TO CHOOSE AN IDEA

Choosing the best business idea from a list of potential ideas can be
challenging. Here are some tips to help you
select the best idea:
 Assess potential profitability: Consider the market size,
competition, and potential revenue of each idea. Choose an idea that
has the greatest potential for profitability.
 Consider your skills and interests: Choose an idea that aligns with
your skills and interests. This will make it easier for you to stay
motivated and committed to the business.
 Evaluate business-lifestyle fit: If you want to have time for both
work and family, choose a business that won't require you to work
long hours. If you don't like being in an office, choose a business that
can be run from anywhere. Picking a business that fits your lifestyle
can help you avoid getting too tired.
 Evaluate the market need: Consider if there is a real need for the
product or service that you are considering. Look for gaps in the
 market that you can fill.
 Evaluate the competition: Consider the level of competition for each
idea. Look for ideas where you can differentiate from competitors and
offer a unique value proposition.
 Test your ideas: Before committing to an idea, test it with potential
customers. This could involve conducting market research or creating
a prototype to get feedback.

Remember, choosing the best business idea requires careful evaluation and
analysis. By considering the factors above, you can select an idea with the
greatest potential for success.

PRODUCT
 A product is something that is made or created to be sold or used by
customers.
 It can be a physical item, such as a toy or a piece of clothing, or a
digital item, such as software or an app.
 Products can be designed for different purposes, such as
entertainment, education, or productivity.
 They are typically created to meet a specific need or solve a particular
problem for the customer.

SELECTION OF PRODUCT
Product selection is the process of identifying, evaluating, and choosing the
best product ideas to bring to market. It is a crucial step in the product
development process as it determines the success of a product in the market.
Here are some important notes on product selection:

 Simple and Affordable to Develop: When selecting a product, it is

important to consider its development cost. Choosing a product that
is simple and affordable to develop can save time and money in the
long run. This could mean selecting a product with a basic design,
fewer components, or a shorter development timeline.
 Evaluate the feasibility: Consider the technical, financial, and
operational feasibility of bringing your product to market.
 Consider your expertise and interests: Choose a product that aligns
with your expertise and interests. It will help you in creating a product
that meets the market need, and you will enjoy working on it.
 Analyze the competition: Analyze the existing competition to
understand their product offerings, pricing, and marketing strategies.
 This analysis will help you create a product that is unique and better
than your competitors.
 Determine your budget: Determine the budget you have for product
development, manufacturing, and marketing. This will help you
choose a product that fits within your budget.
 Consider the scalability: Choose a product that can be easily scaled
up or down according to the market demand. This will help you in
managing the production and distribution of the product effectively.
 Determine the cost and potential profit: Calculate the cost of
producing and marketing your product and determine the potential
profit. Make sure the profit is worth the investment.
 Consider the regulatory and legal requirements: Make sure your
product meets regulatory and legal requirements before bringing it to
market.
 Recurring Revenue: Another important factor in product selection is
its potential for generating recurring revenue. This could involve
selecting a product that requires consumables or ongoing
maintenance, or a product that has a subscription-based revenue
model. Recurring revenue can help ensure a stable cash flow and
sustained growth for the business.
 Test the product: Before launching the product, test it with a sample
group of your target market to gather feedback and improve the
product.
 Keep the future in mind: Select a product that has long-term
potential and can stay relevant in the market for years to come. This
will help you in generating consistent revenue and creating a
sustainable business.

THE ADOPTION PROCESS

The adoption process is a marketing concept that describes the stages a
consumer goes through in accepting and purchasing a new product or
service. This process can be broken down into five stages:

 Awareness: In this stage, the consumer becomes aware of the new

product or service. This can happen through advertising, word of
mouth, or other marketing efforts.
 Interest: Once the consumer becomes aware of the product or
service, they may start to show interest. This can happen if the product
or service meets a need or solves a problem for the consume.
 Evaluation: In this stage, the consumer starts to evaluate the product
 or service. They may research it, read reviews, or compare it to other
products or services.
 Trial: If the consumer is satisfied with the evaluation, they may try
the product or service. This can happen through a free trial, a demo,
or a small purchase.
 Adoption: If the trial is successful, the consumer may adopt the
product or service and continue to use it. This can lead to repeat
purchases and positive word of mouth.

It's important for marketers to understand the adoption process so they can
tailor their marketing efforts to each stage. For example, in the awareness
stage, the focus may be on increasing brand awareness through advertising.
In the evaluation stage, the focus may be on providing detailed information
and answering questions to help the consumer make an informed decision.

PRODUCT INNOVATION
 Product innovation refers to the process of creating new products or
improving existing ones with the goal of meeting customer needs,
improving the quality and performance of existing products, and
enhancing the overall customer experience.
 It may involve the integration of new technologies, materials, or processes
to enhance product performance, functionality, and usability. Product
innovation may also involve the development of new features, designs,
packaging, or marketing strategies to differentiate products from those of
competitors and capture the attention of customers.

Innovation in products is required for several reasons:

 Competitive Advantage: With constantly evolving markets and
changing consumer needs, businesses need to innovate their products to
stay ahead of their competition and gain a
 Customer Satisfaction: Innovation can lead to the creation of products
that better meet the needs and preferences of customers, ultimately
resulting in higher customer satisfaction.
 Increased Revenue: Innovative products have the potential to attract new
customers, retain existing ones, and increase revenue through the
introduction of new and improved features.
 Brand Image: Innovation in products can help build a positive brand
image for a company, positioning it as a leader in its industry and driving
customer loyalty.
 Cost Reduction: Innovations in products can also lead to cost reductions
 through increased efficiency, reduced waste, and improved supply chain
management.

TYPES OF PRODUCT INNOVATION

 Development of new products (NPD) New products can fall under any
type of innovation. They can be radical or disruptive, but usually they are
actually incremental and sustaining by nature. Radical and disruptive
innovations are not the most common and for good reason. They are harder
to get right, they present more risks, and the success rate is not very high.
The tricky part is not just coming up with ideas for new products, or even
taking them to completion. The most difficult part is driving adoption of
these products. And even if you’re successful, you still need to do all of
that with manageable risks while keeping costs under control. Companies
that have a great track record of launching successful new products use a
systematic way of taking their ideas from concept to a marketable product.

 Improvement of existing product or service This type of product

innovation is what we often refer to as incremental innovation. More
specifically it refers to incremental changes aimed at improving existing
products. Improving on innovations developed by others is usually the
most lucrative and successful type of product innovation. This happens
because when new products are launched, they are usually not exploited to
their full potential. A series of incremental innovations and improvements
have to be made to better meet the needs of consumers. Take for example
the computer. It was a new product when it has first appeared, a truly
radical innovation. Several innovations and improvements in the
technology made it possible to go from giant computers the size of a room
to personal computers, and later laptops and smartphones. Innovations in
computer hardware and software have made it possible to mass produce
laptops at affordable prices.

 New features to a product : Product improvement is the process of making

significant and meaningful changes to products and this can also be done
through new features. But new features can be just as risky as launching a
new product.

PRODUCTION, PLANNING, AND DEVELOPMENT STRATEGY

 Production, planning, and development strategy refers to the process of
creating a plan for the manufacturing of products that meets the needs of
the market while also being cost-effective and efficient.
 It involves a series of steps that start with identifying the demand for the
 product and end with the delivery of the finished product to customers.

PRODUCTION, PLANNING, AND PRODUCT DEVELOPMENT

STRATEGY:

Production planning:

STEP 1. Forecast the demand of your product

Estimate your demand, so that you know how many products you need to produce
during a specific time period. You may have already some confirmed orders for
the next couple of month, but on top of that, you need to predict how many more
may come. Different methods exist to forecast your product demand. A traditional
technique to estimate product demand is based on historical information (e.g.
orders placed by your customers in the past). While this is a very common method,
you need to consider external and internal events in your business environment
that could alter past patterns. For example, new market trends, a slowdown in the
economy, or a new marketing campaign that could increase or decrease your
product demand compared to what happened in the past.

STEP 2. Determine potential options for production

Determine the different production options available to meet the forecasted
demand of your product. For example, if you want to produce 100 shirts, you
need to use a certain number of machines, human resources, materials, and time.
Different combinations of these inputs can lead to different production times and
costs.
 Start by mapping all the steps of your production process. When doing so,
take into account if tasks are sequenced or dependent on other tasks, or if
they happen simultaneously or independently. Below is an example of how
a simple process-mapping flowchart could look. Each box represents a task
of your production process. The map of the production process will be
different and unique to each company. Think about how to improve process
flow by eliminating bottlenecks.
 Determine the resources needed to complete each task involved in your
production process. Look at how different combination of resources
lead to different production times and costs:
 Human Resources: Determine the number of staff that will be
involved in each phase of the production process, their availability,
and the cost. Make sure their time is well utilized.
 Machinery and Equipment : Identify the machines needed and their
availability, including any maintenance or replacement that may be
needed.
 Materials : Make a list of all the materials needed for production and
 how you obtain them. Assess the reliability of your suppliers,
including delivery time. Having materials available when needed is
crucial for the production process.
 Inventory : It is important that you consider how to optimize your
inventory. Keeping a large inventory is expensive, but keeping a low
inventory is risky if demand fluctuates on a regular basis. Having a
good inventory control system in place can help your firm
accommodate variations in demand and mitigate possible problems
or delays that may occur during the production process.

STEP 3. Choose the option for production that uses the combination of
resources more effectively
 Compare the cost and time of each potential production option and choose
the option that uses the most efficient combination of resources and that
allows you to meet product demand. The chosen option should maximize
the operational capacity of your firm.
 Always make sure you can cover the costs involved in the production
process (purchase of materials, office rent, payment of staff salary, leasing,
etc.)
 You need to share your production plan with all the departments and staff
that contribute or interact with the production process, including human
resources, procurement, finances, marketing, etc. If everybody knows what
to do, and what materials and equipment should be used for each task of the
production process, operations will be smoother.

STEP 4. Monitor and control

 You want to ensure that your plan is working in the way it is intended.
Monitoring and controlling is about comparing what is happening with
what should be happening. Having a control system in place helps you
detect problems as soon as they occur, allowing you more time to correct
before it is too late.

STEP 5. Adjust
 Be prepared to adjust the plan if needed. The production plan needs to be
flexible to accommodate changes in customers’ demand (e.g. an important
order that gets cancelled). Also, you need to take into account possible risks
that may arise during the production process (e.g. a machine breaks, a
worker gets sick or a supplier does not deliver on time) and have a risk
mitigation plan.
Product development strategy:
 Idea generation: This is the first step in the process where the idea for a
new product is generated. This can be done through various methods such
as brainstorming, customer feedback, competitor analysis, and market
research.
 Idea screening: The second step is to screen the generated ideas and
choose the most feasible and viable one. The idea should align with the
company's goals, objectives, and capabilities.
 Concept development and testing: The third step is to develop the
concept of the product and test it with a sample group of target customers
to evaluate its feasibility and effectiveness.
 Business analysis: The fourth step is to conduct a thorough analysis of
the product's potential profitability, target market, production costs, and
pricing strategies. This analysis helps in determining the financial
feasibility of the product.
 Product development: The fifth step is to develop the actual product,
design its packaging, and create a prototype.
 Market testing: The sixth step is to test the product in the market with a
small group of target customers to gather feedback on the product's
performance, features, and packaging.
 Commercialization: The final step is to launch the product in the market.
This involves creating a marketing plan, setting up a distribution network,
and training sales staff to promote the product.

NEW PRODUCT IDEA

There are several ways to get new product ideas, including:
 Use social media: Use social media platforms to monitor conversations
about your industry and products. This can give you insights into what
people are looking for and what they're not happy with.
 Identify gaps in the market: Look for gaps in the market where there are
no existing products or where current products are not meeting customer
needs.
 Industry trends: Keep up-to-date with industry news and trends to
identify gaps in the market that your business could fill.
 Research and development: Invest in research and development to come
up with new ideas and products.
 Crowd-sourcing: Use online platforms to gather ideas from a large group
of people.
 Customer feedback: Conduct surveys, focus groups, or social media
listening to gather feedback from customers about what products they
 would like to see in the market.
 Personal experience: Pay attention to your own experiences and identify
products that you wish existed or problems that you would like to solve.
 Competitor analysis: Analyze your competitors' products and identify
areas where you can improve or create a better product.