Ch. 10 Summary.docx

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Northeastern University
Business Administration
BUSN 1101
Sandy Blank

• A product is something that can be marketed to customers because it provides them with a benefit and satisfies a need. Products can be goods or services or a combination of both. • A “new-to-the-company product” is a good or a service that is new to the company but has been sold by a competitor in the past—for example, Peeps marshmallow Easter decorating kits. • An “improvement in an existing product” is an enhancement of a product already on the market—for example, a change of ingredients and packaging for Mike & Ike’s. • An “extension to an existing product line” is a new product developed as a variation of an already existing product—for example, Peeps chocolate eggs. • A “new-to-the-market product” is a good or a service that has not been available to consumers or manufacturers in the past—for example, the PowerSki Jetboard. • Four characteristics of the entrepreneurial start-up are: 1. It’s characterized by innovative products and/or practices. 2. Its goals include profitability and growth. 3. It focuses on new opportunities. 4. Its owners are willing to take risks. • Entrepreneurship is about carefully calculated risks, not unnecessary risks. Most entrepreneurial decision making can be improved with input from one or both of two sources: 1. Information gathered from research Knowledge gained from personal experience • The majority of product ideas come from entrepreneurs and small business owners, though medium and large organizations also must identify product-development opportunities in order to remain competitive. Firms seek product ideas from people inside the organization, including those in marketing, sales, research, and manufacturing, as well as from customers and others outside the organization. • An idea turns into a business opportunity when it has commercial potential —when you can make money by selling the product. • Time utility provides value by having a product available at a convenient time. • Place utility provides value by having a product available in a convenient location. • Ownership utility provides value by transferring a product’s ownership. Form utility provides value by changing the composition of a product. • Before developing a new product, you need to understand the industry in which it will be sold. • An industry is a group of related businesses that do similar things and compete with each other. • To research an industry, you begin by studying the overall industry and then progressively narrow your search by looking at smaller sectors of the industry, including markets (or groups of customers) and market segments (smaller groups of customers with common characteristics that influence their buying decisions). Within a market segment, you might want to subdivide further to isolate a niche, or unmet need. • After you’ve identified a group of potential customers, your next step is finding out as much as you can about what they think of your product idea. • Before making a substantial investment in the development of a product, you need to ask yourself: are there enough customers willing to buy my product at a price that will allow me to make a profit? • Answering this
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