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Entrepreneurship Chap 4


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Entrepreneurship Chap 4

  1. 1. HisrichPetersShepherdChapter 4Creativityandthe Business IdeaCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
  2. 2. 4-2Trends The start of a trend that lasts for aconsiderable period of time provides one ofthe greatest opportunities for starting anew venture. Trends that will provide opportunitiesinclude: green trend, clean-energy trend,organic-orientation trend, economic trend,social trend, health trend, and Web trend.
  3. 3. 4-3Sources of New Ideas Consumers Informally monitor potential ideas and needs. Formally arrange for consumers to express theiropinions. Existing Products and Services Analysis uncovers ways to improve offeringsthat may result in a new product or service. Distribution Channels Channel members can help suggest and marketnew products.
  4. 4. 4-4 Federal Government Files of the Patent Office can suggest newproduct possibilities. New product ideas can come in response togovernment regulations. Research and Development A formal endeavor connected with one’s currentemployment. An informal lab in a basement or garage.Sources of New Ideas (cont.)
  5. 5. 4-5Methods of Generating New Ideas Focus Groups A moderator leads a group of 8 to 14participants through an open, in-depthdiscussion in a directive or nondirective manner. An excellent method for generating andscreening ideas and concepts.
  6. 6. 4-6 Brainstorming Allows people to be stimulated to greatercreativity. Good ideas emerge when the brainstormingeffort focuses on a specific product or marketarea. Rules of brainstorming: No criticism. Freewheeling is encouraged. Quantity of ideas is desired. Combinations and improvements of ideas areencouraged.Methods of Generating New Ideas(cont.)
  7. 7. 4-7 Brainwriting A form of written brainstorming. Participants write their ideas on special forms orcards that circulate within the group. Problem Inventory Analysis Consumers are provided with a list of problemsand are asked to identify products that havethose problems. Results must be carefully evaluated as they maynot actually reflect a new business opportunity.Methods of Generating New Ideas(cont.)
  8. 8. 4-8Creative Problem Solving Creativity tends to decline with age,education, lack of use, and bureaucracy. Latent creative potential can be stifled byperceptual, cultural, emotional, andorganizational factors. Creativity can be unlocked by using any ofthe creative problem-solving techniques.
  9. 9. 4-9 Brainstorming Session starts with a problem statement. No group member should be an expert in thefield of the problem. All ideas must be recorded. Reverse Brainstorming A group method that focuses on the negativeaspects of a product, service, or idea as well asways to overcome these problems. Care must be taken to maintain group morale.Creative Problem Solving (cont.)
  10. 10. 4-10 Gordon Method Method for developing new ideas when theindividuals are unaware of the problem. Solutions are not clouded by preconceived ideasand behavioral patterns. Checklist Method Developing a new idea through a list of relatedissues. Free Association Developing a new idea through a chain of wordassociations.Creative Problem Solving (cont.)
  11. 11. 4-11 Forced Relationships Developing a new idea by looking at productcombinations. A five step process which focuses on generatingideas from relationship patterns betweenelements of a problem. Collective Notebook Method Developing a new idea by group membersregularly recording ideas.Creative Problem Solving (cont.)
  12. 12. 4-12 Attribute Listing Developing a new idea by looking at thepositives and negatives. Big-Dream Approach Developing a new idea by thinking withoutconstraints. Parameter Analysis Developing a new idea by focusing on parameteridentification and creative synthesis.Creative Problem Solving (cont.)
  13. 13. 4-13Figure 4.1 - Illustration ofParameter Analysis
  14. 14. 4-14Innovation Types of Innovation Breakthrough Fewest number of innovations. Establishes the platform on which future innovations inan area are developed. Should be protected by patents, trademarks, andcopyrights. Technological Occurs more frequently; not at the same level ofbreakthrough inventions. Offers advancements in the product/market area. Needs to be protected.
  15. 15. 4-15 Ordinary Occurs most frequently. Extends a technological innovation into a betterproduct or service or one that has a different marketappeal. Usually come from market analysis and pull, nottechnology push.Innovation (cont.)
  16. 16. 4-16 Defining a New Innovation (Product orService) Newness can be: In the consumer concept. A change in the package or container. Slight changes or modifications in the appearance ofthe product. (Industrial market) Companies also add products to their productline that are already marketed by othercompanies; products are new to themanufacturer but not the consumer.Innovation (cont.)
  17. 17. 4-17 Classification of New Products Consumer’s Viewpoint The continuum proposed by Thomas Robertson isbased on the disrupting influence that use of theproduct has on established consumption patterns. Continuous innovations. Dynamically continuous. Discontinuous innovations. This approach is consistent with the marketingphilosophy that “satisfaction of consumer needs” isfundamental to a venture’s existence.Innovation (cont.)
  18. 18. 4-18Figure 4.3 - Continuum forClassifying New Products
  19. 19. 4-19 Firm’s Viewpoint Distinction can be made between new products andnew markets. Situations with a new technology and a new marketare the most complicated and pose the highest degreeof risk.Innovation (cont.)
  20. 20. 4-20Figure 4.4 - New ProductClassification System
  21. 21. 4-21Figure 4.5 - A Model of theOpportunity Recognition Process
  22. 22. 4-22Product Planning and DevelopmentProcess Establishing Evaluation Criteria Criteria should be established at each stage ofthe product planning and development process. It should be all-inclusive and quantitative innature. Criteria should evaluate the idea in terms of: Market opportunity. Competition. Marketing system. Financial factors. Production factors.
  23. 23. 4-23Figure 4.6 - The Product Planningand Development Process
  24. 24. 4-24 Idea Stage Promising ideas should be identified andimpractical ones eliminated. Evaluation method – Systematic marketevaluation checklist. Determine the need for the new idea as well asits value to the company. Concept Stage Refined idea is tested to determine consumeracceptance which can be measured through theconversational interview method.Product Planning and DevelopmentProcess (cont.)
  25. 25. 4-25 Product Development Stage Consumer reaction to the product/service isdetermined. A consumer panel is given a product sample andpreference is determined through methods suchas multiple brand comparisons, risk analysis,etc. Test Marketing Stage Increases certainty of successfulcommercialization. Actual sales reflect consumer acceptance.Product Planning and DevelopmentProcess (cont.)
  26. 26. 4-26E-commerce and Business Start-up E-commerce offers entrepreneurs anopportunity to be creative and innovative. Factors that facilitate high-growth inelectronic commerce: Widespread use of personal computers. Adoption of intranets in companies. Acceptance of the Internet as a businesscommunications platform. Faster and more secure systems.
  27. 27. 4-27 Using E-Commerce Creatively Entrepreneurs have to decide whether to: Run Internet operations within the company. Outsource these operations to Internet specialists. Use e-commerce packages provided by softwarecompanies. The integration of front-end and back-endoperations represents the greatest challenge fordoing Internet business.E-commerce and Business Start-up(cont.)
  28. 28. 4-28 Web Sites Ease of use. Structure and organization of information. Search capability. E-mail response system. Speed. Compatibility with different browsers andplatforms.E-commerce and Business Start-up(cont.)
  29. 29. 4-29 Tracking Customer Information Electronic databases track the activity of theindustry, segment, and company. It supports personal marketing targeted atindividual clients. Care must be taken to follow the laws protectingthe privacy of individuals.E-commerce and Business Start-up(cont.)
  30. 30. 4-30 Doing E-Commerce as an EntrepreneurialCompany Products should be delivered economically andconveniently. Products need to interest a wide market;company must be ready to ship the productoutside its own geographical location. Online operations should bring significant costreductions. Company must be able to economically drawcustomers to its Web site.E-commerce and Business Start-up(cont.)