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Steps in Selection of New Business Ideas
Customers expect new and improved products from an entrepreneur. New products, depending on new ideas, are the future of a business. Without a conscious flow of new products the marketing system would probably die. There are various steps in the selection of a new business idea and they are:
1) New product ideas:
An attempt is made to visualize the product. An in-depth study may be undertaken to anticipate features of the proposed product. Ideas may be contributed by scientists, professional designers, rivals, customers, sale force, dealers, top management, magazines, new shapes, surveys etc. a detailed list of new ideas about potential product is prepared and an earnest attempt is made to find out commercially viable product.
2) Ideas screening:
Under this step detailed investigation of various ideas is carried on. Those ideas which offer less scope (or) are not promising are dropped. Most promising and viable ideas are carried to the next stage for in-depth investigation and research.
3) Concept development and testing:
All ideas chosen after preliminary are subjected to in-depth study. These ideas are developed into mature product concepts. An attempt is made to find out minute details of the ideas and resulting features of the proposed product. Concept development and testing product ideas is undertaken keeping in mind preferences of the consumers. Concept testing enables a firm to pick up the best product concept amongst alternative product concepts.
4) Business potential analysis:
After packing up the best product concept, detailed investigation is carried out to find out its market potential, gestation period, capital investment and expected rate of return. Business potential analysis etc. business analysis can help in finding out soundness and viability of the selected product concept. Basic idea behind this analysis is to ascertain the viability and profitability of the proposed product.
5) Product development:
After clearing business potential analysis test concrete steps are taken for giving practical shape to the proposed product. Product development decisions include the type and quality of materials comprising the product, the method of production, cost and production time requirements per unit, plant capacity, alternative sizes and columns, name, trade-mark and image sought, testing of the model product will provide the ground for the final selection of the most promising model of the proposed product.
6) Test marketing:
It is the stage at which the product and marketing programs are introduced into more realistic market setting’. Test marketing involves placing a fully developed new product for sale in one (or) more selected areas and observing its actual performance under a proposed marketing plan. The purpose is to evaluate the product and pretest marketing efforts in real setting prior to commercialization. Before launching a new product in the market, the producer is interested in knowing about consumer opinion so that a stable and accepted product is introduced in the market. A producer can get vital clues for product improvement and for modification in marketing mix.
Commercialization is the actual introduction of the product into the market place with all the related decision and resource commitments. Under this step raw materials and component contracts are to be made with the suppliers, channels of distribution are to be selected, manufacturing facilities comprising of equipment, processes are set in operation, sales people are hired and trained, advertising and other sale promotion efforts are initiated. With commercialization a product starts its introductory stage of product life cycle.
The search for a new product (or) business idea is a never ending activity. An entrepreneur is required to monitor the new product through various stages of its life cycle. He is to keep his eyes and ears open to find out new opportunities to be exploited to promote his business interests.