Do you have a brilliant new product idea or you have a good product development concept? Congratulations! You have
only to check does the customers are willing to share your confidence and make their choice in your favor.
You have to analyze more accurately the market, business environment and future customers, supplement and refine the
requirements for the product, find ways to communicate effectively with future customers, plan the launch in detail and
accelerate the return on invested funds.
Finland is a country with great opportunities!
What is a product and service? Product concept and life cycle
Product is the result of an entrepreneurial activity created to satisfy a customer's real or potential needs
or requirements. A product is something that can be offered in the market to satisfy these needs and demands. The product can
be anything: material good, service, information, real estate and any property, as well as entire
company, organization and idea. The product may have a tangible and intangible component. If the product is mostly a
material unit, then it is called a commodity (bread, flat, clothing, etc.). If in the product prevail an intangible
part, it is called a service (education, any consultation, development of a business plan, etc.).
- A versatile concept:
-
- Physical product is a tangible object that can be touched: food, cars, airplanes, books, shoes, pens etc. Thus,
the tangible product is the RESULT, which has clear characteristics and the price.
- Service Product: transfer of rights to use patents, licenses, trademarks (marks), other objects of intellectual
property, copyright or other similar rights; household, housing and communal services; advertising;
consulting, accounting, auditing, marketing; data processing and information support etc. The nature of the service
is complicated. A service is always a PROCESS. The result of the service may have variable characteristics.
Аccordingly, the service price is flexible and can vary.
![Different levels of product concept]()
Different levels of a product concept
A product model is a composition of the commercial characteristics of the product. These characteristics determine the
ability of the goods to meet those or other needs. Multilevel models/concepts can be used to create a new product or to
develop the existing one. The three-level product concept (the slide above) can serve as a reference point for the analysis of the goods
within a firm and its competitors. In addition, it can be used as a development plan for a new product.
![Product life cycle]()
Product life cycle
Each product has a certain cycle of its existence on the market. The life cycle of a product is the time that a
product exists on the market and the period during which it finds its customers. In the end, there comes a time
when one commodity can be replaced for another. See another slide
Productization. New product creation
Productization as a term is not yet very well known. It can be explained as developing a new competitive product or
service and bringing it to the market. The main idea is that this new product or service can be developed into a commercially viable product on the basis of internal business capability. The purpose of the productization is to maximize the customer benefits and the company profitability. Productization starts from the investigation and clear identification of the customer needs, revealing the problem that the future product or service have to solve.
What does productization means? In a few words:
- Productization means the development and transformation of an existing service or a concept into a top product.
- It makes all your products and services more efficient and, as a result, cost-effective and profitable.
- It makes your products or services more attractive to prospects.
- Note, that productization should not to be confused with the production!
Advantages of productization:
- competitive advantage creation and profitability improvement;
- possibility to scale a business by repackaging existing services as products;
- ability to serve more clients without giving up more of your time.
Productization could represent, for instance, a modification of some concept, idea, product or service of an organization, making it suitable for presentation as a commercial product. For example, already existing customer-specific software can be changed and transformed to some standard software product suitable for a whole market. Marketing consultant can offer courses for sale besides one-on-one consulting.
![a process of productization]()
A process of productization
The company should be able to develop the new products. It must also be ready to update the product in a period of
changing tastes, technology and competition. There are many challenges that a company faces in developing a
new product or service. The solution to these problems is a clear planning for
the release of new products to the market and the creation of a systematic process for their development.
![Creating a new product]()
Creating a new product
When implementing the strategy for creating a new product, a well-constructed process for implementing this strategy
is very important. Each company can have its own concept for creating a product. However, despite the variety of
approaches, there is some general scheme for the process of creating a product which includes a few steps that the firm
should follow when developing a new item. Slide above
Ideas for developing new products. Weak signals
Technological development does not stand still. New advanced materials and technologies are appearing on the market. Can
you create the perfect (ideal) product? Practice shows that almost any product or service has competitors. This means that you have to constantly improve your product, thereby enhancing its competitiveness. Your "ideal" product has to have the characteristics that are the most appropriate to the requirements and requests of your customers. This information can be obtained through research, may be based on consumer surveys about the preferred / optimal product characteristics for them etc. The image of the "ideal" product is often used in advertising campaigns, as well as in developing the preferred
brand positioning.
When developing the new products, it is necessary to: (See the slide):
- be focused on the customer's needs and desires. To do this, you should create a customer feedback system.
- study and eliminate the shortcomings of goods and services, thereby improving your product.
- conduct research activities to study a variety of consumer needs.
- identify and respond in time to "weak signals" of the external environment.
WEAK SIGNALS
The “weak signals” are the first signs of changes in the business environment. Weak signals - early and inaccurate signs
of the onset of important events, which can in the future become something significant and great. Taking into account weak
signals you can understand what kind of problems can appear in the future. Thus, you can accurately predict the changes and
develop your product according to the new circumstances. How do we recognize them? What are their characteristics? It is quite easy to find examples of weak signals in the past, but it is much more difficult to identify them in the present and to assess their potential impact on the future.
Weak signals help to recognize the signs of approaching threats or new opportunities.
Development activities in product creation. Testing and assessment of business idea
Each new product starts as new idea, and then turns into a set of physical characteristics and services offered to a
potential customer. The process in which ideas are born, evaluated and converted into products, is called the development
of a new product. There are several steps in product creation and development:
- the development of a strategy for a new product
- generation of the ideas of a new product
- selection of ideas
- business analysis
- development of the product
- testing the product on the market
- commercialization
This is an arbitrary description of the process, which can have more or a smaller number of stages. These stages can be
represented in different order.
Important aspects in product development (See the slide):
- The basis for the product development is customer needs, and the goal is to satisfy them.
- However, it can be the other way around: a new product can create new needs, thereby forming a new market. Thus, there are two ways to develop a new product:
- identifying the unmet customer needs and, as a result, the appearance of a product that meets these needs;
- release of a product with certain innovative properties, which will create a new need for this product among the consumer.
- After generating, evaluating and choosing business ideas, it is very important to calculate the profitability of a new product: the amount of expenses and future profit
- It has to be quickly and economically produced new product
- Knowledge of the market and marketing is required
Testing and assessment of business idea
Thus, how to test and assess your business idea?:
- First of all, your assessment should be realistic and critical.
- You can use "Choosing a business
idea" form for assessment.
- It will be perfect to get an assistance from external persons or experts.
- You can make a market research based, for example, on statistics, questionnaires and interviews. It can be either
self-made or ordered.
Business plan section: Features of your product or service
The questions below will help you to evaluate a new product and understand if it is expedient to release it. Complete your business plan's product and service section. (See the
slide ):
- What are your products or services?
- Name your product, if possible (think what you want to say to your customer by the use of the product name)?
- What's unique in your product or service? Describe the most important features (3-5 things) which can show the
strength of your product. Write and add them to your business plan.
- What are the weaknesses in your product and/or service?
- How would you change, develop and improve the product if you could get more resources?
- What is the benefit of your products and services to the customer?
- How do you assure your customers of the necessity of the product? What kind of benefits your product could bring?
Give an example (if, for example, they generate economic benefits, you can present a simple calculation)
- Why should a customer buy your product or service? Indicate the reasons for choosing your product or service?
- Complete the price information in your business plan (table)
The key questions for which you should be ready to answer. These questions can help to prepare business plan, define
business strategy and achieve goals. Consider the questions above to help yourself articulate business ideas and plans!
Relationship with the customer. Relationship lifecycle
How to interact with the customers? Your customers have specific needs, that is why you need to develop an interaction
strategy with them in order to achieve certain results. Attracting customers is an exciting activity that can bring more
results in to your business development than you can even imagine. The core things in building the strong relationships
with the customers:
- Persistent co-operation with customers: the producer and the user are cooperating
- Successful relationships: strong relationships with your customers is the key to successful business
- Service or product providers depend on their customers: customer represents the future and the investment
- Listen to the customer! Customers take part and influence to your service or product development
The customer relationship lifecycle
The customer relationship lifecycle (See the slide ) represents the different stages of development of your
relationship with the client. It begins from taking an interest in your services or products and ends with the termination
of cooperation.
- CUSTOMERS:
-
- need your product or service
- find out the service or product
- make consideration
- make decision
- get experience of using the service or product (does it meet the expectation, trust)
- give feedback
- get own imagination/view about the service or product
Customer satisfaction: 5 basic levels and customer base
How to get information about customers? How to use this information to increase sales? Obviously, data gathering is the
best way to understand the client. It gives much greater opportunities for the company-supplier of goods or services.
During the collection of information about clients, various methods and sources may be involved.
- Open sources that can be reached all the time
Internet, phone, feedback, behavior monitoring
- A feedback questionnaire or form
The easiest way to collect customer satisfaction feedback is to use the Smiley Terminal
- Research: surveys and interviews, monitoring, comparison
They can be self-made, customer-made or made by authorities
Such information will be a key point in the price formation. It helps you to understand what kind of services people
want to get. It is a very effective method that helps in conducting different campaigns: advertising campaigns, introducing
loyalty programs and other similar events.
Basic levels of customer satisfaction (See the slide ):
- Deeply disappointed (often former clients)
- Slightly disappointed
- Expected experience
- Slightly positively surprised
- Strongly positively surprised
A customer base is the group of customers that your company serves or hope to serve in the future. The client base consists of:
- Potential (future) clients
- Random clients
- Loyal customers
- Former clients
Business plan section: Classification of client groups
Define the 3-5 most important customer groups. (See the slide ) Define in percentage how much of your resources (time and money) you
will spend on each customer group. Give the names of a few potential customers for each customer group. Describe briefly
your customers and you will get a clear idea of who are your most important customers / customers groups.
- you will be able to identify those clients in to which you should invest more resources and the others which you
can pay less attention to
- you can focus on sales and marketing
Complete your business plan: the customer's section and the market's section. Describe your own market and your
customers on a general level, for example, using the auxiliary questions:
- Who are your customers and your target group?
- What are the customers’ buying habits/preferences?
- Where do the customers usually find the products and services to buy?
- What are the reasons for choosing these products and services?
- Which things generally affect for their purchase decision?
- How do you plan to influence on their purchasing decision?
- Why they buy this service or product again?
- Where are customers located?
- How do you reach your customers?
- How many customers are there?
- How many customers you can effectively reach in one week using the chosen method?
- How many people you think would buy your product or service?
- Who will make a purchase decision if your customers are enterprises, businesses? If you create B2B (business-to-business) company.
- How you are going to find the right decision maker?
- How do you reach a decision-maker?
- What are your negotiating mandates, means and instruments?
- How to ensure the creation of a trade?
The key questions for which you should be ready to answer. These questions can help to prepare business plan, define
business strategy and achieve goals. Consider the questions above to help articulate business ideas and plans!
Business environment. Stakeholder model and its analysis
Short Stakeholder Model
How does the operating or business environment affect your business? How does the other society phenomena affect your
business and marketing? The company does not work in a vacuum. There are external and internal factors in environment that
have an effect for your business. (See the slide "Short Stakeholder model" )
- External factors of the operating environment. The world around the company: people, other businesses, geographic and
social issues that the company cannot ignore. The company cannot control external factors.
- Internal factors of the operating environment. The company make own plans: their own influence, resources,
competitive advantage etc.
Normal Stakeholder Model. Micro and macro environment
The external environment is a set of factors that affect the firm's activities. Each organization has micro and macro
environments. In order to determine the strategy of the organization and implement this strategy, management should have
deep insight not only of the internal environment of the organization, but also about the external environment, its
development trends and the place occupied by the organization in it. (See the slide "Normal Stakeholder Model" )
- The Micro Environment of the company is the nearest environment: people, competitors, other factors affecting the
surrounding environment.
- The Macro Environment of the company: culture, legislation, public or state authority.
Extended Stakeholder Model. Public or state authority and culture. Macro level
Macro level is how the law regulates business (See the slide "Extended Stakeholder Model" ):
- In Finland, the hours of service, labor hours, marketing and marketing practices are carefully regulated
- There are very strict rules for the sale of different products
- Special knowledges, hygiene and work clothes for those who works with food products
- Special requirements for healthcare professionals
The culture changes the consumer's life:
- The cultural environment of the country has a great effect on consumer's life. The influence of the cultural factor
is much more complex and ambiguous than the impact of other, for example, economic or political factors.
- The common system of values is visible throughout society and should not be violated/ignored in Finland (for
example, nature, sauna and child protection)
Stakeholders needed for the company. Partnership and stakeholders. Stakeholder analysis
What other factors can affect your business? Partnerships and all stakeholders.
- Partnership or collaboration:
An inter-organizational long-term cooperation that pursues the same goals
- Stakeholder:
All those with whom the organization is dealing, who can affect organization's existence in general (See the slide "Stakeholders needed for the company" )
- organization cannot work without them
- they are inside and outside the company
Business plan section: STAKEHOLDER ANALYSIS
- Create a stakeholder analysis for your company.
- You can describe the stakeholders in accordance with the templates presented above.
- Remember the arguments!
