DEVELOPING A BUSINESS PLAN: Selecting the Best Product or Service that will Meet the Target Need

Vocabulary flashcards covering key terms related to selecting, evaluating, and developing products, as well as understanding the product life cycle and idea-generation steps.

Product selection

The process of choosing the right product or service to meet a target need, balancing financial benefit, investment requirements, market fit, feasibility, and risk.

Target need

A market need or opportunity that the product aims to address.

Financial benefit

Expected monetary gain or profit to the business from the product.

Investment requirements

Capital and resources needed to develop/produce the product; ideally relatively low.

Return on investment (ROI)

A measure of profitability showing net gain relative to the amount invested.

Fit with present strategy

How well the product aligns with current business goals and direction.

Feasible to develop and produce

Whether the product can be developed and manufactured with current capabilities.

Easy to source and procure

Ease of obtaining materials or components needed for the product.

Relatively low risk

Lower potential for failure, loss, or uncertainty in development or production.

Meet the needs of the customer

Product must address a real customer need or opportunity.

Real value

Customers must recognize, want, and need the value the product offers.

Capable to produce

You must have the time, resources, and capability to produce the product.

Time, resources, and capability to produce

Assessment of whether you have the necessary manpower, equipment, and processes.

Outsource

Ability to delegate product development or manufacturing to external providers when needed.

Size of reachable market

Estimated size of the market you can reach with your product.

Potential customers

People or organizations likely to use or benefit from the product.

Who will pay (long-run market potential)

Understanding who can pay and how big the market can pay off in the long term.

Regulatory compliance

Adherence to government rules and regulations affecting the product.

Permits and licenses

Required legal authorizations to produce or sell the product.

Barriers to entry

Obstacles that hinder new competitors, such as high R&D costs or patents.

Patents

Legal protection for an invention that can prevent others from manufacturing the component.

Cost advantage

Competitors offering lower prices due to lower costs or efficiency.

Break-even point

Sales level at which total revenues equal total costs; no net profit or loss.

Product Life Cycle

A framework describing sales, profits, customers, and marketing emphasis from launch to withdrawal.

Introduction stage

Launch phase to generate customer interest; high marketing costs; early adopters (innovators).

Growth stage

Stage where sales and profits rise as the product gains acceptance and distribution expands.

Maturity stage

Sales growth slows; competition increases; profits may decline; market is fully penetrated.

Decline stage

Sales fall due to substitutes or new competitors; profits decline; may reduce scope.

Extension strategy

Actions to extend a product’s life cycle, such as more promotion, minor innovations, or new markets.

Idea Generation Methods

Techniques used to create new product ideas (e.g., brainstorming, studying existing products, supplier visits, surveys, trade publications).

Brainstorming

Generating ideas through open, free-form discussion among participants.

Analyzing existing products

Studying successful current products to learn how markets capture success.

Visiting suppliers’ facilities

Observing supplier operations and materials to inspire innovation.

Surveys

Collecting feedback from customers and potential markets.

Reading trade publications

Gaining inspiration from industry publications and entrepreneurial stories.

Idea Screening

Filtering out unsuitable ideas; ideas are rated on general, marketing, and production criteria.

Concept Testing

Obtaining consumer feedback on ideas to measure enthusiasm and appeal.

Business Analysis

Review of market factors, revenues, costs, and trends for the idea.

Product Development

Turning ideas into a tangible product or service through development.

Test Marketing

Selling a fully developed product in a selected area to observe performance and guide decisions.

Commercialization

Actual marketing of the product in the target market.