CH 8 Product Design and Development

These flashcards cover key concepts related to product design and development, including definitions of various product types, characteristics of entrepreneurship, market analysis, and the product development process.

What is a product?

A product is something that can be marketed to customers because it provides them with a benefit and satisfies a need.

New-to-the-company product

A product that is new to the company but has been sold by a competitor in the past.

Improvement in an existing product

An enhancement of a product already on the market.

Extension to an existing product line

A new product developed as a variation of an already existing product.

New-to-the-market product

A product that has not been available to consumers or manufacturers in the past.

Four characteristics of an entrepreneurial start-up

1. Innovative products and practices. 2. Goals of profitability and growth. 3. Focus on new opportunities. 4. Owners willing to take risks.

Entrepreneurship

The act of taking calculated risks to create and run a business.

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 ownership of a product.

Form utility

Provides value by changing the composition of a product.

Business opportunity

An idea that has commercial potential to make money by selling the product.

Market segment

Smaller groups of customers with common characteristics that influence their buying decisions.

Niche

Isolating a specific unmet need within a market segment.

Forecasting demand

The process of estimating future customer demand for a product.

Breakeven analysis

A method to determine the level of sales at which a company will break even.

Fixed costs

Costs that do not change when the amount of goods sold changes.

Variable costs

Costs that vary in total as the quantity of goods sold changes but stay constant per unit.

Contribution margin per unit

Excess revenue per unit over the variable cost per unit.

Product development process

A series of activities that transform a product idea into a final product.

Patent

A legal right granted to an inventor to exclude others from making or selling their invention for twenty years.

Criteria for patentability

1. Must be new. 2. Must not be obvious. 3. Must have utility.