KOE060

Idea to Business Model

By: Mahendra Dutt Dwivedi

Sources of Business Ideas/Project Ideas and Tests of
Feasibility-Meaning
• A concept that can be used to make money is called business idea. Business
ideas mainly focus on a product or service.
• Although business idea has the potential to make money but it has no
commercial value. The primary task of a dynamic entrepreneur is the
generation of an idea that is new and worth for further use.
• Generation of a new business idea or project idea involve a lot of creativity on
the part of the entrepreneur and it mainly arises from consideration by the
entrepreneur with a keen and open mind of the following factors like
(i)Opportunity in the market
(ii)Real demand for any product or service.
Important points for selecting a business idea
• The following important points need consideration before selecting any new
business idea/project idea:

(1) Utilisation of the Technical and Professional Skills of the Entrepreneur

(2) Use of Local Raw Materials

(3) Products with good market demand.

(4) Solving market problems

Sources of Information for Business Ideas
• The starting point in any product development is the generation of business
idea/project idea. For this purpose an entrepreneur can refer to potential studies
conducted and prepared by different organizations like the National Council of
Applied Economic Research (NCAER), financial institutions and other
promotional organisations such as Confederation of Indian Industries (CII), etc.
• These may include the study of the following:
(1)Area Studies: It identifies the development of a potential backward area or a
district.
(2)Sub-Sectoral Studies: This study identifies the opportunities in specified
sectors like food processing.
Sources of Information for Business Ideas.. Cont..
(3)Resource-based Studies: This study identifies the opportunities based on
utilisation of natural or industrial resources such as forest-based industries,
marine-based industries, industries using rubber as the main raw material, etc.
(4)Import and Export: The study also identifies the possibilities of import and
export.
(5)Pattern of Product Consumption: The study by different organizations
identified the pattern of product consumption of the country.
(6)Demand Forecasting: Studies also include forecasting of demands made by
Industrial Chambers such as CII, FICC1, ASSOCHAM, etc.
(7) Surveys: It also includes study relating to existing industrial establishments
Approaches to Generating Ideas
• The following approaches to generate business ideas can be used by an
entrepreneur while exploring the different sources of business ideas:
(i)Brainstorming.
(ii)New ways of doing old things.
(iii)Converting hobby into business.
(iv)Improving an existing product.
(v)Utilising waste material.
(vi)Intrapreneurship: The business could have an employee suggestion scheme
which give rewards to employees generating innovative ideas.
 Product Idea
• A product idea is an idea for a possible product that the company can
see itself offering to the market.
• It is obligatory for every company to exactly define its product idea and the
process for making it happen. The company needs to go through several
stages to remain on a safe side when it starts this big job.
What is Product Selection ?
What is Product Selection ?
• Goods and services are necessary for satisfying the needs of society. Such
goods/services or goods along with services or simply an idea can be called as a
product.
• In simple terms, product is anything that is offered for sale into the
marketplace. This makes product an important constituent of marketing and an
important consideration in managerial decision-making.
• In past, it was relatively easier for entrepreneurs to choose a particular product.
He had complete freedom to choose any product which according to him can
satisfy the needs of the market and is money-making in nature.
• Before launching the product, entrepreneur use to consider different criteria
like technological requirement, needed financial resources, an approximate idea
about the product's demand, etc.
What is Product Selection ?........ Cont..
• However, in this age, the selection of a product has become a very complex
task as the market conditions have become very complicated.
• Nowadays, when an entrepreneur wants to select a product, he needs to
consider complex parameters like satisfaction level of the customers, attitudes
of the customers, competitors' strengths, support of the dealers, existing
infrastructural facilities, prevalent macro conditions of the economy, etc.
Selection of Product
Selection of Product
1) Technical Know-how :
✔ Technical know-how is an important guiding factor for an entrepreneur while
selecting a product. An entrepreneur can easily decide what product should be
manufactured if he belongs to the product-related field.
✔ Similarly, knowledge in manufacturing or marketing field enables the
entrepreneur in selection of an appropriate product.
2) Availability of Market :
✔ The availability of a large market for a particular product also helps in its
selection. If the demand for a product is huge, then the market risk of launching
it becomes less.
✔ Thus, it is very essential that the entrepreneur have a good knowledge about the
product's market in terms of how and where the product can be sold.
Selection of Product…….. Cont..
3) Financial Strength :
✔ Relative financial of the entrepreneur also serves as guiding force in selection
of a product. Manufacturing a product generally requires heavy investment in
research and development, capacity creation, plant and machinery, etc., which
is generally beyond the expenditure capacity of a small-sized firm.
✔ Thus, it is advisable for an entrepreneur to analyse its financial strength prior to
product selection.
4) Competitive Rivalry :
✔ The returns from a product are greatly influenced by the degree of competition
prevailing in the market.
✔ Factors like market dominance by the competitors, availability of substitutes,
any barrier to entry, etc., play significant role in determining the viability of the
product.
 Selection of Product…….. Cont..
5) Product Category :
✔ In many cases, certain products fall in the priority sector category while some others may
be reserved for small scale. sectors. The level and extent of competition for these product
categories among small sectors is lesser than that seen in other sectors of the economy.
✔ There are also certain products which the Government has earmarked as exclusively to
be purchased from the small scale sector. In the case of such products, the entrepreneur
will definitely give a greater importance to a product which falls in this category.
6) Consistency in Demand :
✔ When there are not many fluctuations in the demand of a product then the market for
such products can be considered to be stable.
✔ Seasonal products are contrary in the sense that their demand fluctuates a lot. The
seasonality of a product also plays a large part in its selection or non-selection as this is
directly linked to the stability in the demand for the same.
✔ The entrepreneur should definitely prefer a product which has a consistent and stable
demand.
 Selection of Product…….. Cont..
7) Restriction on Imports :
✔ The foreign trade policy of the government may restrict the import of some
products. In such cases, those products. gain attraction from general public and
consequently an entrepreneur should prefer those products that are part of such
restricted category.
8) Availability of Raw Materials :
✔ Availability of raw material is a very important factor for selecting a particular
product. An entrepreneur should ensure that supplies required for smooth
conduct of business operations are mostly available in desired quantity around
the year.
✔ Moreover, the source of procurement of raw material is also important. Where
supplies are to be procured from external sources, the entrepreneur will have to
maintain a sufficient quantity of inventory compared to local sources.
 Selection of Product…….. Cont..
9) Government Incentives and Subsidies :
✔ Government often provide a number of subsidies and incentives for the
promotion of certain businesses. These incentives and subsidies are generally in
the form of tax holidays, exemptions from customs, concessions, etc.
✔ An entrepreneur must consider the availability of such governmental schemes
as they greatly support an entrepreneur in setting up a new business.
10) Ancillary Products :
✔ When the product is in the nature of an ancillary product (a product required for
manufacturing another product), then its increases the attraction for the
entrepreneur.
✔ This is because the product will have a ready market in the parent industry. For
example, an ancillary unit of Maruti.
 Selection of Product…….. Cont..
11) Location of Business :
✔ Business location is also important for selecting a particular product as certain
products are earmarked for production in special zones like free trade zones, export
promotion zones, etc. Government also provides incentives and tax breaks for such
products.
✔ Moreover, the location of big consumer markets near the production centers also
increases the attractiveness of certain products. Such products will also be selected by
the entrepreneur because of the locational advantage.
12) Licensing System :
• There are overtime changes in the governmental licensing policies. For some
products, it is mandatory for the entrepreneur to have the required license issued by
the concerned authority. Under particular conditions, capital addition is also
monitored.
• Moreover, the process of obtaining license is burdensome for certain products. Thus,
products which require a lot of licensing approvals will not be very attractive to
 Selection of Product…….. Cont..
13) Government Policy :
✔ The selection of product also has to be done keeping in mind the government policies and
their likely impact.
✔ The entrepreneur should choose a product which falls in a sector with
favorable Governmental policies.
✔ For example, products which are not socially beneficial like tobacco and alcohol do not
receive government support.
Precautions Regarding Product Selection
• An entrepreneur has to be careful while selecting a product. There are certain
precautions that he should take while selecting a product, which are outlined
below:
1) The production process should not be very long or time-taking.
2) The employed production process should be smooth and straightforward.
3) There should be adequate and consistent demand for the selected product.
4) The product industry must have potentials for growth and development.
5) The product should be accepted by consumers and a healthy competition
should exist for the same.
6) There should be easy availability of plant and machinery and other equipment
required for the production of the product.
Precautions Regarding Product Selection… Cont..
7) There should be availability of adequate raw materials. In case local raw
materials are not available, then suppliers from non-local regions should be able
to provide the raw materials in the shortest possible time.
8) Personnel required for technical, artistic and manual work/labour should be
easily available at reasonable costs.
9) The product should be capable of introducing in overseas markets.
Selection of Business Idea
• Before selecting any particular business idea or project idea, all the project
ideas are need to be screened on the basis of well defined criteria and ideas
which are not promising need to be eliminated.
• Finally the most potential and promising idea needs to be selected considering
the following facts:
(1)Compatibility of Objectives and Resources:
(2)Reasonable Assurance:
(3)Return on Investment:
(4)Environmental Factors:
(5)Comply with Rules and Regulations:
Business Opportunity
• Business opportunity is the proven business idea which can be converted into a
business enterprise for earning profit.
• So a feasible business idea is converted into business opportunity and
ultimately on the basis of feasibility study it is converted into business plan.
Feasibility Study
• In the complex and competitive business environment there is no guarantee for
success of any business enterprise. For this reason the Business Idea or Project
Idea of a startup business or growing business is to undergo considerable
testing before finally being rolled out in the market as a full-fledged business.

• Feasibility study means complete, thorough and detailed study of the

acceptability of any project. It acts as a guideline for implementation of the
project and it also highlights the various risks involved in the project and the
chances of success of the project.
Feasibility Study
• Before investment decision in any particular industrial project feasibility study
provides a basis. In this context a project signifies production capacity at a
selected location, use of inputs like materials and technology and technologies
in relation to that, production costs, sales revenue and return on investment of
the said project.

• A feasibility study is presented in the form of a Project Report. This Project

Report needs sanction from concerned authorities including from financial
institutions. Concerned authorities evaluate the various aspects of the viability
of a project on the basis of feasibility study.
Need for Feasibility Plan
• The need for feasibility plan arises due to following reasons

(i)Estimating Human and Material Resources

(ii)Identify Sources of Resources

(iii)Understanding business related problems

(iv)Formulating Strategies
Types of Feasibility Study
• The feasibility study should contain an analysis of the following types of
feasibility plans:

(1)Technical Feasibility

(2)Commercial Feasibility

(3)Financial Feasibility

(4)Socio-economic Feasibility.
Types of Feasibility Study
• Besides these aspects, a project report should also contain general information
including description of the project, the status of the project in the national priority
and the government policies supporting the project, information about the promoters
of the project, etc.
(1)Technical Feasibility:
(a)Location
(b)Plant Capacity or Size:
(c)Plant and Equipment:
(d)Infrastructure:
(e) Effluent Treatment and Discharge:
(f) Foreign Collaboration:
(2) Commercial Feasibility:
(3) Financial Feasibility
(4) Socio-Economic Feasibility:
What is product adoption?
• Product adoption is the direct opposite of churn(how many customers stop
using the product). When users churn, they decide not to use your product.
• When they adopt your product, they decide that they are going to use it.
• Is product adoption the same as new user acquisition? No.
• User acquisition is when a consumer decides to give your product an initial try.
• Product adoption occurs when a user achieves enough success with your
product that they make up their mind to invest in using it and to stop looking
for alternative solutions – becoming a regular user.
What is a product adoption process?
• A product adoption process is a system or strategy you use for helping people
go from total unawareness of your product to deciding that it works well for
them.
• That journey naturally breaks down into a series of stages, where the users
needs and how you should meet them are different.
• In the early stages, you must make potential customers aware of your product,
what it does, and why they should be interested in using it, helping them move
from the introduction stage to the consideration stage.
• Later on, they’re more concerned about how to make the most of your
functionality and how much it will cost.
 Why is the product adoption process important?
• The product adoption process matters because maximizing product adoption
drives revenue, profit, and growth for SaaS (software as a service) businesses.
• Most SaaS products are paid for on a subscription basis. If a subscription
product doesn’t regularly deliver value, customers will churn.
• Therefore, getting users to adopt your product by helping them realize
sustained value is critical to maintaining and growing your business.
• Not only that:
✔ Acquiring new customers is between 5 and 25 times more expensive than
keeping current ones.
✔ Research shows that increasing customer retention rates by 5% increases profits
by 25% to 95%.
✔ Adopted customers are ideal targets for product expansion strategies, increasing
your revenue through upselling.
Six stages of the product
adoption process
Six stages of the product adoption process….. Cont..
1 – Product Awareness stage
• Becoming aware that a product exists and what it does is the first stage in the
process to product adoption? A familiar brand provides an advantage for new
products in generating awareness.
• Without this, marketing campaigns need to create awareness of the product as a
solution to a well-known problem (differentiating it from alternatives) or
awareness of a less well-recognized problem and the solution together.
2 – Product Interest stage
• A potential customer moves from awareness to the Product Interest stage when
the information about the product is of interest for them and their job to be done
(aka what they are trying to solve by hiring your product).
• The information they want depends on which product adoption group they are
from? It also depends on their intended use cases – along with details like
features, price, customer support
Six stages of the product adoption process….. Cont..
3 – Product Evaluation stage
• The Product Evaluation stage sees a sharpening of focus from the previous stage.
• The customer considers the pros and cons of giving your product and others a try.
• During this phase, your efforts should focus on communicating the best use cases,
highlighting your strongest features, the relative advantage over competitors, and
minimizing the perceived costs of testing your product.
4 – Product Trial (sampling) stage
• By now the prospect has decided they’re going to try your product out.
• This might be a free trial (reducing the perceived cost mentioned above), free samples,
a product demo, or an initial purchase.
• During the Product Trial stage, users test your service against their specific needs.
• They see if it delivers on its value-proposition; if it fits in with their tech stack; how
much effort it requires; etc.
Six stages of the product adoption process….. Cont..
5 – Product Activation stage
• He jump from agreeing to test a product out to committing to it long-term is too
great to treat as one step.
• Pushing for widespread adoption directly now is premature.
• It’s only when you know that a user has activated – experienced value for the
first time – that they can be convinced to stay.
• So, you should include an Activation stage, focused on making sure that your
newly-acquired customers get that benefit fast.
Six stages of the product adoption process….. Cont..
6 – Product Adoption stage
• Activated users are now primed to be convinced that the product is right for
them.
• In this last stage, product teams must convince them that they’ll get enough
value regularly to justify paying for the product, learning how to use it, and
foregoing whatever the competition offers.
• For SaaS products with free trials, consumer adoption is best indicated by users
deciding to start paying. For others, it’s when users renew.
Product Innovation
• The development of new products, changes in design of established products, or
use of new materials or components in the manufacture of established products.
• Product innovation refers to changes that improve design, materials, feel, look,
capacity, functionality, and overall user experience. An improvement can be
tangible, such as a physical product, or intangible, like software or services.
• Product innovation helps companies stay relevant in their market and continue
growing and improving over time. A company’s ability to innovate is
considered essential for its long-term viability.
• Take Apple, for example. The release of the first iPhone changed the look and
use of phones forever, thanks to its sleek touchscreen and internet capabilities.
The result? The iPhone developed a cult following, dominated the market for
years, and sent Apple’s profits sky-high. So, why is product innovation
important? Simple. If you want your company to (at the very least) stay afloat,
you have to create products that people want to buy.
Product Innovation
• The development of new products, changes in design of established products, or
use of new materials or components in the manufacture of established products.
• Product innovation refers to changes that improve design, materials, feel, look,
capacity, functionality, and overall user experience. An improvement can be
tangible, such as a physical product, or intangible, like software or services.
• Product innovation helps companies stay relevant in their market and continue
growing and improving over time. A company’s ability to innovate is
considered essential for its long-term viability.
• Take Apple, for example. The release of the first iPhone changed the look and
use of phones forever, thanks to its sleek touchscreen and internet capabilities.
The result? The iPhone developed a cult following, dominated the market for
years, and sent Apple’s profits sky-high. So, why is product innovation
important? Simple. If you want your company to (at the very least) stay afloat,
you have to create products that people want to buy.
Difference between product innovation and process innovation
• Product innovation is what you design and create, including the quality of the
materials used. Process innovation refers to how you manufacture, distribute,
and sell it.
• A real-world example: Google excels at both forms of innovation. The company
invested millions in its Android operating system and drove device sales by
investing in its site, creating effective ad campaigns, and even partnering with
other companies. The result? Android is a worthy adversary to Apple.
Why is product innovation important?
Many people think there’s no need to innovate if you’re already running a
successful business. But this just isn’t true.
• Product innovation is good for the bottom line. Businesses that introduce new
products earn higher profits than those that don’t. Companies in the top quartile
of new-product introductions generate a median return on sales more than three
times greater than those in the lowest quartile.
• Diversifying brings in new opportunities. Product innovation drives expansion
by opening up new market opportunities. It also helps firms diversify their
business and tap into totally different customer groups.
• Anticipating the needs of your customers boosts retention. If you’re
constantly innovating, customers will never see you as irrelevant or out of date.
• Innovation helps you keep up with the market. Whether you innovate or not,
other companies will. And those competitors could potentially steal your
customers. Innovating helps you differentiate your business and race ahead.
Why is product innovation important?
• Innovation is good business. The problem is, while most people can spot an
improvement, few can develop ideas on their own.

• This is because it’s hard to spot the opportunity and even harder to get that idea
developed, funded, created, and marketed. Innovation also poses a significant
risk: 95% of new products fail. When you consider the money that goes into
development and release, it’s pretty terrifying.
Steps to flawless product innovation
• Brainstorm ideas based on customer research and competitor research. Include
a mix of data-gathering methods, including focus groups, surveys, and customer
studies.
• Develop concepts that satisfy customer needs. Continue conducting analysis to
make sure these products fit into the competitive landscape. Does the product
solve a problem or simplify a process? Is it redundant?
• Validate concepts via testing. Keep gathering feedback as you go, being sure to
listen to what works (and kill what doesn’t).
• Use customer segmentation to assess the market and determine which of your
concepts will be most profitable.
• Refine your concept via prototyping. Develop a Minimum Viable Product
(MVP) to control costs and limit waste. And why stop there? Keep iterating until
your product is the best it can be.
Production Planning and Development Strategy
Production Planning and Development Strategy… cont..
1. Generation of New Product Ideas:

• The first step in product planning and development is generation of ideas for the
development of new/innovative products.

• Ideas may come from internal sources like company’s own Research and
Development (R&D) department, managers, sales-force personnel etc.; or from
external sources like, customers, dealers, competitors, consultants, scientists etc.

• At this stage, the intention of management is to generate more and more new and
better product ideas; so that the most practical and profitable ideas may be
screened subsequently.
Production Planning and Development Strategy… cont..
2. Screening of Ideas:

• Screening of ideas means a close and detailed examination of ideas, to determine

which of the ideas have potential and are capable of making significant
contribution to marketing objectives.

• In fact, generation of ideas is not that significant as the system for screening the
generated ideas.

• The ideas should be screened properly; as any idea passing this stage would cost
the firm in terms of time, money and efforts, at subsequent stages in product
planning and development.
Production Planning and Development Strategy… cont..
3. Product Concept Development:

• Those product ideas which clear the screening stage must be developed into a
product concept – identifying physical features, benefits, price etc. of the
product.

• At this stage product idea is transformed into a product concept i.e. a product
which target market will accept.
Production Planning and Development Strategy… cont..
4. Commercial Feasibility:

• At this stage, the purpose is to determine whether the proposed product idea is
commercially feasible, in terms of demand potential and the costs of production
and marketing.

• Management must also ensure that product concept is compatible with the
resources of the organization technological, human and financial.
Production Planning and Development Strategy… cont..
5. Product Development:

• Product development encompasses the technical activities of engineering and

design. At this stage, the engineering department converts the product concept
into a concert form of product in view of the required size, shape, design,
weight, colour etc. of the product concept.

• A model or prototype of the product is manufactured on a limited scale.

Decisions are also made with regard to packaging, brand name, label etc. of the
product.
Production Planning and Development Strategy… cont..
6. Test Marketing:

• A sample of the product is tested in a well-chosen and authentic sales

environment; to find out consumers’ reaction. In view of consumers’ reactions,
the product may be improved further.

7. Commercialisation:

• After the management is satisfied with the results of test marketing, steps are
taken to launch a full-fledged program for the production, promotion and
marketing of the product. It is the stage where the new product is born; and it
enters it life cycle process.
.

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