FUNDAMENTALS OF

PRODUCT DEVELOPMENT
Before commercializing a new product or service, the
entrepreneur must focus first on refining the product or
service and validate its market acceptability. This new
product does not have to be a totally new product. It can
be a new product line from the existing business of the
entrepreneur, a product line extension, an
enhancement, or a repositioning of an existing product.
 PRODUCT DEVELOPMENT
• Is the process of developing , testing,
and commercializing a product or
service with the ultimate objective of
solving the problem of the primary
target market.
 4 SEQUENTIAL STEPS IN PRODUCT
DEVELOPMENT

1. Developing a product or service description

2. Creating a prototype
3. Testing a prototype
4. Validating the market
Product or Service Description
• The product or service description simply
describes how a product or service works
and how it benefits the customers. A clear
product or service description is important
because this will serve as the blueprint of
all business operations.
The entrepreneur has to take note of the following
regarding the product or service description:
1. It should directly address the primary target market in a
personal manner using everyday language. The entrepreneur
should put himself or herself in the customer’s shoes, where the
product description will be addressed to.
2. It should highlight the features that will cater to the customer’s
needs or address the customer’s problem.
3. Realistic superlatives should be used for the product
description. Motherhood statements such as “ world-class
service or product excellence” may not matter to the customers
at all.
 Creating a Prototype of the Product or Service
• After defining the product or service, you may now proceed
with one of the most exciting but also very challenging
parts of products or service development: the creation of a
prototype.
PROTOTYPE - is a preliminary model or sample of a new
product or service that is created to test a product concept or
service process.
This is an exciting process for the entrepreneur because he or
she will be able to see that his/her ideas will soon become a
tangible reality.
 Advantages of Creating a Prototype
• Creating a prototype enables the entrepreneur to engage in trial-and-error,
provides room for improvements, and refines the functionality of the
product design or service process.
• Creating a prototype provides the entrepreneur a window to test the
performance and specifications of various materials and service processes.
• A prototype helps the entrepreneur effectively describes the product or
service to the product team ( marketing, operations, engineers, suppliers,
business partners, and legal and human resources). It provides the product
team the information needed to create the right product or service as
planned.
• Creating a prototype elicits respect from key stakeholders and customers.
At the same time, a prototype gives credibility to the entrepreneur.
Creating a prototype is the stage where the entrepreneur can
experiment, develop, and make some improvements in the
potential product or service. The objective of the entrepreneur at
this stage is to verify if the product or service concept will work
at the simplest, fastest, and cheapest way.
One technique for creating the best prototype is by studying the
competitor’s product or service. The entrepreneur will try to
scrutinize the parts and functions, as well as the design and other
attributes of that product, in hopes that he/she will be able to
address some problems in the products and come up with the
most efficient and effective prototype.
.
As for the services, the entrepreneur may try availing
the competitor’s services and will take note of their
operations, such as service delivery, location, facilities,
and ambiance. He or she will take note the pros and
cons of the service to create the prototype, simulate
the service by trying it with his/her friends or
relatives, and then get their feedback
 Testing the Product Prototype
All the efforts exerted in the creation of a prototype will be put to
waste if the prototype will not be tested.
Testing the prototype is a vital process before an actual product
or service is launched to the market. Testing the prototype will
uncover the final loopholes that need to be fixed before
commercialization. It gives the entrepreneur a leeway to examine
and scrutinized the prototype and provide feedback as to what
can improved before the launch. These improvements and
changes must be completed first before moving forward to the
next step.
 Methods in Testing the Product Prototype
1. FOCUS GROUP DISCUSSION – the participants will provide relevant insights about
the new product or service. The objective of the FGD is to identify errors, deficiencies, and
issues that may impede the success of the product. Participants also need to provide
suggestions and practical solutions on how to improve these deficiencies.
2. LEGALITY AND ETHICAL TEST – Prior to launching, the entrepreneur must ensure
that the product or service complies with all relevant laws and regulations and has a
necessary license or permit to operate a particular business.
3. SAFETY TEST – The entrepreneur must ensure that the product is safe to use, safe to be
consumed (food and beverages), and safe to be applied (cosmetic products).
In services, the entrepreneur must ensure that the processes to be performed by the service
provider must not be detrimental to the safety and health of the customer.
4. PRODUCT COSTING TEST – the entrepreneur must examine every
stage of the manufacturing process or every process of the service blueprint
to evaluate and finalize the costs involved. This is the time when the
entrepreneur can match the expected costs versus his/her budget.
Modification in the manufacturing process or service blueprint can still be
made at this point to align with the cost objective of the entrepreneur.

5. COMPONENT TEST – each component of the product or service must be

tested independently to identify component failures for goods or service
failures for services. Any failure identified must be redesigned and tested
again until it becomes fully operational and functional.
6. COMPETITOR’S PRODUCT/ SERVICE TEST – the entrepreneur must
test a similar line of products or the competitors’ product or service itself to
compare and get the best practices to be applied to the new product or
service.
 Testing the product prototype is mandatory to ensure that
the product or service will not fail the customers and will deliver
its definitive purpose. This will elicit customer satisfaction and,
eventually, customer loyalty and retention. This is the time to
prove that the concept formulated by the entrepreneur will work
and feasible in real life. All the mistakes accounted for and the
improvements to be fixed should be performed first prior to
commercialization of the product or service.
 VALIDATION OF MARKET
ACCEPTABILITY
-is the process of finding out if the intended
primary target market will be buying the
product or availing the service.
MARKET ACCEPTABILITY – is a critical factor that the
entrepreneur must validate before launching the product or
service, because this can strongly suggest if the business will be
successful or not.
• It either validates or disconfirms the perception of the
entrepreneur about the suitability of the chosen primary target
market.
• It also tests whether the value proposition and unique selling
proposition are appropriate or there’s a need to improve on
them.
• This process is the last step before the product or service can be
introduced to the market.
The following objective questions are more likely to be answered in
the whole process of market acceptability validation:
1. Will the primary target market like the service or product.

2. Will the primary target market buy the product or service

when it is already in the market.
These questions can easily be answered if the entrepreneur will
perform the following activities:
1. Use the most strategic marketing research tool (FGD, survey, observation,
interview, online survey, email, or a combination of these research tools)
2. Prepare relevant open-ended questions that answer the objectives. Do not
go around the bush, go straight to the point. Keep the questions to a
minimum because the target market might get bored and might not
finish the whole questionnaire.
3. Find the market experts who also target the same market but are not
directly competing with the entrepreneur.
Ex. A market expert sells cars to a specific market segment and so it happens
that an entrepreneur sells real estate. The entrepreneur can leverage on the
knowledge of the market expert regarding that market segment because they
almost have the same demographic requirements.
4. Collate all the data, analyze them, and prepare a summative
report that answers the given objectives.
Assume that you have available capital that can finance any original
product or service you have in mind. Using your original product or
service, apply what you have learned in product development.

1. Prepare a product or service description.

2. What will be your game plan for your product or service prototype?
How will you test it?
3. How will you execute your market acceptability validation.