Chapter 14 IDENTIFYING OPPORTUNITIES Why must a businessentrepreneur

Chapter 14 IDENTIFYING OPPORTUNITIES

Why must a business/entrepreneur come up with new ideas?

NEW IDEAS � Entrepreneurs need ideas if they are to start a new business. � Businesses need to find new product ideas to allow them to expand replace old products near the end of their life cycle otherwise the business will lose its market share

NEW IDEAS � Internal sources tend to arise from an examination of our own strengths and weaknesses. An entrepreneur can develop a business based on things they know they can succeed at. � External ideas come form the wider world around us. Entrepreneurs look at the opportunities and threats in the marketplace – this helps to meet existing needs or deflect potential problems

Where exactly do you think new ideas come from? Where do people get their inspiration?

NEW IDEAS INTERNAL EXTERNAL SKILLS/HOBBIES FAMILY/FRIENDS EXPERIENCES STATE AGENCIES RESEARCH & DEVELOPMENT MEDIA CUSTOMER FEEDBACK COMPETITION INTRAPRENEURSHIP IMPORT SUBSTITUTION

INTERNAL SOURCES OF BUSINESS IDEAS 1. Skills and Hobbies � Entrepreneur might have been born with or developed talents. � Someone good at driving could give driving lessons. 2. Experiences � May have experienced something that gave him an idea. � Richard Branson was not happy with airline service he received. 3. Research and Development (R&D) � Department within business whose job is to invent new products. � Nokia has R&D Department.

INTERNAL SOURCES OF BUSINESS IDEAS 4. Customer Feedback � Customer complaints or salespeople meeting with customers can help come up with new ideas. � Mc. Donalds realised fewer women were eating there and so started selling salads. 5. Intrapreneurship � Good ideas for new products from employees which can be encouraged by an employee suggestion scheme with rewards for good ideas. Managers must be approachable and open to ideas.

EXTERNAL SOURCES OF BUSINESS IDEAS 1. Family and Friends � May hear family complain about a product. � The Stira Attic ladder and the Dyson bagless vacuum were developed as solutions to common household problems 2. State Agencies � Provide ideas for new products and statistics. � Enterprise Ireland produces market research reports. 3. Media � May get idea from magazine or television. Pay close attention to changing trends and fashions � Grace Mc. Donnell set up dog walking business Animal Adventures.

EXTERNAL SOURCES OF BUSINESS IDEAS 4. Competition � Copying or adapting successful ideas by rivals. � Microsoft brought out Xbox after success of Playstation. 5. Import Substitution � A view to making products that are currently imported. � Joe Murphy spotted that most crisps were imported from UK and set up Tayto.

SOURCES OF BUSINESS IDEAS ARE ENDLESS Individual INTERNAL EXTERNAL HOBBIES/INTERESTS NEIGHBOURS/RELATIONS/FRIEN DS SPORTS HOLIDAYS AND TRAVEL SKILLS COPYING IDEAS INNOVATIONS EDUCATION BUSINESS EXPERIENCE

SOURCES OF BUSINESS IDEAS ARE ENDLESS External INTERNAL EXTERNAL RESEARCH & DEVELOPMENT MARKET RESEARCH STAFF SUGGESTIONS UNIVERSITY LINKS SALES STAFF GOVERNMENT AGENCIES CUSTOMER FEEDBACK COMPETITORS INTRAPRENEURSHIP INTERNATIONAL TRENDS IMPORT SUBSTITUTION ALLIANCES

How would you generate ideas within a business?

HOW TO GENERATE IDEAS � Offer incentives to encourage employees to come up with ideas � Using management approaches which encourage staff to be creative and innovative on behalf of the firm � Research into both new product ideas and market needs � Holding brainstorming sessions for new product ideas among groups of employees

BRAINSTORMING �A group of people brought together to come up with suggestions. � No one is put down for making ‘stupid’ suggestions � When the ideas have been come up with a SWOT analysis is done on each one to assess their potential and the best ideas go forward.

MARKET RESEARCH � Process of gathering and analysing information in order to identify customer needs � Used 1. 2. 3. 4. to gather information on Customer Competitors Consumer Reaction Market Trends

MARKET RESEARCH 1. Customer � You must find out the size of the consumer market in terms of � � � � Age Gender Income Lifestyle Spending Patterns Tastes Preferences If a market is too low it may not be viable to get involved in the market

MARKET RESEARCH 2. Competitors � You will have to assess your level of competition in terms of their: � � � Products Market Share Prices Strengths Weaknesses Company websites will provide a lot of information about product ranges, prices and market positioning

MARKET RESEARCH 3. Consumer Reaction � � Meeting consumer expectations is a requirement for business success – they are the key stakeholder Customers provide valuable feedback on � � � � Strength Weaknesses Price Design Performance Appearance Intention to buy or not

MARKET RESEARCH 4. Market Trends � � There are lots of variables which have an impact on the future market for goods and services You need to find out about � � Changes in income (economic outlook) Prices Taxes Interest Rates

IMPORTANCE OF MARKET RESEARCH Market research allows you a firm to � Quantify the market � Identify the target market � Ensure the product meets customer needs � Save money by not developing a product which won’t be viable � Identify the product’s unique selling point � Devise marketing strategies to exploit competitor’s weaknesses and counteract their strengths � Evaluate effectiveness of promotional activities

WHEN TO DO MARKET RESEARCH � When developing a new produce/service � As part of on-going research if sales are slowing down or if you’re considering making changes to your product � When devising an advertising campaign

HOW TO CONDUCT MARKET RESEARCH � Decide on information you want collected � Decide on method of research to collect date – desk research or field research � Carry out collection process � Analyse data � Make decisions

DESK RESEARCH INTERNAL EXTERNAL Sales Figures Government Publications such as Central Statistics Office Stock Movements Trade Journals Market Reports and Analysis Media Reports from Sales Staff Company Websites Customer Database Commercial Databases Customer Feedback

DESK RESEARCH Advantages � Relatively cheap � Easy to compile � Information is instantly available Disadvantages � Information may be out of date and not specific to a particular business � ………………. .

DEVELOPMENT PROCESS OF A NEW PRODUCT 1. Idea Generation � The business examines sources and comes up with good ideas by brainstorming. � Cadbury’s fuse bar was found after their market research found the growth of snacking and the R&D team was asked to combine various ingredients. 2. Product/Service Screening � The best ideas are chosen after a SWOT analysis. � Cadbury rejected recipes until it narrowed down

DEVELOPMENT PROCESS OF A NEW PRODUCT 3. Concept Development � Writing an essay bout what the product will do, what it will look like, what is its USP. � Cadbury decided that they would fuse together different ingredients. 4. Feasibility Study � Find out if it is possible to make the product and if it will make a profit. � This is done through cash--‐flow forecast and breakeven chart. � Cadbury did both these tests and found out that it would be profitable.

DEVELOPMENT PROCESS OF A NEW PRODUCT 5. Prototype Development � Make the first working model of the product and eliminate any bugs. � Cadburys tried out various combinations and packaging until it finalised it. 6. Test Marketing � Launching the product on a small scale of the market and evaluating the response. � Cadbury did this and it received highest rating ever for new Cadbury’s product.

DEVELOPMENT PROCESS OF A NEW PRODUCT 7. Product Launch � Company must undertake marketing campaign with launch of product. � Cadbury held one on one briefings with big retailers, advertised in the media and PR stories were given to the press