CHAPTER FOUR

PRODUCT/SERVICE DEVELOPMENT

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 In Entrepreneur’s business, product/service
development is the term used to describe the
complete process of bringing a new product
or service.
 The new product development process
involves the idea generation, product design,
and detail engineering; and also involves
market research and marketing analysis.
 Product development, also called new product
management, is a series of steps that includes the
conceptualization, design, development and
marketing of newly created or newly rebranded
goods or services. 2
4.2 The Concept of Product/Service:
 Many entrepreneurs find it difficult to identify a new
product/service or a new market opportunity.
 To start and expand a small venture, an entrepreneur
needs to identify opportunities for domestic and/or
international expansion.
 Organization's success is dependent on customer satisfaction and
delight. Customer satisfaction is achieved through the development
of product and service, which have all attributes required by the
customer.
 A success product or services do not only have an attractive
package design but should be also able to provide robust
performance. 3
 The essence of product design is to satisfy customer and
maximizes the value for the customer at minimum cost.
 A successful startup depends on its distinctive and
compelling proposition. This is how merchandise or
services stand out from the competition and are
compelling to the young company‘s customers.
3.4 Stages of product/Service Development
1. New Idea Generation:
 The new product development process starts with
search for ideas.
 The key to successful domestic and international
entrepreneurship is to develop an idea that has a
market for the new product/service idea conceived.
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 Some of the more fruitful sources of ideas for entrepreneurs include
consumers, existing products and services, distribution channels, the federal
government, and research and development.
2. Idea Screening:
 The ideas should be written down and reviewed each week by an idea
committee who should sort the ideas into three groups- Promising Ideas,
Marginal Ideas, and Rejects: Each promising idea should be researched by
committee member.
3. Concept Development and Testing
 Attractive ideas must be refined into fast able product concepts since people
do not purchase ideas but they buy concepts. Any product idea can be turned
into several product concepts.
The questions asked probably include:-
 Who will use the product?
 What benefits should the product provide?
 When will people consume the produced?
Concept Testing: - calls for testing product concepts with an appropriate group of
target consumers/customers, and then getting the consumers’ reactions. At this
stage, the concepts can be in words or picture description. 5
4. Marketing Strategy Development
• After testing the new product, the concerned body must
develop a preliminary marketing strategy plan for
introducing the new product into the market.
The marketing strategy plan consists of three parts:
 Market size, structure, behavior ;
 Planned price, distribution strategy, and marketing
budget of the 1st year; and
 Long run sales and profit goals, marketing mix strategy.

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5. Business Analysis
• After management develops product concept and
marketing strategy, it can evaluate the proposals’
business attractiveness. Management needs to
prepare sales, cost and profit projections to
determine whether they satisfy the company's
objective or not.
• Estimated Total Sales: - Management needs to
estimate whether sales will be high enough to yield
satisfactory profit.
• Estimating Cost and Profits: - After sales forecast
the management should estimate the expected
cost and profit at various levels of sales volume.
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6. Product Development
 If product concept passes the business test, it moves to
R&D or engineering to be developed to one or more
physical version of the product concept.
 Its goal is to find a prototype that the
consumers/customers see as embodying the key attribute
described in the product concept statement.
7. Market Testing
 After management is satisfied with the products’ functional and
psychological performance, the product is ready to be dressed up
with the brand name.
 The goals are to test the new product is more authentic
consumer/customer settings and to learn how large the market is
and how consumers/customers and dealers react to handling, using
and repurchasing the actual product. 8
8. Commercialization
 When (Timing):- In commercializing, market entry timing is
critical. If the company hears about a competitor nearing
the end of its development work, it will face three choices.
 The 1st choice is First Entry. Under this category, the firm
usually enjoys the "first mover advantage" of locking up
key distributors & gaining reputation.
 The 2nd choice goes with Late Entry Strategy- which has
three advantages include:-
• The competition will have borne the cost of educating the
market;
• The competing product may reveal fault that the late
entrant can avoid; and
• The company can learn the size of the market. 9
 The 3rd strategy- Parallel Entry- can be also chosen by the
company to get in the market. The strategy to work, a
prospective businessman can take the advantage of opting
for the latest technology and production process and
operate at higher volume of operation.
4.4 Intellectual Property Protection
 Intellectual Property which includes patents, trademarks,
copyrights, and trade secrets represents important assets
to the entrepreneur and should be understood even
before engaging the services of an attorney.
 It is a legal definition of ideas, inventions, artistic works
and other commercially viable products created out of
one's own mental processes.
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 In order to enjoy the benefits arising from the exclusive
ownership of these properties, the entrepreneur needs to protect
these assets by the relevant law.

1. Patents: A patent is a contract between an inventor and the

government in which the government, in exchange for disclosure
of the invention, grants the inventor the exclusive right to enjoy
the benefits resulting' from the possession of the patent.
A patent provides the owner with exclusive rights to hold, transfer,
and license the production and sale of a product/process.

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Utility Patent: A utility patent protects any new invention
or functional improvements on existing inventions.
Design Patent: This patent protects the appearance of an
object and covers new, original, ornamental, and
unobvious designs for articles of manufacture.
 Like utility patents, design patents provide the inventor
with-exclusive right to make, use and/or sell an item having
the attractive appearance protected by the patent.

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 This patent is appropriate when the basic product
already exists in the marketplace and is not being
improved in function but only in style.
What Can Be Patented Then?
 Processes: Methods of production, research, testing,
analysis, technologies with new applications.
 Machines: Products, instruments, physical objects.
 Manufactures: Combinations of physical matter not
naturally found.
 Composition of matter: Chemical compounds,
medicines, etc.

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2. Trademarks:
 A trademark is a distinctive name, marks, symbols or motto
identified with a company’s product or service and registered by
government offices.
 Trademarks unlike patents are periodically renewed unless
invalidated by cancellations, abandonment, or other technical
registration/renewal issues.
3. Copyrights:
 Copyright is a right given to prevent others from printing,
copying, or publishing any original works of authorship.
 Copyrights provide exclusive rights to creative individuals
for the protection original works of literary, dramatic,
musical, and artistic works, such as poetry, novels,
movies, songs, computer software, and architecture.
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The Intellectual Property System in Ethiopia
 Ethiopia became a party to the convention establishing the
world Intellectual Property Organization (WIPO) in February
1998.
 The Ethiopian Government established the Ethiopian
Intellectual Property Office in the year 2003 containing the
understated Objectives:-
 To facilitate the provision of adequate legal protection for and
exploitation of intellectual property in the country
 To collect, organize and disseminate technological information
contained in patent documents and encourage its utilization;
 To study, analyze and recommend policies and legislation on
intellectual property to the government; and
 To promote knowledge and understanding of intellectual
property among the general public. 15
 Trademark Directive is issued in the country in 1986 with the following
objectives in that it helps:-
 To centrally deposit trademarks which are used by local and
foreign enterprises to distinguish their goods or services;
 To distinguish the products or services of one enterprise
from those of other enterprises and prevent consumers from
being victims of unfair trade practices;
 To provide information on trademark ownership and right
of use when disputes arise between parties;
 To provide required information on trademarks to
government and individuals; and
 Protection is granted after publication of cautionary notice;

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 Copyright is protected on the basis of the copyright and
related rights proclamation issued in 2004. The
proclamation gives protection to literary, artistic and
scientific works which include:-
 Authors who are nationals of or have their habitual
residence in Ethiopia;
 Works first published in Ethiopia; or works first published
in another country and published within thirty days in
Ethiopia;
 Audio-visual whose producer has his headquarter or
habitual residence in Ethiopia; and
 Architecture (like works of drawing, painting, sculpture,
engraving, lithography, tapestry) erected in Ethiopia.

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 The End
Thank You!!
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