PRODUCT

DEVELOPMENT
• After you've identified the product attributes desired by your customers, you
will now begin to develop the product (or service) that you will offer.

• Product development refers to the stages of developing and testing the

product/service, moving to the initial commercialization or selling of that
product/service to a limited group of customers.

• During product development, your entrepreneurial mindset of opportunity

seeking is paramount.

• Based on your knowledge of customer preferences, you may decide to offer a

product line. A product line is a group of related products.
• Recall what you've learned in unit 1 about design thinking as an approach to unleash
creativity in solving problems of people through products and services.

• As you've learned earlier, design thinking uses the following steps: EMPATHIZE with a
person or a user; DEFINE the problem; IDEATE or generate new ideas; CREATE A
PROTOTYPE of the solution; and TEST THE PROTOTYPE for feedback.

• In unit 1, you merely simulated the process of design thinking (i.e., you created a "memory
recall device"). However, this time around, you will actually create a prototype of your own
product/service that you will offer as part of your business project.
CREATING A PROTOTYPE OF YOUR
CHOSEN PRODUCT/SERVICE

• A prototype is a preliminary sample or a crude version

(model) of the product or service that you want to test
with users or customers

• The following explains in detail the nature of product

and service attributes.
01
Product and
Service Attributes
• Developing a product or service requires defining its benefits to the customer.

• As an entrepreneur, you need to deliver the benefits of the product or service

in terms of attributes such as quality, features, style, and design.

A. PRODUCT QUALITY –
• This has a direct impact on the product or service performance. Some people
define quality in a narrow sense as merely "free from defects."

• But as we know, the notion of quality is much deeper than this.

• There are different perspectives that can be taken defining quality. Some
have a customer perspective, while others see a product-specification
perspective.
• As a startup entrepreneur, you must know how
quality experts define quality. Here are the
definitions of quality given by popular quality
professionals.

• Dr. Joseph Juran, an advocate and pioneer of

quality management: "fitness for intended use";
"meeting or exceeding customer expectations“

• Dr. W. Edwards Deming, renowned scholar and

professor in the field of quantity: "the customer's
definition of quality is the only one that matters"

• American Society for Quality: "the characteristics

of a product or service that bear on its ability to
satisfy stated or implied customer needs"
• We can see that quality is customer-centric. It means that quality
should create value and satisfaction to customers.

• Today, top companies adopt a customer-driven quality as a way for

doing business.

• Total quality management (TQM) refers to an approach in which all

people in the company are involved in constantly improving the quality
of product, services, and business processes.

• In the same vein, you, as an entrepreneur, must also look at quality

as an investment. This means that all the quality efforts among your
team should rebound to the growth of your chosen venture.
• Product quality has two dimensions:
• The first is quality level, also called performance level. It is the ability of the
product to perform its functions. For example, if you are opening a small
printing shop, your printing service must be able to produce clear, clean, and
fast printouts because, normally, your customer is in a hurry to use the printed
documents.

• The second dimension is quality consistency, also called conformance

quality. It means being free from defects and consistent in delivering a
targeted level of performance. In the given example of the printing shop, it
should produce clear, clean, and fast printouts every time a customer comes
in to order them.

• Otherwise, a dissatisfied customer would easily shift to another printing shop

that consistently produces high-quality printouts.
 • So, product quality both demands high performance level
and high consistency level to satisfy customer needs.

B. PRODUCT FEATURES
• Entrepreneurs can create different features for their product. Features are a
competitive tool for differentiating the entrepreneur's product from the
competitor's product.

• If you are the first producer to offer a new valued feature, you stand a great
chance to compete with your rivals. For example, you are the first to open in your
neighborhood a store that offers a variety of buko (coconut) products (fresh buko
meat, fresh buko juice, buko pie, cookies with buko).

• You can also accommodate online orders (through social media) and offer free
delivery services. Because these nutritious food products are preferred by
homeowners in your community, you are more confident that you have a steady
market.
• A start-up entrepreneur can also offer what is called a stripped-down
model (one that has no extras) as the starting point.

• Then, higher-level features can be added to the basic model to create

differentiation from rival products. For example, if you want to open a
bicycle store, you may first offer basic models of bicycles.

• Then you may add other novelty features or components to the basic
bicycle, such as custom-made baskets to hold goods, or assorted handle
bars made of different materials (titanium, aluminum, iron).

• For you to identify new product features and decide which ones to
gradually add to the basic product, you need to get regular feedback from
customers who have used your product. You could ask them regarding
new or preferred features they would like to be added on the product.
 • The survey feedback would give you rich ideas on new product features
to offer. You also need to assess the value (benefit) of a new product
feature for the customers vis-à-vis the costs required to produce it as part
of production decisions.

C. Product Style and Design

• There are appealing styles and designs that customers look for in the
product.

• What's the difference between style and design?

 • Styling is more concerned with VISUAL or OUTER look of the
product while the Design is more concerned with the BASIC
LAYOUT of a product with its CORE FUNCTIONALITY AND USER
EXPERIENCE

• For example, you may design a fashionable long skirt that

appeals to sophisticated women.

• The skirt comes in varied decorative STYLES, such as

having floral, stars, and striped patterns.

• But the LONG SKIRT HAS A VERSATILE DESIGN because

it can also be shorter by removing the lower portion of the
cloth with the use of buttons.
• As an entrepreneur, you can create good
designs by observing your target customers
and understanding their needs better.

• You can also brainstorm design ideas with

your team members.
(Total Quality Management Approach)

• In summary, production is more than just

creating a product or service.
• It is also shaping the experience of your
customers in using the product.

• Good product designers usually think less about

product attributes and technical specifications;
rather, they focus more on how customers will
use the product and derive greater benefits from
using it.
 Service Industries
• A growing number of customers are turning to the service industry to fill their
unsatisfied wants, particularly in highly developed regions such as North
America.

• People seem to want more from life by availing of entertainment services

such as leisure visits, sports, vacations, restaurant dining, and other forms of
recreational lifestyles, where they can spend their disposable incomes.

• Those with modest incomes also seek fun and recreation. For instance,
Filipinos enjoy going out to fast food restaurants and visiting local tourist
attractions.
• Examples of Philippine scenic spots are the Palawan islands,
Mayon Volcano in Albay, the Rice Terraces in Mountain Province,
and the Chocolate Hills in Bohol.

• In turn, these local spots help the growth of hotels, restaurants, and
travel guides that are part of the hospitality industry.

• Other types of service-oriented businesses are those operated by

department stores, retail shops, personal grooming salons, financial
companies, and information communications and technology
outlets.

• Service companies continue to focus their attention on

understanding and meeting the expectations of customers.
Classifications of Services
a. Degree of Tangibility or Intangibility of the Service Processes - This
depends on whether the service does something physical and tangible (e.g.,
school canteen service), or whether the service processes involve a great
amount of intangibility (e.g., teaching).

- The different levels of intangibility in service processes determine the nature of

the service delivery system and also affect the roles of employees and the
experience of the customers. When a customer buys food in the canteen, the
food is a tangible product of the canteen service. But when a customer enrolls in
a computer programming class, the experience of the customer produces effects
that are highly intangible and, as such, are much more difficult to evaluate.
b. Direct Recipient of the Service Process - This depends on the
extent to which customers themselves are integrally involved in the
service process.

- For instance, some services are directed at the customers

themselves, such as hair grooming or body tattooing. However,
other services are not directed to the customers themselves but to
the objects that belong to them that they want to be improved or
restored, such as key duplicating or shoe repair.

- In this latter type of services, the customers remain uninvolved in

the service process and do not consume the benefits until the
service is finished. So, services differ in terms of the nature of
service encounter between the service provider and their
customers
c. Place and Time of Service Delivery - This depends on whether the
customers need to visit the service organizations at its own sites (e.g.,
visiting a foot massage parlor) or the service should come to the
customer (e.g., pizza delivery).

- Perhaps the interaction can occur through physical channels such

as mail (e.g., in insurance service) or through electronic channels
(e.g., ATM banking transactions).

- The entrepreneur must consider the nature of the service itself, the
locations of the customers, and their preferences as to time of
purchase and use.
d. Customization versus Standardization - This depends on the
degree of customization (in which the service features and its
underlying processes should be adapted to meet individual
requirements or preferences of customers) and degree of
standardization involved in the service delivery (in which the
customers receive the same service features and its underlying
processes).

- For example, a cooking class can be customized to the type of

menu and time schedule according to the preferences of the learner-
participants. Meanwhile, a transport service van may offer fixed area
route, fee rates, and pick-up time for the passengers.
e. Nature of Relationship with Customers This depends on whether the
service involves a formal relationship such that each customer is
known to the organization and all transactions are individually recorded
and attributed.

- An example is legal advisory services. In other services, customers

are unidentified, their transactions are fleeting, and they disappear
from the organization's sight.

- An example is a key duplicating service that is done while the

customer waits for the service to be finished.
 TABLE 4.2: UNDERSTANDING THE NATURE OF THE SERVICES (PAGE. 88)

THE FOUR CATEGORIES OF SERVICE PROCESSES ARE

FURTHER DESCRIBED BELOW:

a. People processing - This involves tangible actions to people's

bodies. The customer is directly involved physically in this type of
service. Also, the customer must physically enter the service location,
sometimes referred to as service factory, to obtain the benefit of the
service.
b. Possession processing

- This involves tangible actions to goods and other physical possessions of the
customer. It often includes providing some form of treatment (such as
cleaning, repairing. improving) to a physical thing that belongs to the
customer, for instance, his or her car, a computer, or a pet dog. Compared to
people processing, the customers are less physically involved with this type of
service.

c. Mental stimulus processing

- This involves interaction with people's minds, which can shape their attitudes
and influence behavior. Customer's mental communication with the information
C. being presented is considered here. Examples are education, legal services,
and entertainment. When there is some kind of dependency on the part of the
customer in availing of the service (e.g., psychotherapy), the service is subject to
strong ethical standards to avoid any form of manipulation or unethical practice.
d. Information processing

- This involves high dependency on the effective collection and

processing of information. Today's digital technology has made
possible advanced information processing that involves machines and
humans. Examples are financial services, management consulting,
and banking services.
QUESTIONS