U5 Ch.19 Ideas Flashcards
Internal sources for entrepreneurs
- Hobbies.
- Unexpected occurrence.
- Frustration with problem.
- Skills+Knowledge
Internal sources of ideas for existing businesses
- Brainstorming.
- Intrapreneurship.
- R&D
External sources for Entrepreneurs
-Family/Friends. -Networking
External Sources for existing businesses
-Copy Competitors. -Customer Feedback
External Sources for both
-media.
-trends.
-state agencies.
-import substitution
Import substitution
making a product domestically that is currently imported from foreign countries
How to collect Intrapreneurship ideas
from employees through suggestion schemes or suggestion boxes. Can be encouraged with bonuses for good ideas
Brainstorming
people from different areas of business cone together and creatively think of new ideas. Some rejected some considered
Reasons for market research
-find size.
-identify competition.
-find needs/wants.
-identify trends
Types of market research
-Primary(field) research. -Secondary(desk) research
Primary Research
go into marketplace gather first-hand info by making direct contact with potential customers
Forms of primary research
1.Observation.
2.Consumer Panels(Focus Groups).
3.Surveys.
4. Mystery Shoppers
Consumer Panels
consumers meet and discuss firm’s products
Mystery Shoppers
Anonymous shoppers evaluate customer service
Secondary Research
gathering + reviewing existing info that has already been collected by others
Forms of secondary research
1.Business Reports. 2.Government Publications. 3.Internet. 4. Commercial Research Agencies. 5.Media
Benefits of market research
- -identify target.
- -lower costs.
- -Evaluate advertising.
- -forecast future trends.
- -identify problems
Development Process
1.Idea Generation -> 2.Product Screening -> 3.Concept Development -> 4.Feasibility Study -> 5.Prototype Development -> 6.Test Marketing -> 7.Product Launch
Idea Generation types
can come from internal and external sources
Product Screening
ideas vetted and those deemed impractical are dropped. Those most likely to be successful are chosen for further development
Concept Development
idea put together into product for consumers needs/wants. Needs clear USP to distinguish itself
Feasability Study
examines whether product is commercially viable and investigates its profitability. Investigates multiple areas of feasibility:
-Market(Demand?).
-Financial(Cost?).
-Production(can it be made?).
-Skills(Does business have skills?)
Prototype development
creation of first working model to determine areas for improvement a new model is then made. This becomes a cycle of improvements until product is satisfactory and full production begins
Test marketing
sold to section of market to gather reactions and consider further changes
Launch
product sold into full market and full-scale production starts. Pricing and distribution channels established. Marketing campaign needed to raise consumer awareness
Break-Even Point formula
FC/Contribution per unit
Contribution per unit formula
selling price p.u. - variable cost p.u.
Fixed costs
don’t change with level of production
Variable costs
change directly with level of production
What is the Margin of safety
difference between forecast output(Sales) and break even point. Shows how far sales can fall before break-even point reached and business begins to lose money
Margin of safety formula
Forecast Output(Sales) - BEP
BEP in euros
BEP x selling price p.u.
Steps for BEP chart
1.Label axis 2.FC 3.TR 4.TC 5.Label BEP 6.Label Profit at forecast 7.Label MOS
Limitations of break-even
- assumes all manafactured products will be sold.
- Assumes selling price remains the same.
- doesn’t account for cost of faulty stock.
- Doesnt consider change in price can change sales.
- Doesn’t consider economies of scale reducing variable cost
How break even doesn’t consider Economies of scale
variable cost per unit decreases because production increases
