5.1 Identifying Business Ideas

Question 1

What are internal sources of business ideas for entrepreneurs?

Answer 1

Interests & hobbies, unexpected events, and frustration.

Question 2

How can interests and hobbies inspire business ideas?

Answer 2

An entrepreneur may look to their interests for inspiration, e.g., set up a gym.

Question 3

What is an unexpected event in the context of business ideas?

Answer 3

A eureka moment, where a thought while solving a problem provokes a business idea.

Question 4

How can frustration lead to business ideas?

Answer 4

An entrepreneur may become frustrated by the lack of goods in the market, e.g., due to lack of touchscreen laptops.

Question 5

What are internal sources of ideas for existing firms?

Answer 5

Brainstorming, entrepreneurship, and research & development.

Question 6

What is brainstorming in a business context?

Answer 6

People come together and work as a team to come up with new ideas.

Question 7

How can firms encourage entrepreneurship among employees?

Answer 7

By providing rewards for new ideas.

Question 8

What is the role of research & development in businesses?

Answer 8

A specialized department develops new ideas.

Question 9

What are external sources of ideas for entrepreneurs?

Answer 9

Family & friends and networking.

Question 10

What is networking?

Answer 10

Meeting people and building relations, e.g., at conferences.

Question 11

What are external sources of ideas for existing businesses?

Answer 11

Customer feedback, competitors, media, and market trends.

Question 12

What is market research?

Answer 12

The process of collecting and analyzing information about a target market.

Question 13

Why do businesses carry out market research?

Answer 13

To identify size of market, competitors, consumer needs & wants, and market trends.

Question 14

What are the types of market research?

Answer 14

Primary (Field) and Secondary (Desk).

Question 15

What is primary (field) research?

Answer 15

Gathering first-hand info from the marketplace through direct contact with potential consumers.

Question 16

What are examples of primary research methods?

Answer 16

Observations, surveys, and mystery shoppers.

Question 17

What are the advantages of primary research?

Answer 17

Confidentiality, specific info, and more reliable results.

Question 18

What are the disadvantages of primary research?

Answer 18

Expensive, time-consuming, and may yield inaccurate feedback.

Question 19

What is secondary (desk) research?

Answer 19

Gathering and reviewing existing information that has already been collected by others.

Question 20

What are examples of secondary research sources?

Answer 20

Business reports and the Internet (CSO).

Question 21

What are the advantages of secondary research?

Answer 21

Faster, cheaper, and provides a large amount of info.

Question 22

What are the disadvantages of secondary research?

Answer 22

Outdated information and may not fit specific needs.

Question 23

What is a Unique Selling Point (USP)?

Answer 23

Features of a product that make it stand out from competitors and attract consumers.

Question 24

Can you provide an example of a Unique Selling Point?

Answer 24

The red iPhone, which aids in attracting consumers.

Question 25

What is Stage 1 of New Product Development?

Answer 25

Stage 1: Idea Generation • Involves generating a wide range of potential product ideas. • Can come from internal (employees, R&D, company records) or external sources (customers, competitors, market trends). • A popular method used is brainstorming.

Question 26

What is Stage 2 of New Product Development?

Answer 26

Stage 2: Product Screening • Screening involves selecting ideas with the highest potential for success and dropping unworkable ones early. • Helps avoid wasting time and money. • SWOT analysis is often used to evaluate each idea’s potential.

Question 27

What is the purpose of Product Screening?

Answer 27

• To identify profitable ideas. • Saves money and time by avoiding investment in weak ideas.

Question 28

What is Stage 3 of New Product Development?

Answer 28

Stage 3: Concept Development • The idea is turned into a detailed product description. • Focuses on the Unique Selling Point (USP) — what makes the product different from competitors. • Example: Mercedes-Benz = luxury, Toyota = reliability.

Question 29

What key questions are asked during Concept Development?

Answer 29

• What will the product do? • What will it look like? • What is its USP?

Question 30

Define USP (Unique Selling Point).

Answer 30

A USP is a feature that makes a product/service attractive and distinctively different from competitors’ offerings.

Question 31

What is Stage 4 of New Product Development?

Answer 31

Stage 4: Feasibility Study • Investigates if the product can be made, and if it can be made profitably. • Assesses: • Financial feasibility (cash flow forecast, breakeven analysis) • Production feasibility (can it be made physically and legally?) • Marketability (will customers buy it?)

Question 32

What tools are used in a Feasibility Study?

Answer 32

• Cash flow forecast • Break-even chart • Market research

Question 33

What is Stage 5 of New Product Development?

Answer 33

Stage 5: Prototype Development • The first working model of the product is created. • Used to test the product idea in practice. • Examines: • Materials and production • Government regulations • Consumer appeal • Example: Cully & Sully tested various ready-made meal recipes.

Question 34

What is a Prototype?

Answer 34

A prototype is a sample version of the product made to test how it works and how customers might react.

Question 35

What is Stage 6 of New Product Development?

Answer 35

Stage 6: Test Marketing • Launching the product in a small segment of the market. • Used to gather feedback on: • Product features • Pricing • Advertising & distribution • Helps reduce risk before full-scale launch.

Question 36

Why is Test Marketing important?

Answer 36

• Reduces risk of failure • Prevents large losses in production and advertising • Consumer feedback can lead to product improvement.

Question 37

What is Stage 7 of New Product Development?

Answer 37

Stage 7: Product Launch • The product is launched into the full market. • Requires a marketing campaign to raise awareness. • Business must ensure production and distribution are ready for demand.

Question 38

What are 7 stages of product development

Answer 38

Idea generation Product screening Concept development Feasibility study Prototype development Test marketing Product launch