Chapter: 4

Product/service development
 4.1 INTRODUCTION
• The new product development process
involves the
idea generation,
product design, and
detail engineering; and also
involves market research and marketing
analysis.
4.2 The Concept of Product/Service
• 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.
• The essence of product design is to satisfy
customer and maximizes the value for the
customer at minimum cost.
• The merchandise or service will succeed most
if it either eliminates an existing pain or
adds significant tangible benefits.
4.3 Product/Service Development Process
• Once the opportunity is selected, and a
business model has been designed, the next
step is to develop a commercial version of
the opportunity

• Product development is the process through

which companies react to market signals,
respond to changes in customer demand, adopt
new technologies, and ensure continuous
growth.
• The product/service generation process/stages
can be referred to as:
• Idea Generation
• Incubation
• Implementation
• Diffusion
[Link] Generation
• The new product development process starts with
search for ideas.
•Develop an idea that has a market for the new
product/service
•Sources of ideas for entrepreneurs include
 consumers
 existing products and services
 distribution channels
 government
 research and development.
2. Idea Screening
• To minimize the number of ideas to few
vital/valuable ideas.
• The ideas should be sort into three groups
Promising Ideas,
Marginal Ideas, and
Rejects:
3. Concept Development and Testing
•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.
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:
(1) Market size, structure, behavior ;
(2) Planned price, distribution strategy, and marketing
budget of the 1st year; and
(3) Long run sales and profit goals, marketing mix
strategy.
5. Business Analysis
•After developing product concept and
marketing strategy, then 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.
• The company can use other financial measure
to evaluate the merit of a new product
proposal. The simplest is breakeven analysis.
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.
• Functional tests are conducted under
laboratory & field conditions to make sure that
the product performs safely and effectively
(Durability, Speed, Cost, etc)
7. Market Testing
• The goals are to test the new product is more accurate
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.
• It can yield valuable information about buyers, dealers,
marketing program effectiveness, market potential etc.
• Test Marketing yields several benefits include more
reliable forecast of future sale, and pretesting of
alternative of future sale.
8. Commercialization
• When (Timing):- In commercializing, market entry timing is
critical.
•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.
•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.
• 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.
• This leads to reduced production cost and
production of quality goods and services.
• Where (Geographical Strategy):- The company must
decide whether to launch the new product in a single
locality, a region/several regions, in the
national/international market.
• To Whom (Target-Market-Prospect):- Within the
rollout markets, the company must target its
distribution and promotion to the best prospect
group.
• How (Introductory Markets Strategy):- To sequence
and coordinate many actives involved in launching a
new product may/can use network-planning
techniques such as Critical Path Scheduling (CPS).
4.4. Legal and Regulatory Frameworks for Entrepreneurs
• Since there are many options that an entrepreneur
can choose in setting up an organization, it will be
necessary to understand all the advantages and
disadvantages of each regarding such issues as
liability, taxes, continuity, transferability of
interest, costs of setting up, and attractiveness for
raising capital.
• Legal advice for these agreements is necessary to
ensure that the most appropriate decisions have
been made.
• One of the challenges the novice entrepreneur
will face as she/he goes into business
understands the regulatory environment which
is made up of numerous laws and regulations.

• To operate as a legal businessperson and

protect the business from unnecessary suits
and liabilities, the entrepreneur needs to
understand the various laws that govern
his/her business
.
4.5. Intellectual Property Protection/Product/Service
Protection
4.5.1 What is Intellectual Property?
• Intellectual Property which includes patents,
trademarks, copyrights, and trade secrets
represents important assets to the entrepreneur
• Intellectual property is a legal definition of
ideas, inventions, artistic works etc created
out of one's own mental processes.
• Intellectual property is protected by such legal
means as patents, copyrights, and trademark
registrations.
• 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.
4.5.2. Patents
• An entrepreneur who invents a new thing or
improves an existing invention needs to get
legal protection for her invention through a
patent right.
• A patent is a contract between an inventor and
grants the inventor the exclusive right to enjoy
the benefits resulting' from the possession of
the patent.
• 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 unobvious
designs for articles of manufacture.
• Both patent provides the owner with exclusive
rights to hold, transfer, and license the
production and sale of a product/process.
• It is an intellectual property right and It is issued
by government to the inventor.

•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.
4.5.3 Trademarks
• A trademark may be a word, symbol, design, or
some combination of such, or it could be a
slogan or even a particular sound that identifies the
source or sponsorship of certain goods or services.
• Unlike the patent, a trademark can last indefinitely,
as long as the mark continues to perform its
indicated function.
• Trademarks unlike patents are periodically renewed
unless invalidated by cancellations,
abandonment, or other technical
registration/renewal issues.
Benefits of a Registered Trademark
 It provides notice to everyone that you have exclusive rights
to the use of the mark throughout the territorial limits of the
country.
 It entitles you to sue in federal court for trademark
infringement, which can result in recovery of profits,
damages, and costs.
 It establishes incontestable rights regarding the commercial
use of the mark.
 It establishes the right to deposit registration with customs to
prevent importation of goods with a similar mark.
 It entitles you to use the notice of registration (®).
 It provides a basis for filing trademark application in foreign
countries.
4.5.4 Copyrights
• Copyright is a right given to prevent others
from printing, copying, or publishing any
original works of authorship.
• It provide exclusive rights to creative
individuals for the protection of literary or
artistic productions.
• It protects original works of authorship
including literary, dramatic, musical, and artistic
works, such as poetry, novels, movies, songs,
computer software, and architecture.
• Usually copyrights are valid for the life of the
inventor plus a few decades.
4.6. The Intellectual Property System in Ethiopia
• Ethiopia became a party to the convention establishing
the world Intellectual Property Organization (WIPO) in
February 1998 right after some time the Country had
joined the Nairobi Treaty on the Protection of the
Olympic Symbol in 1981.
• It is a member of the Treaty establishing the Common
Market for Eastern and Southern Africa (COMESA)
which was formed in 1994, the Partnership Agreement
between members of the African, Caribbean and Pacific
(ACP) Group of States and the European Union (EU).
• 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;
• The existing laws and directives in Ethiopia in the field of
Intellectual Property (IP) are the Patent Proclamation and the
Implementing Regulation, the Copyright and Related Rights
Proclamation and The Trademark Registration Directive.
• According to the proclamation in order to be granted a patent, an
invention must fulfill three conditions-
(1) it must be new- It should never have been published or publicly
used before;
(2) It should be capable of industrial application- It must be something
which can be industrially manufactured or used; and
(3) It must be "non-obvious”- It should not be an invention which
would have occurred to any specialist working in the relevant field.
 The proclamation excludes the following from
patentability:-
 Inventions contrary to public order or morality;
 Plant or animal varieties or essentially biological processes
for the production of plants or animals; and
 Schemes, rules or methods for playing games or
performing commercial and industrial activities and
computer programs;
 Discoveries, scientific theories and mathematical methods;
and
 Methods for treatment of the human or animal body by
surgery or therapy as well as diagnostic methods practiced
on the human or animal body.
• Rights of a patentee include making, using and
exploiting the patented invention in any other way.
• Any person who wants to use the patented invention
has to get the authorization of the owner/inventor.
• The duration of a patent is 15 years which may be
extended for a further period of five years if proof is
furnished that the invention is properly worked in
Ethiopia.
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
•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
books, pamphlets, articles, computer programs and other writings;
speeches, lectures, addresses, sermons, and other oral works;
dramatic, dramatic-musical works, pantomimes, choreographic works,
and other works created for stage production;
musical works, with or without accompanying words;
audiovisual works and sound recordings works of architecture;
works of drawing, painting, sculpture, engraving, lithography, tapestry,
and other works of fine arts;
•The Proclamation gives protection to:
 Works of 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 works whose producer has his headquarter or
habitual residence in Ethiopia; and
 Works of architecture erected in Ethiopia and other artistic
works incorporated in a building or other structure located in
Ethiopia.
• The author of a work shall be entitled to protection, for his work
upon creation where it is an original work; and written down,
recorded, fixed or otherwise reduced to any material form.
• Quality of the work and the purpose for which the work may
have been created is not taken in to consideration.
• The rights of performers, producers of phonograms and
broadcasting organizations are also protected by law.
• Copyright is protected for the life of the author plus fifty years.
• Fifty years for the rights of performers and producers of sound
Recordings and 20 years for the rights of broadcasting
organizations.
 THE END

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