Fundamentals of

product development
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DAY 1
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At the end of the lesson, the students should be able to:

 discuss the fundamentals of product development;

 develop a product or service description;
 create a product or service prototype;
 test the product prototype;
 validate the service description of the product with potential customers to
determine its market acceptability;
 pinpoint suppliers of raw materials;
 demonstrate understanding of the 4Ms (Manpower, Method, Machine and
Materials) of Operations;
 explain the concept of methods in business operations;
 value the importance of methods in business operations through video analysis;
and
 describe the factors that affects methods in business operations.
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Bring Me! – Motivational Activity

Bring out 2-3 body essentials in your belongings

like: lotion, face cream, hand cream, alcohol, hand
sanitizer cologne, perfume, face powder, or sunscreen.

Now that you’re done looking for the item, read

the information presented on its packaging.
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Bring Me! – Motivational Activity

Does the item say something about the product you are
holding? If yes, what is it? Write such in the table and
let’s discuss your answers..

BODY ESSENTIAL
PRODUCT NAME DESCRIPTION
BRAND
1.

2.

3.
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FUNDAMENTALS OF
PRODUCT DEVELOPMET
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Fundamentals of Product Development

Before commercializing a new product or

service, the entrepreneur must focus first
on refining the product or service and
validate its market acceptability.
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Fundamentals of Product Development

 Innovated product
 new product line from the existing
business of the entrepreneur
 Product line extension
 Enhancement product
 Repositioning of an existing product
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Fundamentals of Product Development

 Product development is the creation of a
new or different product that offers new
benefits to the customers.
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Fundamentals of Product Development

 It is composed of four steps:
(1) developing a product/ service
description;
(2) creating a prototype;
(3) testing the prototype; and
(4) validating the market.
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PRODUCT / SERVICE
DESCRIPTION
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Product/ Service Description

 It simply describes how a product or

service works and how it benefits
the customers.
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Product/ Service Description

Example, in consumer goods, such as

food, usually present their description
at the back of the packaging.
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Product/ Service Description

For services, its description is presented in a
way that customers or clients of salons, spa,
clinics, schools, hotels, transportation, and
other servicing businesses get a glimpse of
the service that they would be availing.
Service description provides customers and
clients what to anticipate/ expect/ look
forward from the said provider.
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Product/ Service Description

Product or service description is indeed
another tool for the entrepreneur to look
into. By conveying comprehensively, the
entrepreneur’s product or service
description, it is a way to know if indeed his
or her product or service is superior to the
competitors.
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Product/ Service Description

It should directly address the primary target market
in a personal manner using everyday language.
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Product/ Service Description

It should highlight the features that will cater to the
customer’s needs or cater to the customer’s
problems.
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Product/ Service Description

Realistic superlatives should be used for the
product/ service description. The product/ service
description must be factual. Make sure to use
appropriate adjectives to describe your product/
service. After all you don’t want to mislead/
disappoint your target market.
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What is the importance

of refining one’s
personality?
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Creating a prototype
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Creating a Prototype
A prototype is a preliminary model or sample of a
new product or service that is created to test a
product concept or service process. It is an early
sample, model, or release of a product built to test a
concept or process.
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Creating a Prototype
This stage in the inventing process is possibly the
period of greatest learning. This is the stage where
the entrepreneur can experiment, develop, and
make improvements in the potential product or
service.
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Creating a Prototype
For goods, the entrepreneur will decide as to the
number and type of materials to be used in coming
up with the product ranging from metals to
plastics, to chemicals, to textiles. The entrepreneur
will also scrutinize the parts and functions, as well
as the design and other attributes.
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Creating a Prototype
For services, it can be performed by individuals who
may later become a part of the entrepreneurial
line-up. The entrepreneur will take note strengths
and weaknesses of the said service. The goal is to
come up with an acceptable and standard service.
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Advantages of
Creating a prototype
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Advantages of Creating a Prototype

Creating a prototype enables the entrepreneur to
engage in trial-and-error, provides room for
improvements, and refines the functionality of the
product design or service process.
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Advantages of Creating a Prototype

Creating a prototype provides the entrepreneur a
window to test the performance and specifications
of various materials and service processes.
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Advantages of Creating a Prototype

A prototype helps an entrepreneur effectively
describe the product or service to the product team.
explore all possibilities that are on the market.
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Advantages of Creating a Prototype

Creating a prototype elicits respect from
stakeholders and customers. At the same time, a
prototype gives credibility to the entrepreneur.
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TESTING THE PROTOTYPE

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Testing the Prototype

This is a crucial process before an actual product or
service is launched in the market. Testing the
prototype will uncover the final loopholes that need
to be addressed before commercialization.
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Are “we” final products or work-

in-progress towards others’
acceptability?
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Methods in Testing the Prototype

1. Focus Group Discussion (FGD)

The objective of the FGD is to identify errors,

deficiencies, and issues that may impede the
success of the product or service. The entrepreneur
must also elicit the participants’ suggestions and
practical solutions to these problems.
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Methods in Testing the Prototype

3. Safety Test

This test ascertains that the product is safe to use

(flat iron, light bulb, electric fan), safe to be
consumed (food, beverages, medicines) and safe to
be applied (cosmetics). In no way that the product
or service may harm the customer in terms of
health and safety.
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Methods in Testing the Prototype

4. Product Costing Test

The entrepreneur examines the expected costs

versus the allocated budget in every stage of the
production process. This is to match whether the
cost of production would be greater than, lesser
than, or equal to the allocated budget.
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Methods in Testing the Prototype

5. Component Test

Each component, part, or detail of the good or

service must be tested independently to identify
component failures. The questionnaire is
systematic/ organized. Any failure identified from a
component or part or detail must be solved and
tested again until proven fully functional.
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Methods in Testing the Prototype

6. Competitors’ Product or Service Test

The entrepreneur must test a similar line of

products or services from competitors to compare
and get the best practices to be applied to a new
product or service.
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Methods in Testing the Prototype

Testing the product prototype is MANDATORY to
ensure that the product or service will not fail the
customers and will deliver its definitive purpose.
This will elicit customer satisfaction and
eventually, customer loyalty and retention.
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Validation of
Market Acceptability
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Validation of Market Acceptability

- It is the process of finding out if the intended
primary target market will be buying the good or
availing the service.

- This process either validates or invalidates the

entrepreneur’s perception about the suitability/
appropriateness of the chosen primary target
market.
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Validation of Market Acceptability

- This is also the time to deeply understand the
value that the product or service brings to the
customer and their prospective purchase
behavior. This process is the last step before the
product or service can be introduced to the
market.
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Validation of Market Acceptability

- The following questions are likely to be answered
in the validation of market acceptability:

1. Will the primary target market like the

product or service?
2. Will the primary target market buy the
product or service when it is already in the
market?
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Validation of Market Acceptability

Said questions can be answered easily by the
primary target market segment by these activities
carried out by the entrepreneur:
 Use the most strategic marketing research tool.
Decide whether you are to apply FGD, survey,
interview, observation, online survey, e-mail,
questionnaires, or a combination of these tools.
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Validation of Market Acceptability

 Prepare relevant and concise questions. Do not
go around the bush. Include necessary questions
only that will give you definite answers for the
questions stated earlier.
 Consult the experts. Consider tapping the
knowledge of market experts who can provide
you meaningful information for you to enhance
your good or service.
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Validation of Market Acceptability

 Collect all the data, analyze them, and prepare a
summative report that answers the
aforementioned questions.
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The expectations of life depend

upon diligence; the mechanic that
would prefer his work must first
sharpen his tools
- Confucius
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THE ENTREPRENEURIAL MIND

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The Entrepreneurial Mind

 To reinforce your understanding, please
accomplish the enrichment activity.
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The Entrepreneurial Mind

 Successful new products spring from the
convergence of: (1) the creative mind; (2) the
technical mind; and (3) the business mind. All
three minds come together in the entrepreneurial
mind. In reality, however, the three minds are
seldom found in one entrepreneur. However, the
entrepreneur is certainly the orchestrator of the
three minds.
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The Entrepreneurial Mind

 The creative mind conceptualizes and designs a
product or service that consumers find some use
for. It produces a product or service that is pleasing
to see, touch, smell, hear, and taste.
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The Entrepreneurial Mind

 The technical mind is the technology originator. This
converts the entrepreneur’s new knowledge into something
highly functional and operational. The technical mind is also a
technology adaptor. This uses the entrepreneur’s old
knowledge for new applications in various human endeavors.
The technical mind is a technology renderer. It resolves to
make a new product or service work by configuring and
reconfiguring the technical design of the new product or the
blueprint of the service.
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The Entrepreneurial Mind

 The business mind harnesses the potentials of
new products or services by creating the market
space for them. It also organizes sufficient forces
and resources to develop, launch, and
commercialize the new product or service in order
to maximize its market value.
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The Entrepreneurial Mind

Question Answer
Taking into account your creative mind, does your innovated food
product appeal to senses and emotions? Does your product have
aesthetic appeal? Is your product useful or valuable? Justify.
Taking into account your technical mind, how do you intend to
convert this product concept into something concrete and real? What
technologies and skills must you learn? What are your product
specifications? Would you seek guidance of experts in the field?
Explain.
Taking into account your business mind, who is your target market?
What are your projected sales and expenses? How do you intend to
make money out of selling this product? Discuss.
Additionally, what help do you need to fully exploit the market and
financial potentials of this product or service?
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DAY 2
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THE 4M’S OF OPERATIONS

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The 4M’s of Operations

Every profit or service organization pays
attention to many factors such as:
 Aspiring entrepreneurs must possess the skills,
patience, and passion for the business, as well as
the courage to face reasonable risks.
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The 4M’s of Operations

 Each employee must be qualified to perform his
or her job.
 Proper machines and equipment should be
installed to facilitate operations.
 Raw materials should be readily available.
 The methods or technology used by the
organization must give it a competitive edge over
its competitors.
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The 4M’s of Operations

 First-timers in business must

familiarize themselves with the 4 Ms
of operations.
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The 4M’s of Operations

The operations plan is an important part of the

business plan because it provides the details in
operating the business. Operations
management, on the other hand, controls the
implementation of the business plan.
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The 4M’s of Operations

A strong operations plan should have the four

operational aspects—called the 4 Ms of
operations:

 the methods, or the processes to be followed

in effectively manufacturing or delivering a
product or service;
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The 4M’s of Operations

 the manpower, or the right human resources

who will handle certain business operations;

 the machines, or the technology used in

efficiently operating the business; and

 the materials to be used in creating a product

or performing a service, which includes supply
chain management
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WHY ARE THE 4M’S OF

OPERATIONS IMPORTANT IN A
BUSINESS?
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Importance of 4M’s

 The 4 Ms are applicable to business

opportunities since business is in essence tied
to manufacturing as well. When putting up a
business, manpower is critical as well as the
other elements. The businessman must take all
of those into account.
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Importance of 4M’s

 Running a business is a complex process and

all of these elements interplay. It is not just
one machine, for example, but many.
Manpower issues could also arise, which
would challenge the method that has been set
up. It is up to the businessman to identify and
solve these issues.
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Importance of 4M’s

 Identifying the resource needs is generally

considered in business; it is a task for those in
management. Failure to supply the resources
required by a business often results in
organizational failure
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THE 4M’S OF OPERATIONS

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Methods
The methods aspect represents the day-to-day
operations of a business. It describes how an
entrepreneur will run the business from all facets of
the business such as the manufacturing of goods,
service delivery process, distribution of goods and
services, logistics for delivery of goods, and inventory
management, to name a few.
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Methods
Methods refer to the system and the step-by-step
process in the business. Without a scalable process, it
would be difficult to stabilize or expand the business.
For a business which had expanded, this means that the
methods used in one branch must be documented and
must be replicated as well in other branches. If it is difficult
to implement at another site, find what needs to be
improved.
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Methods
The entrepreneur has to be very detailed in
formulating these processes and must ensure that the
customer experience will be pleasant and seamless.
Internally, the processes must also abide with
industry standards and policies where the business
belongs (e.g., ISO certification).
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Methods
The entrepreneur must also set standard operating
procedures (SOPs) both in manufacturing goods and
rendering of services. These SOPs must be monitored
to validate compliance. The entrepreneur must also
critically consider the effects of these processes to the
environment and to the public.
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Methods
Methods describe how the entrepreneur will manage all facets
of his/her business such as:

 manufacturing of goods
 service delivery processes
 distribution of goods and services
 logistics for delivery of goods
 inventory management
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manufacturing of goods
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Methods – manufacturing of goods

The entrepreneur who will engage in producing his or
her own products will have to consider the basic
guidelines and principles in manufacturing.
Manufacturing is the process of translating raw
materials into finished goods that are acceptable to
the customer's standards. It consists of three
elements:
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Methods – manufacturing of goods

 Inputs
These are the materials or ingredients to be used
in creating the product.
 Process
It is the transformation phase where inputs are
processed by manpower and machines to come up
with the final product.
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Methods – manufacturing of goods

 Output
It is the final product of the process stage, which
is intended to be sold to target customer
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Methods – manufacturing of goods

Sample methods used in the production of rice are as
follows:
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Methods – manufacturing of goods

The entrepreneur must also consider the most
efficient manufacturing site in which the
manufacturing process will take place. Depending
on the entrepreneur’s objective and financial
capacity, he or she can opt to have any of the
following manufacturing sites:
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Methods – manufacturing of goods

Home-based

Most start-up do not have financial capacity to

establish a manufacturing site. Thus, their only option is
to manufacture goods at home. This option is the
cheapest and highly flexible. The entrepreneur can start
with products that are usually manageable to be
processed at home such as food products and
customized clothes.
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Methods – manufacturing of goods

Commercial space for rent

This is advisable if the business really requires a

commercial space for the processing of goods and if the
home option is not viable anymore. A commercial space
gives the entrepreneur a more specialized and suited
manufacturing site than manufacturing at home.
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Methods – manufacturing of goods

Commercial space purchase

This option requires the biggest amount of

capital expenditure; but it also provides the
entrepreneur substantial freedom and flexibility to
design and run the commercial space. Compared
with renting, purchasing a commercial space is
considered more of an investment than an expense.
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SERVICE DELIVERY PROCESS

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Methods – Service Delivery Process

The entrepreneur who will engage in a service business
must be more meticulous when it comes to the service
delivery process. This is because services are intangible,
and the only way the customer can appreciate the service
is by remembering how pleasant his or her experience
was.
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Methods – Service Delivery Process

Service entrepreneurs must prepare a detailed flowchart
of the service business, which is also called a service
blueprint. Every process in the blueprint must be relevant
to the service business to minimize wastage.
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Methods – Service Delivery Process

The service bottlenecks must be addressed
immediately to avoid customer complaints.
Bottleneck is a part of the process where there is an
apparent inefficiency and where the customer waits
longer. The service entrepreneur must develop
scripts that the service provider will follow to serve
the customers better and to establish standard
processes.
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Methods – Service Delivery Process

In terms of the floor plan, the service entrepreneur
must design it according to the most efficient way
in performing the service, which can be based on
the internal structure of the service business,
service delivery requirements, or customer
requirements. For example, a barber shop should
place the receptionist in front so that customers can
easily inquire of the service that they will avail.
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DAY 3
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Distribution method
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Methods – Delivery Method

Distribution is the process of bringing the products
or services to customers. In selling physical goods,
the entrepreneur must plan the location, the
processes, and the distribution of the products to
the customers.
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Methods – Delivery Method

The entrepreneur may also buy the finished goods
from the manufacturers and plan how to distribute
them efficiently to target distribution centers or the
customers.
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Methods – Delivery Method

Distribution is not a straight process from the
entrepreneur to customers; thus, the term supply
chain or distribution channel was coined. The
manufacturer will deliver the products to the
distributors, to the wholesalers, to the retailers,
and then finally to customers.
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Methods – Delivery Method

According to Will Kenton, “A supply chain is a
network between a company and its suppliers to
produce and distribute a specific product to the
final buyer. This network includes different
activities, people, entities, information, and
resources. The supply chain also represents the
steps it takes to get the product or service from its
original state to the customer.”
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Methods – Delivery Method

The entities involved in a supply chain include the
manufacturer, distributors, and agents. Learn more
about the functions of each entity through our next
discussion.
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Methods – Delivery Method

Manufacturer

The manufacturer handles the invention,

development, and production of the product or
service. Entrepreneurs can be manufacturers of a
product or service. Manufacturers take charge of
acquiring materials, production and delivery
schedules, product quality, and inventory or safety
management. Manufacturers also handle product
delivery, marketing, and selling.
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Methods – Delivery Method

Distributors
These are entrepreneurs who often buy products or services
from the manufacturers and sell them at a mark-up price to
either wholesalers or retailers. Distributors buy the products
in bulk for a discounted price. The bought products or services
are now owned by the distributors, so any damage, spoilage,
or other liabilities to the product will be their sole
responsibility. Distributors become wholesalers when they sell
the product to another distributor.
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Methods – Delivery Method

Agents

Agents, on the other hand, don't own the

products or services because they do not buy these
from the manufacturer. Instead, they negotiate
with buyers as to how much or how many are to be
sold, so the manufacturer will be able to deliver the
goods directly to the buyer. Agents get the
commission for every product sold.
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Methods – Delivery Method

Agents

Some agents do consignment, wherein agents get

the products in advance to demonstrate them live to
the customers. If unsold, agents just return the
merchandise to the manufacturers. They are not
held liable for any damages or losses incurred.
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PAYMENT PROCESS
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Methods – Payment Process

The entrepreneur must also establish a seamless
payment process. Generally, there are no problems
if the customers pay in cash. But there are instances
when they do not want to pay in cash and are
usually attracted by flexible and customer-friendly
payment terms such as credit cards, installment
plans, or a simple accounts payable or “pautang”.
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Methods – Payment Process

The entrepreneur must ensure that credit payments
are seamless and that the customers are aware of
the terms and conditions of the credit.
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Methods – Payment Process

Some entrepreneurs put point-of-sale (POS)
machines in their shops to accommodate those who
will pay through their credit or debit cards. For
traditional ones, they put the credit purchase in a
ledger and indicate the due dates. Once the due date
arrives, the entrepreneur has to collect payments
from the customers.
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Methods – Payment Process

The objective for all entrepreneurs is to ensure
efficient collection of accounts receivables and
avoid bad debts. He or she must conduct due
diligence first before allowing a customer to
purchase via credit.
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“All hard work brings a

profit, but mere talk leads
only to poverty.”
- - Proverbs 14:23
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DAY 4
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PETA 1
Video Bites