1 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Chapter 9: New Product Development

2 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Learning Objectives To become aware that new product development is a high-risk endeavor To be able to explain why small companies can develop new products more easily than large companies can To know several ways of brainstorming for new product ideas To be able to identify the factors needed for a successful new product To comprehend the types of legal protection available for new products

3 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ A High-Risk Venture Coca-Cola’s “Surge” beverage failed to reach projected sales volume 3M’s Floptical disk was not successful

4 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Small Businesses and New Product Development Advantage—less bureaucracy Disadvantage—lack of financial backing

5 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Developing a New Idea Recognize a need Improve existing products Combine industries Recognize trends Be aware of everything Question assumptions Name it first, then develop it

6 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Factor For New Product Success Do adequate market research Satisfy a need Have a high product advantage Get quality and pricing right the first time Use the right channels of distribution

7 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Distribution Channels Direct marketing Wholesalers Agents

8 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ The Distribution Decision Factors Consumer or industrial market Location and number of customers Product characteristics Entrepreneur’s resources Competitor’s distribution channels

9 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Obstacles to Securing Distribution Channels Proof of demand Minimum inventory levels Minimum advertising levels Slotting fees

10 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Patents Excludes others from _____ the invention making using offering for sale selling importing

11 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Types of Patents Utility Design Plant

12 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Utility Patents For new, useful... Processes Machines Manufactured articles Improvements

13 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Design Patents For new, original, and ornamental designs of manufactured articles

14 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Plant Patents For new varieties of plants

15 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Problems With Patents Circumvent patents with minor product changes Ideas are not patentable Fighting infringement is costly No protection of infringement claims by others No protection in foreign countries

16 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Copyrights Protects “original works of authorship” Literary Dramatic Musical Artistic Software

17 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Trademarks Used to identify a company’s goods Word Name Symbol Device

18 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ Trade Secrets Confidential company information Theft is subject to federal criminal action

19 ENTREPRENEURSHIP, 4/e By Lambing and Kuehl PRENTICE HALL ©2007 by Pearson Education, Inc. Upper Saddle River, NJ New Product Development and the Business Plan Explain stage of product development Explain legal protections that will be sought