2 18 14 Chapter 6 Analyzing the Industry the Market Industry a grouping of similar businesses that interact in a common environment Market a grouping of customers that an entrepreneur targets Primary Customer represents that segment of the marketplace that needs the product or service most Interview Analysis How is the industry described Is the industry growing Where are the opportunities What does the future look like Are there any threats to the industry What are the typical margins in the industry Frameworks for Understanding Industries Birth Growth adaptation Differentiation competition Maturity decline Shakeout Industry Trajectories 4 changes in industry Progressive Change most common companies grow geographically increase profits through innovations Ex Wal Mart Southwest airlines Intermediating Change change that comes when there are major shifts in the value chain in the form of backward or forward integration strategic partners developing new ways to transect business with customers Ex card swipes for in home work done Radical Change occurs when an innovation results in the obsolescence of previous technology drives old line companies out of business Ex iPod took CDs out of business Creative Change found in industries where resources turn over frequently must continually be replaced Ex film music industries Porter s Five Forces Model Barriers to entry if high they may present a significant challenge to the entrepreneur Economies of scale hard for new venture to achieve Brand loyalty not easy to get loyal customers to switch Capital requirements R D or plant equipment Switching costs for the buyer time effort to switch starting over the learning process with a new company Access to distribution channels will retailers sell your product Proprietary factors must stick with supplier who holds patent to make the product you need Government regulations licensing of airwaves zoning FDA approval Threats from substitute products Products services which accomplish same function in different way or at a different price bowling alleys compete with miniature golf courses Threats from buyers bargaining power Threats from suppliers bargaining power Competitive rivalry among existing firms A highly competitive industry will drive down profits Random fact companies pay to have their brand placed on shelves in the average customers line of sight when s the last time a Kroger brand was the first thing you ve seen on a shelf Characterizing the Target Market Step in Market Research identify profile customer Primary research techniques Mail phone surveys Overview Internet In person Market Industry Radical change Creative change Intermediating change Progressive change Porters five force model Primary research 2 20 14 Chapter 7 Nature of Product Process Development Sophisticated customers generally exist in fragmented markets Customers can differentiate products on a very subtle level Impact of Technology Today marginal cost of added technology is usually small growing business cannot build its competitive advantage around technology alone Shortened product life cycle of almost everything Impact of Insufficient Resources Poor execution Time to market increases not enough people to do work need to redo work because you hired under qualified people the first time First to market opportunities are missed Projects are made simpler so that more can be done with less projects dumbed down or key features are deleted Team morale declines Strategies to consider to compete effectively in product development Design products right the first time Outsource certain product development tasks Shorten the time to market Process Cycle Components been served Proper opportunity recognition have you identified a niche that has not Technical feasibility analysis does the product service currently exist Does it have and application in the market Can it be produced How much Design and development of platform ideally a platform product will provide for many derivative products their corresponding revenue streams Product Development Cycle Prototype building and field testing Initial market tests Market introduction and ramp up time to consider how to replicate your product at lowest possible cost New Product Checklist pros cons table Areas Suitable for outsourcing that require engineering analysis design and expertise Component design Materials specifications Machinery to process Ergonomic design Packaging design Assembly drawings and specifications Parts and material sources suppliers Operator s and owner s manuals Intellectual Property Rights group of legal rights associated with patents trademarks copyrights and trade secrets Patents The primary means of protecting an original invention The process was designed by Thomas Jefferson in 1790 to provide a brief legal monopoly to give the inventor a opportunity to get the invention to market and recoup development costs before competitors entered the market The invention must fit into 1 5 classes established by Congress Invention must have utility 1 2 Must not contain prior art 3 Must not be obvious to someone with ordinary skills in the field Ex cannot patent how to hammer a nail Types of Patents Utility protect functional part of machines processes Design protect new original ornamental designs for manufactured articles Business Method protect fundamentally different ways of doing business whereby the embedded process Process Disclosure document not available since Feb 2007 File a provisional patent Fila a non provisional patent application Patents give the holder right to enforce the patent Defense costs in time and money make it difficult for small business to Patent Infringement enforce Foreign Patents united states Patent rights granted to an individual extend only to the borders of the Every country has different laws regarding intellectual property working to develop international property attorney Hire a knowledgeable intellectual Trademarks symbol logo word sound color design or other device that is used to identify a business or a product in commerce Not trademarkable Anything immoral or deceptive Uses official symbols of a U S or any state municipality such as a flag Uses a person s name or likeness without permission Copyrights Protects the form of the original works of authors composers screenwriters computer programmers does not protect the idea itself Lasts for the life of the holder 70 years Digital Millennium Copyright Act 1998 prohibits falsification