Idea to Business Model

(BOE - 060)
 Business
• A business is an activity carried out with the
aim of making economic profits.
or
• A business is defined as an organization or
enterprising entity engaged in commercial,
industrial, or professional activities.
• Businesses can vary in size and structure, from small
local enterprises to large multinational corporations.

• Success in business requires planning, efficient

management, market knowledge, and the ability to
adapt changes.

• Businesses can operate in different sectors, such as

trade, industry, technology, or services, and contribute
to economic growth and employment in society.
 Concept of Business

• All economic activities that involve the sale

and/or purchase of goods and services with
some element of risk and motive of earning
profits are known as business.
• All business activities also aim at satisfying the
needs of human beings in society.
• It is an activity that is performed on a regular
basis and hence also means ‘being busy.’
 Characteristics of Business

• Economic activity: Business is an economic

activity, as it involves performing activities
with the basic objective of earning money and
profits.
• Sale or exchange of goods and services: A
business should include the sale or exchange
of goods and services for some consideration
or value in return between the buyer and
seller directly or through some third party.
• Procurement or production of goods and
services: Procurement means trading goods and
services, and production means manufacturing
the goods and services in an organization.
• In procurement, businesses do not manufacture
goods or services on their own; instead, they
purchase them from other companies and then
sell them to different consumers and businesses.
• Regular basis: An activity will be considered as
a business if it takes place on a regular basis. It
means that selling or purchasing goods and
services for one time only is not considered a
business. For example, manufacturing and
selling chairs on regular basis is a business.
However, selling your school books for one
time is not a business.
• Profit earning: The main objective of any
business is to earn profits. No business can
survive only on the sale and purchase of goods
and services without making profits.
• Element of risk: Uncertain business
environment and different natural, human,
social, economical, political, financial, or
personal factors exist in every business that
exposes them to certain risks.
 Objectives of Business

• Profit earning: Profit is the amount of a

business’s revenue over expenditure.
• Innovation: To attain success and growth, it is
essential for a business to innovate.
• Market standing: Another important objective
of any business is market standing which can
be attained by providing goods and services to
its customers to meet their needs and wants.
• Social responsibility: Besides economic
objectives, there are some social obligations
that a business has to follow, also known as
social responsibility.
• P r o d u c t i v i t y /o p t i m u m u t i l i z a t i o n o f
resources: The next objective of a business is
o p t i m u m u t i l i za t i o n o f r e s o u rc e s a n d
productivity.
• Quality goods and services at a fair price: It is
another social objective of a business that
aims at providing better quality goods and
services to the customer at a reasonable price.
• Workers Development: Human beings are the
most important resource of a business, and
their development is one of the most crucial
objectives.
 Business Idea
• A business idea is a creative or innovative
concept that can be turned into a profitable
business venture.
• It’s something that identifies a problem or gap
in the market and has the potential to meet
the needs of a specific target audience.
• A successful business idea can lead to the
creation of a new product, service, or business
model that can generate revenue and profit.
 Characteristics of a Promising
Business Idea
• Innovative: They introduce new or improved products, services, or
processes. For instance, Dropbox revolutionized file storage by offering
cloud-based syncing, making data accessible from anywhere.
• Unique: They offer something that is not readily available in the
market. Airbnb created a new way for people to travel, allowing
homeowners to rent out their spaces to guests.
• Problem solving: They address specific problems or fulfill unmet needs.
The biotech firm Curemark developed a novel treatment for autism based
on enzyme deficiencies, addressing a significant gap in healthcare.
• Profitable: They have a clear path to financial sustainability. Google's
search engine, through its ad revenue model, transformed information
access and became one of the most profitable ideas in the internet age.
• Understandable: They can be easily grasped and communicated. The
concept behind Uber, using an app to hail a ride, is simple yet transformed
urban mobility.
 Search for a Business Idea
• Identify Problems or gaps in the market
• Research current market trends
• Assess your skills , passion and interest
• Look for inspiration from your own experience
• Identify engineering technologies
• Evaluate your resources
• Evaluate your potential ideas
• Test your idea
Search for a Business Idea
How to choose an idea to business
 Product
• G o o d s a n d s e r v i c e s a re n e c e s s a r y fo r
satisfying the needs of society.

• Product is anything that is offered for sale into

the marketplace. This makes product an
important constituent of marketing and an
important consideration in managerial
decision-making.
 What is Product Selection ?
• Product selection is a strategic decision consisting of “what
product is to be produced – in what form, what features
and what number” whereas Process Selection decides
about the quality and quantity of the manpower, capital
requirement and the choice of processes used for the
production.
• In this age, the selection of a product has become a very
complex task as the market conditions have become very
complicated. Nowadays, when an entrepreneur wants to
select a product, he needs to consider complex parameters
like satisfaction level of the customers, attitudes of the
customers, competitors' strengths, support of the dealers,
existing infrastructural facilities, prevalent macro
conditions of the economy, etc.
 Technical Know-how :
• Technical know-how is an important guiding
factor for an entrepreneur while selecting a
product. An entrepreneur can easily decide
what product should be manufactured if he
belongs to the product-related field.
• Similarly, knowledge in manufacturing or
marketing field enables the entrepreneur in
selection of an appropriate product.
 Availability of Market :
• The availability of a large market for a
particular product also helps in its selection. If
the demand for a product is huge, then the
market risk of launching it becomes less.
• Thus, it is very essential that the entrepreneur
have a good knowledge about the product's
market in terms of how and where the
product can be sold.
 Competitive Rivalry :
• The returns from a product are greatly
influenced by the degree of competition
prevailing in the market.
• Fa c to rs l i ke m a r ke t d o m i n a n c e b y t h e
competitors, availability of substitutes, any
barrier to entry, etc., play significant role in
determining the viability of the product.
 Financial Strength :
• Relative financial of the entrepreneur also serves
as guiding force in selection of a product.
Manufacturing a product generally requires
heavy investment in research and development,
capacity creation, plant and machinery, etc.,
which is generally beyond the expenditure
capacity of a small-sized firm.
• Thus, it is advisable for an entrepreneur to
analyse its financial strength prior to product
selection.
 Product Category :
• In many cases, certain products fall in the priority
sector category while some others may be reserved for
s m a l l s c a l e . s e c t o rs . T h e l e v e l a n d ex t e n t o f
competition for these product categories among small
sectors is lesser than that seen in other sectors of the
economy.
• There are also certain products which the Government
has earmarked as exclusively to be purchased from the
small scale sector. In the case of such products, the
entrepreneur will definitely give a greater importance
to a product which falls in this category.
 Consistency in Demand :
• When there are not many fluctuations in the
demand of a product then the market for such
products can be considered to be stable.
Seasonal products are contrary in the sense that
their demand fluctuates a lot.
• The seasonality of a product also plays a large
part in its selection or non-selection as this is
directly linked to the stability in the demand for
the same. The entrepreneur should definitely
prefer a product which has a consistent and
stable demand.
 Restriction on Imports :
• The foreign trade policy of the government
may restrict the import of some products. In
such cases, those products. gain attraction
from general public and consequently an
entrepreneur should prefer those products
that are part of such restricted category.
 Availability of Raw Materials :
• Availability of raw material is a very important
factor for selecting a particular product. An
entrepreneur should ensure that supplies
required for smooth conduct of business
operations are mostly available in desired
quantity around the year. Moreover, the source
of procurement of raw material is also important.
Where supplies are to be procured from external
sources, the entrepreneur will have to maintain a
sufficient quantity of inventory compared to local
sources.
 Location of Business :
• Business location is also important for selecting a
particular product as certain products are
earmarked for production in special zones like
free trade zones, export promotion zones, etc.
• Government also provides incentives and tax
breaks for such products. Moreover, the location
of big consumer markets near the production
centers also increases the attractiveness of
certain products. Such products will also be
selected by the entrepreneur because of the
locational advantage.
 Ancillary Products :
• When the product is in the nature of an
ancillary product (a product required for
manufacturing another pro duc t), then
its increases the attraction for the
entrepreneur. This is because the product will
have a ready market in the parent industry.
For example, an ancillary unit of Maruti.
 Licensing System :
• There are overtime changes in the governmental
licensing policies. For some products, it is
mandatory for the entrepreneur to have the
required license issued by the concerned
authority. Under particular conditions, capital
addition is also monitored. Moreover, the process
of obtaining license is burdensome for certain
products. Thus, products which require a lot of
licensing approvals will not be very attractive to
entrepreneurs.
 Government Policy :
• The selection of product also has to be done
keeping in mind the government policies and
their likely impact. The entrepreneur should
choose a product which falls in a sector with
favorable Governmental policies. For example,
products which are not socially beneficial like
tobacco and alcohol do not receive
government support.
 Government Incentives and
Subsidies :
• Government often provide a number of
subsidies and incentives for the promotion of
certain businesses. These incentives and
subsidies are generally in the form of tax
holidays, exemptions from customs,
concessions, etc. An entrepreneur must
consider the availability of such governmental
schemes as they greatly support an
entrepreneur in setting up a new business.
 Precautions Regarding Product
Selection
There are certain precautions that he should take while
selecting a product, which are outlined below:

• 1) The production process should not be very long or time-

taking.
• 2) The employed production process should be smooth and
straightforward.
• 3) There should be adequate and consistent demand for the
selected product.
• 4) The product industry must have potentials for growth and
development.
• 5) The product should be accepted by consumers and a
healthy competition should exist for the same.
• 6) There should be easy availability of plant and
machinery and other equipment required for the
production of the product.
• 7) There should be availability of adequate raw
materials. In case local raw materials are not available,
then suppliers from non-local regions should be able
to provide the raw materials in the shortest possible
time.
• 8) Personnel required for technical, artistic and
manual work/labour should be easily available at
reasonable costs.
• 9) The product should be capable of introducing in
overseas markets.
 Product Adoption Process
• The product adoption process is the process by
which consumers accept and purchase new
products.
• With product adoption, people learn about your
product and start using it to achieve their goals. In
other words, product adoption allows you to
convert one-time users to loyal, long-term, and
profitable customers.
Stage 1: The product awareness stage
• Becoming aware that a product exists and ‘what
it does’ is the first stage in the new product
adoption process.
• A familiar brand provides an advantage for new
products in generating awareness among the
target audience.
• Marketing campaigns need to create awareness
of the product as a solution to a well-known
problem (differentiating it from alternatives) or
awareness of a less well-recognized problem and
the solution together.
Stage 2: The product interest stage
• A potential customer moves from awareness
to the product interest stage when the
information about the product is of interest to
them and their job to be done .
• The information they want depends on which
product adoption group they are from.
• It also depends on their intended use cases –
along with details like features, price, and
customer support.
Stage 3: The product evaluation stage
• The product evaluation stage sees a sharpening
of focus from the previous stage.
• The customer considers the pros and cons of
giving your product and others a try.
• During this phase, your efforts should focus on
communicating the best use cases, highlighting
your strongest feature s , and t he re l at i ve
advantage over competitors, and minimizing the
perceived costs of testing your product.
 Stage 4: The product trial (sampling)
stage
• By now the prospect has decided they’re going to
try your product out.
• This might be a free trial (reducing the perceived
cost mentioned above), free samples, a product
demo, or an initial purchase.
• During the product trial stage, users test your
service against their specific needs.
• They see if it delivers on its value proposition; if it
fits in with their tech stack; how much effort it
requires; etc.
 Stage 5: The product activation stage
• The product activation stage is the step we’ve added to
the typical five-stage breakdown.
• The jump from agreeing to test a product out to
committing to it long-term is too great to treat as one
step. Pushing for widespread adoption directly at this
step in the customer journey is premature. It’s only
when you know that a user has activated –
experienced value for the first time – that they can be
convinced to stay.
• So, you should include an activation stage, focused on
making sure that your newly-acquired customers get
that benefit fast.
 Stage 6: The product adoption stage
• Activated users are now primed to be convinced
that the product is right for them.
• In this last stage, product teams must convince
users that they’ll get enough value regularly to
justify paying for the product, learning how to
use it, and foregoing whatever the competition
offers.
• For SaaS products with free trials, consumer
adoption is best indicated by users deciding to
start paying. For others, it’s when users renew.
 Product adoption curve
(Everett Roger’s Adoption Curve)
 Stage 1: Innovators
• The very first adopting segment is the innovators, who make up just
2.5% of the market. They’re technology enthusiasts and thrive off
being among the first in the technology adoption process.
• Innovators don’t care too much about bugs or missing features.
They’re risk-takers and care about being the first to try an unproven
product. This makes them a great source for early feedback.
• However, their enthusiasm is fleeting because they move on quickly.
So they won’t pay premium prices and prefer to try products at a
discount or for free.
• Understanding the innovator segment is crucial for businesses, as
they provide valuable feedback, help refine the product, and serve
as to attract the early majority and other user segments.
• Engaging innovators effectively can accelerate the product’s
adoption and set the stage for broader market acceptance.
 Stage 2: Early adopters
• Next in the product adoption stages are the early adopters, who represent
13.5% of the market. Unlike the innovators, they’re trying to solve a real
problem and have access to capital for innovation. They’re often thought
leaders in their space and look for disruptive innovation.
• Think of an early adopter as a trendsetting individual rocking AirPods in
2016 back when the idea of wireless headphones was anxiety-inducing.
• As visionaries, early adopters are easy to convince there’s a better way. But
they’re not quite as risk-loving as innovators and need positive reviews
from innovators before adopting new technologies and products.
• Since early adopters are trying to solve a real problem, they’re less
tolerant of technical issues or missing product features. They need
more support and expect a lot of customization, all of which makes them
rather demanding.
 Stage 3: Early majority phase
• The early majority make up a whopping 34% of the market. But unlike
innovators and early adopters, they like business continuity and don’t
want to pioneer new technology. This is a big shift in attitude and exactly
why the chasm exists.
• The early majority is also slower at making decisions and prefers to let
others thoroughly test new products. They rely on good references from
existing users’ success stories with a product before deciding to buy it.
• The challenge is that they mainly communicate with each other and less
with early adopters. This is frustrating, especially since early adopters are
the very segment that ’s best able to provide them with positive
references!
• As a result, this is where many product innovations fail, according to
Moore in Crossing the Chasm.
• Once you do cross the chasm, you’re rewarded with a user base full
of loyal customers and a sign of product/market fit. It’s also where you
have the greatest potential for growth and an increase in market share
 Stage 4: Late majority adopters
• The late majority is next to adopt a product. In terms of adoption
rates, the early and late majorities are usually roughly equal,
around 34%. Now we’re at the peak of the product adoption curve,
where the early majority and late majority intersect. Things start to
slow down a little here.
• Consumers in the late majority phase are conservative. They don’t
actively seek out change because failed innovation can be quite
costly to them. They also don’t have big budgets for new products.
• Although users in the late majority group don’t like change, they
recognize failing to adopt popular products can put them at a
competitive disadvantage. And they don’t like that. So they adopt
new products out of necessity, not curiosity. But only ones that are
tried and tested well.
• An example of this is a small business putting itself on Google Maps
so it doesn’t lose business to competitors already on Google Maps.
 Stage 5: Laggards
• Laggards are the last adopting segment and makeup 16% of the
market. They’re usually older and less comfortable with technology.
For this reason, they value traditional ways of doing things.
• As skeptics, laggards resist change more than any other segment.
They’ll eventually cave but only when not using a new product
makes life unbearably difficult for them. Or once their traditional
alternatives are no longer available or acceptable.
• A great example of a laggard is my old man. He finally gave in to
buying a pair of Sketchers in 2021. But – only after watching my
mother and I flaunt these shoe pillows for over fifteen years.
• When laggards finally come on board, a product is already in
decline. But they’re no small segment, making up as much of the
market as innovators and early adopters combined. Ignoring them
may rob you of a decent amount of revenue and market share.
Stage Key characteristics

•Excited to try new features and

products, demand novelty
Stage 1 - Innovators •Don't mind a few bugs in your product
•Double as a great feedback source
•Difficult to convert for the long-term

•Prefer innovation over novelty

•Want a product to work well
Stage 2 - Early adopters
•Demand that the product supports
them during issues
 •Demand a 'proven' product
•Not risk-takers, and hence, if
Stage 3 - Early majority
converted, they will become loyal
customers
•More risk-averse
Stage 4 - Late majority •Are generally more cautious
•Less tolerant of bugs and glitches

Stage 5 - Laggards •Don't want to switch companies

 product adoption metrics?

• 1. Time To First Value (TTFV): Measures how

quickly users move from starting a trial to
product activation.
• 2. Product Qualified Leads (PQLs): Refers to
activated users who are ready for adoption
but just need a gentle push to become die-
hard customers.
• 3. Daily active users: Indicates the number of
unique users who actively engage with your
product on a daily basis and highlights how
frequently your product is being used.
• 4. Customer Lifetime Value (CLV): Refers to
how valuable (think: profitable) a customer is
to your SaaS brand over their entire
relationship with the company.
 Product innovation
• Product innovation is the process of creating a
new product—or improving an existing one—
to meet customers’ needs in a novel way.
 Types of Product innovation
1. New product innovation
• Experts term new products as either radical or
disruptive because if they achieve a successful
adoption rate, they can become game changers and
cause a market shift.
• However, radical and disruptive innovations are harder
to get right, have a lower success rate, and present
more risks. For these reasons, they are not common
because the challenging part is not coming up with a
new idea, but driving market adoption. Success
requires a systematic, proven way of taking ideas from
conception to marketable products.
 2. Incremental changes of existing
products
• Incremental innovation aims at improving
existing products. It's the most lucrative and
successful type of product innovation because
it improves products enjoying relatively
successful market adoption. It also meets the
needs of consumers—for example, the
innovation of the computer into smartphones,
laptops, tablets, and PCs.
 3. Development of new product
features
• Introducing new product features is the third
type of product innovation. Developers and
designers develop new features to improve
products and increase their frequency and
adoption. The trick is not to overburden
consumers with numerous additional features
that distract them from the product's original
usability and utility.
 3 stages of product innovation
process
1. Market research
• Companies can do primary or secondary market research
when initiating their product innovation process. The aim is to
gather as much information as necessary about the tastes and
preferences of potential consumers and any existing market
gaps.
• Primary research involves gathering first-hand information
individually via various sampling methods, focus groups,
questionnaires, or interviews. Secondary research is
universally accessible information from previous studies.
Primary research delivers specific results and is limited to the
business, while secondary research is low-cost but globally
available.
• Ensure the following when conducting market research:
Create customer segments
• Divide your customers up using their common
characteristics such as behaviors and
demographics. Segmentation allows you to build a
m a rketi n g p e rs o n a a n d i nfo rm s yo u r p ro d u c t
innovation process.
Collect customer feedback
• Collect customer feedback to help make informed decisions
moving forward.
Think of ways to improve per customer needs
• Lastly, think of ways to improve your product offering per
your buyer persona and target customer needs.
 2. Product development
• Product development is where designers and
developers build the first test product
(prototype) and test it. This stage includes
continuous testing and improvements to
develop the final product.
• Prioritize new development opportunities
• Since you will never have enough time and resources
for all the new product development ideas proposed,
you must prioritize new development opportunities to
narrow down options. Avoid choice paralysis and break
down product features by viability, feasibility, and
desirability. Also, score options on an effort-to-impact
scale.
• Build a prototype to test customer response
• Test your prototype to assess its functionality and
utility using a focus group to provide insight into its
effectiveness and limitations.
 3. Feasibility study
• At this point, you must look at the legal and
financial restrictions of introducing a new
p ro d u c t to t h e m a r ket . C o n s i d e r s a l e s
forecasts, product price, profitability estimates,
and overall production costs.
 Reason to invest in innovation
1.Improved product quality
All business innovations directly improve product quality and performance. In
turn, this increases the efficiency and effectiveness of business processes
and makes radical structural and operational reforms possible.

2. Smart expansion to new markets

Companies can find a way out in oversaturated markets by turning to product
innovation. It gives them a leeway to expand to new markets and get new
customers simultaneously.

3. Product differentiation
When companies use a differentiation strategy focusing on one aspect of the
product (such as cost value), they create a perceived value among
potential customers and consumers. Thus, innovation simplifies customer
choices by solving their problems.
4. Business growth
Successful product innovation and adoption boosts the growth of
business and industrial enterprises. It allows companies to grow,
conquer new markets and turn higher profits.

5. Market domination
Successful companies find new ways to leverage innovation, gain a
competitive advantage over their competition, and dominate the
market. However, success requires balancing three approaches:
new products, incremental improvements, and targeting new
markets. For example, Apple dominates the global smartphone
market by maintaining its competitive advantage.
 Product innovation examples
1. Apple
Apple's innovation strategy involves introducing exciting new
products and improvements (iPod, iPhone, iPad, and iTunes)
and using innovative business models for maximum product
success. It utilizes both radical and incremental innovation to
its advantage and focuses on product design and functionality.
• 2. Sony
As a leader in product and process innovation, Sony
Electronics remains focused on imagination more
than manufacturing. It's currently branching from
purely manufacturing hardware to new paths like
TV shows, films, and music. Its other products
include computer hardware, consumer
electronics, telecommunications equipment,
video games, robots, and semiconductors.
3. Tesla
Tesla's innovation strategy resulted in impressive in-
car hardware and software integration. No other
automaker has adopted Tesla's cutting-edge
technology and potential for AI and deep learning.
As of 2021, Tesla held the number two rank
among luxury hybrid and electric cars. It also
remains committed to world-changing technology,
for example, its fast-charging sustainable
batteries.
4. Netflix:
Netflix revolutionized how we consume entertainment by
shifting from DVD rentals to streaming services. Its on-
demand streaming model allows users to access, offering a
vast library of movies and TV shows anytime, anywhere,
and has disrupted traditional television and rental markets.
5. Amazon Kindle:
The Amazon Kindle transformed the way we read and access
books. It introduced e-ink technology, offering a digital
reading experience resembling reading from paper. The
Kindle enabled users to carry thousands of books in a single
device, changing the publishing industry.
 Product Planning and Development
• Product planning is the process of developing
successful products to offer your customers. It
includes all aspects of the product development
cycle, including market research, strategic
planning, product design and development,
manufacturing and pricing. A product
development plan helps you construct realistic
goals for each stage of the development process.
It also allows you to measure your progress
toward those goals, assess your successes and
make adjustments as needed.