Product Design and Development

A product is something that can be marketed to customers since it provides a benefit and satifies a need. It can either be a physical good or a service. Four major categories of product development are, new-to-the-company, improvement of existing product, extension of product line, and new-to-the-market.

Product ideas can come from anywhere. It is important to think of product ideas that customers would want or need. Ideas can turn into a business opportunity when it has commercial potential. Products provide customers with 4 types of utility or benefit: time utility, place utility, ownership utility, and form utility.  It is also important to understand the industry your product fits in. Do some research on the industry and ask people in the industry about it. Also when it comes to research, also look up similar product sales to help forecast sales for your product idea.

Below is the product development process.

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Marketing

Marketing is more than just about advertising and selling. It includes other things such as setting a price, identifying a target market, and even delivering the product.  It is a team effort for an organization and overall everyone including consumers is involved in marketing.

With marketing you do need a strategy. You need to identify your market and then segment it. You will either have a consumer market or an industrial market or maybe even both. With segmenting the market there is demographic segmentation (age, gender, income,etc), geographic segmentation(region, climate, population), behavioral segmentation(receptiveness to technology,usage), and psychographic segmentation(lifestyle variables such as interests, activities, attitudes and values).  After this you need to develop and implement a marketing program,which involves the marketing mix(pictured below).

Pricing strategies include:

  • Skimming Pricing- Start off with the highest price that keenly interested customers are willing to pay.
  • Penetration Pricing– Charging a low price,both to discourage competition and to grab a sizable share of the market.
  • Cost-Based Pricing– Figure out how much it costs to make a product and then set a price by adding a profit to the cost.
  • Demand-Based Pricing– Set a price based off how much consumers are willing to pay
  • Target Costing– Figure out how much consumers are willing to pay and then subtract the retailer’s profit from this price.
  • Prestige Pricing– Set prices high to show they are high quality.
  • Odd-Even Pricing– Set prices such as $9.99 or $99 to make it look cheaper than $10 or $100.

 

The marketing field is extensive just like the opportunities for a person graduating with a marketing degree. Some options include advertising, brand and product management, marketing research, supply chain and logistics management, retailing, and sales.  Even if you’re not sure if you want to go into marketing,you may still want to take one or more marketing courses to see what’s all involved. Also when it comes to a job in sales, it can be helpful for any type of future career in business.

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Teamwork and Communications

The importance of teamwork is taught to people usually sometime starting in elementary school. A team is just a group of people who get together to work towards a common goal. Some characteristics of teams are that they are accountable for achieving specific common goals, the members of the team must rely on each other for information, they are stable so they can finish any assigned tasks, teams have authority, and they are assembled to do work for larger organizations.

Types of teams include:

Manager-Led Teams– The manager is the team leader and team members have little autonomy.

Self-Managing Teams– They are usually small and have considerable autonomy. Managers may determine goals but team members control the activities.

Cross-Functional Teams– Team members will come from different functional areas of the company. This way there can be people with different expertise on the team.

Virtual Teams– These type of teams interact electronically such as through videoconferencing, instant messaging, and in electronic meetings. Members can be located anywhere due to the fact all they usually need is a computer/laptop with internet connection.

Teams will either work or not work. The factors that contribute to teams working out are:

  • Team members depend or rely on each other to get the work done.
  • Team members will trust one another.
  • Team members work better as a group than individual.
  • Team members will encourage others to do their best.
  • Team members will be more committed if they enjoy being on a team.
  • If leadership roles are rotated the team will function better.

The factors that contribute to teams failing are:

  • Members fail to cooperate.
  • There is a lack of managerial support.
  • Managers fail to delegate authority.
  • Teams fail to cooperate thus affecting the success of the organization.

Communication, just like teamwork is important when it comes to business. Prospective employers want to hire people with good communication skills. Communications can either flow downward, upward, or lateral(horizontal) in a typical organization.

When it comes to communication there are some barriers. These can include noise, failure to listen, cultural barriers and functional barriers.  Cultural barriers are the differences among people of different cultures. This can include barriers among both genders, different ethnicities, different educational backgrounds, age, and experience. Functional barriers are barriers that can come up with people of the different functions in the organization, such as marketing, engineering ,management, etc.

In business there is different forms of communication. These can be through email, presentation with visuals, technical reports, formal reports, memos, and presentations without visuals. This link right here will tell you how to write a business report, a business memo and a business email. Also keep in mind of the nonverbal communication you may or may not be aware of that you use on a daily basis.

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Recruiting, Motivating, & Keeping Quality Employees

Recruiting is the process of identifying suitable candidates and encouraging them to apply for openings in the organization. Managers must comply with antidiscrimination laws when recruiting. The Equal Employment Opportunity Commission (EEOC) enforces many federal employment laws such as Title VII of the Civil Rights Act of 1964, The Equal Pay Act of 1963, The Age Discrimination in Employment Act of 1964, and Title I and Title V of the Americans with Disablilities Act of 1990. Managers will look for candidates either inside the organization or outside of it. They also must publicize the opening and possible outlets could be newspaper ads, job fairs, a website, or even a bulletin board inside the building of the company. The steps to the selection process are: applying for the job, taking an employment test, doing an interview, taking a physical exam, having a background and reference check done and finally the final decision on whether you’ll be hired.

Motivation is the drive to achieve a goal or follow a particular course of action. Unmotivated employees will most likely not perform as well as motivated employees.  The hierarchy-of-needs theory is the theory of motivation that holds people are motivated by a hierarchical series of unmet needs.

The two-factor theory is the theory that holds that motivation involves both motivation factors and hygiene factors. Motivation factors are strong contributors to job satisfaction while hygiene factors are not strong contributors but must be there to prevent employees from being dissatisfied.

 There are also two other motivation theories, expectancy and equity. The expectancy theory says employees will work hard if they know there will be a reward. However managers need to make sure that the rewards are able to be obtained and that whatever the employee must do isn’t impossible. The equity theory focuses on the way an employee sees themselves being treated compared to others. For example let’s say two employees do the same job but employee A works harder and longer than employee B. However when it comes to paychecks employee B gets paid more. Based off the equity theory, employee A would feel like he or she is being treated unfairly. This is why it’s important for managers to treat all employees equally and not have any favoritism.  

Employees will enjoy their jobs more if it is a pleasant environment. Also employees like to be able to manage their work and home lives. Many people would probably prefer to be able to choose the hours and days they work instead of being forced to work certain hours and days that may not exactly fit their schedule. For some people, they choose to telecommute, which means they work from home.  It’s estimated that 20% of the US workforce are in telecommuting.

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Managing for Business Success

It is important for any business to have some type of management. Managers are the ones who plan, organize, direct, and control resources to achieve goals. Every business should have a strategic plan if they want to succeed and move forward. The steps in a strategic plan include: identifying the purpose of the company, writing a mission statement, identifying core values or beliefs, assessing the company’s strengths, weaknesses, opportunities, and threats(SWOT),  establishing goals and objectives, and developing and implementing tactical and operational plans to achieve goals and objectives.

Usually there are several layers of management in an organization. The higher up levels will have more authority and responsibility than the lower levels. The usual levels are: top managers, middle managers, and first-line managers. Top managers may include the CEOs, CFOs, COOs, presidents, and vice presidents. Middle managers may include operations managers, division managers, plant managers, and branch managers. First-line managers vary but may include department heads, group leaders, office managers, foremen, and supervisors. The organizational structure is also important in management.

There are 3 common leadership styes: autocratic, democratic, and laissez-faire. In an autocratic style, managers tend to make decisions without asking for input from others. In a democratic style, managers do seek for input on decisions. In a laissez-faire style, managers provide little direction and let subordinates make their own decisions. Most people would probaby prefer a democratic style, but there are certain times when one of the other two would be a better option. Other styles of leadering include transactional and transformational.

Managers will have to master a number of skills if they plan to be successful. These include technical skills, interpersonal skills, conceptual skills, communication skills, time-management skills, and decision-making skills. However, the skills will vary depending on which level of management you are. The skills all managers need are communication, decision-making and time-management.

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Challenges of Starting a Business

Many people want to own their own in business,but there are certain things that needs to be considered before doing so. One of the main reasons for starting a business is that you can be your own boss. Yet the Small Business Administration (SBA) suggests that anyone wanting to start a business needs to be a self-starter, get along with different personalities, be good at making decisions, have physical and emotional stamina, be able to plan and organize well, be highly motivated, and know what to expect before starting a business.

There are nearly 27 million small businesses in the U.S. meaning they play a major part in the economy. They generate about 50% of the GDP, help created jobs, spark innovation, and provide opportunities for many people. Some well known small business founders include: Henry Ford, Thomas Edison, Bill Gates, Steve Jobs, and many others.

When starting a new business there are probably types you should avoid. This may include any type that involves a large investment in property, plant, or equipment. There are two types of industries,or sectors: the goods-producing sector and the service-producing sector. The goods-producing sector would be companies involved in manufacturing, construction, and agriculture. The service-producing sector would be companies involved in retail and wholesale trade, transportation, communications, finance, insurance, real estate, health care, advertising, accounting, and personal services. About 80% of small businesses are in the service-producing sector.

It is important to consider the advantages and disadvantages of business ownership.

Advantages include:

  • Independence-You’re your own boss.
  • Lifestyle- You decide when and where you work.
  • Financial rewards- It’s possible you’ll make more money owning your own business than working for another person.
  • Learning opportunities-You’ll be able to gain more knowledge and understanding of business functions.
  • Create freedom and personal satisfaction- You can work in a career field you enjoy and put your skills and knowledge to use. Satisfaction will come by seeing your business succeed.

Disadvantages include:

  • Financial risk-You may go in debt and if things don’t go as plan, you may face financial loss.
  • Stress-You are responsible for the business so there are many things to worry about such as competition, employees, bills, making sure equipment works properly, and customer problems.
  • Time commitment-Running a business is time-consuming. Many business owners spend more than 60 hours a week working.
  • Undesirable duties-When you first start up, you will be responsible for almost everything, including things you may not enjoy,such as firing an employee.

The most important step in starting a business is to have a business plan. This identifies the goals and how they will be achieved. It also states your mission statement, core values and plans for management, marketing and finances. For more information on creating a business plan click here. This is the U.S. Small Business Administration website that has much information on starting a business.

People usually succeed in business if:

  • They know their business well.
  • They know the basics of business management.
  • They have a strong commitment to the business.
  • They are able to get adequate funding.
  • They pay attention to the money coming in and going out.
  • They are able to manage time efficiently.
  • They know how to manage their employees and train them properly.
  • They can satisify customers by meeting their needs.
  • They are aware of their competition and are able to compete with them.

The reasons someone may not succeed in business are:

  • They had a bad business idea.
  • They had issues with money.
  • They had little experience in management or business in general.
  • They lacked customer focus.
  • They are unable to handle growth.
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Forms of Businesses

There are three main forms of businesses: sole propriertorships, partnerships, and corporations. Each has its’ advantages and disadvantages and when starting a business you will need to decide which form will work best for you.

Sole propriertorships are businesses owned by one person. It’s the most common with 75% of all U.S. businesses being sole propriertorships. This is because it’s the easiest and cheapest to form. Since you are the owner, you get all the profits but you are also responsible for any debts that may occur. And if you die,the business dissolves and doesn’t go to a spouse,child or any other survivor.

Partnerships are businesses owned by two or more people. There are general partnerships and limited partnerships. In the US about 6% of all businesses are partnerships. They too are pretty easy and inexpensive to set up depending on how big you want the business to be. It is suggested with partnerships that you have a partnership agreement defining each partners’ rights and responsibilities with the business. The main disadvantage with partnerships is unlimited liability.

Corporations are legal entities that are entirely separate from the parties who own them. Corporations make up 19% of all business types and most well-known businesses are corporations. Shareholders are the owners of corporations and the portion of the corporation they own depends on the percentage of stock they hold. The board of directors are responsbile for governing the corporation, overseeing policies and decisions, setting goals, hiring and evaluating the CEO, and approving the distribution of income to shareholders. The advantages of a corporation are limited liability, being able to raise funds by selling stock, specialized management, continuity and transferability. The disadvantages are there could be different opinions on goals between the managers and shareholders of the corporation, it’s expensive to set up, they are subject to levels of regulations, and double taxation.

Other types of businesses include: s-corporations, limited-liability companies, cooperatives and not-for-profit corporations(nonprofit).

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