The possible product/s or

service/s based on viability,

profitability and customer
requirements
 LOOKING BACK TO YOUR
LESSON
As we go further, let us try to recall our A product can be tangible or
lesson about determining the possible intangible in nature that can be
product/s or service/s that will meet the offered for satisfaction of the
need. recipients and it may be an idea,
Entrepreneurs must have a full knowledge a physical entity (a good),
as to what products are needed in the service or any combination of
society. The product will be for the the three. Product is the bundle
satisfaction of the group of the target of satisfaction which the buyer
market. It must be specific, identified from receives as the result of a lease
others, and easily be recognized. An of purchase. It includes the
entrepreneur must conduct market research physical good or service itself.
to determine better the needs and wants of (Agustin-Acierto, M., 2017)
the target market.
2
BRIEF INTRODUCTION:
The entrepreneur’s desire to establish his
business is a visible idea yet it must come into a
test whether it is a viable business option. It needs
a careful analysis of opportunity evaluation. The
entrepreneur who fails to evaluate his noble idea
because of his eagerness to plunge into the
business world often discovers later that he has
more problems to solve and at times abandons the
idea after spending his time and money
(AgustinAcierto, M., 2017).
3
◎ Viability – refers to the ability to survive or persist. In a business sense,
that ability to survive is ultimately linked to financial performance and

“
position. A business is viable if (http://www.managementguru.net/ business-
viability-checklist/, 2014):  it is gaining a profit that is sufficient to provide
a return to the business owner while also meeting its commitments to business
creditors.  it has sufficient cash resources to sustain itself through a period
when it is not returning a profit.
◎ Profitability – determines whether a business stays in business
(https://study.com/academy/lesson/what-is-profitability-definitionanalysis-quiz.html).
It also refers to the ability of a company to use its resources to generate revenues in
excess of its expenses. It is a company’s capability of generating profits from its
operations (https://www.myaccountingcourse.com/accounting-ictionary/profitability).

4
◎ Profit – refers to the revenue a business generates after it pays all
expenses directly related to the generation of the revenue, such as
producing a product, and other expenses related to the conduct of the
business activities (

“
https://study.com/academy/lesson/what-isprofitability-definition-analysi
s-quiz.html
).
Customer requirements - are those characteristics that determine
whether or not the customer is happy
(https://www.sixsigmadaily.com/customerneeds-and-requirements/).
Example: a requirement is that the iPad is user-friendly, has to be fast in data
storage and retrieval, etc (https://www.sixsigmadaily.com/customerneeds-and-
requirements/).

5
Starting Point of Conceiving the Idea of the Type of
Business (Agustin-Acierto, M., 2017):
◎ 1. Conceiving a new product is a process of innovation and when this comes
into a reality, the product must be different from an existing product.
◎ 2. New product needs customer evaluation and this process needs exposure to
the target market as to its economic value.
◎ 3. The entrepreneur must find a new approach to win customer on his side if the
product or service is similar to what is existing in the community.
◎ 4. He must know the strengths and weakness of his competitor and thereby
devise a new system of promotion and advertising such as product discounts,
cash discounts, raffles and other package of prizes. (Agustin-Acierto, M., 2017)

6
 Tactical aspects of a product and its impact to business
model:

◎ 1. Product Size and Weight

◎  If the product is large or heavy it may have high shipping
costs.
◎  If customers are provided with free and fast shipping, it will
significantly increase the chances of winning their loyalty.
◎  If the product is small or light, it can minimize shipping
costs and satisfy customers’ desire for quick and easy delivery.

7
 Tactical aspects of a product and its impact to business
model:
◎ 2. Product Fragility

◎ Fragile products are products that can be easily broken or

damaged. It needs extra attention when shipping to ensure they
arrive in perfect condition.
◎
◎ Fragile goods will increase costs for shipping,
inventory and customer service.
8
 Tactical aspects of a product and its impact to business
model:

◎ 3. Stock Keeping Unit Consider

◎  SKU refers to color, size and other variations of a
single product. The more SKUs, the more attention,
time and money it will need to spend in tracking and
maintaining inventory, adding a level of complexity,
and to manage and distribute the product.

9
 Tactical aspects of a product and its impact to business
model:
◎ 4. Product Lifespan
◎ Product lifespan is the time interval from when a product is
sold to when it is discarded. Having a consumable or
disposable product is often perceived as a great choice from a
business perspective because it improves customers’ loyalty
and, ultimately, builds repeat sales.
◎ The challenge of selling perishable products like ice cream,
frozen yogurt, fruits, etc. are storages, shipping and
production.
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 Tactical aspects of a product and its impact to business
model:
◎ 5. Seasonality
◎ Seasonality means that there are different levels of
demand for a product throughout the year.
◎ Consider the location of your target customers (if you’re
selling internationally or locally)
◎ In managing a seasonal product, there is a need to
determine the business downtime, and work to off-set
expectations and costs during those periods.

11
 Tactical aspects of a product and its impact to business
model:
◎ 6. Price Point
◎ Selling a product with a higher price tag doesn’t prevent firms
from finding success. Example, firms offering fashion brands or
luxury items are able to find success through their product quality
and service to their customers.
◎ Make sure that prices are still attainable for the target customer.
◎ To determine the market viability, maintain functionality at the
forefront of quality and luxury.

12
 Tactical aspects of a product and its impact to business
model:
◎ 7. Competition
◎ The more niche products are, the lesser the
competition, thus, the more leverage a firm has to win
a large share of the market. Competition can be a good
thing—just be sure to continue market viability
research. To determine the market viability, maintain
functionality at the forefront of quality and luxury.

13
 Tactical aspects of a product and its impact to business
model:
◎ 8. Yourself
◎ On top of choosing a product that’s viable in the
market, entrepreneurs should select one that they
actually enjoy or one that solves a problem they have
personally experienced.

14
 Profitability analysis
(https://www.ecommerceceo.com/product-profitabilityanalysis).

◎ >Revenue without profit is pointless.

◎ >Gross sales are all smoke and mirrors.
◎ >Profit is what matters.
◎ >Profit is what’s left in your pocket after you
breakeven.
◉ >Break-even is a point at which cost and income
are equal and there is neither profit nor loss.
15
 4 Keys to Analyze the Profitability of your Product
(https://www.ecommerceceo.com/product-profitability-analysis)

◎ 1. Determine the true cost of production

◎ >It involves the cost in getting the product into the hands of the
customer.
◎ >How much does it cost to bring a product into existence?
 4 Keys to Analyze the Profitability of your Product
(https://www.ecommerceceo.com/product-profitability-analysis)

◎ Running a business comes with many potential costs, including, but not
limited to:
◎ >Property and equipment leases
◎ >Loan repayments
◎ >Utilities
◎ >The inventory itself
◎ Freight costs—it is the amount you pay to transport goods from one place to
another, whether by land, sea, or air. Shipping of the product from Point A to
Point B (Point A is the place or places at which the product was manufactured
or assembled; Point B is the place of business—or, depending on the scenario,
the customer).
 4 Keys to Analyze the Profitability of your Product
(https://www.ecommerceceo.com/product-profitability-analysis)

◎ 2. Test the market

◎ >It might begin as simply as drawing upon your own experience as a customer,
putting yourself in the shoes of someone who might be interested in the
product you intends to sell. Consulting with family, friends and acquaintances
who have prior familiarity with the product is also a good course of action
◎ >Testing the market by conducting research on a wider scale.
◎ >Visit stores that sell the same product in the locality. Take note of what is
being stocked on the shelves and the associated prices. Compare with online
prices for the same or similar products in via internet research.
 4 Keys to Analyze the Profitability of your Product
(https://www.ecommerceceo.com/product-profitability-analysis)

◎ 3. Find the „Sweet Spot‟  It is about striking an attitude that

will make customers who want to choose you over their
other options.  Offer relevant business insights in the form
of blogs or social media posts that analyze trends or
aggregate data from other sources.  The right prices, the
right attitude, the right understanding of customer
psychology—all inform each other and cohere into a
profitable whole.
 4 Keys to Analyze the Profitability of your Product
(https://www.ecommerceceo.com/product-profitability-analysis)

◎ 4. Understand margins
◎  Margin is the difference between total sales and the cost of
those sales.  Reducing business expenses can increase earnings,
key to higher margin.  Figure out new or improved ways to
reduce costs in areas like labor and shipping.  Turn to the
services of “Sourcify” and other similar tools, which connect
budding entrepreneurs with the manufacturers that are right for
them.
What is Customer Requirements?

Determining the specific requirements of the

customers will contribute to the success of the
proposed desired products.

Customer Requirements are characteristics or

specifications that should be present in a product for it
to be deemed desirable by the consumer.
21
Two Types of Customer Requirements:

1. Service Requirements: Intangible aspects of

purchasing a product that a customer expects to
be fulfilled.
Examples: on-time delivery, service with a
smile, easy-payment etc.

22
 Two Types of Customer Requirements:
2. Output Requirements:
Tangible characteristics, features or specifications that a
consumer expects to be fulfilled in the product. If a
consumer is availing a service as a product, then various
service requirements can take the form of output
requirements.
Examples: on-time arrival of a grab taxi, loudness and
clarity of a pair of speakers, etc.
23
 3 Levels of Customer Requirements
(https://www.mbaskool.com/businessconcepts/marketing-and-strategy-terms/11884-customer-requirements.html

1. Must Haves: These are the bare minimum requirements

expected by the customers; if fulfilled, customers will not
be showing any exceptional appreciation but if not fulfilled,
the customer will show dissatisfaction.
Example: A clean and decent washroom provided by the
restaurant as part of their facility.

24
 3 Levels of Customer Requirements
(https://www.mbaskool.com/businessconcepts/marketing-and-strategy-terms/11884-customer-requirements.html

2. Satisfiers: These are the requirements that

customers can express their desire for, explicitly. If
you offer better or more of these satisfiers, then the
customers will appreciate it more and will be more
satisfied. Example: the assortment of desserts in a
buffet; the customers might feel that they’re entitled to
at least two as they’ve paid heavily for the buffet and
will be happier if they get four.
25
 3 Levels of Customer Requirements
(https://www.mbaskool.com/businessconcepts/marketing-and-strategy-terms/11884-customer-requirements.html

3. Delighters: These are the extras or the add-ons.

Absence of these will not leave the customer
dissatisfied; but adding these would increase the
customer’s satisfaction greatly and will leave them
delighted.
Example: you order a-la-carte in a restaurant and get
complimentary wine
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THANK YOU!!!
Total success!

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