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Section 10.1 Product
Build a Prototype
A prototype is a working model for a new product for testing
purposes. Large companies may create several prototypes for a single
idea. But, creating prototypes can be expensive. To save money, an
entrepreneur may choose to create a prototype of only one of the
designs. Once the prototype is approved, the product can go into full
production.
Market the Product
Many businesses spend a lot of money to introduce new products.
It is important to decide which marketing strategies will best reach the
target market. The marketing strategies and the budget for marketing
should be determined before the product is created.
Product Review
As the business matures, the market will change and product
offerings will need to be adjusted for the business to remain
competitive. Businesses constantly need to review product offerings to
determine if the product mix is still correct for the market.
Another way to remain competitive is to repurpose a current
product. To repurpose a product is to use it for something different than
its original function. A good example is Arm & Hammer baking soda.
By positioning the product as a cleaning agent as well as a baking
ingredient, the company got new life out of an old product.
A product life cycle consists of the stages a product goes through
from the beginning to the end. Certain products, such as computers
or cell phones, can have a short life cycle due to rapidly changing
technology. The four stages of the product life cycle are introduction,
growth, maturity, and decline, as illustrated in Figure 10-1. When a
product enters the decline stage, it may be necessary to stop making or
selling the product.
Introduction Stage
The introduction stage is the time when a new product is first
brought to the market. At this stage, often very few people know
about the product. The costs to create a new product tend to be higher.
Also, sales are low in this stage. Therefore, a product may be the least
profitable in this stage of the life cycle.
Growth Stage
The growth stage is defined as the period during which sales of the
product increase rapidly. To keep the product sales high, new models
of the product may be introduced. Modifications may also be made to
the product to keep customers interested or meet new needs.