CHAPTER 6
Analyzing Product/Service Design and
Protection
SUMMARY AND AUTHOR’S NOTE
It is a rare entrepreneurship text that treats the issue of product development, and yet, I have
found in my courses that fully half of all the business concepts developed are related to products.
How entrepreneurs move from an idea to a product that has commercial value is an important
topic for entrepreneurs to understand. Far too often, a great product idea can’t be manufactured
at a cost that will allow it to be priced at a level customers will pay. If product development
issues aren’t considered during feasibility analysis, that fact may not come to light until the
entrepreneur has already spent a lot of time and money on an infeasible concept. Furthermore,
CHAPTER OBJECTIVES
After reading this chapter, students will be able to:
• Discuss the current trends in product/process design and development.
• Describe the product development cycle.
• Compare the advantages and disadvantages of outsourcing product development.
• Explain the process of intellectual-property development for patents, trademarks,
copyrights, and trade secrets.
CHAPTER OUTLINE
OPENING CASE: Building a Prototype on the Cheap
26 Chapter 6: Analyzing Product/Service Risks and Benefits
I. Entrepreneurs and New Product Design—factors affecting entrepreneurial product and
service development
a. How Entrepreneurs Develop Products and Services—meeting the challenges of
• Table 6.1—New Product Checklist
GLOBAL INSIGHTS—Think Less to Tap Emerging Markets
a. Outsourcing Product Development—using other companies for product
development
III. Acquiring Intellectual Property Rights—protecting new product assets
IV. Patents—applying for patents to protect original inventions
a. Is the Invention Patentable?
b. Patent Types
c. The Patent Process
• Figure 6.4—The Utility Patent Process
V. Trademarks—using symbols, logos, etc., to identify a business or product
a. Trademark Infringement, Counterfeiting, and Dilution
VI. Copyrights—protection of original works
confidence about the ability to produce and protect the product or service
RELEVANT CASE STUDIES
Case 1 Command Audio
Case 6 Potion Inc.
Chapter 6: Analyzing Product/Service Risks and Benefits 27
ANSWERS TO QUESTIONS ON KEY ISSUES
1. How has the environment for product development changed in the last decade, and what
does that mean to entrepreneurs starting new businesses?
Since the 1980s, there has been an enormous increase in the number of companies
2. What are the principal reasons why new products fail?
3. Suppose you are going to develop and market a new device for tracking calories consumed
during the day. What will your product development strategy be, and why?
Students will come up with a variety of responses, but their strategies should address
4. In what ways should you protect an invention from the time of its earliest conception?
Answers to these questions may suggest the need for a patent: Does the invention solve a
SUGGESTIONS FOR EXPERIENCING ENTREPRENEURSHIP
1. Visit an entrepreneurial company that is developing new products. What is the company’s
product development strategy, and how effective is that strategy? What criteria did you use
to measure effectiveness? You may want to use outside sources to confirm what the
company tells you.
2. Visit the U.S. Patent Office at www.uspto.gov. Pick a patented product that interests you,
and contact the inventor to determine whether the patent has ever been commercialized. If
so, in what ways? If not, can the inventor provide a reason? What can you conclude about
the potential for this patent?
SUPPLEMENTARY LECTURE MATERIAL
Entrepreneur: Protect that Product
In 1995, Keri Beyer started a furniture company in Minnesota that she called Wigglestix. During
the first years of the business, her customers were small mom-and-pops, but in 1999, she landed
a $400,000 contract with Pottery Barn Kids. A year and a half after that first order, the rep from
Pottery Barn visited Beyer to find out what new pieces she had designed. She took digital
pictures of the new furniture line and returned to headquarters in San Francisco. Keri was certain
she was about to get another big order, so when requests for samples came in, she willingly
complied with thousands of dollars’ worth of merchandise.
One of the most egregious examples happened when two Harvard Business School students
launched a venture, X-IT, to manufacture and distribute a collapsible fire-escape ladder for
homes. The packaging even had family members’ pictures on it. Walter Kidde Portable
Equipment approached the two about buying their company, but then, after signing a
confidentiality agreement and being privy to proprietary designs, the company came out with its
own ladder in the same packaging, using the students’ family pictures. Now that’s chutzpah! X-
Chapter 6: Analyzing Product/Service Risks and Benefits 29