Selection Criteria for New Launching of Product
An entrepreneur can decide to sell a completely new product or modify the existing product and sell it in the market. The decision regarding what to sell, how to a sale, and to whom it is to be sold depends on various criteria.
a) Cost
If the entrepreneur is thinking of a completely new product the cost will be very high as it includes the cost of research and product development other than initial investment into new machinery training for employees & the cost of raw materials. if it is just a modification of an existing product then the cost will be less hence depending upon the cost or the capacity to spend the type of new product can be determined.
b) differentiation
The extent to which an entrepreneur can establish a brand image, service product innovation, or reputation describes its differentiation. An entrepreneur should select a product that differentiates it from competitors.
C) Financial Strenght
If an entrepreneur selects a luxurious product like a car, vehicle jewelry, etc then it is a very high investment is required which calls for finance from other sources like a financial investment, shares, debentures, secured loans, etc. If the product is semi-luxurious or shopping goods like TV, DVD washing machine then the investment is comparatively less but if the product is non-luxurious like soap, vegetables, cloth very less investment is required. Hence depending on the financial strength the type of product can be selected.
d) Personal factors
The nature of an entrepreneur is also deciding criterion. If he is self-competent, optimistic, able to take self-risk, versatile creative, dynamic & has knowledge of the market then he can take up a completely new product-building decision other than continuing the existing product.
e) Functional Departments
All the functional departments in an enterprise have an impact on the entrepreneurial plan and action. The finance department is concerned with the availability of funds, the R&D department focuses on innovation, the purchasing department has to obtain sufficient raw materials, the manufacturing department is responsible to the met production target, etc.
