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This essay is about the description and development of a new product that is yet to be introduced to the market. My idea is creating a potless water heater which will be a convenient and quick way of heating water. I argue that my idea creates unique value for whom because this product does not exist in the market. I propose to develop my idea by first creating the value proposition, then conduct PESTEL analysis, create the design and name the product. My theories are entrepreneurial alertness theory and economic and finance theory of entrepreneurship.
My idea is to create a potless water heater which will be simply although intelligently designed to heat water directly while cutting down excessive water and energy loss. Other than heating water, the product may heat any liquid including milk, soup, a cup of coffee or any drink in the vessel. The design of this product is straightforward and works with non-ferrous vessels such as cups, bowls, glass, and teapots. Using it involves filling the container with the desired amount of water to heat and placing it onto the induction base. A heating rod is then immersed into the water and 2-3 minutes allowed for the water to boil.
I argue that my idea creates unique value for whom because there is no such product in the market. The common method for heating water is placing the pot filled with water on the burner and waiting for it to boil. The water may also be heated using electric kettles. Unlike pots, electric kettles heat water faster, and some even have an adjustable temperature to ensure water is just right for the desired purpose. However, issues associated with the current water heating methods such as can lead to excessive water heating instead of heating the desired amount of water was behind looking for a product that can address these problems. The solution is potless water heaters which will be new in the market.
I will develop my idea by first creating the value proposition, then conduct PESTEL analysis, create the design and name the product. The value proposition has been included to tell the audience what the product is all about, what they should expect and why they should buy the product from my business and not from competitors (Anderson, et al., 2006). Conducting PESTEL analysis will help me to decide whether or not introducing the product into the prevailing market will be profitable. Any market has the potential for good and bad things, and PESTEL analysis will help to weigh things and decide the way forward (Sharma, 2016). Creating the design is a critical phase in product development. The product will be used to heat water in vessels therefore what will only be designed is the rod and the induction base to hold the vessels. The product will be given the name potless water heater which suggests it is innovative.
My theories are entrepreneurial alertness theory and economic and finance theory of entrepreneurship. Entrepreneurial alertness is a theory of opportunity identification in entrepreneurship. The theory was developed by Israel Kirzner in 1979 and defines entrepreneurial alertness as the ability to recognize competitive imperfections within the market (Kirzner, 1979). This theory helped me to come up with the idea of the product by observing the current water heating products and thought of the economic profits that can be gained if an alternative is introduced into the market. To help to develop the product, the economic and finance theory of entrepreneurship will be used. The theory argues that the basis of entrepreneurship is observing unnoticed profit opportunities that have not been exploited before (Kirzner, 1979). Thus, from the value proposition to the product name, the focus will be making the product as unique as possible to tap profits which previously have not been gained from any similar product in the market.
The type of product I intend to develop is a potless water heater. A pot is the most used gadget for boiling water for various purposes. Suppose one needs hot water for tea, then he should place the pot containing water on the burner and then cover it with a lid to keep the heat. Alternatively, hot water can be obtained by heating it using an electric kettle. The product I will develop will provide hot water without a teapot. With the potless water heater, there will be no need to heat up excess water. What will only be done is placing water in any available cup and then immersing the rod into the water. The cup with these contents is then placed on the induction base, and within a short while, there is hot water! Other than heating water for tea, the rod may also be used to reheat tea, coffee or any other drink. Figure 1 shows the proposed product
The reason for picking this opportunity is because there is no such product in the market. Pots and kettles are the only known equipment for boiling water in the kitchen, and no other approach has been invented beyond these tools. The energy lost in a day by overfilling electric kettles is well enough to power all streetlights in England for a night! This opportunity has been selected to provide a modern way of heating water instead of using traditional kettles that are wasteful. For instance, when one needs to make a cup of tea, he may end up overfilling the kettle. The practice leads to water and energy loss, and one may have to wait for long hours for the water to heat up. This opportunity sets out to change this by eliminating the pots and electric kettles and replacing them with potless water heaters. The potless water heater will be a game changer that surpasses the ordinary kettle needs. The users will only heat the amount of water they prefer.
In a simple definition, a business opportunity is a packaged business investment through which a person can start a business. Finding an opportunity is the toughest parts of entrepreneurship. There may be several opportunities, but the role of an entrepreneur is to distinguish between the good and bad opportunities (Errigo, 2012). An entrepreneur should then make right decisions that will set him or his business ahead in the long run. The best way to be ahead of the competitors is to differentiate from them by having different unique products (Kuratko, 2013). There is still an opportunity in the market for unique products, and my idea fits this opportunity since it’s a new idea that has not been yet exploited by any person.
An entrepreneur is a person who discovers, evaluates and exploits an opportunity to come up with a new product, services, market, process or raw materials. He organizes efforts that previously were not existing (Kuratko, 2017). One of the essential traits of a good entrepreneur is alertness. The idea to introduce potless water heaters was thought through the entrepreneurial alertness theory. Developed by Kirzner (1979), the theory defines entrepreneurial alertness as the ability to notice an opportunity without actively seeking for information. The theory bases its roots on entrepreneurial awareness where an individual is sensitive to information about products, circumstances or reacts to behaviors in the environment. As a result, an individual may easily identify markets or user problems (Kirzner, 1979). According to the entrepreneurial alertness theory, an entrepreneur can find an opportunity because of his previous knowledge which can through work related skills, interests or hobbies (Kirzner, 1979). I have a strong interest in heating gadgets, and over the years, I have dedicated most of my time studying the principles behind working of these equipment. I am well conversant with electric kettles, and by studying the way they work, this triggered me to think of an alternative way of heating water without necessarily placing it in the kettle. This is in line with the entrepreneurial alertness theory which mentions that people tend to observe circumstances in which they have previous knowledge, and their knowledge helps them to recognize and value the new-found information.
Entrepreneurial alertness is also defined as the ability to recognize competitive imperfections within the market (Malerba, 2015). Competitive market imperfections result when businesses in the same industry do not comprehensively understand the information about technology, demand or various determinants of competition within the industry. Whenever there are competitive imperfections in the market, there is a high likelihood for some economic factors in the market to gain economic profits. Therefore, entrepreneurial alertness is the ability of a person to recognize opportunities that can be translated to economic profits (Malerba, 2015). Owing that there is nothing like potless water heaters in the market, I thought of the economic profits that can be gained if they are made, and that is the reason I opted to come up with these products.
Kirzner (1979) explains that entrepreneurial alertness does not mean systematically and rationally looking for an environment for competitive imperfections. However, one discovers competitive imperfections through his daily activities. In fact, an entrepreneur is shocked to realize that no one has taken a move to exploit such competitive imperfections. Several kitchen water heating gadgets have been invented ranging from kettles to pots, and no engineering has previously exploited ways to make tea minus a teapot. Therefore, I thought coming up with the product that would exploit these imperfections.
Other than the potless water heater, another pre-emptive alternative idea is developing a self-stirring pot. Making foods such as porridge requires constant stirring. One will realize that endless whirring can sometimes be hard for his forearms. There is no person who has previously exploited this imperfection. Therefore, it is also another perfect area to look. The idea will be developing an automated cooking machine that can whip up delicious dishes with zero help from human beings. The machine can even add the ingredients to make the food just like a normal person. Thus, as an alternative to making a potless water heater, I can develop an automated cooking machine.
The value proposition is a statement that gives a picture of what the brand offers for prospects (Anderson, et al., 2006). It tells the audience how the product solves the current problem, the benefits customers can anticipate and why the product should be purchased from the business and not its competitors. The value proposition also introduces a business to potential buyers and helps a firm to make a strong first impression (Anderson, et al., 2006). Therefore, it is vital to have a powerful value proposition.
My motivation is to create a product that does not exist in the market. The focus will be having an innovative way of heating water easily and quickly without using an electric kettle or pot. Developing the value proposition will be the most crucial part of idea development because it concludes who the product targets, how it improves/solves the problem and how the product will be presented (Anderson, et al., 2006). Much emphasis will be on the customers, the market, competitors and other external forces (PESTEL analysis). After conducting PESTEL (political, economic, social, technological, environmental and legal) analysis, the next step will be creating the design and focus will be on the product name. The product will be given the name “potless water heater “which by itself shows innovation and creativity. These steps are meant to ensure the product is original and does not have replicas in the market. The product has been selected to be developed using these steps to earn unnoticed economic profits.
According to economic and finance theory of entrepreneurship, an entrepreneur can recognize opportunities because of economic return (Hayek, 1945). Entrepreneurship starts by observing unnoticed profit opportunities that have not been exploited before. However, a profit opportunity is not just waiting for an ordinary individual to observe and act upon. When one creates an opportunity, other people especially those near the opportunity will ordinarily act on it quickly (Kirzner, 1979). For instance, the people working in the technology industry will be the first most likely to observe an opportunity in the industry. People have knowledge that is relevant to their activities, and there could be higher economic productivity when the economic system allows every person to act on specific knowledge he/she possesses. According to Hayek (1945), the benefits of a market economy allows one to act on his specific knowledge of time and place. The market economy also provides incentives in the form of economic profits which can be gained entrepreneurially. Entrepreneurship bases its roots on giving entrepreneurs an opportunity to keep profits generated from their ventures. Entrepreneurs also respond to the available entrepreneurial opportunities. When there are several opportunities in the market, an entrepreneur will be more alert towards finding them (Kirzner, 1979).
The basis of entrepreneurship is observing previously unnoticed profit opportunities. According to Kirzner (1979), entrepreneurship is all about recognizing unnoticed profit opportunities. Kirzner (1979) also emphasizes, in contrast to Schumpeter (1934), the equilibrating characteristics of entrepreneurship. Kirzner (1979) studied how entrepreneurship takes advantage of previously unnoticed economic profits to ensure the economy attains an equilibrium state. He also studied ways to create these profit opportunities and reasons they had gone unrecognized. Kirzner (1979) discovered that the majority of profit opportunities had not been previously recognized because they were new. However, once the profit opportunities were created, they were quickly exploited. Owing that this will be a new product, the owner will enjoy the profits before other businesses may study the technology and produce similar products. As part of developing the product, the PESTEL analysis has been included to discover whether there are other similar products in the market and to recognize other external forces that may undermine the success of this product.
The other way of developing the idea could be defining the audience, analyzing the idea, performing PESTEL analysis, creating the mockup and testing it (Errigo, 2012). Irrespective of the greatness of the idea, it may not correspond to the market needs. That is the reason it will be important first to define the target audience (those who will buy and use the product). Once they are defined, they will be listened and observed.
In the next step (analyzing the idea), the idea will be scrutinized based on various perspectives. The first perspective will be the customers (those who will buy the product and influencers who may determine how the product will be situated on the market). The second perspective will be examining the idea for the business; what will the business known for. The third perspective is competition. Even though this product is unique and new in the market, there are electric kettles which act as alternatives to heating of water. The competitors will be defined to know the kind of messages to fashion when competing with them.
After analyzing the idea, a PESTEL analysis will be conducted. This analysis helps to see external factors that may undermine the success of the product. Consequently, the analysis will help to spot challenges and look for ways to address them before the product is released to the market (Errigo, 2012).
Lastly, a mockup will be created and tested. Once a clear idea of the product has been obtained, the prototype will be created and given to potential customers for testing. For instance, a market survey will be created whose aim will be to obtain feedback from key figures in the industry. The survey will also involve building a focus group (people will be invited from various demographics to talk about the product to guide me in the right directions). Developing an idea into a product is a long and difficult process, although I believe if I succeed through it, there will be high chances of my product becoming the next big thing in the market.
By completing this essay, I have learned invaluable things about the conception and development of an idea to business. Although the methods of identifying an opportunity and developing an idea covered in this paper are specific to a potless water heater, they can be used for any other product. For instance, entrepreneurial alertness is not entrepreneur-specific, but every entrepreneur needs to be alert to opportunities within his environment. The economic and finance theory also apply to every entrepreneur, and they can use these theories to develop their ideas into “something” great in the market.
Any idea cannot be picked and used to start a business. One needs to figure out a good idea that does not exist in the market. A good way of getting an idea is looking for competitive imperfections in the key players in the industry and think of a venture that can fill the gaps. Developing an innovative product will help to tap unnoticed profits and eliminate competition from other businesses.
The potless water heater is an example of products in the technology industry. If given more time and resources, I could have developed different products though in the tech industry. Some of these products are a dishwasher or an automatic cooking machine. Although dishwashers are in the market, their price is high ranging from 600 USD to 1,000 USD which is not affordable for many, especially in developing countries. I could like to create an alternative that costs as low as 200 USD for many to afford. Sometimes one gets tired to do ordinary kitchen tasks such as cooking. Creating an automatic cooking machine will help many to cook relieving them to do other house tasks. An automated cooking machine, just like the potless water heater are some of the areas that the current engineering has not exploited thus there is a high likelihood of fetching huge profits if these products are created.
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