Developing New Products and Services

About this book

Developing New Products and Services examines the early work of identifying an opportunity, differentiating an offering, testing its business logic, and organizing a launch. The Saylor-adapted text associated with G. Lawrence Sanders uses feature-rich Midas, economical Hermes, and mainstream Atlas offerings to connect innovation with customer willingness to pay. Fifteen chapters develop that approach into creativity methods, planning templates, valuation, project management, and continuing business renewal.

Chapter and section guide

1. Concepts in Monopolistic Competition

Differentiation gives a business a reason to be chosen when customers have alternatives. The chapter connects innovation, entrepreneurship, diffusion, technology life cycles, and learning. Learning about a problem and learning by doing are complementary activities: information becomes more useful when a team can build, test, and revise something. The discussion of absorptive capacity explains why an organization’s existing knowledge affects its ability to recognize new possibilities. Competitive advantage is therefore connected with a continuing capability rather than one isolated idea.

Study application: Choose a familiar service and explain the customer problem, the alternatives, and one meaningful difference. Identify what desk research could reveal and what would require an actual trial.

2. Product and Price Differentiation

Different customers value features differently and may have different price sensitivities. The chapter connects those differences with product design and alternative pricing approaches. Willingness to pay is not the same as production cost or an entrepreneur’s desired margin. Students should distinguish differences in the offering from differences in the conditions under which a price is charged. A useful pricing analysis states the segment, value offered, relevant alternatives, and assumptions instead of treating a higher price as evidence of higher quality.

Study application: Compare two versions of a fictional service. Identify the customer need served by each feature difference and the evidence needed to estimate willingness to pay.

3. Differentiation in Action

Versioning makes differentiation concrete through alternative bundles and prices. The chapter examines how revenues depend on customers choosing among versions and on the relationship with complementary or substitute products. A dashboard can organize assumptions, but its numerical output is not market evidence by itself. Adding a version may attract a new segment or move existing customers into a lower-margin option. Students should trace both effects rather than count every sale of a new version as additional demand.

Study application: Build a small original versioning table with price, expected volume, and unit cost. Include a scenario in which customers switch from an existing version, and explain the effect on total contribution.

4. Dynamic Tension and Differentiation Curves

The Midas–Hermes contrast describes the tension between feature-rich design and economical design. Atlas represents an offering aimed at a wider middle market. These categories encourage deliberate choices about which benefits to retain, add, or simplify. They are planning ideas rather than a guarantee that every business needs exactly three products. The differentiation curve helps make a team’s assumptions about feature value visible. A productive analysis connects the design choice with a customer and a cost consequence.

Study application: Sketch a proposed feature-value curve for three versions of one offering. Explain one feature you would remove from the economical version and why removing it need not destroy the core benefit.

5. Examples of Versioning Curves

Examples show that firms can emphasize premium, economical, or broad-market offerings in different ways. The purpose is to recognize design patterns while retaining the context that made them plausible. A historical example does not prove that the same configuration will work in another market or at another time. Students should identify the segment, alternatives, complementary assets, and cost structure behind the observed choice. This turns examples into comparative evidence rather than a list of companies to imitate.

Study application: Compare two examples using the same criteria: target user, core benefit, version differences, and economic logic. State one contextual reason their strategies might not be interchangeable.

6. Creativity and Innovation

The creativity chapter treats new ideas as something supported by habits and an environment, not only sudden inspiration. Dialogue, experimentation, learning, time, and construction contribute in different ways. Generating possibilities is distinct from selecting and implementing one. A team that evaluates every suggestion too early may narrow exploration, while unlimited ideation without tests can prevent progress. The chapter links creative work with the practical ability to make and learn from an artifact or process.

Study application: Run a short idea exercise for a specific customer problem, then choose one idea for a low-cost test. Explain the criterion used for selection and what result would justify revision.

7. Features, Attributes, and Design

The FAD template organizes product or service features and attributes so differentiation can be discussed explicitly. User-driven, technology-driven, and meaning-driven perspectives ask different questions about what an offering does and why it matters. Students should distinguish a technical feature from the benefit a customer experiences. The template also encourages attention to changes in an attribute’s importance over time. Its value lies in connecting design choices with a reasoned hypothesis about customer value.

Study application: Complete a small FAD table for an original service concept. For each feature, state its user benefit, the evidence supporting its importance, and whether that importance might increase or decline.

8. Strategic and Ten–Ten Planning

Strategic planning supplies a broader setting for the product idea. The chapter reviews ways to examine an organization and industry while preparing the more concise Ten–Ten process. A plan should connect differentiation with capabilities, competition, supply, and execution. Innovation alone does not remove the need for reliable delivery or a recognizable position. Students should distinguish a useful strategic question from an answer that merely restates ambition. Clear priorities make the plan usable when resources and attention are limited.

Study application: State three strategic choices for a fictional launch, including one activity the team will deliberately postpone. Explain the tradeoff each choice creates.

9. Crafting a Business Story

The Ten–Ten process combines an organizational and industry analysis with a business-plan overview. Its brevity is intended to force clarity, not excuse weak research. A concise business story connects a customer problem, an offering, a way to deliver it, and a way to sustain the organization economically. The templates and executive summary should agree about these relationships. Students should identify unsupported transitions, such as moving from a large market size directly to an assumed share of sales.

Study application: Draft a short business story with one sentence for the problem, customer, offering, delivery method, and revenue logic. Mark every claim that needs evidence before it belongs in an investor-facing plan.

10. Lock-In and Revenue Growth

Switching costs and network effects can affect customer retention and growth, but they operate through different mechanisms. The chapter contrasts the producer’s interest in durable relationships with the buyer’s interest in flexibility. A useful product may become more valuable as participation grows, while a costly exit can keep a dissatisfied user in place. Students should distinguish value creation from dependence. An evaluation of a growth strategy should include the customer experience and alternatives, not only the seller’s projected retention.

Study application: Compare a genuine network benefit with a contractual switching barrier in a fictional platform. Explain how each could affect adoption, retention, and customer trust.

11. Valuing a Business

Valuation depends on assumptions about future performance, risk, and the method used. The chapter compares approaches rather than treating a business as possessing one context-free price. A forecast is an input to a model, not a fact about the future. Students should identify whose decision the valuation supports and how changes in growth, costs, or discounting affect the result. Comparing methods is most informative when their assumptions are visible and consistently applied.

Study application: Create optimistic, central, and cautious scenarios for a simple fictional business. Explain which assumptions drive the difference in valuation and what evidence would reduce uncertainty.

12. Developing the Business Plan

The expanded plan adds detail to the earlier templates: what will be offered, to whom, why, how, and when. Financial, operating, marketing, and organizational sections should describe the same business. A polished presentation cannot repair inconsistent assumptions. The discussion of format, writing, investors, and pitching emphasizes communication as well as analysis. Students should make the relationship between an evidence-backed claim and the requested commitment clear, rather than treating the plan as promotional prose.

Study application: Audit a fictional plan for consistency between target customer, capacity, forecast volume, and staffing. Identify a contradiction and state what change would make the sections agree.

13. Project Management

A proposed business becomes a set of interdependent implementation tasks. Project-management tools help clarify sequence, resources, responsibility, and risks. A schedule is more useful when dependencies are explicit and a critical delay can be recognized. The chapter also links launch work with the construction and testing of a supply chain. Students should distinguish completing a task from proving that the resulting system works. A launch date unsupported by tested dependencies is an aspiration rather than an implementation plan.

Study application: Build a small dependency map for an original launch. Identify one bottleneck, its owner, a test of completion, and a contingency if the activity takes longer than expected.

14. Renewal and Real Options

Existing success does not remove the need to prepare future opportunities. Real-options thinking treats some investments as creating the ability, rather than an obligation, to make a later commitment. Staged learning can preserve flexibility when uncertainty is high. This differs from describing every small expenditure as automatically valuable. A useful option requires a clear future decision and information that may improve it. Students should identify what is learned, what choice is preserved, and what the initial commitment costs.

Study application: Design a small pilot that could support expansion, revision, or abandonment. State the evidence required at the next decision point and distinguish the pilot’s learning value from immediate profit.

15. Wrap-Up

The final chapter brings differentiation, experimentation, planning, and renewal together as continuing work. The book’s methods organize entrepreneurial judgment but cannot guarantee commercial success. A business model can be revised when evidence contradicts an assumption, and a mature organization still needs learning and design capabilities. Students should leave with a connected process rather than a set of disconnected templates. The strongest application explains how an insight changes a concrete decision and how that decision will be evaluated.

Study application: Revisit the original service concept and identify the assumption that changed most during your study. Explain the resulting design or business-model change and the next test it requires.

Study instructions

1. Use one original product or service concept throughout the book so the templates build on one another.
2. Record customer evidence separately from guesses about demand, pricing, and feature value.
3. Compare Midas, Hermes, and Atlas versions by benefits, costs, and likely customer substitution.
4. Keep financial and operational assumptions consistent across the overview, valuation, and project plan.
5. Treat launch as a staged learning process with explicit decisions and criteria for revision.

Practice and review task

Produce a compact concept portfolio containing a FAD table, three-version comparison, customer-evidence log, business story, scenario-based financial sketch, and launch dependency map. Explain one result that would make you stop rather than expand.

Questions for reflection

When can a cheaper version reduce rather than increase total contribution? What distinguishes a real option to learn from an unstructured delay in making a decision?

Sources and coverage

This original study guide follows Saylor archived PDF, fifteen chapters. It draws on the source contents, chapter introductions, selected explanations and examples, and review material. It condenses the resource rather than replacing the full text; study applications are original exercises. The reviewed PDF is a Saylor adaptation whose notice says the original creator requested no attribution in the adaptation. The catalog-associated author credit is retained separately.

Reviewed source text; Book and cover catalog record.