Unit II – Startup
Selection Process
1. Product/Service Selection
• Important Factors Essential for Selection of Product/Service and
Process
1. Core Competence
2. Process
3. Product/Service Life Cycle
4. New Product/Service Development Process
5. Mortality Curve
6. Creativity and Innovation in Product/Service
Modification/Development
• 1. Core Competence
• Definition: A unique capability or advantage an entrepreneur or enterprise
possesses.
• It can be:
• Technical skills
• Domain knowledge
• Access to exclusive resources
• Strong brand or networks
• Example:
• An IT graduate with AI expertise may start a chatbot development service.
• A person with tailoring skills may launch a designer boutique.
• Why it matters:
• Leveraging strengths reduces risk and increases chances of success.
• Helps in positioning the product/service better in the market.
• 2. Process
• Definition: The method or system followed to produce goods or deliver
services.
• The process selected determines how efficiently, economically, and
consistently the product/service is delivered.
• Types of processes:
• Job-based (custom/boutique work)
• Batch-based (bakery, garments)
• Mass production (automobile assembly)
• Service processes (restaurant, consultancy)
• Example: In a food startup, deciding between a cloud kitchen (centralized
process) and individual outlets (decentralized process) is a process selection.
• Why it matters:
• Impacts quality, speed, and cost.
• Determines equipment and labor needs.
• Influences the business scalability and customer satisfaction.
• 3. Product/Service Life Cycle
• The 4 stages: Introduction, Growth, Maturity and Decline
• Example:
• Traditional feature phones are in decline.
• EV (electric vehicle) sector is in growth phase.
• Why it matters:
• Choose products/services in growth or early maturity phase to
ensure better returns and lower market risk.
Stage Description Decision Implication
Introduction Product launched High promotion cost
Growth Increasing demand Expand production
Maturity Market stabilizes Innovation needed
Decline Demand drops Consider exit or update
• 4. New Product/Service Development Process
• This is the structured approach to turning ideas into viable offerings.
7-Step Process:
1. Idea Generation – Brainstorming based on problems or market
gaps.
2. Idea Screening – Evaluate feasibility, profitability, and competition.
3. Concept Development – Make product concept with USP (unique
selling point).
4. Market Research – Validate idea with real users.
5. Prototype Development – Build a minimum viable product (MVP).
6. Market Testing – Launch pilot in small segment.
7. Commercialization – Full-scale production and marketing.
• 5. Mortality Curve
• Definition: The rate at which startups/businesses fail over time.
• High Risk in Year 1–3
• Stabilization phase in Years 4–5
• Only a small % survive beyond 5 years
• Why important:
• Helps entrepreneurs prepare better.
• Guides in choosing products with lower market saturation and
realistic entry barriers.
• Example:
Many restaurants fail in the first 2 years due to poor location, pricing,
or service issues — showing a steep mortality curve.
• 6. Creativity and Innovation in Product/Service Modification or
Development
• Creativity: Generating unique ideas.
• Innovation: Applying those ideas in real market settings to solve
problems.
• Types of Innovation:
• Product Innovation – e.g., eco-friendly packaging
• Process Innovation – e.g., automation to reduce cost
• Service Innovation – e.g., 10-minute delivery apps
• Examples:
• A traditional sweets shop introducing online pre-ordering for festivals.
• Why it matters:
• Keeps business relevant, competitive, and customer-focused.
EXAMPLE: Yulu Bikes Pvt. Ltd.,
2. Process Selection
a) Technology life cycle
b) forms and
c) cost of transformation
d) factors affecting process selection
e) material handling
f) location for an industry
a. Technology Life Cycle
• Stages: Innovation → Application → Maturity → Obsolescence
• Choose technologies in application or early maturity stage for cost efficiency and scalability.
b. Forms of Transformation
• Manufacturing (raw materials to goods)
• Service (time, skill, or information to solution)
• Choose a process that suits the type of product/service and market expectation.
c. Cost of Transformation
• Includes equipment, labor, utilities, maintenance, and training.
• Low-cost but efficient methods are preferred for start-ups.
d. Factors Affecting Process Selection
• Volume of production
• Quality requirements
• Flexibility and scalability
• Availability of raw materials and skilled labor
e. Material Handling
• Efficient material handling reduces waste and cost.
•
f. Factors to Consider for Location Selection
Factor Why Important? Example
Availability of Raw Reduces cost of Sugar mill near sugarcane
Material procurement fields
Market Proximity Easier to sell Bakery in residential area
products/services
Skilled Labour To reduce training cost IT startup near colleges
Infrastructure Roads, electricity, water, Manufacturing unit in
internet MIDC
Transport & For easy logistics Courier service near city
Communication center
Government Incentives Subsidies, tax exemption, Industrial units in rural
SEZs (Special Economic areas
Zone)
Environmental Factors Pollution control and legal Chemical plants in
compliance industrial zones only
Market study procedures
• Purpose of Market Survey
• Understand customer demand, preferences, buying habits
• Identify competition, pricing strategies
• Test viability of new product or service
• Steps to Plan a Market Survey
Define Objectives, Design Questionnaires, Sampling, Data Collection,
Data Analysis, Conclusion and Action
• 1. Define Objectives • 4. Data Collection
• Example: To find customer preference • Methods:
for eco-friendly packaging in Mumbai. • Online (Google Forms)
• 2. Design Questionnaire • Offline (paper forms, interviews)
• Types of Questions: • 5. Data Analysis
• Close-ended (e.g., Yes/No, rating) • Use tools like Excel, Google Sheets, or
• Open-ended (for opinions) basic statistical methods.
• Demographic info (age, location, • Identify patterns, customer preferences,
income) gaps.
• Example: "Would you prefer paying ₹5 • 6. Conclusion and Action
extra for biodegradable packaging?"
• Based on the findings, decide:
• 3. Sampling
• Product features
• Select a group of people that represent • Pricing
your target audience
• Marketing channels
• Sampling Methods: Random, stratified,
convenience
Sources for Entrepreneurial
Information
Organization Details
MCED (Maharashtra Centre for
Provides training and support for start-
Entrepreneurship Development) ups. Website: mced.nic.in
NI-MSME (National Institute for Micro,
Offers guidance, training, project reports.
Small and Medium Enterprises) Website: nimsme.org
PMEGP (Prime Minister's Employment Loan subsidy scheme to start micro-
Generation Programme) enterprises.
DI (Directorate of Industries) State-level support for industries; helps
with registrations and incentives.
KVIC (Khadi and Village Industries Promotes rural employment through
Commission) khadi and village industries.
