This phase is an exploratory stage in which the feasibility of a product and market concept is qualified as a business opportunity. The type of activity required in this stage is extensively described, as cited previously, in many books and articles. There needs to be a defined time limit for this initial phase within which the team must conclude the investigation and analysis. The analysis must lead to a decision to continue or suspend the proposed business endeavor.

A product idea may come from anywhere; e.g. the company, market, user, vendor or technology. But the development of the concept must go through the same process regardless of where the idea was created.

Following are some of the things to consider in this phase:

• Define, as best as possible, the product concept
  - Functionality
  - Performance
  - Look, feel and quality
  - Cost Of Manufacturing target
  - Standards, regulatory compliance, environmental safety and robustness requirements
  
  
• Justify user needs
  - Benefit of product
  - Use demographics & psychographics
  - Distribution of user sophistication
  
  
• Define as best as possible the market
  - Size, thus product quantities
  - Location (domestic, international)
  - Promotion and sales methods
  - Product pricing & expected life
  - Product support and warranty
  
  
• Include any potential OEM requirements
  
  
• Define a quality assurance (QA) philosophy for the product.
  
  
• Estimate resources
  - Financial
  - Facilities and equipment
  - People (employees, experts, etc.)
  
  
• Develop production concepts
  - In-house or contract
  - Where
  - Shipping and distribution
  - Post sales service and support