Chapter 1 product design introduction


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Product Design and Development
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Chapter 1 product design introduction

  1. 1. Product Design and Development Pragya gupta/PDD/SOCET Page 1 Chapter-1 Product Design Introduction Product is something which is sold by an enterprise to its customers. Product development is a set of activities which begins with market opportunity and ends with the production, sale, and delivery of the product. Characteristics of Successful Product Development  Product quality o How good is the product resulting from development? o Does it satisfy customer needs? o Is it robust and reliable? o Product quality is reflected in market share?  Product cost o What is the manufacturing cost? o It includes capital equipment and tooling ?  Development time o How long did the PD effort take?  Development cost o How much spent in PD effort?  Development capabilities o Did the team/firm acquire any experience for future projects? Factors affecting Product design and development  Product identification related factors o Gap in demand – demand> supply o Under-utilized resources- contract manufacturing, lending of facilities. o Diversification – limited customer base. o New product ideas- friends, co-workers, environment.  Marketing related factors o Prestigious of company o Technologically sound product o Customer’s requirement o Market potential
  2. 2. Product Design and Development Pragya gupta/PDD/SOCET Page 2 o Product life o Competition  Legal factors o Environmental pollution o Import restrictions on capital goods o Restrictions in finance  Finance related factors o Capital investment –manufacturing resources, plant and machinery . o Cash generation  Govt. support  Shares  Fixed deposits  Organization related factors o Skill requirement- workers and managers both o Availability of labor, managers etc. o Salary and wages of workers – cost implications  Manufacturing related factors o Availability of technological know how – its cost , related equipments. o Cost of manufacturing facilities o Quality of manufactured products – customer requirements. o Rate of production- market demand.  Distribution related factors o Availability of distributors-reputation, facilities, manpower. o Availability of ware houses- space requirements, facilities, cost. o After sale service- maintenance, repair, spares, cost o Sales personnel – marketing skills, implementation of sale promotional schemes etc
  3. 3. Product Design and Development Pragya gupta/PDD/SOCET Page 3 Product life cycle Who Designs and Develops Products?  Marketing  Design o Mechanical o Electrical o Software o Industrial  Manufacturing o Operations o Warehouse o Supply Chain
  4. 4. Product Design and Development Pragya gupta/PDD/SOCET Page 4 3 measures of design Duration may vary from 1 yr to 10yrs or greater Challenges of product development 1. Global Competition Global competition is often a major factor impacting the challenges of new product development. Since the playing field is large and diverse, often spanning the globe, it may be very difficult for companies to gather intelligence on competitors. A company may invest heavily in a new product, yet be unaware that an overseas competitor is set to release a similar product imminently. As a result, shepherding a new product from concept to market is often done under intense time pressure, as product developers attempt to bring the product to market ahead of their competition. Case- Mahindra & Mahindra scored its first SUV hit with bolero in 2000. Building on this success, in 2002 it launched the Scorpio, a model that signalled M & M had finally achieved the right mix of design, power,and price. Not it was a looker and a performer; it cost less than its rivals. The Xylo,launched in 2009 and the XUV500 in 2011 have helped M&M consolidate its position. 2. Time The companies today are facing time as one of the critical challenges in new product challenge.Introducing the new product at the right time reduces the ambiguity about the failure of the product. Giving the market a product at a time when there the need for such a product/service is not required is surely a planned way to head for the edge. Quality
  5. 5. Product Design and Development Pragya gupta/PDD/SOCET Page 5 Case- Spanish apparel brand ZARA takes just two weeks to create a new product line out of high street fashion design and ship it to stores making it the world‟s most popular „fast fashion‟ brand. Zara has replicated a model that has worked for it globally - creating affordable, copycat versions of the latest fashions or designer-wear and making them available to shoppers in doublequick time. Zara is known for its fresh fashion delivery every week. Their weekly delivery supply chain is the best in the world. 3. MARKET POTENTIAL A company needs to know their current and future competitors. In today’s economic climate only two products will be successful in any given market. Unless your product is far superior to your competition, you will not be able to enter a market successfully or retain your leadership in the market. While it is initially fine to get to know your competition from searching online, it cannot replace feedback from customers who use the product. Knowing your future competitors will help you to develop a strategy to retain your competitive advantage. Case- The social media network Facebook has taken the world by storm since it was introduced to the web in 2004. The Harvard student Mark Zuckerberg had no way of knowing how quickly and readily accepted his social networking site would be. An app, known as Instagram, was developed to make photo-sharing easier and quicker for users. Not only could users share their photos quickly, but they could edit them and add special effects to their photosbefore sharing them. With 1 million iPhone and Android users being added each and every day,Facebook saw Instagram as its fastest growing competitor and decided to take control before it became a problem for Facebook. Facebook acquired Instagram for $ 1 billion which was not an easy or cheap process, but it eliminated the stress of a future competitor, or even worse, the app being acquired by an already powerful competitor such as Google or Twitter. 4. TECNOLOGICAL CHANGE Rapid advancement of technology may be considered by many to be among the top challenges of new product development. A technological arms race may put product developers in a precarious position of uncertainty. Product developers may not know what the next development might be. If a firm chooses a pathway to creating functionality using a form of technology that may be soon obsolete, the company’s investors could lose a sizable investment.
  6. 6. Product Design and Development Pragya gupta/PDD/SOCET Page 6 Case- Without question, nearly everyone believes the equation Apple = Innovation is a fundamental truth. Starting from the first Macintosh to the ipod, ipad, iphone , the list is still growing and apple has time again proved that innovation is the ultimate success of a new product. That‟s why the company stands out of the crowd when it comes to its innovation. The company is a leader in producing innovating products and amazing the customers and making them think that this is it, but not for Apple. This year, Apple will spend $10 billion investing in its future innovations. The company is ranked number 5 in The World‟s Most Innovative Companies as per the Forbes list. 5. DISTRIBUTION Who's going to sell the product? Can you use the same distribution channels you currently use? Can you use the same independent representatives or sales force? Is there sufficient sales potential in the new product to convince a distributor, retailer, or agent to take on the new line? There are significant up-front selling costs involved in introducing new products. Everyone in the channel wants some assurance that the investment of time and money will be recovered. Case- Taking the first step towards its longawaited entry into India, US coffee chain Starbucks on said it has signed a pact with Tata group firm Tata Coffee for a possible alliance that could include retail operations and sourcing. Starbucks Coffee Company and Tata Coffee signed a non-binding Memorandum of Understanding (MoU) to collaborate in sourcing of coffee beans and roasting facilities, relating to Starbucks entering retail operations in India initially. The collaboration would also explore other Asian countries over a period of time. The two companies will also collaborate on the promotion of responsible agronomy practices, including training for local farmers, technicians and agronomists, to improve their coffee-growing and milling skills. The brand‟s ranking is 54th in the most powerful brands of the world. 6. NEW FEATURES Competitive advantage needs to be articulated to your customers: how does the product (or attributes of the product) meet your customers’ unmet need that no other product can. This is the reason why customers will use your product over any other product. Knowing your competition will validate or invalidate your competitive advantage and potential market leadership.Adding new features can increase your overall product value and consequently, increase your market share. What makes new product development different from product development? While new product development can
  7. 7. Product Design and Development Pragya gupta/PDD/SOCET Page 7 be revolutionary, product development (i.e. adding new features) is an evolutionary process. Case- Google is a leader in both areas. The search giant develops revolutionary products (i.e. new product development) and finds ways of improving upon them (i.e. product development). Gmail is one of many Google products that illustrate this point. Once Google mastered the end product, the search giant was able to add new features to increase the products overall value. For instance, enables users to make large changes, such asadding a customized inbox skin or SMS through Gmail chat, and small adjustments, such as YouTube e-mail previews. The company is ranked 7th in the most innovative company. 7. CRITICAL UNMET NEEDS Statistics on the success rates of new products show that for every four new products that enter development, only one becomes a commercial success. Research by Calantone and Cooper shows that the number one reason for a new product to fail is the lack of attention paid to the real needs and wants of the marketplace.There are three key elements to meeting a customer’s need when developing new products or services. Desirability: the new product or service must be desirable, i.e. a person wants to use it Purpose: the new product or service must have a useful purpose, i.e. a person will use it User Experience: the new product or service must provide customer satisfaction, i.e. a person is happy using it. When creating and designing a new product or service it is important to consider the use of the product (what does the product do), the level of usability of the product (how does it work, can it be used comfortably) and the meaning that the product conveys. Case- Considering that the Men cosmetic segment was still untouched in India and thinking of a fairness cream as a unmet need of the customers EMAMI introduced the fair and handsome cream particularly targeting the men consumers. The brand has rightly positioned itself in the new segment though it now faces competition from Vaseline and Garnier. Though communications of this type have raised criticisms from some sectors of the society arguing that fairness of skin implies better acceptability, the market is growing by over 10% per annum.
  8. 8. Product Design and Development Pragya gupta/PDD/SOCET Page 8 8. MARKET SIZE It is also important to keep an eye on the market size as well as the market potential for the product in meeting the business goals of the company. The last thing you want to find out is that there is no market for the product or that the customer isn’t buying the product. In addition to meeting a critical unmet need you need to be in a market where you sell a significant amount of product to develop more products and expand your business. It often makes sense to outsource to someone who can determine the size of the market and the market potential for the product in meeting the business goals of the company through market research and talking to potential customers. 9. PRICE Setting the right price of the product before introducing it in the market is also a challenge for the organisation. Suppose you set the price of your product almost same as that of your competitor and assuming the product is similar in quality and features and the competitor holds a good position in the marketplace, then the success of your product will depend on the market and in my opinion your‘LUCK’. Well good luck if you believe your luck is good. Else anyone would surely believe that the product has hardly any chances of survival. Thus setting your product at the right price at the right time is a challenge. CASE- When MICROMAX recently introduced its smartphone model CANVAS. Knowing that it faces a tough competition from the large market leaders like APPLE, SAMSUNG, the company has introduced a beautiful and striking product which is not only unique from its other products but is also economical in meeting the Indian customer needs. The ultimate success of the product was its price which not only ensured the longevity of the product but also opened gamut of opportunities for the company. Currently the mobile is giving a slight competition to Samsung SIII and is quickly running out of stock. 10. PROMOTION Promoting a new product in the new market or in the current market is the job of every marketer and the utmost requirement for the longevity of the product in the market. Firms who hardly promote their product are rarely recognised by the market and thus remain a mystery product for the consumers. Promotion techniques adopted by the firms from print media to social websites is all a one step of the staircase approach of NPD. Thus promotion is must process for the new product hit.
  9. 9. Product Design and Development Pragya gupta/PDD/SOCET Page 9 CASE- RA ONE was a kind of new product in itself for the Indian movie watchers. Knowing that the movie wasn‟t upto the mark, the producers adopted a first of its kind advertisement strategy. Newspapers, popular websites, magazines, music channels etc. were and are all flooded with advertisement posters of the movie, showcasing to the people the unique characters much before the movie was released. Tie-ups with popular brands such as McDonalds, KFC was done as a part of co-branding and increasing the credibility of the movie. Even before its release, Ra One managed to earn a revenue of Rs132 crore simply by giving away the rights of the movie. The cost of the movie was 100 crores and 52 crore were spent only in its promotion.