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A330MED: Product Development Strategies (Group Assignment)Table of Content1.IndividualContribution for the Group Course wo...
A330MED: Product Development Strategies (Group Assignment)                                                        2
A330MED: Product Development Strategies (Group Assignment)1. Individual Contribution for the Group Course workDarshanaRaja...
A330MED: Product Development Strategies (Group Assignment)2. Problem statementStair climbing hand truck is a perfect produ...
A330MED: Product Development Strategies (Group Assignment)       Another problem is used only for small stairs because of ...
A330MED: Product Development Strategies (Group Assignment)3. Product planningCurrently in Sri Lanka there are only few sta...
A330MED: Product Development Strategies (Group Assignment)Political factor       Since raw materials account for large num...
A330MED: Product Development Strategies (Group Assignment)3.2 Identify potential competitorsPorter’s five forces modelThis...
A330MED: Product Development Strategies (Group Assignment)Threat of substitute Products: After introducing this product in...
A330MED: Product Development Strategies (Group Assignment)3.3Market researchIdeas of the market situation and the preferen...
A330MED: Product Development Strategies (Group Assignment)To understand the customer needs and their idea about this produ...
A330MED: Product Development Strategies (Group Assignment)    12    10       8       6                                    ...
A330MED: Product Development Strategies (Group Assignment)4. Product Specification4.1 What is product specification?Custom...
A330MED: Product Development Strategies (Group Assignment)                                                              [O...
A330MED: Product Development Strategies (Group Assignment)        Hasn’t proper break system to stop on the middle of    ...
A330MED: Product Development Strategies (Group Assignment)3    try wheel unit      Smooth climbing on stairs              ...
A330MED: Product Development Strategies (Group Assignment)26    completed trolley       Last a long time with no need for ...
A330MED: Product Development Strategies (Group Assignment)Metric Need       Metric                                        ...
A330MED: Product Development Strategies (Group Assignment)4.6 What customer’s needs are satisfied by the matrices         ...
A330MED: Product Development Strategies (Group Assignment)4.7 Final product specificationFor achieve this purpose cost mod...
A330MED: Product Development Strategies (Group Assignment)Assembly                                   600.00              5...
A330MED: Product Development Strategies (Group Assignment)plateBall bearings              2 Nos.      170.00             1...
A330MED: Product Development Strategies (Group Assignment)pipe                                      (19-0 length)    (19-0...
A330MED: Product Development Strategies (Group Assignment)5. Concept GenerationDefinition of a product concept:A concept i...
A330MED: Product Development Strategies (Group Assignment)Concept 01- Trolley with fixed bottom and base with hot dip galv...
A330MED: Product Development Strategies (Group Assignment)Bottom plate can move with relevant to the Product manufacturing...
A330MED: Product Development Strategies (Group Assignment)                                           Figure 5.1This trolle...
A330MED: Product Development Strategies (Group Assignment)      Figure 5.2                                                ...
A330MED: Product Development Strategies (Group Assignment)This trolley can move easily on stairs with its triple wheels. T...
A330MED: Product Development Strategies (Group Assignment)                                           Figure 5.3This trolle...
A330MED: Product Development Strategies (Group Assignment)                                                                ...
A330MED: Product Development Strategies (Group Assignment)        Product development stage        Introduction stage     ...
A330MED: Product Development Strategies (Group Assignment)            Demand initially from “early adopters”            Fo...
A330MED: Product Development Strategies (Group Assignment)     General over head cost.     Necessary investment.     Ra...
A330MED: Product Development Strategies (Group Assignment)Supplier can control the material distribution. If they stop the...
A330MED: Product Development Strategies (Group Assignment)requiresspecifyingthe aim ofthe business enterpriseendeavorortas...
A330MED: Product Development Strategies (Group Assignment)                               Strengths                        ...
A330MED: Product Development Strategies (Group Assignment)In theStage Gate process,lots ofideasarrivesbeing brand fresh no...
A330MED: Product Development Strategies (Group Assignment)7.3 NPV calculation for stair climbing hand truck (Concept 2)   ...
A330MED: Product Development Strategies (Group Assignment) Calculate of NPV for stair climbing hand truck (Concept 2)     ...
A330MED: Product Development Strategies (Group Assignment)ROI calculation for stair climbing hand truck (Concept 2)       ...
A330MED: Product Development Strategies (Group Assignment)1,000,000.00 800,000.00 600,000.00                              ...
A330MED: Product Development Strategies (Group Assignment)8. Conclusion       In the current market, many kind of trolleys...
A330MED: Product Development Strategies (Group Assignment)9.References:1. Wesco Industrial Products Multi-purpose Hand Tru...
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Transcript of "stair climbing trolley market"

  1. 1. A330MED: Product Development Strategies (Group Assignment)Table of Content1.IndividualContribution for the Group Course work ............................................................. 32. Problem statement .................................................................................................................... 43. Product planning....................................................................................................................... 6 3.1 PEST Analysis ................................................................................................................................... 6 3.2 Identify potential competitors ............................................................................................................ 8 3.3 Market research ................................................................................................................................ 104. Product Specification ..............................................................................................................13 4.1 What is product specification? ......................................................................................................... 13 4.2 Product identification ....................................................................................................................... 13 4.3 Identify customer needs ................................................................................................................... 15 4.4 Considered factors when constructing matrices ............................................................................... 17 4.5 Matrices to be used .......................................................................................................................... 17 4.6 What customer’s needs are satisfied by the matrices ....................................................................... 19 4.7 Final product specification ............................................................................................................... 205. Concept Generation ................................................................................................................24 5.1 Identify three product concepts ........................................................................................................ 24 5.2 Discuss each product concept .......................................................................................................... 26 5.3 Choose and justify product concept to be used ................................................................................ 306. Analysis of the innovated product .........................................................................................31 6.1 Market Consideration....................................................................................................................... 317. Marketing & Financial Analysis............................................................................................33 7.1 Micro & macro environment............................................................................................................ 34 7.2 Stage Gate process ........................................................................................................................... 37 7.3 NPV calculation for stair climbing hand truck (Concept 2) ............................................................ 398. Conclusion ...............................................................................................................................439. References:...............................................................................................................................44 1
  2. 2. A330MED: Product Development Strategies (Group Assignment) 2
  3. 3. A330MED: Product Development Strategies (Group Assignment)1. Individual Contribution for the Group Course workDarshanaRajapaksha (Team Leader):-Develop the outline of the project report, literature review, script writing, report writingChamaraRathnataka(Team Member):-Literature review, data compiling and report writingNalinGamage (Team Member):-Literature review, data compiling and report writing 3
  4. 4. A330MED: Product Development Strategies (Group Assignment)2. Problem statementStair climbing hand truck is a perfect product for carrying loads towards the up and down on thestair case. In day to day life, it’s very useful for carrying heavy loads such as pieces of furniture,household appliances and the like, up and down a staircase. Main advantage of this product isallows it to be readily moved while loaded, more particularly up and down a stair. Stair climbing hand truck Figure 2.1(Source-Tooled up- Stair climbing hand truck) [Online image])Basically, it include of at least one handle at its upper part ,main frame, bottom frame, pair ofwheel frames, pair of brackets, 6 wheels & wheel assembly. The wheel assembly comprises apair of rotary arms which are rotatable connected to the brackets.In basic models, some problems were identified. Such as, Lot of effort is required to adjust the inclination of the hand truck for provide stable transportation of the loads. As a result of operator gets out of control when climbing the stair, the accident will occur due to the load roll back. These trucks have a pair of ground engaging wheels which wear quickly because of the heavy load bearing downwardly directly on the wheels. 4
  5. 5. A330MED: Product Development Strategies (Group Assignment) Another problem is used only for small stairs because of the size of their wheels which is limited to a maximum diameter due to the star-shape plate. Need more space to be keep away when not use. Only luggage type goods can be transport but Small items cannot be filled. Cannot easily handle by one person due to manufacturing weight of the hand truck.Innovation should do for improve hand truck for moving loads upstairs and downstairs whileensuring a controllable transportation of the load along the staircase.as well as low cost.Solutions for above given problems are shown below,  An accident can stop by using proper break system to stop on the middle of the stairs. Wear of the tire can reduce by increase the hardness & grip the tiers. Small items can be filled after adding galvanized steel plate for main frame. Uses hot dip galvanized plates for reduce manufacturing weight of the hand truck. 5
  6. 6. A330MED: Product Development Strategies (Group Assignment)3. Product planningCurrently in Sri Lanka there are only few stair climbing trolley manufacturers that can be find.And any of them haven’t mass production. But there are some imported stair climbing trolley inthe Sri Lankan market. Because of their high price due to high shipping cost, they are unablegain enough market share. There are some basic stairs climbing trolleys in currently excise in SriLankan market. Most of these products are unable satisfy the customer needs for their money.Therefore we choose to do innovation to basic stair climbing trolley.3.1 PEST Analysis Figure –Pest analysis for stair climbing hand trolly. Figure 3.1 6
  7. 7. A330MED: Product Development Strategies (Group Assignment)Political factor Since raw materials account for large number of industry turnover, the government of Sri Lanka,should reduce taxes for import steel. Especially for Hot dip galvanized pipes &hot dip galvanized steel plate. The government should give some technical Knowledge and training for develop this product as a Sri Lankan product.Economic factor Initial cost for this product is high. In rural areas, it is difficult to introduce these kind products due to high market price. Production cost may be increase due to Rising fuel bill and a rising in interest rates. To avoid a cut in production, companies will consider about the exports for non- developed countries. Due to the increase of economy, urbanization also increases. As a result of this, lot of urban people lives in flats & multi story buildings.so, this product definitely become a must need product for their day to day requirements.Social factor The number of upper-class and upper-middle class families use this product in their day to day household needs. The young generation those who have low income, have good opportunity to join with manufacture/sale of this product to increase their income.Technology By using new technology, weight can be reducing by use of lightweight materials. By introduce new welding technologies (thermite & spot welding), Strength can be increase. 7
  8. 8. A330MED: Product Development Strategies (Group Assignment)3.2 Identify potential competitorsPorter’s five forces modelThis is one of famous industry analysis model that use in the world. Porter’s five forces model isuse to determine the competitive intensity and to analyze the competitive strength and positionof a corporation. This model is used to identify whether new products, services or businesseshave the potential to be profitable. Porter’s five force model. Figure 3.2Competitive Rivalry within an industry: By doing innovation to the stair climbing trolley cangain sustainable competitive advantage. Eg: Adding safety feature called “Anti-lock” (wheelsare stopped when they are rotating backward). Using modern advertising methods like internetadvertisement, publishing thro social network, can get advantage in marketing. Adding optionalfeatures with flexibility will help to be competitive in the market.Threat of new entrants: Some foreign firms can invest in Sri Lanka because of lowcostproductions. But by been local brand, we can go to the customers easily by knowing their needs.By improving after sales service is help to gain customer loyalty to established product brand. 8
  9. 9. A330MED: Product Development Strategies (Group Assignment)Threat of substitute Products: After introducing this product in to the market, some companiesmight think to come to this market. Currently there isn’t many substitute products in the localmarket. Due to high import tax and high shipping cost it is very difficult enter to local market forinternational brands.Bargaining power of customers: Oneof main feature in this product is low price. So it is easyto keep customer satisfied with low price. There are three different models for three differentprice levels. Therefore buyers can get their product according to their own affordability. Throbetter distribution channel, product can easily deliver to customer. So it helps save the time andmoney of the buyer.Bargaining power of Suppliers: Main materialsused in thetrolley are galvanized plates andbars. Currently there are enough suppliers can be found in the market. Due high exchange rate,prices of these materials are going high. But reduction of tax in material(Steel) is increase theavailability. Therefore it will minimize the bargaining power of the suppliers. 9
  10. 10. A330MED: Product Development Strategies (Group Assignment)3.3Market researchIdeas of the market situation and the preferences of the consumers are exactly need beforelaunching a product to the market. Company should identify consumer’s desires, as well aswhom has the ability to buy this product & areas for distributed. According to these dataCompany get an idea about the performances of their product among the market and how thedistribution is potential.To increase the market condition, company has a fine awareness about the distribution of theplaces such as Luxury houses, Factories, Hospitals, Offices, and Super Markets. This can giverough idea about the amount of product according to the preferences of the consumers. Population of Sri Lanka by district (source-http//www.statistics.gov.lk) Figure 3.3 10
  11. 11. A330MED: Product Development Strategies (Group Assignment)To understand the customer needs and their idea about this product, we did a research by usinground 100 people in 6 districts. For the identifying the market research we ask several questionsfrom each customer. Sample of customer survey sheet is attached in the appendix .In survey we ask “Do you want to use stair climbing hand trolley to ease your work?” and theanswers were categories in to district wise. 100% 90% 80% 70% 60% 50% 40% No 30% 20% Yes 10% 0% Table 3.1According to the chart, most people in Colombo, Galle (urban) like to use stair climbing trolley.People in Badulla and Rathnapura district less like to use this product. That means people inurban areas are more likely to use this product. Therefore distribution network must more forceon the urban areas.Another question we ask in the survey is “What price would you expect to see this product to beoffered?” and the answers are categories in to three groups. 11
  12. 12. A330MED: Product Development Strategies (Group Assignment) 12 10 8 6 Below 5000 4 Between 5000-7500 Over 7500 2 0 Table 3.2This charts shows more people in Colombo and Galle like to spend more than 7500 rupees forstair climbing trolley. That means if the product good, urban people are willing to pay more theirproduct. If the product is around 5000-7500 rupees, more people are willing buy this product.Chart given in the below shows what aged people are like to buy this product.This chart clearly shows that the people aged over 45 are more likely to use this product.Therefore the advertising & market strategy focus on these aged groups. 40% 35% 30% 25% 20% 15% 10% 5% 0% Under 25 25 - 34 35 - 44 45 - 54 55 or over Table 3.3 12
  13. 13. A330MED: Product Development Strategies (Group Assignment)4. Product Specification4.1 What is product specification?Customer needs are generally expressed in the “language of the customer”. They provide littlespecific guidance about how to design and engineer the product.To make the idea of “What the product has to do”development teams usually create a set ofspecifications. Although, product specifications do not tell to how to address the customerneeds, but it support to achieve in order to satisfy the customer needs. The list of productspecifications is also one of the key information system used by the team throughout thedevelopment process.4.2 Product identificationFollowing are the currently existing products in the market;01.) Multipurpose Hand Trolley  Equipments or goods fell off easily when filled  with a large quantity.  Possibility to being dropped and damage goods while  transporting.  Small items cannot be filled.  Hasn’t ability to climb stairs. Figure 4.1 Multi-purpose Hand Truck [Online image]02.) Multi-Purpose Metallic Trolley  Hasn’t ability to climb stairs.  Difficult to handle by a person.  High technique design.  Big packing space.  Expensive product. Figure 4.2 GLOBEX Trolley Stair climber 13
  14. 14. A330MED: Product Development Strategies (Group Assignment) [Online image]03.) Stair Climber Hand Truck-01  Stability of the cart is not sufficient.  Equipments fell off easily when filled with a large  quantity.  Hasn’t proper break system to stop on the middle of  the stairs.  Small items cannot be filled  Only languages type goods can be transport Figure 4.3 GINORMOUS Sealey Sack Truck Stair Climbing 150kg Capacity [Online image]04.) Stair Climber Hand Truck-02  Stability of the cart is not sufficient.  Equipments fell off easily when filled with a large quantity.  Hasn’t proper break system to stop on the middle of the stairs.  Small items cannot be filled Figure 4.4 ABE Product and Services LTD Trolley Selector [Onlineimage]05.) Stair Climber Hand Truck-03  Stability of the cart is not sufficient.  Equipments fell off easily when filled with a large  quantity. 14
  15. 15. A330MED: Product Development Strategies (Group Assignment)  Hasn’t proper break system to stop on the middle of  the stairs.  Small items cannot be filled  Expensive product. Figure 4.5 ebay120kg H Duty Stair Climb ing Flat Bed Hand Truck Trolley [Online image]Following are the problems encountered with each existing productPricing : If a cost is moreover high it will be caused to decline the product share of the market)Product is bulky : required separate space to store. (Almost all the products in the market require more space to store.)Climbing of stairs : when the product traveling on the stairs. Stability of the system is an important factor.Heavy : weight of the product is very important feature. Product should be handling by one person.Protection of goods : It is very vital the protection of goods while moving by using trolleys without fall off.4.3 Identify customer needsNo. Part of the product Needs Importance Rating1 wheels Wheels rotate easily without any friction 12 wheels & wheel axial Easy to move without applying a much force (smooth 1 move) 15
  16. 16. A330MED: Product Development Strategies (Group Assignment)3 try wheel unit Smooth climbing on stairs 14 bottom plate Less percentage of weight effect to arms while 1 climbing with goods5 trolley frame Trolley can pull without bending body while 2 climbing6 side cover plates Prevent drop and damage of the goods while 2 transporting7 handle Smooth comfortable handle 48 trolley frame Easy to clean 49 break system Can stop middle of stairs 510 height changer Adjust the height of the bottom weight plate 511 trolley frame Can be used for lift up plenty of commodities 112 completed trolley Light weight 113 completed trolley One person can handle 114 completed trolley Low price 215 completed trolley Long lasting 316 completed trolley User friendly quality product 117 completed trolley Limited space required to store 418 completed trolley Stability (Balancing while moving through the 1 staircases)19 completed trolley Product should have good value for money 120 completed trolley Capable of being use in both indoor and outdoor 4 environments21 completed trolley Materials used for the product should be recyclable 522 completed trolley Product should not dissipate any harmful radiation or 3 chemicals23 completed trolley Product should not cause damage or pollute the 4 surrounding24 completed trolley Attractive product shape 325 completed trolley Allows easy replacement of worn parts 2 16
  17. 17. A330MED: Product Development Strategies (Group Assignment)26 completed trolley Last a long time with no need for repair or 1 maintenance27 completed trolley Trolley has to be handle a weight of at least 80kgs 2 plus equipment28 Powder coated Can choose several of colours as prefer 5 painting29 Powder coated Steadiness colour to the product 2 painting Table4.14.4 Considered factors when constructing matricesMatrices should be complete: In practice several matrices may be needed to completely reflecta single customer need.Matrices should be dependent: Specification also indicates what the product must do, but nothow the specifications will be achieved. When consider the variables used in productdevelopment some are dependent some are independent.Matrices should be practical: Matrices will be directly analyzable orobservable properties ofthe product that can be easily evaluated by the team.Some needs cannot easily be translated into quantifiable metrics: That matric is subjectiveand would be assessed by panel of customers.4.5 Matrices to be used 17
  18. 18. A330MED: Product Development Strategies (Group Assignment)Metric Need Metric Importance UnitsNo. Nos. Rating 1 1 Frictionless wheel rotation 1 N 2 3 Wheel sizes 1 mm 3 3,18 Balanced wheel unit 1 mm 4 4,11,18 Bottom plate fixed with transferring the center of 2 mm gravity of weight towards the wheels 5 5,7,11, Trolley frame with proper dimension 1 mm 13,18,24, 26,27 6 6,11 Include side cover plates 3 mm 7 8,24 Proper smooth structure 1 mm 8 9 Easy & quality break system 5 N 9 10 Movable bottom plate 5 mm 10 12,13 Total mass 2 kg 11 14,1519, Use materials to production 3 - 20,21,22, 23,26,27 12 16,17,18, Complete trolley design 1 - 19,20,23, 24,26,27 13 28,29 Attractive and quality enamel colourpainting of the 3 - product 14 14 Unit manufacturing cost 1 - 15 8,25 Time to dissemble/assemble for maintenance 2 - Table4.2 18
  19. 19. A330MED: Product Development Strategies (Group Assignment)4.6 What customer’s needs are satisfied by the matrices Table4.3 19
  20. 20. A330MED: Product Development Strategies (Group Assignment)4.7 Final product specificationFor achieve this purpose cost model should be prepared.4.7.1 Develop a cost model of the productThe goal of this step of the process is to make sure that the product can be produced at the targetcost. The target cost is the manufacturing cost at which the company and its distributionfollowers can make adequate profits while still offering the product to the end customer at acompetitive price.Concept-01: Trolley with fixed bottom and base with hot dip galvanized platesComponent Qty High Price Low Price High Total Low Total Price Price Rs. Rs. Rs. Rs.Wheels 6 Nos. 375.00 350.00 2250.00 2100.00½ Hot dip galvanized 20-10 1500.00 1350.00 1645.00 1481.00pipe (19-0 length) (19-0 length)Cutting & bending (Hot 350.00 300.00 350.00 300.00dip galvanizedsteelpipe)2mm (3-0x1-6) Hot 1 No. 3320.00 3120.00 622.50 585.00dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)2mm (1-6x1-0) Hot 1 No. 3320.00 3120.00 207.50 195.00dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)Cutting & shaping (Hot 125.00 120.00 125.00 120.00dip galvanized steelplates)4mm (0-9x0-6 x0-3) 1No. 6540.00 6240.00 77.00 75.00Hot dip galvanized steel (36x96 Sheet) (36x96 Sheet)plateBall bearings 2 Nos. 170.00 150.00 340.00 300.0012mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00½ Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00 20
  21. 21. A330MED: Product Development Strategies (Group Assignment)Assembly 600.00 500.00 600.00 500.00Powder coated painting 550.00 500.00 550.00 500.00Total 6947.00 6306.00 Table4.4Concept-02: Trolley with bottom and base with hot dip galvanized plates and shrinking sideplates with hot dip galvanized platesComponent Qty High Price Low Price High Total Low Total Price Price Rs. Rs. Rs. Rs.Wheels 6 Nos. 375.00 350.00 2250.00 2100.00½ Hot dip galvanized 30-10 1500.00 1350.00 2435.00 2191.00pipe (19-0 length) (19-0 length)Cutting & bending (Hot 350.00 300.00 350.00 300.00dip galvanized steel pipe)2mm (3-0x1-6) Hot 1 No. 3320.00 3120.00 622.50 585.00dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)2mm (1-6x1-0) Hot 1 No. 3320.00 3120.00 207.50 195.00dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)2mm (2-11x0-9) Hot 2 Nos. 3320.00 3120.00 605.00 568.80dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)Cutting & shaping (Hot 125.00 120.00 125.00 120.00dip galvanized steelplates)4mm (0-9x0-6 x0-3) 1No. 6540.00 6240.00 77.00 75.00Hot dip galvanized steel (36x96 Sheet) (36x96 Sheet) 21
  22. 22. A330MED: Product Development Strategies (Group Assignment)plateBall bearings 2 Nos. 170.00 150.00 340.00 300.0012mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00½ Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00Assembly 600.00 500.00 600.00 500.00Spray painting 250.00 200.00 250.00 200.00Total 8042.00 7284.80 Table4.5Concept-03: Trolley with moving hot dip galvanized bottom plateComponent Qty High Price Low Price High Total Low Total Price Price Rs. Rs. Rs. Rs.Wheels 6 Nos. 375.00 350.00 2250.00 2100.00½ Hot dip galvanized 20-4 1500.00 1350.00 1606.00 1445.00pipe (19-0 length) (19-0 length)¾ Hot dip galvanized 0-8 2000.00 1850.00 70.00 65.00 22
  23. 23. A330MED: Product Development Strategies (Group Assignment)pipe (19-0 length) (19-0 length)Cutting & bending (Hot 350.00 300.00 350.00 300.00dip galvanized steel pipe)Cutting & shaping (Hot 125.00 120.00 125.00 120.00dip galvanized steelplates)3mm (1-9x1-2) Hot 1No. 4900.00 4680.00 417.00 398.00dip galvanized steel plate (36x96 Sheet) (36x96 Sheet)4mm (0-9x0-6 x0-3) 1No. 6540.00 6240.00 77.00 75.00Hot dip galvanized steel (36x96 Sheet) (36x96 Sheet)plate1D - 1-6L Square 1No. 3200.00 3000.00 800.00 750.00Threaded bar (6-0 length) (6-0 length)Top hand rotator 1No. 500.00 450.00 500.00 450.00Ball bearings 3 Nos. 170.00 150.00 510.00 450.0012mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00½ Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00Assembly 800.00 650.00 800.00 650.00Spray painting 250.00 200.00 250.00 200.00Total 7935.00 7153.00 Table4.6 23
  24. 24. A330MED: Product Development Strategies (Group Assignment)5. Concept GenerationDefinition of a product concept:A concept is a statement about projected product features (form or technology) that will yieldselected benefits relative to other products or problem solutions already available.The following criteria are looked for our concept:  Economies of scale needed in production volume  Technology the idea requires  Fit with manufacturing operations  Fit with marketing operationsA rough early screen was evaluated under the following factors:  Marker worth – attractiveness to target group  Firm worth – enhance the company’s competencies  Competitive insulation – can the product’s benefit be maintainedIdea generation is an ongoing process with contributions from inside and outside theorganization. Many market research techniques are used to encourage ideas including: channelmembers, running focus groups with costumers, and the company’s sales force; encouragingcustomer suggestions and comments via toll-free telephone numbers and website forms; andgaining awareness on competitive product developments through secondary data sources.One important research technique isgenerating ideas by from open-minded, creative thinkersfrom inside and outside the firm.5.1 Identify three product conceptsWhen identify the product concepts hand trolley should satisfied the key customer needs.Generally when used properly, hand trolley can protect people from having back injuries andother health problems that can result from lifting and carrying heavy loads.Three product concepts were identified with their advantages and disadvantages as bellow. 24
  25. 25. A330MED: Product Development Strategies (Group Assignment)Concept 01- Trolley with fixed bottom and base with hot dip galvanized platesAdvantages DisadvantagesCan easily move on stairs with its triple wheels Bottom frame fix to the base frame therefore cannot move itProduct manufacturing cost is considerably Small items can fill but difficult to move onlow stairs.Luggage type goods which width is more thantrolley base frame can easily transportConcept 02- Trolley with bottom and base with hot dip galvanized plates and shrinking sideplates with hot dip galvanized platesAdvantages DisadvantagesCan easily move on stairs with its triple wheels Bottom frame fix to the base frame therefore cannot move itProduct manufacturing cost is moderateLuggage type goods which width is more thantrolley base frame can easily transport becauseof shrinking side plates.Perfect solution for carrying small itemsConcept 03- Trolley with moving hot dip galvanized bottom plateAdvantages DisadvantagesCan easily move on stairs with its triple wheels Small items cannot be filled 25
  26. 26. A330MED: Product Development Strategies (Group Assignment)Bottom plate can move with relevant to the Product manufacturing cost is considerablyequipment or luggage size highLuggage type goods which width is more than Bottom plate cannot move quicklytrolley base frame can easily transport Difficult to carry heavy loads on bottom plate Table5.15.2 Discuss each product conceptConcept 01: Trolley with fixed bottom and base with hot dip galvanized platesConcept-01 engineeringdesigndrawingsof the hand trolley as follows. 26
  27. 27. A330MED: Product Development Strategies (Group Assignment) Figure 5.1This trolley can move easily on stairs with its triple wheels. But bottom frame fix to the baseframe therefore it cannot move. Large size luggage type goodscan transporteasily while smallitems difficult. Main advantage of this product is low manufacturing cost.Concept 02: Trolley with bottom and base with hot dip galvanized plates and shrinkingside plates with hot dip galvanized platesConcept-02 engineeringdesign drawings of the hand trolley as follows 27
  28. 28. A330MED: Product Development Strategies (Group Assignment) Figure 5.2 28
  29. 29. A330MED: Product Development Strategies (Group Assignment)This trolley can move easily on stairs with its triple wheels. Trolley design with fixed bottomand shrinking side plates with hot dip galvanized plates, therefore this trolley is perfect solutionfor carrying small items as well as large size luggage type goods. Manufacturing cost of thisproduct is moderate.Concept 03: Trolley with moving hot dip galvanized bottom plateConcept-03 engineeringdesign drawings of the hand trolley as follows 29
  30. 30. A330MED: Product Development Strategies (Group Assignment) Figure 5.3This trolley can move easily on stairs with its triple wheels. Main advantage of this trolley isbottom plate can move with relevant to the equipment or luggage size. But small type itemscannot be filled because there is no base plate with moving bottom plate, as well as heavy loadscannot bear on moving plate which not strong enough. Further, this bottom plate cannot movequickly. Main disadvantage of this trolley is high manufacturing cost.5.3 Choose and justify product concept to be usedConcept selection is the process of valuing concepts with respect to customer needs and othercriteria, comparing the relative strengths and weaknesses of the concepts, and selecting one ormore concept for further investigation, testing or development.For achieve the above purpose concept scoring is used to better differentiate among competingconcepts. 30
  31. 31. A330MED: Product Development Strategies (Group Assignment) Concepts Concept-01 Concept-02 Concept-03Selection Criteria Weight Rati Weighte Rati Weighte Rati Weighte ng d score ng d score ng d scoreEasy of handling 10% 4 0.40 4 0.40 3 0.30Light weight 20% 5 1.00 5 1.00 4 0.80Ease of manufacture 15% 5 0.75 4 0.60 2 0.30Durability 15% 4 0.60 4 0.60 2 0.30Manufacturing cost 20% 5 1.00 4 0.80 3 0.60Usefulness 15% 3 0.45 5 0.75 2 0.30Attraction 5% 3 0.15 5 0.25 4 0.20 Total 4.35 4.40 2.80 Score Rank 2 1 3 Continue No Develop No Table 5.2According to the results scoring, Concept-02 (Trolley with bottom and base with hot dipgalvanized plates and shrinking side plates with hot dip galvanized plates) scored best marks.Therefore company production start with that product concept.6. Analysis of the innovated product6.1 Market ConsiderationAfter the product was introduced to the market, it’s very important to understand the how thesales and profit changes with time. To understand this behavior there is analysis method inmarketing called product life cycle analysis.There are five stages in product life cycle. 31
  32. 32. A330MED: Product Development Strategies (Group Assignment) Product development stage Introduction stage Growth stage Maturity stage Decline stageProduct life cycle Figure 6.1Product developmentstage– In this stage it is important to understand the current situation inthe market and identifying the market unidentified market needs. After that innovations need bedone to the product according to the customer needs. For that R&D must be stronger. Stairclimbing hand trolley has been develop to this concept.Introduction stage – When the hand trolley introduce to the market following problems can beoccur Low quantity of sales High advertising cost Low cash flow Distributors are hesitant to take new product To minimize these problems there are solutions can be implement Large promotion campaign to get consumers attraction. 32
  33. 33. A330MED: Product Development Strategies (Group Assignment) Demand initially from “early adopters” Focused customer distribution network. Reasonable priceGrowth stage - In this stage, sales are increasing rapidly. Therefore the profit also increasing. Ifthe trolley’s demand goes high the price of the hand truck can be maintained at high. If not, byreducing the price can increase consumers’ quantity. Also in this stage cash flow can be positive.And also the unit cost of trolley is can down due to high production. By expanding thedistribution and strengthening spending the promotion can improve the sale growing rate.Maturity stage – This the stage is the most profitable. Whilesalescontinue toboostin this stagebut pace of the growth is at a sluggish speed. Simply due to the fact that brand awareness isactually strongand marketing expenses will be reduce. In this stage stair climbing trolley isgetting older so the competitors may have be similar products. So there can be treats for marketshare. To keep the stair climbing hand truck more time in this stage, there must be newinnovations need to be done to the product.Decline Stage – In this stage sales are going down. The techniques that use in the trolleybecome outdated. Because of sales are going low the unit production cost is going high.Therefore the profit will be reduced. There some options can be done in this stage. Keep up with the product assured in which competition will certainly exit. Reduce costs in order to find more uses for the product. Harvest it, reducing marketing support and coastline along until you can minimize income can be made. Discontinue the product whenever no more income can be made or there is new innovative products need be introduce to the market.7. Marketing & Financial AnalysisIn financial analysis, company must be considered important things such as,  Identify the market potential.  Value of the target market.  Cost of the product. 33
  34. 34. A330MED: Product Development Strategies (Group Assignment)  General over head cost.  Necessary investment.  Rate of the product.There are some competitors in the “stair climbing hand truck” market in srilanka. So there is ahuge contest with those competitors in the market. At once, it isnot easyto enter the market as aninnovated product and grab the customer’s desires. Top line and bottom line have clearlyidentified and can makeproperchoice to develop the productivity simultaneously.Value of the target market isanother key factorin development process of the company.Customers in the market can be categorized as domestic user & industrial users. So, requirementofboth parties may bedifferent from the capacity and market price.Cost of the product also plays an important role. So the total cost of this product may bevaryingwith the requirement of the customer. Price of the hot dip galvanized pipe&hot dipgalvanized steel plateare cost increasing factors of the product.General overhead cost also consider at cost category. It mean, Maintains cost, salaries, wages,building cost, electricity bills, marketing cost, transport cost, insurance cost, design cost must becalculate as a cost.To promote this product, the company should use “effective marketing strategies”. Advertisingis an ideal way to inform customer about this product. Such as, Newspapers andmagazines,Leaflets,Outdoor advertising billboards, FM Radio and television, Online Marketing&Posters. It is not sufficient only from marketing; it should introduce to the Super-markets inthe Colombo region and main stores in Metro region. One week prior to the release of the newproduct it is suggested to keep a poster in-front of selected super-markets regarding the newproduct. And also collaborate with the company and super–markets can give a discount for thecustomers who are the buyers of new product within this introducing month.7.1 Micro & macro environmentMicro & macro environment are the two types of environment. Micro environment can bedivided into “internal micro environment” & “external micro environment”. The external microenvironment includes suppliers, customers and market intermediaries. 34
  35. 35. A330MED: Product Development Strategies (Group Assignment)Supplier can control the material distribution. If they stop their distribution it will be directlyaffected to the manufacturing process of the product. Sometimes it will be the end of theproduction process.Customeris the major factor of company’s destiny, who decides the life time of the company.Intermediates are also directly affected to the business. Because they playing important rolebetween the customer and manufacture interface.The internal micro environment can be divided into Management structure,organizationstrategies&Objectives.Macro environment includes of demographics, economics, nature, technology, politics andculture. Figure 7.1SWOT AnalysisSWOT analysis is anorganizedpreparingmethodused tomeasuretheStrengths,Weaknesses,Opportunities,as well asThreatsassociated withanyprojector inacompanyventure.AnySWOT analysiscan be carried outfor aproduct,locationorindividual.It 35
  36. 36. A330MED: Product Development Strategies (Group Assignment)requiresspecifyingthe aim ofthe business enterpriseendeavorortaskas well asdiscoveringtheinnerandoutsidefactorswhich areadvantageousas well asunfavorablein order to be able for you tohelpachievingwhichaim. Figure 7.2Here is the market SWOT analysis for stair climbing truck. By doing SWOT analysis we canidentify what are the Strengths, Weaknesses, Opportunities, Threats that the stair climbing truckhas. Helpful Harmful 36
  37. 37. A330MED: Product Development Strategies (Group Assignment) Strengths Weaknesses Low cost product No market opportunity in rural Durability is high areas. Currently there aren’t any big Not a popular band. local competitors. There aren’t wide ranges of More features than ordinary models for differentInternal Origin product. consumers. Distribution network is not expanded. Opportunities Threats Market is growing because of Low cost products from china new super markets and flats are Material cost can be increase increasing in future. Solution for high lobour cost New technologies are coming Important duty is high for trolleys so quickly.External therefore easy to competitive with Big companies are opting toOrigin price. use lifts Table 7.17.2 Stage Gate process Stage Gate process Figure 7.3 37
  38. 38. A330MED: Product Development Strategies (Group Assignment)In theStage Gate process,lots ofideasarrivesbeing brand fresh notionswithvariouslevels.Yetirrelevantideasare usuallyblockedfrom thetop management of thesystem. Useful conceptstend to beconsumingtoaccounts.Itsnumerousstagessuchas“Scoping”,“buildbusinesscase”,“development”, “testing &validation”and“market launch”.Followingbenefitsmay be accomplishedbyimplementationof theStage Gate process.  Speed uppaceto themarket.  Improvedlikelihood ofproduct accomplishment.  Introducesdisciplineintoan ordinarydisorderly.  Reduce the re-work along with otherkinds ofthewaste materials.  Improvesconcentrateby means ofgates wherepoor project are usuallykilled.  Defineseffectiveandefficientallocationofdiscouragesources.  Ensuresany complete-no critical steps tend to bedisregarded.Thisstage gate processefficientlyrequiredto buildprofitable “business case” in thecompany. Firstof all the companydid “preliminary investigation” that is performedfollowing thelots ofgeneralmarket research.Lots ofsurveyswas overto identifiedwhat is pointin whichconsumerrequired.Plenty ofurbanconsumersreally desire toutilize thestair climbing hand truckfor their day to dayhouseholdactivities.The issuecomingas a result of the selling price of the product is high. This isactually theprimary target market which usuallycompanyattempt toimplementtheir newproduct.Afterlots ofstudies,The Company discoverssuperbbusinesscase whichotherswerenotincludedat present.Finally the companyinvented “Trolley with bottom and base with hot dipgalvanized plates and shrinking side plates with hot dip galvanized plates”.Determinedfewerrorsare usuallydebugsuccessfullyas well asimplementedexcellentnewproductfor thetargetcustomer. 38
  39. 39. A330MED: Product Development Strategies (Group Assignment)7.3 NPV calculation for stair climbing hand truck (Concept 2)  Assumed Discount Rate = 5%  Formula for Discount Factor = 1/(1+r)n In here, r = Discount Rate n = no of years  Assume the project is completed in year 0  Initial Cost for solar Refrigerator =100,000 .00  Expecting annual cost = 50,000.00  Expecting benefit in each year = 200,000.00  NPV analysis for coming 4 years.7.3.1 NPV analysis for upcoming 4 years.Discount factor, DF = 1/ (1+r)n ; where r = 0.05, n =1,2,3,4Hence, Discount Factor for coming 4 years is shown below.YEAR DISCOUNT FACTOR00 1.0001 0.9502 0.9003 0.8604 0.82Table 7.2 39
  40. 40. A330MED: Product Development Strategies (Group Assignment) Calculate of NPV for stair climbing hand truck (Concept 2) YEAR TOTAL 0 1 2 3 4Cost © 100,000.00 50,000.00 50,000.00 50,000.00 50,000.00DiscountFactor(DF) 1.00 0.95 0.90 0.86 0.82DiscountedCost (cxDF) 150,000.00 47,500.00 45,000.00 43,000.00 41,000.00 176,500.00Benefit (B) 0 200,000.00 200,000.00 200,000.00 200,000.00DiscountFactor(DF) 1.00 0.95 0.90 0.86 0.82DiscountedBenefit(BxDF) 0.00 190,000.00 180,000.00 172,000.00 164,000.00 706,000.00DiscountedBenefit-Discounted 529,500.00Cost (DB-DC) -150000.00 142,500.00 135,000.00 129,000.00 123,000.00CumilativeBenefits- Costs 150,000.00 57,500.00 192,500.00 321,500.00 444,500.00 NPV Table 7.3 7.3.2 Return on investment (ROI). ROI =Total Discounted Benefits - Total Discounted Costs x 100% Discounted Costs ROI = NPV x 100% Discounted Costs 40
  41. 41. A330MED: Product Development Strategies (Group Assignment)ROI calculation for stair climbing hand truck (Concept 2) ROI = NPV x 100% Discounted Costs ROI = (529500.00/ 176,500.00) x 100% ROI= 300%7.2.3 Payback analysis  Pay back Analysis is another essentialfinancial factor.  The Payback period of timecan be acalculationforobtain acash flow.  Payback collectivebenefitand alsocumulativeexpenseshould not bezero & itshould bea positive value.  Large number of companyhave notgreaterperimeterassociated withpaybackDetermine the payback periodThe sourceas well as thebudget ofstair climbing hand truck innovationandalsomarketimplementationbybusiness financing loans,stakeholdersassetsto becomeretrievedthetimeofpaybackdecideinproduct planning stage.Tabulation YEAR CUMILATIVE CUMILATIVE COST BENEFIT ($) ($) 00 100,000.00 0.00 01 150,000.00 200,000.00 02 200,000.00 400,000.00 03 250,000.00 600,000.00 04 300,000.00 800,000.00 Table 7.4 Payback Period 41
  42. 42. A330MED: Product Development Strategies (Group Assignment)1,000,000.00 800,000.00 600,000.00 CUMILATIVE COST ($) 400,000.00 CUMILATIVE 200,000.00 BENEFIT ($) 0.00 1 2 3 4 5 Payback period Figure 7.4 42
  43. 43. A330MED: Product Development Strategies (Group Assignment)8. Conclusion In the current market, many kind of trolleys are available, but those are not in satisfactionlevel with the customer requirements. Hand trolleys are used to transport, lifting recurring loadslike books, foods and gas cylinders etc. in places like houses, supermarkets, libraries andhospitals. Trolley is often used by those who organize and stock merchandise in retail storesrestock. Store or move to upper level is not easy job; especially there are no lifting facilities. Inmost of the building houses does not have elevators or escalators. Because of that Peoplerequired user friendly trolley for their day to day usage to carry goods and equipments up anddown through the stairs.Any age group range especially in urbanized area needs that product rather than other areas.Further this can reduce the human burden in their daily lives. When used properly, trolley canprotect people from having back injuries and other health problems that can result from liftingand carrying heavy loads. 43
  44. 44. A330MED: Product Development Strategies (Group Assignment)9.References:1. Wesco Industrial Products Multi-purpose Hand Truck [Online image] Available from: http://www.hiwtc.com/products/multi-purpose-hand-truck-268048-12145.htm [Accessed 13/12/2012]2. BASH-P INTERNATIONAL GLOBEX Trolley Stair climber [Online image] Available from: http://www.bashpint.com/fire_safety/trolley_stairclimber.php [Accessed 13/12/2012] 3. GINORMOUS Tolled-up.com Sealey Sack Truck Stair climbing 150kg Capacity [Online image] Available from: http://www.tooled- up.com/Product.asp?PID=26879&Referrer=affiliatewindow&source=affwin [Accessed 13/12/2012] 4. ABE Product and Services LtdTROLLEY SELECTOR Stair Climbing Trucks[Online image] Available from: http://www.trolley-selector.co.uk/stair-climbing-trucks [Accessed 13/12/2012] 5. Tool-Supply.co.uk 120kg H Duty Stair Climbing Flat Bed Hand Truck Trolley [Online image] Available from: http://www.ebay.com/itm/120kg-H-Duty-Stair-Climbing-Flat-Bed-Hand-Truck-Trolley- /180723573804?pt=UK_Lifting_Moving_Equipment&hash=item2a13f6e42c [Accessed 13/12/2012]6. Karl T Ulrich, Steven D Eppinger& Anita Goyal (2011) – Product Design & Development. 4th ed. TATA McGraw Hill Education Private Limited 44

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