This topic will explore the concept of product design and development of Principles of management

1. Product Design & Development
Prof. K N Tayade
Department of Information Technology
Government College of Engineering,
Amravati
Principles of Management- Unit-III

2. Introduction
• Design is a wider concept than style.
• Style describes the appearance of a product, which can be
eye-catching or dull.
• A good design contributes to a product’s usefulness as well
as its attractiveness.
• A good designer considers functionality, aesthetics, human
factors (ergonomics), ease of service and repair, ease of
manufacturer and costs of materials and tooling.

3. Categories of New Product
Allen and Hamilton have identified six categories of new products in
terms of their newness to the company and to the market place.
1. New-to-the –world products: New product that create an entirly
new market.
2. New-product lines: New products that allow a firm to enter an
established market for the first time.
3. Addition to existing product lines: New products that supplement a
firm’s established product lines.
4. Improvement in / revisions to existing products: New product that
provide improved performance or greater perceived value and replace
existing products.
5. Repositioning: Existing products that are targeted to new market or
market segments.
6. Cost reduction: New product that provide identical performance but
at lower cost.

4. New-Product-Development Dilemma
Successful new product development may even be more difficult to
achieve in the future for the following reasons:
1. Shortage of important new-product ideas in certain areas: Some
R&D scientists think there are few feasible new technologies feasible.(Ex.
Automobile, Computer, xerography).
2. Fragmented Market: Keen competition is leading to increasingly
fragmented market.
3. Social and governmental Constraints: New product have to satisfy
public-interest criteria such as consumer safety and ecological
compatibility.
4. Cost of New-Product-Development process: The firm has to face
rising R&D , Manufacturing and Marketing costs.
5. Capital Shortage:
6. Shortened time-span to completion : Many competitors are likely to
get the same idea at the same time, and the victory often goes to the
swiftest.
7. Shorter life-spans for successful products:

5. The New Product Planning System
For new product planning, following points need to be taken into
consideration:
a. The company decides on a strategy for technological advance over a
long-term period.
b. Market research indicates the major directions where successful
research effort would bear immediate fruite.
c. Basic research indicates possible breakthrough in technology.
d. Applied research expands basic discoveries and applies them to the
particular industrial field
e. Design and development produce a new-product specification either
from applied research or directly from market planning.
The system is therefore, highly interactive with new product ideas being
developed for eventual production and market launch.
 Refer page no: 153

6. Design of the Product
Terminologies:
1. Research : The discovery of novel techniques, ideas or systems.
2. Development : The improvement of existing techniques, ideas or
systems.
3. Design : The translation of requirements into a form suitable for
manufacture or use.

7. Responsibility for Design
It is clear that the decisions taken during the design stage can have
significant and long-term effects upon the whole organization.
Design process in the organization can be found in three locations:
1. Within the marketing department.
2. Within the production department.
3. As an independent unit directly responsible to the board.

8. Five Stages of a Design Project
In every project, the design programme will pass through the following
five stages:
1. Conception: When a draft specification is laid down.
2. Acceptance: When the specification is shown to be achievable by
mathematical calculations or laboratory-scale processes.
3. Execution: Where pilot-plants are made following the laboratory-
scale experiments.
4. Translation: Where the project is put into such a form that it can
be made within the organization and to the specification laid down.
5. Pre-production: Where sufficient quantities are produced to check
the design, tools and specifications.

9. Use of Critical Path Analysis in Design
CPA is most effective tool for the control of design process.
A common difficulty in using CPA in design tasks is the belief that it is not
possible to assign time duration to design activities.
When dealing with this problem, the following steps are useful.
1. Determine the design specification as accurately and in as much detail
as possible.
2. Involve the people concerned in the drawing of the network.
3. Establish fixed dates.
4. Assign time duration to non-contentious activities.
5. Break contentious activities into smaller activities.
6. Examine the remaining activities to see whether there are any
historical precedents. If not, then assign to them as much time as
possible without overrunning the fixed completion date.

10. Reducing Design Costs
Design effort is expensive: a qualified engineer or scientist not only draws a
high basic pay, but also needs considerable support staff and sometimes heavy
capital equipment.
It is possible at times to avoid the heavy fixed costs of permanent staff by
purchasing design efforts. There are number of sources:
1. Research Associations:
2. Government Research Institutions:
3. Education Establishments:
4. Private Design Companies:
5. Licences to Manufacture:

11. Integrated Management of New Product
Development
A five-step decision process for new-product development.
1. Opportunity Identification: Defining the best market to enter and generating
of ideas that form the basis for entry. If an attractive opportunity is identified,
the design phase is initiated.
2. Design: Process of converting the idea into a physical and psychological entity
through engineering, advertising and marketing.
3. Testing: If a good design is found, testing begins.
4. Introduction: If final testing is successful, the product is launched. The
launch is carefully monitored to detect early warning signals and changes in
strategy are sometimes made.
5. Life Cycle Management: If the launch is successful, the product becomes
established and the process of life cycle management begins. This part is
critical, since profits are the reward for risk-taking and creative efforts
undertaken earlier in the process and must be managed judiciously.
Refer Page 165.

12. New Product Development
The basis of new product-development process for most firms today is to
maintain core business with minimum re-investment.
The new-product-development process consists of eight stages
1. Idea generation
2. Idea screening
3. Concept development and Testing
4. Marketing strategy development
5. Business Analysis
6. Product Development
7. Market Testing
8. Commercialization
The purpose of each stage is to decide whether the idea should be further
developed or dropped.

13. 1. Idea Generation
Direct Methods: Depends on the creativity of individuals as well as groups.
Indirect Methods: These are synthetic methods ie methods used for other
purposes but with little ingenuity.
Father Mascarenhas has suggested that the techniques suitable for Indian
conditions are:
1. Brainstorming
2. Focus Group Interviewing
3. Attribute Analysis
4. Market Gap Analysis
5. Heuristic Ideation Technique

14. 2. Idea Screening
The purpose of screening is to reduce the number of ideas to an attractive
practical few. Screening is essential to reduce costs and cover risk of
developing new products.
“Must Have” Criteria
a. Fill the perceived need with a sufficiently defined group of heavy users for
the product.
b. Have unique product characteristics that offer distinctive benefits to the
user.
c. Having adequate trading profit contribution.
d. Be saleale in large, expanding territories.
“Would Like” Criteria
a. Be compatible with and able to carry the company’s brand name.
b. Provide the basis for a continuing business.
c. Lend itself to mass media advertisement.

15. 3. Concept development and Testing
Concept Development
Any product idea can be turned into several product concepts.
Concept Positioning:
Each concept requires positioning so that its real competition can be understood. The
concept also has to be positioned against existing brands in the product category.
This decision requires researching the size of alternative preference segments in the
market.
Concept Testing:
Concept testing calls for testing the product concepts with an appropriate group of target
consumers. Consumers are asked to respond to the questions about the product concepts.
Concept development and testing methodology applies to any product, service or idea
such as a new machine tool, a new electronic instrument, an electric component or a
new maintenance service.

16. 4. Marketing Strategy Development
The marketing-strategy development consists of three stages.
1. The first stage describes the size, structure and behaviour of the target
market, the planned product positioning and the sales sought in the first
few years.
2. The second stage outlines the product’s planned price, distribution
strategy and marketing budget for the first year.
3. The third stage describes the planned long-term sales and profit goals
and marketing-mix strategy over time.

17. 5. Business Analysis
After the development of product concept and a marketing strategy, the
management can evaluate the business features of the proposal.
Management must review the sales, cost and profit projections to determine
whether they satisfy the firm’s objectives.
If they do, the product concept can move to the product-development stage.

18. 6. Product Development
If the product concept passes the business test, it moves to R&D and
engineering section to be developed into a physical product.
This stage will answer whether the product idea can be translated into a
technically and commercially feasible product.
The R&D department will develop one or more physical versions of the
product concepts.
It expects to find a prototype that satisfies the specified criteria.

19. 7. Market testing
Test marketing is the final stage of new product development process
before commercialization or launch.
Market testing can yield valuable information about buyers, dealers,
market potential etc.
A carefully structured test marketing can identify how to improve
product, price placement and promotion.
Market testing methods differ in testing consumer versus industrial
products.

20. 8. Commercialization
When the test marketing results are positive, the new product is ready to enter
the market.
The marketing plan for a launch is simply a course of action to be followed for
the introduction of the product into the market.

21. Material Planning and Control
Material planning is essentially an activity of an enterprise for the
procurement and use of material.
Objectives
1. Primary Objectives:
The primary objectives include purchasing, stores and inventory
management, continuity of supply, quality of materials, good supplier
relations and departmental efficiency.
2. Secondary Objectives:
The secondary objectives help to achieve the primary objectives. It
includes make-or-buy decisions, value analysis and value engineering,
standardization, product development and new product, price, demand and
requirement forecasting.

22. Steps to achieve objectives of Material
Planning and Control
1. Classification of items required in terms of both quality and quantity of
each item.
2. Purchasing the items from a reliable source at economic rate.
3. Ensuring timely supply from suppliers.
4. Ensuring good storage facilities.
5. Ensuring scientific recordkeeping and developing an effective control
mechanism.
6. Controlling pilferages.
7. Ensuring proper distribution at the point of usage.
8. Employing only trained and efficient personnel in the materials
management department.
9. Ensuring good performance.

23. Integrated Approach to Material
Planning and Control
The aim is to maximize material productivity out of every rupee invested
in materials. This calls for a integrated approach towards various problem
areas involving decision-making with respect to materials.
The important areas to improve efficiency on material planning and control
are:
a. Value analysis, purchase price analysis.
b. Material Handling.
c. Inventory Control.
d. Stores Management.
e. Waste Management.