1. Product Decision and Analysis/
Product Development
N.K.Agarwal

2. Major Classification of Products
• Consumer and Industrial Products
– Consumer products are those which are destined to be used
by the ultimate consumers or households without any further
processing / personal use
• Soaps, toothpastes, wrist watches etc
– Industrial products are those which are destined to be used
by buyers as inputs in producing other products and for
further commercial processing / business use
• Machine tools, computers, trucks etc.
– However some products could be a consumer product as
well as industrial product
• Oil when used by the housewife is a consumer product
but when purchased by a hair oil or soap manufacturer
can be industrial product

3. Major Classification of Products
• Durable and Non-durable Products
– Durable products are those tangible products which normally
survive many uses
• Machinery, cars, scooters etc
– Non-durable products are those tangible products which
normally survive a few uses or consumed in one use itself
• Toffees, lubricating oils, etc
• Convenience, Shopping and Specialty Products
– Consumer products have been divided into three categories
– Convenience products
• Those consumer products which a customer usually
purchases frequently, immediately and within the
minimum effort
– Soaps, toothpaste, bread etc

4. Major Classification of Products
– Shopping products
• Those consumer products which the customer in the
process of selection and purchase characteristically
compares on such criteria as suitability, quality, price etc
– Refrigerator, suiting, etc
– Specialty products
• Those consumer products with unique brands
identification for which significant group of people are
habitual & willing to make a special purchasing effort
– Ice cream, special eating items, fancy goods etc

5. Classification of product
•
•
Further classification is done based on nature of the
product
Custom built products
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Products especially designed to specifications and needs of
customers. Example: an aircraft, construction etc.
Not available from inventory
Emphasis on uniqueness, on-time delivery, quality etc.
Cost / price is a secondary consideration
 Strategy: obtain high profit margin

6. Classification of product
•
Standardised product
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Products available off-the-shelf from inventory
Ready availability and cost are important. Examples: standard
shapes in steel and aluminum, sugar etc.
Very little Product differences between producers and limited
options available in the product
Purchase decisions based on dependability of supply & lower
cost

7. Classification of product
•
Between these two extremes there are products that
are sensitive to
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•
Quality of products in such cases is important but
not as much as in custom built products
Multiple sizes and type of products available
•
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Variety,
Flexibility,
Cost, and
Reliability of supply
From inventory or by order
Some products are available in low volumes
whereas others like automobiles, TVs are available
in high volumes

8. Classsification of product
• Majority of products available fall in this middle category
• Most consumer products are available from inventory
• Producer goods are available by order, and
– May be subject to special design modifications to meet customer’s
needs
• Although the basic designs are quite standard

9. Design of a Product
• Defined as determining its shape, specifications and
pattern of the product
• Types of design
• Product design may be divided into four groups
– Functional
– Developing an idea: a sketch of the product gives an
idea of its overall shape and parts necessary to
accomplish the task
– Drafting specifications: to draft the correct
dimensions of the product
– Experimental Model: proposed and tested thoroughly
starting actual production

10. Design of a Product
– Aesthetic design
• The product design must appeal to the customers’ eyes
and induce them to buy the product
– Production design
• Functional design has to be translated to Production
design without sacrificing the functional efficiency
• Design of jigs and fixtures needed in production should
be done simultaneously
– Packaging design
• Design of package and labels must be aesthetically
pleasing
• Must be sturdy so that the product does not get damaged
• Special packing for export consignments
• Should attract the customer and meet his requirement

11. Product Development
• Devising the product to meet market or customer
requirement
• Two aspects are involved
– Introduction of new products confirming the demands of
customer
– Improvement in existing product in order to satisfy the needs
of the customer
• Need for product development
– Immediate objectives include
• Stimulation of sales function
• Offer of new look; quality advantage to public
• Utilisation of existing equipment and skilled men
• Fulfillment of immediate requirement of the customer

12. Product Development
– Ultimate objectives include
• Monopolisation of the market
• Making possible its manufacture on quality basis
• Persuasion of the person to only branded product
• Reduction of the cost of production by creating demand
and producing on large scale
• Supply of goods at lower price

13. Product Development
• Factors responsible for product development
– Are the customers satisfied with the size, colour etc and
other characteristics of the product?
– Reduction in price for the consumer
– Chances and scope for the product protection
– How does it affect other products in line?
– Durability of the product
– Chances of increasing demand due to improvement in
quality
– Ease of handling during transportation or in use
– Scope for using waste during production for some other by
product of the utility
– Convenience to stock
– New product to have an edge over existing competitive
products

14. Product Standardisation
• Fixation of standard dimensions for the product with a
view to having large production of only limited
number of varieties
• Object is to measure, to identify: to compare, to
describe product process, activities and performance
in an organisation
• It helps in controlling function of the organisation
• Advantages
– Facilitates large scale production
– Eliminates the wastage in designing and purchasing
– Helps in introducing mechanisation

15. Product Standardisation
– Helps in assisting the controlling function of the production
system
– Gives incentives to management for producing new styles
– Loan on standard commodities easier
– Service and maintenance costs reduced
– Higher productivity
– Easier purchasing and selling
• Disadvantages
– Standardisation promotes rigidity
– Not suitable for small entrepreneurs
– Excessive standardisation has deleterious effects

16. Simplification
• Elimination of superfluous varieties, sizes,
dimensions etc.
• Advantages : To Producers
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–
–
–
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Reduction in the manufacturing costs
Use of specialised plants
Reduction in inventories
Increase in efficiency
Better market control
Increased profit
Use of skilled labour
Reduction of cost after sales
Saving in storage costs
Makes supervision and production planning easier

17. Simplification
• Advantages: to Consumer
– Quality products at cheaper rates
– Greater repair and service facilities
– Steady supply of products
• Disadvantages
– Effects of seasonal fluctuations
– Low competitive position is especially in complementary
products

18. Product Life Cycle
• Demand for a product generally tends to follow a
predictable pattern called the Product Life Cycle
(PLC)
• PLC is defined as
– An attempt to recognise different distinct stages in the sales
history of the product, and
– A generalised model of sales and profit trends for a product
class or category over a period of time
• The various stages through which a product passes
are
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–
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–
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Introduction
Growth
Maturity
Saturation
Decline

19. Product Life Cycle
• Introduction
– First stage which begins with launching of a product
– Product entry into the market requires a large investment
which gradually comes down as sales pick up
– Sales at this stage are fairly low and the competitors are
already there in the field
• Growth
– Both sales and profit begins to rise and arrangement of
distribution is likely to get completed at the end of this stage

20. Product Life Cycle
• Maturity
– Manufacturers introduce new models or adopt new
techniques for production of products with a view to retaining
their position in the market
– Stage marked by stiff competition and the rate of growth
could be quite low
• Decline ( Decay)
– Last stage during which the sales decline and profits reduce
down as the new competitors appear in the market with
newer and better products
– Customers start using them

21. STAGES OF DEVELOPMENT
DECLINE
SATURATION
MATURITY
GROWTH
INTRODUCTION
SALES VOLUME
PRODUCT LIFE CYCLE

22. Process focused systems
• Production systems for custom built products
– Should be flexible, and
– Able to accommodate requirements
• As per customer specifications
• Typical machine shop can have a number of types of
machines to do various jobs
• Nature of demand on the production system results in
intermittent demand on the production system’s
facilities
• This physical arrangement of departments by generic
types is Job Shop

23. Product focused systems
• High volume, standardised products call for continuous
use of facilities as in a flow shop
• Special processing equipment and dedicated production
systems justified
• Mechanisation & automation to achieve standardisation
& low cost are the main features

24. Production systems
• In between these two extremes are systems that deal
with
– Low-volume multiple products,
– Or/and relatively high volume multiple products
• The former usually involves a process- focused system
– Products are produced in batches to give some economies of
scale in comparison to the job shop system
• The high volume multi-product situation employs a
mixed production strategy
– That combines both the process- focused and product-
focused systems

25. Production systems
• Parts fabrication in manufacturing is often organised on a
batch-intermittent basis
– Parts produced in economical batches & resulting investment
provides an important production strategy
• Final assembly is organised on a line or continuous basis
– Nature of assembly makes possible continuous lines dedicated to
certain products

26. Production - To - Order
• Offers
– Product design flexibility to customers,
– Minimise risk of inventories,
– Closer quality control ,etc.

27. Production - To - Stock
• Offers benefits of
– Better service in terms of availability,
– To reduce variable costs, and
– To increase market share by making items available offthe-shelf when customer wants to buy

28. Production strategy
TYPES OF
SYSTEMS
EXAMPLES OF 2-DIMENSIONS OF POSITIONING
PRODUCT
FOCUSED
PROCESS
FOCUSED
FINISHED GOODS INVENTORY POLICY
TO STOCK
TO ORDER
PRODUCT FOCUSED / PRODUCT FOCUSED /
TO STOCK
TO ORDER
PROCESS FOCUSED / PROCESS FOCUSED /
TO STOCK
TO ORDER

29. PRODUCTION SYSTEM
FINISHED GOODS INVENTORY POLICY
TO STOCK
TO ORDER
PRODUCT FOCUSSED- PRODUCT FOCUSSEDTO STOCK
TO ORDER
OFFICE COPIER
TV SETS
PRODUCT FOCUSSED
CALCULATORS
GASOLINE
CAMERAS
CONSTRUCTION
EQUIPMENTS
BUSES/TRUCKS
EXPERIMENTAL
CHEMICALS
TEXTILES
CABLES
PROCESS FOCUSSED- PROCESS FOCUSSEDTO STOCK
TO ORDER
MEDICAL
INSTRUMENTS
PROCESS FOCUSSED
TEST EQUIPMENTS
SPARE PARTS
STEEL PRODUCTSSPECIAL SECTIONS
MACHINE TOOLS
NUCLEAR
COMPONENTS
AEROPLANES
CONSTRUCTION
PROJECTS

30. References
• Production and Operations Management:
R.C. Manocha
• Production & operations management:
Aswathappa / Bhat
• Modern production / operations management:
Buffa / Sarin

31. Thank You

33. PRODUCT LIFE CYCLE
•
FOR A PRODUCT, AS IT DEVELOPS THROUGH ITS LIFE CYCLE,
THE PRODUCTION SYSTEM GOES THROUGH A LIFE CYCLE OF
ITS OWN
– A PROCESS FOCUSSED, TO-ORDER JOB SHOP SYSTEM (IN THE
INITIAL STAGE)
– INTERMEDIATE STAGE OF PROCESS FOCUSSED, TO ORDER
BATCH PRODUCTION
– PRODUCT FOCUSSED , TO STOCK BATCH PRODUCTION, AND
ULTIMATELY
– A PRODUCT FOCUSSED TO-STOCK CONTINUOUS PRODUCTION
SYSTEM
• WHEN THE PRODUCT IS DEMANDED IN LARGE VOLUMES

34. PRODUCT LIFE CYCLE AND PRODUCTIVE SYSTEM TYPES
PROCESS
FOCUSSED,
TO ORDER,
BATCH
PRODUCT
FOCUSSED,
TO STOCK,
BATCH
PRODUCT
FOCUSSED,
TO STOCK,
CONTINUOUS
STAGES OF DEVELOPMENT
DECLINE
MATURITY
GROWTH
INTRODUCTION
SALES VOLUME
PROCESS
FOCUSSED,
TO ORDER,
JOB SHOP

35. PRODUCT- PROCESS MATRIX
LOW VOLPRODUCT CYCLE
LOW
STANDARDISA
TION, ONE OF
A KIND
HIGHER VOLFEW MAJOR
PRODUCTS
NONE
JOB SHOP
PROCESS LINE
JOB SHOPBATCH
PROCESS
ASSEMBLY
LINE
CONTINUOUS /
FLOW SHOP
LOW VOLMULTIPLE
PRODUCTS
HIGHER VOL-HIGH
STANDARDISATION
,COMMODITY
PRODUCTS
NONE