Chapter 1 product design introduction

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

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

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

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

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.

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

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. 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.

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.

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