product design and development · terms of demand. people’s fashion habits are influenced by what...

Product Design and

Nanang Ali Sutisna, M.Eng

Senior Manager, Product Development

PT Multistrada Arah Sarana, Tbk

Product Design and

Development

A product is the end result that comes from ideas and processes of design

evolution.

Product development may come through :

inventions – products developed from original thoughts and ideas or

through innovations

improvement to an existing product.

New-Product Overview

New products New products

drive sales and drive sales and

profit growth.profit growth.

New Product

New products New products

may gain market share may gain market share

from competitors.from competitors.

New Product

Failure Rate

May Be 80%

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

9-3

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

9-3

• Need/Function – the desire to satisfy a specific need/purpose. For example, what is the product going to be used for?

• Fashion – design style influences how consumers react to a product in terms of demand. People’s fashion habits are influenced by what is current and trendy in style. Product designs tend to follow fashion trends

• Aesthetics – the essence of beauty/style of a product is the way shape/form and colours are combined. Aesthetics plays a major role how a

Product design & development are

influenced by many factors including:

shape/form and colours are combined. Aesthetics plays a major role how a product is made and looks

• Materials – the availability and development of new materials have influence on design products. Some materials are amenable to specific purpose. Material research should be an important consideration in product design and development

Visual Information Example: Book Bag Design

• Ergonomics –products designed for humans must fit proportions and sizes that would make them comfortable to use. Therefore, sizes and comfort of the end users must be considered when developing products

• Customer requirements –consider customer preferences – taste, likes and dislikes when developing a product. Market survey may be conducted to gage consumer preferences

• Cost – the cost of materials and labourmay influence product

….. Product development factors

• Cost – the cost of materials and labourmay influence product development. Is the product affordable? If the cost is too expensive, that may influence its market viability

• Culture – culture influences how a product is viewed – whether it is acceptable or not acceptable. The use of pattern, colours, production method etc may play a critical role as to how a product is viewed by people from different cultures

Customer Needs Example:

Cordless Screwdrivers

Five Guidelines for Writing Needs Statements

Guideline Customer Statement Need Statement-Wrong Need Statement-Right

What Not How

Specificity

Positive Not

Negative

“Why don’t you put

protective shields around

the battery contacts?”

“I drop my screwdriver all

the time.”

“It doesn’t matter if it’s

raining, I still need to work

The screwdriver battery

contacts are covered by a

plastic sliding door.

The screwdriver battery is

protected from accidental

shorting.

The screwdriver is rugged. The screwdriver operates

normally after repeated

dropping.

The screwdriver is not

disabled by the rain.

The screwdriver operates

normally in the rain.

Attribute of the

Product

Avoid “Must”

and “Should

raining, I still need to work

outside on Saturdays.”

“I’d like to charge my

battery from my cigarette

lighter.”

“I hate it when I don’t know

how much juice is left in

the batteries of my cordless

tools.”

disabled by the rain. normally in the rain.

An automobile cigarette

lighter adapter can charge

the screwdriver battery.

The screwdriver battery

can be charged from an

automobile cigarette

lighter.

The screwdriver should

provide an indication of

the energy level of the

battery.

The screwdriver provides

an indication of the

energy level of the

battery.

• Production method –production technique may influence how the final product looks. There are many ways to produce a product -from hand-made method to machine etc

• Company identity –companies that produce products always like to keep their unique identity which may be in form of logo, slogan etc. They may prefer specific colours or design pattern to identify their products

….. Product development factors

prefer specific colours or design pattern to identify their products

• Environment – more and more, environmental concerns influence how people think about the product they consume. People now think of product environmental impact – whether they are renewable or none renewable resources as well as production methods. Using products that are environmental friendly is in trend. This promotes the use of recycled materials

• Human capital –knowledge and skills derived from human development. The use of scientific and technological knowledge to improve material quality and production processes.

• Workplace safety –applying safety guidelines in material acquisition and production processes. This is often supported by legislation – laws.

• Time – Lead time between design and production should not be too long.

….. Product development factors

• Time – Lead time between design and production should not be too long. Time is of essence not only to bring product to market but to capture market opportunities.

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

9-3

New-Product Development Strategy

A firm can obtain new products through:

• Acquisition

• New-product development• New-product development

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New-Product Development Strategy

Acquisition refers to the buying of a whole company, a patent, or

a license to produce someone else’s product

New product development refers to original products, product New product development refers to original products, product

improvements, product modifications, and new brands

developed from the firm’s own research and development

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New-Product Development Strategy

Reasons for new product failure

• Overestimation of market size

• Poor design

• Incorrect positioning• Incorrect positioning

• Wrong timing

• Priced too high

• Ineffective promotion

• Management influence

• High development costs

• Competition

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Types of New Products

New to the World Products

New Category Entries

Additions to Product Lines

Product Improvements

Repositionings

Sources of New Products

External

Sourcing

Internal

DevelopmentSourcing

Collaborative

Venture

Development

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

9-3

PRODUCT DEVELOPMENT PROCESS PRODUCT DEVELOPMENT PROCESS

Defining the goals

Initial context of use

Initial requirement

Initial technical specification

Concept and

Visualisation

Evaluation

Design requirements

Tire simulation design

Prototype tire

for test drive

Revised Design

Order New mold and

useful productsNew and Revised

requirements and

context of use

New-Product Development Process

Idea Generation

Idea Screening

Prototype

Development

Idea Screening

Concept

Development

& Testing

Business

Analysis

Test Marketing

Commercialization

New-Product Development Approaches

Idea Generation

� Idea Generation:� The initial stage for the new-product

development process.

Idea Screening

• Idea Screening:– Evaluate the idea pool and reduce it to a

smaller and more attractive set of potential new products.

Concept Development and Testing

� Concept Development:� The process of shaping and refining the idea into a

more complete product concept.

Business Analysis

� Business Analysis:� Stage of the new-development process that

calls for preparing initial marketing plans for the product.

Prototype Development

� Prototype Development:� Converting the concept into an actual product.

Test Marketing

� Test Marketing:Testing the product prototype and marketing strategy in simulated or actual market situations.

Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction

When to test market

• New product with large investment

• Uncertainty about product or marketing program

When may not test market

Test Marketing

When may not test market

• Simple line extension

• Copy of competitor product

• Low costs

• Management confidence

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Approaches to test marketing

• Standard test markets

• Controlled test markets

Test Marketing

• Controlled test markets

• Simulated test markets

9-19

Test Marketing

Standard Test Marketing:� Testing a new product and its marketing strategy

in actual market situations.

Standard test markets are small Standard test markets are small representative markets where the firm conducts a full marketing campaign and uses store audits, consumer and distributor surveys, and other measures to gauge product performance. Results are used to forecast national sales and profits, discover product problems, and fine-tune the marketing program.

Challenges of standard test markets

• Cost

• Time

• Competitors can monitor the test

• Competitor interference

Test Marketing

• Competitor interference

• Competitors gain access to the new product before

introduction

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Controlled test markets

panels of stores that have agreed to carry new

products for a fee

• Less expensive than standard test markets

Test Marketing

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• Less expensive than standard test markets

• Faster than standard test markets

• Competitors gain access to the new

Simulated test marketing

events where the firm will create a shopping

environment and note how many consumers

buy the new product and competing products.

Provides measure of trial and the effectiveness

Test Marketing

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Provides measure of trial and the effectiveness

of promotion. Researchers can interview

consumers.

Advantages of simulated test marketsAdvantages of simulated test markets• Less expensive than other test

methods• Faster• Restricts access by competitors

Disadvantages• Not considered as reliable and

accurate due to the controlled setting

Commercialization

Commercialization is the introduction of the new

product

• When to launch

• Where to launch

• Planned market rollout

Commercialization

� Commercialization:�The firm introduces the product on a full-scale basis,

involving:

�Understanding Consumer Adoption�Understanding Consumer Adoption

�Timing

�Coordination

The Consumer Adoption Process

Consumer Marketing Strategy

Adoption Stage Objective

Awareness Communicate AvailabilityAwareness Communicate Availability

Interest Communicate Product Benefits

Evaluation Emphasize Advantages

Trial Motivate Customers to Try

Adoption Ensure Customer Satisfaction

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

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Managing New-Product Development

Successful new product development should be:

• Customer-centered• Customer-centered

• Team-centered

• Systematic

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Managing New-Product Development

Customer-centered new-product development

focuses on finding new ways to solve customer

problems and create more customer-satisfying problems and create more customer-satisfying

experiences

• Begins and ends with solving customer problems

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Managing New-Product Development

Team-based new-product development is a

development approach where company

departments work closely together in cross-

functional teams, overlapping in the product-

development process to save time and development process to save time and

increase effectiveness

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Managing New-Product Development

Systematic new-product development is an

innovative development approach that

collects, reviews, evaluates, and manages collects, reviews, evaluates, and manages

new-product ideas

• Creates an innovation-oriented culture

• Yields a large number of new-product ideas

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Organizational Approaches to New Product DevelopmentOrganizational Approaches to New Product Development

Balanced MatrixBalanced Matrix

OrganizationOrganizationOrganizationOrganization

Project MatrixProject Matrix

OrganizationOrganization

Project TeamProject Team

OrganizationOrganization

Outline

1. Product Design & Development Factors

2. New-Product Development Strategy

3. New-Product Development Process3. New-Product Development Process

4. Managing New-Product Development

5. Product Life-Cycle Strategies

9-3

Product Life-Cycle Strategies

Product life cycle (PLC) is the course that a product’s sales and profits take over its lifetime

• Product development • Product development

• Introduction

• Growth

• Maturity

• Decline

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Product Life-Cycle Strategies

Introduction stage is when the new product is first

launched

• Takes time• Takes time

• Slow sales growth

• Little or no profit

• High distribution and promotion expense

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Product Life-Cycle Strategies

Growth stage is when the new product satisfies the market• Sales increase

• New competitors enter the market

• Price stability or decline to increase volume• Price stability or decline to increase volume

• Consumer education

• Profits increase

• Promotion and manufacturing costs gain economies of scale

• Product quality increases

• New features

• New market segments and distribution channels are entered

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Product Life-Cycle Strategies

Maturity stage is a long-lasting stage of a product that has gained consumer acceptance

• Slowdown in sales• Slowdown in sales

• Many suppliers

• Substitute products

• Overcapacity leads to competition

• Increased promotion and R&D to support sales and profits

9-39

Keys to New-Product Success

Marketing-Research Support

• Focus Groups

• Market Definition Studies

• Target Segment

• Name & Package Evaluation

• Product Tests

• Copy Tests

Prelaunch

• Target Segment

Identification

• Concept Tests

• Copy Tests

• Simulated Test Markets

• Test Markets

• Awareness & Attitude Studies

• Usage Studies

Rollout

Marketing-Research Support

• Usage Studies

• Tracking Studies

• Product Refinement Tests

• New Advertising Strategy Tests