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Product Design and Pricing Strategies

This document discusses product design concepts and considerations. It begins by introducing the link between product development, design, and production/manufacturing capabilities. It then examines different product strategies such as pricing low for high volume, prioritizing quality, targeting luxury, or balancing features and price. The document outlines factors to analyze in design like marketing, product characteristics, economics, and production. It emphasizes that all these interrelated factors must be carefully considered in the design process. Finally, it discusses basic design considerations like convenience, maintenance, costs, sales, and appearance and the typical procedure industrial designers follow.

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0% found this document useful (0 votes)
33 views8 pages

Product Design and Pricing Strategies

This document discusses product design concepts and considerations. It begins by introducing the link between product development, design, and production/manufacturing capabilities. It then examines different product strategies such as pricing low for high volume, prioritizing quality, targeting luxury, or balancing features and price. The document outlines factors to analyze in design like marketing, product characteristics, economics, and production. It emphasizes that all these interrelated factors must be carefully considered in the design process. Finally, it discusses basic design considerations like convenience, maintenance, costs, sales, and appearance and the typical procedure industrial designers follow.

Uploaded by

vinayak
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

33.

0 PRODUCT DESIGN CONCEPT


33.1 Introduction:
Product development and design is closely linked with industrial activity and production.
When a new product is planned, the designer has to bear in mind the available resources of
the plant and the possible impact of the firm having to acquire, modify or substitute existing
machines and equipment or buy various components from other suppliers. It is therefore
obvious that product development and design is at the core of the development and growth
of the 'production centre and its departments. Thus, product design is one .of the
fundamental elements of management policy.

33.2 Pricing Strategy for Product


What is the product strategy of an organization, and how does it affect the design of the
product? Surveys in industry, by use of questionnaires and interaction with executives of
manufacturing firms, have revealed that there is no such common policy for all organizations.

a) Pricing Strategy for Product


As an example of pricing strategy, one large chain of departmental stores aims at offering
commodities to the public at a minimum price, whatever be the quality. In fact, one may be
quite sure that articles bought at these stores cannot be obtained cheaper or even at the
same price elsewhere. The company bases this policy on the assumption that the type of
goods it offers need not have a very long life and that, if sold cheaply enough, the volume of
sales is likely to be very large, so that even a very marginal profit per unit will lead to
substantial gains. This strategy is termed pricing strategy.

b) Product Quality Strategy


Other manufacturers (e.g. the aircraft industry and many precision instrument makers) define
their aim as high qualify, whatever be the cost. The Chairman of Bajaj Auto Ltd. has recently
expressed that for his company, product quality is the secret of success for over the last
three decades. The high quality is manifested in minimal maintenance, high reliability and
ergonomic superiority of the Bajaj scooter for Indian conditions. Similarly, LML Vespa and
Kinetic Honda have been able to capture substantial market share due to their superior
product quality.

c) Product luxuriousness strategy


In some cases, luxury and comfort are the prime considerations that cost becomes
secondary. For example, Rolls Royce. However, in others, precision and prestige play an
important part, for instance, Mercedes, BMW and Toyota. The manufacturers of these
automobiles produce luxurious models (of course, Toyota has several popular models
besides the luxury models), but the number produced is not very large, and in spite of the
high price of the finished product, the firm cannot expect to get high profits from this line of
production alone.

d) Product Utility Strategy


Other automobile firms like Monto aim at large volume production of a low-priced car that will
compete with more expensive models' (Esteem) by having .some of their successful and
popular features and innovations. Most companies, however, say they aim at striking a
satisfactory balance between very high quality and a reasonable price. Others go further and
try to improve this balance in favour of the customer, by improving quality and leaving the
price unchanged or by improving production methods and offering the same quality at a
reduced price.
e) Time to market
The importance of product development and design for long-range planning by management
is further emphasized by the amount of time that elapses from . the inception of the idea for
the new design until production starts.

33.3 Analysis of the product


Many factors have to be analyzed in relation to development and design factors which vary in
character and complexity, and factors related to different fields in production and industrial
engineering. Some of these may be grouped as follows:

Marketing aspect
Product characteristics
o Functional aspect
o Operational aspect
o Durability and dependability aspects
o Aesthetic aspect
Economic analysis
o Profit consideration
o Effect of standardization, simplification and specialization (c) Break-even
analysis
Production aspects.

All these factors are interrelated and each presents many issues that have to be carefully
considered. Market research may guide product designers in their work to improve existing
products or to develop new ones. The design and its characteristics have to undergo an
economic analysis and must be researched in the light of available production facilities and
techniques. A costing analysis is naturally dependent on the sales volume; hence the
proposed design has to be re-evaluated by market research so that a sales projection can be
done. This expected sales volume provides the basis for a further study from the production
methods aspect, and the economic analyses have to be rechecked and perhaps modified.
Thus product development and design is an excellent example of interdependence of a
multitude of factors that have to be unified and integrated into a final composition

33.4 Basic design considerations


Let us assume that a five-year product plan has been established. There are still major
factors which the designer must consider before he puts pencil to sketch pad:

(a) Convenience of use


(b) Maintenance
(c) Costs
(d) Sales
(e) Appearance.

a) Convenience of use.
No matter what the product is, convenience is of primary importance. Whether the customer
or user is a housewife with a hair-dryer or an engineer driving a limousine, it is the designer's
primary objective to make the product desirable through its utility. In determining the proper
approach, he has several sources from which he may seek assistance. These sources are
now described.
(a) It is always possible for marketing research people to find out what the customer
dislikes about the company's previous models. Returned warranty cards and field
reports from dealers and sales representatives are good sources of information.
(b) Customer surveys may be conducted by making working models and pre-testing
potential users. This is, of course, a costly method whose value is sometimes
questionable. Both the automobile industry, through its experimental car models, and
appliance manufacturers, through their "kitchens of the future", use this. approach to
elicit public reaction.
(c) The least costly and the most commonly used approach is common
sense.

b) Maintenance:
Ease of maintenance and life of parts are important factors. It is the customer who ultimately
benefits from proper consideration in this area, and the designer must be careful to resist the
temptation of designing primarily to please the service personnel. It cannot be repeated too
often that the customer must always come first in the designer's thinking.

c) Cost:
Although cost certainly cannot be ignored, it should not be the overriding consideration in all
cases. The lowest-priced item does not necessarily out-sell the highest-priced, as the
automobile industry offers ample evidence.
If the only consideration was cost, we would still be using the hand crank handle instead
of the automatic starter, and the manual shift instead of the automatic transmission. Here
again, it is the customer who must ultimately decide how much the product is worth.

d) Sales:
We must know the volume of sales anticipated, the competition that will be encountered,
what the competitors are offering, and what we plan to offer. With regard' to sales, it will be
better to remember that maximum efficiency and good performance do not necessarily help
in selling the product. Again, as an example, the first automatic washing machines did not
wash clothes as clean as the wringer-type, yet they were sold in great quantity. A good
number of men use electric razors, even though these razors cannot give as good a shave
as the safety razors. Like all the rest, people prefer convenience; and this seems to be the
overriding consideration in the motivation of most sales today.

e) Appearance:
Appearance should not be underestimated, for it determines the whole "character" of the
product. It should reflect pride of ownership, the function served, high product quality and
value, and the reputation of the maker.

33.5 Procedure adopted by industrial designers


Knowing the type of design problem being considered, the designer can now proceed. Quite
briefly, the various stages of design are:
1. Rough sketches and colour renderings
2. Detail drawings (full size)
3. Three-dimensional models in clay, plaster, wood, metal or plastic (all actual materials to
be finally specified). These models are evaluated, improved and revised. New models are
made and then presented to management for evaluation and approval.
Through all these design stages, the design group work very closely with the engineering
staff. Several versions of the final product will be carried along in the early stages, but these
will be narrowed down as the programme progresses. In many cases, two and possibly three
widely diverse designs may be presented for management's approval. Management should
not be asked whether or not it personally prefers the red or the maroon nameplate, the round
or the elongated handle; it is, after all, the customer who is to be pleased. Management
should have confidence in the design specialists it has employed to make such decisions.
Designers should be satisfying not the management but the market.
Good designers are in constant touch with all aspects of art and industry, through
publications, visits, technical meetings, seminars, panel discussions and the like. In this way,
they keep abreast of new techniques, materials, finishes, and processes as they appear in
the market. They watch closely the trends in the allied fields of architecture, fine arts, and
craft. And speaking of trends, they are responsible for establishing many by themselves.
Every new trend, after all, had to be started by someone who was not satisfied with the
established way. The industrial designed probably the most dissatisfied person in industry
today, because he does not consider the existing product is ultimate in quality on designs.
We should be thankful that this is so, for as soon as we say, "This is the ultimate", and we
have stopped progressing. Once a new product actually appears, no matter how well it may
impress others, it is not unusual to find its designer lacking in enthusiasm, simply because he
has thought of half a dozen new and better ways to make it. Dissatisfaction is probably the
only thing that brings changes in the design business.

33.5.1 Types of models designed by industrial designers


The types of models usually met with in the development of the product or a line of products
are: Clay studies, mock-ups, scale models, and prototypes. These are now briefly described.

a) Clay studies:
These are made full size or to a smaller scale by the designer himself, not his understudy.
These are valuable in the study of form relationships, e.g. Is the base too small for the
superstructure of subtitles, of curvature and camber, of size, of radii and fillets, and so on?
Though primarily intended for form analysis, these can be of great help later in discussions
with tool and die engineers in the final stages of the project.

b) Mock-ups:
This is a proven and old technique in model-making. It involves making a false model to
simulate the real product or prototypes. It is made in wood or plaster instead of, say, cast iron
or plastics. The mock-up has to be painted in suitable metallic or other paint to create an
impression of the actual future product. There is a trend now-a-days of designing for ease of
operation, i.e., ergonomic design. The person who is to use the product is looked upon as an
object needing space, user of physical effort, sensor or observer and finally, controller of the
product. The latest trends in mock-ups simulate human mannequins on the CAD terminal
and determine "Space requirement envelope" of the dummy, check up how man and
machine fit, and carry out a stress analysis on the dummy, should an accident occur. These
methods help build better and user friendly designs through interactive computer graphics
and animation. The latest trend in "mock-up" is to use CAD instead of plaster of paris or
wood mock-ups.

c) Scale models:
These are favoured when a material, which can take a very good finish is available, this is
not possible in clay modeling. Plaster is the commonest material for scale models.

d) Prototypes:
It is a full size model of the real product, but is seldom made by the designer. Before going
into large scale production of any major product, an operating or working model has to be
built, exact in every minute detail, inside and outside. Prototypes are costly in terms of labour
but are essential before going for mass production. Nowadays, computer simulation is widely
used for testing a final design. A prototype is still the best technique to improve the level of
confidence of the designer for new products.
33.6 Rapid Prototyping:
Since the middle of the last decade, a silent revolution has been taking place in the field of
manufacturing. As a result, a host of new manufacturing techniques have been developed
using which it is possible to produce a solid object with the required shape, size, and
accuracy directly from its computer model. Though at present such techniques of direct
shape generation are being applied primarily for rapid prototype development, it is firmly
believed by many that the age-old concepts and methods will gradually be replaced by these
techniques in the actual manufacture of shaped articles and components as also spare part
production. Most of the generative manufacturing machines, commonly known as rapid
prototyping machines, are still in the developing stage. A few such as stereolithography,
selective laser sintering, solid ground curing, fused deposition modelling, and laminated
object manufacturing are now commercially available and are being used by many industries
for rapid prototyping.

33.7 Manufacturing:
The conversion of resource into raw materials is normally done by two subdisciplines of
engineering: mining and metallurgy. The real shaping starts from the stage a material is
available in raw form. Changing a raw material into a final product generally involves various
processes. The major processes a component undergoes before it is converted into a final
product are:
1. Casting: primary and secondary forming,
2. Machining,
3. Joining: assembly and finishing.
A material is often subjected to primary forming for producing standard shapes such as those
of rods, bars and sheets. However, it may also undergo secondary forming, and this is
performed when the objective is to obtain a shape other than the standard shapes. The three
engineering activities that require an understanding of the production processes are (i)
designing, (ii) production, and (iii) development of new techniques. At the design stage,
manufacturing considerations have to be taken into account, not only for producing the part
in the most economical manner, but also for imparting to the part some required properties
such as strength and hardness. Besides, in the production shop, a successful engineer must
have a thorough understanding of the subject if he has to select and implement the right
processes. The selection of the important process parameters is extremely important to
achieve success in manufacturing. The third type activity is development of new
manufacturing processes and modification of the existing technology. It has already been
mentioned that the production engineers are facing more and more challenging problems,
and often such problems cannot be solved with the help of existing conventional methods.
Thus, a variety of new processes have evolved during the last two decades. The product to
be manufactured and ready for inspection. After the inspection, now it is ready for launching.

33.8 Quality of performance.


How well a product performs in tough environmental conditions is determined by the
following metrics of product quality:
1. Reliability: It is the probability that a product shall perform the assigned function for a
time termed mission time.
2. Maintainability: It is the probability that a product can be maintained and brought back
to working condition in the shortest service time. The Japanese take another view of
maintainability: they address design as maintenance prevention (or MP) design. An
MP design is one in which modularity is incorporated so that, if a certain module of the
design system fails, instead of repairing, it is substituted by a stand-by module.
3. Availability: Availability of a design is the multiple of reliability and maintainability.

Theory of sampling inspection


Sampling inspection is carried out for assessing quality of incoming raw materials and quality
of finished goods in stores.
Sampling plans are used for checking the quality of the material before and after production.
A single random sample of a predetermined size (n) is taken, each of the units in the sarnple
is inspected, and at the end of the inspection, the number of defective (x) found is noted. If
this is less than or equal to a stated (acceptance) number (c), then the lot is accepted;
otherwise. if there are more than c defectives in the sample), the lot is rejected. Note that the
decision to accept or reject refers to the lot and not to the sample. The sample is only an aid
to make the decision.

33.9 Test marketing:


The important phase in the development cycle called test marketing consists of small-scale
tests with customers. Until this stage, the idea and the product have been tested in a
somewhat artificial context. At this stage, the appeal of the product is tested amidst the mix of
activities comprising the market launch. That is salesmanship, advertising, sales promotion,
distributor incentives and public relations. The objectives of test marketing are
1. Find out the consumer needs of buying
2. Evaluate impact of local advertising and promotion during the test
3. Evaluate the market potential for other competing products
4. Find out the area coverage for sales
5. Find the consumers ability to buy the product based on price.

33.10 Commercialization or launch.


This is the final stage of the initial development process and is very costly. It involves
decision making on issues such as when to launch the product, where to launch it, how and
to whom to launch. It is based on information collected throughout the development process.
With regard to timing, important considerations include:
1. Seasonality of the product
2. Whether the launch should fit any trade or commercial event
3. Whether the new product is a replacement for the old one.

Location for large companies describes the number of countries in which the product will be
launched and whether national launches need be simultaneous or they need to roll out from
one country to another. For smaller companies, the decision is restricted to a narrower
geographical region. The factors upon which such decisions are based, depend upon the
required lead-times for product to reach all the distributive outlets and the relative power and
influence of channel members. Launch strategy encompasses any advertising and trade
promotions necessary. Space must be booked, copy and visual material prepared, both for
the launch proper and for the pre-sales into the distribution pipeline. The sales force may
require extra training in order to sell the new product effectively
Methods of launching:
(i) Immediate national launch: This is one way to overcome the competition and to
save on the cost of launch. The risk of national launch is that it leaves the
company with many problems, which were not contemplated during the test
marketing. Production routines that work well in theory may not result as expected.
Early problems of supply may create problems during actual launch.
(ii) Rolling launch: This is an alternative to the full national launch. It involves building
towards full national coverage by starting with one or two recognized distribution
areas, then gradually adding new regions to those already served as experience
and success of the product further increases. This helps the company to
concentrate on getting the logistics and production schedules in tune with the
requirements. Coca Cola, Kelloggs, and several other major players including HLL
use this strategy effectively.
33.11 An overview of new product development process:

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