Bahir Dar University

Bahir Dar Institute of Technology, BiT

Faculty of Mechanical and Industrial Engineering

Postgraduate Program in Industrial Engineering)

(Production Engineering and Management)

Course Title: Product Development & Innovation

By: Ephrem Gidey Berhe, Ph.D.

Addis Ababa Science and Technology University, College of Electrical and
Mechanical Engineering

November, 2017

1
 The Course in Brief

Part I: New PD Strategies (Chapters 1 & 2)

• Ch-1: Introduction to Product Development {Why R&D;
Types of New Products; Product Development Cycle; Generic Product
Development Process}

• Ch-2: The Discipline of Innovation {Innovation Defined; The

Innovation Process; Components of Innovation; Models of Innovation;

Types of Innovation Outputs; A Model of Innovation Adoption}

2
 The Course in Brief
Part II: Techniques & processes for managing
different stages of product development
(Chapters 3 to 7)
• Ch-3: Product Development Processes {Generic PD Process;
The “Fuzzy Front End” phase of Innovation; Stage-gate process; Product
Planning {Identifying customer needs; Analyzing customer preferences;
Quantitative analysis of tradeoffs between products attributes; Product

specifications; Market creation; Product platforms; Concept

Development {Concept generation, Selection & Testing}

3
• Ch-4: Product architecture {Product Architecture; Design for
Manufacturing ; Prototyping; Robust Design}

• Ch-5: Product Positioning {New product commercialization;

Identifying target market; Common mistakes in product positioning}

• Ch-6: Product Development Economics {Element of

economic analysis, Economic analysis process; Trade-off rules

• Ch-7: Basics of Intellectual Property

4
 Part One:

New Product
Development Strategies

Introduction to Product Development

The Discipline of Innovation
5
 Introduction

Firms‟ success mainly depends on:

• Ability to identify customers‟ needs;

• Ability to design products that meet these needs;

• Ability to manufacture & deliver the products on

time;

• Feasibly low cost;

• Ability to continuously improve; i.e.,

6
 Intro. Cont’d…

• Firms have to continuously improve their

products & processes as well as introduce
new products into the market;

• Achieving these goals is not solely a marketing

problem; nor is it solely a design problem or a
manufacturing problem; it‟s a product development
problem involving all of these functions;

• PD process is however the responsibility of

R&D departments of firms; 7
 What’s Product?

• Anything (good, service, idea) which

consists of a bundle of tangible & intangible
attributes that satisfies target customers
& is received in exchange for money or
some other unit of value (attention,
acquisition, use or consumption);

8
 Product Cont’d…

• A product does not suddenly show up on the

assembly line of a firm; much work & time
goes into finding new ideas for products;
i.e.,
– After having a conceptual product idea;

– Having target market or customer; and

– Competitive advantage,

• Care for the 4P‟s in once market plan:

Product-Place-Price-Performance 9
 Why product?
• Property/Asset (Intellectual, Physical);

• Profit & Competition;

• Customer satisfaction;

• Environment, social, & other concerns;

• In general, improved human welfare;

• But, every new idea does not necessarily

become a new product; & every new product
is not always the result of a good idea;
10
 Why R&D?

To cope up with the dynamics of markets

• Customer requirements;

• Competitors‟ capabilities & strategies;

• Technology;

• Environment;

11
 Product Development

• All about the systematic decision related to

all aspects of the development & management
of a firm‟s products;

• The overall process of conceptualizing a product and

designing, producing, & selling is a generalized &
comprehensive process known as – „PD & Innovation‟;

12
 PD & Innovation Cont’d…

• PDI process ensures whether the full complement of

firm‟s products are logically related, individually
justifiable items, and designed to strengthen a
firm‟s competitive position;

• New products come to exist as a result of an idea

or „perceived gap‟ in the current world; i.e.,

• Arise from the need that can‟t be instantly filled; &

bring ideas to create & sell new ones;
13
 A new idea

• Might be a totally new product; or an

improvement of a product already existing;

• It could also be about the production

process (to produce the product faster,
easier, or more economical);

• All in all, it is all about keeping a firm

ahead of its competitors;
14
Definition/Distinction among…

R&D,
Innovation,
Product Development, &
Product Design

15
 R&D

• It is the process of creating new knowledge

about products or processes; i.e.,

• Creative work carried out on a systematic

basis in order to devise new things
(materials/products/processes/sys.s/services)
or to substantially improve existing ones;

• It is a system used to make ideas work into

real items, the main objective being launching
of new products and supporting activities;
16
 Innovation

• Innovation is used to describe a new

breakthrough in a process or production
technique or a novel product.

• It is a holistic activity from invention (the

discovery of a new device, product, process,
or system) to the point of first commercial
or social use.
17
 Product Development

• It is the process that transforms technical

ideas or market needs and opportunities
into a new product launched on to the
market.

• It is the process of changing the form,

components, materials, marketing or packaging of a
product, and it differs from innovation in that it
does not usually involve invention.
18
 Design

• It is the process of converting an idea into

information from which a new product can
be made.

• Design is the very core of innovation, the

moment when a new object is imagined,
devised and shaped in a prototype form."

19
 Product design

• Product design is the activity in which ideas

& needs are given physical form, initially as
solution concepts & then as a specific
configuration or arrangement of components
& materials.

20
• Product Design is a multi-disciplinary process
which usually involves market and
technological research, concept design,
prototype development, final product
development and testing as well as post
production refinement.

21
22
• Factors that drive market of the future –
influences & drivers for new product
development:

Energy Saving
Entertainment/Leisure
Fuel tax/Costs Lasting

Space Smaller

Pleasure
Smoothness/Softness
Safety Hygiene

23
 Emerging Needs for Market
2020s?

• All in one; simple; unique features; entertaining;

24
• Thus, effective product development &
commercialization ranges from line
extensions, evolutionary development, to most
exceptionally revolutionary developments –
game-changing products and markets;

25
 Product Development Stages & Process

• Stages of Product Development

• Generic stage-gate NPD process

• The Generic Product Development Process

26
 Stages of Product Development

• Idea Generation

• Idea Screening

• Concept Development

• Market Strategy

• Feasibility Analysis/Study

• Product Design

• Test Marketing

• Market Entry
27
28
The Generic Product Development
Process

Concept System-level
Planning
Development Design

System Spec.
Mission Concept

Review
Approval Review

Production Testing & Detail

Ramp-up Refinement Design
Production Critical Design
Approval Review

29
 Who Designs & Develops Products?
• It requires contribution from nearly all functions
of a firm, mainly:

• Marketing: mediates, identifies opportunities, target

prices, overseas the launch & promotion of the product;

• Design: defines the physical form of the product

– Engineering design: mech., elect., software, etc

– Industrial design: ergo., OSH, aesthetics, interface;

• Manufacturing: designing, operating, &/or

coordinating the production system; 30
 Types of New Products

• Generic (market pull products)

• Technology push products

• Platform products

• Process incentive products

• Customized products

• High risk products

• Quick-build products

• Complex systems
31
 Types of New Products Cont’d…

• Generic (market pull products)

• {Furniture, Sporting goods, Tools}

• Technology push products

• {Gore-Tex rainwear, iBOT}

• Platform products
• {Customer electronics, computers, printers}

• Process incentive products

• {Snack foods, chemicals, semiconductors}
32
 Types of New Products Cont’d…

• Customized products
• {Motors, switchers, batteries, containers}

• High risk products

• {Pharmaceuticals}

• Quick-build products
• {Software, cellular phones}

• Complex systems
• {Airplanes, Jet engines, Automobiles}
33
 Types of New Products Cont’d…

Types of New Product Development

Products that
are derived Products that
New
from other are entirely new
products/ Derivative Breakthrough
extension of
Market

the product
line
Existing

Products that
Products that Enhancement Platform form the base for
have minor a product family
changes in tech, Incremental Radical
processing & Innovation
Mkt

34
 Attributes of a successful PD
• Product quality;

• Product cost;

• Development time;

• Development cost;

• Development capability.

35
 Challenges of PD

• Trade-off b/n manufacturing cost & quality;

• Dynamics: technological change, preference,

competitors;

• Details

• Time pressure: PD decision has to be made

quickly & „without complete information‟

• Economics & finance;

36
Product Life Cycle

37
• What products are currently in the market at
different stages of the PLC? 38
 Factors affecting success of NP

• Top management support;

• Matching customer needs;

• High value to customers;

• Innovative;

• Technical superiority (operate, maintain);

• Screened on growth potential;

• Fit internal company strengths;

• Communication among functions;

39
 Individual and Group Assignments
Deadline, 3 weeks Dec. 23, 2017
• Getachew, 6, 8 G-2
• Negussie, 18, 19, G-1
• Ataklt, 14, 16
• Dagmawi, 1, 2, G-3
• Selamawit, 12, 21, G-3
• Amdework, 26, 4, G-2
• Wondwosen, 3, 7 G-1
• Dejen, 5, 9
• Yonathan, 10, 22
• Ephrem, 23, 27
• H/mariam, 11, 13
• Musie, 24, 29
• Mesfin, 15, 20
• Beza, 17, 25
• Eyoel, 28, 32
40
• Yemata, 30, 31, G-3
 Chapter 2

The Discipline of Innovation

41
 Introduction
Definitions of Innovation
The Innovation Process
Innovation Stages
Components of Innovation
Models of Innovation
Types of Innovation Outputs
Model of Innovation Adoption

42
 Introduction
Significance of Innovation…

• New products are stimuli to economic growth; i.e.,

• „Competitors come to the market with a product

that changes the basis of competition‟;

• Thus, the „competition posed by new products is far

more important than marginal changes in the prices
of existing products‟;

43
 Introduction Cont’d…

• The industrial revolution of the nineteenth century

was fuelled by technological innovations (Paul Trott, 2005);

• „… not to innovate is to die‟ – Christopher Freeman

(1982) in his study of the economics of innovation. 44
 Introduction Cont’d…

• Leading companies also noted that „Innovation‟ is

critically important to deliver consistent business
results in all economic conditions;

• Thus, to be competitive, organizations need to

deliver new products and even business models to
the market quickly, reliably, and cost effectively.

45
 Definition

The definition by Praveen Gupta, „The Innovation

Solution‟, encompasses:

• Being a break-through & its continuity;

• Efficiency of development;

• Value to customers;

• Profitability to the firm;

• Competitive advantage;

46
 Definition Cont’d…
Thus, …
• “Innovation is the process of continually &
efficiently developing & delivering break-through
products by offering higher value to customers,
achieving profitable growth for businesses, and
gaining competitive advantages in the marketplace.”

• “Innovation is significant positive change to solve

problems”

• Revolutional vs. Evolutional value addition

47
• It is the process of converting an invention into a
useful product/s which directly or indirectly can
satisfy human needs;

• A Working Definition of Innovation

• It is the entire process by which a firm generates

creative & new ideas & converting them into novel,
but useful & viable commercial products for
economic gain & some other form of value;
48
Conceptual framework of innovation

49
 The Innovation Process

It includes:
• An economic perspective;

• A business management strategy perspective, and

• Organizational behavior;

50
The Innovation Process Cont’d…

51
 The Innovation Process Cont’d…

Two types of innovation process:

1. Market pull: is the development of new products
primarily oriented towards specific market needs
& secondarily towards increased technical
performance. (E.g. Food product varieties, waste
minimization, preservation requirements)

2. Technology push: is the development of new

products primarily oriented towards increased
technical performance & secondarily towards
specific market needs. (Onion, Coffee grinders/ devices)
52
 Innovation Stages

Business Product & Service Organizational

Innovation Innovation Enablers

Innovation Innovation Portfolio Development Global PLM

Strategy Operating Management Excellence Development Systems
Model Operations

53
• Innovation Strategy: defining paths to more
profitable growth, from core product development to
radical business innovation;

• Innovation Operating Model: establishing the

resources, processes, metrics and other elements to
create incremental and breakthrough innovations;

• Portfolio management: defining winning innovation

and product strategies, optimize portfolios and
balance roadmaps 54
• Development Excellence: increasing new product
profit growth by increasing development productivity,
managing complexity and reducing time to market;

• Global Development Operations: optimizing innovation

and R&D footprint for access to markets, ideas,
talent, and for cost and tax efficiency;

• PLM systems: optimal product lifecycle management

systems and realizing rapid ROI;
55
 Components of Innovation

All innovations (especially technological) have three

components:

1. A hardware component which consists of the

material or physical aspects of the innovation;

2. A software component which consists of the

information base that is needed to use the
innovation;

Both are intrinsic to the innovation

56
 Components of Innovation Cont’d…

3. An evaluation information component which

consists of the information useful for decisions
related to the adoption of the innovation

This is not intrinsic to the innovation; but, it

enables firms or individuals to evaluate its
usefulness.

57
58
 Models of Innovation

According to …

1) Rate of change: Disruptive VS. sustaining innovations

(radical or incremental innovations)

2) Purpose: To existing customers/ New

• Creating problems to existing customers; but, tend to

create new markets; & eventually can capture the
existing market;

59
 Models of Innovation Cont’d…

3) Schools of thought

• Two traditional schools of thought of innovation:

• 1) Social deterministic school: innovations are the

results of a combination of external social factors &
influences (demographic/cultural changes, economic
influences); i.e., when the conditions were „right‟
innovations would occur.

• 2) Individualistic school: innovations are the results

of unique individual talents & such innovators are born.
60
 Models of Innovation Cont’d…

Over the past 15 years …

• Schools of thought of drivers of innovation:

„market-based‟ & „resource-based‟ views:

• 1) Market-based view: market conditions provide the

context which facilitate or limit the extent of firm
innovation activity.

• It focuses on the ability of firms to recognize

opportunities in the market place.

61
 Models of Innovation Cont’d…

• 2) Resource-based view: it focuses on the firm and

its resources, capabilities, & skills; i.e., a firm‟s own
resources provide a much more stable context to
develop;

• This view assumes that a market-driven orientation

fails to provide a secure foundation for formulating
innovation strategies for markets which are dynamic
& volatile;
62
 Models of Innovation Cont’d…

Two classifications of Innovation Models: based on

Iterativeness & Adoption

1) Iterativeness: iterative models look at the interactions of

the people involved in the innovation process

• Linear,
• Simultaneous coupling, &
• Interactive models

63
 Linear models
• Introduced by US economists after WW-II;
• Basis of models of innovation today;

64
 Simultaneous coupling model

• The other models concentrate on what is driving

the downstream efforts rather than on how
innovations occur;

• For example, the linear model only offers an

explanation of where the trigger for the idea or
need was initiated;

65
• The simultaneous coupling model suggests that it is
the result of the simultaneous coupling of the
knowledge within all three functions that will foster
innovation;

66
 Interactive model
• This model links together the technology-push and
market-pull models;

• It emphasizes that innovations occur as the result of

the interaction of the marketplace, the science base
and the organization‟s capabilities;

• Like the coupling model, there is no explicit starting

point; i.e., the use of information flows is used to
explain how innovations emerge; they can arise from
a wide variety of points. 67
68
 Models of Innovation Cont’d…

2) Adoption: Adaptive models examine the feedback

after the innovation is accepted in the market

Static models
- Abernathy-Clark Model: preserving/destructing firm‟s
market knowledge & technological capabilities;

- Henderson-Clark Model: building a product requires two

kinds of knowledge – product‟s components & linkage between
components;

69
 Models of Innovation Cont’d…

Dynamic models
- Tushman Model: Abernathy-Clark Model plus technology
cycles & innovation streams;

- Chandy and Telli‟s Model: extent of newness of market &

technology
- S Curve models:

70
71
72
73
 Serendipity or luck in innovation

• Unexpected discovery is rare indeed; prior

knowledge is required; i.e.,

• Most discoveries are the result of people who have

had a fascination with a particular area & it is
following extended efforts on their part that
advances are made;

• „Chance favours the prepared mind‟, Louis Pasteur,

74
 Types of Innovation Outputs

• Process innovation;

• Product innovation;

• Organizational innovation;

• Marketing innovation.

75
 Model of Innovation Adoption

• Awareness,

• Attitude formation;

• Decision;

• Implementation;

• Confirmation.

76
End of Chapter Two

77
• Part II: Techniques & processes for managing
different stages of product development
• (Chapters 3-7)
• Chapter 3. Development Processes
– Generic PD Process
– The “Fuzzy Front End” phase of Innovation
– Stage-gate process
– Product Planning
– Concept Development
78
79
 Chapter 3
Product Development
Process

80
 Product Development Process/Stages

• Stages of Product Development

• Generic stage-gate NPD process

• The Generic Product Development Process

81
 Stages of Product Development

• Idea Generation

• Idea Screening

• Concept Development

• Market Strategy

• Feasibility Analysis/Study

• Product Design

• Test Marketing

• Market Entry
82
83
 Generic stage-gate NPD process
• Developed by Robert G. Cooper

• He breaks the new product project into discrete and

identifiable stages;

• Each stage is designed to gather information needed

to progress the project to the next gate or decision
point. Each stage is multifunctional and consists of a
set of parallel activities;

• It is both a conceptual and operational model for

moving a new product from idea to launch; 84
85
Generic NPD Process (1)

86
NPD Process (2)

87
The Generic Product Development
Process (3)

Concept System-level
Planning
Development Design

System Spec.
Mission Concept

Review
Approval Review

Production Testing & Detail

Ramp-up Refinement Design
Production Critical Design
Approval Review

88
 1. Planning

• Planning: phase-zero – Project approval & launch;

• Begins with opportunity identification;

• Output: Project mission statement

89
 2. Concept development
• Concept of the product vs. target market;

• This encompasses the generation of the concept

via selection to its testing;

• A description of the form, function, & features of

a product;

• A set of specifications;

• An economic justification of the project;

90
Concept development – the front-end process
• Identifying customer needs;
• Establishing target specification;
• Concept generation;
• Concept selection;
• Concept testing;
• Setting final specifications;
• Project planning;
• Economic analysis;
• Benchmarking of competitive products;
• Modeling & prototyping 91
 3. System (architectural) design

• It‟s the preliminary design of key components;

• Definition of product architecture, with an

assembly layout;

• Division of the product into subsystems and

components, each with a functional specification;

92
 4. Detail design

Control documentation via:-

• Complete specification or drawings describing the
geometry, materials, & tolerances of each of each
component;

• Identification of all standard parts to be

purchased;

• Establishment of a process plan & tooling;

93
 5. Testing & refinement

• Construction & evaluation of multiple pre-production

versions of the product – PROTOTYPE;

• Alpha & Beta prototype versions

a) Early (alpha) prototyping: mainly for testing

designer‟s environment if key customer needs are
met; but, may not be with the intended production
processes;
94
 Test & refinement Cont’d…

b) Later (beta) prototyping: parts supplied by the

intended production processes; products tested by
customers environment so as to evaluate product
performance & reliability; but, may not be with the
intended- assembly process

95
 6. Production Ramp-up

• Product is made using the intended

production system;

• Preferred customers are requested to

identify remaining flaws;

• Train work force & work out any remaining

problems in the production processes;
96
 The Fuzzy Front-End in New Product
Development

•Effectively managing the „fuzzy front- end‟ (FFE) of the

product development process is one of the most
important, difficult challenges facing innovation managers;

•The importance of the FFE lies in the fact that

effectively performing front-end activities can contribute
directly to the success of a new product (Cooper, 1998);

•The FFE also is a place where one can find several low
cost opportunities to achieve large improvements in time-
to-market;
•Thus, competence in managing the FFE is important in
creating new product success. Many firms, however,
acknowledge a serious weakness in the predevelopment
steps of their product innovation process;

•Difficulties occur in studying the FFE as it is

dynamic, often unstructured, and has traditionally been
characterized by low levels of formalization;
 What is the FFE?

• During the FFE an organization formulates a product

concept and determines whether or not it should invest
resources to develop the idea;

•The FFE includes product strategy formulation and

communication, opportunity identification and
assessment, idea generation, product definition, project
planning, and early executive reviews, which typically
precede detailed design and development of a new
product.
•The FFE begins when an opportunity is first
considered worthy of further ideation,
exploration, and assessment and ends when a
firm decides to invest in the idea, commit
significant resources to its development, and
launch the project;

•Thus, FFE can be defined as the period between

when an opportunity is first considered and when
an idea is judged ready for development.
 Product Planning

 Product planning involves making decisions

about those features that are needed to sell a
business‟s products, services, or ideas;

 These decisions relate to product features,

such as packaging, labeling, branding, etc.;

 Product planning allows a business to make or

sell products that are wanted by customers;
 Sustaining Product Sales

The Product Life Cycle

• There are four (five) stages of the life cycle:

introduction, growth, maturity, and decline
(decision point);

• As each stage in the product life cycle is

reached, marketers must adjust their product
mix and their marketing strategies to ensure
continued sales.
Identifying Customer Needs
 The six step process for gathering customer
needs are:

• Define the Scope • Organize the Needs

– Mission Statement – Hierarchy
• Gather Raw Data • Establish Importance
– Interviews – Surveys
– Focus Groups – Quantified Needs
– Observation • Reflect on the Process
• Interpret Raw Data – Continuous
– Need Statements Improvement
Customer Needs Example:
Cordless Screwdrivers
 Mission Statement
Example: Screwdriver Project

Product Description Assumptions

•A hand-held, power- •Hand-held
assisted device for installing •Power assisted
threaded fasteners •Nickel-metal-hydride
Key Business Goals rechargeable battery
•Product introduced in 4th Q technology
of 2008 customers
•50% gross margin •User
•10% share of cordless •Retailer
screwdriver market by 2012 •Sales force
Primary Market •Service center
•Do-it-yourself consumer •Production
Secondary Markets •Legal department
•Casual consumer
•Light-duty professional
 Gather Raw Data: Interviews

Visit Definition Develop

Determine Which Discussion
Customers to Visit Guide

Visit Customers

Develop “Picture” of
Customer’s
Environment and
Needs
 Determine Which Customers to Visit
• Create a “what do we want to learn” statement
– To explore_______ in order to______
– To discover______ in order to______
– To learn_________ in order to_____

• Examples of customers
– Distributors and dealers, end users
– Lead/visionary customers
– Lost customers, Unhappy customers
– Customers using competitive products
– External/Internal customers
– Customers with non-Ethiopian headquarters or focus
– Good current customers
– Customers who buy multiple products, or from multiple divisions
 Creating a Discussion Guide
• Tell the stakeholder why you are there

– “We are here to discuss our senior design project. Thank

you for agreeing to work with us.”

• 6-10 Key Topics

– Based on what we want to learn

– Open-ended

– Subtopics as needed

– It is a guide, not a script or questionnaire

– Evoke images of experiences and needs

Guidelines for Creating Discussion Questions

• Scenes or images
– Stakeholder’s use environment
• Perceptions of weaknesses/problems
– Past experiences
• Current considerations
– Competitive comparison
• Future enhancements
– “Delighters”
 Question Formats to Avoid

• “Would you like a system that could….?”

• “Wouldn’t you agree that if we could produce
a system that could…”
 Question Formats to Encourage
• What- tend to focus conversation on events.
“What problems have you experienced?”
Your text has several helpful questions.
• How- tend to focus discussion on the process.
“How do you use..?”
• Why – require an explanation which my be helpful,
but may elicit a defensive reaction!!
• Could – are usually perceived as “gentle” and very
open.
“Could you give an example?”
 Clarity
• Keep questions short
– Break complex issues into a series of short
questions
• Avoid technical jargon
– Be sensitive that jargon is more pervasive than we
first think
• Value of silence
– Uncomfortable, but helpful
Product families and Product platform
 Why Product Families?
To embrace commonality, compatibility, standardization, or
modularization among different products or product
lines.”

To remain competitive, companies are utilizing product

families and product platforms to:
– increase product variety
– shorten product lead-times
– reduce cost
 Definition of Key Terms

 Product family
– a group of related products that share common features or
components so as to satisfy variety of markets

 Product platform
– the set of features, components or subsystems that remain
constant from product to product, within a given product
family

 Variant or derivative
– products derived from the product platform through:
• addition, removal, or substitution of one or more modules (module-
based product family)
• scaling or “stretching” the platform in one or more dimensions (
scale-based product family)
 Product Family Design
 Top-down Approach
(Proactive):
– a company strategically Black &
manages and develops a Decker
family of products based on a
product platform and its
module- and/or scale-based
derivatives
 Bottom-up Approach
(Reactive): Sony
– A company
redesigns/consolidates a
group of distinct products by
standardizing components to
improve economies of scale
and reduce inventory Lutron
 Tools and Methods for Product Family Design

 Maps
– Product family maps
– Market segmentation grid

 Metrics
– Commonality indices
– Platform efficiency and effectiveness

 Methods
– Modular design
– Scalable design
– Resolving product family tradeoffs
– Determining product platform extent
 Module-Based Product Families
 Modular design is best known approach for effective
product family design
– Design a product platform that can be easily modified by adding,
subtracting, and/or upgrading of modules

 Designing a module-based product family involves

defining its product architecture (Ulrich, 1995):
– the arrangement of functional elements
– the mapping of functional elements to physical components
– the specification of the interfaces among physical components

 Common modules in family form product platform

 Standardized interfaces facilitate addition, substitution, and

removal of modules
 Scale-based Product Families
• Develop a product platform that can
be “scaled” or “stretched” in one or
more dimensions to satisfy a variety
of market niches

• Boeing 737 is divided into

3 platforms:
– Initial-model (100 and 200)
– Classic (300, 400, and 500)
– Next generation (600, 700,
800, and 900 models)
• The Boeing 777 has also
been designed knowing that
it will be “stretched”
 Resolving Tradeoffs in Product Family Design
• Product family design involves the design of multiple products to
maximize commonality within the family with minimal sacrifice in
individual product performance

Individually How do we ensure that this tradeoff is

Best “optimal” for us and our company?
Optimized
Designs
Designs
Performance

Designs Design
Based on Management Engineering
& Marketing
Poor
Common
Platform $
Designs
Manufacturing
& Production
Degree of Commonality
Product Specification
 Nature of Specifications

The reference point for functionality design

and quality planning

A product assembly usually requires a

hierarchy of specs, for the final product and
each of its components

123
 Target vs. Final Specs

Target specs: the hope and aspiration of the

design (ideal and marginal)
Refined specs: trade-offs among different
desired characteristics.
-Intermediate specs
Final specs
-It is in the project’s contract book

124
 The Product Specs Process

1. Set Target Specifications

– Based on customer needs and benchmarks
– Develop metrics for each need
– Set ideal and acceptable values
2. Refine Specifications
– Based on selected concept and feasibility testing
– Technical and economic modeling
– Trade-offs are critical
3. Reflect on the Results and the Process
– Critical for ongoing improvement
Product Specifications Example:
Mountain Bike Suspension Fork
 Quality Function Deployment
(House of Quality)

technical
correlations
relative engineering
importance metrics

customer benchmarking
needs on needs
relationships
between
customer needs and
engineering metrics

target and final specs

Start with the Customer Needs
Establish Metrics and Units
Link Metrics to Needs
Benchmark on Customer Needs
Benchmark on Metrics
Assign Marginal and Ideal Values
Set Final Specifications
 Concept Development

• Concept generation, Selection & Testing

136
 Concept Development
• Concept development is a process driven by a set of
customer needs and target product specifications,
which are then converted into a set of conceptual
designs and potential technological solutions;

• These solutions represent an approximate description

of form, working principles, and product features;

• Often, these concepts are accompanied by industrial

design models and experimental prototypes that help in
making final selections.
• The initial concept development process is
important because:

– a better design process leads to a better design

outcome;

– Decisions made during the early stages of design

tightly constrain future options;

– It is estimated that 70% cost of a product is

determined in the first 30% of the design cycle.
•The early stages of the new product development
process are most usually defined as:

idea generation,
idea screening, and
concept testing.

•They represent the formation and development of an

idea prior to its taking any physical form.

•The subsequent stages involve adding to the concept as

those involved with the development (manufacturing
engineers, product designers and marketers) begin to
make decisions regarding how best to manufacture the
product, what materials to use, possible designs and the
potential market‟s evaluations.
 Idea Generation

Idea Generation Idea Screening Concept Testing

 Idea Generation

• Idea generation is the systematic search for

new product ideas obtained internally or
externally.

• Idea generation is a process in which creative

thinking is used to produce large amount of ideas
for new products.

• It is very important that all ideas no matter how

ludicrous or extreme may sound, to be gathered.
Idea generation starts with a set of customer needs and
target specifications;

5 steps in concept generation:

clarify problem,
search externally,
search internally,
explore systematically, and
reflect on the solutions and process.

A good concept is sometimes poorly implemented, but a

poor concept can rarely be manipulated to achieve
commercial success.

Fortunately, concept generation is relatively inexpensive

compared to the rest of the product development process;
Characteristics of a good Idea Generation Process

1. should be on - going
2. have a specific purpose
3. involve the whole of the company
4. use a variety of methods
5. have one person in charge
6. not evaluate the gathered ideas
7. one should not criticize the ideas of others
8. should be freewheeling and generate as many ideas
as possible
Sources for Idea Generation

Top
Customer
management

Dealers and
Scientific
representativ
research
es

Miscellaneou
Competitors
s sources
 Key Factors for Successful Idea Generation

• Time Pressure

• Try smart incentives

• Trying harder and providing more “incentive” around each
idea
• Following instructions more accurately
• Actual number of ideas
 Idea Screening

Idea Generation Idea Screening Concept Testing

Tools
 Idea Screening
• A series of evaluations, including technical,
commercial and business assessments of the
concept.

• Once all viable ideas are gathered and managed,

they must be further
– developed,
– examined,
– prioritized and
– evaluated so that a single product idea is selected for
further development into a product concept. This whole
process is called screening and is the main problem to solve
in this level using different tools and techniques.
 Idea Screening
• Idea screening involves screening new product ideas in
order to spot good ideas and drop poor ones as soon as
possible.

• Because product-development costs rise dramatically in

later stages, companies must proceed only with product
ideas that will turn into profitable products.

• One way to keep information organized is to have executives

write up new-product ideas on a standard form that can be
reviewed by a new-product committee. A well-designed
system for rating and evaluating new-product ideas prevents
problems at later stages.
 Idea Screening

• Two potential risks in screening:

 Dropping ideas too early means missed

opportunities!

Developing the "wrong" ideas means wasted

resources in terms of time, financial
investments and may risk your activities with
your current portfolio.
 Idea Screening
• An initial screening is the first decision to commit
resources to the idea and to decide whether a NPD
project starts or not. This gate is a "gentle" screen of
certain "must meet" and "need to/should meet"
criteria.

• Must meet criteria: corporate policy, strategic fit,

magnitude of market opportunity, product advantage,
project feasibility, availability of resources,
regulations, impact on corporate image.

• Need to/should meet criteria: synergy (with product

portfolio, production lines and capacity etc.), market
attractiveness, competitive advantage, organizational
and operational issues.
 Idea Screening

• The challenge at this gate is to identify and decide

on the "right" ideas for further exploration.

• Balance between what is desirable (especially from a

consumer point of view) and what is feasible both in
technical and market terms.

• As precise information about market responses and

technical requirements is not present at this stage
you also need to rely on your intuition or gut feeling.
 Tools and Solutions
• Qualitative Research

• Dot Sticking (Voting)

• Delphi Method

• Discussion Boards

• Weighting

• SWOT Analysis
 Qualitative Research

• An original company research tool on a subject such

as new product ideas or concepts, which is concerned
with getting a "feel" for the research topic without
doing a numerical and statistical measurement.

• One can think of Qualitative Research as an in -

depth - interview or conversation with a target of
potential users of the new product.
 Dot Sticking (voting)

• Step 1. Each concept or idea must be presented in a

similar way having the same amount detail

• Step 2. The participants must be then selected

• Step 3. Dots are allocated to each of the

participants. Depending on the number of concepts or
ideas these can be 3 to 5. Different colored dots can
be used to indicate different things such as
performance, functionality, design etc. Participants
can use their dots to indicate choice, by sticking them
next to the concept or idea drawing.
 Dot Sticking (voting)

• Step 4. After all participants have used their

corresponding dots, dots for each concept or idea are
summed and the best concept is declared. Also a second
round of dot sticking can take place by selecting the
best 2 or 3 strongest concepts or ideas.

• Step 5. It is sometimes helpful and necessary to

understand the reason of the voting or dot sticking. In
this case the participants are required to indicate or
note likes and dislikes about the concepts by using post-
it notes. This enables the design team to keep strong
features of rejected concepts in mind.
 Dot Sticking (voting)

• A concept or idea selection tool that engages a wide

number of people in the process.

• It is a simple tool and easy to administer but does not

provide rich feedback on the reasons or motivations of
the people involved in the process.

• It can be a powerful tool if the target customers are

involved in the process. The tool is extremely useful when
there are a lot of potential or competing ideas on the
table.
 Delphi Method

Structuring of information flow

Regular feedback

Anonymity of the participants

 PMI Analysis (weighting)
(purchasing managers index)

• An improvement of the weighting the pros and cons

technique.

• When one has selected a course of action, PMI is a

good method of evaluating this course.

• This method can be used in any case when decision-

making plays a great role in the success of a
project.
 SWOT Analysis

• A very effective way of identifying one's Strengths

and Weaknesses, and of examining the Opportunities
and Threats one can face.

• Carrying out an analysis using the SWOT framework

can help focusing activities into areas where the
company is strong, and where the greatest
opportunities lie.

• By Performing a SWOT analysis, one can use the

analysis results to screen new product ideas against
the characteristics of one's company and ultimately
its strategic goals.
 Product portfolio analysis
 In this process, new projects are evaluated,
selected, and prioritized;

 Existing projects may be accelerated, killed,

or de-prioritized and resources are allocated
(or reallocated) to the active projects in
order for:

• Value maximization
• Balance
• Business Strategy Alignment
• Sufficiency
 Concept Testing

Idea Generation Idea Screening Concept Testing

 Concept testing definition

• Process of using quantitative and qualitative

methods to evaluate consumer response to a
product idea prior to the introduction of a product
to the market.
 Problems Solved with Concept Tests

• Modifications and upgrades can reformulate and add

Product new life to existing products and services. Again,
identifying the optimal bundle of features is a
Modification/ priority. Differentiating those features that are "need
to haves" vs. "nice to haves” is critical in creating
Upgrade products or services that are truly “New and
Improved” “New Release” and “Upgrade” worthy

•Many products and services offer upgrade or migration

paths. For the customer, it is a reflection of a need for
Migration path the next level of sophistication. Understanding the key
features and benefits is critical in mapping consumer
needs to the likelihood of upgrading an existing product
or adopting a new technology.
 • Identify which benefits are most important to
customers and which features are most likely to lead
New Product to the fulfillment of that promise. Features can be
categorized into those which are "need to haves" vs.
Concepts "nice to haves." Customer need must be identified
and prioritized for product development and
advertising.

Product Usability- •The most effective concept tests assess the use
experience of a specific product or service and
Serviceability determine how that experience can be improved

Pricing and •No one underestimates the importance of price

Incentives expectations in new product adoptions.
 Types of Concept Tests

(I) Concept Screenings

(II) Concept Test-Positioning - Demand

Analysis

(III) Pre-Market Concept Tests

 Type I: Concept Screening
• Identifies concept ideas that are sufficiently promising
to merit further consideration and development

• Believability, Relevance

• Perceived Uniqueness, Value

• Trial ability: Potential for trial;

• Relative Attribute Performance Advantages;

• Integration of multiple measures, leading to a more

sensitive forecast;

• Provides trial potential based on multiple measures that

go beyond purchase intent.
 Type II: Concept Test-Positioning -
Demand Analysis

Selected measures from the Type I Concept Test, plus

measures that…

• Presents consumers with test concepts defined to

include the concept and competing brands in product
consideration sets;

• Identify potential opportunity size for a chosen

concept, including preliminary sales estimates.

• Strengths/Weaknesses analysis based on

attributes/benefits
 Type III: Pre-Market tests
• Measures attractiveness of a new product or service
before its launching into the market by identifying its
strengths and weaknesses;

• Allows to evaluate the level of agreement between the

concept and the specific brand attributes;

• Detects communication problems that may interfere

with appropriate comprehension by the target segment.

• Provides purchase intention indicators, with scenarios

varying from most optimistic to most conservative.

• Minimizes the risk of failure in the market by allowing

product and communications adjustments before launch.

• Possible with both qualitative/quantitative techniques.

 Considerations in the Concept Test
 Core Idea vs. Positioning/Commercial Concept
Statement;
 New Brand vs. Old Brand vs. No Brand;
 Concept statement: narrative, drawing, model?

 Respondent group: Lead users? Large users?

 Response situation: Where? How?

 Purchase Measure Decisions:

 Buyer Intent
 Frequency
 Price
 Product Diagnostics

 Attribute Diagnostics
 How can concepts be tested?
• Focus Groups

• One-on-One Personal Interviews

• Mall Intercept

• Phone Interviews

• Postal Surveys

• Internet Surveys

• Hybrids (e.g., phone-mail-phone)

• Prototyping & Rapid prototyping

• Alpha, Beta & Gama Tests

 Ask the right people...

Ask the right questions...

 Concept Testing Process

• Define the purpose of the test

• Choose a survey population

• Choose a survey format

• Communicate the concept

• Measure customer response

• Interpret the results

• Reflect on the results and the process

173
Product Architecture

174
 Product Development Process

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

Platform Concept Decomposition

decision decision decision

Product architecture is determined early in the development process.

 Product Architecture: Definition
A scheme by which the functional elements of the product
are arranged (or assigned) into physical building blocks
(chunks) and by which the blocks interact.

module
module

module
module
Product
module
module

module
module
• The basic layout and the architecture of the
product is established by defining the basic
building blocks of the product in terms of the
function of these building blocks and the nature of
their interfaces;

• Thus, the architecture of the product is given by

the relationships among the components in the
product and the functions that the product is being
made to perform as a whole.
 Considerations at Factors affecting
product architecturing architecture modularity
• The way it affects • Product changes
– the ability to offer • Product variety
product variety; • Component standardization
– the product cost; • Product performance
– the design lead time; • Manufacturability
• Product development
management

7
 Product changes Product variety
Reasons for product changes
• Upgrades • The range of
• Add-ons products (models)
concurrently
• Adaptation (adapt to different
available in the
operation environments)
market
• Wear (e.g., razors, tires, bearings)
• Modular can vary
• Consumption (for example, toner without adding
cartridges, battery in cameras) tremendous
• Flexibility in use (for users to complexity to the
reconfigure to exhibit different manufacturing
capabilities) system.
• Re-use in creating subsequent
products 9
• Component • Manufacturability
standardization – DFM can be performed
– Use the same on the chunk-level but
components in not across several chunks.
multiple products • For example, minimize the
total number of part
– Increase counters.
production – Thus, it is more
volumes applicable to an
integrated design.

11
• Product performance (for integrated design)
– Allow optimizing the performance for an individual
integrated architecture.
– Allow function sharing
• Implementing multiple functions using a single physical
element.
– Allow for redundancy to be eliminated through
function sharing and geometric nesting
• Thus, could lower the manufacturing cost

14
 Styles of Product Architecture (Modular vs.
Integrated)

• Modular
– Chunks implement one or a few functional elements in their
entirety (each functional element is implemented by exactly
one physical chunk);
– The interactions between chunks are well defined and are
fundamental to the primary functions of the products.

• Integrated
– Functional elements of the product are implemented using
more than one chunk
– A single chunk implements many functions.
– The interaction between chunks are ill defined and may be
15
incidental to the primary functions of the products.
 Trailer Example:
Modular Architecture

protect cargo
box
from weather

connect to
hitch
vehicle

minimize
fairing
air drag

support
bed
cargo loads

suspend
springs
trailer structure

transfer loads
wheels
to road
 Modular Product Architectures
• Chunks implement one or a few functions entirely.
• Modular architecture has advantages in simplicity and
reusability for a product family or platform.

Swiss Army Knife Sony Walkman

Platform Architecture of
the Sony Walkman
 Trailer Example:
Integral Architecture

protect cargo
upper half
from weather

connect to
lower half
vehicle

minimize
nose piece
air drag

cargo hanging support

straps cargo loads

spring slot suspend

covers trailer structure

transfer loads
wheels
to road
 Integral Product Architectures
• Functional elements are implemented by multiple chunks,
or a chunk may implement many functions.
• Interactions between chunks are poorly defined.
• Integral architecture generally increases performance and
reduces costs for any specific product model.

High-Performance Wheels Compact Camera

 Steps for Product Architecture

1. Defining arrangement of functional elements,

– Also known as functional structure;
– The functional elements primarily involve exchange of
signals, materials, force and energy;
– Thus, these are functional requirements of the product;

2. Mapping from functional elements to physical

components, and
– Mapping can be one to one as in modular product
architecture or one to many as in integral architecture
3. Defining specifications of the interfaces among
interacting physical component.
Schematic presentation of the arrangement of
functional elements in a trailer
Schematic mapping of functional elements
to physical components for a trailer
 Schematic three-dimensional drawing of a trailer to
aid to specification of interfaces between components

box
fairing

Hitch

bed wheels

spirings
 The concepts of integral and modular apply at
several levels:
• System
• Sub-system
• Component
Product Architecture =
Decomposition + Interactions
• Interactions within
chunks
• Interactions across
chunks
 Establishing the Architecture

To establish a modular architecture, create a

schematic of the product, and cluster the
elements of the schematic to achieve the types
of product variety desired.
 Product Architecture Example:
Hewlett-Packard DeskJet Printer

31
 DeskJet Printer Schematic
Enclose
Printer Print
Cartridge

Provide
Structural Accept
Support Position Display
Cartridge User
Inputs Status
In X-Axis

Position
Store
Paper
Output In Y-Axis Control
Printer
Store Supply
“Pick” DC
Blank
Paper Paper Power

Communicate
Command
with
Host Printer
Functional Flow of forces or energy
or Physical Flow of material
Elements Connect
Flow of signals or data to
Host
 Cluster Elements into Chunks
Enclosure
Enclose
Printer Print
Cartridge

Provide User Interface Board

Structural Accept
Support Position Display
Cartridge User
Inputs Status
Chassis In X-Axis

Position
Store
Paper
Output In Y-Axis Control Power Cord
Printer and “Brick”
Store Supply
“Pick” DC
Blank
Paper Paper Power

Paper Tray Print

Mechanism Communicate
Command
with
Host Printer
Host Driver
Functional Connect Software
or Physical Chunks to
Elements Host
Logic Board
 Geometric Layout
logic
board user interfa ce board

print
cartridge
paper tray
print
mechanism

chassis
enclosure

print cartridge
height
roller
paper
paper tray
chassis
logic board
 Design for manufacturing
1. Configuration design
• In this, we tend to realize the shape and the general dimensions of
components; exact dimensions and tolerances would be established in later
stages.
• It depends on the availability of materials and production techniques that
would be used to create the form from the material. Usually, there is a close
interrelationship among the functions and form and the dependency between
the material and the method of production which is schematically shown
below;
 Parametric design
• The parametric design is primarily concerned with the specific
values and attributes of various design elements that are found
in the configuration design which are also known as design
variables.

• The design variable is an attribute of a part whose value is

under the control of the designer.

• These typically include dimensions or tolerances, material,

shape, manufacturing processes, assembly and finishing
processes, and so on;

• The objective of parametric design is setting values for the

design variables that will produce the best possible design
considering both the performance and the manufacturability;
• Failure mode and Effects Analysis (FMEA)
By performing FMEA we can determine all possible ways by
which the components can possibly fail in service and
establish the effects of the failure on the system thus
improving the performance and quality of the product;

• Design for Reliability

By designing for reliability the capacity for the product to
operate without failure in the service environment increases.
 Robust design
• By performing the process of robust design high quality in
product can be assured as it reduces the variability in
performance and manufacture over a wide range of operating
conditions. The following are typical steps undertaken
towards the approach for robust design.
• (1) System design: This relates to what we have referred to as
the product architecture where the engineering principles are
used to determine the basic configuration of the system.
• (2) Parametric design: Statistical methods and techniques are
used to set nominal values for the design variables that
minimize the variability from uncontrollable variables in the
environment.
• (3) Tolerance design: Extensive statistical methods are used to
set the widest required tolerance s on the design variables
 Prototype
• A prototype is a full-scale working model, technically
and visually complete;

• The main purpose of a prototype is to confirm that the

design satisfies all the customer requirements and
performance criteria;

• Extensive testing of this prototype gives the necessary

information for reliability and robustness of design;

• It also need to verify whether the environmental,

safety and other legal requirements have been met.
203
 Product Positioning
– New product commercialization
– Identifying target market,
– Common mistakes in product positioning

204
 Product positioning refers to the perceptions
customers have about the product;
 It is the act of designing the company’s offering and
image to occupy a distinctive place in the target
market’s mind;
 Positioning is an essential part of launching your
product and company in the market;
 It is founded upon understanding how customers
discriminate between alternative products; it
considers the factors customers use in making
judgments or choices between products in the market
being investigated;
 Product-Positioning Process

1. Identifying Potential Competitive Advantages

2. Developing Positioning Strategy or Choosing
Competitive Advantages
3. Communicating the Company’s (Competitive
Advantages) Positioning
1. Identifying potential competitive advantages
Product is positioned by highlighting product benefits
/advantages. So, identify which are the potential
competitive advantages that a company can offer.
Thus, a company can differentiate its product via its
competitive advantages;

Types Competitive Advantages:

– Competitive Advantages Related to Product
– Competitive Advantages Related to Service
– Competitive Advantages Related to Personnel
– Competitive Advantages Related to Channel
– Competitive Advantages Related with Image
i) Competitive Advantages Related to Product: such
advantages include product features or distinctive characteristics,
product qualities (including durability, reliability, design/style
and reparability), and product performance;

ii) Competitive Advantages Related to Service: these cover:

(1) Easy ordering
(2) Speedy, accurate, and careful delivering
(3) Facility for free and safe installation
(4) Training to customers for effective and safe use of the product;
guarantee, credit, and maintenance, and
(5) Customer consultation, which includes information and
advice, either free or at price to buyers.
iii. Competitive Advantages Related to Personnel:
• They consist of employees’ competence, courtesy,
credibility, responsiveness, communication, etc.

iv. Competitive Advantages Related to Channel:

• Such advantages may include coverage, accessibility,
regularity, types and quality of services, expertise,
and performance of channel members.

v. Competitive Advantages Related with Image:

• It is related to a company image or brand image
(reputation, status, and identity) offered by the
product manufactured and marketed by a well-
known and reputed company.
2. Developing positioning strategy or choosing
competitive advantages
The advantages a company wants to position must satisfy
following conditions:
i. Advantages must be important to consumers.
ii. These must be distinctive or unique
iii. These must be superior.
iv. These must be communicable and visible to buyers.
v. These must be preemptive (defensive or preventive),
cannot be easily copied by competitors.
vi. These must be affordable to pay by the buyers.
vii. These must be profitable to company.
 3. Communicating the Company’s
(Competitive Advantages) Positioning

• Also known as signalizing the competitive advantages.

Once the company has decided on product positioning,
the next task is to communicate them effectively to
position them in the mind of consumers;

• Note that competitive advantages may not be

positioned automatically; appropriate physical signs
and cues should be used to make consumers judge
different advantages.
 New product commercialization
Commercialization is the process or cycle of introducing a new
product or production method into the market.
The actual launch of a new product is the final stage of new product
development, and the one where the most money will have to be
spent for advertising, sales promotion, and other marketing efforts.

The 3 key aspects of Commercialization:

1. Ideation Stage - It is essential to look at many

ideas to get one or two products or businesses that
can be sustained long-term;
2. Business Process Stage - It is a stage-wise process and
each stage has its own key goals and milestones
3. Engage Stage - It is vital to involve key stakeholders
early, including customers
Commercialization of a product will only take
place, if the following three questions can be
answered:
1. When the company has to decide on the introduction
timing;
[Link] the company has to decide where to launch its
products;
3. To whom the primary target consumer group will have
been identified earlier by research and test marketing
 Commercialization Action Plan

a) Develop the Marketing Mix

 The marketing mix is a broad concept which includes several
aspects of marketing which all inquire to obtain a similar goal of
creating awareness and customer loyalty.
 The marketing mix is a guideline to reference back to when
implementing the price, promotion, product, and distribution.

b) Address the 7 Key P‟s

Product (tangible/intangible]/Place/Price/Promotion/People/Process/Phy. Env’t;

c. Design the Product pre-launch planning & preparation

 Product business case development and general business planning;
 Commercial road map including launch planning, detailed resources
and budgets;
 Identifying Target Market

 Success to product positioning strategies/target should

differentiate your product, address important
customer buying criteria, and articulate key product
attributes;

 To achieve these three objectives, an in-depth

understanding of the followings is required:

How your target market makes

How your competition positions their products
 What your product has to offer
 Target of market

Your product Competitive

positioning

 The three interrelated elements of the Positioning

Triangle must be in balance to attain competitive
advantage;

 If you only understand two of the three, you still

don‟t know enough;
 Positioning Triangle Analysis will help you develop much
more effective product positioning strategies or target

Step 1: Understand your target market

Use Target Audience Profile (TAP) template to gather &
interpret information; learn which buying criteria your
target audience uses:
 Which product features (size, speed, etc), if any, do they
emphasize?
 Which product benefits (i.e. safety, comfort…), if any, do they
emphasize?

List their buying criteria, in order of priority; if you can assign a

quantitative weight to each criterion, do so.
Target market buying criteria example (prioritized and weighted)
40% - Color selection
30% - Length of warranty
20% - Service reputation
5% - Makes me happy/feel good
5% - High technology use
Step 2: Understand Your Competition
Conduct primary and secondary research to determine how your
competitors are positioning themselves, the strategies they’re using,
and how successful they’ve been.

Step 3: Map Buying Criteria Against Competitive Positioning

Add a column to the right of your list of buying criteria to note each
competitor that positions its product against that criterion.

Target market buying criteria (prioritized and Competitive positioning

weighted)
40% - Color selection Company C
30% - Length of warranty Company B
20% - Service reputation
10% - Makes me happy/feel good Company A
5% - High technology use Company B and D
Don’t be surprised to discover that:
• Two or more competitors are battling for the same position
• A competitor is trying to position itself on multiple buying criteria
(thereby risking muddy product positioning)
• One or more buying criteria are not being addressed by any
competitor
• The market share leader is strongly positioned within the top
priority buying criteria

Step 4: Assess Your Product‟s Strengths Against The Buying

Criteria
Now add a column to the left of your buying criteria list to write your
product’s relative strengths. Ask your customers how they rank your
various strengths. Otherwise, just use your best judgment.
Target market buying criteria Competitive positioning Competitive positioning
(prioritized and weighted)
40% - Color selection Company C
#2 30% - Length of warranty Company B
#1 20% - Service reputation
#3 10% - Makes me happy/feel Company A
good
5% - High tech gadgetry Company B and D

Step 5: Analyze The Gaps

Review the completed Positioning Triangle analysis to determine if there are
any vacant positions in the market.
 Is there one your product satisfies effectively?
 Would successfully positioning yourself there yield the returns you seek?

If there are no unfilled positions (or there are but you’re not interested in any
of them), then you will have to decide which competitor to battle and which
position you can most effectively win.
 Common Mistakes in Product Positioning

• Under positioning

• Over positioning

• Confused positioning

• Double Positioning

• Irrelevant Positioning
Under positioning Over positioning
 Failing to present a  The marketer makes the
strong central benefit product too special, so the
or reason to buy the potential customer group
product; becomes too small;
 Occurs when customers
cannot readily identify  It means that buyers
the brand or the believe that the product is
brand´s features. The meant for a very selected
product must stand out audience because it is
in the mind of the premium priced;
consumer;
Example: Aqua Sure
Example: solar lamp
 Double positioning
Confused positioning
 Claiming a benefit that
 By claiming more
customers will doubt that the
benefits that contradict
brand can actually deliver;
each other
 OR Ex. Fair and Handsome
 Too many benefits
claimed when the brand
attempts to position in
too many segments;

Example: NeXT computers Irrelevant

positioning
 By claiming a
benefit which few
prospects care
about the brand will
have an irrelevant
brand position;
Ex. Motorola‟s Razr V3
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Chapter 6. Product Development Economics

– Element of economic analysis, Economic analysis

process
– Trade-off rules
•

225
• Most commonly applicable method is NPV;
• But, sensitivity and trade-off analysis supports
development decisions;
• Qualitative factors also influence decisions;

226
 Inputs for NPV analysis
• Development cost and timing;
• Testing cost and timing;
• Tooling investment and timing;
• Ramp-up cost and timing;
• Marketing and support cost and timing;
• Sales volume and lifetime;
• Unit production cost;
• Unit revenue;
• Discount rate;
227
 Types of Economic Analysis
• Quantitative: based on cash inflows (revenues) and
cash flows (costs) in life cycle of a successful new
product;

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• Qualitative: concerned with:
– Factors/issues which can not be measured and
have often +ve or –ve effect on development
costing and timing;
– Such factors can be analyzed via: brainstorming,
what-if analysis by project team, and other
structured techniques (game theory)

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