Product Design and
Development
Reference: Prof. Keith Lovegrove
Problem-Solution
Product Selection
Metrics McDo JoliBee KFC
Price P 143 P 130 P 110
Skin Saltiest Crispy Salty
Meat Bland Bland Flavorful
Gravy Salty Watery Spicy
http://www.pepper.ph/treys-anatomy-fried-chicken-wars/
Product Selection
Metrics Toyota Mitsubishi Ford Isuzu
Model Fortuner Montero Sport Everest Mu-X
Price (P) 2,260,000 2,058,000 2,239,000 1,968,000
Engine (li) 2.8L 2.4L 3.2L 3.0L
Transmission 6-speed auto 8-speed auto 6-Speed auto 6-speed auto
Valves 16 16 20 16
Power (Hp) 174 181 200 175
Torque (Nm) 450 430 470 380
Cylinders 4 4 5 4
What are the causes of
failures1?
• Sales are too low • Positioning issues
– Need is not shared by enough – Unclear Positioning
customers – Inferior Positioning
– Wrong market definition • Product design problems
• Lack of fit with company • Cost of product
– Low motivation
development
– Failure to build necessary
• Competitive reaction
capabilities
– Unanticipated
• Not new or different
– Imitation and
– No product improvement
Improvement
– No perceived improvement
What are the causes of
failures2?
• Supply changes • Lack of channel support
– Cost of raw material, labor or – Availability
capital increase. – Shelf space
– Suppliers’ breakdown – Demo’s
• Lack of repeat purchase – Service
– Product only “good on paper” • Bad Timing
– Product is too good – Too early
• Not meeting financial goals – Too late
– ROI, breakeven time, etc. – Technological and
• Forecasting error Marketing windows of
opportunity
– Too optimistic
– Too pessimistic
What was wrong?
• Development of new products come from within the company and not
from needs of customers; hence, product problems surface at market
introduction because customer needs are not adequately anticipated;
• Marketing develops a product definition without adequate understanding
of requirements of engineering, manufacturing, distribution, service, etc.;
• Design engineering is caught between marketing demands for features
and variety and manufacturing needs for efficient production;
• Lack of communication and coordination across functional areas leading
to necessary product redesigns during the process; and,
• Distribution and service support are reluctant to follow orders or are
forced to react to decisions made by the top management.
How to overcome these
challenges?
• Develop a unique and superior product – with better
quality, new features and greater value (value for
money)
• Clear definition of market and product concept
• Meeting segmented market needs
• Senior management commitment
• Relentless pursuit of innovation
• New product planning
• Systematic product design and development process
Framework
New Product Customer Concept Product In-life
The Product P1 P2 P3 P4
Design Needs Development Specification product
Products of Interest
• Agricultural Products
• Marine Products
• Energy (Biofuel, Solar, Wind, Hydro, etc.)
• Software
• Plant-Based Food
• Artificial Intelligence
• Mobile Phone
New Product Development (NPD)
Inputs Corporate objectives Outputs
• Financial objectives
• Budget
Customer • Operational targets
needs • Technology strategy
• Regulatory requirements Revenue
growth
Easy to
handle Flexible Market Image
Position Transformation
Robust
New Product
Migrations
Development Better Financial
Portable
customer Rewards
experience
Efficiency
Cross functional contributions (examples) targets
• Customer needs and perception
• IT delivery capability
Operational
• Changes for field force and Operations’ capacity to
improvements
train
• Process changes in Services
• HR issues
Benefits of NPD
Market Position Resource Utilization
o Increase market share o Improving returns on
o Extend product range existing assets (R&D,
o Image creation salesforce,
Manufacturing)
o Barrier to competition
Renewal & Transformation Financial Rewards
o Improves organizational o Improved ROI
performance o Higher margins
o Improves ability to o Increased sales
recruit best people
o Increased value added
o Encourages learning
o Lower costs
o Improved productivity
about new approaches
and practices
Benefits
"People don't want to buy a quarter-inch drill.
They want a quarter-inch hole!"
• Benefits – what customers receive by using product/service.
Subjective, perceived by customer
• Features – built into the product. tangible and objective
Needs-Benefits
How your approach will provide benefits to meet a need?
• What is the need (articulate specifically), customer “Pain Point”
• Describe the ‘as-is’ state, why other approaches not good enough.
• How does your product provide a benefit to meet that need
• Show specific evidence (eg, anecdotes) how benefits meet need
“Use Case”, a specific example showing
• Need, acquisition and benefits of product
• Why customer would get it
• Barriers to adoption
• Interface points
Value
• Value = benefits/price
• Increase value by increasing benefits or decreasing price
• Only the customer defines your value
• Customer satisfaction is the ratio (Value)/(Expected Value)
Value Proposition Statement
A clear, crisp, compelling statement that describes the value of your
offering.
Should include NABC:
Needs
Approach
Benefits per cost
Competition
Example: I understand you are hungry (Need), so let’s go to the X
Restaurant (Approach) instead of McDonalds (Competition) because it
has better food and it is closer (Benefits/cost)
Assignment 3: Value Proposition
• give top three priorities of target customer
• describe “as-is state”, customer pain points, opportunities
• potential solution – given in general terms
• identify key metric measuring how solution meets the need
• give a clear, compelling Value Proposition statement
