Design: A powerful but neglected marketing tool

Author(s): Philip Kotler and G. Alexander Rath

Source: Die Unternehmung, Vol. 37, No. 3 (1983), pp. 203-221
Published by: Nomos Verlagsgesellschaft mbH
Stable URL: https://www.jstor.org/stable/24178590
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Philip Kotler, G. Alexander Rath

Design
A powerful but neglected marketing tool

The authors: Philip Kotier is currently Professor of Marketing at Northwestern University — a title
he has held since 1969. Before entering M.l.T. where he received his Ph.D. in Economics,
Professor Kotier received his M. A. in economics from the University of Chicago. His postdoctoral
work has been at Harvard (mathematics) and at the University of Chicago (sociology). The reci
pient of many scholastic honors and awards. Professor Kotler's expertise has earned him: the Paul
D. Converse Award for Excellence of contribution to marketing (1978). Professionally, Professor
Kotier is Director of several organizations (Marketing Science Institute, Management Analysis
Center, and EST) and has served as consultant to much companies as General Electric, Capitol
Records, Playboy, General Mills, Encyclopedia Americana (Grolier), American Hospital Supply,
Montedison, ATT, and ITT.
G. Alexander Rath is principal of Rath & Associates, a Chicago firm that specializes in design
research and new services marketing for the hotel industry. Mr. Rath is a graduate of Hampshire
College in Amherst, Mass.
Address: Dr. Philip Kotier, Professor of Marketing, Northwestern University Dept of Marketing,
2001 Sheridan Road, Evanston, Illinois 60201, USA.

Abstract: Design is a potent marketing tool that can be used to gain competitive distinctiveness
and provide consumer satisfaction. But with few exceptions, most companies neglect or mis
manage design as a marketing tool. The authors describe what constitutes good design; how
companies can employ design to enhance their products, environments, communications, and
corporate identity; and how companies can improve the working relationship between designers
and marketing people. The article includes two audit instruments which companies can use for
measuring company design sensitivity and design management effectiveness.

Zusammenfassung: Design (Entwurf und Gestaltung von Produkten) ist ein wirksames Marketing
instrument im Rahmen der Konkurrenzstrategie und zur Erhöhung der Konsumentenzufrieden
heit. Mit einigen Ausnahmen jedoch vernachlässigen die meisten Unternehmungen das Design als
Marketinginstrument oder setzen es schlecht ein. Die Autoren beschreiben, wodurch sich ein gutes
Design auszeichnet, wie Unternehmungen das Design zur Aufwertung und Verbesserung ihrer
Produkte, zur Abgrenzung in ihrer Umwelt und in ihrer Kommunikationspolitik und im Bereiche
der Corporate Identity einsetzen können. Ferner zeigen die Autoren, wie die Unternehmungen die
Zusammenarbeit zwischen den Produktgestaltern (designers) und den Marketingspezialisten verbes
sern können. Der Beitrag zeigt zwei Kontrollinstrumente für die Unternehmung zur Abschätzung
der Design-Empfindlichkeit von Unternehmungen und zur Messung der Effizienz des Design
Managements (Handhabung der Produktgestaltung).

37. Jahrgang 1983, Nr. 3 203

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1. Design: a powerful but neglected marketing tool

In this era of intensifying global competition, companies are searching for ways to
add competitive distinctiveness to their products and images in the hope of pro
tecting or improving their market positions. A great many industries are charac
terized by intense service and/or price competition that only succeeds in driving
down everyone's profits to an unhealthy level. One of the few hopes companies have
to "stand out from the crowd" is to produce superiorly designed products for their
target markets.
A few companies stand out for their design distinctiveness, notably IBM in com
puters, Herman Miller in modern furniture, Olivetti in office machines, and so on.
But most companies lack a "design touch". Their products are prosaically styled,
their packaging is unexciting, their information brochures are tedious. Their
marketers pay considerable attention to product functioning, pricing, distribution,
personal selling, and advertising, and much less attention to product, environment,
information, and corporate identity design. Many companies have staff designers or
buy design services, but the design often fails to achieve identity in the marketplace.
The following real (but disguised) example is typical of many managers' attitudes
toward design:

Steven Grant, an entrepreneur, visited one of the authors and described a device he was
developing called the Fuel Brain, which monitors room temperature and controls the heating
and air circulation functions of oil furnaces. When asked whether he would use professional
design services to assist in this venture, he said there was no need. His engineer was designing
the product. His next door neighbor was designing the logo. His marketing officer was designing
a four-page brochure. The Fuel Brain would not need any fancy packaging, advertising, or
general design work, because he felt that the product would sell itself. Grant believed that
anyone with an oil burning furnace and a desire to save money would buy one. A year later,
upon being recontacted, he sadly explained his disappointment in the sales of the Fuel Brain.

One only has to look at current U. S. products in many product categories — kitchen
appliances, office supplies, air conditioners, bicycles, automobiles, and so on — to
acknowledge the lack of good design. Yet its potential rewards are great. Consider
the dramatic breakthroughs that some companies have achieved with outstanding
design:

— In the stereo equipment market, where several hundred companies battle for market share, the
small Danish company of Bang & Olufsen won an important niche in the high end of the
market through designing a superbly handsome stereo system noted for its clean lines and heat
sensitive volume controls.

— In the sportscar market, Datsun endeared itself by designing the handsome 240Z. For most
buyers before 1976, the 240Z was a dream car at an affordable price, around $4000—6000.
The latest copy is by Mazda, which coupled innovative pricing with the 240Z design, capturing
a large share of the sportscar market with its first offering, the RX7.

— In the hosiery market, Hanes achieved a dramatic breakthrough in a mature market by using
creative packaging design and modern packaged goods marketing techniques, catapulting the
L'eggs division to the position of market leader. The L'eggs boutique (in-store display) used
information design effectively, pulling consumers from other stores and brands. Design was a
key component in the marketing strategy and created instant product recognition for the
brand.

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— In the kitchen furnishings market. Crate & Barrel selects products for its retail stores that meet
good standards of material, finish, form, and color. Most of the products are Italian and
Finnish. The look has become so well entrenched that many consider it to be the standard in
kitchen furnishings. Crate & Barrel also designed environments to promote traffic and used
seconds of expensive products as loss leaders. Once again good design is used as an element in a
marketing strategy.

Well-managed, high quality design offers the company several benefits. It can create
corporate distinctiveness in an otherwise product- and image-surfeited marketplace.
It can create a personality for a newly launched product so that it stands out from
its more prosaic competitors. It can be used to reinvigorate product interest for
products in the mature stage of its life cycle, it communicates value to the con
sumer, makes selection easier, informs and entertains. Design management can lead
to heightended visual impact, greater information efficiency, and considerable con
sumer satisfaction.
This article aims to help executives think more consciously and creatively about
design management and to help marketers work more effectively with designers. It
addresses the following questions:

— What constitutes effective design?

— What areas of business decision making require design skills?

— What keeps executives from becoming more effective design managers?

— How can a corporation's design sensitivity be measured?

— How can the interface between marketers and designers be improved?

2. What constitutes effective design?

The term "design" has several usages. People talk about nuclear plant design and
wallpaper design even though the two emphasize different design skills, that of
functional versus visual design. Design also appears in the description of higher
priced products, such as designer jeans and designer furniture. Design connotes
different qualities in different countries: Italian design is modern, Finnish design is
elegant, and German design is functional.
Design is also used to describe a process. Pentagram, the noted British design firm,
sees design as a planning and decision making process to determine the functions and
characteristics of a finished product, which they define as something one "can see,
hold, or walk into".( 1 ) Our definition of design is as follows:

Design is the process of seeking to optimize consumer satisfaction and company

profitability through the creative use of major design elements (performance,
quality, durability, appearance, and cost) in connection with products, environ
ments, information, and corporate identities.

Thus the objective of design is to create high satisfaction for the target consumers
and profits for the enterprise. In order to succeed, the designers seek to creatively
blend the major elements of the design mix, namely performance, quality, dura
bility, appearance, and cost.

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These elements can be illustrated in the problem of designing (say) a new toaster:

— Performance: First, the designer must get a clear sense of the functions that the
target consumers want in the new product. Here is where marketing research
comes in. If target consumers want a toaster that heats up rapidly and cleans
easily, then the designer's job is to arrange the features of the toaster in a way
that facilitate the achievement of these customer objectives.

— Quality: The designer faces many choices in the quality of materials and work
manship. The materials and workmanship will be visible to the consumers and
communicate to them a certain quality level. The designer does not aim for
optimal quality but affordable quality for that target market.

— Durability: Buyers will expect the toaster to perform well over a certain time
period, with a minimum number of breakdowns. Durability will be affected by
the product's performance and quality characteristics. Many buyers also want
some degree of visual durability, in that the product doesn't start looking "old
hat" or "out-of-date" long before its physical wearout.

— Appearance: Many buyers want the product to exhibit a distinctive or pleasing

"look". Achieving distinctive style or form is a major way in which designed
products, environment, and information can stand out from competition. At the
same time, design is much more than style. Some well-styled products fail to
satisfy the owners because they are deficient in performance characteristics. Most
designers honor the principle that "form follows function". They seek forms that
facilitate and enhance the functioning of the object rather than form for its own
sake.

— Cost: Designers must work within budget constraints. The final product must
carry a price within a certain range (depending on whether it is aimed at the high
or low end of the market) and designers must limit themselves to what is possible
in this cost range.

Consumers will form an image of the product's design value in relation to its price,
and favor those products offering the highest value for the money. Effective design
calls for a creative balancing of performance, quality, durability, and appearance
variables at a price that the target market can afford.

3. What areas of business decision making require design skills?

Effective design can make a contribution in four marketing arenas\ product design,
environmental design, information design, and identity design. We will treat these as
separate marketing arenas although in practice they overlap. Thus designing the
packaging for a product is partly product design and partly information design.
Designing pieces of office furniture is partly product design but the ensemble
becomes an example of environmental design.

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3.1 Product Design

Before the Industrial Revolution, craftsmen normally were responsible for both
design and production. With the advent of mass production, however, the design
function separated from the production process. Two early manufacturers stand out
as rare examples of good design managers:

— Starting in the 1750s, Joseph Wedgwood and Sons of England wed artistry with mass pro
duction to manufacture china prized for its classically pure designs. Wedgwood ran a manu
facturing company which encouraged creativity on the part of its design staff.

— In 1856, the German, Michael Thonet, perfected a process by which solid lengths of beachwood
could be steamed and bent to form long curved rods. He used this wood to construct a system
for the manufacture of mass-produced furniture. His firm, Gebrüder Thonet, sold over
1 000 000 of his most popular design, the "Vienna Cafe" chair, still used in today's restaurants.
The "Vienna Cafe" chair is unadorned — the undecorated shape of the curving wood rods of
the back and the round chair seat are the design — and represents a brilliant example of the
"form follows function" concept in product design.

Many early product designers, however, had no close ties with engineering, pro
duction, or sales, and their job was simply to decorate the manufactured goods.
They applied decorations such as those on early National Cash Registers and Singer
Sewing Machines. This "styling" role for product designers resulted from the fact
that the engineers and production people took responsibility for solving the
problems of technical performance, leaving them little enery for adding "styling".
The relative role that styling versus technical performance design should play in
product development is a battle that has gone on in several industries, most notably
in automobiles. Early styling advocates include the following:

— As early as 1915, Elmo Calkins, the head of a New York City advertising agency, pointed out
the importance of beauty in selling automobiles. His agency's campaigns for the Pierce-Arrow
motorcar emphasized the beauty of the car's styling rather than its functional performance. The
copy in the advertisements described the car being created by artists who gave it the look and
fell of high style.

— Alfred P. Sloan, Jr., of General Motors saw Ford's blindness to good product design as an
opportunity for product differentiation. Sloan told his division managers and contractors such
as Fisher Brothers Auto Body that design for appearance, through color and body style, would
have a tremendous influence on auto sales. Later Sloan introduced the policy of annual model
changes, making styling a major competitive weapon in auto sales. Many changes were cosmetic,
but nevertheless real design improvements were also introduced, such as headlights, turn signals,
and safety glass.

On the other hand, early advocates of technical performance design include:

— Henry Ford rejected the concept of design for appearance, although he accepted the role of
design for performance. His famous dictum was that the customer could have any color
Model T Ford as long as it was black. Ford believed that there exists an ultimate design for
every product, and that once it is realized, it cannot be improved.

— In 1936, Dr. Ferdinande Porsche, the sportscar designer, was commissioned by a group of
German industrialists to build a small, functional car. They desired a car that performed well.

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 was durable, was easy to repair, and which sold for half the price of the standard low end
offering.. Dr. Porsche responded by designing a car that lasted for nearly 50 years in almost
unchanged form, the Volkswagen Beetle.

Yet styling and technical performance design need not be in conflict. In the 1920s,
the Bauhaus, a school of design run by Walter Gropius, promulgated the philosophy
that styling and design are not in conflict but that good styling is that which reveals
good design. They held that good design does not need extra-decorative qualities.
Thus an all-glass-and-steel skyscraper is beautiful because the materials perform the
functions well: the glass provides light for the inhabitants and light weight for the
structure and the stell provides strength for the structure. The Bauhaus group held
that design was an intrinsic part of production rather than a decorative art.
In the thirties and forties, Raymond Loewy, Henry Dreyfuss, Norman BelGeddes,
Walter Teague, and other leading product designers pointed out that design offered a
significant marketing tool that could differentiate products in an increasingly
competitive marketplace. Companies began to design the whole product to serve and
please the consumer. Such companies as John Deere and Herman Miller took this
process to heart.

— John Deere & Co. of Iowa hired John Dreyfuss to develop a full line of 19 tractors. The
collaboration lasted five years and Dreyfuss' design firm was involved from product concept
through production, including supervising the tool and die makers to insure the end result.
Dreyfuss designed the prototype tractor to be comfortable and pleasing to the farmer-operator.
Through human engineering studies, he determined the best form for the machine so that
farmers could manage it easily. An outgrowth of this client-sponsored research was one of the
first books on human design specifications. The Measurements of Man, later used extensively by
both the automotive industry and NASA. Dreyfuss also took an approach leading to tractors
that had a cohesive visual appearance. John Deere has kept up its philosophy of good design
through the years and commissioned Eero Saarinen to design its corporate headquarters.

— Herman Miller Furniture Co. of Zeeland, Michigan, was one of the first furniture manufacturer
to introduce comfortable chairs of molded plywood which fit the human figure. Designed by
Charles Eames, the chairs sell for as low as $ 60 and can be seen sitting on their steel legs in
many buildings today. Over a million of these chairs were sold. In 1945, George Nelson
designed for Herman Miller the "Storagewall" consisting of bookcases, drawers, cabinets, and
open spaces in a similar organization to the dining room breakfront, but being geometric and
unadorned. The "Storage Wall" presaged the concept of office landscaping.

Design is also a strong factor in cosmetics, particularly on the packaging side. Jovan,
the Chicago based manufacturer, spends as much or more time and money on
packaging as on scent development. The interlocking His and Hers perfumes is one
example of their work. Jovan is organized to encourage and reward good design
work, and the company views design as a fundamental tool of marketing manage
ment.

The most exciting recent development in product design is the growing use of
Computer Aided Design and Computer Aided Manufacture, known as CAD/CAM
The gradual drift to robot manufacturing is resulting in a new breed of managers and
product designers who possess computer and engineering skills.(2) Products and
their components are being designed to be handled by robot arms rather than human
fingers.

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The imaginative and successful use of product design by such firms as John Deere,
Henry Miller and Jovan, and a handful of other companies is gradually spreading the
recognition among competitors of the great potentialities of good product design as
a marketing tool. The stellar successes of many Japanese companies in the auto
mobile, motorcycle, bicycle, consumer electronics, watch and musical instruments
markets is due in no small measure to their extraordinary aptitude in putting good
design in their products. Recently the Ford Motor Company announced its intention
to use design as a major strategic variable in differentiating its automobiles from
competitive products.

3.2 Environmental Design

Environmental design, whether planned or not, exists everywhere. Business is con

ceived, planned, and implemented in man-made environments. From the World
Trade Center to a local McDonald's, the environment has been created to facilitate
numerous buisness and social transactions.
Architects and builders have always been influenced by structural engineering,
available materials, and prevailing ideas of style and form. Before the Twentieth
Century, architects hid the materials and foundations behind historical (Greek
Roman, and Gothic) and picturesque (animal, vegetable, and shell) motifs. They
emphasized applied decoration. However, as industrialists in England and America
developed new needs and stronger materials, significant changes in the architectural
design took place.
From the complicated floral patterns of the Victorian architects emerged the
sinuous curvilinear and hard-edged rectilinear designs of the Art Nouveau architects.
The most famous was Louis Sullivan, who used flora and fauna elements in his early
designs such as The Carson Pirie Scott department store, but then he advocated th
"form follows function" dictum. This new outlook and the invention of new buil
ding materials such as cast iron columns resulted in several new approaches t
designing and building business environments.
Beginning in the 1920s, Walter Gropius advocated the functionalist mode for a
tectural, environmental, and product design. His Bauhaus School taught studen
use unadorned, geometric forms, making the materials themselves a major par
the design. Mies van der Rohe elaborated Gropius' concept of classical purity w
teaching at the Bauhaus. Later, as an architect in Chicago, he developed the fam
international style skyscraper. His buildings, largely glass, metal, and concre
created an entirely new interior environment, which spurred Le Corbusier, Ma
Breuer, Charles Eames and Mies himself to develop furniture, lamps, appliances, an
so on for these buildings. These furniture designs typify the use of new mate
(metal tubes, molded plastic etc.) and geometric formats.
Today, environmental design is the process of creating suitable atmospheres
support, motivate, and facilitate the functions being performed at the given s
These sites include stores, offices, buildings, and grounds. Each place has to
planned, built, and furnished to accomplish one or more intended effects on
users, visitors, employees, etc. Thus a restaurant has to be designed to attra
customers and enhance the enjoyment of eating. Consider the following:

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— Lettuce Entertain You Productions of Chicago is an outstanding designer of restaurant in
teriors. The restaurants are designed to facilitate good traffic flow of customers and waiters.
Each restaurant's interior is thematically styled. Thus in their R.J. Grunts restaurant are large
paintings of vegetables and fruits, photographs, plants, mirrors, and popular culture items to
match the interests of the target consumers.

Good environmental design management interweaves the talents of architects, space

planners, interior designers, decorators, and art consultants. They must work the
textures, colors, sights, sounds, and smells into an integrated and motivating
whole.(3) Design can be used to create movement, excitement, and liveliness for a
shopping center, or quietness and majesty for a museum. Here is an example of how
coordinated design created a highly successful shopping mall:

— The Rouse Company of Maryland rehabilitated the Faneuil Hall/Quincy Market, an old, run
down vegetable and meat market near the waterfront in the Boston Harbor area. They pre
served the buildings' exterior to maintain their historical appearance but added color and space
design, to bring life to the marketplace. Today the Faneuil Hall/Quincy Market is a bustling
shopping center, one of the main "sights" of the city of Boston.

Business firms have also begun to invest in attractive edifices to improve employee
productivity as well as to enhance the corporate image. Years ago, Frank Lloyd
Wright developed a stunning design for the Johnson Wax's corporate headquarters,
and Eero Saarinen did the same for John Deere & Co. Today, a large number of
corporations are viewing architecture as a corporate asset and commissioning striking
buildings for their headquarters.(4) Environmental design can communicate a corpo
rate identity to the organization's internal and external publics:

— Gould Inc. of Rolling Meadows, Illinois, used environmental design to communicate an image
of being humanistic and up-to-date. Gould fashioned a marvelous landscape around its corpo
rate headquarters. The center piece was a giant Picasso statue of a bathing woman standing
almost 25 feet tall. Its landscaping and sculpture attracted many visitors who would otherwise
never have heard of this industrial company.

— Rust-Oleum of Vernon Hills, Illinois, designed their new corporate headquarters around Mies
Van der Rohe's open plan, with exposed materials, a high tech look, and office landscaping.
Large expanses of glass allow employees to look from the bottom to the top of an atrium,
seeing the entire structural foundation, including red hot water pipes and blue air conditioning
ducts, and the Steelcase 9000 modular office landscaping on every level.

— Fijitsu Fanuc Ltd. of Tokyo uses bright yellow as the corporate color. Yellow employee
jackets, yellow paint on their robots and numerical controls units, and yellow interiors and
exteriors in all their buildings create an unmistakable environmental design motif.

All said, environmental design can be a highly effective communication tool and
have a deep influence on people's attitudes, moods, and energy. Today, many com
panies are consciously designing environments that please and motivate their
workers and customers and enhance their public image.

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3.3 Information Design

Information transfer is a critical function of the modern firm. Each company needs
to communicate with its own offices and personnel as well as its customers, dealers,
suppliers, and other publics. It uses internal forms, print media, broadcast media,
and computers to distribute information.
For the last two hundred years, newspapers have been an important business
medium for information transfer. Early versions of the newspaper date back to
Roman times, but in the 1840s, the Hoe Manufacturing Company developed a flat
bed press which printed over 8000 impressions an hour and the print medium ex
ploded with activity. Soon afterward new inks, papers, and typesetting machines
were invented to further increase production speed. After the technical hurdles were
overcome in the later part of the nineteenth century, newspaper publishers hired
graphic designers to improve word and picture formats. During this era, newspaper
graphic design set the standard for all printed pieces. When advertising became a
separate business, it followed the design styles of newspapers which used mainly
small type and an occasional picture. Large, bold headlines in ads was thought
uncouth, and newspapers penalized such ads with an extra charge.
In the 1870s, Montgomery Ward's of Chicago developed a new marketing tool, the
mail order catalog, which required a great amount of printing and graphic design.
Subsequently Ward's and newer amil order houses employed hundreds of graphic
designers who adapted newspaper typography and added product illustration to the
catalog pages. Advertising designers borrowed the stylistic innovations created by
the catalog artists, and newspapers grew more illustrative. During the age of yellow
journalism, the newspaper editors began using large front page illustrations. The
adaptation of two color printing to newspapers opened a door to advertising illus
trators and they began to develop bolder ads. Later four-color printing made further
levels of sophistication available to the users for print media.
The next major development in information design came during the 1930s. Walter
Paepcke, the son of a lumber mill owner, developed a method for mass producing
cardboard boxes, and Container Corporation of America was founded. Until this
time, most products travelled in large barrels, trunks and sacks. This new material
made shipping easier, lowered packing expenses, and allowed for greater product
indentification by printing messages on the sides of the boxes. Packaging became a
new competitive marketing tool. Companies such as Quaker Oats, Procter & Gamble,
and Kraft saw the great potential of packaging and quickly added it to their battery
of promotional tools. This new avenue of marketing communication helped com
panies build brand loyalty and product distinctiveness, and companies hired many
graphic designers to work in this area.
Marketing communication specialists gew increasingly sensitive to the need for long
term information design to supplement the short term impact of packaging, adver
tising, and point-of-sale displays. Companies turned to the development of corporate
information programs. Managers of public relations, financial relations, and
employee relations hired designers to develop and distribute their messages.
One of the most important corporate communication tools is the annual report. For
many years, the sole function of the annual report was to inform the stockholders of
the firm's financial well-being. Balance sheets and income statements were about as
interesting to read as the local telephone directory. Starting in the mid-sixties,

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graphie designers started to work on annual reports to increase their liveliness and
informativeness. Corporations can derive important benefits by designing highly
readable, attractive annual reports. These reports help promote products and de
scribe the company's role in the community, industry, and nation. Consider the
following examples:

— IBM's annual report last year contained a long and detailed exploration of the newly developed
bubble memory .The explanation was non-technical and supplied stockholders and other readers
with a concise summary of the bubblesort programs. In addition to the information on
computer technology, IBM also discussed the corporate philosophy and financial statistics.

— United Technologies' annual report several years ago contained a 44-page product promotion
section, entitled "Fulfilling the Promise of Technology". Photographs and copy outlined the
company's contributions in the areas of energy, national defense, environment, urban develop
ment, communications, space, and medicine.

Modern computer and communication technology is expanding the possibilities of

information design. Computerized typesetting does the job much more accurately
and for less money per galley of type. Information designers are now organizing
materials for transfer by cable, computers, and satellites. This not only calls for a
new end look but also new production techniques.
Information design is an area of day-to-day management concern. With the advent of
new media, the area is growing more difficult to navigate and the costs of mistakes
are growing higher. Companies must continue searching for better control of
communication flows and visual effects, as well as cost breaks stemming from econo
mies of scale.

3.4 Identity Design

Companies are becoming increasingly conscious of the impact of their corporate

image on their sales, profits, and stock prices. At one time the major corporate
identity tool was the trademark. The Mercedes Benz trademark, originally designed
in 1900, and reshaped in 1923, is one shining example. It is acknowledged uni
versally as a sign of excellence. Not until the 1950s however, did corporations start
coordinating their various trademarks, logos, and other features. IBM is credited
with systematically applying the idea of a corporate identity program in the United
States. Developed in 1957 by Paul Rand, the IBM program's main purpose was to
create an image of product excellence, complete corporate trustworthiness, and
personalized service. It also specified use of good architecture, product design and
brochures to reinforce the corporate image. Olivetti and other European companies
had house styles during the 1920's to 1950's, but they were not goal-oriented or
thought out.
Whether or not the corporation has a corporate identity program, it will have an
image with its various publics — customers, employees, the media, stockholders,
financial analysts, the community, and others. The image is generated by the
company's employees, products, buildings, and communications as they reach
various publics. In most cases, the image is not planned but simply results from the
thousands of encounters between company materials and various publics.

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When companies discover that they are not well-understood or recognized by their
publics, they begin to give serious thought to developing a corporate identity pro
gram. They recognize they must compete for attention in a society characterized by
large institutions and abundant mass communication media. They begin to see
corporate identities as marketing tools that can be used for company and product
positioning.
Designing a corporate identity can range from creating a new logo and stationary, on
the one hand, to a multi-faceted, comprehensive, million dollar communication
programs on the other. In the later case, the identity tools include product packa
ging, information brochures, signage, office environments, car and truck decals,
uniforms, advertising, employee communications, business cards, and so on. Cur
rently, corporate identity planners use one logo on all company media. This leads to
a standardized presentation, ignoring the differences in audiences and market seg
ments. The unidimensional coporate identity may have been sufficient a few years
ago but the proliferation of audience segments is forcing corporate identity
managers to rethink their strategies.
Some corporate identity programs start with, or are occasioned by, a corporate
name change. Consider the following examples:

— During the 1960's, many corporations acquired other companies but continued to carry an
out-dated name. For example, neither the "U. S." or "Rubber" was appropriate for U. S. Rub
ber because the company had become multinational and its product line included over
400 brands of chemicals, plastics, fibers, and rubber. U. S. Rubber needed a name which would
work around the world for all its products, and after much corporate identity planning, it chose
the name Uniroyal.

— United Aircraft of Hartford, Connecticut also needed a name change. When not confused with
United Airlines of Chicago, the company was grouped with the cyclic and government depen
dent aircraft and defense contractors, even though its product line had grown to include Otis
Elevators, Carrier Air Conditioners, and other industrial and capital goods. This limited its
growth potential, despite the fact that it was among the Dow-Jones 30 Industrials. The name
was changed to United Technologies, and its stock has become a darling of Wall Street.

During the 1970's, many corporations harnessed corporate identity design to achieve
marketing objectives. Here are two examples:
— Allegheny Airlines of Pittsburgh grew to become the sixth largest air carrier in terms of passen
gers served, but it suffered from a small-time, regional image. Research by corporate identity
consultants, Landor Associates, showed that in the case of air carriers consumers felt "bigger is
better". Landor's job was to reposition Allegheny Airlines as a big-time, national carrier. Corpo
rate identity planning led to changing the airline's name to USAir. To reinforce the identity
change, planes, ground vehicles, and terminal stations were painted bright colors. The environ
mental design was supplemented with new advertising, saying "it takes a big airline to fly more
flights than TWA. ..".

— Allied Van Lines of Broadview, Illinois, used corporate identity planning to solve a different
problem, that of creating brand name recognition without a large, national advertising budget.
Market research indicated that 24.4 million people saw at least one of Allied's 12,000 trucks a
year. The company decided that a bold, new logotype and a striking truck design would
produce a strong impression on people. Thus corporate identity design served as a low cost,
highly effective advertising tool.

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Corporate identity program design was advanced in the 1950s by Walter Margulies of
Lippincot and Margulies, New York. His methodology has been adopted by others as
the standard operational procedure. Design firms such as L & M typically work on
two important phases before starting logo and logotype design. First, they study the
perceptions and preferences of the major publics — consumers, dealers, employees,
and the financial community. Then they decide what they need to accomplish. Only
then do the designers start their work on the visual aspects of the identity. This is a
significant departure from the working methods of the visually oriented corporate
identity designer, who without conducting any information gathering or analysis,
draws a few logos and lets the company pick one. The Margulies methodology of
corporate identity development and planning demonstrates market-based decision
making combined with creative design management.

4. What keeps executives from becoming more effective design managers?

According to one estimate, over 5000 U. S. companies have internal design depart
ments and there are at least eight industrial design consulting firms with over ten
employees, as well as numerous smaller ones.(5) Yet most companies neglect or
mismanage their design capabilities. The reasons are design illiteracy, cost con
straints, tradition-bound behavior, and politics.

4.1 Design Illiteracy

Some designers charge that U. S. managers are largely illiterate when it comes to
design. According to Rita Sue Siegal:
For the past 20 years American industry has been run by managers. They are trained in business
schools to be numbers-oriented, to minimize risks and to use analytical, detached plans — not
insights gained from hands-on experience. They are devoted to short-term returns and cost
reduction, rather than developing long-term technological competitiveness. They prefer
servicing existing markets rather than taking risks and developing new ones.(6)

Although this is stereotyped thinking, it represents a widespread view that many

designers have of the people who run America's corporations.

4.2 Cost Constraints

Good design costs money. Using Skidmore, Owings, & Merrill to design a new ware
house will be expensive. But bad design also costs money. In the long run, good
design will hopefully make or save money.

4.3 Tradition-Bound Behavior

Tradition-bound behavior is also a barrier to effective design management. A catalog

format is very hard to change; and a product design or a company name is even

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harder to change. Salesmen will argue that their customers will be confused by
name, product, or catalog changes. Managers prefer to stick with the original design
instead of exposing their tastes to critical judgement.

— After Pillsbury bought Green Giant Foods, several suggestions were made that a facelift was in
order. Pillsbury asked Leo Burnett, the Green Giant's agency, to look into this but after initial
creative development, the agency gave up because no one would commit themselves to backing
the new designs.

4.4 Politics

Company politics play a role in every firm. Some executives may oppose a proposed
design simply because they want to block another group. Politics surface in creativ
reviews, budget meetings, and strategy planning sessions.

5. How can a corporations's design sensitivity and design management effec

ness be measured?

The preceding factors keep companies from making optimal use of design. Com
panies need to periodically review the role that design plays in their marketing
program. At any point in time, company management will have a certain degree of
design sensitivity. Figure 1 shows a design sensitivity audit consisting of five
questions that will indicate the role design plays in the company's marketing
decision making. Figure 2 shows a design management audit with five more
questions that rank how well management uses design. Each question is scored either
0, 1, or 2. A corporation's design sensitivity will range from zero to ten, and its
design management will also range from zero to ten. Companies with a combined
design sensitivity and design management effectiveness rating of anywhere from
14—20 are in fairly good shape. Those scoring less than 8 should examine whether
they are missing a major opportunity by not making more use of design thinking in
their marketing strategy.

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 1. What role does the company assign to design in the marketing decision process?
(0) Design is almost completely neglected as a marketing tool.
(1) Design is viewed and used as a minor tactical tool.
(2) Design is used as a major strategic tool in the marketing mix.

2. To what extent is design thinking utilized in product development work?

(0) Little or no design thinking goes into product development work.
(1) Occasionally good design thinking goes into product development work.
(2) Consistently good design thinking goes into product development work.

3. To what extent is design thinking utilized in environmental design work?

(0) Little or no design thinking goes into environmental design work.
(1) Occasional good design thinking going into environmental design work.
(2) Consistently good design thinking goes into environmental design work.

4. To what extent is design thinking utilized in information design work?

(0) Little or no design thinking goes into information design work.
(1) Occasional good design thinking goes into information design work.
(2) Consistently good design thinking goes into information design work.

5. To what extent is design thinking utilized in corporate identity design work?

(0) Little or no design thinking goes into corporate identity design work.
(1) Occasional good design thinking goes into corporate identity design work.
(2) Consistently good design thinking goes into corporate design work.

Figure 1: Design Sensitivity Audit

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 1. What orientation does the design staff follow?
(0) Aims for high aesthetic ideals without any surveying of the needs and wants of the
marketplace.
(1) Designs what marketing or consumers asks for with little or no modification.
(2) Aims for design solutions that start with an awareness of consumer needs and
preferences and adds a creative touch.

2. Does the design staff have an adequate budget to carry out design analysis, planning, and
implementation?
(0) Insufficient budget even for production materials.
(1) The budget is adequate but typically cut back during hard times.
(2) The design staff is well budgeted, especially on new product development projects.

3. Do managers encourage creative experimentation and design?

(0) Creative experimentation and design is discouraged.
(1) Designers are occasionally allowed creative freedom, but more typically have to
design within tight specifications.
(2) Designers have creative freedom within the limits of the project parameters.

4. Do designers have a close working relationship with people in marketing, sales, engi
neering, and research?
(0) No.
(1) Somewhat.
(2) Yes.

5. Are designers held accountable for their work through post-evaluation measurement and
feedback?
(0) No.
(1) Designers are accountable for cost overruns in the production process.
(2) Design work is evaluated and full feedback is given to the designers.

Figure 2: Design Management Effectiveness Audit

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6. How can the interface between marketers and designers be improved?

If a company recognizes the need for more and better design work, then a two-way
process of education must occur. Marketers must acquire a better understanding of
the design process and designers must acquire a better understanding of the marke
ting process.
Marketers need to be aware of the split in the design community between the
functionalists and the stylists. The orientation of the functionalists is based on
putting good functional performance, quality, and durability in the design. The
orientation of the stylists is to put good outer form into the design. Functional
designers are normally responsive to marketing research and technical research, while
stylists often resist a marketing orientation. The stylists prefer to work by inspi
ration and tend to pay less attention to cost. Fortunately few designers are at the
extremes, and most are willing to pay some attention to market data and feedback
in developing their designs.
Marketers also often split into the same two camps. Some marketers, notably those
in the salesforce, often plead with the designers to add "bells and whistles" to the
product to catch the buyers' attention and win the sale. They press for features and
styling that are eye-catching, even though they may not contribute to good design
and performance. Other marketers hold that the key to customer satisfaction and
repeat sales is not simply attracting initial purchase but providing long-term pro
duct-use satisfaction. These marketers are more interested in supporting the incorpo
ration of good performance, quality, and durability characteristics into the product.
They point to the success of Japanese automobiles as based not on style leadership
so much as the consumer belief that Japanese automobiles offer better quality,
durability and useful features. So marketers also need to get their act together when
they work with designers and make recommendations as to what counts most in the
consumers' mind.
A common management mistake is to bring designers into the new product deve
lopment process too late or to bring in the wrong type of designer. Figure 3 shows
the eight steps in the new product development process. Typically the designer is
invited in at stage six when the prototype product is to be developed. We would
argue that designers should be brought in earlier, preferably in the idea generation
stage or at least the concept development and testing stage. Designers are capable of
producing ideas that no customers would come up with in the normal course of
researching customers for ideas. And designers may propose intriguing features
during the concept development and testing stage that deserve investigation before
the final concept is chosen.

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 Stages

1. Idea Generation Designer should come in here

2. Screening

3. Concept development and testing Designer should come in here

4. Marketing strategy

5. Business analysis

6. Product development Designer typically doesn't come in

until here
4

7. Market testing

8. Commercialization

Figure 3: Stages in the new product development process

Design Philosophy

Each company has to decide on how to incorporate design into the marketing
planning process. There are three alternative philosophies. At one extreme are
design-dominated companies which allow their designers to design out of their heads
without any marketing data. The company looks for great designers who have an
instinct for what will turn on customers. This philosophy is usually found in such
industries as apparel, furniture, perfumes, tableware, and so on.
At the other extreme are marketer-dominated companies that require their designers
to adhere closely to market research reports describing what customers want in the
product. These companies believe designs should be market-sourced and market
tested. This philosophy is usually found in such industries as packaged foods, small
appliances, and so on.
An intermediate philosophy holds that designs need not be market-sourced but at
least should be market-tested. Consumers should be asked to react to any proposed
design, because often consumers have ways of seeing that are not apparent to de
signers and marketers. Most companies espouse the philosophy that designs should
be market-tested even if not market-sourced.
One designer of bank retail environments uses a highly market-oriented procedure
for arriving at an optimal design for remodeling a bank. She gathers pictures of

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competing bank interiors and shows them to a small focus group of bank customers
who represent the target customer group for the particular bank. She asks them to
respond to the different layout arrangements, textures, furniture, and so on, shown
in the pictures, to gain insight into consumer perceptions and preferences. Then she
develops a proposed design for the bank. She tests this design with another focus
group, and makes further improvements. She presents the final version to manage
ment with the evidence of how much interest and satisfaction were expressed by the
bank's customers. Management either approves or suggests further modifications,
until there is consensus on a final design for the bank remodeling project.
This rhythm between the visual conceptions of the designer and the consumers'
reactions to proposed designs represents the essence of markt-oriented design thin
king. It neither inhibits the designer from coming up with great ideas nor allows bad
design ideas to be accepted without testing.

7. Conclusions

While every corporation buys and uses product, environmental, informa

identity design, very few have developed a sophisticated understanding
manage design as a marketing tool in the marketing mix. We defined
process that seeks to optimize consumer satisfaction and company pr
through creating performance, form, durability, and value in connectio
ducts, environments, information, and identities. We have shown that stron
can help a company stand out from its competitors. Strong design can b
training general managers, marketers, sales people, and engineers to
design and designers to be aware of and understand these and other fu
Design ideas should at least be market-tested, and preferably be market-sourced or
stimulated by market survey data. As other marketing tools become increasingly
expensive, design is likely to play a growing role in the firm's unending search for
differential advantage in the marketplace.

Footnotes

1 Peter Gorb, ed.. Living by Design, London: Lund Humphries 1979, p. 7—8.
2 Jean Pronger King, Robots Will Never Be Practical Unless Products Are Designed for Them,
Industrial Design January/February, pp. 24—29.
3 Philip Kotier, Atmospheres as a Marketing Tool, Journal of Retailing Winter 1973—1974,
pp. 48—64.
4 See Architecture As a Corporate Asset, Business Week, October 4, 1982, pp. 124—126.
5 Rita Sue Siegal, The USA: Free to Choose, Design, January 1982, p. 24.
6 Ibid

The authors wish to thank Lawrence Solomon (Director of Graduate Studies, School of Art and
Design, University of Illinois at Chicago), Jane Bell (President, Atmospheres), and Barbara Devis
for their perceptive comments and suggestions.

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Bibliography on design

Drexler, Arthur and Greta Daniel Twentieth Century Design, New York: Museum of Modern Art,
1959.

Ferebee, Ann, A History of Design, New York: Van Nostrand Reinhold, 1970.
Gorb, Peter, ed.. Living by Design, London: Lund Humphries, 1979.
Papanek, Victor, Design for the Real World, Pantheon Books New York, 1971.
Pile, John F., Design: Purpose Form & Meaning, Amherst, MA: University of Massachusetts Press,
1979.

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