PRODUCT DEVELOPMENT

Two Approaches:
 Modification of an existing product
 Develop new product or enhanced features
Three Traditional Classes of Production
1. Primary production - earliest stage in the production process, e.g. mining, farming, oil
extraction, etc.
2. Secondary Production - involves converting primary production raw materials into finished, or
part-finished, goods either through constructing, manufacturing or other forms of processing.
3. Tertiary Production - describes the activities of the services sector of the economy e.g. retail,
insurance, banking and direct services to the public (policing, nursing, etc.) which rely on the
products of the two above classes to create their working environment.
Product Lifecycle Graph
 Conception
 Launch
 Growth
 Maturity
 Retirement

Product Lifecycle Graph Matrix

Product Lifecycle Combined Matrix Terms

 Infants - are in a position where research and development (R&D) costs are being recovered with
high pro-motional expenditure in terms of educating the market.
  Problem Children - are in a high-growth situation but with a low market share. They are costly
to maintain and market, requiring action to transfer them to "star" or "cash cow" positions.
 Stars - have high promotional costs but have a good future potential once the product/service has
been accepted by the market.
 Cash Cows - earn money in high market growth/low-growth situations. Another benefit is that
promotional costs are lower as the market is already familiar with the product or service.
 Cash Dogs - are products with a low market share in a saturated market. These typically have
uniform cash cow.
 War Horses - are products in a declining market but which still have a relatively high market
share probably as a result of competitors departing the market in favour of new products.
 Dodos - are products which are in a declining market with a low market share and a negative cash
flow. Clearly, these should be deleted from a company's offerings as soon as practicable.

Two Professional Disciplines of Product Management

 Product Planning
 Product Marketing

Product Management

Organizations depend on their product management teams to perform activities that satisfy customers'
requirements.

These activities are conducted within five main areas of product management:

 People
 Product
 Process
 Plant
 Programme

Technological Lifecycle
Technological Phases
1. Cutting Edge - Technology product marketed without specific application, no target market,
sales in technology markets.
2. State of the Art - Adoption of cutting-edge technology to meet wider market needs, sales based
on technological benefits, beginning to sell on benefits.
3. Advanced - Adoption of the product's concept, sales based on benefits.
4. Mainstream - Low-cost, high-quality standard product, selling on benefits,
5. Mature - Reduced product differentiation (commodity market), shift from segmentation to
customer service.
6. Decline - Displaced by new technologies, price competition.

Considerations on “Value for Money”

Purchase decision Criteria

 affordability
 functionality and quality
 aesthetic appeal
 perceived status of ownership.

Buyer Classification

 Innovators
 Adopters
 Sceptics
 Traditionalists
Other factors to consider:

 Cost of Ownership
 Cost of Disposal

Proposed product/services “values” with examples of good and bad service

Value Example of Good Practice Example of Poor Practice

Supplier understands and values
Customer-supplier Unable to develop rapport, trust,
customer's needs, committed to
relationship or interest in customer needs.
long-term collaboration.

Product Development
Subsequent Design Change
Flexibility
Product/Services Reliability
Product/Services Availability
Product/Services Performance
Lifetime Product/Services
Support
Safe Product Operations
Product Use Training
Product Maintenance
Product/Services Adherence to
Program Requirement
Residual Worth
Status Feature
Example “Values” Considerations For New Defence (Aircraft) Project
Value
Customer-supplier
relationship
Product Development
Subsequent Design Change
Ability
Product/Services Reliability
Product/Services Availability
Product/Services Performance
Ability to specify required
features.
Main agent/dealer recalls for
safety developments.
Goods need little maintenance,
always perform as required.
Choice of goods available in
showroom, ready to take away.
Goods and services perform as
per marketing literature.
Established dealer network with
spare parts, service centers, and
after-sales support.
Goods meeting safety standards.
Knowledgeable sales staff, good
after-sales service, product
instructions.
Easy maintenance designed for
it.
Online shopping with home
delivery.
Quality items retain high value.
High-priced, unique products.
Demonstration of meeting
this value
Partnered approach covering
hard and soft issues with a
partnering charter.
Joint buyer and supplier design
teams with close involvement of
supply chain members.
Ability to consider future needs
and plans for upgrades.
Testing and reliability modeling.
Performance management for
aircraft and training systems.
Fleet and performance
management with customer
Unable to change specifications
as goods are already made.
Products unable to accept new
modifications.
Goods break down or become
faulty soon after the warranty
period.
Goods need to be ordered due to
demand exceeding supply,
leading to long waiting lists.
Products wear out soon after the
warranty period.
Goods become obsolete with no
maintenance or service support.
Second-hand electrical goods of
unknown origin.
Poor instructions, no product
training or awareness by sales
staff.
Design neglects long-term
maintenance needs.
Delivery delays due to
production issues.
Low value after use, especially
consumables.
Market demand leads to price
reductions.
Consequences of not
meeting the value
Adversarial approach leading to
time, cost, and quality impacts,
as well as morale issues.
Products may not meet
operational requirements or end
user needs.
Obsolescence and inability to
incorporate future defence
developments.
Unreliable performance
impacting defence decisions.
Lack of defence capability
impacting national security.
Reduced effectiveness of
defence capability and national

Lifetime Product/Services
Support
Safe Product Operations
Product Use Training
Product Maintenance
Timing
Residual Worth
Status Feature
participation.
Pre-planned product
development for flexibility.
Integrated safety management.
Provision of specialist training.
Maintenance management
services.
Smooth transition to operational
capability.
Understanding of potential
residual worth.
Improvement on current
capability.
security.
Inability to meet long-term
operational requirements.
Risks to flight crew, service
personnel, and civilians.
Inability to use the aircraft
safely and effectively.
Inability to use the aircraft
safely and effectively.
Additional costs and burden on
current operations due to delays.
Limited market value and
difficulty in establishing
financial worth.
Poor reputation and lack of
seriousness in international
standing.

EXISTING PRODUCT DEVELOPMENT

some of the major problems in modern living:

 Too much noise

 Too much information
 Too many decisions
 Too much complexity
 Issues on quality and reliability

Existing Product Development Options

Product Development Suggestions Example Products

Simplification by removing complexity Ready prepared fresh food meals

Apply the existing product to a new use Combined scanner/photocopier/fax machine

Automate Electrical kettle, toaster

 Mass produce items, TVs, compact disks,
Reduce cost
computers

Make easier to use and understand Camera and picture processing

Reduce fear to own, use Chainsaw, Hedge trimmer

Give more performance such as capacity Jumbo sized flask

Instant coffee, lottery tickets online, internet

Make faster, less waiting for customer
banking

Provide more durability and improve reliability Motorcars

Design to give better appearance Stay-pressed fabric, water-proof clothing

Add new features and add new functions Multi-drink machines – coffee, tea, cappuccino

Make portable Sony Walkman, then to mp3 players, iPods, etc.

Make easy to clean or self-cleaning Self-cleaning ovens, self-de-icing freezers

Make operationally quieter Vacuum cleaner

Mobile telephone with digital camera and mp3

Integrate function
player, blackberry, iPhone

Vacuum cleaner attachments, suitcases with

Make more flexible and versatile
wheels, mobile phone with cameras

Make lighter weight – or heavier if this implies

Hover lawn mower, garden furniture
quality

Make smaller Mobile phones, collapsible umbrellas

Make larger, if this improves user interaction Plasma screen TV

Make more powerful Computer processors

Reduce or eliminate drawbacks or side-effects Medicines, no-drowsy tablets

Make more accurate Quartz watches

Give better shape, design, style Kitchen goods

Provide better sensory appeal (paste, fill, look,

Digital radio
smell, sound)
 Provide better psychological appeal
Branded “fashionable goods”
(understandable, acceptable)

Provide better emotional appeal (happy, Sports equipment such as skateboards, surf
satisfying, enjoyable, fun, etc.) boards, roller blades, etc.

Product Lifecycle “S” Curves

Existing Product Development

- continual process of evolution
Rules for Product Improvement:
1. Continuous improvement is ongoing, with resource and budget implications.
2. Regular outsider reviews can provide fresh perspectives.
 3. Prioritize simple and inexpensive improvements first.
4. Implement improvements in stages rather than all at once.
5. Try to work on two to three top priorities.
6. Celebrate, acknowledge and reward accomplishments.
7. Focus on customer value and involvement.
8. Look for breakthrough improvements.
9. Develop a continuous improvement system tailored to the specific business.
10. Learn from industry best practices and competition.

NEW PRODUCT DEVELOPMENT

“Introducing a new product to the market is seldom easy”
Various challenges in introducing new product
1. Resource Intensive Process
2. Legal Protection
3. Trade-offs in Value Delivery
4. Ideation and Progression
5. Launch Success Rate
“You have to kiss a lot of frogs to find a prince. But remember, one prince pays for a lot of frogs.” -
3M's Art Fry - inventor of the Post-It note
Four Potential Avenues of Innovation

 Existing Market Growth

 Related Market Growth
 New Market Creation
 Disruption
To achieve a well-balanced new product development strategy, a company's resources should be
allocated as follows:

 60% on existing market growth.

 20% on related market growth.
 15% on new market creation.
 5% on disruption products.

New product, market and risk

Extended Incremental Totally New

Same Product
Product range Change Product
Existing Market Low Low Medium Medium
Related market Medium Medium Medium High
Totally New Market Medium Medium High High
Market Disruption - - - High
Management of Design

Considerations for Product Differentiation

1. Features – capabilities of the product or service
2. Fit – tailoring the product or service to suit customer requirements
3. Styling – functional, visual, tactile
4. Reliability – warranties, lifetime guarantee, returns, policy of product
5. Packaging – color, size, shape, protection
6. Sizes – Clothing, appliances, computers and luggage sizes
7. Brand naming – labelling, implied status or meaning
8. “Turnkey” solutions – total ownership solution, funding, service, warranty, disposal as seen in
the growth of personal car lease arrangements.

Strength of a product

 Technical specification
 Reliability
 Simplicity
 Specialist Application
 Aesthetic features
 Price