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CHAPTER I
1.1 INTRODUCTION
Design strategy is a discipline which helps firms determine what to make and do, why do it and
how to innovate contextually, both immediately and over the long term. This process involves
the interplay between design and business strategy.
While not always required, design strategy often uses social research methods to help ground the
results and mitigate the risk of any course of action. The approach has proved useful for
companies in a variety of strategic scenarios.
New product development is an important way for businesses to stay ahead of the competition
and continue to appeal to the changing needs of existing customers. In addition, new product
development can open up new marketing channels and help to increase market share. There are a
variety of strategies that can be used for effective product development.
Product design is cross-functional, knowledge-intensive work that has become increasingly
important in today's fast-paced, globally competitive environment. It is a key strategic activity in
many firms because new products contribute significantly to sales revenue. When firms are able
to develop distinctive products, they have opportunities to command premium pricing. Product
design is a critical factor in organizational success because it sets the characteristics, features,
and performance of the service or good that consumers demand. The objective of product design
is to create a good or service with excellent functional utility and sales appeal at an acceptable
cost and within a reasonable time. The product should be produced using high-quality, low-cost

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materials and methods. It should be produced on equipment that is or will be available when
production begins. The resulting product should be competitive with or better than similar
products on the market in terms of quality, appearance, performance, service life, and price.

1.2 OBJECTIVES OF THE STUDY

To study importance of product design strategies.

To study impact of designing strategies on products.

1.3 SCOPE OF THE STUDY

The study helps in a better and clear understanding of importance of designing strategies
of product.

1.4 RESEARCH METHODOLOGY

Secondary sources:
The methodology of the collection of data with reference to the secondary data was taken
from different published books, journals and government websites.
Analysis of data:
The data collected from secondary sources has been edited by preparing tables, charts and
statistical tools have been applied which have been explained in various parts of the study.

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1.5 REVIEW OF LITERATURE

1. Henry W. Stoll in his book Product Design Methods and Practices states product design is
generally conducted by a manufacturing enterprise whose primary purpose is to manufacture and
sell products for a profit. Although product design is an extremely important activity performed
within the manufacturing enterprise, it is just one of a variety of activities which must be
performed well if the firm is to survive and prosper in the long term. How these other activities
and concerns enable and/or constrain the product design process is therefore of key importance
in good design.
2. Kesheng Wang, George L. Kovacs, Michael Wozny in their book Knowledge Enterprise:
Intelligent Strategies in product design, Manufacturing, and Management says the productivity
efficiency of manufacturing enterprises can be affected by product design, manufacturing
enterprises can be affected by product design, manufacturing decisions and production
management. With recent advances in computers and manufacturing techniques, powered data
acquisition systems are actively in use in manufacturing enterprises. This supports huge datasets
which are related to bill of material, product design, process planning and scheduling, process
and systems, monitoring and diagnosis, and market forecasting, which are collected and stored in
databases at various stages for easy manufacturing. The knowledge which is valuable for
enterprises including rules, regulars, clusters, patterns, association and dependencies, etc. is
hidden in the datasets.
3. Ireneusz Zbicinski, John Stavenuiter &Barbara Kozlowska in their book, Product Design and
Life Cycle Assessment mentions the production process is essentially a wastisation process of
labour and resources. Every process of production and consumption begins with an intellectual

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act, recognizing the use potential embodied in a part of nature and landscape, be it land for
grazing, wood for construction or ores for mining. In the next step, a value is attributed to what is
now no longer perceived as a part of nature but a resource. This attribution of a value refers to
the potential market value of the resources, i.e. the demand that people other than the owners
have, not to any kind of intrinsic value. The resource is exploited if this market value is higher
than the cost of waste production, overburden, drainage water, wastes heaps are all parts of
nature which have been in the way of commercial exploitation of a resourses. So every
production process necessarily begins with waste generation, and with negative environmental
impacts.

1.6 LIMITATIONS

It is based on secondary data.

It focuses only on designing strategies of products.

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CHAPTER 02
2.1 PRODUCT DESIGN: A KEY TO ORGANIZATIONAL SUCCESS
Product design is an essential activity for firms competing in a global environment. Product
design drives organizational success because it directly and significantly impacts nearly all of the
critical determinants for success. Customers demand greater product variety and are quick to
shift to new, innovative, full-featured products. In addition, customers make purchase decisions
based on a growing list of factors that are affected by product design. Previously, customers
made purchase decisions based primarily on product price and/or quality. While these factors are
still important, customers are adding other dimensions such as customizability, order-to-delivery
time, product safety, and ease and cost of maintenance. Environmental concerns are expanding to
include impacts during production, during the product's operating life, and at the end of its life
(recycle-ability). In addition, customers demand greater protection from defective products,
which leads to lower product liability losses. Safer and longer lasting products lead to enhanced
warrantee provision, which, in turn, impact customer satisfaction and warrantee repair costs.
Programs and activities are being put in place so organizations can cope with these dimensions.
Organizations are embracing concepts such as mass customization, design for manufacturing and
assembly, product disposal, quality function deployment, and time-based competition. They are
using technology such as rapid prototyping and computer-aided design to examine how products
function, how much they may cost to produce, and how they may impact the environment. Firms
are searching for and implementing new technologies to determine ways to design better

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products. They are examining legal and ethical issues in product design as well as the impact of
product design on the environment.
The job of bringing product innovations to market is challenging for most manufactures. Today,
many companies are outsourcing some of their design to third par- ties, or setting up their
own design centers in geographically dispersed areas.
Global product design is not a brand new idea; about one-half of manufacturers surveyed have
had a global design strategy in place for longer than one year. As design teams be- come more
physically dispersed, the complexity of managing the product development process has
intensified. As these networks of design resources are formed, new chal- lenges have come
into play based on the relationships between the product managers and the global design centers.

2.2THE INCREASING IMPORTANCE OF PRODUCT DESIGN

Product design is more important than ever because customers are demanding greater product
variety and are switching more quickly to products with state-of-the-art technology. The impacts
of greater product variety and shorter product life cycles have a multiplicative effect on the
number of new products and derivative products that need to be designed. For example, just a
few years ago, a firm may have produced four different products and each product may have had
a product life cycle of ten years. In this case, the firm must design four new products every ten
years. Today, in order to be competitive, this firm may produce eight different products with a
life cycle of only five years; this firm must introduce eight new products in five years. That
represents sixteen new products in ten years or one product every seven and one-half months. In
this fast-paced environment, product design ceases to be an ad hoc, intermittent activity and

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becomes a regular and routine action. For an organization, delays, problems, and confusion in
product design shift from being an annoyance to being life threatening.
Product Design is one of the most important non-price factors which determines the success of a
product. The role of product design changes throughout the life-cycle of a product. In the initial
product development stage, the role of design is to create a marketable product from an
innovation. The product may create a need where none existed before, or quite different products
may be competing with others in the same market. As the product life cycle matures, more
competitors enter the market and the chief role of design is in product differentiation; through
quality, appearance, performance, ease of use, reliability, reparability and so on.
The importance of design as a non-price factor and the role of design in determining the
production and running costs of a product lies in the theory that:

A purchaser will chose a better designed, higher quality product when given the choice of
two products of similar price.

A purchaser will chose the cheaper of two products of similar design and quality.

In reality, purchaser choice will also be influenced by various other non-price factors such as
availability, advertising, company image, and ideology. In addition, price is often regarded as an
indication of quality. Finally, purchasers can also chose between a product or a service. A number
of studies have shown that innovativeness and technical sophistication are the non-price factors
which most determine competitive success in international markets.
While product design is generally considered to be a non-price factor it also important to
consider the influence of design upon product price. Product design effects the cost of production

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through the choice and use of materials and how the product is assembled. Design also
influences after-sales maintenance and running costs. Running costs are often calculated as being
integral to the price of a product in purchasers decisions. Therefore it is simplistic to view design
as purely a non-price factor.
In the UK, studies of the return of investment in design have been carried out by the Design
Innovation Group of Open University and Manchester Institute of Science and Technology. One
study showed that 'Design Conscious Firms' had a three per cent higher return on capital, one per
cent higher profit margin, 28 per cent higher Turnover growth and a seven per cent higher capital
growth than a representative sample.
Macroeconomic factors and design: In industrialised countries, the link between design of
products and industrial competitiveness has increasingly been acknowledged by economists and
policy makers as well as by designers themselves.
In the UK, two important reports stimulated debate into the important role of design in
competitiveness: the Corfield Report on Product Design (NEDO, 1979) and the Finniston
Report, 'Engineering our Future' (Finniston, 1980). The reports suggested that Britain was
declining industrially through loss of market share to other countries, especially Germany and
Japan, both of which were renowned for the high quality and design of their products. The
reports pointed to a cause being the UK's relative lack of investment in Research and
Development and Product Design. Walsh et. al. (1992: 4) summarises the main findings of these
reports:
Since the Second World War, and particularly since the late 1950s, the creation and manufacture
of well-designed products, across the whole spectrum of innovation, have become essential to

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the success both of individual companies and national economies...our research has shown that
those firms that invest resources and professional expertise in product and industrial design in
both traditional and new industries have been commercially more successful than firms that pay
less attention to these aspects of design.
Such has been the concern in the UK with the country's decline in the share of the world's
manufactured products, that during the 1980s, the Conservative government significantly
departed from their policy of reducing public spending when they funded a new initiative to
directly subsidise product design within firms (the Support for Design Scheme). Margaret
Thatcher (1992) cited in Walsh et. al. (1992: 69) wrote of the importance of product design:
There are many ingredients for success in the market-place. But I am convinced that British
industry will never compete if it forgets the importance of good design. By 'design' I do not just
mean 'appearance'. I mean all the engineering and industrial design that goes into a product from
the idea stage to the production stage, and which is so important in ensuring that it works, that it
is reliable, that it is good value and that it looks good. In short it is good design which makes
people buy products and which gives products a good name. It is essential to the future of our
industry.
These reports and government initiatives have been reflected in other reports relating to design in
Japan, Germany, France, UK, Scandinavia.
According to Braunerhjelm and Fors, comparative advantage can be regarded from two
perspectives, static or dynamic. In this analysis, static comparative advantage includes the fixed
factors of production such as physical capital, labour, human capital, labour skill, land and
natural resources. Dynamic comparative advantage is the ability to upgrade skills, adopt new

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technologies, introduce innovative products and production techniques and the transfer of these
technologies between companies in a country. Therefore, goods competing on price, compete on
a static comparative advantage whereas goods which are of higher value added, more technically
sophisticated and differentiated, require that dynamic comparative advantage be present
(Braunerhjelm and Fors, 1994: 7). Thus product design, as a process, is a factor of dynamic
comparative advantage. Braunerhjelm makes two important points regarding dynamic
comparative advantage; firstly, with dynamic comparative advantage it is more difficult to
predict which firms will succeed, since success depends on individual companies internal
capacity to innovate and adapt. Secondly, in an open international economy, it will be more
difficult to predict winners

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2.3 PRODUCT DESIGN AND SUPPLY CHAIN MANAGEMENT

Product design can also be an important mechanism for coordinating the activities of key supply
chain participants. As organizations outsource the production of sub-assemblies and components,
they also may be asking suppliers to participate in product design. As they outsource design

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capabilities it is essential that they manage and coordinate the flow of information among the
supply chain participants. This can be especially important as firms outsource components to two
or more suppliers. Now, there may be important design interfaces among two, three, or more
suppliers. These interfaces must be properly managed to ensure cost effective and timely designs.
Clearly, information and communication technologies become important parts of this effort.

2.4 STAGES OF PRODUCT DEVELOPMENT

A product usually starts as a concept which, if feasible, develops into a design, then a finished
product. The following seven phases can be identified in a variety of product design and
development projects.

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1. Identification of needs, feasibility study and concept selection,

2. System-level design, detail design and selection of materials and processes
3. Testing and refinement
4. Manufacturing the product
5. Launching the product
6. Selling the product, and
7. Planning for its retirement.
A. Feasibility study
Elements of feasibility study include:
1. Market research
2. Product specifications
3. Concept generation, screening and selection
4. Economic analysis
5. Selecting optimum solution
B. Product specifications
Product specifications give precise and measurable description of the expected product
performance based on the qualitative descriptions of the customer needs.
For example, a specification of the total weight of the product must be less than 5 kg can be
based on the customer need of a light weight product and the observation that the lightest
competing product is 5 kg. Similarly, a specification of average time to unpack and assemble

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the product is less than 22 min can be based on a customer need of the product is easy to
assemble and the observation that the competing product needs 24 minutes to unpack and
assemble.
C. Concept generation and screening
Product specifications are then used to develop different product concepts that satisfy customer
needs. Some of the concepts may be generated by the development team as novel solutions but
others may be based on existing solutions or patents. The different concepts are then compared
in order to select the most promising option. The Pugh method is useful as an initial concept
screening tool.

D. Economic analysis
The economic analysis section of the feasibility study normally provides an economic model that
estimates:
(1) The development costs,
(2) The initial investment that will be needed,
(3) The manufacturing costs, and
(4) The income that will result for each of the selected concepts.
The economic analysis also estimates sources and cost of financing based on the rate of interest

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and schedule of payment.

E. Selecting an optimum solution
Factors involved in selecting an optimum solution:

Customer needs
Physical characteristics of size and weight
Expected life and reliability under service conditions
Energy needs
Maintenance requirements and operating costs
Availability and cost of materials and manufacturing processes
Environmental impact
Quantity of production
Expected delivery date.

F.
1.

Launching and selling the product

Launching the product
Project planning and scheduling
Manufacturing

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2.

Quality control
Packaging
Marketing
Selling the product:
Cost of product engineering
Actual manufacturing cost
Sales expense and administrative cost
Selling price

2.5 MASS CUSTOMIZATION

Mass customization is the low-cost, high-quality, large volume delivery of individually
customized products. It is the ability to quickly design and produce customized products on a
large scale at a cost comparable to non-customized products. Customization, cost effectiveness is
the ability to produce highly differentiated products without increasing costs, significantly.
Consumers expect to receive customized products at close to mass-production prices.
Customization volume effectiveness is the ability to increase product variety without diminishing
production volume. As markets become more and more segmented and aggregate demand
remains constant or increases, firms must continue to design and produce high volumes across
the same fixed asset base. Customization responsiveness is the ability to reduce the time required
to deliver customized products and to reorganize design and production processes quickly in
response to customer requests. It would be counter-productive to pursue mass customization if a
customized product takes too long to produce. Speed in product design and production is an
indispensable criterion for evaluating an organization's mass customization capability.

2.6 DESIGNS FOR MANUFACTURING AND ASSEMBLY

Improving manufacturability is an important goal for product design. A systems approach to
product design that was developed by two researchers from England, Geoffrey Boothroyd and

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Peter Dewhurst, is called design for manufacturability and assembly (DFMA). It can be a
powerful tool to improve product quality and lower manufacturing cost. The approach focuses on
manufacturing issues during product design. DFMA is implemented through computer software
that identifies designs concepts that would be easy to build by focusing on the economic
implications of design decisions. These decisions are critical even though design is a small part
of the overall cost of a product because design decisions fix 70 to 90 percent of the
manufacturing costs. In application, DFMA has had some startling successes. With the DFMA
software, Texas Instruments reduced assembly time for an infrared sighting mechanism from 129
minutes to 20 minutes. IBM sliced assembly time for its printers from thirty minutes to three
minutes.
Firms are recognizing that the concept behind DFMA can also be extended beyond cost control
to design products that are easy to service and maintain. To do this effectively, service and
maintenance issues should be considered at the earliest stages of the design. Also, firms will be
required to examine disposal during product design as they become liable for recycling the
products they make. It can be easier to recycle products if those factors are part of the product
design paradigm.

2.7 DISPOSAL AND PRODUCT DESIGN

Disposal is becoming an increasingly important part of product design. The European Union is
taking the lead by requiring that most of an automobile is recycled by the year 2010. This
requirement has a major impact on product design. The most obvious effect is to change the
notion that a consumer is the final owner for a product. With this approach, the product returns to
the manufacturer to be recycled and the recycling process should begin in product design.

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Vehicles should be designed so they can be disassembled and recycled easily. The designers
should avoid exotic materials that are difficulty to recycle. For example, parts that have plastic
and metal fused together should not be used in applications where they are difficult to separate.
The designers should determine which parts will be designed to be refurbished and reused, and
which will be designed to be discarded, broken down, and recycled. All this should be done
without adding costs or reducing product quality.

2.8 QUALITY FUNCTION DEPLOYMENT

Product design shapes the product's quality. It defines the way that good and service functions.
Quality has at least two components. First, the product must be designed to function with a high
probability of success, or reliability; that is, it will perform a specific function without failure
under given conditions. When product reliability increases, the firm can extend the product's
warrantee without increasing customer claims for repairs or returns. Warrantees for complex and
expensive items such as appliances are important selling points for customers. Second, quality
improves when operating or performance characteristics improve even though reliability does
not. The goals of product design should be greater performance, greater reliability, and lower
total production and operating costs. Quality and costs should not be viewed as a tradeoff because improvements in product and process technologies can enhance quality and lower
costs.
Quality function deployment is being used by organizations to translate customer wants into
working products. Sometimes referred to as the house of quality, quality function deployment
(QFD) is a set of planning and communication routines that focus and coordinate actions and
skills within an organization. The foundation of the house of quality is the belief that a product

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should be designed to reflect customers' desires and tastes. The house of quality is a framework
that provides the means for inter-functional planning and communications. Through this
framework, people facing different problems and responsibilities can discuss various design
priorities.

2.9 PROTOTYPING
Engineering and operations combine to develop models of products called prototypes. These may
be working models, models reduced in scale, or mock-ups of the products. Where traditional
prototype development often takes weeks or months, the technology for rapid prototyping has
become available. Some companies are using the same technology that creates virtual reality to
develop three-dimensional prototypes. Other firms employ lasers to make prototypes by
solidifying plastic in only a few minutes; this process can produce prototypes with complex
shapes. Prototyping should increase customer satisfaction and improve design stability, product
effectiveness, and the predictability of final product cost and performance.

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2.10 COMPUTER-AIDED DESIGN

Currently, business managers and engineers perceive computer-aided design (CAD) as a tool to
assist engineers in designing goods. CAD uses computer technology and a graphic display to
represent physical shapes in the same way that engineering drawings have in the past. It is used
in the metalworking industry to display component parts, to illustrate size and shape, to show
possible relationships to other parts, and to indicate component deformation under specified
loads. After the design has been completed, the engineer can examine many different views or
sections of the part and finally send it to a plotter to prepare drawings. This capability greatly
reduces engineering time and avoids routine mistakes made in analysis and drawing. It
significantly increases productivity and reduces design time, which allows faster delivery.

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Applications of CAD systems are not limited to producing goods. While it's true that services do
not have physical dimensions, the equipment and facilities used to produce services do. For
example, the service stalls in an automotive center or rooms in an emergency medical center
have physical characteristics that can be represented by the interactive graphics capabilities of a
CAD system.

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CHAPTER 3
3.1 ELEMENTS OF PRODUCT STRATEGY
Companies carefully plan the life of a product from launch to discontinuance. Product managers
tie each step of product strategy to consumer reaction to the product. If the product sells well,
they expand the strategy to increase the product's distribution. If the product fails to meet sales
projections, they accelerate it discontinuance. Become familiar with the key elements in a
product marketing strategy that you will use to drive revenue and develop advertising campaigns.
A. Target Market
Your target market is the demographic you feel will be most interested in purchasing a product.
Some of the subcategories used to identify a target market are age, gender, geographic location,
occupation, income and family situation such as single or married with children. You can
establish a target market by using historical data for similar products, conducting market surveys
with test subjects that fit into many potential demographic groups and by examining the
consumer tendencies of various groups.
B. Pricing
The revenue generated from a product strategy relies on an accurate pricing element. Product
price consists of the cost to manufacture market and distribute the product along with a desired
profit margin. Profit margin can be a percentage of the total selling price or it can be a set
amount. For example, you can determine that profit needs to be 40 percent of the final selling

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price or that profit can be set at $15 per unit. The method used to set profit is based on company
policy.
C. Differentiation
Your competition figures into many elements of your product strategy. One element that will
guide product advertising is differentiating your product from the competition's. Determine what
your product offers that the competition does not and use that information in your advertising
and marketing materials. It can be easier to focus in on one or two significant differences rather
than trying to fill advertising material up with a comprehensive comparison chart.
D. Schedule
A product strategy has a beginning and an ending. Create the strategy time line and develop
milestones for measuring the progress of the campaign. A schedule makes it easier to create
deadlines for items such as product improvements, development of marketing materials and
reaching revenue projections.

3.2 RELATIONSHIP BETWEEN PRODUCT DESIGN & BUSINESS

STRATEGY
Competing in a free market populated with giant multinational companies requires the
development of new products to maintain a share of the market. As a result, rapid, effective
product design and market introduction are essential ingredients of a firm's business strategy.
A. Product Design

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Product development is a three-stage process in which marketing establishes product

requirements, a design team develops a working prototype and production engineers then
determine how the product will be manufactured. A concept design is used to evaluate product
ideas for initial market testing. If a review by potential customers or salespeople suggests the
product has market potential, a design specification that addresses such product characteristics as
appearance and function is created and market-tested. If the market test is successful,
embodiment design is initiated to identify design options. The design options lead to implications
for product development. A preferred product design is then selected and tested. A successful
market test leads to a detailed product design and a design for manufacture, which leads to the
creation of a production prototype. The prototype is then formally approved.

B. Business Strategy
A business strategy is a plan that guides a company to profitable operations. A strategy ensures
that a company retains the loyalty of important customers through product extensions (new
products based on current offerings), changes in a product mix (a range of complementary

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products) and adjustments to prices or costs. Strategy reflects decisions regarding what products
to market and what products to abandon.
C. Product Design and Strategy
Customers make purchase decisions based on price, quality and product design. As a result,
product design strategy is a key element of an organization's business strategy in that the former
determines the characteristics and performance of new services and goods that can contribute in
a significant way to sales revenue. Product design is the means by which customer demand for
new and varied products can be met, a key focus of business strategy.
D. Implementation
Customers seek custom products, the timely delivery of products, safe products, products that are
simple to use and products that require little maintenance as well as products that are low in cost,
high in quality and backed by warranties. In addition, some customers consider the
environmental impact of a product in terms of its production, function and disposal. These
customer preferences are key considerations in the development of both a product design
strategy and a business strategy.

3.3 LEGAL AND ETHICAL ISSUES IN PRODUCT DESIGN

The responsibility of an organization and its managers to see that the goods and services they
produce do not harm consumers? Legally, it is very clear that organizations are responsible for
the design and safe use of their products. Consumers who believe they have been damaged by a
poorly designed good or service have legal recourse under both civil and criminal statutes. Often,

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however, only the most serious and obvious offenses are settled in this way. More difficult
ethical issues in product design result when the evidence is not as clear. For example, what
responsibilities does a power tool manufacturer have with respect to product safety? Does a
power saw manufacturer have the responsibility to design its product so that it is difficult for a
child to operate? Suppose a parent is using a power saw and is called away to the telephone for a
few minutes. A ten-year old may wander over, press the trigger and be seriously injured.
Designing the saw so it has a simple and inexpensive lockout switch that would have to be
pressed simultaneously when the trigger is pressed would make it more difficult for the accident
to happen. What is the responsibility of the parent? What is the responsibility of the company?
A. PRODUCT DESIGN AND THE ENVIRONMENT
Organizations consider product design a critical activity to the production of environmentally
friendly products. Organizations increasingly recognize that being good corporate citizens
increases sales.

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Fast-food restaurants have begun recycling programs and redesigned packaging materials and
systems in response to customer concerns. In other cases, being a good corporate citizen and
protecting a company's renewable resources go well together; there are win-win opportunities
where an organization can actually design products and processes that cut costs and increase
profits by recapturing pollutants and reducing solid waste.
B. OVERVIEW OF PRODUCT DESIGN PROCESS
Product design time can be reduced by using a team approach and the early involvement of key
participants including marketing, research and development, engineering, operations, and
suppliers. Early involvement is an approach to managing people and processes. It involves an
upstream investment in time that facilitates the identification and solution of down-stream

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problems that would otherwise increase product design and production costs, decrease quality,
and delay product introduction.

Time-based competitors are discovering that reducing product design time improves the
productivity of product design teams. To reduce time, firms are reorganizing product design from
an "over-the-wall" process to a team-based concurrent process. Over-the-wall means to proceed
sequentially with the limited exchange of information and ideas. When this approach is used,
problems are often discovered late because late-stage participants are excluded from decisions
made early in the process. As a result, poor decisions are often made.
Product design is a labor-intensive process that requires the contribution of highly trained
specialists. By using teams of specialists, communications are enhanced, wait time between
decisions is reduced, and productivity is improved. Participants in this team-based process make

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better decisions faster because they are building a shared knowledge base that enhances learning
and eases decision-making. By sharing development activities, design decisions that involve
interdependencies between functional specialists can be made more quickly and more effectively.
This reorganized process creates a timely response to customer needs, a more cost-effective
product design process, and higher-quality products at an affordable price.
There are several reasons why early involvement and concurrent activities bring about these
improvements. First, product design shifts from sequential, with feedback loops that occur
whenever a problem is encountered, to concurrent, where problems are recognized early and
resolved. The ability to overlap activities reduces product design time. Second, when a team of
functional specialists works concurrently on product design, the participants learn from each
other and their knowledge base expands. People are better able to anticipate conflicts and can
more easily arrive at solutions. As a result, the time it takes to complete an activity should
decline. Third, fewer changes later in the process results in faster and less expensive product
design. When problems are discovered late, they take more time and money to solve.
Product design requires the expertise and decision-making skills of all parts of the organization.
Marketing, engineering, operations, finance, accounting, and information systems all have
important roles. Marketing's role is to evaluate consumer needs, determine potential impact of
competitive pressure, and measure the external environment. Engineering's role is to shape the
product through design, determine the process by which the product will be made, and consider
the interface between the product and the people. Operations' role is to ensure that the product
can be produced in full-scale production. Finance's role is to develop plans for raising the capital
to support the product in full-scale production and to assist in the evaluation of the product's

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profit potential. Accounting and information systems provide access to information for decision
making. Cross-functional teamwork and knowledge sharing are thus keys to success.

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CHAPTER 4
The useful life of consumer products, being the amount of time between buying and discarding
them, is getting ever shorter. What's more, most of these products are still functioning when they
are discarded. Combine these facts with the rather steep and extremely volatile rise in the price
of raw materials over the past decade and the predicted growth in global demand for raw
materials and energy, and it becomes instantly clear that continuity and cost of supply are
potentially major business risks. However, business risks often come along together with
business opportunities, and it is exactly these that a project called Products That Last aims to
explore.
Funded by the Dutch Ministry of Economic Affairs and led by the Industrial Design Engineering
faculty at Delft University of Technology, Products That Last brings together companies and
organisations that aim to be leaders in sustainability and the circular economy, one of which is
Philips. Products that Last is about finding successful business models and design strategies to
create value for companies and consumers in a circular economy through longer-lasting products,
while minimising the consumption of resources.

4.1 NEW OPPORTUNITIES

Although recycling has recently received a lot of attention in the business world, extending the
useful life of products is about more than just recycling materials. It intervenes at product level
and effectively slows down the pace at which products are put through recycling loops. Perhaps
even more importantly, extending the useful life of products creates opportunities for designing

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and marketing value adding services, which have already proven even more profitable than sales
of additional units of product.
Business models based on the 'sell more, sell faster' principle, which have dominated our linear
Western economies since the Industrial Revolution are not suited to accommodating longerlasting products and their services. The success of a circular economy depends on new business
models that are able to truly capitalise on longer product lifespans over time. Research into
companies that have successfully promoted longer-lasting products has narrowed down the
myriad of business model options into five distinct business model archetypes, which have
proven capable of capturing value from longer-lasting products.

4.2 STARTING POINT FOR DESIGN

The five business model archetypes for Products That Last are intended to serve as a starting
point for businesses and designers in thinking about longer-lasting products in a circular
economy. They range from being primarily about product to being primarily about service.

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1. The classic long-life model: primary revenue stream from sales of high-grade products (eg the
German company Miele's washing machines) with a long useful life.
2. The hybrid model: combination of a durable product and short-lived consumables (eg OcCanon, printers and copiers). Main revenue stream from repeat sales of the fast-cycling
consumables.
3. The gap-exploiter model: exploits 'lifetime value gaps' or leftover value in product systems.
Main revenue stream from selling products, parts and services based on the mixed product life of
components (eg printer cartridges outlasting the ink they contain, shoes lasting longer than their
soles).
4. The access model: provides product access rather than ownership (eg the Dutch company
GreenWheels' shared car use). Main revenue stream from payments for product access.
5. The performance model: delivers product performance rather than the product itself (eg hours
of thrust in a Rolls- Royce, Power-by-the-Hour jet engines). Primary revenue stream from
payments for performance delivered.

4.3 COUNTERING OBSOLESCENCE

The Products That Last approach to designing products with extended life is aimed at
maintaining product integrity. This means keeping a product as close as possible to its original
state over time and eliminating the perceived reasons for it becoming obsolete.

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Clustering the results of existing research and conducting new analyses of companies and their
longer-lasting products has led to the identification of six design strategies that can be applied to
prevent, or at least postpone, perceived product obsolescence. These strategies are:
1. Design for product attachment and trust is aimed at countering emotional obsolescence by
creating products that will be loved, liked or trusted longer; for example the Patek Philippe
watch.
2. Design for product durability is aimed at countering functional obsolescence by developing
products that can take wear and tear; for example the Miele washing machine.
3. Design for standardisation and compatibility is aimed at countering systemic obsolescence by
creating products with parts that fit other products as well; for example the Vitsoe wall shelving.
4. Design for ease of maintenance and repair is aimed at countering functional obsolescence by
enabling products to be maintained in tip-top condition; for example the Rolls Royce jet engine
and the Philips pay-per-lux solution.
5. Design for upgradability and adaptability is aimed at countering systemic obsolescence by
allowing for future expansion and modification; for example the Kitchen Aid mixer.
6. Design for disassembly and reassembly is aimed at countering systemic obsolescence by
ensuring product parts can be separated and reassembled easily. For example the Oc-Canon
document (re)production equipment and the Philips Healthcare refurbished systems.
Together with Philips Research we are currently investigating how to apply design for product
attachment and trust in consumer products. These six design strategies are not unique to any of

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the aforementioned business model archetypes, and their relative importance and usefulness will
vary according to the context in which they are applied. As each model has its own mechanism
for capturing value from longer-lasting products, it will also have a different set of critical
success factors. All our research to date supports early adoption of one or more of the six design
strategies for product life extension, at the same time as fostering long-term relationships with
end-users and suppliers, and providing high-quality, tailor-made services.

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CONCLUSIONS
In highly competing business environments, maintaining existing markets should be equally
important than developing new markets. Product designers should take customer loyalty
elements into account in their design works. The loyalty strategy framework should be integral.
Any one single loyalty strategy along is incapable of handling long-term customer loyalty. To be
effective, loyalty strategies are often in form of combinations.
Normally, an effective product design that can help "lock" customers consists of 2-4 kinds of
loyalty strategies. Each loyalty strategy might possess a specific, relative level of strategic
interplay.
In different product adoption phases and to different customer groups, effectiveness of a loyalty
strategy may vary. So do strategy combinations. Strategic center changes as product adoption
phase shifts. Each phase may have at least two core strategies.
This paper adds understanding to strategic decision making in the context of small software
product businesses. The framework both illustrates the scope of issues involved in strategic new
product development for small software product businesses and serves as a checklist for
managing, evaluating and improving management of product development as well as the
development processes themselves. Despite the fact that todays turbulent market and
technological environment make planning hard and there is a trend towards flexible, fragile
development, we think that explicit planning at product strategy level has distinct value. Even in
situations where planning is impossible, the planning process in itself can be valuable since it
forces the company to identify and evaluate various options. Thus, we see our framework as
complementing modern development approaches, not as contradictory or as a replacement
for them. Strategic perspective into product development, we are currently examining if the

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viewpoint it provides on reconciling strategy and product development can be used to focus
process improvement efforts. A companys product development process should support its
intended way of doing business, but explaining this relationship has to our knowledge received
very little attention. We propose that the business strategy of the company should be reflected in
its product development processes through decision-making at the product strategy level. For
example, business needs provide constraints and requirements for future releases contents,
timing and quality, and achieving these goals can be supported by proper development rhythm,
requirements processes and quality strategies Because the elements in the decision areas are
interrelated, changes in one area set constraints and requirements on how the other areas can
and/or should be organised. For example, the need to release a product having a near-zero
tolerance for defects sets demands on the quality strategy. This in turn places constraints on the
release strategy (for example, release cycle length), the development model used, and so on. We
hypothesise that in well-organised software companies the degree and causality of these
interactions and dependencies can be traced to business needs. Exploring how companies
business environments and desired ways of conducting business are reflected in their new
product development could shed light on what kind of development processes and practices are
suitable for different business models, and how development process capability in turn affects
the set of feasible business models. By understanding the key factors involved, software process
improvement can focus on the essentials, increasing the value of such work especially in those
small companies having relatively ad hoc practices to start with.

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B Magazines
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Business Today
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