Topic 2: Product innovation

2.1 Designers and the product cycle 2.1.1 Describe the product cycle Progress of a product through a sequence of stages from introduction to growth, maturity and decline. Linked with changes in the marketing situation, thus impacting the marketing strategy. 2.1.2 Discuss the role of the designer in the product cycle. Designing is part of the product cycle: as a need is generated, a product is designed, made and sold, eventually becoming obsolete. The cycle is complicated by distributors, retailers, accountants and production engineers, all of whom have an influence over the cycle. Although the designer is an integral part of the process, he or she is not necessarily in control (unlike in the design process). Computer-aided design (CAD) and computer aided manufacture (CAM), where a prototype is produced by the designer from his or her personal computer (PC), blurs this distinction. 2.1.3 Outline the product cycle in terms of early, mature and late stages of development. 1. INTRODUCTION. With any new product or service you must introduce it to the market place. Introduce it with the right image and the right price. Ensure you have the infrastructure to support this new product - poor distribution at the start can spell disaster. To introduce a new product to the market place will requires investment. 2. GROWTH. Once your product has survived the introduction phase it will need to grow. At this stage it is hoped sales and profits to grow. With a customer base established this might be a good time to introduce complimentary products or services. 3. MATURITY. The profit revenue from the product is falling and price reductions are necessary in order to remain competitive. It is likely that your customer base is as wide as it will go 4. DECLINE. Falling sales means that customers are tiring of your product or buying the same product from a competitor. The market is changing. At this stage the following issues need to be addressed: Could the product be re-launched? Does the product need modifying? Do you need a new product? Is it time to move on? Do you need a new market? Introduction Stage: building product awareness and develop a market for the product Product branding and quality level is established and intellectual property protection such as patents and trademarks are obtained Growth Stage: increase market share Product – maintain the quality of product and additional features and support services may be added Maturity Stage: high voltage competition; competitors come with similar products Product – improve the content to distinguish with competitors Pricing – maintain or lower Decline Stage: sales decline, limited existence in the market Recovery Stage – brand refreshment, market expansion/diversification, market penetration

2.1.4 Identify products that are at the early, mature and late stages of their product cycle. The ballpoint pen is in the mature stage, as it still sells well although the design does not change much. The cassette tape is in the late stage, as it has been overtaken by successive generations of products. 2.1.5 Compare the design cycle with the product cycle. The design process is aimed at producing a suitable solution to a problem,

and that the product cycle is concerned with putting that solution into commercial practice. The major difference between the design and product cycle is that the design process is made to clarify the process of creating a product. The product cycle, on the other hand is to clarify the process of making that product ready for sales. Therefore, the design cycle's function is to find asolution to a problem, the product cycle's to put that solution into commercial purposes. Design cycle consists out of planning, research, analysis and production. Product cycle includes need, manufacturing (design cycle), obsolete and finally redefinition of the need.

2.1.6 Discuss why for many products the product cycle has shortened. Compare a laptop computer and a ballpoint pen. Laptop computers are an intensely competitive market, with size and power being key issues. In the field of Laptop computers, there is the need to have the fastest, lightest, and smallest laptop with the longest battery life. This causes many laptops to soon become obsolete after their release, as the market will all ways have a new contender for the ultimate machine. The life cycle of a laptop is therefore shortened, because it is considered obsolete after a newer and faster product is released. For ballpoint pen, for example, has a longer product cycle. The need to write is addressed by the almost unchanging technology inside of the pen. This product could possibly never become obsolete, this would mean that the product cycle could never end.

2.2 Invention and innovation 2.2.1 Define invention and innovation. Invention The process of discovering a principle. A technical advance in a particular field often resulting in a novel product. Innovation The business of putting an invention in the marketplace and making it a success. 2.2.2 Outline the stages of innovation. Developing an idea into a viable product; its production; marketing and sales; followed by redesign; and the cycle or spiral continues.

"There are millions of ideas around the world at any time. Some of them have the potential to be viable; more have the potential to be viable but do not have the people behind them who can make it happen. So an idea has to be developed before it becomes an innovation."

"The first stage of the innovation process is the development of an idea into a concept that has the demonstrated potential to be commercially feasible. The idea must be fleshed out to the point where technical, financial and management considerations have been incorporated into the concept, so that the practical application of the concept can be clearly plotted."

The second stage is the production, where the product is manufactured or manufacturing begins.

The Third stage is marketing and sales, "a primary activity associated with pre-sales tasks. Activities within marketing and sales often include: sales management; selling; market research activities; technical literature development (such as user guides and brochures); customer focus groups; convention activities, and more."

The fourth stage is redesign: reasons for:

• develop products that better meet customer needs • make it easier to manufacture • availability and cost of materials • improve safety • more user friendly • shelf or product life • improve properties • changing or different markets • distribution - packaging, weight • green design and clean technologies • recycling issues

Finally, once the product/concept has gone through redesign the cycle/spiral begins all over again until the product becomes mature or obsolete. 2.2.3 Discuss the importance of science to invention and innovation. Science explains how the world is. The importance of science to invention and innovation is evidently unquestionable. Most developments we produce in the field of Design are attributed to scientific breakthroughs, which in

turn allow the designer to produce these advancements. Science is a vital aspect of any design project taking place within a classroom, to NIKE shoe factories. It is the aspect that allows us designers to distinguish between the better materials, shapes, sizes and various other factors that come to consideration when we come to developing a project. You can find out more about scientific breakthroughs and this site:http://www.bbc.co.uk/worldservice/people/features/mycentury/science.shtml 2.2.4 Discuss the importance of technology to invention and innovation. Technology uncovers new possibilities for materials, manufacturing techniques and processes.

Advances in technology aids invention and innovation which leads to new or cheaper products through advances in materials, manufacturing techniques, and processes. Moreover, advancement in technology improves product quality. Additionally, it creates a major benefit for the upcoming generations. For example, the Internet and mobile are emerging communication technologies which were nonexistent thirty years ago. Due to the increased scientific research, there has been an exponential increase in the advancement of technology recently.

Examples of new materials used on products or processes can be found at:

http://www.trnmag.com/Stories/2004/122904/TRN%27s_Top_Picks_122904.html 2.2.5 Explain why the majority of inventions fail to become innovations. Consider marketability, financial support, marketing; the need for the invention, price, resistance to change, and aversion to risk.

Marketability

• Low product demand or not readily saleable

Financial support

• There is little monetary backing from the organisation or an outsider. • The invention would need more sponsors to financially aid the product.

Marketing

• Is the process of getting products from the producer or vendor to the consumer or buyer, which includes advertising, shipping, storing, and selling. Poor marketing strategies or wrong target markets. • Invention would need to be advertised as a product the public would want. • Trends in innovation.

The need for the invention

• Examples include alternative energy resources to combat our insatiable need for oil however if oil prices are low or there is a ready supply of oil then the alternative energy invention will not take hold.

Price

• Affordable, cost effectiveness or value for money therefore it may be too expensive to purchase, or to manufacture and the consumer may not see it worth its cost compared to its use. • Keep in mind, the product's price needs to be equivalent to the income of the specific age group that would buy the majority of the product.

Resistance to change

• People and organisations can be resistant and reluctant to change, feeling comfort and security in the familiar thus resist new ideas/products.

Aversion to risk

• "Risk aversion is a concept in economics, finance, and psychology related to the behavior of consumers and investors under uncertainty".

2.2.6 Explain the relevance of design to innovation. For continued innovations (re-innovation), products and processes are constantly updated (redesigned) to make them more commercially viable and to give consumers choice and improved products. Design is vital to innovation due to innovation being the key to developing products and services. Design-led innovation allows the organisation to focus on the customer as a strategy for development and a collaborator in mutual service innovation. There are five principles underlying design that allow it to become a useful tool for creating strategy, and for conveying innovation in products and services; They are:

Customer Focus Design-led innovation places the customer at the centre of its process, concentrating only on acquainting the desires of the consumer, thus delivering genuine value to customers.

Flexibility Design makes ideas existent and evident. This process is essential in producing tangible innovations and providing a specific main point for generating decisions.

Repetition Design recurrently experiments with ideas, reshaping both the proposal and the process based on criticism, therefore permitting failure into the design process as a method of learning and reducing the risk of mass failure upon initiation.

Teamwork Design consists of a universal language that allows distinctive groups to share thoughts and converse their aims, thus joining differing teams together.

Reducing Risk By considering all of the points above and devising schemes on the topic of consumer needs, a business decreases the perils frequently related with innovation.

By pertaining design-led innovation to both the organisations and the services the business provides, the firm accommodates change, thus becoming consumer-oriented in a well-organised, active, and successful way. As the UK Minister for Innovation Ian Pearson stated “The contribution of design to innovation hasn’t been emphasised enough until now, but user-led innovation always clearly demonstrated the importance of design in developing new products, processes, and new ways of working.” 2.2.7 Define dominant design, diffusion into the marketplace, market pull and technology push. Dominant design The design contains those implicit features of a product that are recognized as essential by a majority of manufacturers and purchasers. Diffusion into the marketplace The wide acceptance (and sale) of a product. Market pull The initial impetus for the development of a new product is generated by a demand from the market. Technology push Where the impetus for a new design emanates from a technological development. “Dominant Design is a Technology Management concept identifying key technological designs that become a de-facto standard in their market place. When a new technology emerges- often firms will introduce a number of alternative designs (e.g. Microsoft - Windows, Apple Inc. - Mac OS and IBM - OS2). Updated designs will be released incorporating incremental improvements - at some point an architecture that becomes accepted as the industry standard (Anderson and Tushman, 1990) may emerge (e.g. Microsoft Windows).” The design contains those implicit features of a product that are recognized as essential by a majority of manufactures and purchasers with the wide acceptance and sale of the product depending on the market demand ( market pull) and the technology push ( where the impetus of new design emanates from a technological development.: http://www.bbc.co.uk/schools/gcsebitesize/design/images/dt_dmim_pa_03.jpg Example of successful products in the Market pull and technology push 2.2.8 Describe a design context where dominant design is relevant. For example, ballpoint pen (Biro), Apple®, iPod®, Coca-Cola®.

Dominant Design: It is a concept identifying key features in designs that become a traditional standard in the market place. Dominant designs don't necessarily have to be better than other designs found on the market, however they will provide a minimum required set of important and basic features. Definition of dominant designs according to Webster's Dictionary: A standard, which becomes generally accepted after a period of rapid technological change

Example: The “QWERTY” keyboard layout was specifically designed to replace the flaws of the mechanical typewriter by changing the order of the letters on the keyboard. Now it is recognised as well used worldwide and

preferred over the more logical and formal keyboard layouts.

Other examples of a dominant design:

• Ball point pen • Light bulbs

2.2.9 Explain the difficulties of getting a product to diffuse into the marketplace. Consider local, national and global competition. The problems of getting novel products to market include product launches and marketing. Local, national and global competition.

Competitors in the market place will put pressure on novel products entering the market. If competitors already exist, marketing strategies will need to be developed to get your product known. Product launches need to be well thought out. Also, if you product is new and there is no other like it, people (customers) will still be spending money with your competitors. Access to cheap labour from other countries (China or India) could mean your competitors maybe producing the product cheaper than you and therefore add pressure. On a national level taxes in different states may cause difficulties or place price pressures on you product.

Product Launch

Today's Launch Hurdles: Schneider reveals little-understood demographic trends, alterations in the media and retail landscapes, and changes in consumer behavior that are making it more challenging to reach consumers with an effective launch message.

Marketing is the process of promoting and selling products. Marketing includes advertising, distribution and selling of a product. If it is just an upgrade from another product- the escalation in price is limited, people will not be willing to pay so much for a new product if the only change is a minor update. A useful thing to keep in mind is that buyers will pay a respectable sum if the product is exciting and the 'it' thing to have. For companies to able to continue innovating you need strategy and the correct environment: Kodak is one of the companies that are good innovators “they give people the freedom to follow their own ideas and take some risk”

For a company to be completely innovative, they need to inspire the staff; the ability to creative innovative products; and the ability to connect with the market.

The Product Diffusion Curve model uses an S-shaped curve to show the different stages. The model shows five different groups of people that adopt your product at the different stages of the products life.

• Innovators: The members of this group are people who take a risk on the product, and are willing to experiment on its efficiency. Innovators represent the first 2.5% of people to adopt a new product. Innovators are usually unconcerned if the product is not 100% effective, they are usually wealthy enough to afford it. • Early Adopters: The members of this group base their opinions on the innovators but they too, will

probably be educated and be 'product savvy.' Early Adopters represent about 13.5% of the total consumer population. • Early Majority: The members of this group are more cautious about taking a risk on this product

that is untested and unproven, they have money at stake. They are usually waiting for the approval of the Early Adopters, so they can hear from those who have experienced the product and can hear from their feedback. The Early Majority represents 34% of consumers. • Late Majority: They are usually not so sure about the product and only jump on board when the

product becomes very popular and proven. The Late Majority represents about 34% of consumers. • Laggards: The members of this group usually do not accept the product unless the more

traditional version is no longer in use and they have to accept the new product. Laggards represent about 16% of consumers.

2.2.10 Explain why it is difficult to determine whether market pull or technology push is the impetus for the design of new products. Push and pull are present in most successful innovations. The explanation should apply only to the origin of the idea or where the idea seems to have been generated.

Scientific innovation has two different paths:

• The demand driven, “Market Pull” method. • The supply driven, “Technology Push” method. • They differ because of how they manage and organize resources.

“Technology” Push approaches:

• Typified by programs, but not necessarily software programs • Internal development comes up with a patent or a technological device to fulfill the need of a customer • Has high market related risk because application is not known • Has low technology related risk because application is known • Innovation is created, then appropriate applications are sought to fit the innovation • Did the market ask "please give me an iPod with download store" or a camera phone? Most likely not; so this would be a technology push,.

“Market” Pull approaches:

• Implemented on platforms • Platforms are open ended and can evolve based on changing needs • Has low market related risk because application is known • Has low technology related risk because solution is not known • When the market asks for better safety features in a car then this would be market pull.

Technology risk is how uncertain we are about finding a solution. Market risk is how uncertain we are about finding an application.

Technology advances often occur some time before the market knows about them. So when the new products with the new tech hit the market, the line between market pull vs. technology push is blurred. 2.2.11 Define lone inventor. An individual working outside or inside an organization that is committed to the invention of a novel product and often becomes isolated because he or she is engrossed with ideas that imply change and are resisted by others.

Lone inventors:

• Individuals with a goal of the complete invention of a new and somewhat revolutionary product. • Have ideas that are completely new and different. • May not comprehend or give sufficient care to the marketing and sales of there product. • Are usually isolated, and have no backing towards their design. • Are having harder times to push forward their designs, especially in a market where large investments are required for success.

2.2.12 Discuss why it is becoming increasingly difficult to be a successful lone inventor. Most products are now extremely complex and rely on expertise from various disciplines. Most designs are developed by multidisciplinary teams.

Take the Scanner, copier and printer as an example, where there are so complex and many features that for one inventor would need such a broad range of knowledge and skills. 2.2.13 Explain why lone inventors often find it difficult to work in the design departments of large companies. They are often used to setting their own targets rather than working as members of teams. They can be dogmatic in their methodology and less flexible than team workers. It could be surprisingly difficult for a "lone inventor" to work with a group of designer. This is due to the fact that the lone inventor's job is to create new and groundbreaking products. This may conflict with the opposing visions possessed by the other designers. It would be difficult for the "lone inventor" to work with numerous designers as the product he will design has not been created before. This will cause conflict as the other designers may not understand what the "lone inventor" is planning 2.2.14 Define product champion. A person who takes an excessive interest in seeing that a particular process or product is fully developed and marketed a product champion can bring both expertise and enthusiasm to the project. (In small business environments, this product champion will often be the entrepreneur/owner himself.) A strong product champion will be able to balance all the issues associated with a product—economic factors, performance requirements, regulatory issues, management issues, and more—and create a winning new product. The product champion also has to guide the project through a predetermined series of viability tests—checkpoints in the development process at which a company evaluates a new product to determine if the product should proceed to the next development stage.

2.2.15 Compare the lone inventor with the product champion. The lone inventor may lack the business acumen to push the invention through to innovation. The product champion is often a forceful personality with much influence in a company. He or she is more astute at being able to push the idea forward through the various business channels and is often able to consider the merits of the invention more objectively. An individual working outside or inside and organisation who is committed to the invention of a novel product and often becomes isolated because he or she is engrossed with ideas that imply change and are resisted by others, while the product champion is a person who takes an excessive interest in seeing that a particular process or product is fully developed and marketed A product champion can bring both expertise and enthusiasm to the project. 2.2.16 Explain why innovators may have difficulty in obtaining financial support for an invention. Most people with money to invest will be inclined to wait until it is clearer whether an invention is going to be successful before investing: the problem is to get them to take the risk. 2.3 People and markets 2.3.1 Define technophile, techno cautious and technophobe. Technophile Someone who immediately welcomes a technological change. Techno cautious Someone who needs some convincing before embracing technological change. Technophobe Someone who resists all technological change 2.3.2 Explain how people can be broadly classified according to their reactions to technological change. People’s reactions to technological change vary depending on their values and personal circumstances. First-order effects and second order effects should be taken into account, for example, personal gain in owning a car versus social and environmental considerations. 2.3.3 Define corporate strategy. 2.3.4 Describe the corporate strategy referred to as “pioneering”. Pioneering means being ahead of the competitors by introducing a new product first. It is the most risky (costly) strategy but one with the potential for the largest gains. A pioneering company requires a strong research and development (R&D) capability, which is expensive. A pioneering company needs to be financially secure and requires product champions to push new ideas. Consider the Sony or Apple companies and their various pioneering developments. Good market research can offset some risk, but is problematic for novel products.

Pioneering, a corporate strategy, is the process of introducing new areas of thought or development in the design process. To be successful while using this type of corporate strategy, the firm must learn more about the consumer market by extensive market research. This is recommended because the pioneering strategy is very risky due to the fact the firm is introducing a totally new, unknown, and unexpected product or service to the market. The risk of failure is considerably high because this product or service has never entered the market, thus making it is impossible to determine that the product will be a success or failure since the product/service’s lack of experience in the market. Although pioneering is risky and costly, the profits that can be earned from this strategy balances with the risks.

2.3.5 Describe the corporate strategy referred to as “imitative”. The imitative strategy aims to develop a product similar to the “pioneered” product as quickly as possible. It takes advantage of R&D invested by others, and is less risky, but is based on a strong development capability. 2.3.6 Explain the benefits for a company of using a hybrid strategy. Imitative creates lower risk and research and development cost, pioneering ensures that companies are at the adopters and early majority stages 2.3.7 Define market penetration. Market penetration is one of the four growth strategies of the Product-Market Growth Matrix. It happens when a company comes into the market with a product that already exists. Market penetration consists of lowering prices, increasing advertisement, receiving better selling positions (e.g. in stores having better positions for public to see in windows/shelves). The main goal is to be the most innovative. 2.3.8 Describe a strategy that a company would use to enhance market penetration. Consider product promotion through marketing. A strategy a company may consider to enhance market penetration is product promotion. Product promotion engages in propagating information about a product, product line, brand, or company. Information gathering and research is exceedingly essential in product promotion because a company must know how to appropriately promote its product or service to a specific desired market. The aim of product promotion is to the initiate the profits and cash inflow without paying a large amount funds on promotion. It is of utmost importance that an offer is identified before a company begins any promoting. A company must ask questions such as: What am I offering the target customer? What do I want the target market to do? A common mistake that a company can do is to make a promotional advertisement and not inform the client what to do. A company must inform the consumer in the promotion to, for example, "call this number to place an order" or "download this software from our web site".

2.3.9 Define market development.

Marketing development is the strategy when existing new products can be brought into the market for the company to grow. This can be done in two ways: gaining a wider understanding of the segmentation or selling the product to markets overseas that are new. 2.3.10 Describe how a company would undertake market development. The identification of new markets for products, for example, nylon was originally developed for parachutes.

Market Development is a process for developing sales for businesses in new markets. This process is effective for developing all types of businesses. It delivers business growth by delivering new or existing products/services to new or existing customers. To undertake market development, a company would have to follow this specific four step process:

1. Segmentation Task - It deals with the difficulty of classifying groups of related target customers by a method which depicts their main characteristics.

2. Decision Makers Task - It focuses on the problem of which officials should be promoted by a process which recognizes the decision makers, their tasks and values.

3. Competitors Task - It embarks upon the trouble of how to place the company against rival companies by a process which classifies the firm’s chief differentiators in the viewpoints of potential clients

4. Marketing Mix Task - It undertakes the difficulty of what to propose to meet the market recognized in the previous tasks, tasks 1-3, by a method that delineates product, price, promotion and distribution elements of your "offer". For more information, here is a good site for a thorough explanation of the market development process: http://www.businessballs.com/marketdevelopmentservice.htm 2.3.11 Define product development. Product development consists with dealing with the design, creation and marketing of new products. It is towards developing methods and ways for directing everything that is involved in getting a new product into the market. A numerous number of organizations support product development professionals. Such as the PDMA-Product Development and Management Association, and also the PDI- Product development institute. Their main missions are "to improve the effectiveness of people engaged in developing and managing new products - both new manufactured goods and new services. This mission includes facilitating the generation of new information, helping convert this information into knowledge which is in a usable format, and making this new knowledge broadly available to those who might benefit from it." 2.3.12 Describe one example of how a company undertakes product development. Consider adding variations to a product to develop

a range of products building on an established brand, for example, ice cream, snack food products, chocolate products (Kit Kat, Mars bars). Product development, can be approached through many ways:

• By enhancing the released product, adding new features i.e. a camera on a phone, or video playback on an I-pod.

• By increasing the products range, giving different designs and/or adding more options to certain ones.

• The company may release many different types, of a certain general product, even if they are very different i.e. different soda flavours under the same company name.

2.3.13. Define diversification. Involves a company both in the development of new products and in selling those products to new companies. 2.3.14 Describe one example of diversification.

For example, a company manufacturing three-pin electrical plugs may consider producing them in a range of colours or from materials of different textures and/or material properties.

Example of diversification: A small town's entire economy is dependent on two companies. Company A sells umbrellas and company B sells sunscreen. If a portfolio is only invested in company A it will sell strongly during the rainy season and very poorly during the dry, sunny season. Vice versa if the portfolio is only invested in company B it will be very successful during the hot, sunny season and decline during the cold, rainy weather. Thus the investment should be spread equally between both companies. Rather than taking a risk, doing very well at times and terribly at others, a diverse portfolio will result in decent profit no matter what season it is. 2.3.15 Define market sector and market segmentation. Market sector A broad way of categorising the kinds of market the company is aiming for. Market segmentation Markets divide up into smaller segments where the purchasers have similar characteristics and tastes. Market Segmentation is a segmentation of the market by key product categories, ideally by value and volume. For example: the yoghurt market can be segmented into: drinking yoghurt, flavoured yoghurt and natural yoghurt. Market segmentation is the process of splitting customers, or potential customers, in a market into different groups, or segments, within which customers share a similar level of interest in the same or comparable set of needs satisfied by a distinct marketing proposition. Market sector is a subdivision of a market with distinctive characteristics. Market sectors are usually determined by market segmentation, which divides a market into different categories. Car buyers, for example, could be put into sectors such as car fleet buyers, private buyers, buyers under 20 years old, and so on. The smaller the sector, the more its members will have in common. Sellers may decide to compete in the whole market or only in segments that are attractive to them or where they have an advantage. 2.3.16 Outline two ways in which markets may be segmented.

Consider income, age, lifestyle, geographical location, and so on.

2.3.17 Define robust design and product family.

Robust design Flexible designs that can be adapted to changing technical and market requirements. Product family A group of products having common classification criteria. Members normally have many common parts and assemblies.

2.3.18 Discuss an example of a robust design that evolved into a product family.

An example of a robust design is the Apple iPod. It is a flexible design that, in just the past few years, developed new features from the original product. It has been changed and has evolved to fit different needs in the market.

Furthermore, the iPod has evolved into a product family. There's the Nano, the Touch, the Classic and the Shuffle; all of these members of the iPod family fulfil the basic needs of being an iPod, they can all play music in the same manner, and all follow the same basic procedure and software. Yet they have little changes in between them that allow them to have robust design. These include:

• Displaying photos • Displaying movies • Being thinner • Being smaller • Having more memory