product development is an interdisciplinary


Product development is an interdisciplinary activity requiring contributions from almost every part of a company. Three areas that are always involved are:

  • Design
  • Manufacturing
  • Marketing

These functions must be considered concurrent: the development of the design should evolve in parallel with the knowledge of how the product will be made and how it will be marketed.

The three types of product design usually undertaken are:

1)New Category Products - Introduction of new products to the marketplace. High risk to the company but high rewards if successful. With no competition, a price premium is enjoyed.

2)"Me - Too" Products- Products that compete in an established marketplace. Less risk involved for the company. Rewards depend on sales volume.

3) Enhanced Products - Innovations to existing products to improve competitiveness. Low risk due to prior market acceptance.

Lowest reward as the company is competing with itself.

For a company to be successful it must be capable of producing a product that satisfies the needs of its customers and it must be able to do it in a timely and profitable manner. A product must not only be well designed in terms of appearance, function, and ease of use, but it must also be made available at a price the customer is willing to pay. Better quality (higher reliability, more features) usually means higher manufacturing costs resulting in a higher selling price and/or lower profit margin. Good marketing also plays a role in the success of a company. A customer can't buy your product if they aren't aware of it.

When examining the cost to manufacture a product, not only must you consider the incremental cost of producing each unit, but you must also include spending on capital equipment and tooling. Even more significant is the development cost. In fact, most of the cost of manufacturing a product occurs at the initial design stage (estimated at 70% in the car industry). For a "new" product (the original VCR's and DVD players) a company can try to recover most of this development cost quickly by setting an initially high price. For a "me-too" product, however, the company must compete with current market prices.

The design process begins with an identified need and ends with the acceptance of a prototype. The goal in design is to satisfy a set of requirements. There is no single solution, only a best solution given available resources. Achieving it requires integration of all design activities within an environment conducive to good communications. A company that wishes to undertake such a project must be willing to commit the required personnel. A design team will require people from engineering, marketing, sales and administration.

Although the design process will vary from company to company, it is important that a company does have some kind of formalized approach. A well-defined process is useful for product quality assurance, project coordination, planning, and management, and process improvement. In general, the design process can be broken down into 6 basic steps:

1.Recognition of need and problem identification

2.Idea generation (preliminary ideas)

3.Conceptual design & refinement

4.Detailed analysis

5.Production planning & Prototyping

6.Implementing production

Although the design team will work sequentially from step to step, it should be an iterative process - updating previous steps as new information is acquired.

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Marketing Management: product development is an interdisciplinary
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