Product Design and

Development
• A product is something sold by an enterprise
to its customers.
• Product Development is the set of activities
beginning with the perception of a market
opportunity and ending in the production,
sale, and delivery of a product.
 Characteristics of Successful Product
Development
• Product quality: how good is the product
resulting from the development effort? Does
it satisfy customer needs? Is it robust and
reliable? Product quality is ultimately
reflected in market share and the price that
customers are willing to pay
• Product Cost: What is the manufacturing cost
of the product? This cost includes spending
on capital equipment and tooling as well as
the increment al cost of producing each unit
of the product. Product cost determines how
much profit accrues to the firm for a particular
sales volume and particular sales price.
• Development Time: How quickly did the team
complete the product development effort?
Development time determines how
responsive the firm can be competitive forces
and to technological developments, as well as
how quickly the firm receives the economic
returns from the team efforts.
• Development Cost: How much did the firm
have to spend to develop the product?
Development cost is usually a significant
fraction of the investment required to achieve
the profits
• Development Capability: Are the team and the
firm better able to develop future products as
a result of their experience with a product
development project? Development capability
is an asset the firm can use to develop
products more effectively and economically in
the future.
 Who Designs and Develop Products?
• Marketing: The marketing function mediates
the interactions between the firm and its
customers. Marketing often facilities the
identification of product opportunities, the
definition of market segments, and the
identification of customer needs. Marketing
also typically arranges for communication
between the firm and its customers, sets
target prices, and oversees the launch and
promotion of the product.
• Design: The design function plays the lead role
in defining the physical form of the product to
best meet customer needs. The design
function includes engineering design and
industrial design.
• Manufacturing: The manufacturing function is
primarily responsible for designing and
operating the production system in order to
produce the product. The manufacturing
function also often includes purchasing,
distribution, and installation. The collection of
activities is sometimes called supply chain.
 The Challenges of Product
Development
• Trade-offs: An airplane can be made lighter,
but this action will probably increase
manufacturing cost. One of the most difficult
aspects of product development is
recognizing, understanding, and managing
such trade-offs in a way that maximizes the
success of the product.
• Dynamics: Technologies improve, customer
preference evolve, competitors introduce new
products, and the macroeconomics
environment shifts. Decision making in an
environment of constant change is formidable
task.
• Details: The choice between using screws or
snap-fits on the enclosure of a computer can
have economic implication of million of
dollars. Developing a product of even modest
complexity may require thousands of such
decisions.
• Time pressure: Any of these difficulties would
be easily manageable by itself given plenty of
time, but product development decisions
must usually be made quickly and without
complete information.
• Economics: Developing, producing, and
marketing the new product require a large
investment. To earn reasonable returns on this
investment, the resulting product must be
both appealing to customers and relatively
inexpensive to produce.
• Creation: The product development process
begins with an idea and ends with the
production of a physical artifact. When viewed
both in its entirely and at the level of
individual activities, the product development
process is intensely creative.
• Satisfaction of Societal and Individual Needs:
all products are aimed at satisfying needs of
some kind. Individual interested in developing
new products can almost always find
institutional settings in which they can
develop products satisfying what they
consider to be important needs.
• Team Diversity: Successful development
requires many different skills and talents.
Development teams involves people with a
wide range of different training, experience,
perspective and personalities.
• Team Spirit: Product development teams are
often highly motivated, cooperative groups.
The team members may be collocated so they
can focus their collective energy on creating
the product. This situation result to
camaraderie.