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Product Decision, Analysis & Development

What is a Product?
The term product is often used as a catch-all word to identify solutions a marketer provides to its target market. We will follow this approach and permit the term product to cover offerings that fall into one of the following categories: Goods Something is considered a good if it is a tangible item. That is, it is something that is felt, tasted, heard, smelled or seen. For example, bicycles, cell phones, and donuts are all examples of tangible goods. In some cases there is a fine line between items that affect the senses and whether these are considered tangible or intangible. We often see this with digital goods accessed via the Internet, such as listening to music online or visiting an information website. In these cases there does not appear to be anything that is tangible or real since it is essentially computer code that is proving the solution. However, for our purposes, we distinguish these as goods since these products are built (albeit using computer code), are stored (e.g., on a computer hard drive), and generally offer the same benefits each time (e.g., quality of the download song is always the same). Services Something is considered a service if it is an offering a customer obtains through the work or labor of someone else. Services can result in the creation of tangible goods (e.g., a publisher of business magazines hires a freelance writer to write an article) but the main solution being purchased is the service. Unlike goods, services are not stored, they are only available at the time of use (e.g., hair salon) and the consistency of the benefit offered can vary from one purchaser to another (e.g., not exactly the same hair styling each time).

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Ideas Something falls into the category of an idea if the marketer attempts to convince the customer to alter their behavior or their perception in some way. Marketing ideas is often a solution put forth by non-profit groups or governments in order to get targeted groups to avoid or change certain behavior. This is seen with public service announcements directed toward such activity as youth smoking, automobile safety, and illegal drug use.

In BUSINESS, a product is a good economics and accounting good or service which can be bought and sold. In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In manufacturing, products are purchased as raw materials and sold as finished goods. Commodities are usually raw materials such as metals and agricultural products, but a commodity can also be anything widely available in the open market. In general usage, product may refer to a single item or unit, a group of equivalent products, a grouping of goods or services, or an industrial classification for the goods or service. Production decisions: In decisions on producing or providing products and services in the market it is essential that the production of the product or service is well planned and coordinated, both within and with other functional area of the firm, particularly marketing. The main elements to consider are the production process itself, specifications, culture, the physical product, packaging, labeling, branding, warranty and service. Product Selection Selecting which products to manufacture can be one of the most challenging parts. You may have a preference based on knowledge of your product or service, world trends in our industry or your intuition about potential new markets. It makes sense to test and confirm your preference using a mix of formal and informal measures.

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The product selection process requires you to: * Collect information about potential export markets * Make comparisons * Make decisions Idea for New Product or Service Sources of Ideas: At this stage, someone has an idea for a new product or service. Ideas can come from many sources, for example: Complaints from current customers (Customer Service and Customer Satisfaction) Requests for Proposals from large businesses, government agencies, etc. Modifications to current products (Innovation) Suggestions from employees, customers, suppliers, etc. (Creative Thinking) Distributors Competitors Research and Development Consultants Brainstorming: The process of getting a group to think of unlimited ways to vary a product or solve a problem. Rules of thumb, intuition, tradition, and simple financial analysis are often no longer sufficient for addressing such common decisions as makeversus-buy, facility site selection, and process redesign. In general, the forces of competition are imposing a need for more effective decision making at all levels in organizations. Decision analysts provide quantitative support for the decisionmakers in all areas including engineers, analysts in planning offices and public agencies, project management consultants, manufacturing process planners, financial and economic analysts, and experts supporting medical/technological diagnosis, and so on and on. Progressive Approach to Modeling: Modeling for decision making involves two distinct parties, one is the decision-maker and the other is the model-builder known as the analyst. The analyst is to assist the decision-

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maker in his/her decision-making process. Therefore, the analyst must be equipped with more than a set of analytical methods. Specialists in model building are often tempted to study a problem, and then go off in isolation to develop an elaborate mathematical model for use by the manager (i.e., the decision-maker). Unfortunately the manager may not understand this model and may either use it blindly or reject it entirely. The specialist may feel that the manager is too ignorant and unsophisticated to appreciate the model, while the manager may feel that the specialist lives in a dream world of unrealistic assumptions and irrelevant mathematical language. Such miscommunication can be avoided if the manager works with the specialist to develop first a simple model that provides a crude but understandable analysis. After the manager has built up confidence in this model, additional detail and sophistication can be added, perhaps progressively only a bit at a time. This process requires an investment of time on the part of the manager and sincere interest on the part of the specialist in solving the manager's real problem, rather than in creating and trying to explain sophisticated models. This progressive model building is often referred to as the bootstrapping approach and is the most important factor in determining successful implementation of a decision model. Moreover the bootstrapping approach simplifies otherwise the difficult task of model validating and verification processes. What is a System: Systems are formed with parts put together in a particular manner in order to pursuit an objective. The relationship between the parts determines what the system does and how it functions as a whole. Therefore, the relationship in a system are often more important than the individual parts. In general, systems that are building blocks for other systems are called subsystems The Dynamics of a System: A system that does not change is a static (i.e., deterministic) system. Many of the systems we are part of are dynamic systems, which are they change over time. We refer to the way a system changes over time as the system's behavior. And when the system's development follows a typical pattern we say the system has a behavior pattern. Whether a system is static or dynamic depends on which time horizon you choose and which variables you concentrate on. The time

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horizon is the time period within which you study the system. The variables are changeable values on the system. In deterministic models, a good decision is judged by the outcome alone. However, in probabilistic models, the decision-maker is concerned not only with the outcome value but also with the amount of risk each decision carries As an example of deterministic versus probabilistic models, consider the past and the future: Nothing we can do can change the past, but everything we do influences and changes the future, although the future has an element of uncertainty. Managers are captivated much more by shaping the future than the history of the past. Uncertainty is the fact of life and business; probability is the guide for a "good" life and successful business. The concept of probability occupies an important place in the decision-making process, whether the problem is one faced in business, in government, in the social sciences, or just in one's own everyday personal life. In very few decisions making situations is perfect information - all the needed facts - available. Most decisions are made in the face of uncertainty. Probability enters into the process by playing the role of a substitute for certainty - a substitute for complete knowledge. Probabilistic Modeling is largely based on application of statistics for probability assessment of uncontrollable events (or factors), as well as risk assessment of your decision. Therefore risk assessment means a study to determine the outcomes of decisions along with their probabilities. Decision-makers often face a severe lack of information. Probability assessment quantifies the information gap between what is known, and what needs to be known for an optimal decision. The probabilistic models are used for protection against adverse uncertainty, and exploitation of propitious uncertainty. It is a challenging task to compare several courses of action and then select one action to be implemented. At times, the task may prove too challenging. Difficulties in decision making arise through complexities in decision alternatives. The limited information-processing capacity of a decision-maker can be strained when considering the consequences of only one course of action. Yet, choice requires that the implications of various
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courses of action be visualized and compared. In addition, unknown factors always intrude upon the problem situation and seldom are outcomes known with certainty. Almost always, an outcome depends upon the reactions of other people who may be undecided themselves. It is no wonder that decision-makers sometimes postpone choices for as long as possible. Then, when they finally decide, they neglect to consider all the implications of their decision. Emotions and Risky Decision: Most decision makers rely on emotions in making judgments concerning risky decisions. Many people are afraid of the possible unwanted consequences. However, do we need emotions in order to be able to judge whether a decision and its concomitant risks are morally acceptable. This question has direct practical implications: should engineers, scientists and policy makers involved in developing risk regulation take the emotions of the public seriously or not? Even though emotions are subjective and irrational (or a-rational), they should be a part of the decision making process since they show us our preferences. Since emotions and rationality are not mutually exclusive, because in order to be practically rational, we need to have emotions. This can lead to an alternative view about the role of emotions in risk assessment: emotions can be a normative guide in making judgments about morally acceptable risks. Most people often make choices out of habit or tradition, without going through the decision-making process steps systematically. Decisions may be made under social pressure or time constraints that interfere with a careful consideration of the options and consequences. Decisions may be influenced by one's emotional state at the time a decision is made. When people lack adequate information or skills, they may make less than optimal decisions. Even when or if people have time and information, they often do a poor job of understanding the probabilities of consequences. Even when they know the statistics; they are more likely to rely on personal experience than information about probabilities. The fundamental concerns of decision making are combining information about probability with information about desires and interests. For example: how much do you want to meet her, how important is the picnic, and how much is the prize worth?

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Business decision making is almost always accompanied by conditions of uncertainty. Clearly, the more information the decision maker has, the better the decision will be. Treating decisions as if they were gambles is the basis of decision theory. This means that we have to trade off the value of a certain outcome against its probability. To operate according to the canons of decision theory, we must compute the value of a certain outcome and its probabilities; hence, determining the consequences of our choices.

Types of new products: There are several general categories of new products. Some are new to the market (ex. DVD players into the home movie market), some are new to the company (ex. Game consoles for Sony), some are completely novel and create totally new markets (ex. the airline industry). When viewed against a different criteria, some new product concepts are merely minor modifications of existing products while some are completely innovative to the company.
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Changes to Augmented Product Core product revision Line extensions New product lines Repositionings Completely new

WHAT IS PRODUCT DESIGN?

It is a systematic formulation which leads to the selection of material, its specification and its aesthetic appearance of the product to be manufactured. Though product design is a part of engineering design but its role in operation management is very crucial. IMPORTANCE OF PRODUCT DESIGN Production or operations strategy is directly influenced by product design for the following reasons.
1. As products are designed, all the detailed characteristics of each product are established. 2. Each product characteristics directly affects how the product can be made or produced (i.e. process technology and process design) 3. How the product is made determines the design of the production strategy (production design) which is the heart of production and operation strategy. Further, product design directly affects product quality, production and customer satisfaction. Hence, the design of product is crucial to stay in todayss global competition. A good product design can improve the marketability of a product making it easier to operate or use, upgrading its quality, improving appearance, and/or reducing manufacturing costs.

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A distinctive design may be the only feature that signifies differentiates a product. An excellent design includes usability, aesthetics, reliability, functionality, innovation and appropriateness. An excellent design provides competitive advantage to the manufacture by ensuring appropriate quality, reasonable cost and the expected product features, Firms tomorrow will definitely compete not on price and quality, but on product design.

WHAT DOES PRODUCT DESIGN DO?

The activities and responsibilities of product design includes following: 1. Translating customer needs and wants into product and requirements (marketing). 2. Refining existing products (marketing). 3. Developing new products (marketing & product design). 4. Formulating quality goals (quality assurance, production). 5. Formulating cost targets (Accounting). 6. Constructing and testing prototype (marketing, production). 7. Documentary specifications (product design).

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REASONS FOR PRODUCT DESIGN OR REDESIGN

The most obvious reason for product design is to offer new products to remain competitive in the market. The second most important reason is to make the business grow and increase profits. Also, when productivity gains result in reduction of workforce, developing new products can mean adding jobs and retaining surplus workforce instead of downsizing by layoff/ retrenchment. Some times product design is actually redesign or modification of existing design instead of an entirely new design. The reasons for this include customer complaints, accidents or injuries during product use, excessive warranty claims or low demand. Some times product redesign is initiated to achieve cost reductions in labour and materials costs.

OBJECTIVES OF PRODUCT DESIGN 1. 2. 3. 4. 5. The overall objective is profit generation in the long run. To achieve the desired product quality. To reduce the development time and cost to the minimum. To reduce the cost of product. To ensure productibility or manufacturability (design for manufacturing and assembly).

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CHARACTERISTICS OF GOOD PRODUCT DESIGN A good product design must ensure the following:
1. FUNCTION OR PERFORMANCE:- The function or performance is what customer expects the product to do solve his/her problem or for certain benefits leading to satisfaction. For example, a customer for motorbike expects the bike to start with a few kicks on the kick pedal and also expects some other functional aspects such as pick up, maximum speed, engine power and fuel consumption etc. 2. APPEARANCE OR AESTHETICS:- This includes the style, colour, look, feel, etc. which appeals to the human sense and adds value to the product. 3. RELIABILITY:- This refers to the length of time a product can be used before it fails. In other words, reliability is the probability that a product will function for a specific time period without a failure. 4. MAINTAINABILITY:- This refers to the restoration of a product once it has failed. High degree of maintainability is desired so that the product can be restored (repaired) to be used within a short time after it breaks down. This is also known as service ability. 5. AVAILABILITY:- This refers to the continuity of service to the customer. A product is available for use when it is in an operational state. Availability is a combination of reliability and maintainability. High reliability and maintainability ensures high availability. 6. PRODUCIBILITY:- This refers to the ease of manufacture with minimum cost (economic production). This is ensured in product design by proper specification of tolerances, use of materials that can be easily processed and also use of economical processes and equipments to produce the product quickly and at a cheaper cost.

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7. SIMPLIFICATION:- It refers to the elimination of the complex features so that the intended function is performed with reduced costs, higher quality or more customer satisfaction. A simplified design has fewer parts which can be manufactured and assembled with less time and cost. 8. STANDARDISATION:- It refers to the design activity that reduces variety among a group of products or parts. For example, group technology items have standarised design which calls for similar manufacturing process steps to be followed. Standard design leads to variety reduction and results in economies of large scale due to high volume of production of standard products. However, standardized designs may lead to reduced choices for customers. 9. SPECIFICATION:- A specification is a detailed description of a material part or product, including physical measures such a dimensions, volume, weight, surface finish etc. These specifications indicate tolerances on physical measures which provide production department with precise information about the characteristics of products to be produced and the process and production equipments to be used to achieve the specified tolerance(acceptable variations). Interchangeability of parts in products produced in large volumes (mass production and flowline production) is achieved by appropriate specification of tolerances to facilitate the designed fit between parts which are assembled together. 10.SAFETY:- The product must be safe to the user and should not cause any accident while using or should not cause any health hazard to the user. Safety in storage, handling and usage must be ensured by the design and a proper package has to be provided to avoid damage during transportation and storage of the product. For example, a pharmaceutical product while curing the patient, should not cause some other side effect threatening the user.

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FACTORS INFLUENCING PRODUCT DESIGN

1. CUSTOMER REQUIREMENTS:- The designers must find out the exact requirements of the customers to ensure that the products suit the convenience of customer for use. The products must be designed to be used in all kinds of conditions. 2. CONVENIENCE OF THE OPERATOR OR USER:- The industrial products such as machines and tools should be so designed that they are convenient and comfortable to operate or use.

3. Break - even charts

A break-even-chart shows the relationship between fixed costs, variable costs and profit. Fixed costs include all development charges, design charges and capital investment in plant and equipment while variable costs include material cost, labor cost, and part of overhead costs. In manual production methods, fixed costs are low but variable costs per unit are high. Break-Even-points under such methods are lower. Though profit start early (i.e. at smaller outputs) but they (profit) are lower even at high outputs.

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Figure shows the break-even-point at 30 % production capacity The above aspects clearly bring out the importance of market research as the basis for accurate sales forecasting in the development of new product design. In mechanized production systems, fixed costs are high but variable costs per unit are lower. In such cases break-even-point is raised but at higher volume there is substantial profit.

Above fig. shows break-even-point at 60 % production capacity. Depending upon the forecast of the product demand, manufacturing system selection has to take place. If market forecast shows higher volumes, mechanized production system may be selected so that the sooner production starts and the volume increases, the sooner the investment will show a return. The designer in such situations has to ensure that the product design is such that 1. It tends easily to large production 2. There are no teething problems 3. Product has low variable-cost-element. Value engg. Techniques considerably help to reduce variable as well as fixed cost.

4. TRADE-OFF BETWEEN FUNCTION AND FORM:- The design should combine both performance and aesthetics or appearance with a proper balance between the two.
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5. TYPES OF MATERIALS USED:- Discovery of new and better materials can improve the product design. Designers keep in touch with the latest development taking place in the fields of materials and components and make use of improved materials and components in their product designs. 6. WORK METHODS AND EQUIPMENTS:- Designers must keep abreast improvements in work methods, processes and equipments and design the products to make use of the latest technology and manufacturing processes to achieve reduction in costs. 7. COST/PRICE RATIO:- In a competitive market, there is lot of pressure of designers to design products which are cost effective because cost and quality are inbuilt in the design. With a constraint on the upper limit on cost of producing products, the designer must ensure cost effective designs. 8. PRODUCT QUALITY:- The product quality partly depends upon on quality of design and partly on quality of conformance. The quality policy of the firm provides the necessary guide lines for the designers the extent to which quality should be built in the design stage itself by deciding the appropriate design specifications and tolerances. Product quality is made up of quality of design and quality of conformance.The quality of design must be fixedat the corporate level to provide the designer the guide line for the quality standard of his design. Such a policy will set the design trend for the futute and build a particular quality Image of the companies product. Once the quality policy has been specified, the designer has to design the product which Meets the customers requirement Meets the companies quality standard, and is capable of being manufactured using facilities at the command of the companies production department. Quality of design is reflected in clear and concise drawings and realistic tolerances and finishes, reliability and maintainilty figures, and properly specified visual standards. The specification of all these factors leads to consistency of product quality and when
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achieved to the level of that quality, the total gives quality of design. High quality of design means high and consistent performance over a period of time and this is a property which depends largely on the designer.

9. PROCESS CAPABILITY:- The product design should take into

consideration the quality of conformance the degree to which quality of design achieved in manufacturing. This depends on the process capability of the machine and equipments. However the designer should have the knowledge of the capability of the manufacturing facilities and specific tolerances which can be achieved by the available machines and equipments.Product design is goverened by quality policy of the firm on one side and availibilty of the plant and machinery to meet specification on the other side. There is no sense in designing a product which cannot be manufactured at the machinres avalible in the company and at the same time the machine capability should not be so bad that they cannot meet the needs of the quality of design. The capabilitgy of machine is deteemined in terms of standard deviation of that machine of that particular operation. The process capability should be such that they meetcompanies quality standards. It is responsibility of production department to keep their plant in top condition. It is also their responsibility to replace worn out machine and justify expenditure to top management. However the designer must know the capability of machine available in the company and design the products to satisfy their process capability as well as design quality.

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10. EFFECT ON EXISTING PRODUCTS:- New product design while replacing existing product designs, must take into consideration the use of standards parts and components, existing manufacturing and distribution strategies and blending of new manufacturing technology with the existing one, so that the costs of implementing the changes are kept to the minimum. The designer also needs to consider the effect of the new products on the existing product. If new product is to replace an existing product, it should fit into the manufacturing and distribution plans of the original product. Use the same standardised parts and components. Require same manufacturing technology. And if the new product requires different distribution arrangements and use of different technology, the effect on the sell of other product must be considered. 11. PACKAGING:- Packaging is an essential part of a product and packaging design and product design go hand in hand with equal importance. Packaging design must take into account the objectives of packaging such as protection and promotion of the product. Attractive packaging enhances the sales appeal of products in case of consumer product (non-durable). Good packaging is as important as good design of the product. Packaging is required for either : Protection of the product, or A means o transporting the product to the consumer, or Promotion ( advertising) of the product Consumer product generally attractive packaging to increase sale appeal while capital goods requires heavy and sturdy packaging as protection and as a means of transporting, packaging, particularly in a consumer product, is a design activity.

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STAGES IN PRODUCT DESIGN

The various stages through which a product design passes: 1. 2. 3. 4. 5. 6. CONCEPTION ACCEPTANCE EXECUTION EVALUATION TRANSLATION PRE-PRODUCTION CONCEPTION:- In this stage a draft copy of product specification prepared by the marketing department in consultation with the design department. The purpose of the draft specification is to help designer understand what exactly the customers expect from the product, also to let marketing people understand the cost of the proper product. The design specifications should include information of the product such as requirements regarding performance, aesthetics (appearance) safety, reliability, serviceability, maintainability, volume of demand for the product and maximum acceptable of design and development of the product. ACCEPTANCE:- The draft specification is scrutinized for checking technical feasibility and economic viability. If the specification accepted, it may have to be modified or rejected and such decisions taken jointly by design and marketing departments. EXECUTION:- This stage involves the conversion of design specification into drawings (preliminary design) to build the prototype model product. The prototype model should be a true replies of the prototype new product satisfying all the requirements of the customer. Sometimes it may be necessary to build more models prototype (For example, A model, B model, C model etc.) First A model is built and tested, if not satisfactory, the designed is modified and then B model is built and tested and so on till a satisfactory prototype model is built and tested. This stage establishes the feasibility of the proposed product design.

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EVALUTION AND REVIEW OF DESIGN:- The design is evaluated by a cross functional team having representatives from finance, marketing, manufacturing and service departments to achieve optimal design (trading off between product quality and cost). The design is reviewed to ensure that all requirements of the product such as function, aesthetics (appearance), materials and process alternatives, and their costs, economic assembly, repair and maintenance, lead time required for installing the new process and training the labour etc. are met by the product design. TRANSALTION:- In this stage based on the experiences in the previous stages, the detailed engineering drawings for parts, subassemblies, final assemblies, part lists etc., are prepared. These documents are known as a provisional design documents which take into account the producibility aspects of the design. Also, detailed estimates of costs are prepared at this stage. PREPRODUCTION:- A pilot production run is carried out using the provisional design documents and the producibility aspect is proved in this stage. Based on the experience gained in preproduction, the provisional design is modified into final design which is approved for bulk production later.

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Design Influences Manufacturing Cost

Design is the single most important area where the efforts to minimise manufacturing cost are really rewarding. Costs can be curtailed more easily at design stage and once product has been designed or developed, very little can be done except to cut corners here and there. some of the areas where significant savings can be made at the design stage are discussed here under:

a: Materials-Material cost constitutes a major portion of the product total cost and as such it provides vast scope for cost reduction .At the design stage, the designer must ensure that ---Only those materials which make the product perform satisfactorily are selected. If cheaper material can work satisfactorily, there are no us to go for costly. Materials which are easily available in the market are used. Scarce or those with long lead time prove to be expensive due to higher procurement cost. Component dimensions are such that commercially standard available sizes can be used. Non standard sizes push up cost due to greater process waste.

b:Machinability
Machinability of materials is another important aspect to be considered at the design stage while selecting material .Some materials are easy to machine, allow higher cutting speeds and cause less tool wear and breakage. Even if such materials are costly, they should be preferred if there is greater savings due to lower machining cost. Steel for example , is less costly than brass or aluminium but it is slow to machine. Cost benefit analysis may be made for each alternative before making the final selection.

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c: Make-or-buy decisions
No firm can manufacture all the items required by it .Some of them are to be purchased . Analysis ,therefore ,must be made at design stage at to which parts are to be purchased are which are to be manufactured. As a general role ,it is advantageous to Manufacture a part for which best technical know how is available. Manufacture a part if its procurement is expected to require large amount of money very year. Buy parts which are available at quite reasonable rates in market and there is very little or no profit in manufacture them considering the investments and other problems. Buy parts which require the use of special manufacturing process/equipment which utilisation is expected to be very poor.

d: Tolerances
Absolute uniformity to produce each piece to an exact dimension is not only impossible to obtain in production but also is costly to approach. tolerances are stipulated to Provide a necessary fit or clearance between the mating parts. Ensure interchange ability between the parts. Enable manufacturing of products/parts at the lowest cost. Specification of tolerance by the designer is an important aspect of production design. Too close tolerances are costly to obtain since they require skilled operators, precisions machines, high grade materials and better quality tools. Machines requires to be reset more often and inspection require to be conducted more frequently to avoid out-of-limit work. The net effect of close tolerances is more defectives and higher manufacturing cost Most common cause of unnecessary costs attributable and finishes is lack of knowledge of cost of manufacturing a job to key tolerances and finishes .Miraculous results can be achieved if designers are told as to how much it costs the firm to machine a surface to particular tolerance. following figure shows the effect of cost of producing a product to a specific tolerance and the manufacturing method necessary to achieve the specified tolerance.

e: Use of standard parts

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To reduce cost of product, the design must incorporate maximum number of standard parts/vendors speciality products. Several parts can be had from the speciality manufacturers at low cost by making slight changes in original design. Non standard parts should only be created when it is economically justified. Obvious benefits of using standards parts are as follows: Standard parts cost less to buy since they are produced by their manufacturers large quantities on special purpose machines with special purpose tooling to cater to needs of a large numbers of customers. Standard parts are easy to procure from multiple sources with smaller lead time thereby reducing procurement cost and inventory carrying cost. Standard parts concept is not restricted to mean a material, or a fastener or a bearing or something else to comply with an international standard specifications but it also implies something that somebody is making for some one. for eg -a product may require a gear ,a shaft, a sprocket or a pin, or a cover or a bush ,it is likely that somebody is already making it for someone .Inclusion of such parts and their procurement instead of making ,even if it involves slight changes in the design, is sure to reduce manufacturing cost. Analysis should also be made, when standard part cannot be used due to some limitations ,whether or not the standard part be purchased and the same can ba altered at the home plant make it suitable for use.

f: Variety reduction(or use of fewer parts)

Variety reduction is the voluntary elimination of unnecessary variety in the products ,materials, components, tools etc. Benefits of variety reduction include reduced manufacturing cost, lower inventory investment, lesser labour cost, fewer defectives, better quality and economy in buying cost. While designing a product, care must be taken to keep as a fewer parts as possible .Lesser number of parts also improve the reliability of the product as probability of failure of the product with lesser number of parts is lower.

g: Tool design

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Product design should be such that companys existing manufacturing facilities-machines, tools, fixtures etc.-are utilized to extent possible. Also, as far as possible, only stand cutting tools (drilling, reamers, taps, etc.)Should be used. Special tools should be considered only when extra cost of the tools is justified.

Meaning of product development

Product development is creation of new product to fill the new demands of the market, improvements in the old product to conform to the changes in the consumer demands, and addition/deletion from the product line to realise greater efficiency and profitability to the organisation. Product development aims to provide the goods wanted by the market, at the time and in the quantities desired by it, at the prices it is willing to pay yet leaving a sufficient margin(or a net profit) for the manufacturer. Product development falls into two categories: (a) introduction of new product. (b) improvement of existing product.

(A) Introduction of new products: Products are created to Give practical shape to the ideas struck accidentally. Fill the gaps in the complete range of products. Give a boost to the existing product range (it is a common practice to keep a few products ready at maturity in the market to take place of existing products if the decline in the market). Utilize the ideal resources. Protect the company against the risk of being wiped off by having a few more products with new designs. Give scope or utilize the special skills available with the company . Project corporate image of the company. Meet new requirements of the customers (i.e. to exploit a fashion.)

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There are several stages in the new product development process...not always followed in order: 1. Idea Generation (The "fuzzy front end" of the NPD process, see below) o Ideas for new products can be obtained from customers (employing user innovation), the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. o Formal idea generation techniques can be used, such as attribute listing, forced relationships, brainstorming, morphological analysis and problem analysis 2. Idea Screening o The object is to eliminate unsound concepts prior to devoting resources to them. o The screeners must ask at least three questions: Will the customer in the target market benefit from the product? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? 3. Concept Development and Testing o Develop the marketing and engineering details Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering, and rapid prototyping What will it cost to produce it? o test the concept by asking a sample of prospective customers what they think of the idea 4. Business Analysis o Estimate likely selling price based upon competition and customer feedback
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Estimate sales volume based upon size of market o Estimate profitability and breakeven point 5. Beta Testing and Market Testing o Produce a physical prototype or mock-up o Test the product (and its packaging) in typical usage situations o Conduct focus group customer interviews or introduce at trade show o Make adjustments where necessary o Produce an initial run of the product and sell it in a test market area to determine customer acceptance 6. Technical Implementation o New program initiation o Resource estimation o Requirement publication o Engineering operations planning o Department scheduling o Supplier collaboration o Logistics plan o Resource plan publication o Program review and monitoring o Contingencies - what-if planning 7. Commercialization (often considered post-NPD) o Launch the product o Produce and place advertisements and other promotions o Fill the distribution pipeline with product o Critical path analysis is most useful at this stage These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities.

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For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable. Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process. Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of the two is important. People respond to new products in different ways. The adoption of a new technology can be analyzed using a variety of diffusion theories such as the Diffusion of innovations theory.it include economical support of social sector.

(B) Improvement of existing products

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Improvement of existing products has to be a continuous activity of every manufacturer. Improvements of product is done for two objectives : i. Short term objectives. ii. Long term objectives.

Short term objectives of product improvements are : To provide a new look to the product. To utilize the existing equipment and manpower. To satisfy immediate needs of the customers. To stimulate sales by providing new advantages.

Long term objectives of the product improvements are:

to monopolise the market to ensure long term growth of business by trying up with the customers to only branded products. To make possible the manufacturer of the product on quantity basis. To reduce the cost of manufacture of the product.

RELATIONSHIP BETWEEN RESEARCH , DEVELOPMENT AND DESIGN

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A lot of confusion exists regarding terminology in the field of research, development and design . inspite of considerable overlap, distinction can be made ,basic terms necessary to understand the differences are defined below: a) Product is tangible output of a production system. b) Design is the translation of requirements into a form convenient for manufacture or use . c) Research is the deliberate and planned effort to discover new ideas, techniques, systems, applications etc . d) Development is the improvement of existing techniques or systems. e) Innovation is the generation of new ideas. From the above definition it can be concluded that: Product development involves refinement or improvement of an existing product. Product design involves the development of specifications of a product. Product design encompasses both research and development . Product research generates basic information which gets converted into practical ends during development and into final physical form on completion of design. Few additional key words are: a) Prototype is a model of a product or part of a product. It is the first embodiment of features of a product to be used for testing. b) Module is a component made up of several parts that are frequently used interchangeably between a number of products. c) Standardization is the use of standardized products , components , materials , or processes for fabrication or assembling products. d) Simplification is the reduction in components of a product as well as reduction in complexity.

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PRODUCT LIFE CYCLE

A product has to undergo through four different stages. 1) Introduction: when a new product is introduced.

2) Growth: when the sales of a product pick up/increase in market share.

3) Maturity: here the market share/sales remain constant. Product redesign is improvement to prevent decline of an existing products.

4) Decline: here the sales of the product reduces due to either innovation by the competitors or introduction of a new product by the comprtitors redisgn here would see a product life cycle be recived.

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Case study
CADBURY FUSE

Background to the confectionery market

Per capita confectionery consumption in the UK is among the highest in the world, exceeded only by Ireland and Denmark. Chocolate confectionery accounts for around 70% of sales value in the UK market, with sales of sweets (sugar confectionery) at around 30%. Historically, the chocolate confectionery market has been characterized by the dominance of a number of well established brands, such as Cadbury Dairy Milk, Mars Bar and Kit Kat. Although some brands enjoy a rich heritage, the key need in a busy and developed market sector is innovation, not just of existing brands but also in the development of completely new brands. Brand-led innovation is a vital component in the growth of this market as it enables organisations to build competitive advantage. Over recent years, competitors in the chocolate market have made significant investments in new product development. Indeed, over 15% of volume sales in the last ten years have been generated by new products. For Cadbury, this figure is even higher, at 20%, with new brand launches such as Wispa Gold and TimeOut. This case study focuses on the launch of Cadbury Fuse. In the face of strong competition from well-known brands in an already busy market sector, the launch of Fuse represented a significant investment in a new brand. Market research is a process designed to link managers to consumers through information. It is used to identify opportunities and make better informed decisions about products which have future market potential.

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Market research has revealed that snacks play more of a functional role than one of pure indulgence. Research also shows that successful snack brands in the confectionery category tend to have more 'foodie' values and often contain ingredients such as cereal, wafer, biscuits, peanuts and fruit to break up the chocolate delivery. Cadbury's philosophy is to continue as a driving force in the confectionery market, and thus constantly analyze its offerings for consumers. The core objective of Cadbury's innovation program is to generate incremental volume for the company and achieve the vision of market leadership in every segment in which it operates. The role of innovation is critical as it allows Cadbury to develop ahead of its competitors in those areas of the market which are new or growing.

Product Development
Cadbury set out two objectives for the development of Fuse:

1. To grow the market for chocolate confectionery 2. To increase Cadbury's share of the snacking sector
The 'Fuse' concept was developed after market research identified the growth of snacking and a definite gap in the market for a more chocolaty snack. A number of ingredients were devised and tested following a survey which questioned consumers about their snacking habits and preferences. A research and development team was then asked to develop a number of product recipes which addressed the needs expressed by consumers. Not all products successfully emerge from the product development phase. Research and development involves combining various ingredients to develop potential new products. Considerable development time was spent on Fuse, carefully engineering the ingredients in order to deliver the right balance of chocolate, food elements and texture. More than 250 ingredients were tried and tested in various combinations before the recipe was finalized. Any new product in the snacking sector must establish points of difference from existing products within the market - thus creating a unique selling proposition (USP) i.e. a product with unique appeal which is not shared by any of its competitors. Whereas other confectionery snacking

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products focus primarily upon ingredients, with chocolate used only to coat the bar, the product developers decided to use Cadbury chocolate to ''fuse'' together a number of popular snacking ingredients such as raisins, peanuts, crisp cereal and fudge pieces. Early consumer testing As products are developed, they must be tested to ensure that consumers would be willing to buy them. As approximately 85% of all new products launched into the grocery and allied trade sectors fail in their first year, extensive research helps to reduce the risk of launching a new product into an already competitive market. Fuse went through two extensive 'in home placement' tests. The results of these tests were multiplied into repeat purchase and purchase frequency figures to allow Cadbury to anticipate the volume of bars required for the launch of Fuse and post-launch. Pack design Packaging enables a manufacturer to convey both the tangible and intangible attributes of a product. The packaging for Cadbury's new product sought to position it as a unique, exciting and delicious chocolate snack which would stand out from its competitors. It was important to emphasise the qualities and appeal of Fuse whilst at the same time reinforcing that it was a Cadbury brand. The packaging achieved impact by using bright, fiery colours for the product name and contrasting them against the deep and instantly recognisable 'Cadbury purple', which communicated the manufacturer's heritage. The colours were also used in a gun powder style to suggest an explosive taste. The vibrancy of the design aimed to differentiate it from other products in the sector so that it would have an immediate point-of-sale impact both on-shelf and in store display units. Three different packaging formats were developed in order to maximise the various multi-purchase opportunities available. The key pack size was the single bar, designed to entice trial and to encourage repeat purchase. The 'treat size' and the multi-packs were aimed at families.

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Brand name Like packaging, brand names play a critical role in the success of a product, by helping to create a product's 'personality'. The new product aimed to have broad appeal to 16-34 year olds, although it was primarily targeted at 16-24 year olds. The name Fuse was chosen to communicate the fusion of snacking ingredients. The logo was bright and fiery with a mock fuse - alight in several places - which aimed to give the new bar the quirky and humorous style which Cadbury sought to appeal to this younger target market. Further consumer testing Testing is vital throughout the entire product development process. It helps to provide valuable information that can be used to fine-tune the product and minimise many of the launch risks. In research, Fuse scored higher for texture, 'interesting eat' and combination of ingredients, than its competitors and achieved the highest rating ever for a new Cadbury product - 82% of consumers rated Fuse as excellent or very good and 83% said they would buy it regularly.

The Launch
The launch strategy of any new product is critical. Cadbury has two targets for its products - trade customers who stock the product and consumers who buy it. In recent years, product launching has become an art which can make or break a product. A successful launch makes potential customers aware of the new product and keen to try it. Before consumers could try the product, however, it was important for Cadbury to gain the support of its trade customers. Retailers had to view it as helpful in encouraging customers to visit their shops. If the product had failed to interest retailers and distributors, the costs of investment would not have been met and they would not have stocked the product. Cadbury conducted one-to-one briefings with over 70 key trade customers. This helped Cadbury build awareness and commitment to the launch and obtain significant orders for in-store displays and merchandising ahead of the launch date. The trade commitment was reflected in high levels of display support in store during the launch.
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Traditionally, new confectionery products are initially launched in one region of the country, in order to gauge the product's success, before moving on to other regions over a period of time. Time Out and Wispa Gold, for example, were launched in this way. The commitment to the success of Fuse was so great, however, that it was Cadbury's first completely national launch for 20 years. There were certain key requirements to the co-ordination of the launch: Secrecy had to be paramount! Marketers who had identified the gap in the market had to work closely with individuals from research and development as well as other external agencies. Manufacturing operations, in conjunction with marketing and finance, had to evaluate a new factory investment for Board approval. Having a catchy 'hook' for a new launch helps to make consumers notice the product. Cadbury and its trade customers managed the first availability of Fuse around one day, Tuesday 24th September, aptly christened 'Fuseday'. This involved tight management of stock distribution, with more than 40 million bars being moved from Cadbury depots into the trade only a few days prior to the launch date. Press releases were tailored to specific audiences. In each case, a strict embargo was imposed to ensure that the impact of Fuseday was not diluted. The only exceptions were briefings with The Grocer, and Marketing (trade publications) and The Daily Telegraph, which reviewed the product in its business pages. Public relations (PR) support was substantial. It told the story of Fuse, explained that it had taken five years to develop, involved an investment of 10 million, the development of a new plant at Somerdale near Bristol and 4 million in advertising costs. The TV campaign and PR campaign were so successful that Cadbury was under pressure to meet repeat orders postlaunch!

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Post-launch results After a new product launch, it is important to analyse whether the product has managed to meet its launch objectives. During 1996, the chocolate market grew by 9% with 19% of this growth attributable to Fuse - a single brand which had only been available for a quarter of the year. One way of evaluating the effectiveness of advertising and promotional campaigns is to ask market research volunteers to identify advertisements using prompts in a recall test. The Fuse launch had created massive awareness of the new brand, achieving greater prompted awareness than the celebrated Wispa launch. Within just one week of the launch, a record 40 million Fuse bars were sold into the trade and within eight weeks of sale, Cadbury Fuse was the UK's favourite confectionery line, outselling both Mars Bar and Kit Kat by 20% and capturing an astonishing 6.5% of handheld confectionery product sales. It had also contributed significantly to Cadbury's growth in 1996. The launch had exceeded expectations, with consumers buying 70 million Fuse bars within the first three months of its launch. Cadbury's competitors reacted to the success of Fuse by increasing their own new product activity. Conclusion This case study has examined Cadbury's ability to use innovation in a developed and crowded market-place. There were three clear elements in this process: 1. the use of consumer research to identify a significant market opportunity; 2. product research and development combined with extensive consumer testing; 3. massive trade and consumer hype generated by a national launch. Snacking remains the big opportunity to expand the chocolate market even further. As Fuse moves through the growth phases of its product lifecycle, the next stage is to move it into the 'super brand' league. As it does so, the key requirement will be to maintain the product's momentum by continuing to develop innovative approaches to marketing it to consumers.

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