3 Description of the product phases

From EvolutionaryProductDevelopment

Evolutionary Product Development

1 Introduction 2 Product phases 3 Description of the product phases 4 Research questions 5 Study 1 - retrospective case survey 6 Product characteristics 7 Study 2 - ranking by experts 8 Testing of the theoretic model 9 Conclusions, discussion and recommendations References Thesis propositions

The product characteristics will be described by statements that can be linked to the product phases. In two studies, these statements will be tested to see if they properly describe the product characteristics together with the product phases.

3.1 Performance

From several studies it has become clear that with new products based on new technologies, functionality (i.e., the performance of the product) is the most important aspect of product development. Christensen (1997) states that in the beginning new products (he calls them disruptive innovations) perform less than the products they will replace at a later stage. Baudet (1986) says that products often start as status products, and usually perform worse than the existing alternatives - although despite this shortcoming, some people still want to own them. As an example, he mentions amongst others the first cars that were much less reliable than the usual horse drawn carriage. Dirken (1997) describes how functionality (he speaks of technical functionality) is the first important aspect of a new product. In the 'buying hierarchy' of Windermere Associates (Christensen, 1997) functionality comes first. If there are no products available that answer the wishes of the consumer in a satisfying way, competition takes place based upon the improvement of functionality. From the studies of the diffusion of innovations by Rogers (1995) it can be concluded that the first buyers of new products (i.e., the innovators) are attracted to those products because they are new and because they can distinguish themselves with them. The innovators have financial means at their disposal and are able to live with uncertainties. They don't worry about the possibility that the product might not perform very well, as they are looking for new and challenging experiences.

The studies mentioned above confirm that in the early phases of the life of a product most effort is spent on improving the functionality, and that there are consumers willing to buy and use the product, despite the fact that performance of the product is usually rather poor. In his study on launch strategies of new products, Hultink found comparable results: "In early stages of the product life cycle, few competitors are around and products tend to be technology-driven and innovative. In these circumstances, prices should be relatively high." (Hultink, 1997, p. 154)

The issue of high prices during the early stages of the product life cycle has also been reported on by Baudet (1986). In 1947, the first ballpoints would cost nearly 6,- euro and around 1900, a bicycle would cost about ten to twelve times the average weekly wage of a working man. The product characteristics of the product phase performance can be summarised as follows:

1. The product is new to the market and results from a 'technology push'.
2. The performance of the product is poor.
3. Product development is aimed at improving the performance.
4. Form giving is not very important, and therefore matching form giving to different parts of the product is poor (leading to a product that is not very aesthetically pleasing).
5. There are few competitors around, and in some cases there is a monopolist.
6. The price per unit is relative high.
7. The product is designed for production with standard machining, the product usually has many parts, and assembly is often done by hand.
8. The product is promoted through fairs, free publicity, the internet, brochures in retail shops, etcetera.
9. There is no organised service organisation. (This does not mean that there is no service, since start-up companies often offer a lot of service and support.)
10. The social behaviour of the company or organisation behind the product is of no concern to the customer.

3.2 Optimisation

As mentioned before, in the first phases of the economic product life cycle the activities of designers are aimed at improving both technical and ergonomic functionality. According to the opinion of the Windermere Associates (Christensen, 1997) competition will be based on reliability when products offer almost identical functionality. At which point, claims Dirken (1997), product safety becomes more important to the consumer. Pye (1964) and Smets (1986) agree that in that stage product development is aimed at fine tuning the products on the available production methods in order to realise lower prices.

"It seems to be invariably true that those characteristics which lead people to call a design functional are derived from the requirements of economy and not of use." (Pye, 1964, p. 35) "We are so reluctant to acknowledge that economy has been a major influence on the design of even the most splendid things which men have made, that we often say 'better' when we mean 'cheaper'." (Pye, 1964, p. 46)

Hultink (1997) calls the second phase 'growth' (like in the economic product life cycle) and mentions the following characteristics: products are not totally new, but offer major improvements, the number of competitors grows and the market grows between 5 to 10%. He further states that products are promoted more actively, amongst others with sales force promotion, trade promotion and direct marketing. Baudet (1986) shows that, after a spectacular growth of the bicycle market in the first phase (in 1897 nearly 170%, in 1904 still 16%), the growth in the following years was about 10%.

The product phase optimisation is characterised by:

1. The product is new to the market or there is some consumer awareness. It results from a 'technology' push.
2. The performance of the product is reasonable.
3. Product development is aimed at improving performance, better reliability, improvement of ergonomics and safety.
4. Form giving is not very important, and therefore matching form giving to different parts of the product is poor.
5. There are few competitors around, but the number starts to grow.
6. The price per unit can still be relative high, although there is more competition.
7. The product is designed for production with standard machining, the product usually has many parts, and assembly is often done by hand.
8. Promotion is still predominately done through personal selling, such as fairs, free publicity, the internet, sales force promotion and trade promotion.
9. There is no organised service organisation.
10. The social behaviour of the company or organisation behind the product is of no concern to the customer.

3.3 Itemisation

Both Windermere Associates (Christensen, 1997) and Mann and Dewulf (2002) find that when vendors have improved their product to the point that they satisfy functionality and reliability, the basis of competition shifts to convenience. Customers will prefer products that are the most convenient to use and (especially in the business to business market) vendors that are convenient to deal with. For products that are mass produced, personal selling becomes impossible. With regard to these products, Hultink (1997) states that they are less innovative, although product improvement is still possible. The growth of the market is less than 5% and the number of competitors increases. As the product range grows, prices fall and costs of advertising increase. Communication channels change from personal selling strategies to direct marketing, print-, TV- and radio-advertising.

The product characteristics of the product phase itemisation are:

1. There is some consumer awareness of the product.
2. The functionality and reliability of the product are good. The ergonomics and human interface are acceptable, and the product is safe.
3. Product development is aimed at improving performance, reliability, ergonomics, human interfaces and safety. There is an endeavour to develop extra features and accessories, including special editions of the product that are developed for different trade channels and target groups.
4. The matching of the form giving of different parts (integration of form giving) of the product is good.
5. Their number is still growing, but the amount of competitors is not very high.
6. Prices start falling.
7. The number of product parts decreases, and automation becomes more important.
8. Promotion is mainly done through direct marketing, print-, TV- and radio-advertising.
9. There is a well organised service organisation to support the product.
10. The social behaviour of the company or organisation behind the product is of no concern to the customer.

3.4 Segmentation

In the first three product phases (i.e., performance, optimisation and itemisation) the focus was on improved functionality, reliability, ergonomics and safety. There was an endeavour to add extra features and accessories in order to differentiate the product from its competitors. However, there is an end to this kind of developments. There comes a time when the performance offered is actually more than the performance that is required. Delhoofden (1994) speaks of unnecessary functions. He distinguishes five sorts of functions: main functions (the reason for the consumer to buy the product), sub functions (functions that are wanted or necessary), supplementary functions (functions that are not essential, but are appreciated by the consumer), unnecessary functions (functions that are available but the consumer did not ask for) and unwanted functions (functions that are disadvantageous or harmful). Christensen (1997) speaks of performance oversupply. The product has extra features that the customer does not appreciate, the so called 'take-it-or-leave-it' features as described by Pine and Gilmore (1999).

"... every mass-produced product comprises a bundle of 'take-it-or-leave-it' features or dimensions offered to all customers. The more features bundled, the greater the likelihood of introducing some element that disqualifies the product with a particular buyer (either because he flat out doesn't want the element or doesn't want to incur the perceived higher price for a marginal element)." (Pine and Gilmore, 1999, p. 79)

For less complicated products, such as furniture and trinkets, the possibilities to add features or accessories are limited. Moreover, for innovators and early adopters, products become less attractive during the latter product phases. The market share is such, that the product is considered 'to be accepted'. Owning the product is no longer distinctive, as it does not offer status. According to Rogers (1995) the innovators and early adopters are sensitive to status aspects; therefore it is advantageous for companies to strive for features that provide these aspects. Adding emotional benefits to a product is a possibility.

The product characteristics of the product phase segmentation can be summarised as follows:

1. Almost all members of the target group know the product or have heard of it.
2. The functionality, reliability, ergonomics and human interface of the product are good and the product is safe. Therefore, the customer has a lot of choice, as there is a broad product range.
3. Product development is aimed at extra features and accessories, including special editions of the product for different trade channels and target groups.
4. The matching of the form giving of different parts (integration of form giving) of the product is good. Form giving becomes more expressive (styling) and is aimed at adding emotional benefits.
5. The market penetration is high (i.e., there are a lot of competitors).
6. Since competitors' prices are low, it is almost impossible for a company to lower their prices even further.
7. The number of product parts decreases. Production and assembly are highly automated.
8. Promotion and advertising are intensive (i.e., a lot of advertising in the media).
9. There is a well organised 'service organisation' to support the product.
10. The social behaviour of the company or organisation behind the product is of no concern to the customer.

3.5 Individualisation

Extrapolation of segmentation (continuous fine tuning of products on smaller target groups) leads to a well tuned product especially produced for one individual. The developments in information technology make this kind of individualisation possible (Lotgerink en Hoekstra, 1997; Peelen, 1996; Molenaar, 1999). It leads to the following description of the product phase individualisation.

1. Almost all members of the target group know the product or have heard of it.
2. The functionality, reliability, ergonomics and human interface of the product are good and the product is safe. Therefore, the customer has a lot of choice, as there is a broad product range.
3. Product development is aimed at extra features and accessories, including special editions of the product for different trade channels and target groups. Product development is also aimed at mass customisation or co-creation, allowing the customer to influence the final result.
4. The matching of the form giving of different parts (integration of form giving) of the product is good. Form giving becomes more expressive (styling) and is aimed at adding emotional benefits.
5. The market penetration is high (i.e., there are a lot of competitors).
6. Since competitors' prices are low, it is almost impossible for a company to lower their prices even further. However, co-creation and mass customisation can offer possibilities to realise higher prices.
7. Production and assembly are highly automated.
8. Promotion and advertising are intensive (i.e., a lot of advertising in the media). Interactive media are used to customise the product to needs of the individual.
9. There is a well organised 'service organisation' to support the product.
10. The social behaviour of the company or organisation behind the product is becoming more and more important to the customer.

An important problem of this product phase is that individualisation is not possible for each product. Complicated products, such as cars, are already customised to a greater extent - although the customer can only choose from a limited number of possibilities. A system whereby a customer can submit a RAL-number for the desired colour of his car has yet to be developed. However, for less complicated products, such as a diary and a spectacle case, the possibilities are much more limited - although it is possible to order these products with one's name printed on them, for example.

3.6 Awareness

In 1997, the market research bureau Inter/View carried out research into responsible entrepreneurship (Sikkema, 1997). This research showed that consumers are only willing to contribute to a better environment and to solving societal problems if this can be done very easily, and if it does not lead to less comfort than they are used to and there are no heavy financial burdens. The research also showed that people expect companies to play an active role in improving societal problems. According to Hafkamp (1997), a company can tempt consumers who are usually committed to purchasing luxury products, by offering them the possibility to show their involvement and buy products that have an environmental or social claim added to them.

Products that are in the product phase awareness have the following product characteristics:

1. Almost all members of the target group know the product or have heard of it.
2. The functionality, reliability, ergonomics and human interface of the product are good and the product is safe. Therefore, the customer has a lot of choice, as there is a broad product range.
3. Product development is aimed at mass customisation or co-creation, allowing the customer to influence the final result. Product development is also aimed at special editions of the product for different trade channels and target groups.
4. The matching of the form giving of different parts (integration of form giving) of the product is good. Form giving becomes more expressive (styling), but in this phase that can sometimes mean a very sober design.
5. The market penetration is high (i.e., there are a lot of competitors).
6. Since competitors' prices are low, it is almost impossible for a company to lower their prices even further. However, co-creation and mass customisation offer possibilities to realise higher prices.
7. Production and assembly are highly automated.
8. Promotion and advertising are intensive (i.e., a lot of advertising in the media). Interactive media are used to customise the product to the individual. The organisation communicates the ethics of the company concerning the society and the environment.
9. There is a well organised 'service organisation' to support the product.
10. The social behaviour of the company or organisation behind the product is becoming more and more important to the customer. The company can be successful with products that become more attractive during use ('positive aging').

3.7 The predictive value of product phases

As shown above, a model is presented that describes the most probable course of life of a product using the six product phases. Each product phase is described, thus making use of the product's characteristics, such as its newness, functionality, product development, form giving, number of competitors, pricing, production, promotion, service and ethics. The value of this model to the industrial design engineer lies in the possibility to make qualitative predictions on the future of a product. These predictions can be based on the product characteristics, since each product phase has its own characteristics. Therefore, by researching the present product characteristics (i.e., a more precise analysis of the characteristics of the competitors products, that are currently in the market when a new product development is about to start) the product characteristics of the new product that is meant to be the follow up of the present products, can be defined.

With regard to the last two product phases (individualisation and awareness) some precautions are necessary. For the first four product phases mentioned in the literature, many studies were found that confirm their existence. Also, some evidence suggests that these phases do indeed appear in the proposed order of time. Although for the last two product phases, much less evidence was found. For instance, it is therefore possible that one or both of these phases form a part of the product phase segmentation. Thus, the question that has to be answered, is if the phases usually appear one after another or do they actually coincide?

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