4.3.4

Product Design

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Product Design

Product design is the process of creating new products or services for firms to sell. Firms that are good at product design will be good at researching new products, good at developing them and good at coming up with new and innovative ideas that customers will buy.

Market-driven approach

Market-driven approach

  • The market-driven approach is one that listens and responds to the needs and wants of customers.
  • Firms that use a market-driven approach don’t just design a product that a couple of people in the company think is a good idea.
  • They will do lots of market research into what customers want.
  • A market-driven approach is much more effective in developing successful new products.
Product differentiation

Product differentiation

  • Product differentiation is making your product different to competitors' products. A product’s unique selling point (USP) is the part of the product or service that is different to anything else in the market.
    • Tesla’s USP is that their cars run on electricity rather than petrol or diesel.
    • Dyson's USP is that it produces fans that are bladeless. However, other businesses, like Samsung, have since imitated this feature, and so it is no longer unique.

The Design Mix

A product is usually produced with the three following aspects in mind: function, cost and aesthetics.

Function

Function

  • Function is the way that a product works (including all of the different aspects of how it works).
    • For example, when designing a speaker you need to think about whether or not it will be Bluetooth, will it be wireless and if so, how will it be charged.
    • Beats by Dre offer wired and wireless versions but making the wireless headphones is usually more expensive, so Apple (which owns Beats) usually charges a higher price for these.
Cost

Cost

  • The product design and its features affects how much the product will cost to make, and so price is an important consideration when designing a product.
Aesthetics

Aesthetics

  • Product image (or the way a product looks) can make a product stand out from competition, but it also has important impact on the overall brand image of the business.
    • For example, Monzo is an app that offers banking services. Its functionality is not very different to other big banks like Barclays but the aesthetics of its products are very pleasing.
  • Brand image is important because it is essentially the reputation of the firm. This is not just important for selling the product but also for selling the firms other products and services.
Jump to other topics
1

Business Activity & Influences on Business

1.1

Business Objectives

1.1.1Business Aims1.1.2Business Objectives1.1.3Business Objectives Change Over Time1.1.4End of Topic Test - Business Aims1.1.5Diagnostic Misconceptions - Profit
1.2

Types of Organisations

1.2.1Sole Traders & Partnerships1.2.2Limited Companies1.2.3Limited Liability1.2.4Unlimited vs Limited Liability1.2.5Not For Profit & Franchises1.2.6Multinational Companies1.2.7End of Topic Test - Business Ownership1.2.8Application Questions - Business Ownership1.2.9Diagnostic Misconceptions - Company vs Business1.2.10Diagnostic Misconceptions - Owners vs Shareholders
1.3

Classification of Businesses

1.3.1Sectors
1.4

Decisions on Location

1.4.1Location
1.5

Business & the International Economy

1.5.1Globalisation1.5.2Exchange Rates
1.6

Government Objectives & Policy

1.6.1Government Objectives1.6.2The Government & Business Activity1.6.3Interest Rates1.6.4Interest Rates - Calculations1.6.5Diagnostic Misconceptions - Recessions
1.7

External Factors

1.7.1External Factors
1.8

What Makes a Business Successful?

1.8.1Measuring Success1.8.2Reasons for Failure
2

People in Business

2.1

Internal & External Communication

2.1.1Communication
2.2

Recruitment & Selection Process

2.2.1Types of Employment2.2.2Recruitment Stages2.2.3Effective Recruitment2.2.4Legal Controls Over Employment2.2.5Diagnostic Misconceptions - Internal Recruitment
2.3

Training

2.3.1Training
2.4

Motivation & Rewards

2.4.1Motivation in the Workplace2.4.2Financial & Non-Financial Methods2.4.3End of Topic Test - The Workforce2.4.4Application Questions - The Workforce2.4.5Diagnostic Misconceptions - Money
2.5

Organisation Structures

2.5.1Organisational Structures2.5.2Centralised vs. Decentralised Structures2.5.3Tall & Flat Organisations2.5.4Functional Areas Within a Business2.5.5End of Topic Test - Org Structure
3

Business Finance

3.1

Sources of Finance

3.1.1Internal & External Sources of Finance3.1.2Factors Affecting Sources of Finance
3.2

Cash Flow Forecasting

3.2.1Cash Flow3.2.2Consequences of Cash Flow Problems3.2.3Cash Flow - Calculations3.2.4Solutions to Cash Flow Problems3.2.5Diagnostic Misconceptions - Cash Flow
3.3

Cost & Break-Even Analysis

3.3.1Costs, Revenue & Profit3.3.2Profit, Average Unit Cost & Interest3.3.3Costs - Calculations3.3.4Revenue - Calculations3.3.5Break-Even Analysis3.3.6Profit & Losses - Calculations3.3.7End of Topic Test - Finance3.3.8Grade 9 - Finance3.3.9Diagnostic Misconceptions - Fixed Costs3.3.10Diagnostic Misconceptions - Break-even
3.4

Financial Documents

3.4.1Financial Statements3.4.2Income Statement3.4.3Understanding Business Performance
3.5

Account Analysis

3.5.1Business Calculations3.5.2Gross Profit - Calculations3.5.3Net Profit - Calculations3.5.4Business Calculations 23.5.5Business Calculations 33.5.6Liquidity
4

Marketing

4.1

Market Research

4.1.1Market Research4.1.2Forms of Market Research
4.2

The Market

4.2.1Customer Needs4.2.2Satisfying Customer Needs4.2.3Market4.2.4The Competitive Environment4.2.5Market Segmentation4.2.6Market Mapping - Price vs Quality4.2.7End of Topic Test - Marketing4.2.8Application Questions - Marketing4.2.9Diagnostic Misconceptions - Competition
4.3

The Marketing Mix

4.3.1Price4.3.2Price Penetration4.3.3Other Forms of Pricing4.3.4Product Design4.3.5The Product Life Cycle4.3.6Extending Existing Products4.3.7New Products4.3.8Benefits and Risks of New Products4.3.9Promotion4.3.10Public Relations and Sales Promotion4.3.11Sponsorship & Social Media4.3.12Product Placements4.3.13Promotional Mix4.3.14Place4.3.15Place 24.3.16Place 34.3.17M-Commerce4.3.18Benefits & Drawbacks of M-Commerce4.3.19End of Topic Test - Marketing Mix4.3.20Grade 9 - Marketing Mix4.3.21Diagnostic Misconceptions - Decreasing Price4.3.22Diagnostic Misconceptions - Advertise vs Promote4.3.23Diagnostic Misconceptions - Social Media
5

Business Operations

5.1

Economies & Diseconomies of Scale

5.1.1Economies of Scale5.1.2Diagnostic Misconceptions - Economies of Scale
5.2

Production

5.2.1Production Processes5.2.2Flow and Batch Production5.2.3Production Efficiency5.2.4Technology & Production5.2.5Diagnostic Misconceptions - JIT vs JIC
5.3

Factors of Production

5.3.1Factors of Production
5.4

Quality

5.4.1Importance of Quality5.4.2Identifying Quality5.4.3Total Quality Management5.4.4End of Topic Test - Operational Decisions

Practice questions on Product Design

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Why is product differentiation important?Flashcard
  2. 2
    What do we call the part of the product or service that is different to anything else in the market?Multiple choice
  3. 3
    Features of a market-driven approach:True / false
  4. 4
    What is the USP of Dyson Airblade hand dryers? Multiple choice
  5. 5
    How is brand image or product image important to a business?Multiple choice
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Other Forms of Pricing

The Product Life Cycle