Design and Business..

1
Design and Business..

• What did we do again?!

2
What did we do last year..?

• We completed a Market Situation report which
  involved examination of a Market sector
  including
• Market sector overview
• Competitor Analysis
• User Analysis
• Consideration of Brand Values
• Considering market objectives and there effect on
  New Product Design and Development.
• Making product commercially successful.

3
What was a strategy..?

• Design only works as part of an integrated
  company strategy.
• A strategy is a business tool that helps to give
  an overview of a companies activities internally
  and externally
• It is the driving force behind a companys
  development in their market and could be
  described as a master plan for success!

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What does a strategy include?

• Business objectives
• Market objectives and strategy
• Design or product strategy
• Plan for managing these objectives to achieve
  goals
• Includes details of resources and financial
  backup needed to achieve these goals.

5
Specifically we examined

• Market Strategy
• Design Strategy
• The relationship between the two to allow for
  commercially successful products.
• How these two diciplines work toward both the
  internal and external factors that effect
  successful business

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What does it consider?

• Internal and external factors that effect design
  development.
• How design can be used to give the company
  competitive advantage by differentiating product
  or creating a new market niche.
• How this will be managed and implemented.

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Internal Factors..

• Management
• Research and Development
• Time Scales
• People and Skills in-house
• Culture for Design
• Cash and Investment
• Production Capabilities
• Communication

8
External Factors..

• Competitors
• Trends and Fashion
• Market Research
• Product Life Cycles
• Sales
• Target Market
• Technology
• Brand Identity
• The Future

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Examples of Strategic Development..

• IKEA
• Strategy for cost effective, high quality design
  - available to the masses, competing on price,
  trends and creating a market niche too!
• Strategy for developing significant brand
  identity that is co-ordinates business effort.

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Black and Decker..

• Developed a product development scheme that
  introduced ergonomic considerations to new ranges
  of product and specific user trends.
• Responded to increased consumer demand for tools
  for DIY, that is still booming.
• Have used strong position in the market to
  diversify product offering.

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Apple Macintosh..

• The I-Pod.
• Great design, simple interface and lots of
  accessories!
• Massive Product Diversification
• High price point latest technology
• High profile marketing campaign
• Now using strong reputation from quality of
  products to break into new markets..

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Summary..

• In the UK and Global market place, companys that
  use design successfully, succeed.
• Companies Develop Strategies that help them
  culminate information about their market and
  specifically target consumers and the market
  place.
• Integral to these Master Plans is a design
  development strategy.
• Internal and external factors must be considered
  when planning company strategy it must be
  in-touch with the market!

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The Marketing Concept

• Concerned with determining the needs, wants and
  values of a target market and directs a company
  to delivering the desired satisfactions more
  effectively and efficiently than its competitors.

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Core Marketing Aims

• Needs, wants and demands (what people want)
• Products and Services (What you provide)
• Value, Satisfaction and Quality (How you provide
  it)
• Exchange, Transactions and Relationships (How you
  keep providing it)
• Markets (Where you provide it)!

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Understanding Markets..

• The difference between marketing and a market.
• Marketing is the activity and comprehensive
  function of many interrelated activities, aimed a
  profitably fulfilling the needs of a chosen
  customer group
• A market is simply a term for a set of actual and
  potential buyers of a product.

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Specific Markets..

• A Market consists of buyers that normally share
  similarity or common characteristics. They can
  be simply described as follows
• Geographic The British Market, The European
  Market.
• Product Based The computer and video games
  market, The car market.
• Need based The home security market
• Or combinations The European car market.

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Markets, Products and Services.

• Classifications of Markets include both consumer
  and industrial markets.
• Consumer Market Households that buy and use
  goods or services for themselves.
• Industrial Markets Organisations who buy and use
  goods or services for themselves, commercial
  organisations and nationalised industries.

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Markets, products and Services.

• Products and Services are the basis of and
  organisations offering to a chosen markets. The
  Service sector dominates industry in the UK, as
  with most developed countries.
• A product an tangible item to the consumer.
• A service an intangible benefit received by the
  purchaser. E.g. insurance.

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The big questions..

• What business are we in? Type, size, sectors,
  competitors, geographic location, current
  economic status, business potential etc.
• What needs are we going to serve? Customer
  profiles, market strategy, segmentation,
  product/service planning, NPD, market research,
  etc.
• Where do we want to go? Business planning and
  objectives, financial management, resources,
  adequate staff, potential for expansion,
  profiteering.
• How are we going to get there? Overall strategy,
  product range and service offerings in tune with
  market needs and wants, coherent brand identity,
  design strategy, set out into long term and sort
  term objectives.

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STP Segmenting, targeting, positioning.

• The heart of the modern marketing is based on the
  principles of Segmenting, Targeting and
  Positioning.
• Market Segmentation is the recognition that
  customers in a market area or sector are not
  homogenous. And follows these basic premises
• Customers are different
• Differences in customers relate to differences in
  demand.
• Segments of customers can be isolated within the
  overall market and targeting specifically.

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Why segment markets?

• Better matching of customer needs
• Enhanced profits
• Better opportunity of growth
• Retention and good relationship with customers.
• Targeted communications, good brand associations.
  
• Stimulation of innovation!
• Market share is maintained.
• Excellent target for gathering specific market
  intelligence.

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Market segmentation..

• We know that companies place high emphasis on
  analysing market sectors and dividing them up
  into areas of specialisation.
• These segments can be focus on and define the
  target market and its demands.
• Therefore its critical to get an accurate
  appraisal of your market segment.

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Market segmentation..

• Marketing uses research and analysis techniques
  to define demand patterns of specific buyers.
• Basically What product is demanded, by what
  people and why it will be brought.
• Companies use this to target sectors in different
  ways..

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• Mass Markets (undifferentiated)
• Multiple Niche (differentiated)
• Market Niche (concentrated)

25
Market research and Analysis

• Techniques used to define market segmentation.
• Geographic region, climate population density.
• Demographic come back to this!
• Behavioural Attitudes, knowledge, loyalty,
  occasions.
• Psychographic Personality, lifestyle.

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Demographics..

• Relates to specific data to do with population.
• Considers..

1. Age
2. Sex
3. Education
4. Occupation
5. Family size
6. Lifestyle
7. Income
8. Religion
9. Nationality

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Age.

• Different age groups want different things and
  have different needs.
• In recent years the competitiveness of markets
  has led to more specifically targeted age groups.
• Age groups doesnt just apply to human
  demographics!
• So lets have a look at some demographic
  representation..

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Family life cycle..

• Bachelor Stage young, single, living at home
  Few financial commitments, recreation and fashion
  orientated. Buy Cars, entertainment, holidays!

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Full nest 1 youngest child under 6 years old

• House buying is important, liquid assets are low,
  dissatisfied with level of savings and financial
  position generally. Buy Medicines, toys, baby
  food!

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Empty Nest 1

• Home ownership at peak. Financial situation is
  good, savings increased. Interests in travel,
  recreation and self-education. Buys More
  expensive Holidays, luxuries and home
  improvements!

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Occupation

• Class though less relevant these days!
• Manual, Skilled, Semi-Skilled, Professional.
• Linked to income (obviously)
• Though not always in disposable income! family
  life cycle!

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Targeting Markets..

• So we have used demographic study methods to help
  define market segments within a market sector.
• Now we need to target a particular segments and
  assess them to see which will be the most
  respondent to our product.

33
Marketing Intelligence

• This feeds into the strategic planning processes
  companies use, that we discussed last week.
• Market intelligence continuously reviews market
  segments your company is targeting, giving
  updates on changes that affect your plans!

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Targeting.. How?

• Once you have segmented your market into groups
  of users, all with specific demands, you can
  split them into those that will be most receptive
  to your product or service and those which may be
  less profitable to target. Using you most
  receptive segments you can them tailor your
  strategies to target effectively. If your
  research and strategies are correct, that you
  stand a good chance of making headway. Remember
  the battle scenario..
• Now you have researched and understood your
  market, you can begin to formulate a strategy.

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Analysis

• By analysing how Apple have used market research,
  product development and market strategy we can
  begin to see how they have understood the market
  they are in, and responded to it!
• Remember that marketing is
• Marketing is a management process responsible
  for identifying, anticipating and satisfying
  customer requirements profitably
• (Chartered institute of marketing definition)

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The Marketing Mix..

• The ingredients of the marketing mix
• Product
• Price
• Promotion
• Place
• The four Ps

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Marketing Mix

• What is the marketing mix for?
• The way in which differential advantage may be
  achieved and sustained by manipulating the four
  Ps
• There are more Ps but we are focusing on the
  main four.

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Marketing Mix..

• Product Product management, New Product
  Development, Branding and Packaging.
• Price Cost, Discount Structure, Terms of
  Business.
• Promotion Advertising, Sales Promotion, Public
  Relations, Merchandising.
• Place Customer Service, Physical Distribution,
  Channel Management.

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The Product I-Pod (2001)

• Simple to use excellent interface
• Stylish design that purveys the simplicity of
  use.
• Neutral colour scheme, but noticeable!
• Expensive price point
• Cutting edge technology
• Based on established lifestyle brand from I-Mac
  range.

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Is it enough just to have an excellent product?
no!!

• So the I-Pod has excellent design, quality,
  enhanced and new technology, and excellent
  interface and its an innovation.
• But is this enough to make a product sell as
  successfully as it has?
• No! You have to get it noticed. Enter promotional
  strategy as one of the four Ps

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Integrated marketing communications!

• A concept of marketing communications planning
  that recognises the added value of a
  comprehensive plan that evaluates the strategic
  roles of a variety of communication disciplines
  e.g.. General advertising, sales promotion and PR
  and combines them to provide clarity, consistency
  and maximum communications impact.. The strongest
  worldwide brands use this method.

42
How have Apple done it?

• Advertising
• Packaging
• Personal selling
• Sponsorship
• Public Relations
• Exhibitions
• Sales promotion

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Very effective!

• Targeting multiple markets simultaneously..

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The Apple Brand..

• Apple logo has become synonymous with quality by
  design, innovative use of technology, and
  aesthetic beauty inspired by a highly successful
  range of technology products since 1997 that have
  led the shift in technology being easy to use,
  efficient and not an black box hidden in the
  corner of a home, but a lifestyle object.
• The companies internal design strategy is led by
  the use of state of the art technology
  converted for simple use, Steve jobs explanation
  of apples customs being people who dont want to
  read instruction manuals, people who lead very
  busy lives
• The brand has been build on design led products,
  in touch with customers needs.

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Product Diversification..
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Accessorise!
Consumer is temped to give their I-Pod unique
features etc. You have brought into the Brand!
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PRICE strategy!

• The initial price strategy was set as a new,
  innovative, high tech product of exceptional
  quality. So you paid for it!
• This gives the product a desirable reputation,
  expensive, well made.
• Product Diversification as the technology becomes
  accepted is great, the product still maintains
  the quality aspect, but becomes affordable and is
  still with the associated as a status symbol or
  lifestyle I have an i-pod, its the best, and
  I had the money for it!
• Accessories add to continuous sales by providing
  a staple income from existing users whom have
  brought into the brand and the product Mass
  customisation!
• By monitoring prices and correctly pitching the
  cost to consumers, a company can elongate the
  life of a product. Rejuvenating sales as they
  fall with add-ons etc.
• This is particularly relevant in high tech
  markets where product lives are short! Remember
  product life cycle!

48
Competing products..

• Product integration is a double-edged sword for
  the audio player market, on the one hand
  non-audio electronic goods such as mobile phones,
  PDAs, video games and digital cameras are
  increasingly being developed to include digital
  audio capabilities, so reducing the need for a
  standalone player.

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So what happened?

• The new I-Phone, fully integrated mobile
  communication device with all the excellent
  features of a simple PDA, the original MP3 player
  itself and one of the most powerful associations,
  a recognised and popular interface. It even
  browses full web pages. It has an integrated
  camera, the list is endless

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Summary..

• Quite simply, you can now see how the four Ps in
  Market Strategy contribute to making a product
  successful on the market, how the evidence from
  how a product progresses on a market is integral
  to how design reacts to consumer needs at a
  strategic level.

51
The new project..

• For this project we are going to examine more
  closely the bigger picture for designers and the
  commercial world..
• We are going to examine the prospective
  possibilities in the next decade and think about
  the future for the design industry.
• What issues will effect customers and commerce
  that is going to affect the way we work as
  designers? What will be the shape of the UK
  design industry in 2020?
• Design is top of the agenda for the UK economy at
  the moment and you need to understand why!

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What are your ideas?

• For me this will be about Sustainability and
  Social Responsibility.
• Poverty, HIV/AIDS has created more than 14
  million orphans 92 percent of them live in
  Africa
• China/India economic growth financially and in
  the development of knowledge economy to support
  rapid industrial and technological development.
• Role of the government supporting creative
  industries.
• Globalisation The creation of a world
  community? Products from around the world on
  every doorstep!
• Key Environmental problems and solving them
• Energy Technology.. Can we solve the carbon
  crisis?
• Urbanisation
• Inclusive Design