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Design and Business.. What did we do again?! 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. 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 company’s development in their market and could be described as a master plan for success! 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. 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 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. Internal Factors.. • • • • • • • • Management Research and Development Time Scales People and Skills in-house Culture for Design Cash and Investment Production Capabilities Communication External Factors.. • • • • • • • • • Competitors Trends and Fashion Market Research Product Life Cycles Sales Target Market Technology Brand Identity The Future 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 coordinates business effort. 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. 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.. Summary.. • In the UK and Global market place, company’s 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! 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. 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)! 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. 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. 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. 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. 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. STP – Segmenting, targeting, positioning. • • 1. 2. 3. 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. 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. 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. 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.. • Mass Markets (undifferentiated) • Multiple Niche (differentiated) • Market Niche (concentrated) 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. Demographics.. • Relates to specific data to do with population. 1. Age • Considers.. 2. Sex 3. Education 4. Occupation 5. Family size 6. Lifestyle 7. Income 8. Religion 9. Nationality 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 doesn’t just apply to human demographics! • So – lets have a look at some demographic representation.. Family life cycle.. • Bachelor Stage: young, single, living at home – Few financial commitments, recreation and fashion orientated. Buy: Cars, entertainment, holidays! 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! Empty Nest 1 • Home ownership at peak. Financial situation is good, savings increased. Interests in travel, recreation and selfeducation. Buys: More expensive Holidays, luxuries and home improvements! 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! 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. 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! 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. 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) The Marketing Mix.. The ingredients of the marketing mix: • Product • Price • Promotion • Place • The four P’s Marketing Mix… What is the marketing mix for? • The way in which differential advantage may be achieved – and sustained by manipulating the four P’s • There are more ‘P’s’ but we are focusing on the main four. 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. 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. 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 ‘P’s’ 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. How have Apple done it? • • • • • • • Advertising Packaging Personal selling Sponsorship Public Relations Exhibitions Sales promotion Very effective! • Targeting multiple markets simultaneously.. 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 don’t want to read instruction manuals, people who lead very busy lives” • The brand has been build on design led products, in touch with customer’s needs. Product Diversification.. Accessorise! Consumer is temped to give their I-Pod unique features etc. You have brought into the Brand! 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, it’s 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! 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. 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… Summary.. • Quite simply, you can now see how the four P’s 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. 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! 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