DESIGN OF GOODS AND SERVICES
ARIZONA STATE UNIVERSITY
TMC 410 - ENTERPRISE OPERATIONS
SPRING 2024
Introduction:
In daily life, goods and services are traded and consumed by the community. In general,
there are goods and services that are directly consumed by consumers, and there are those
that are reprocessed to become other products, so that the output of one producer becomes an
input for another producer. The number and form of these goods and services vary greatly,
ranging from volume/quantity, quality, model, size, and type.
Efforts to realize goods and services are created through production activities by
transforming production factors through the production system. The factors of production are
transformed through the presence of people, raw materials, capital, methods, and
management.
In its capacity, the role of management in this context combines these production
factors in such a way that the products created are in accordance with the principles of
efficiency and effectiveness. Therefore, production managers can easily achieve company
goals or objectives by using skills through the management process and paying attention to
management functions (planning, organizing, actuating, controlling).
An effort to create products that meet the demands and needs or desires of consumers,
managers must skillful in combining good quality support with maximum profit, so as to
ensure the survival of the company to always grow.
This, if implemented properly, makes it very possible to achieve the company's target
goals. In other words, if all activities to be carried out begin with a work plan or a mature
production plan. An activity that starts with poor planning will affect the final results that will
be obtained. In the end, the company may not be able to develop, more than that the company
will experience bankruptcy.
A. Product Design Concept:
1. Definition of Design or Model
Talk about design, talk about a unique dimension that offers an emotional aspect in
influencing customer satisfaction. A design that quickly changes with the times, price, and
technology is not enough for that. In other words, a design is a trigger factor that often
becomes a company's edge.
Kotler (2001: 353) defines design as the totality of features that affect the appearance
and function of a particular product as required by the customer. Therefore, design is very
important in making and marketing retail services, clothing, packaged goods, and durable
equipment. As such, design considers how much to invest in style, durability, reliability, and
ease of repair.
Phillip Kotler (2001: 353) provides a definition of design focusing on design
parameters. In this context, design focuses on:
a.
style, describes the appearance and feeling that the product evokes for the buyer;
b.
durability, which is a measure of the expected life of the product under normal or heavy
conditions which is a valuable attribute for certain products;
c.
reliability, which is a measure of the probability that a particular product will not break
down or fail within a certain period of time;
d.
easy to repair (reparability), which is a measure of the ease of repairing a product when
it breaks or fails. For the company, a well-designed product is one that is easy to
produce and distribute. For customers, a well-designed product is one that is pleasant to
look at and easy to open, install, use, repair, and dispose of.
Design is also translated as applied art, architecture, and various other creative
achievements. A sentence meaning of the word "design" can be used as either a noun or a
verb. When used as a verb, design means the process of making and creating new objects.
When used as a noun, design is used to refer to the end result of a creative process, whether
in the form of a plan, proposal, or real object.
2. Design Terminology
In essence, design is a process that has existed along with the existence and
development of humans on earth. This is often not realized, as a result some people argue that
design seems to have only been known since modern times and is part of modern life.
In popular language, the word design is often defined as a design, plan or idea. In the
Big Indonesian Dictionary, the word design is found to be equivalent to the word design.
However, the word designing or drafting, which is often equated with the word design, does
not seem to be able to define design more broadly.
According to Sachari (2000), based on the etymological aspect of the word design is a
new word, also an Indonesianization of the word design (English), it is still maintained. The
meaning of the word design in fact displaces the word design because the word cannot
accommodate the activities, science, breadth, and prestige of the profession or competence.
The definition of design can be seen from various perspectives and contexts. According
to Archer (1965), design can be defined as an artist's creation to meet certain needs and in
certain ways. Design can also be problem solving with a clear target. According to Alexander
(1963), design is the most objective finding of physical elements. According to Jones (1970),
design is the action and initiative to change human work.
In later developments, the definition of design varied greatly due to the growth of this
profession in various countries. One of the figures who evaluated the notion of design was
Bruce Archer (1965). According to him, design is a form of human physical and spiritual
needs that are elaborated through various fields of experience, expertise, and knowledge that
reflect attention to appreciation and adaptation to their surroundings, especially those related
to the shape, composition, meaning, value, and various purposes of man-made objects.
Palgunadi's (2007) view states that the term design means plan. The plan is the object
(the object produced in the planning process). The activity is called planning or planning. The
implementer is called a planner, while everything that is closely related to the implementation
process of making a plan is called planning. Palgunadi continued, the word designing has a
meaning that is generally equivalent to planning, designing, designing, or engineering, which
is equivalent to the term to design or designing (English). The term designing has the
meaning of carrying out activities/activities/processes to produce a design.
Thus, the meaning of design always changes in line with the pace of development of
human civilization. This can prove that design actually has It is important in human life and
culture as a whole, both in terms of solving human physical and spiritual problems, and as a
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part of culture that provides certain values throughout the history of mankind on this earth.
Understanding some of the definitions above, it is clear that design is not only a design
on paper, but also the whole process until the work is realized and has value. It is also a
practical activity that encompasses economic, social, technological and cultural elements in
their various dynamics. Good design on paper will only fall into a mere concept culture
because good design is design that meets the needs of society. In addition, society's response
and acceptance of design is critical because without these elements there will be no healthy
growth of design.
According to Sachari (1986: 139), this definition also illustrates that design does not
belong to just one discipline, but to all disciplines. Basically, design is a cross-field between
art, science and technology. For more details, Sachri (1986) illustrates in the picture
6.1 below.
Figure 6.1 Design is a crosscutting field of Art, Science and Technology
Based on the illustration above, design is a combination of art, science, and technology.
Thus, a designer has the ability and knowledge as well as experience of the three disciplines,
so that the design produced is a quality design aesthetically, ethically, communicatively /
operationally and economically.
3. Basis and Purpose of Product Design:
a.
Product Design Basics
One of the efforts to determine the product to be produced is preceded by research, both
market research, competitor product research, and research on the benefits obtained.
Therefore, product design is never separated from commercial and marketing aspects.
In product design, the ability to compete in the market is important, so that
manufacturers can determine the price of the product, and the costs to be incurred in the
production process. An effective product strategy links product decisions to investment,
market share, and product life cycle and describes the breadth of a product line.
b.
Product Design Objectives
The basic foundation of the goal of product decisions is to develop a product strategy
that can meet market demand with a competitive advantage.
The basic purpose of design is all the efforts that a product designer/team makes in their
work, which is to make life more comfortable, enjoyable, and efficient.
Such as comfortable office chairs, kitchen knives that are comfortable for the elderly
and toys that are safe to play with and can stimulate children to learn are just a few examples
of the creations of product designers that are produced by studying and paying attention to
humans while doing their activities at work.
In other words, studying the parts of the product that directly interact with humans as
wearers, it is hoped that products that are safe for users and the environment can be produced.
In the end, from the touch of a product designer/team comes an elegant product that
makes people want to buy it.
In essence, product design is a scientific field that is integrated with all aspects of
human life from time to time.
Design combines elements of imagination and orientation towards finding solutions to
various problems faced by humans by bridging aesthetics, ethics and technology in a dynamic
manner and has a certain pattern in its development.
4. Scope of Product Design
Understanding product design, in scientific language, is also called "industrial product
design" which is interpreted as a scientific field or profession that determines the shape/form
of a manufactured product. In processing the shape or design to suit the user and also in
accordance with the capabilities of the production process in the industry that produces it.
For example, chair product designers not only want the chair to look good, but also for
it to be comfortable to sit on and easy to produce, as well as affordable for users to buy.
a.
Components of Product Design Principles
The principle components underlying product design include the following.
1) Mode
Products are produced according to consumer demand. Market conditions will
foster the desire to make products that have similarities in terms of design and
packaging.
2) Technology
The choice of the type of product produced depends on the ability to produce goods
and services. The determination of the type of technology used can be preceded by the
results of product research and development. Technological developments allow
producers to choose to produce quality products and meet product specifications.
3) Destination
The purpose of product planning is so that the products produced can meet the
needs of the wearer.
b.
Limitation/Scope of Product Design Model
In principle, the scope of product design can be said to be almost unlimited. Design
covers all aspects that this profession/competency is capable of solving. However, with
reference to international developments, there are professional areas consisting of product
design, graphic design, and interior design.
The design areas mentioned are design areas that are placed in the field of fine arts.
Based on the division of areas, product design is one of the existing design areas.
Adhi Nugraha (1989) asserts that product design is a translation of industrial design.
Some experts, generally translate industrial design as equivalent to product design.
c.
Mechanism of Product Design
Although product design can be divided into several groups, in general, product design
has the same mechanism in thinking creatively in designing a product, so that the product
fulfills the right functional values and becomes a solution to the problems faced by humans
without leaving the user comfort aspect through certain techniques and conditions.
Ultimately, it continues to be a product life cycle that is determined by the initial design
pattern, whether innovation, modification, or duplication.
The flow mechanisms and systems that are developed today were born from habits that
developed long ago. When early humans encountered the problem of getting game, they
created weapons in the form of spears, so that they could be used as effective tools to catch
the animals they hunted.
Based on this illustration, the same creative thinking mechanism in product design
essentially starts with a problem, then creates an object to serve as an effective solution to the
problem. This orthodox mindset is the basis of the scientific methodology of product design
to this day.
However, the design of a product when it becomes the most elevated aspect of human
life, with its designed values and orientation can appropriately turn into a means or tool of
determining tastes, interactions, and other psychological components in the market it enters.
As such, product design can be a theory, an icon, a semantics, as well as an influence
with its existence brought about by other aspects independently.
d.
The Role of Product Design
Product design is the pioneer and key to the success of a product to penetrate the market
as basic bargain marketing. Designing a product means reading a market. Willingness,
ability, mindset, and many other aspects can finally be translated and applied in the design of
a product.
The ability of a product to survive the market cycle is determined by the way a design
is able to adapt to changes of any kind that occur in the market that the product enters, so the
ability to design a product becomes a success value for the product later on.
e.
Product Designer Competencies
Crucially, the responsibility and competence of an industrial product designer in
designing a product. Product designers must have good knowledge and research before
designing a product. The process takes a short time to design.
The sharpness of thinking and reading opportunities is very dominant in determining
the designer's rating. Sense, so to speak, is formed from long experience and forged by
various aspects that surround and face the designer.
The scale of product design is vast when viewed from various aspects. In other words,
product design is a dominant language in human development and thinking since time
immemorial.
In further development, the design profession is divided into several competency
groups (may also be able to develop in line with the times), namely:
1) equipment product design;
2) environmental tooling design;
3) transportation design;
4) craft product design.
B. Product Planning:
1. The Nature of Product Design
Product planning is basically the process of creating a product idea and following up
until the product is introduced to the market. In addition, the company must have backup
strategies in case the product fails in its marketing, including product extensions or
improvements, distribution, price changes, and promotion.
The economic success of a manufacturing company depends on the ability to identify
customer needs, then rapidly create products that meet those needs at a low cost.
This is not only the responsibility of the marketing department, manufacturing
department, or design department, but also a corporate responsibility that involves many
functions in the company.
The method of product development based on customer requests or requirements and
product specifications is a fairly good method based on customer desires.
Conversely, there will be a smaller possibility of the product not being accepted by the
customer when the requirements and specifications of the product are not based on the wishes
of the customer, cannot be met.
Product design is therefore a critical element towards the economic success of a
manufacturing company. That is because it depends on the designer's ability to identify
customer needs, then quickly create products that can fulfill those needs at a low cost.
2. Specific Dimensions Related to Profit
When viewed from the point of view of investors in profit-oriented companies, product
development efforts can be considered successful if the product can be produced and sold by
generating profits. In reality, profit is difficult to assess quickly and directly.
Therefore, there are five specific dimensions that relate to profit and are commonly
used to assess the performance of product development efforts, which are as follows.
a.
Product Quality
How good and large the products produced are, in principle, the result of
development efforts and can satisfy customer needs. A quality product will affect
market share and can determine the price that customers are willing to pay.
b.
Product Cost
The use of costs for capital equipment and auxiliary tools and the production cost
of each unit are called the manufacturing cost of the product. The role of product cost
can determine the amount of profit generated by the company at a certain sales volume
and sales price.
c.
Product Development Time
The use of time in the development of goods or services also determines the
company's ability to compete. This shows that the company's responsiveness to
technological changes will determine the speed at which the company will receive
economic returns from the efforts made by the development team.
d.
Development Cost
In general, development cost is one of the most important components of a
company's investment, which is required to achieve profit.
e.
Development Capability
Ownership of development capabilities is an asset that can be used by companies
to develop products more effectively and economically in the future.
Capability in the design and manufacture of a new or existing product is a very large
part of all existing engineering activities. This activity will be derived from the perception of
human or customer needs, followed by the creation of product concepts, product design,
product development and improvement, ending with the manufacture and distribution of the
product.
In general, the determination of product functions can be sought in two steps:
identification and arrangement of product functions, grouping of product functions.
3. Product Design:
The role of product design in the economic success of a manufacturing company
depends on the ability to identify customer needs, and then precisely create products that can
meet those needs at a low cost. To create a quality product will go through the following
stages.
a.
Market Research and Feasibility Study
Market research is conducted to find out the tastes of the market in general. Based on
the results of this market research, the type, shape, and quality of products that consumers
want will be obtained.
b.
Brainstorming
Brainstorming, brainstorming, or discussion is a process that serves to gather new ideas
to find a solution or way out of the problem being discussed, namely product design.
Based on this brainstorming process, an outline of the design of the product/item to be
made, how it works, the components to be used, and so on will be obtained. For example,
when making a dust suction machine, you will imagine the need for a motor,
chasing/container, filter/filter, hose/pipe, pipe mouth, and so on.
c.
Define Product Objectives and Limitations
Product design objectives and limitations are needed so that the design or product is not
excessive in designing the product. Excessive product design or products will result in high
selling prices to consumers. In general, consumers want the added value offered in the
product, as well as commensurate with the costs incurred (reasonable price). Of course,
market research is needed to find out the tastes of the market.
The important role of defining these objectives and constraints is to derive the
specifications of the components and materials to be used.
d.
Product Drawing
A goods and services company should pay attention to the meaning and importance of a
product drawing. By describing the product based on the dimensional relationship of the
components that have been determined. Based on the product drawing, the company will get
an illustration of the finished product.
Products can generally be drawn in two or three dimensions. Usually, three-
dimensional drawings are more easily understood by most people or consumers. Currently,
the work of designing products in three dimensions can be done using Solid Works software,
Inventor, Catia, and others.
Thus, the company can present quality product images, so that consumer interest will
increase and contribute to determining sales turnover.
e.
Product Review
The important role of product review is to evaluate the flaws in the design that has been
made. Product review activities can be carried out through discussions by looking at product
images rather than just imagining them.
At this stage, brainstorming is again carried out to get optimal results and serves to
minimize problems that will arise when production begins. At this stage, the product being
designed also needs to be improved and refined.
f.
Making Prototype/Sample
The significance of a sample item that will be mass produced can be made in various
ways. Usually products from machines can be modeled with rapid prototyping machines,
stylish car body designs can be modeled with clay For specialty products, the product
wrapping cardboard can be made by hand. For common products, there is no need to make
samples (iron products). It also requires accuracy in drawing and there must be no drawing
errors that can be fatal to rejected goods.
g.
Test Run
Trials are conducted before being marketed. This is done to test whether an item
produced is reliable or not. Usually there are those who test it based on time, pressed,
dropped, and others.
For example, cell phone manufacturers have special machines to test their phones for
resistance to dings. If anything is found unsatisfactory, the product needs to be redesigned. Of
course, what is satisfactory should be seen from the perspective of the consumer, not the
manufacturer.
In general, major manufacturers nowadays review their products continuously in order
to maintain their brand name. Proper and accurate trials have implications for the brand or
company image. Ultimately, it will be in demand by consumers.
h.
Mass Production
In mass production, it is very necessary to have quality control so that consumers do
not receive damaged goods. If consumers receive damaged goods, it will have a negative
impact on the company. In the end, consumers will no longer buy these goods.
i.
Warranty
Warranty is an after-sales service, usually provided by the company that makes the
product with the aim that consumers are calm if at any time there is damage to the item.
In general, many consumers prefer to pay more for a higher warranty and peace of mind
in using the product.
C. Improve, Classify, Characterize, and Differentiate Products:
1. Product Tiers
In understanding product levels, according to Kotler (2003: 408) there are five product
levels, which are as follows.
a. Core benefit (namely the fundamental service of benefit that customers are really
buying), namely the basic benefits of a product offered to consumers.
b. Basic product (namely a basic version of the product), namely the basic form of a
product that can be perceived by the five senses.
c. Expected product (namely a set of attributes and conditions that the buyers normally
expect and agree to when they purchase this product), namely a set of product
attributes and conditions expected by buyers when buying a product.
d. Augmented product (namely that one includes additional services and benefits that
distinguish the company's offer from competitor's offer), namely something that
distinguishes between the products offered by the business entity and the products
offered by competitors.
e. Potential product (namely all of the argumentations and transformations that this
product that ultimately undergo in the future), namely all of the argumentations and
changes in form that a product undergoes in the future.
2. Product Classification
According to Tjiptono (1999: 95), conceptually a product is a subjective understanding
of the producer of "something" that can be offered in an effort to achieve organizational goals
through fulfill the needs and desires of consumers, in accordance with the competence and
capacity of the organization and purchasing power.
According to Kotler (2003), there are several things in understanding product
classification, including the following.
a. Based on Form
Products based on their form are divided into two parts.
1) Item
Goods are products that are physical, can be touched, moved, felt, held, and other
physical treatments. Products in the form of goods are more likely to spoil the eyes and
attract the attention of buyers because they are judged in terms of the beauty of the
shape of the product. One of the shortcomings of products in this form is damage. An
item that is used continuously or incorrectly, can cause damage and will reduce the
selling value of the product. In other words, the price of an item will continue to
decrease as the product is used.
2) Services
Services are product results that have no form (abstract) in the form of activities
or activities that are useful and can meet consumer needs. The product can be
associated or not associated with a physical product. Examples, products in the form of
services, namely travel, drivers, employees, and others.
b. By Purpose
Products based on consumption purpose include:
1) Consumer Goods
Consumer goods are products that can be directly consumed without going through
other processes in meeting needs.
2) Industrial Goods
Industrial goods are products that cannot be directly consumed. These products require
further processing to add value, function and satisfaction to the goods/services in order to
meet more specific consumer needs. Industrial goods are divided into four parts, namely
convenience goods (goods that are often purchased), shopping goods (goods that can be
resold), speciality goods (goods that have special identification to buy them), and unsought
goods (goods that consumers have not thought to buy).
Classification of goods or products based on durability can be classified into three
groups.
a) Nondurable goods, which are tangible goods that are consumed in one or several uses,
such as soap, butter.
b) Durable goods, i.e. tangible goods that are used for a long time, for example
refrigerators, machines, tools onderil.
c) It uses services, high margins, and even requires a warranty in its sales.
The classification of consumer products or goods is as follows.
a) Daily goods (convenience goods), meaning that consumers buy immediately and with
minimum effort, such as milk, tea.
b) Shopping goods, meaning goods whose characteristics are compared by consumers
based on fit, quality, price, and style.
c) Specialty goods, meaning that they have unique characteristics or brand identification,
namely when there are enough buyers who are willing to make special purchasing
efforts, and dare to buy expensive, such as paintings, antiques, and others.
d) Unsought goods, meaning goods that are not known to consumers or not sought by
consumers to buy, such as smoke detectors, life insurance.
The classification of industrial goods can be divided into two, as follows.
a) Materials and spare parts, meaning goods that are entirely part of the producer's
product, are divided into two, namely raw materials and spare parts.
b) Capital goods, meaning durable goods that facilitate the development of the
management of finished goods. Capital goods include two groups, namely plant and
equipment.
3. Characteristics of Service Products
Products in the form of services have different characteristics from products in the form
of goods. According to Kotler (2003), there are four characteristics possessed by services,
which are as follows.
a. Intangible
Services are intangible. Unlike physical products, services cannot be seen, felt,
heard, or smelled before they are purchased. For example, a person undergoing "health
care" cannot see the results before purchasing the service.
To reduce uncertainty, buyers will look for signs or evidence of the quality of the
service. Consumers will draw conclusions about the quality of the service from the
places, people, equipment, communication tools, and prices they see.
b. Inseparable
Services are generally produced specifically and consumed at the same time, so
the quality of a service occurs at the time of service delivery. The interaction that
occurs between service providers and consumers greatly affects the quality of the
services provided.
There are several strategies that service providers can take to maintain quality,
namely working with larger groups, working faster, training more employees and
building confidence in consumers.
c. Diversity
Variety means that a good or service has many variations in type and quality
depending on who, when, and where it is provided. Service users are very concerned
about high diversity and often ask other people's opinions before they decide to choose
and buy it.
In maintaining service quality, investments can be made in the selection and
training of good personnel, standardization of performance processes at all levels of the
organization, monitoring customer satisfaction through message and impression
systems, customer surveys, and so on.
d. Not Durable
Services that cannot be stored because of their physical intangibility. This is not a
problem if demand is stable because it is easy to prepare services in advance.
Conversely, if demand fluctuates, it will cause problems for the company.
4. Differentiation
Kotler (2003) defines differentiation as the act of designing a set of meaningful
differences to distinguish a company's offerings from those of competitors.
Differentiation can also be done through five dimensions, including the following.
a. Product differentiation serves to distinguish main products based on features,
performance, suitability, durability, reliability, ease of repair, style and product design.
b. Service differentiation serves to distinguish key services based on ease of ordering,
delivery, installation, customer training, customer consultation, maintenance, and
repair.
c. Personnel differentiation serves to distinguish company personnel based on ability,
courtesy, credibility, reliability, responsiveness, and good communication.
d. Channel differentiation is a measure to differentiate through the way distribution
channels are formed, the range, expertise and performance of these channels.
e. Image differentiation serves to distinguish the company's image based on differences in
identity through positioning, differences in symbols, and differences in advertising.
In order to become a brand, products that are popular with consumers must be
differentiated just as physical products have the potential to be diversely differentiated.
At neither extreme does the public/consumer encounter products that allow little
variation, e.g. chicken, aspirin, and steel. Sellers on the other hand face a number of
differentiation possibilities including shape, features, customization, quality of work, quality
of fit, durability, reliability, ease of repair, and style.
Product design with its capacity is becoming an increasingly important means of
differentiation in the world of product and service businesses.
Thus, product differentiation includes the following.
a. Shape, many products are differentiated based on the size, shape, or physical structure of
the product.
b. Features, can be offered by complementing the basic functions. Companies can
differentiate and select the right new features by surveying recent buyers and then
calculating the ratio of customer value to company cost for each potential feature.
c. Customization, marketers can differentiate products by customizing products and
individual desires. It can also be mass customization, which is the company's ability to
meet the needs of each customer to prepare mass-based products, services, programs, and
communications that are individually designed.
d. Performance quality, i.e. the degree to which key characteristics of the product operate.
Quality becomes a very important dimension for differentiation when companies
implement a value model and deliver higher quality for less money.
e. Conformance quality, buyers expect products to have high conformance quality, that is,
each unit produced is authentic and meets the promised specifications.
f. Durability, a measure of a product's operating life under ordinary or stressful conditions
is a valuable attribute for certain products.
g. Reliability is a measure of the probability that a product will not fail within a specified
period of time.
h. Repairability is a measure of the ease of repairing a product when it malfunctions or
fails.
i. Style describes the look and feel of the product to the buyer.
Through product design, differentiation becomes the totality of features that influence
the look, feel and function of the product based on customer needs. Design is essential in the
manufacture and marketing of retail services, clothing, packaged goods and durable
equipment.
When a product is not easy to differentiate, the key to competitive success lies in adding
valuable services and improving quality. The main service differentiators needed include the
following.
a. Ordering ease, refers to how easy it is for customers to place orders with the
company.
b. Delivery, refers to whether or not the product or service is brought to the customer.
Delivery includes speed, accuracy, and maintenance throughout the process.
Nowadays, customers generally want fast delivery.
c. Installation, refers to the work done to make the product operational in the planned
location.
d. Customer training, refers to training the customer's employees to use the supplier's
equipment correctly and efficiently.
e. Customer consulting refers to the data, information systems, and advice services that
sellers offer to buyers.
f. Maintenance and repair, describes a service program to help customers maintain
purchased products in good condition.
g. Returns, while product returns are definitely a concern for customers, manufacturers,
retailers, and distributors, returns are also an unavoidable reality of business,
especially online purchases.
D. Product Development and Management:
In general, the expectations of companies or consumers for new products are very
important in that new products are considered capable of maintaining the growth rate and
profits of the company and to replace products that are old and obsolete.
These expectations are the basis for consideration of the importance of product
management development. In accordance with Product management functions in its capacity
to coordinate product resources to be efficient and effective.
1. Definition and Concept of Product Development
a.
Definition of Product Development
According to Kotler (2000: 374), product development is basically that companies must
develop new products. New product development can be believed to serve to shape the future
of a better and quality company.
Substitute products are created to maintain or build sales. Companies may add new
products through acquisitions and/or new product development.
Product development efforts can be carried out through several strategies, including
marketing research, engineering, and design.
b.
New Product Categories
There are several things that can be categorized as new products, namely:
1) innovative and unique products;
2) replacement products are different from existing products;
3) Imitative products are new to a particular company, not new to the market;
4) products that use new raw materials.
The other meanings of the term new product are often confusing because they contain a
very wide range of meanings. A product can be new to the market, to the consumer, to the
manufacturer or seller or a combination of these categories.
There are six other categories of new products, which are as follows.
1) New-to-the-world product, meaning that a product can be said to be new as a result of
discontinued innovations. This product will create a whole new market. Examples
include telephones, televisions, computers, and facsimile machines.
2) New-product-lines, meaning that a product has never been offered by the company
before, is provided to enter an already established market. For example, additions to
existing product-lines.
3) The new product category includes new products that are additions to an existing
product line. For example, improvements or revisions of existing products.
4) An item is said to be a new product and may change significantly. For example,
repositioning products.
5) A product is said to be new, if the product is at a lower price (lower-priced-products).
6) This product category refers to products that have similar performance to competing
brands at a lower price.
c.
Product Modification
Product modification serves to improve existing products, its activities include quality,
feature, and style with the aim of increasing sales. Product modification creates three
dimensions, including quality improvement, feature improvement, and style improvement.
d.
Merchandising
Merchandising is all of the planning activities, both of the manufacturer and the
intermediary merchant that are intended to matching the products produced with market
demand.
2. New Product Development Objectives:
According to Buchari Alma (2000: 101), the objectives of product development
include:
a.
to fulfill the desires of unsatisfied consumers,
b.
to increase sales turnover,
c.
to win the competition,
d.
to utilize the sources of production,
e.
to increase profits with the same material usage,
f.
to utilize leftover materials,
g.
to prevent consumer boredom,
h.
to simplify products, wrapping.
3. New Product Development Stage:
An effort to make the implementation of product development run well and as expected
by the company, it is necessary to pay attention to the stages in carrying out product
development. Kotler (2002: 382) designs the stages of product development into eight, which
are as follows.
a.
Idea Generation
The product development stage starts with idea generation. Product ideas come from
various sources, including development and research managers, customers, scientists,
competitors, employees, competitors, marketing channels, and top management.
b.
Screening Ideas
This stage requires the ideas presented by the parties to be summarized into three
groups: promising ideas, mediocre ideas, and ideas which are rejected. In the process of
filtering ideas, companies should pay attention to and avoid two mistakes, namely:
1) Discarding error, this error occurs if the company discards an idea that is actually good
to develop. Due to the company's lack of overview of the potential of the idea, the
company discards it;
2) This error occurs when a company develops an idea that is actually detrimental. This
will result in the developed product failing in the market.
c.
Concept Development and Presentation
In principle, interesting ideas must be refined into testable concepts. A product idea is
an idea that a company can offer to the market. A product concept is a detailed version of an
idea expressed in terms that are meaningful to consumer desires.
d.
Marketing Strategy Development
In general, companies develop products through marketing strategies because they need
to introduce their products to the market. Marketing strategy includes three main parts.
1) First Part
- Describe the size, structure, and behavior of the target market.
- A plan for product positioning, sales, market share, and desired profit over the next few
years.
2) Second Part
- Summarize the product price plan.
- Distribution strategy.
- Marketing budget for the first year.
3) Third Part
- Explaining long-term sales.
- Explaining profit objectives.
- Describe the marketing mix strategy during that timeframe.
e.
Business Analysis
Business analysis is conducted by the company after management has developed the
product concept and marketing strategy, so that management can evaluate the attractiveness
of the business.
Furthermore, management needs to prepare sales, cost and profit projections. It is
necessary to determine the company's goals. If management has fulfilled the concept,
activities can proceed to the product development stage.
f.
Product Development
If the product concept passes business testing, it moves on to R&D and/or engineering
to be developed into a physical product.
g.
Market Testing
Market testing is a stage when products are branded, packaged, and programmed for
consumer response and distribution of product treatment, usage, and repurchase issues as well
as an assessment of the actual market size.
The extent to which market testing should be conducted will depend on two aspects: the
cost and risk of capital investment on the one hand, and the limited time and cost of research
on the other.
h.
Commercialization Stage
The commercialization stage is the stage of launching products to the market when
companies with the capacity of producers of a product will decide on the launch of the
product to the market.
This stage is entirely the responsibility of management in determining when, to whom,
and how the products are marketed.
A company that is successful in developing, introducing and delivering new products
generally does the following.
1) Own and execute the long-term commitment required to support innovation and new
product development.
2) Always using a company-specific approach, driven by corporate objectives and using
strategies that have been affirmed as key corporate strategies.
3) Having experience as capital to achieve and maintain a competitive advantage.
4) Have a view to establishing an environment - a management style, organizational
structure and top management support conducive to achieving new product-specific
objectives as well as corporate goals.
D. Product Design Issues and Challenges
1. The Nature of Product Design Value
Product is one of the important aspects in marketing mix variables. Products are also
one of the variables that determine the activities of a business. Without a product, a company
cannot carry out activities to achieve the expected results.
The number of competitors in the business world requires a product design and shape
that is different from one another. The company's product design must have a toughness,
superiority or advantage compared to products produced by other companies, in this case
competing companies.
2. Product Design Issues
a. Robust Design
Resilient design means that a product is designed in such a way that any slight
variation in the product or assembly does not have much impact on the final product.
Producible designs need to conform to predetermined requirements, even in the
presence of imperfect production process conditions, need serious attention. The lack of
seriousness in presenting a robust design will trigger problems for the company.
b. Modular Design
Modular design is when parts or components of a product are divided into
modules that can be easily interchanged and replaced. That ease also has an impact on
the instability and consistency of a company.
c. Computer-Aided Design
Computer-aided design is the interactive use of computers to develop and
document products. Product design documentation is necessary when a company wants
to remanufacture an item. Otherwise, the design is not documented, so the company
will find difficulties, especially in terms of standards, shapes, models, sizes, and the
like. If that happens, it will result in non-standardized products.
d. Computer-Aided Manufacturing
Computer-aided manufacturing is the use of information technology to control
machines. The benefits are improved product quality, shorter design time, reduced
production costs, database availability, and new capabilities.
The malfunction of computer-aided manufacturing means that there is no control
over the design or product. If that happens, the quality of the product will not be
guaranteed. The assurance of a product is the responsibility of the company.
Unguaranteed products have a negative impact on the development of the company.
e. Virtual Reality Technology
This form of visual communication is used as a substitute for the real thing, but
still allows users to respond to it interactively.
With the development of technology today, a good company needs to keep up with
technology. Conversely, a company unable to utilize information and communication
technology is a trigger for falling behind.
3. Challenges in Product Design
There are many factors in product design that need to be considered, including the
following.
a. Consumer needs. Customers will have a great influence on the way the product is designed
and developed. The reason the product is designed must be able to meet the needs of the
potential customers it will target.
b. Market segmentation. Markets/consumers need to be differentiated, partly because of
differences in consumer tastes. The more complex consumers are in their strata, the more
types of products will be needed to serve consumer segmentation.
c. Technology. In designing products, technology plays a role in producing products that are in
demand. Technological developments require manufacturers to create quality products.
d. Local conditions. In product design, it is necessary to consider the local culture of the
community/consumers so that the product can be utilized properly and is not troublesome.
