Why Manage Design?

Corporate Overview of Design Management and Strategy!

The Value of Design in Business..• As designer’s we must be capable of considering the big

picture and designs place in the global economy. • Why is it that some companies succeed where others fail?• DESIGN! • What is it that we do that makes companies successful?• We apply creativity to a purpose, whether it be buildings,

products, services or environments in response to people’s needs.

• Innovation increases productivity• Innovation/design adds value to products and services through

quality and novelty.

Dyson..

• We’ve all seen it! • Very successful due to the

invention and eventual marketing of the cyclone system within vacuum cleaners.

• But Dyson has made some fundamental design flaws!

Oops.…!!

•The first ‘pink’ Dyson was a flop everywhere except Japan.. Now a collectors item!

•The Washing Machine had some nasty flaws.. Now improved!

The Spanner in the works..

• 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 it consider?

• Internal and external factors that effect business development.

• How design can be used to give the company competitive advantage by differentiating products, brands and services.

• How this will be managed and implemented. • How design can collaborate with other

important disciplines to create the best products and services for a business, given its position

Internal Factors..

• Management and Leadership.• 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/communication.• 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 co-ordinates 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!

• Product Diversification• High price point – latest

technology• High profile marketing

campaign• Targeting specific market!

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 relative to their position.

• 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! • Innovation in business adds-value, but the journey to achieving

success through design has many issues: Key to these are Leadership, management and vision, skills and culture, positioning products and services with marketing, research, technology and skills.

Apple..

• We are going to use Apple as a good example of the relationship of strategy and design.

• We are going to examine the strategic rise of the I-Pod generation of products and how Apple have successfully exploited multiple markets!

Apple.. Brief history.

1976 – Apple formed by Steve Jobs and Steve Wozniak.

1984 – Apple launches the graphical interface that becomes standard on home computers.

1985 – Steve Jobs forced out of Apple (Microsoft causes huge problems)

1997 – Steve Jobs Re-installed as chief executive

1998 – Apple releases highly successful I-Mac.

2001 – I-Pod is launched 20m sold in four years.

Current Status • Apple are currently exploiting the success of the I-Pod series

• Top product in the digital music sector and dominates the music downloading market.

• Marketing campaign has been excellent and generated huge product awareness.

• Worth mentioning that Apples hand is still weak in the home computer market, but is rapidly improving through design of both products and development of its brand.

• Using success and strength of identity/reputation to push into new markets.

Questions relevant to Market Strategy

• What, as designers, are the questions we need to ask to examine this company?

• Well, how have they done it?

• Product, price, promotion, place what were their tactics?

• Most importantly how are they going to continue to be this successful?

• Why is it important that we know how Apple may progress in the future?

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)

Core Marketing Concepts:

• 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)!

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.

What did the initial product do? • Provided a more convenient way of carrying large amounts of music – don’t carry some, carry your collection! Innovation!

• Provided a high tech, portable device, light and ergonomic and above all ‘cool’ (consumer appeal)!

• Used lifestyle brand to enhance and popularise the Apples reputation.

• What is a lifestyle brand?!

•Raised awareness of digital music’s versatility and convenience.

• Established a trend in downloading music easily and cheaply using the internet and a simple to use, well designed FREE interface.

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/Service• Exhibitions• Sales promotion• Supply chain management

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 customers being “people who don’t want to read instruction manuals, people who lead very busy lives”

• The brand has been built on design led products, in touch with customer’s needs. The brand has evolved with the products

Product Strategy 2nd ‘P’:

• Product Strategy – (The next P) is not just about the object itself – Apple needed to respond to the initial success, what did the first product lack that consumers wanted and how could they expand and exploit their market?

• Price – original was expensive - can we sell cheaper? • Storage – most people didn’t require so much music and it

even became confusing. • Market demands – miniaturisation, new technology,

fashion and trends move fast. • They needed new products in the same range –

competitors such as Sony were catching up! • By diversifying and accessorising they opened up the I-pod

craze to new markets, on more of a budget, like the teenage market.

Product Diversification..

Accessorise!

Consumer is temped to give their I-Pod unique features etc. You have brought into the Brand other companies like Bose started to produce accessories

under licence – another money maker!

Diversification..• So Apple produced different product types with

specific attributes that allowed access to new markets and increased sales and profits, appealing to a huge potential market.

• I-Pod Mini – Smaller storage, miniaturised, came in different colours

• U2 I-Pod – Same technology, different aesthetic appeal, related to highly successful and very popular band, limited edition – exclusive, special.

• I-Pod Shuffle – Super small, very simple, excellent price point, USB ‘Key’, appealed to sports market. (especially in USA) and growing trend in potable storage of data.

• But what was the key strategy behind these products that allowed new customers access to the I-Pod Phenomenon?

PRICE strategy! (3rd ‘P’)

• 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!

What’s the proof?

• The new I-Pod Nano – Already achieving huge sales. • Introducing innovation in size and in storage again. A new sleek look

and colour screens, replacing the i-pod mini. • But? – It’s virtually the same price because the consumer now has an

expectation – a perceived value, where as before it was new!

“The Nano is thinner than a pencil and lighter than two bucks in quarters,” reports Lev Grossman for TIME.com. “It’s one-fifth the size of the original iPod that Apple introduced four years ago. It has 4 GB of memory, enough to hold 1,000 songs, and it displays album art and photographs. And as small as it is, the Nano’s got some audio oomph: this mouse can roar. For a device ostensibly created to be listened to, it is suspiciously good-looking. It’s so teensy and glossy and perfect, you want to put it in your mouth like a hard candy.”

The Nano!

Associated with pricing..

• Related to pricing strategy:• Markdowns, premium offers, coupons (self-

liquidating premium offers), branded packaging, free sampling, try-outs, tasting etc. Competitions, Endorsement, personality promotions, in-store demos, special displays (POS)

• This becomes more and more important for mass produced products as retail outlets compete to sell them off!

Place..

• Apple have targeted multiple markets with the range of i-pod products they provide, positioning themselves in different market segments and leading in all of them!

• The product design has been key to this success – innovation, quality and style.

• The demand has been so great that it is now sold all over the world.

• Initially it was targeted at countries with stable economies, high levels of employment and therefore disposable income. It is a luxury product, where consumer focus in choice and desire, not necessity.

• Its important to remember your demographics!

Understanding the Market.. • More detail about this next week – but its not rocket

science. • I bet given our knowledge of the Apple product we can

begin to make predictions about how the market will proceed for Apple?

• Think!! – What's likely to happen to prices?• Will sales continue to increase? • What other products may compete? • What new technologies may be used? • How are competing companies responding? • User friendliness?• Which age groups are most interested in this technology?• Who has the money to buy the product?

Predicting the future..anticipating market needs and change. The vital ingredient for innovation success. • Digital file players to drive growth• Digital file players are likely to drive the growth in

the market, and despite the continued innovation in these products, the availability of budget-priced players will result in a slower rate of growth of average prices paid. As is the case with many established sectors in the audio-visual goods market, CD players, which are presently the mainstay of the market will continue to see heavy discounting so dampening value growth at current prices.

Innovation..

• Innovation to maintain the trade-up• This is a dynamic market that will see a great deal

of innovation at the premium end of the market, as manufacturers look to produce smaller, sleeker players with greater capacity and functionality, such as wireless Internet access, for those who are prepared to trade up to the latest products.

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.

To complicated?

• There may be a danger that increased innovation and greater product integration may complicate matters for the consumers who are perhaps less technologically savvy, and manufacturers must not lose sight of this. There will always be those consumers who will look to keep up-to-date with the latest technology and feel comfortable with it. However, in order to widen the consumer base of the new products simplicity will be crucial, not just in terms of instructions that come with the products, but also in terms of the design and layout, which needs to be user-friendly.

Age groups and PDI..

• Personal disposable income (PDI) will influence how much people spend on discretionary items such as personal stereos, and whether they opt for the higher-priced premium products, which will be important to drive growth in the market. The expected increase in income levels over the next five years therefore bodes well for this market and will ensure continued growth.

• It tends to be the younger generation that are more interested in keeping up-to-date with the latest technology, but in order to reflect the fact that slightly older consumers are becoming more technologically savvy a broader age range of 15-44 year olds have been used as an additional factor.

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 predicting requirements.

• Next week we are going to look more closely at marketing and design’s relationship and examine the knowledge that designers need both lead and work in collaboration with companies and professional to make design work.