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A330MED: Product Development Strategies (Group Assignment)
Table of Content
1. Individual Contribution for the Group Course work...........................................................3
2. Problem statement....................................................................................................................4
3. Product planning.......................................................................................................................6
3.1 PEST Analysis..................................................................................................................................6
3.2 Identify potential competitors...........................................................................................................8
3.3 Market research..............................................................................................................................10
4. Product Specification..............................................................................................................13
4.1 What is product specification?........................................................................................................13
4.2 Product identification......................................................................................................................13
4.3 Identify customer needs..................................................................................................................15
4.4 Considered factors when constructing matrices..............................................................................17
4.5 Matrices to be used.........................................................................................................................17
4.6 What customer’s needs are satisfied by the matrices......................................................................19
4.7 Final product specification..............................................................................................................20
5. Concept Generation................................................................................................................24
5.1 Identify three product concepts.......................................................................................................24
5.2 Discuss each product concept.........................................................................................................26
5.3 Choose and justify product concept to be used...............................................................................30
6. Analysis of the innovated product.........................................................................................31
6.1 Market Consideration......................................................................................................................31
7. Marketing & Financial Analysis............................................................................................33
7.1 Micro & macro environment...........................................................................................................34
7.2 Stage Gate process..........................................................................................................................37
7.3 NPV calculation for stair climbing hand truck (Concept 2)............................................................39
8. Conclusion...............................................................................................................................43
9. References:...............................................................................................................................44
1
A330MED: Product Development Strategies (Group Assignment)
2
A330MED: Product Development Strategies (Group Assignment)
1. Individual Contribution for the Group Course work
Darshana Rajapaksha (Team Leader):-
Develop the outline of the project report, literature review, script writing, report writing
Chamara Rathnataka(Team Member):-
Literature review, data compiling and report writing
Nalin Gamage (Team Member):-
Literature review, data compiling and report writing
3
A330MED: Product Development Strategies (Group Assignment)
2. Problem statement
Stair climbing hand truck is a perfect product for carrying loads towards the up and down on the
stair case. In day to day life, it’s very useful for carrying heavy loads such as pieces of furniture,
household appliances and the like, up and down a staircase. Main advantage of this product is
allows it to be readily moved while loaded, more particularly up and down a stair.
Stair climbing hand truck
Figure 2.1
(Source-Tooled up- Stair climbing hand truck) [Online image])
Basically, it include of at least one handle at its upper part ,main frame, bottom frame, pair of
wheel frames, pair of brackets, 6 wheels & wheel assembly. The wheel assembly comprises a
pair of rotary arms which are rotatable connected to the brackets.
In basic models, some problems were identified. Such as,
Lot of effort is required to adjust the inclination of the hand truck for provide stable
transportation of the loads.
As a result of operator gets out of control when climbing the stair, the accident will occur
due to the load roll back.
These trucks have a pair of ground engaging wheels which wear quickly because of the
heavy load bearing downwardly directly on the wheels.
4
A330MED: Product Development Strategies (Group Assignment)
Another problem is used only for small stairs because of the size of their wheels which is
limited to a maximum diameter due to the star-shape plate.
Need more space to be keep away when not use.
Only luggage type goods can be transport but Small items cannot be filled.
Cannot easily handle by one person due to manufacturing weight of the hand truck.
Innovation should do for improve hand truck for moving loads upstairs and downstairs while
ensuring a controllable transportation of the load along the staircase.as well as low cost.
Solutions for above given problems are shown below,
An accident can stop by using proper break system to stop on the middle of
the stairs.
Wear of the tire can reduce by increase the hardness & grip the tiers.
Small items can be filled after adding galvanized steel plate for main frame.
Uses hot dip galvanized plates for reduce manufacturing weight of the hand truck.
5
A330MED: Product Development Strategies (Group Assignment)
3. Product planning
Currently in Sri Lanka there are only few stair climbing trolley manufacturers that can be find.
And any of them haven’t mass production. But there are some imported stair climbing trolley in
the Sri Lankan market. Because of their high price due to high shipping cost, they are unable
gain enough market share. There are some basic stairs climbing trolleys in currently excise in Sri
Lankan market. Most of these products are unable satisfy the customer needs for their money.
Therefore we choose to do innovation to basic stair climbing trolley.
3.1 PEST Analysis
Figure –Pest analysis for stair climbing hand trolly.
Figure 3.1
6
A330MED: Product Development Strategies (Group Assignment)
Political factor
Since raw materials account for large number of industry turnover, the government of Sri
Lanka, should reduce taxes for import steel. Especially for Hot dip galvanized pipes &
hot dip galvanized steel plate.
The government should give some technical Knowledge and training for develop this
product as a Sri Lankan product.
Economic factor
Initial cost for this product is high. In rural areas, it is difficult to introduce these kind
products due to high market price.
Production cost may be increase due to Rising fuel bill and a rising in interest rates.
To avoid a cut in production, companies will consider about the exports for non-
developed countries.
Due to the increase of economy, urbanization also increases. As a result of this, lot of
urban people lives in flats & multi story buildings.so, this product definitely become a
must need product for their day to day requirements.
Social factor
The number of upper-class and upper-middle class families use this product in their day
to day household needs.
The young generation those who have low income, have good opportunity to join with
manufacture/sale of this product to increase their income.
Technology
By using new technology, weight can be reducing by use of lightweight materials.
By introduce new welding technologies (thermite & spot welding),
Strength can be increase.
7
A330MED: Product Development Strategies (Group Assignment)
3.2 Identify potential competitorsPorter’s five forces model
This is one of famous industry analysis model that use in the world. Porter’s five forces model is
use to determine the competitive intensity and to analyze the competitive strength and position
of a corporation. This model is used to identify whether new products, services or businesses
have the potential to be profitable.
Porter’s five force model.
Figure 3.2
Competitive Rivalry within an industry: By doing innovation to the stair climbing trolley can gain sustainable competitive advantage. Eg: Adding safety feature called “Anti-lock” (wheels are stopped when they are rotating backward). Using modern advertising methods like internet advertisement, publishing thro social network, can get advantage in marketing. Adding optional features with flexibility will help to be competitive in the market.
Threat of new entrants: Some foreign firms can invest in Sri Lanka because of low cost productions. But by been local brand, we can go to the customers easily by knowing their needs. By improving after sales service is help to gain customer loyalty to established product brand.
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A330MED: Product Development Strategies (Group Assignment)
Threat of substitute Products: After introducing this product in to the market, some companies might think to come to this market. Currently there isn’t many substitute products in the local market. Due to high import tax and high shipping cost it is very difficult enter to local market for international brands.
Bargaining power of customers: One of main feature in this product is low price. So it is easy to keep customer satisfied with low price. There are three different models for three different price levels. Therefore buyers can get their product according to their own affordability. Thro better distribution channel, product can easily deliver to customer. So it helps save the time and money of the buyer.
Bargaining power of Suppliers: Main materials used in the trolley are galvanized plates and bars. Currently there are enough suppliers can be found in the market. Due high exchange rate, prices of these materials are going high. But reduction of tax in material(Steel) is increase the availability. Therefore it will minimize the bargaining power of the suppliers.
9
A330MED: Product Development Strategies (Group Assignment)
3.3 Market research
Ideas of the market situation and the preferences of the consumers are exactly need before
launching a product to the market. Company should identify consumer’s desires, as well as
whom has the ability to buy this product & areas for distributed. According to these data
Company get an idea about the performances of their product among the market and how the
distribution is potential.
To increase the market condition, company has a fine awareness about the distribution of the
places such as Luxury houses, Factories, Hospitals, Offices, and Super Markets. This can give
rough idea about the amount of product according to the preferences of the consumers.
Population of Sri Lanka by district
(source-http//www.statistics.gov.lk)Figure 3.3
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A330MED: Product Development Strategies (Group Assignment)
To understand the customer needs and their idea about this product, we did a research by using round 100 people in 6 districts. For the identifying the market research we ask several questions from each customer. Sample of customer survey sheet is attached in the appendix .
In survey we ask “Do you want to use stair climbing hand trolley to ease your work?” and the answers were categories in to district wise.
Colombo Galle Matara Kaluthara Rathnapura Badulla0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NoYes
Table 3.1
According to the chart, most people in Colombo, Galle (urban) like to use stair climbing trolley. People in Badulla and Rathnapura district less like to use this product. That means people in urban areas are more likely to use this product. Therefore distribution network must more force on the urban areas.
Another question we ask in the survey is “What price would you expect to see this product to be offered?” and the answers are categories in to three groups.
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A330MED: Product Development Strategies (Group Assignment)
Colombo Galle Matara KalutharaRathnapura Badulla0
2
4
6
8
10
12
Below 5000Between 5000-7500Over 7500
Table 3.2
This charts shows more people in Colombo and Galle like to spend more than 7500 rupees for stair climbing trolley. That means if the product good, urban people are willing to pay more their product. If the product is around 5000-7500 rupees, more people are willing buy this product.
Chart given in the below shows what aged people are like to buy this product.
This chart clearly shows that the people aged over 45 are more likely to use this product. Therefore the advertising & market strategy focus on these aged groups.
Table 3.3
12
Under 25 25 - 34 35 - 44 45 - 54 55 or over0%
5%
10%
15%
20%
25%
30%
35%
40%
A330MED: Product Development Strategies (Group Assignment)
4. Product Specification
4.1 What is product specification?
Customer needs are generally expressed in the “language of the customer”. They provide little
specific guidance about how to design and engineer the product.
To make the idea of “What the product has to do” development teams usually create a set of
specifications. Although, product specifications do not tell to how to address the customer
needs, but it support to achieve in order to satisfy the customer needs. The list of product
specifications is also one of the key information system used by the team throughout the
development process.
4.2 Product identification
Following are the currently existing products in the market;
01.) Multipurpose Hand Trolley
Equipments or goods fell off easily when filled with a large quantity. Possibility to being dropped and damage goods while transporting. Small items cannot be filled. Hasn’t ability to climb stairs.
Figure 4.1
Multi-purpose Hand Truck
[Online image]
02.) Multi-Purpose Metallic Trolley
Hasn’t ability to climb stairs. Difficult to handle by a person. High technique design. Big packing space. Expensive product.
Figure 4.2
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A330MED: Product Development Strategies (Group Assignment)
GLOBEX Trolley Stair climber
[Online image]
03.) Stair Climber Hand Truck-01
Stability of the cart is not sufficient. Equipments fell off easily when filled with a large quantity. Hasn’t proper break system to stop on the middle of the stairs. Small items cannot be filled Only languages type goods can be transport
Figure 4.3
GINORMOUS Sealey Sack Truck
Stair Climbing 150kg Capacity
[Online image]
04.) Stair Climber Hand Truck-02
Stability of the cart is not sufficient. Equipments fell off easily when filled with a large
quantity. Hasn’t proper break system to stop on the middle of
the stairs. Small items cannot be filled
Figure 4.4
ABE Product and Services LTD
Trolley Selector [Online image]
05.) Stair Climber Hand Truck-03
Stability of the cart is not sufficient. Equipments fell off easily when filled with a large
14
A330MED: Product Development Strategies (Group Assignment)
quantity. Hasn’t proper break system to stop on the middle of the stairs. Small items cannot be filled Expensive product.
Figure 4.5
ebay120kg H Duty Stair Climb
ing Flat Bed Hand Truck Trolley
[Online image]
Following are the problems encountered with each existing product
Pricing : If a cost is moreover high it will be caused to decline the product share
of the market)
Product is bulky : required separate space to store. (Almost all the products in the market
require more space to store.)
Climbing of stairs : when the product traveling on the stairs. Stability of the system is an
important factor.
Heavy : weight of the product is very important feature. Product should be
handling by one person.
Protection of goods : It is very vital the protection of goods while moving by using trolleys
without fall off.
4.3 Identify customer needs
No. Part of the product Needs Importance
Rating
1 wheels Wheels rotate easily without any friction 1
2 wheels & wheel axial Easy to move without applying a much force (smooth 1
15
A330MED: Product Development Strategies (Group Assignment)
move)
3 try wheel unit Smooth climbing on stairs 1
4 bottom plate Less percentage of weight effect to arms while climbing with goods
1
5 trolley frame Trolley can pull without bending body while climbing
2
6 side cover plates Prevent drop and damage of the goods while transporting
2
7 handle Smooth comfortable handle 4
8 trolley frame Easy to clean 4
9 break system Can stop middle of stairs 5
10 height changer Adjust the height of the bottom weight plate 5
11 trolley frame Can be used for lift up plenty of commodities 1
12 completed trolley Light weight 1
13 completed trolley One person can handle 1
14 completed trolley Low price 2
15 completed trolley Long lasting 3
16 completed trolley User friendly quality product 1
17 completed trolley Limited space required to store 4
18 completed trolley Stability (Balancing while moving through the staircases)
1
19 completed trolley Product should have good value for money 1
20 completed trolley Capable of being use in both indoor and outdoor environments
4
21 completed trolley Materials used for the product should be recyclable 5
22 completed trolley Product should not dissipate any harmful radiation or chemicals
3
23 completed trolley Product should not cause damage or pollute the surrounding
4
24 completed trolley Attractive product shape 3
25 completed trolley Allows easy replacement of worn parts 216
A330MED: Product Development Strategies (Group Assignment)
26 completed trolley Last a long time with no need for repair or maintenance
1
27 completed trolley Trolley has to be handle a weight of at least 80kgs plus equipment
2
28 Powder coated painting
Can choose several of colours as prefer 5
29 Powder coated painting
Steadiness colour to the product 2
Table4.1
4.4 Considered factors when constructing matrices
Matrices should be complete: In practice several matrices may be needed to completely reflect
a single customer need.
Matrices should be dependent: Specification also indicates what the product must do, but not
how the specifications will be achieved. When consider the variables used in product
development some are dependent some are independent.
Matrices should be practical: Matrices will be directly analyzable or observable properties of
the product that can be easily evaluated by the team.
Some needs cannot easily be translated into quantifiable metrics: That matric is subjective
and would be assessed by panel of customers.
17
A330MED: Product Development Strategies (Group Assignment)
4.5 Matrices to be used
Metric No.
Need Nos.
Metric Importance
Rating
Units
1 1 Frictionless wheel rotation 1 N
2 3 Wheel sizes 1 mm
3 3,18 Balanced wheel unit 1 mm
4 4,11,18 Bottom plate fixed with transferring the center of gravity of weight towards the wheels
2 mm
5 5,7,11,
13,18,24,
26,27
Trolley frame with proper dimension 1 mm
6 6,11 Include side cover plates 3 mm
7 8,24 Proper smooth structure 1 mm
8 9 Easy & quality break system 5 N
9 10 Movable bottom plate 5 mm
10 12,13 Total mass 2 kg
11 14,1519,
20,21,22,
23,26,27
Use materials to production 3 -
12 16,17,18,
19,20,23,
24,26,27
Complete trolley design 1 -
13 28,29 Attractive and quality enamel colour painting of the product
3 -
14 14 Unit manufacturing cost 1 -
15 8,25 Time to dissemble/assemble for maintenance 2 -18
A330MED: Product Development Strategies (Group Assignment)
Table4.2
4.6 What customer’s needs are satisfied by the matrices
Table4.3
19
A330MED: Product Development Strategies (Group Assignment)
4.7 Final product specificationFor achieve this purpose cost model should be prepared.
4.7.1 Develop a cost model of the product
The goal of this step of the process is to make sure that the product can be produced at the target
cost. The target cost is the manufacturing cost at which the company and its distribution
followers can make adequate profits while still offering the product to the end customer at a
competitive price.
Concept-01: Trolley with fixed bottom and base with hot dip galvanized plates
Component Qty High Price
Rs.
Low Price
Rs.
High Total Price
Rs.
Low Total Price
Rs.
Wheels 6 Nos. 375.00 350.00 2250.00 2100.00
½'' Hot dip galvanized pipe
20'-10'' 1500.00
(19'-0'' length)
1350.00
(19'-0'' length)
1645.00 1481.00
Cutting & bending (Hot dip galvanizedsteel pipe)
350.00 300.00 350.00 300.00
2mm (3'-0''x1'-6'') Hot dip galvanized steel plate
1 No. 3320.00 (36''x96'' Sheet)
3120.00
(36''x96'' Sheet)
622.50 585.00
2mm (1'-6''x1'-0'') Hot dip galvanized steel plate
1 No. 3320.00 (36''x96'' Sheet)
3120.00
(36''x96'' Sheet)
207.50 195.00
Cutting & shaping (Hot dip galvanized steel plates)
125.00 120.00 125.00 120.00
4mm (0'-9''x0'-6'' x0'-3'') Hot dip galvanized steel plate
1No. 6540.00 (36''x96'' Sheet)
6240.00 (36''x96'' Sheet)
77.00 75.00
20
A330MED: Product Development Strategies (Group Assignment)
Ball bearings 2 Nos. 170.00 150.00 340.00 300.00
12mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00
½'' Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00
Assembly 600.00 500.00 600.00 500.00
Powder coated painting 550.00 500.00 550.00 500.00
Total 6947.00 6306.00
Table4.4
Concept-02: Trolley with bottom and base with hot dip galvanized plates and shrinking side
plates with hot dip galvanized plates
Component Qty High Price
Rs.
Low Price
Rs.
High Total Price
Rs.
Low Total Price
Rs.
Wheels 6 Nos. 375.00 350.00 2250.00 2100.00
½'' Hot dip galvanized pipe
30'-10'' 1500.00
(19'-0'' length)
1350.00
(19'-0'' length)
2435.00 2191.00
Cutting & bending (Hot dip galvanized steel pipe)
350.00 300.00 350.00 300.00
2mm (3'-0''x1'-6'') Hot dip galvanized steel plate
1 No. 3320.00 (36''x96'' Sheet)
3120.00
(36''x96'' Sheet)
622.50 585.00
2mm (1'-6''x1'-0'') Hot dip galvanized steel plate
1 No. 3320.00 (36''x96'' Sheet)
3120.00
(36''x96'' Sheet)
207.50 195.00
2mm (2'-11''x0'-9'') Hot dip galvanized steel plate
2 Nos. 3320.00 (36''x96'' Sheet)
3120.00
(36''x96'' Sheet)
605.00 568.80
21
A330MED: Product Development Strategies (Group Assignment)
Cutting & shaping (Hot dip galvanized steel plates)
125.00 120.00 125.00 120.00
4mm (0'-9''x0'-6'' x0'-3'') Hot dip galvanized steel plate
1No. 6540.00 (36''x96'' Sheet)
6240.00 (36''x96'' Sheet)
77.00 75.00
Ball bearings 2 Nos. 170.00 150.00 340.00 300.00
12mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00
½'' Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00
Assembly 600.00 500.00 600.00 500.00
Spray painting 250.00 200.00 250.00 200.00
Total 8042.00 7284.80
Table4.5
Concept-03: Trolley with moving hot dip galvanized bottom plate
Component Qty High Price
Rs.
Low Price
Rs.
High Total Price
Rs.
Low Total Price
Rs.
Wheels 6 Nos. 375.00 350.00 2250.00 2100.00
22
A330MED: Product Development Strategies (Group Assignment)
½'' Hot dip galvanized pipe
20'-4'' 1500.00
(19'-0'' length)
1350.00
(19'-0'' length)
1606.00 1445.00
¾'' Hot dip galvanized pipe
0'-8'' 2000.00
(19'-0'' length)
1850.00
(19'-0'' length)
70.00 65.00
Cutting & bending (Hot dip galvanized steel pipe)
350.00 300.00 350.00 300.00
Cutting & shaping (Hot dip galvanized steel plates)
125.00 120.00 125.00 120.00
3mm (1'-9''x1'-2'') Hot dip galvanized steel plate
1No. 4900.00 (36''x96'' Sheet)
4680.00 (36''x96'' Sheet)
417.00 398.00
4mm (0'-9''x0'-6'' x0'-3'') Hot dip galvanized steel plate
1No. 6540.00 (36''x96'' Sheet)
6240.00 (36''x96'' Sheet)
77.00 75.00
1''D - 1'-6''L Square Threaded bar
1No. 3200.00
(6'-0'' length)
3000.00
(6'-0'' length)
800.00 750.00
Top hand rotator 1No. 500.00 450.00 500.00 450.00
Ball bearings 3 Nos. 170.00 150.00 510.00 450.00
12mm Welding rods 0.5 kgs 280.00 240.00 140.00 120.00
½'' Rubber bushes 2 Nos. 20.00 15.00 40.00 30.00
Assembly 800.00 650.00 800.00 650.00
Spray painting 250.00 200.00 250.00 200.00
Total 7935.00 7153.00
Table4.6
23
A330MED: Product Development Strategies (Group Assignment)
5. Concept Generation
Definition of a product concept:
A concept is a statement about projected product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available.
The following criteria are looked for our concept:
Economies of scale needed in production volume
Technology the idea requires
Fit with manufacturing operations
Fit with marketing operations
A rough early screen was evaluated under the following factors:
Marker worth – attractiveness to target group
Firm worth – enhance the company’s competencies
Competitive insulation – can the product’s benefit be maintained
Idea generation is an ongoing process with contributions from inside and outside the
organization. Many market research techniques are used to encourage ideas including: channel
members, running focus groups with costumers, and the company’s sales force; encouraging
customer suggestions and comments via toll-free telephone numbers and website forms; and
gaining awareness on competitive product developments through secondary data sources.
One important research technique is generating ideas by from open-minded, creative thinkers
from inside and outside the firm.
5.1 Identify three product concepts
24
A330MED: Product Development Strategies (Group Assignment)
When identify the product concepts hand trolley should satisfied the key customer needs.
Generally when used properly, hand trolley can protect people from having back injuries and
other health problems that can result from lifting and carrying heavy loads.
Three product concepts were identified with their advantages and disadvantages as bellow.
Concept 01- Trolley with fixed bottom and base with hot dip galvanized plates
Advantages Disadvantages
Can easily move on stairs with its triple wheels Bottom frame fix to the base frame therefore
cannot move it
Product manufacturing cost is considerably
low
Small items can fill but difficult to move on
stairs.
Luggage type goods which width is more than
trolley base frame can easily transport
Concept 02- Trolley with bottom and base with hot dip galvanized plates and shrinking side
plates with hot dip galvanized plates
Advantages Disadvantages
Can easily move on stairs with its triple wheels Bottom frame fix to the base frame therefore
cannot move it
Product manufacturing cost is moderate
Luggage type goods which width is more than
trolley base frame can easily transport because
of shrinking side plates.
Perfect solution for carrying small items
25
A330MED: Product Development Strategies (Group Assignment)
Concept 03- Trolley with moving hot dip galvanized bottom plate
Advantages Disadvantages
Can easily move on stairs with its triple wheels Small items cannot be filled
Bottom plate can move with relevant to the
equipment or luggage size
Product manufacturing cost is considerably
high
Luggage type goods which width is more than
trolley base frame can easily transport
Bottom plate cannot move quickly
Difficult to carry heavy loads on bottom plate
Table5.1
5.2 Discuss each product concept
Concept 01: Trolley with fixed bottom and base with hot dip galvanized plates
Concept-01 engineeringdesigndrawings of the hand trolley as follows.
26
A330MED: Product Development Strategies (Group Assignment)
Figure 5.1
This trolley can move easily on stairs with its triple wheels. But bottom frame fix to the base
frame therefore it cannot move. Large size luggage type goods can transport easily while small
items difficult. Main advantage of this product is low manufacturing cost.
Concept 02: Trolley with bottom and base with hot dip galvanized plates and shrinking
side plates with hot dip galvanized plates
Concept-02 engineering design drawings of the hand trolley as follows
27
A330MED: Product Development Strategies (Group Assignment)
Figure 5.2
28
A330MED: Product Development Strategies (Group Assignment)
This trolley can move easily on stairs with its triple wheels. Trolley design with fixed bottom
and shrinking side plates with hot dip galvanized plates, therefore this trolley is perfect solution
for carrying small items as well as large size luggage type goods. Manufacturing cost of this
product is moderate.
Concept 03: Trolley with moving hot dip galvanized bottom plate
Concept-03 engineeringdesign drawings of the hand trolley as follows
29
A330MED: Product Development Strategies (Group Assignment)
Figure 5.3
This trolley can move easily on stairs with its triple wheels. Main advantage of this trolley is
bottom plate can move with relevant to the equipment or luggage size. But small type items
cannot be filled because there is no base plate with moving bottom plate, as well as heavy loads
cannot bear on moving plate which not strong enough. Further, this bottom plate cannot move
quickly. Main disadvantage of this trolley is high manufacturing cost.
5.3 Choose and justify product concept to be used
Concept selection is the process of valuing concepts with respect to customer needs and other
criteria, comparing the relative strengths and weaknesses of the concepts, and selecting one or
more concept for further investigation, testing or development.
For achieve the above purpose concept scoring is used to better differentiate among competing
concepts.
30
A330MED: Product Development Strategies (Group Assignment)
Concepts
Concept-01 Concept-02 Concept-03
Selection Criteria Weight Rating
Weighted score
Rating
Weighted score
Rating
Weighted score
Easy of handling
Light weight
Ease of manufacture
Durability
Manufacturing cost
Usefulness
Attraction
10%
20%
15%
15%
20%
15%
5%
4
5
5
4
5
3
3
0.40
1.00
0.75
0.60
1.00
0.45
0.15
4
5
4
4
4
5
5
0.40
1.00
0.60
0.60
0.80
0.75
0.25
3
4
2
2
3
2
4
0.30
0.80
0.30
0.30
0.60
0.30
0.20
Total Score
4.35 4.40 2.80
Rank 2 1 3
Continue No Develop No
Table 5.2
According to the results scoring, Concept-02 (Trolley with bottom and base with hot dip
galvanized plates and shrinking side plates with hot dip galvanized plates) scored best marks.
Therefore company production start with that product concept.
6. Analysis of the innovated product
6.1 Market ConsiderationAfter the product was introduced to the market, it’s very important to understand the how the
sales and profit changes with time. To understand this behavior there is analysis method in
marketing called product life cycle analysis. There are five stages in product life cycle.
31
A330MED: Product Development Strategies (Group Assignment)
Product development stage
Introduction stage
Growth stage
Maturity stage
Decline stage
Product life cycle
Figure 6.1
Product development stage– In this stage it is important to understand the current situation in
the market and identifying the market unidentified market needs. After that innovations need be
done to the product according to the customer needs. For that R&D must be stronger. Stair
climbing hand trolley has been develop to this concept.
Introduction stage – When the hand trolley introduce to the market following problems can be
occur
Low quantity of sales High advertising cost Low cash flow Distributors are hesitant to take new product
To minimize these problems there are solutions can be implement
Large promotion campaign to get consumers attraction.
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A330MED: Product Development Strategies (Group Assignment)
Demand initially from “early adopters” Focused customer distribution network. Reasonable price
Growth stage - In this stage, sales are increasing rapidly. Therefore the profit also increasing. If
the trolley’s demand goes high the price of the hand truck can be maintained at high. If not, by
reducing the price can increase consumers’ quantity. Also in this stage cash flow can be positive.
And also the unit cost of trolley is can down due to high production. By expanding the
distribution and strengthening spending the promotion can improve the sale growing rate.
Maturity stage – This the stage is the most profitable. While sales continue to boost in this
stage but pace of the growth is at a sluggish speed. Simply due to the fact that brand awareness
is actually strong and marketing expenses will be reduce. In this stage stair climbing trolley is
getting older so the competitors may have be similar products. So there can be treats for market
share. To keep the stair climbing hand truck more time in this stage, there must be new
innovations need to be done to the product.
Decline Stage – In this stage sales are going down. The techniques that use in the trolley
become outdated. Because of sales are going low the unit production cost is going high.
Therefore the profit will be reduced. There some options can be done in this stage.
Keep up with the product assured in which competition will certainly exit. Reduce costs
in order to find more uses for the product.
Harvest it, reducing marketing support and coastline along until you can minimize
income can be made.
Discontinue the product whenever no more income can be made or there is new
innovative products need be introduce to the market.
7. Marketing & Financial Analysis
In financial analysis, company must be considered important things such as,
Identify the market potential.
Value of the target market.
Cost of the product.
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A330MED: Product Development Strategies (Group Assignment)
General over head cost.
Necessary investment.
Rate of the product.
There are some competitors in the “stair climbing hand truck” market in sri lanka. So there is a
huge contest with those competitors in the market. At once, it is not easy to enter the market as
an innovated product and grab the customer’s desires. Top line and bottom line have clearly
identified and can make proper choice to develop the productivity simultaneously.
Value of the target market is another key factor in development process of the company.
Customers in the market can be categorized as domestic user & industrial users. So, requirement
of both parties may be different from the capacity and market price.
Cost of the product also plays an important role. So the total cost of this product may be varying
with the requirement of the customer. Price of the hot dip galvanized pipe & hot dip galvanized
steel plate are cost increasing factors of the product.
General overhead cost also consider at cost category. It mean, Maintains cost, salaries, wages,
building cost, electricity bills, marketing cost, transport cost, insurance cost, design cost must be
calculate as a cost.
To promote this product, the company should use “effective marketing strategies”. Advertising
is an ideal way to inform customer about this product. Such as, Newspapers and magazines,
Leaflets, Outdoor advertising billboards, FM Radio and television, Online Marketing & Posters.
It is not sufficient only from marketing; it should introduce to the Super-markets in the Colombo
region and main stores in Metro region. One week prior to the release of the new product it is
suggested to keep a poster in-front of selected super-markets regarding the new product. And
also collaborate with the company and super–markets can give a discount for the customers who
are the buyers of new product within this introducing month.
7.1 Micro & macro environment
Micro & macro environment are the two types of environment. Micro environment can be
divided into “internal micro environment” & “external micro environment”. The external micro
environment includes suppliers, customers and market intermediaries.
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A330MED: Product Development Strategies (Group Assignment)
Supplier can control the material distribution. If they stop their distribution it will be directly
affected to the manufacturing process of the product. Sometimes it will be the end of the
production process.
Customer is the major factor of company’s destiny, who decides the life time of the company.
Intermediates are also directly affected to the business. Because they playing important role
between the customer and manufacture interface.
The internal micro environment can be divided into Management structure, organization strategies & Objectives.
Macro environment includes of demographics, economics, nature, technology, politics and
culture.
Figure 7.1
SWOT Analysis
SWOT analysis is an organized preparing method used to measure the Strengths, Weaknesses,
Opportunities, as well as Threats associated with any project or in a company venture. Any
SWOT analysis can be carried out for a product, location or individual. It requires specifying the
35
A330MED: Product Development Strategies (Group Assignment)
aim of the business enterprise endeavor or task as well as discovering the inner and outside
factors which are advantageous as well as unfavorable in order to be able for you to help
achieving which aim.
Figure 7.2
Here is the market SWOT analysis for stair climbing truck. By doing SWOT analysis we can
identify what are the Strengths, Weaknesses, Opportunities, Threats that the stair climbing truck
has.
Helpful Harmful
Strengths
Low cost product
Weaknesses
No market opportunity in rural
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A330MED: Product Development Strategies (Group Assignment)
Internal Origin
Durability is high
Currently there aren’t any big
local competitors.
More features than ordinary
product.
areas.
Not a popular band.
There aren’t wide ranges of
models for different
consumers.
Distribution network is not
expanded.
External
Origin
Opportunities
Market is growing because of
new super markets and flats are
increasing
Solution for high lobour cost
Important duty is high for trolleys
therefore easy to competitive with
price.
Threats
Low cost products from china
Material cost can be increase
in future.
New technologies are coming
so quickly.
Big companies are opting to
use lifts
Table 7.1
7.2 Stage Gate process
Stage Gate process
Figure 7.3
In the Stage Gate process, lots of ideas arrives being brand fresh notions with various levels. Yet
irrelevant ideas are usually blocked from the top management of the system. Useful concepts
tend to be consuming to accounts. It's numerous stages such as “Scoping”, “build business case”,
37
A330MED: Product Development Strategies (Group Assignment)
“development”, “testing & validation” and “market launch”.
Following benefits may be accomplished by implementation of the Stage Gate process.
Speed up pace to the market.
Improved likelihood of product accomplishment.
Introduces discipline into an ordinary disorderly.
Reduce the re-work along with other kinds of the waste materials.
Improves concentrate by means of gates where poor project are usually killed.
Defines effective and efficient allocation of discourage sources.
Ensures any complete - no critical steps tend to be disregarded.
This stage gate process efficiently required to build profitable “business case” in the company.
First of all the company did “preliminary investigation” that is performed following the lots of
general market research .Lots of surveys was over to identified what is point in which consumer
required.
Plenty of urban consumers really desire to utilize the stair climbing hand truck for their day to
day household activities. The issue coming as a result of the selling price of the product is high.
This is actually the primary target market which usually company attempt to implement their
new product. After lots of studies, The Company discovers superb business case which others
were not included at present. Finally the company invented “Trolley with bottom and base with
hot dip galvanized plates and shrinking side plates with hot dip galvanized plates”. Determined
few errors are usually debug successfully as well as implemented excellent new product for the
target customer.
7.3 NPV calculation for stair climbing hand truck (Concept 2)
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A330MED: Product Development Strategies (Group Assignment)
Assumed Discount Rate = 5%
Formula for Discount Factor = 1/(1+r)n
In here, r = Discount Rate
n = no of years
Assume the project is completed in year 0
Initial Cost for solar Refrigerator =100,000 .00
Expecting annual cost = 50,000.00
Expecting benefit in each year = 200,000.00
NPV analysis for coming 4 years.
7.3.1 NPV analysis for upcoming 4 years.
Discount factor, DF = 1/ (1+r)n ; where r = 0.05, n =1,2,3,4
Hence, Discount Factor for coming 4 years is shown below.
YEAR DISCOUNT FACTOR
00 1.00
01 0.95
02 0.90
03 0.86
04 0.82
Table 7.2
Calculate of NPV for stair climbing hand truck (Concept 2)
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A330MED: Product Development Strategies (Group Assignment)
YEAR TOTAL
0 1 2 3 4
Cost © 100,000.00 50,000.00 50,000.00 50,000.00 50,000.00
Discount
Factor(DF) 1.00 0.95 0.90 0.86 0.82
Discounted
Cost (cxDF) 150,000.00 47,500.00 45,000.00 43,000.00 41,000.00 176,500.00
Benefit (B) 0 200,000.00 200,000.00 200,000.00 200,000.00
Discount
Factor(DF) 1.00 0.95 0.90 0.86 0.82
Discounted
Benefit(BxDF) 0.00 190,000.00 180,000.00 172,000.00 164,000.00 706,000.00
Discounted
Benefit-
Discounted
Cost (DB-DC) -150000.00 142,500.00 135,000.00 129,000.00 123,000.00
529,500.00
Cumilative
Benefits- Costs 150,000.00 57,500.00 192,500.00 321,500.00
444,500.00
NPV
Table 7.3
7.3.2 Return on investment (ROI).
ROI = Total Discounted Benefits - Total Discounted Costs x 100%
Discounted Costs
ROI = NPV x 100%
Discounted Costs
ROI calculation for stair climbing hand truck (Concept 2)
ROI = NPV x 100%
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A330MED: Product Development Strategies (Group Assignment)
Discounted Costs
ROI = (529500.00/ 176,500.00) x 100%
ROI= 300%
7.2.3 Payback analysis
Pay back Analysis is another essential financial factor.
The Payback period of time can be a calculation for obtain a cash flow.
Payback collective benefit and also cumulative expense should not be zero & it should
be a positive value.
Large number of company have not greater perimeter associated with payback
Determine the payback period
The source as well as the budget of stair climbing hand truck innovation and also market
implementation by business financing loans, stakeholders assets to become retrieved the time of
payback decide in product planning stage.
Tabulation
YEAR CUMILATIVE COST
($)
CUMILATIVE BENEFIT
($)00 100,000.00 0.00
01 150,000.00 200,000.00
02 200,000.00 400,000.00
03 250,000.00 600,000.00
04 300,000.00 800,000.00
Table 7.4
Payback Period
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A330MED: Product Development Strategies (Group Assignment)
Payback periodFigure 7.4
42
1 2 3 4 50.00
100,000.00200,000.00300,000.00400,000.00500,000.00600,000.00700,000.00800,000.00900,000.00
CUMILATIVE COST ($)CUMILATIVE BENEFIT ($)
A330MED: Product Development Strategies (Group Assignment)
8. Conclusion
In the current market, many kind of trolleys are available, but those are not in satisfaction
level with the customer requirements. Hand trolleys are used to transport, lifting recurring loads
like books, foods and gas cylinders etc. in places like houses, supermarkets, libraries and
hospitals. Trolley is often used by those who organize and stock merchandise in retail stores
restock. Store or move to upper level is not easy job; especially there are no lifting facilities. In
most of the building houses does not have elevators or escalators. Because of that People
required user friendly trolley for their day to day usage to carry goods and equipments up and
down through the stairs.
Any age group range especially in urbanized area needs that product rather than other areas.
Further this can reduce the human burden in their daily lives. When used properly, trolley can
protect people from having back injuries and other health problems that can result from lifting
and carrying heavy loads.
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A330MED: Product Development Strategies (Group Assignment)
9. References:
1. Wesco Industrial Products Multi-purpose Hand Truck [Online image] Available from:
http://www.hiwtc.com/products/multi-purpose-hand-truck-268048-12145.htm
[Accessed 13/12/2012]
2. BASH-P INTERNATIONAL GLOBEX Trolley Stair climber [Online image] Available from:
http://www.bashpint.com/fire_safety/trolley_stairclimber.php
[Accessed 13/12/2012]
3. GINORMOUS Tolled-up.com Sealey Sack Truck Stair climbing 150kg Capacity [Online image] Available from:
http://www.tooled-up.com/Product.asp?
PID=26879&Referrer=affiliatewindow&source=affwin
[Accessed 13/12/2012]
4. ABE Product and Services Ltd TROLLEY SELECTOR Stair Climbing Trucks [Online image] Available from:
http://www.trolley-selector.co.uk/stair-climbing-trucks
[Accessed 13/12/2012]
5. Tool-Supply.co.uk 120kg H Duty Stair Climbing Flat Bed Hand Truck Trolley [Online image] Available from:
http://www.ebay.com/itm/120kg-H-Duty-Stair-Climbing-Flat-Bed-Hand-Truck-Trolley-/
180723573804?pt=UK_Lifting_Moving_Equipment&hash=item2a13f6e42c
[Accessed 13/12/2012]
6. Karl T Ulrich, Steven D Eppinger & Anita Goyal (2011) – Product Design & Development.
4th ed. TATA McGraw Hill Education Private Limited
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