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CULTURA I HISTÒRIA DEL DISSENY. ANÀLISI DEL LLENGUATGE VISUAL. DISSENY I MERCAT. TECNOLOGIA I TRACTAMENT DE LA INFORMACIÓ ,
1991
The design of new productsNew products in
industry
In the present article we speak of new products when referring to those which are new to industry, whether or not they are innovative. Thus, ours is an industrial outlook that is internal to industrial activity. They are also named like this independently of their
degree of novelty. Thus new products are those that are original and contribute
new physical or perceptual characteristics, as well as re-designed or
re-formulated products; in other words, those which vary some of its physical
characteristics without altering its fundamental function. Even products that
have similar physical characteristics but with a different image or percepcion
on the part of the user, in other words re-positioned products, can be
considered new and subject to a more or less similar problematic.2
The first thing that strikes us as obvious is
industry's constant activity in generating new products, understanding these as
those categories described in the previous paragraph. Both fieldwork as well as
numerous references of studies carried out in and outside of our country
confirm that the development of new products is a continuous function of most
organizations.3 This function fundamentally depends on the sector;
it depends very little on the economic situation and even less on the size of
the industry, although middle-sized industries are identified as tending to be
relatively more active in this sense than large industries.
The second observation that can be made is the
importance of the problems surrounding the management
of new products, which can be
summarized by the following two points: the high degree of failures and the
cost of developing and especially promoting new products.
Insofar as risk is concerned,
although the size of our sample does not allow us to conclude quantitative
data, all industries have accepted a high degree of failures even in the case
of products that have been successful in other countries. In certain industrial
sectors the estimation of failure of new products reaches almost fifty per
cent, and quantities considered to be normal are between thirty five and forty
per cent for consumer products and between eighteen and twenty per cent in the
case of industrial products.
In reference to cost, this
obviously depends on the sector, industry or even the individual product, and
even though it is difficult to give specific date due, amongst other things, to
the lack of an adequate accountancy, we have obtained some significative data
in relation to percentages and the estimated time taken for the development of
new products, which indirectly is a measure of part of the cost that is
undertaken. In the industries we interviewed the time taken is usually between
one and three years.
In sum, according to general
opinion, risk and cost are the most relevant problems in the process of
developing new products. Nevertheless, the activity of innovating cannot be
stopped or reduced since the stimuli for producing new products are
fundamentally external to industry. If we closely analyse the reasons for the
development of new products expressed in Figure I, we will observe that only
the last two, namely, financial objectives and a rise in sales, are a product
of the active intervention of the industry, while the rest of the surrounding
elements are not subject to its direct control.
 If we reflect on future tendencies, the prevalence of these causes seems obvious. The rise in competitivity by way of new products, the growing diversification of industries, the maturity and saturation of markets, the consumer's change of habits, the user's growing demands, the rise of innovation rates and the pressure of governments and consumer groups in the regulation of products, are some of the tendencies that are already a reality and in the face of which the industry's attitude must be that of anticipating change and the management of innovation. This analysis leads us to formulate
the hypothesis that a reduction in the risk and cost of the development of new
products passes through the formulation of a strategy and a planified process
of design and promotion.
The hypothesis is reinforced if we
closely study the variables that discriminate between the success and failure
of new products presented in Figure 2.
 As can be observed, most of the
variables are directly related to the process that must be followed, while
others such as the development of capacities and human resources organization
and knowledge of the user's necessities, are related to the strategy.
Strategies for the
development of new products
The analysis of the factors that explain the success or failure in the promotion of new products indicates that having an explicit strategy for the development of new products is necessary in order to reduce the level of failures. This evidence is confirmed by various authors who affirm that new products cannot be treated as a simple piece of data and technology cannot be considered a resource of the industry to be used when it is convenient, but rather, these factors must be a part of the strategy.4 The development of new products is linked to the
strategic plans of many industries helping to define its possible alternatives,
as has been confirmed. For many of the industries in the sectors studied, new
products are the central part of their corporate strategy. This is also true in
other sectors: the rapid increase of an uncountable number of industries in
sectors such as office computers, bioengineering. microelectronics and robotics
evidences the potential of a well conceived strategy or new products. In the
same way, many industries maintain their position thanks to a good choice of
products carried out year after year.
Admitting the strategic importance of new products,
some industries develop strategies for new products as part of their
corporative planification, as Crawford describes.5 He states that
many industries are beginning to define the strategies for new products basing
them on the specification of the products, markets, technologies and
orientation of the firm that is being pursued by the new product program.
One of the main problems in the strategy of new
products is that very few theoretical and methodological contributions are made
on the formulation and definition of strategies. The majority of strategic planification
concepts refer to already existing products and markets. Concepts such as the
Strategic Business Units (SBU), portfolio analysis, and the subsequent models
of assigning resources refer to products or strategic unities that already
exist. Certain indications can be extracted from these models, and it has been
done in the thesis, but there still exists a vacuum in reference to finding a
systematic process of generating and choosing strategic alternatives in new
products or businesses.
The structure-behaviour-results scheme produces a
starting basis for the formulation of a new product's strategy that agrees with
many authors, amongst whom we would like to point out Cooper.6
The new product strategy (behaviour) determines the
results of the industry, conditioned by the structural element of the sector
and naturally by the other aspects of the firm's behaviour, as is graphically
portrayed in Figure 3.
 The strategy for new products is closely related to the industry's strategy as a whole, but it should be more specific. The strategy of new products in a firm should define the direction of the new product's program (for example, indicating what type of products, markets and technologies should be developed), the orientation or attitude (for example, being a leader or a follower, being aggressive or passive) and the priorities (for example, the I + D budget). The study carried out by Crawford identifies four large dimensions for defining the strategy of new products in an industry, and these are: type of product, activity of the ultimate user, type of technology used and type or class of the ultimate user. On the other hand, in his article Cooper describes the
strategy for new products by means of four blocks: the type of new products
developed, the type of markets that must be reached, the type of technologies
used and, lastly, orientation and priorities of the process.
The results that allow us to measure the efficiency of
a strategy are several and varied, and amongst them the following should be
pointed out:
a) Financial criteria: for example, percentage of sales generated by the new products. b)
Objectives:
ways in which the program for new products reaches its objectives.
Urban and Hauser7 reduced the strategies for new products fundamentally to two categories: reactive and proactive, both of them divided into other possible categories. This division is the one that has mainly been used in fieldwork and by which the industries have been classified. An industry can have two types of strategies in
reference to new products. One of them is to develop new products when it
intuitively perceives that a change is going to take place or when it really
perceives that a new product has been developed by its competitors.
This type of strategies are the so-called reactive
type, in other words, they react in the face of an external element. On the
contrary, there are other industries that generate changes and are the first to
innovate: these have a proactive strategy.
Reactive strategies can be of a very different nature.
Thus we can speak of defensive strategies, which consist of competing with the
new products that appear by improving or modifying already existing products
without really creating a new product to substitute the original one. This
would correspond to the most elemental state of novelty of a product: the
repositioned product. Obviously, these strategies only have a short term
validity if the original new products impose themselves. There are also
imitation strategies, strategies known as «me too». These consist of copying or
imitating the concept of the competitor even before knowing whether or not it
has been successful. This is a common strategy in a large part of certain
sectors where are very few innovators while the majority are followers. In the
present study, the clothes manufacturing sector would be a clear example in
which the majority of industries follow an imitation strategy.
A variation on the previous strategy is improving the
competitor's product, being «second but better». The objective of this strategy
is to be flexible and efficient in order to achieve a better product than that
of the competitor without having to carry out the initial cost of development
and experimentation. This strategy has been identified as being used by certain
industries in the sector of small household electric utensils. Lastly, a
typical reactive strategy is to respond directly to the necessities explicitly
defined by the users. This is the strategy followed by many industries that
manufacture intermediate products, thus responding to the specific demands of
the client.
On the other hand, in proactive strategies the
industry begins the innovation and benefits from the greater profitability
derived from being the first, though logically with a greater risk. An industry
can base its proactive strategy in two ways. One is giving priority to research
and development, in other words, assigning resources to research and putting
the results of this research on the market. The second is emphasizing
marketing, in other words, developing only those products that respond to a
necessity that has been detected.
Consumer product industries that follow a proactive
strategy usually behave like this, while those of industrial products
(chemical, steel and metallurgy, etc.) apply the first type of strategy.
Nevertheless, numerous studies coincide that the majority of successful
innovations have been generated from detecting the needs of the market rather
than from inventions or discoveries carried out in research and development
laboratories.8
One of the most proactive forms of developing products
is what Urban calls the «entrepreneurial» form. It consists of enabling one
person —the «entrepreneur»— who has an idea, to develop it thanks to the
support («venture») of the organization, inside or outside of it. Some
industries (the author quoted mentions 3M) have a «new venture» department that
enables these opportunities to be carried out.
Lastly, another proactive strategy for incorporating
new products is that of «acquisition». In this case, another industry is bought
which has products that are new for the industry buying it and maybe even new
for the market. The choice of one or other strategic alternative depends on the
strategy of the industry and the structure of the sector. Both aspects are
always a part of the different formal systems of choice of strategy.
In the industries we have analysed, the elements
identified as being more relevant in deciding a proactive or reactive strategy
are portrayed in Figure 4.
 In general, the conclusions that can be drawn are that reactive strategies can be better in industries that9 — have a competitive strategy based on cost; — require a
greater concentration in the existing products and markets;
— can acquire
little protection for innovation;
— have a market
whose size does not allow them to recover from the costs of development;
— are in danger
of being overcome by the imitation of their competitors;
— have an
innovative role in the sector which comes from the suppliers or the clients.
On the other hand, industries can be proactive in their strategies for new products if — their competitive strategy is based on the differentiation of the product; — they follow a
policy of growth or expansion;
— they want to
introduce themselves into new products or markets;
— they have the
capacity for acquiring registration trademarks and protecting the market;
— they can have
access to markets with a large volume or a great margin;
— they have
human and economic resources and enough time to develop new products;
— the
competition is not capable of rapidly following up with a strategy of the
«second but better» type;
— they have a
certain degree of power in the channels of distribution.
The process of
developing new products
The process of developing new products, though apparently different for every industry, has numerous common traits. Simplifying, we would have two extremes, two model types. The first, represented in Figure 5, is a process followed by industries that lack a defined strategy for their new products. The results of these industries, measured by their position within the sector or by the admitted failure of some of their products, clearly indicates the flaws of this process.  The proposed model (depicted schematically in Figure 6) based on different theoretical contributions proves to be absolutely valid and is more or less exactly followed by the most relevant and exemplary industries, those with a belter efficiency in the development of their products. The process thus proposed, which is followed by some
«excellent» industries, presents certain outstanding characteristics.
The first is the active search for opportunities and
ideas versus the passive and reactive attitude. A systematic exploration that
requires the definition of fields of research and, therefore, defined
objectives and strategies. The selection of potentially valid ideas must be
precisely carried oul according to the aforementioned strategy.
 The second is the conceptual amplitude of the designing phase or, in other words, the necessary phases previous to the actual projecting phase. Elements such as the definition of the concept of product or marketing positioning and strategy, presuppose that the product to be designed is precisely a variable that must be modelled and not a fixed data that must be commercialized at whatever cost. The concept of the product and the desired marketing elements in order to obtain greater precision, that is, a greater adjustment of the product to its market, are all a part of the requisites of design. The third is the permanent reduction of the risk by means
of explicit analysis such as testing the product, the market or the economic
analysis itself. There are also implicit analysis such as developing an
accurate marketing plan, before promoting the product, containing a
definition of all the variables: product, price, distribution and
communication.
Lastly, the proposed process tends
to eliminate each and every one of the variables that discriminate between the
success and failure of new products and which are described in Figure 2.
1.
The creation, development and market promotion of new products is a key
area in all the organizations. The study of the phenomenon, its reasons,
problems and measures in order to achieve a greater efficiency are the
objective of the thesis of which this article is a part. In it, industries of
three different industrial sectors are analysed: the toy sector, the textile
manufacturing sectors and the small household electric utensil sector. All of
them are important sectors in our country and, though very different, they have
an important activity in common in the development of products. The analysis or
our industrial reality has only come to confirm the formulated hypothesis, in
other words, that in order to achieve an improvement in the process of
developing new products it is necessary to carry out a specific type of
behaviour which includes introducing a strategy that is adapted to the
structure and conditions
of the sector and a process or coherence with the capacities of the industry,
subsequently in accordance with its competitive position within the sector. The
description of the behaviour and results of the industries, one by one, along
with the analysis of the industrial sectors within which they are framed and
that condition certain general strategies, verifies the adequacy of the
proposed steps, as has been previously mentioned. Therefore, the thesis
contributes a practical, useful and operative method for improving the design
and marketing of new products on the basis of the existing theory, professional
practice and the empirical evidence obtained from the industries that have been
studied
2. This classification of new products is in agreement with
numerous authors amongst whom we would like to point out Rothberg. R., Corporate
Strategy and Product Innovation. Free Press. New York. 1981. and Chofray,
D., Dévenloppement de gestion des produits nouveaux. Mac-Graw Hill. New
York. 1983.
3.
We would like 10 point out the study carried out in Great Britain during
the industrial crisis by the British Institute of Management: Randall, G.,
Managing New Products, BIM Foundation,
London, 1983.
4.
Crawford, C. M., «Defining the Charter for Product Innovation». Sloan
Management Review, Autumn 1980. pp. 3-12.
5.
Crawford, C. M., op. cit.
6.
Cooper. R. G., «The Performance Impact of Product Innovation Strategies»,
European Journal of Marketing, vol, 18. nº 5, 1984.
7. Urban and Hauser. Design and
Marketing of New Products. Prentice Hall, Englewood Cliffs, New Jersey.
1980.
8.
The Conditions for Success in Technological Innovations, OCDE,
Paris, 1971.
9.
The results obtained from the analysis of the different sectors and industries
interviewed, reflected in the fourth and fifth chapter, fully coincide with
some of the theoretical contributions, and especially with Urban and Hauser. op.
cit.
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Sobre l'autor
JORDI MONTAÑA
Professor i director del Departament de Direcció de Marketing d'ESADE, director del curs Direcci ó Estrat è gica de la Marca que s'imparteix a Esade-Madrid i catedr à tic de la Universitat Ramon LLull . És també soci de Quod, Disseny i Marketing, S. A. Pertany al consell assessor de Temes de Disseny. Doctor
Enginyer Industrial per la Universitat Polit è cnica
de Catalunya. Master en Direcci ó i Administraci ó d'Empreses per ESADE, on exerceix
l'activitat docent. Actualment ocupa el c à rrec de president de l'empresa Integral
Design and [...]
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