Evolutionary Product Development

Evolutionary Product Development

Arthur 0. Eger 

 

The well-known economical product life cycle describes the typical pattern of a product's turnover over time. Although it has become a central concept in product development and marketing, it has severe practical limitations. Probably one of the most important limitations is that it is a purely quantitative, descriptive relationship. In this paper, the six phases of the product life cycle are complemented with a set of six qualitative "product phases", which allows us to explain in what phases of the product life cycle functionality, design, pricing, production technology, promotion strategies and presentation, as well as the service level and the social behaviour of a company are important.

 

(1)Economic product life cycle. The concept of product phases is related to the economic product life cycle. Both consist of six phases. The first phase of the product life cycle, product development, shows (essentially R&D) costs of the product before its introduction. The second phase, the pioneering phase, starts immediately after the product is launched on the market. If the product is not rejected, a growth phase will set in, leading to an increased turnover. From now on, imitation by other producers will lead to increasing competition. Next comes the maturity phase, characterized by decreasing growth in sales rates and the elimination of weaker competitors. During the next two phases, saturation and decline, turnover will reach its peak, after which sales will decrease in absolute terms. This is caused, for instance, by the emergence of substitute products. During the last phase, the product will gradually disappear. Sometimes a residual market will remain and another phase will follow: ossification (See: Figure 1).

 

(2)How qualitative product phases can map the status quo of a product Introducing product phases opens up the possibility to analyze the relationships between the different fields of industrial design engineering: ergonomics, marketing, construction and styling. The form giving of a product can be analyzed in relation to its (primary and secondary) functionality, its ergonomic qualities, its production technology and the marketing techniques that are used to sell the product. To demonstrate this, we propose six qualitative product phases一performance, optimisation, itemisation, segmentation, individualisation, and awareness一complementary to the (essentially quantitative) phases of the product life cycle (See: Figure 1 and 2). Placed in chronological order, a more or less general pattern reveals itself, which enables一to some extent一the possibility of explaining a product's development.

 

Each product phase can be described in terms of ten product characteristics of which four apply to the product itself; two of them to its market, and the others to its production technology, its main promotion instruments, the services that accompany the product and the ethical aspects of the product in question. The ten we propose are product characteristics that 1 Newness; 2 Functionality; 3 Product development; 4 Styling; 5 Number of competitors; 6 Pricing; 7 Production; 8 Promotion: 9 Service: 10 Ethics

 

We state that each of the six product phases displays a typical pattern of product characteristics. In this section, these product characteristics will be made explicit for each product phase.

 

(1)Performance New products一that is: products based on new technologies一normally suffer from teething troubles for some time when they have been put on the market. By implication, improvement of primary functionality (i.e., the technical performance of the product) is the most important aspect of product development in this phase. Technically new products often start as status symbols, and usually perform worse than the existing alternatives. The first cars, for example, were much less reliable than the contemporary horse drawn carriages, but despite these shortcomings, some people still wanted to own them. The product characteristics of the product phase "performance" can be summarized as follows (Eger, 2007). The product is technically speaking new and results from a "technology push". The performance of the product is often poor. Product development is primarily aimed at improving the performance. Design in the limited sense of "overall form giving" is unimportant, and therefore, product aesthetics are of minor concern. The product is put on the market by a monopolist or a small number of heterogeneous oligopolists, so competition is low. As a consequence, the price per unit can be relatively high. The product is frequently produced by standard machinery equipment; it often has more parts than the number that would be technically feasible, and assembly is mostly done by hand. The product is promoted through fairs, free publicity via public media, brochures in retail shops, et cetera. There is no properly organized service organization set up by the producer, and the ethical behaviour of the producing company is of no concern to the customer.

 

(2) Optimisation

In the second phase, product development is broadened to include ergonomic aspects and issues of reliability in use and safety. The product phase "optimisation" is characterized as follows. Although the product is technically speaking still new, consumer awareness of the product starts to develop. The performance of the product is reasonable, but product development is still aimed at improving performance. Other aspects, like increased reliability, improvement of aspects of ergonomics and safety are becoming serious considerations. The number of competitors starts to grow. The price per unit is still relatively high, but increasing competition creates a tendency towards lower prices.

 

(3)Itemisation

When producers have improved their product to the point that they satisfy generally accepted standards of functionality and reliability, the edge of competition shifts to convenience. Buyers will prefer those products that are the most convenient to use and一especially in the business to business market一sellers that are convenient to deal with. With mass produced products, personal selling becomes impossible. The growth of the market is less than 50% and the number of competitors increases. As the product range grows, prices fall and promotion costs increase. Communication channels change from personal selling strategies to direct marketing, and (paid) print-, TV- and radio-advertising. Product development is aimed at improving performance, reliability, ergonomics, human interfaces and safety. An endeavour sets in to develop extra features and accessories, including special editions of the product that are developed for different trade channels and target groups. Design becomes more important, and product aesthetics become a major concern. The number of competitors is still growing, but the market has usually not yet developed into a perfectly competitive market (homogeneous polypoly). The number of product parts decreases, and mechanic and/or automatic assembly becomes more important. If needed, well-organized service organizations are set up to support the product.

 

(4) Segmentation

In the first three product phases (i.e.，performance, optimisation and itemisation) the focus was on improved functionality, reliability, ergonomics and safety. An endeavour to add extra features and accessories in order to differentiate the product from its competitors, sets in somewhere in the third stage. However, there is an end to this kind of developments. Actually, there comes a time when the performance offered is actually more than the performance required. For relatively uncomplicated products, such as furniture and trinkets, the possibilities to add features or accessories are limited Moreover, for innovators and early adopters, products become less attractive during the latter product phases. The market share is such, that the product is considered to be "accepted".Owning the product is no longer distinctive, as it does not offer any form of status. Adding emotional benefits to a product is now a possibility.

 

Characteristics of the product phase "segmentation" are: almost all members of the target group know the product from their own experience or have at least heard of it. As the product, technically speaking, enters the domain of some "dominant design" (or, a limited number of "dominant designs"), product development is aimed at adding extra features and accessories, including special editions of the product for different trade channels and target groups. Design has reached a stage of complete integration of the different parts of the product into a completely unified and recognizable form and design focus shifts from form giving proper to expressive features, aimed at increasing emotional benefits. The market approaches perfect competition. As prices approach average total costs, price decreases come to a halt. Promotion and advertising are often intensive and costly, by intensive advertising in various mass media.

 

(5) Individualisation

Extrapolation of segmentation (continuous fine tuning of products on ever smaller target groups) ultimately leads to a product well tuned upon one individual. Recent developments in information and production technology make this kind of individualisation even more possible. These developments imply the following changes in characteristics in the product phase "individualisation". In order to make the product discernible from its competitors (i.e. to escape in some way from the "dominant design"), product development is aimed at extra features and accessories including special editions of the product for different trade channels and target groups,

and on top of that, deliberately geared to mass customisation and co-creation, allowing the customer to influence the final result. The market starts to shift from a homogeneous polypoly into a heterogeneous polypoly. Although prices approach average technical production costs of the dominant design, co-creation and mass customisation offer possibilities to realize higher prices. Interactive media are used to customise the product to the needs of the individual customer. The ethical behaviour of the producing company starts to become of some importance to the customer.

 

A problem with this product phase is that individualisation is not possible for each product. Complicated products, such as cars, are already customised to some extent, but choice so far is limited. A system whereby a customer can submit a RAL-number for the desired colour of his car has yet to be developed. For less complicated, low-priced and mass produced products, such as diaries, spectacle cases, writing utensils, etc., possibilities are even more limited一although it is possible to order these products with one's own name printed on them, for example.

 

(6) Awareness

In 1997, market research bureau Inter/View studied aspects of so called "responsible entrepreneurship". The results suggested that consumers are willing to contribute to a better environment and are willing to help solving societal problems by changing their consumption patterns, but only if this can be done without much effort, and only if it doesnot lead to decrease of consumer satisfaction and to an increase in financial burden. On the other hand, this research also showed that people do expect companies to play an active role in solving common societal problems. A company can successfully tempt consumers一especially those who are committed to purchasing luxury products一by offering them the possibility to show their ethical involvement by acquiring products that claim in some way to be more environmentally or socially beneficial than their competitors. This leads to slight changes in the characteristics of the last product phase, "awareness". The addition of extra features and accessories, including special editions of the product for different trade channels and target groups, has not stopped, but becomes of secondary concern. Design is focused upon the enhancement of expressive features, aimed at increasing emotional benefits, but when these benefits start to include ethical concerns, this can lead to a sudden leap into ascetic and sober forms. The market approaches a heterogeneous polypoly. Co-creation and mass customisation offer possibilities to realize higher prices. This tendency is reinforced even more by product claims on societal and environmental issues. The producing company explicitly communicates company ethics in its promotion campaigns. The ethical behaviour of the producing company does influence- to some extent一consumers' choices. The company can for instance be successful with products that become more attractive during use ("positive aging").

 

 

The bicycle follows the theory of product phases to a great part. The first three phases that are passed through conform to the theory. Despite that, the history of the bicycle interferes with the theory in a few cases. An important explanation is that the bicycle has a long history. One can say that the bicycle even influenced history. Suburbanisation became possible amongst others by the bicycle (and later to a greater extent with the invention of the car). Thanks to the bicycle people could move further away from their work. Interferences with the theory are attributed to the Second World War, due to lack of materials and the introduction of the car and the moped. With regard to promotion, the history of the bicycle differs from the theory of product phases. Until now the advertising efforts remained rather small. Direct marketing methods are not really utilized, and advertising on radio or television is seldom.

 

In a short period of time the mobile phone has passed through all the product phases and met almost all the product characteristics. Because of the quick development of the market and the enormous amount of products sold in a short period of time, the mobile phone does not meet the product characteristics for 'production' in the product optimisation phase. Also, in the product segmentation phase, the product characteristic, 'number of competitors' is not met. The description suggests many competitors, but in reality there are only a few large manufacturers. In the third quarter of 2005 the market shares are: Nokia 33,2%; Motorola 18,5%; Samsung 13,4%; LG 6,6% and Sony Ericsson 6,5%.