A customer is likely to consider several factors when buying a product. In some cases this is an easy decision made on the basis of previous experience but in other cases the choice is the result of careful deliberation. Some of the questions a consumer might ask are:

Is it suited to my purpose?
Can I afford it?
What will the running and maintenance costs be?
Is it safe?
Is it reliable?
How long will it last?
Is it attractive and fashionable?

On occasional instances there may only be one product that satisfies the criteria but in most cases the consumer is faced with several competing models. Referring to the manufacturers literature may help but obviously it will not give you a balanced opinion. By and large, the issue of safety will have already been dealt with by national and international standards for industrial and consumer products. The UK organisation is the British Standards Institute (BSI) which certifies products and awards them the "Kitemark" and the "Safety Mark". International standards are coordinated by the imaginatively titled International Standards Organisation (ISO). Information on safety and performance is published in journals such as Which? magazine and What Hi-Fi? These are independent and give an unbiased view allowing the consumer to choose the product that best meets the requirements at the right price. There are two main issues at stake here. Quality and Value.

Quality

Quality comprises a number of different factors. Some of these are emotive and subjective, others can be measured and are therefore objective. The quality of the thought and attention that has gone into the design cannot strictly be measured. It is a "feel-good" factor which which adds to the appeal of the product and elevates it above the others. This means that it does more than simply fulfil its purpose, it goes beyond mere function ~ it makes you feel good about having bought it.
If the quality of the materials and components is high (these can be measured by looking at material choice and thicknesses, surface finish, component specifications, assembly techniques) then the product is likely to perform its task well, and likely to be long lasting and reliable with low maintenance costs. High quality usually results in a higher cost. The additional investment in design, materials, construction, finish and specification is going to have to be clawed back somehow.

Value

The value of a product refers to more than simply its cost. A cheap product can be said to have good value just as easily as an expensive one. Value is determined by factors which are significant when the purchase is made and factors which come into play over the life of a product. When we purchase a product we look at at its price and also its features and its quality. Thus we might spend £200 on camera A which has the latest features, power zoom, Advantix loading system, built-in flash etc or we might spend the £200 on camera B with less features but a higher quality lens and a better reputation for durability. In their own way, each of them may represent good value.
Equally we could have spent £300 on camera C which has the same features as camera A but is made by the same manufacturer as camera B. Does this then represent poor value for money? Maybe not. If it lasts twice as long or can be sold on second hand for more then over the course of its life, camera C will have represented better value than the cheaper camera A.

Setting the price for a product is a crucial decision for a manufacturer. The priority has to be recouping the investment and manufacturing costs. These can sometimes vary enormously. When you pay £15,000 for a car a significant chunk of that cost is for the raw materials and manufacturing processes involved. When you pay a software company £750 for their latest graphics package, the cost of the materials involved (a CD-ROM or two) is pence. The investment made in employing software writers, however, is huge. The cost of the product will also be relative to the volume of production.
At one extreme, a one-off item will be designed to meet the needs of one particular client. That degree of attention is time-consuming and costly. The design and development costs have to be recovered by a single sale. At the other extreme mass production means that the large investment in tooling can be spread over several years, the selling price will be a fraction of the equivalent one-off leading to increase sales and if production rates matche sales rates there are no costs incurred by stockholding.

Lowering the price of a product can be a way of boosting sales dramatically. This is something manufacturers eventually resort to as the popularity of their product wanes. This is related to the product life cycle which is described below.

Introduction

This is the period when knowledge of a new product is spreading. Potential customers will begin to evaluate the product's potential in relation to alternatives. Rival manufacturers will be considering their response. For approximately two thirds of the new products there will be a rapid rise in sales and the growth phase will be entered. The remaining third will not gain acceptance by the market.

Growth

This is the most dynamic part of the product life cycle. Sales increase rapidly as word spreads, rivals enter the market with imitations, new features etc. There is scope for experimentation with the product form and characteristics because demand is still high.

Maturity

The period of rapid expansion ends. There are a number of reasons for this. There are no new customers to be found, rival products have taken part of the market or the market simply becomes dated. This latter cause is a feature of fashion goods such as skateboards, clothes or, more recently, cyberpets.

Decline

This period of the life cycle is the result of a product category being superseded by other products meeting the same or similar requirements. The ability of an organisation to prolong this period is important as much of the money made from a product in the introduction and growth periods is used to recoup development and marketing costs.

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