New Product Development

Ganesh N Prabhu
 12.
Designing Products
for Emerging Markets
 What are Appropriate Products?
• Meets customer needs better than competition.
• Better quality (as defined by users/customers)
• Has unique benefits and features for its users.
• Solves users real problems with the most
competitive alternate products or services
• Reduces total in-use costs over product lifetime
• Highly visible benefits for users/customers
• Innovative, novel, first of its kind product.
 Personal Internet Communicator
AMD launched the Personal Internet
Communicator (PIC) in 2004 at US$250 for
emerging markets – divested by AMD in 2006.
 Failure of PIC in Emerging Markets
• The PIC had a robust design and was low
priced at that time yet it failed to gain any
market in the targeted developing countries!
• PIC could not effectively compete with low
cost internet access in internet cafes that were
easily accessible by users at that time.
• PIC also meant recurring cost of highly priced
and slow speed internet subscriptions.
 Failure of PIC in Emerging Markets
• More importantly, the PIC could not compete
with a working three year old second hand PC
that cost less than US$200 locally and was easily
serviced by local computer service providers.
• So in effect the PIC increased the technology
risk for its potential users who opted out of it.
• PIC failed but won a 2006 Industrial Design
Excellence Award of BusinessWeek- recognized
by the Industrial Design Society of America!
Best Sellers in Emerging Markets
Nokia 3310/3315 Nokia 1100

136 million sold 250 million sold

Retired in 2005 since 2003 - retired
Why did the Nokia 3310/3315 succeed?
The most obvious reasons are:
• Priced at lowest possible level at that time.
• It looked very robust in construction.
• It had the longest battery life at that time.
• It was very reliable over fairly long time use.
• It had a good and wide service support.
• It had a good resale or exchange value.
• It thus provided superior value to its users.
 Why did the Nokia 3310/3315 succeed?
The not so obvious reasons also are:
• It had no non-essential, non-call features.
• It was most suitable for first time users.
• It had a very simple intuitive user interface.
• It had the largest font sizes available.
• It was the natural choice for senior citizens
and semi-illiterates as closest to public phone.
The Nokia 3315 thus reduced risk for all users.
 Development of Nokia 1100
• Small design team from Nokia Finland led by
NID design graduate Raman Saxena spent
three weeks touring rural and urban India.
• They met users of Nokia 3315 in villages, towns
and cities to see and photograph how they lived
and how they maintained their phone.
• They took suggestions from users on how
their phone could be made better.
 Development of Nokia 1100
• Some results of this field design study effort:
1. The idea of a torch light on the Nokia 1100.
2. The idea of a removable cleanable surface in
Nokia 1100 instead of buttons to prevent
dust accumulation around the buttons.
3. The redesign of better grip lines on the sides
of the phone to avoid slipping out of hand.
4. Clear red on/off button on face of phone.
 Did Nokia lose out in dropping 3315?
• The 1100 was far smaller than the 3315 and the
user interface was a bit more complex!
• The 1100 was easier to carry but more difficult
for older people to read and press numbers.
• The 1100 font size was smaller - more difficult
for visually challenged and older people to use.
• The 1100 was robust but looks less robust than
the 3315 – keypad seems likely to wear out.
• Such design tradeoffs are sometimes required!
The Nokia 1100 was a Success – Yet!
• Customers still looked for unsold Nokia 3315!
• Low end phones today are too complicated for
first time users and the old and semi-literate!
• These users are better off, if you remove any
non-essential features to improve familiarity!
• First time users is a good business opportunity
but requires design that builds on the familiar
and thereby effectively reduces risk for users.
 Building Base of Pyramid Markets
• Build very functional but minimal feature
products – avoiding all detracting extra features.
• Build intuitive products that do not require a lot
of training at the point of sale by the dealer.
• Product’s utility should be easily demonstrated.
• Product should be robust enough to withstand
harsh conditions and both abuse and misuse.
• Product should be easily to try at low user risk.
• Products can be released as modular interlinked.
 Building Base of Pyramid Markets
• Products should be innovatively financed to
better match user needs and their cash-flows.
• Companies must assure support over the entire
estimated life of the product – longer warranty.
• Companies must also support the move from
those who depended on their previous product.
• Companies must have a tight control on price-
performance equation to convey good value.
• Customers are value sensitive not price sensitive.
New Business Options in Emerging Markets
1. First go for emerging market users with high
intent to buy but many users cannot find it or
cannot afford it due to the higher unit prices.
2. Next go for emerging market users with high
intent to buy but many users cannot afford it
due to higher prices and higher/more features.
3. Next go for markets with high demand but you
can easily move users to products that are
more appropriately designed for them.
New Business Options in Emerging Markets
4. Next go for markets with latent demand but
many potential users do not consider it as it is
high priced and appears inappropriate to them.
5. Next go for markets with latent demand but
many potential users do not consider it as it is too
cheap and so appears inappropriate to them.
6. Next go for markets with high demand but you
have to aggressively reach out to get customers to
consider a better product than what they are using
 13.
Design Thinking
for New Products
 Why Design Thinking?
• School education focuses on routine abilities –
simple computations, reading familiar texts,
reciting poetry etc. tested with examinations.

• Work life requires you to ask good questions,

interpret unfamiliar texts, create new texts,
build new arguments, do complex analysis,
develop original solutions and make judgments.
 Why Design Thinking?
• Reasoning on your own and building on the
reasoning of others along with rapid testing of
iterations is key to designing unique solutions.
Design thinking combines left and right brains.
Left is for linear, logical, sequential and analytical
Right is design, synthesis, context, pattern, artistic
Dan Pink - Right brain ability is more valued over
left brain as it is less common and less developed.
 Right Brain Abilities
1. Design ability – crafting novel unique solutions.

2. Story-telling ability – weaving context, emotion.

3. Symphony ability – big canvas strategic thinking

4. Empathic ability – see from user point of view.

5. Playfulness ability – using whatever is available.

6. Giving meaning – significance, purpose motive.

 What is Design?
Design is the creative organizing of human,
physical, technical and knowledge
elements towards the creation of an object
or system that meets functional, aesthetic,
ergonomic and economic goals under
constraints of technical feasibility and
resources in line with a vision and a value
system.
 Caricature of Design by Engineers
• Typical engineer approach to design is to
– gather data on the use context and users
– design a device or a system that meets all the
user stated clear requirements and
– test the device with users in the context.
• Contextual failures and user feedback on the
finished device is then used to tinker with it.
• If it can be fixed its ok or it is a shelved failure.
• Works far better when users are less complex.
 Designers “Think” by Implementing

• DT is a method that avoids this engineering led

pathway with typically higher failure with users.
• DT imbibes the view that designers just do not
know enough to design well for their users.
• DT mindset is a user based solution focused
mindset rather than problem solving focused.
• DT draws equally upon logical reasoning and
user context based imagination and intuitions.
 Design Thinking Cycle
• DT means never ever saying that the design
was “right” but its implementation had failed!
• DT starts with a deep understanding of what
users are trying to do to then create easier
enjoyable ways to help them achieve their goal.
• DT builds a broad range of perspectives to get
a full appreciation of user challenges to then
build a range of potential solutions to them.
 Design Thinking Cycle

• DT involves rapid experimentation and quick

cycles of user led feedback on the full range of
potential solutions with target users and other
key stakeholders to refine on novel solutions.
• DT requires flexibility and openness to all
possible ideas and suggestions from all users
and stakeholders to improve on the prototype
solutions that they are shown for comments.
 Design Thinking Cycle

• DT driven experimentation and multiple

prototype cycles eventually results in effective
new design solutions that can potentially
never be thought up initially or independently
either by the users or by the designers.
• Design Thinking is imbibed in design schools
by the clear directive that roughly translates
to: “Thou shall not make any design sketches
till thou meets thy real users!
The Design Council (UK) – 4D Design Thinking Framework

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 4D Framework – (What & Why) on Left
Start on question, vision or statement of intent.
Stage 1 – Discover
- Mapping all those who are involved
- Understanding peoples’ daily experiences
- Understanding all the causal influences
Stage 2 - Define
- Identifying major themes to design
End with clear opportunity/brief to base ideas.
 4D Framework – (How) on Right side
Starts with clear opportunity/brief to base ideas
Stage 3 – Develop
- Rapid testing of new ideas and concepts
- Seeking feedback on ideas from users
- Refining the business model to what works
Stage 4 - Deliver
- Measuring the impact of the new concept
End with functioning and proven new concept
 Nature of Design Thinking
• In summary - Design Thinking is more driven
to reach an acceptable solution that satisfies
the user requirements effectively and no more.
• Design Thinking solutions are developed very
interactively with all key users and through an
iterative process the team reaches closure.
• Design Thinking solutions meet complex goals
by rapid and many user feedback loops rather
than by adding complex technical resources.
 Economics of Soft Innovation - Stoneman
• Soft innovation is the creation of variants that
affect aesthetic or intellectual appeal of the
product and not just functional performance.
• Soft innovation includes new book titles, new
packaging, marketing innovations, new
recorded music, new food creations and new
delivery methods.
• Soft innovation is also embodied in the smell,
touch, colour and intangibles of the product.
 Economics of Soft Innovation - Stoneman
• High product variety with consumer preferred
distinctiveness through soft innovations can
ensure higher premiums and profits.
• Pricing variations are also a form of soft
innovation – prominent example are the
mobile tariff deals and combo offers.
• Soft innovations can be protected by design
registrations rather than by patents.
• The economic logic of “commodities” does
not directly apply to soft innovations.
 Soft Innovation and Hyper-competition
• Hyper-competition is a market condition
where new products are launched by all the
players in the industry at such a high frequency
that it gives no possible scope for the industry
players on average to be profitable.
• Hyper-competition is problematic for players
as launching new products is costly and risky
but not launching products is even more risky
as the company loses market share to others.
 Soft Innovation and Hyper-competition
• Hyper-competition may be episodic (short
period) or transformational (long run).
• Episodic hyper-competition may lead to
temporary gains based on soft innovation fads
(fancy packaging) that may die out very soon.
• Transformational hyper-competition is based
on major shifts in consumer tastes or in new
technologies and is likely to be permanent.
 Soft Innovation and Hyper-competition
• Transformational hyper-competition leads to a
post hyper-competition era with new basis of
competition with new resource configurations.
• Few players hyper-competition may die out.
• More players hyper-competition may persist.
• Hyper-competition will typically reduce overall
industry level profitability as all new products
on average are unprofitable at launch.
• Need to re-examine the basis of competition.