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Brighton Business School
MK202: Product Design Marking Scheme
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Instructions to candidates:
Time allowed: 1 Hour
Nature of Examination: unseen/closed book
The paper is in 2 parts:
Part A – 40% of the overall marks
This is a short answer section and you should answer 4 questions
You should spend around 20 minutes on this section
Part B – 60% of the overall marks
This section requires a more analytical approach and you should answer 1 question. You
should spend around 40 minutes on this section
Please start a new page for each answer and make sure that you clearly label the question you are
answering.
Part A (40%) – Answer 4 questions from the following:
1. Identify the different stages of a typical innovation process and describe the typical
activities included in each stage (10%)
Two versions exist for a typical innovation process. The first version (Tidd and Bessant, 2011)
includes the following four stages, search (opportunities for innovation), select (what are we
going to do and why), implement (make it happen), capture (how we get the benefits from it).
The second version includes the generation of new ideas (search ideas and identify market
opportunities), explore ideas (investigate, select and validate ideas), commit to develop
(decision-making and influence stakeholders), realise development (manage the development
process and the politics) and optimise outcome (improve and fine-tune product and capture the
value). Either of these responses should be considered as right answers.
2. What is the product-market matrix (also called the Ansoff table)? Give a brief definition of
each of these elements (10%)
Product-market matrix is a framework providing different combinations of a company’s
products and markets. The matrix distinguishes between existing and new products and
existing and new markets i.e. markets served by the company currently or potentially. The
matrix includes four components: (i) growth through market penetration (existing products,
existing markets) (ii) product development (new products, existing markets) (iii) market
development (existing products, new markets) and (iv) diversification (new products, new
markets)
3. What are the lead users and how they can benefit the process of product innovation?
(10%)
Lead users are consumers that are ahead of their time (i.e. ahead of the other consumers) in
terms of ideas, approaches and attitudes towards new products. Companies use lead users not
only to detect the emerging needs of the market but also to identify innovative changes to
existing products and services. Lead users are very good in identifying radical product
innovations.
4. What is the biggest potential pitfall of the undercutting cost strategy and how can it be
avoided? Give an example (10%)
In order to lower the price in this strategy, a company needs to cut down on the quality level of
the offered product. For instance in a low-cost airline, you do not get free food and drinks in the
cabin while the airports tend to be remote from the main destination. However when
employing this strategy, the company should be careful not to lower the quality below the
threshold that a user is prepared to accept. Typical example if a low-cost airline is trying to
save cost by economising on the policy of safeguarding the safety of its airplanes.
5. What is the difference between the generic product and the augmented product? (10%)
Generic product is a version of the product containing only those attributes or characteristics
absolutely necessary for it to function. Augmented product is the product with the inclusion of
additional features, benefits, attributes or related services that serve to differentiate the
product from its competitors. Product design is often used to distinguish the augmented
product from the generic one.
6. What is the biggest barrier when a company is trying to introduce a product or service that
is new to the market (or the world)? When does it occur? (10%)
The biggest barrier emerges when the company is trying to move from the innovators (or
technologists) and the early adopters (or visionaries) to the early majority (the pragmatists). It
has been termed in the literature as the Chasm and it is important because it requires from the
company to change drastically their marketing approach (i.e. their marketing strategy, their
marketing message, their marketing target etc.).
Part B (60%) – Answer 1 question from the following:
Question 7
You are hired by an established company to take charge of the process of new product
development. You start your new job and you are about to take the first steps of the process to
identify the ‘strategic space’ where this product can be located
a) Define what is the strategic space of the company is and why it is important as first step of
new product development (15 marks)
Strategic space is the possibilities of new products for a company, if its current skillsets,
capabilities, products and markets are taken into account. It is important to ensure a strategic
coherence for the company and reduce the failure risks since the development and promotion
of the new product can use some of the existing assets and resources of the company.
b) Identify three different approaches that need to be born in mind when considering the
strategic space of the company, providing relevant examples from previous case studies
wherever appropriate (15 marks per technique)
The three techniques are: (i) the core competence (ii) the product-market matrix and (iii) the
scanning the periphery view.
The core competence is an attempt to identify the ‘fundamental skills’ of a company that
support all its products in the various markets the company is present. It is like the root of
company innovation tree, where the final products and markets are just the leaves of the tree.
Typical example the Canon corporation where its products are supported by a core competence
in opto-electronics.
The product-market matrix distinguishes between existing and new products and existing and
new markets i.e. markets served by the company currently or potentially. The matrix includes
four components: (i) growth through market penetration (existing products, existing markets)
(ii) product development (new products, existing markets) (iii) market development (existing
products, new markets) and (iv) diversification (new products, new markets)
Scanning the periphery refers to the need to look carefully at emerging needs and trends in the
margins of your market (i.e. currently marginal customers but with a future innovation
potential). Typical example was the failure of the IBM corporation in 1980s to identify the need
of individuals to posses a Personal Computer at home (marginal customers at the time) to the
benefit of Microsoft which invested in this marginal market.
Question 8
You are brought as a consultant to a consumer goods company with the brief of identifying the
markets which can be addressed by a new product (to be developed).
a) Discuss ways that the targeted market(s) can be segmented to appropriate segments (20
marks)
There two kinds of segmentation for the market: (i) the psychographic segmentation and (ii)
the circumstance-based segmentation. The psychographic segmentation combines
demographics with psychology, taking into account factors like the income, the social class, the
lifestyle and the values of the targeted customers. A very popular psychographic model is the
Sinus Milieus model where the social class is combined with the personal values. The
circumstance-based segmentation focus more on the ‘job’ needed by the customer, combining
it with other factors like the social class and the income level.
b) Identify and define the different kinds of gaps that can be identified in each of these
segments, providing relevant examples wherever appropriate (20 marks)
There three kinds of market gaps: (i) he functional gap where a specific function is missing from
the market (e.g. the functional gap experienced by water consumers in the South East of
England to filter the mains water from salts) (ii) the economic gap where a relevant product
does exist in the market but at a price that it is not affordable for a significant portion of
potential customers (e.g. detergent sold in big bottles in India) and (iii) emotional gap where a
product solution exists at the right price but in a very uninteresting form or appearance (e.g. a
bulky computer with no design elements).
c) Identify different levels of awareness that potential customers may have for their needs
and wants (20 marks)
Awareness
Customer Characteristics
Actions for NPD
Latent
Needs/Wants
Unaware of the problem, the
need or the want
Rationalise solution as too
expensive, complicated or risky
Diagnose problem and create
a vision of solution
Make buyer to admit problem
or aware of solution
Admitted Needs/Wants &
No Solution Vision
Buyer admits problem but do
not know how to solve it
A lot of talking, no action
No clear vision of solution
Diagnose problem and create
a vision of solution
Admitted Needs/Wants &
Solution Vision
Buyer accepts responsibility for
solving problem and can
visualize what is needed
Listen the customer carefully
Co-create a vision of solution
Question 9
You are the Managing Director of a company and your staff brings different ideas for new
products. You agree with them that you need to develop an external and internal positioning for
each of these product ideas.
a) Discuss the three alternative competitive trajectories that each product can follow,
elaborating on the elements of each trajectory (20 marks)
Do it better in the mainstream market: continuous improvement of the performance/price ratio
to get a competitive advantage on your competitors; most of competitive offerings converge to
similar packages
Undercut cost strategy: Low price for customer (lower than mainstream competition), lower
quality than the mainstream competition but above minimum threshold, attack operational
cost.
Disruptive (or blue ocean) trajectory: where a product competing a new performance
dimension is offered to the market, aligning the whole system of firm’s activities to
differentiation by creating uncontested market space and making the competition irrelevant.
b) Discuss the choices that will determine the internal positioning of the product (20 marks)
Relation of the product to the company market share and the rate of the relevant business
growth, creating four archetypes of products: the cash cows, the dogs, the stars and the
question marks.
The existing product families and whether the new product will be part of an existing product
family or not. If it is, the cost of development and the risk of failure are reduced given that the
new product will build on an existing and successful archetype.
The decision whether the product will be stand-alone or a combination of physical product with
services. The rational is that a physical product has a long life in the market which is associated
with a significant level of financial transactions (trading) well after the original product is sold
in the market place.
c) Identify the key elements of the associated business model (20 marks)
The primary elements of a business model are the revenue streams and the cost structure.
There are different kinds of revenue stream like the initial low charging, followed by a stream
of high-price sales (e.g. the Gillette shaving machines), the high initial charging followed up by
a stream of low-price charging products (e.g. the i-phone model). Other aspects of the business
model are the key partners, the key activities, the key resources, the value proposition, the
customer relationships, the channels to the market and the customer segments.
SECTION B
One from three, 60 marks for each.
No specific marking schemes.
An excellent answer (50-60) will be comprehensive, indicating extensive breadth and depth of
knowledge of the topic. This is likely to draw on material and examples from beyond the taught
content. It will be well constructed with a logical structure and flow, that ‘answers the question’
where appropriate.
A good answer (40-49) may have some omissions and be drawn primarily from material covered.
There may be some deviation from the topic but again there should be a clear attempt to
structure the answer and to draw conclusions where appropriate.
A poor answer (36-39) will have major weaknesses in breadth and/or depth but with sufficient
relevant content to indicate some knowledge of the subject. Structure and language may be poor,
e.g. terms may be used without clearly demonstrating understanding. There may be content that
is valid in itself but not relevant to the question as asked.
A very poor answer (15-25) will be lacking essential information.
(0-14) marks may be awarded for very short/incomplete answers that include a few key aspects
issues.