The design mix
The design mix is the three things a business balances when designing a product:
• Function — how well it works and how reliably it does the job it was bought for. • Aesthetics — how it looks, feels, sounds or smells; its appeal to the senses. • Cost — how much it costs to make, which sets the lowest price at which it can profitably be sold.
They pull against each other, which is why it is a mix rather than a list. Better materials improve function and aesthetics but raise cost. Cutting cost usually means compromising one of the other two.
Which matters most depends on the product and the customer. A safety helmet is designed around function; a fashion item around aesthetics; a supermarket's own-brand basics around cost. Getting the balance wrong for the market is a common cause of failure — a beautifully designed product nobody can afford sells no better than an ugly one that works.
Common mistake
Cost in the design mix means the cost to produce, not the price to the customer. A design decision changes what the product costs to make; pricing is a separate decision, covered in 2.2.2.
- Design mix
- the three things a business balances when designing a product: function, aesthetics and cost
The product life cycle
The product life cycle describes how sales of a product change over time, from its development to its withdrawal. It matters because the right decisions about price, promotion and investment are different at each phase.
Extension strategies are actions taken to lengthen a product's life and delay decline. The specification asks for them alongside the phases, and the timing matters: they are used during maturity, when sales are levelling off, rather than after decline is well under way.
Common extension strategies:
• Advertising — a new campaign to remind customers the product exists. • New packaging or a redesign — making it look current without changing what it does. • Adding a new feature or variation — a new flavour, colour or model. • Entering a new market — a new country, or a different group of customers. • Lowering the price — attracting more price-conscious buyers, though this reduces margin.
Why extend rather than launch something new? Developing a replacement is expensive and risky, while an extension builds on a product customers already know. But extension only postpones decline — eventually a product does have to be replaced.
- Product life cycle
- how sales of a product change over time, from development through introduction, growth, maturity and decline to withdrawal
- Extension strategy
- an action taken to lengthen a product's life and delay decline, such as a new version, new packaging, a new market or extra promotion
Differentiating a product or service
Differentiation means making a product or service distinct from competitors' — giving customers a reason to choose it that is not simply price.
Why it matters to a business:
• It allows a higher price, because customers cannot get the same thing elsewhere. • It builds loyalty, so customers return rather than switching to whoever is cheapest that week. • It avoids competing on price alone, which is the competition a small business is least likely to win. • It makes promotion easier, because there is something specific to say.
How businesses differentiate: through function, quality, design and aesthetics, branding, customer service, or a unique selling point. Those overlap with the ways of adding value in 1.1.3, which is not a coincidence — differentiation is how a business justifies the value it adds.
The limitation worth noting: most differences can eventually be copied. A genuinely unique feature may last only until competitors match it, which is why businesses keep developing new products rather than relying on one advantage indefinitely.
Worked example
A soft drink has been in maturity for three years and sales are beginning to fall. Recommend a response.
- Identify the phase: sales levelling then falling means late maturity, moving into decline.
- Consider extension first, because it is cheaper and less risky than developing a replacement.
- Choose extensions that suit the product: a new flavour or a limited edition adds novelty; new packaging refreshes the look; a campaign reminds customers it exists.
- Note what would make extension the wrong choice — if the decline is caused by a permanent change in tastes rather than familiarity.
- Commit to a recommendation and say what would change it.
Answer: Use extension strategies during maturity rather than waiting: a new flavour or limited edition, refreshed packaging and an advertising campaign, which cost far less than developing a new product. But if sales are falling because tastes have permanently shifted — away from sugar, for instance — extension only delays the problem, and the business should develop a replacement instead.
- Differentiation
- making a product or service distinct from competitors', giving customers a reason to choose it that is not simply price
Before you practise
- The design mix is function, aesthetics and cost — and cost means cost to produce, not price.
- The three pull against each other, and which dominates depends on the product and its customers.
- The life cycle phases: development, introduction, growth, maturity, decline.
- Cash flow is negative during development and introduction, and strongest in maturity.
- Extension strategies lengthen a product's life: advertising, new packaging, new features, new markets, lower price.
- They are used during maturity, before decline sets in.
- Differentiation gives customers a reason to choose the product other than price, allowing higher prices and greater loyalty.
- Most differences can eventually be copied, so businesses must keep developing.