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Design and market position - mapping the market with the MADRID market map

Riedel,, Johann; Roy, Robin and Potter, Stephen (2008). Design and market position - mapping the market with the MADRID market map. In: International Product Development Management Conference, 30 Jun - 1 Jul 2008, Hamburg, Germany.

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Abstract

This paper reports on some of the significant findings of the MADRID project - "Market Demands that Reward Investment in Design". The origin of the project wasas a follow up, and development of, the earlier CID - "Commercial Impacts of Design" study (Roy & Potter, 1993). CID was undertaken by the Design Innovation Group, from 1987-90, as a study of over 220 design and product development projects in small and medium sized UK manufacturers. It provided, for the first time,quantified information on the commercial returns upon investing in professional design expertise at the product level. The MADRID project builds upon this work andsought to identify:
(a) Which types of market(s) are most likely to produce the best commercial returns from investments in design and product development?
(b) The most effective contribution of design in different market types.
(c) The longterm commercial benefits of investment in design and product development.
This paper presents the results of a re-analysis of data from the earlier CID study in order to address the first of the above aims. The results for the second aim were reported in Roy & Riedel (1997) and the third aim in Roy et. al. (1998).
Different approaches for market mapping were reviewed in order to develop a suitable technique for analysing the relationship between the market position of a company's product and its commercial performance. This led to the development of a new type of "market map" for classifying product markets according to dimensions of quality and price sensitivity versus volume of production. This MADRID market map enabled products involving different inputs of design (product, graphics, engineering, industrial design) and with different degrees of financial performance to be compared according to the type of market at which they were aimed. Some 64 products were successfully plotted on the MADRID market map.
The analysis of commercial performance showed that there are successful products aimed at all types of market. Nevertheless, there were two noticeable clusters of commercially successful products - aimed at mid-quality, niche markets (QN) and at mid-quality, volume markets (QV). Some products in the price-sensitive volume (PV) market were also successful, where companies attempted to gain a competitive edge through adding value/ quality, whilst reducing the price-sensitivity of their products. However, the price-sensitive, niche (PN) market can be a problematic one in which to position a product. It appears difficult to perform well in it.
In conclusion design was used by companies either to move products into more profitable quality-sensitive markets or, in the case of some high-quality niche market products, to reduce costs and thereby increase sales volume. None of the companies attempted to move their product down-market (bar the exceptions of high product quality companies trying to capture larger sales volumes). Likewise, none crossed from quality-sensitive to price-sensitive markets.

Item Type: Conference Item
Copyright Holders: 2008 The Authors
Keywords: design; commercial impacts
Academic Unit/Department: Mathematics, Computing and Technology > Engineering & Innovation
Interdisciplinary Research Centre: Innovation, Knowledge & Development research centre (IKD)
Related URLs:
Item ID: 26244
Depositing User: Stephen Potter
Date Deposited: 12 Jan 2011 17:01
Last Modified: 06 Jun 2012 06:01
URI: http://oro.open.ac.uk/id/eprint/26244
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