A Systematic Method for Designing Profitable Product Families

Every company has the business objectives of maximizing customer choice as well as its profitability. Typically, companies address maximum customer choice through a large spectrum of variants in their products to satisfy varying customer needs. For example, a camera manufacturer may wish to offer various choices such as fixed focus, auto-focus, variable zoom, different zoom ranges, SLR, APS, and digital cameras, and in different combinations, to satisfy customers with different demands (including the price that they wish to pay). The business goal, therefore, is to design a product family that meets a wide range of customer choices but at a minimum cost so as to maximize the profit margin. These two objectives, choice and profit margin, are not as contradictory as they seem. In this paper, we show that by using a set of systematic methods a company can identify the essential design elements of a profitable product family. We have successfully applied this method in a number of product families ranging from airhandling fans to robot controllers, and from mass-produced products to project based customized products.