Lesson video

Hello there, everyone.

My name is Mr. Booth, and welcome to your design and technology lesson for today.

In today's lesson, we are looking at commercial viability.

Can our product actually make any money? This is part of our communal areas context and part of the unit Iterative design: Student living.

Today's outcome, I want you to be able to identify and understand the factors in making products commercially viable and then apply that to your product that you have been designing.

Three keywords today that are all related.

The first one is commercial viability, the likelihood of a product being successful in its target market and making a profit.

We then have profit, the money a business earns after paying all its costs.

And finally, our target market, the specific group of people a product is designed and sold for.

Two learning cycles today.

The first one is all about commercial viability.

So let's take a look.

So commercial viability is the likelihood of a product being made, sold, being successful in its target market, and making a profit after all.

A profit is the money a business earns after paying all its costs.

In other words, it asks, can this product make money and work well once manufactured? Which is a pretty key question when it comes to designing and making products.

Quick check for understanding.

What is the money a business earns after paying all of its costs? Is it A, capital; B, revenue; C, profit; or D, expenses? Pause the video now.

Come back to me when you've got your answer.

It is of course profit.

Well done.

If a product is too expensive to produce or no one wants to buy it, then the company will ultimately lose money.

Commercial viability helps businesses make smart decisions about materials, manufacturing, prices, and marketing, just to name a few.

This makes sure that the product is realistic.

It's got to meet those consumer needs and it can compete with similar products that are already on the market.

Without commercial viability, a product idea might fail, even if it is aesthetically pleasing and everyone absolutely loves the look of it and it functions really well.

To ensure a product is commercially viable, a designer needs to consider this throughout the designing process.

This cannot be an afterthought.

It needs to be considered at all stages of designing and manufacturing.

Let's have a look at two examples, and for our examples we're going to have a look at kettles.

So the first kettle is an Alessi designer kettle.

Very nice from a design firm that is very famous for making high-end products.

The second one is what you might find in your kind of standard kitchen, a non-designer kettle, something very similar to what I have in my own kitchen.

Now if I told you that the non-designer standard kettle retailed for about 30 pounds, how much do you think the designer Alessi kettle will retail for? Have a little guess.

Pause the video now, have a think.

Come back to me when you've got an answer.

So what do you think? Well, the Alessi kettle retails for over 100 pounds, whereas the kettle on the right retails for approximately 30 pounds.

But these, both these products are commercially viable.

Now that's interesting because they are very different price bands.

So we can see that one is very expensive, the other is not so expensive.

Now, why do you think that is? Why do these two kettles have such extreme prices, but they are both still commercially viable? Pause the video now.

Have a little think.

Come back to me when you've got an answer.

So what did you think? Well, it is of course because they both have completely different target markets.

The target market, remember, is a specific group of people a product is designed and sold for.

Quick check for understanding.

The specific group of people a product is designed and sold for is called the what? Is it A, target market; B, consumer; or C, demographic? Pause the video now, come back to me when you've got your answer.

It is of course A, the target market.

Let's go back to our example of our kettles.

So the expensive kettle appeals to customers who want high-quality materials, advanced features, designer stylish design, and are willing to pay much more.

Whereas the lower cost kettle is aimed at customers who want a basic affordable product to boil water so they can make their cups of tea.

Each kettle meets the needs and the wants of their target market and also the price expectations.

So both of them sell and they make a profit, meaning they're both commercially viable.

Your first task, I want you first to define commercial viability.

Then I want you to explain why it is important for designers to consider commercial viability throughout the designing process.

Pause the video now, have a go at these two tasks, and come back to me when you've got your answers.

So first of all, I wanted you to define commercial viability.

Well, commercial viability means whether a product can be successfully made, sold, and make a profit.

And then I wanted you to explain why it is important for designers to consider commercial viability throughout the design process.

Well, designers should consider commercial viability throughout the design process so they don't waste time or money on a product that won't sell.

They can make better decisions that will help the product succeed by thinking about it early on.

This means the final design is not only functional and attractive, but it's also realistic and profitable for a business, it's commercially viable.

On to our second learning cycle.

So now what we're going to do is relate all the things we've just learned and compare them to your product that you've been designing.

How to ensure a product is commercially viable.

Research into the market is vital for commercial viability.

Designers and manufacturers must be aware of several areas to help them make appropriate decisions.

And those areas are cost, target market, materials and processes, competition, and profit.

Now there are more, but we are going to focus on these ones.

But if they are going to make sure that their product is commercially viable, they must look at these areas and conduct in-depth research.

Which of the below do designers consider to ensure their product is commercially viable? Is it A, a designer's favorite color; B, prototype materials; C, profit; or D, target market? Pause the video now, have a go at this.

Come back to me when you've got your answers.

It is of course profit and target market.

Well done.

So let's have a look at each of those areas in a little bit more detail.

So first of all, cost.

Is it affordable to make and sell at a price that your customers are willing to buy? What you need to think about is how much it's going to cost to produce the product, including materials, manufacturing processes, the labor you are going to use to make that product, and of course, packaging.

If the product is too expensive to make, the final price might be too high for our customers.

Designers aim to keep costs low so they can sell the product at a price people are willing to pay and still make a profit.

So if we imagine we have a certain cost that we know our product will cost to make, we then have the price the product is sold at, and as long, obviously, as that is more than what it costs to make, we can make that profit.

It's a little bit more complicated than that, but that's just a basic understanding of what it means.

Target market.

The target market is the group of people the product is designed for.

This could be teenagers, parents, athletes, whoever you are aiming your product at.

It's important to know what this group wants, needs, and can afford.

If the product doesn't appeal to them or solve a problem, it probably won't sell.

So it's important to consider their needs and wants.

Designers often do market research to understand their target market before even designing or making a product will take place.

For example, if you design a baby teething toy, your target market might be new parents.

Your research may tell you that you need to design it to be durable, safe, and colorful.

If you design it to suit the new parent target market, it's much more likely to sell and be more likely to be commercially viable.

Materials and processes.

To make a product commercially viable, the materials and the processes used must be readily available and suitable for production.

For example, if a designer chooses a rare or imported material that comes from a long way away, it might cause delays in delivery or even increase the costs.

Using standard materials and efficient manufacturing methods helps keep production smooth and affordable.

Quick check for understanding.

Why would a rare or imported material affect the commercial viability of a product? Is it A, it will make the product lighter; B, it could cause delays and increase costs; C, it guarantees the product will be more popular; or D, it will improve the product's color? Pause the video now, have a go at this.

Come back to me when you've got your answer.

Yeah, it is of course B, it could cause delays and increase the cost.

Let's have a look at competition now.

If there are any similar products already, it can be harder to break into that market.

We sometimes call this market saturation, when there are just simply too many organizations or designers producing products for the same market.

Designers must look at what's already on the market and think about how their product is different or better than the others.

It might have a lower cost.

It might be more stylish, like the Alessi kettle.

It might be more sustainable or it might have better features, or even function better.

Standing out from the competition makes your product more likely to be commercially viable.

Research is vital to ensuring designers know about similar products.

This can be done by carrying out existing product analysis, something you might have already done in your design and technology lives.

Let's have a look at Lucas and what he found out when he did his research.

So, "During my design process, I looked at existing products on the market that were similar to mine.

I looked at the materials they used, the cost they were being sold for, and what made them appealing to my target market." And finally, let's look at profit.

A product needs to make more money than it costs to produce and sell.

This is called making a profit.

A product that is aesthetically pleasing but doesn't make any money isn't commercially viable.

You're not going to last very long as an organization, a company, if you are not making money.

Designers calculate things like selling price, production costs, and expected sales to make sure the product can bring in a good profit and it can be commercially viable and you can continue to sell those products.

All of these areas have to be considered and be in balance to make sure the product is of course commercially viable.

And that of course is cost, target market, materials and processes, competition, and of course profit.

So we're now on to task B.

I want you to consider your own product and carry out research into each of the points below to check and ensure the commercial viability of it.

Those areas I want you to look into are the costs, the target market you have aimed your product at, the materials and processes that you aim to use in your product, the market competition, so you might need to do some research into products that are already out there and are on the market being sold right now.

And finally, the profit.

What are you going to sell it for? How much is it going to cost to make? And do you think you can make a profit on your design? Pause the video now, have a go at this.

Come back to me when you completed your research.

So how did you get on with your research? So let's have a look at how Alex got on with his research.

Now first of all, he decided to look at competition.

"I looked at other products similar to mine on the market and found out that most are made of polymers and metals and retail at around 30 to 40 pounds.

Mine will be lower in cost as I wanted to suit my target market," which of course for Alex was students at university.

They of course don't have much money.

"Target market: I considered my target market from the start of the design process and designed aspects of it to suit them and their needs and wants, so I'm confident it will appeal to them." And that's a great way of doing this.

Remember that all of these have to be considered throughout the designing process, not just an afterthought at the end.

And we can see Alex has done that with his target market.

Well done Alex, and well done you.

So that brings us to the end of this lesson.

Let's have a quick summary.

Commercial viability is the likelihood of a product being made, sold, being successful in its target market, and making a profit.

Commercial viability helps businesses make decisions about materials, manufacturing, pricing, and marketing.

It ensures the product is realistic, meeting consumer needs and can compete with similar products in the market.

And finally, it ensures a product is commercially viable.

A designer needs to consider this throughout the design and making process rather than it be an afterthought at the end of the process.

Well done today.

You've all been absolutely fantastic, and I look forward to seeing you all next time.

Goodbye.