Madison Avenue style kings think they can sell members of the public anything through snappy slogans, gorgeous models and funky graphics. But according to new research from Northeastern University and RPI, a product's design, ease of use, and aesthetic appeal have perhaps the greatest impact on a company's bottom line.
"There are many beautifully designed products that are commercial failures, so we know from the outset that aesthetics are only one element of a product's success, albeit an important one," says author Marjorie Platt, a business professor at Northeastern University and one of three authors of the study. "But few studies have attempted to quantify the contribution of a good design to improved company performance. This leaves managers with the intuitive sense that good design is profitable and primarily anecdotal evidence to support this contention. But without proper evidence as to what links the two " design and financial success " decision makers are left to sort of what design might be expected to contribute to their companies' profit margins."
Platt and NU colleague Julie Hertenstein and Robert Veryzer from Rensselaer Polytechnic Institute began a five-year study, closely examining products' designs and companies' stock market returns. What they found substantiated their hypothesis, unearthing a strong, positive relationship between design effectiveness and three financial performance criteria including stock market returns, return on sales and return on assets.
Based on data gathered from professional design managers and experts who rated products in nine different retail areas " apparel, automotive, computer, electronic appliances, farm and construction, furniture, household audio/video, photography, and sports and athletic " from some 93 companies, the study's findings suggest that firms rated as having "good" product design were stronger on virtually all measures examined. Some of the companies examined included Apple Computer, Hewlett-Packard, Xerox, Maytag, Toyota and Polo Ralph Lauren.
"Designing products with features, aesthetics, ease of use, or quality superior to those of competitors can enable the firm to command higher prices than competitors," says Veryzer. "Although most designers are likely to implicitly incorporate this notion in their designs, the return on industrial design is often not fully assessed, and businesses may fail to fully profit from this investment."
"Designers should consider not only attributes and features that enable a product to sustain a higher price, but also factors that reduce the manufacturing and servicing costs as well as reducing the costs or quantities of assets associated with the products," says Hertenstein.
For a full copy of the report, please visit our web site: http://www.nupr.neu.edu or call 617-373-5455.
Located in the heart of Boston, Northeastern University is a private institution recognized for its expert faculty, first-rate academic and research facilities and flagship co-op program. The co-op program, which combines classroom learning with real-world experience, has been cited for excellence for two years running by U.S. News & World Report. Recently named a top college in the northeast by the Princeton Review, Northeastern's career services was awarded top honors by Kaplan Newsweek's "Unofficial Insiders Guide to the 320 Most Interesting Colleges and Universities," 2003 edition. For more information, please visit http://www.northeastern.edu
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