Marketing and Product Development

1. The FAD Template

1a. About the Template

In operations management, the FAD template is a tool for both considering all design aspects of a product or service and communicating those decisions to others within the organization. FAD stands for features, attributes, and design. By analyzing these three aspects, designers gain a clear picture of their product or service and give marketing a clearer idea of how it can be positioned for success.

Recall the features are the main selling points of a product, while attributes are a more encompassing set of qualities that must be decided and done with deliberation, even if they are not seen as important by the customer. In this context, design encompasses the overall look and feel, including physical design, packaging, and even service delivery methods.

By dissecting these elements, operations or marketing can identify areas for differentiation. Is there a unique feature this product can offer? Can the company improve an attribute to stand out from competitors? FAD also helps ensure that marketing can communicate these features and attributes to the target market accurately.

big idea

The FAD template and similar strategies covered in this tutorial all serve a dual purpose of both clarifying design strategies and communicating the ideas to marketing; this is usually a reciprocal process where marketing can share their own expertise and research to further refine design decisions.

In the previous tutorials, we discussed some of the reasons an attribute might rise to the level of “feature,” be obligatory as a point of parity, or should be dropped due to obsolescence or dissatisfaction. A FAD template formalizes this process so that designers consider their options and document their decisions.

The FAD template is completed very early in the process, likely after an initial proposal is accepted. There are three essential steps:

1. Provide a description of the product or service that is being considered. It is key to focus on differentiation, as well as any blue ocean markets. These concepts are usually interrelated.
2. Describe the meaning of the product. Recall that meanings can involve many different things—self-worth, convenience, altruism, etc. Which will be the key meaning of your product?
3. Identify all relevant attributes. The attributes can be features, performance characteristics, form, design, and even additional meanings. A good template will prompt the designer to consider a range of attributes that might not be essential to the meaning of the product but must be made.

Focusing on attributes that are exciters and blue ocean features will assist in the differentiation process. It is sometimes helpful to focus on features that are on the verge of extinction or features that consumers are not satisfied with, or wish were not there. Considering exciters and dissatisfiers helps to expand the way designers view the meaning behind a product or service, and it allows the designer to gain deeper insight into how to improve the current performance of the product.

1b. Example Template

The following example provides an idea of what a FAD template looks like, but note that the exact form will vary by industry and by company; different attributes are important in the development of different products and services.

1. Product or service description (what will it do or what is its function?). What type of customers or customer segment(s) are you targeting?

2. What is/are the meaning(s) behind the product or service?

3. Potential product/service attributes, features, and functions.

Category	Description (Completed by designer)
Price How much do you expect it to cost?
Quality How well does the product or service conform to the product specifications? Does the product do what it says it is supposed to do in the user manual? Is it effective in performing its function?
Reliability Does the product or service perform as it is supposed to over its expected life? Is it prone to failure? Is it easily maintained? What is the projected lifespan for the product?
Ease of Use Is the product or service easy to use, and can consumers learn to use it without much trouble?
Design Is the external form attractive? Is it visually, tactically, audibly, and olfactorily attractive? What would the product packaging be? If a service, will the service experience be attractive and positive from the consumer’s perspective? Does the product or service suggest a certain meaning?
Technology Is there an emerging technology or a process that can improve quality, reliability, ease of use, performance, value, design, and meaning?
Value Creation Is there any intrinsic value in the product that distinguishes it from other products or services? Does it solve a problem that consumers want to solve, and will it attract them to the product or service?
Other Attributes List the key attributes, features, and functions that will be focused on and, in particular, those that reinforce or detract from the meaning.
Points of Parity and Must-Haves (POPs) List the attributes, features, and functions that most of the products or services in a category usually have, including industry standards and legal requirements.
Points of Difference and Differentiators (PODs) List the attributes, features, and functions of a product that distinguish it from the competition. This typically refers to a product or service that you are developing.
Blue Ocean Features and Exciters (BOFs) List the sunrise attributes, features, and functions that could be used to develop a new blue ocean market.
Extinct and Vestigial Features (EXTs) List the sunset attributes, features, and functions that are no longer necessary or are on the verge of becoming extinct for the product or service. This typically refers to products and services that are already being sold.
Dissatisfiers (DISs) List the attributes, features, and functions that can cause some consumers to avoid using your product or your competitor’s product. This typically refers to products and services that are already being sold.

Now that you know what the template looks like, let’s see how Gordon might fill this out for his e-bike idea.

1. Product or service description (what will it do or what is its function?). What type of customers or customer segment(s) are you targeting?
The e-bike will be sleek and light and be able to “read” the rider's needs, such as when they are going uphill, to provide them additional assistance. The rider will also be able to ask for help to assist the rider.

2. What is/are the meaning(s) behind the product or service?
The meanings include environmental friendliness, convenience, and healthy living.

3. Potential product/service attributes, features, and functions.

Category	Description
Price How much do you expect it to cost?	Price will be in the higher range, $1700–$2500.
Quality How well does the product or service conform to the product specifications? Does the product do what it says it is supposed to do in the user manual? Is it effective in performing its function?	The e-bike will be high end, with power and a long-lasting battery. Charging time will be much less than competitors.
Reliability Does the product or service perform as it is supposed to over its expected life? Is it prone to failure? Is it easily maintained? What is the projected lifespan for the product?	High-quality parts, such as gears and disc brakes, will be used. The bike will be made from aluminum and carbon fiber for its corrosion resistance. The projected lifespan is 10 years, if maintained regularly. Maintenance will consist of a yearly “tune-up,” which can be done by the customer.
Ease of Use Is the product or service easy to use, and can consumers learn to use it without much trouble?	The control buttons will be simple and intuitive, with plus and minus icons that indicate “more help” or “less help” requested from the rider. The bike will be pre-assembled, with no assembly required.
Design Is the external form attractive? Is it visually, tactically, audibly, and olfactorily attractive? What would the product packaging be? If a service, will the service experience be attractive and positive from the consumer’s perspective? Does the product or service suggest a certain meaning?	The design will be sleek and contain a storage area for a backpack or similar item. The bike will be pre-assembled and housed in a large box for shipment.
Technology Is there an emerging technology or a process that can improve quality, reliability, ease of use, performance, value, design, and meaning?	The electric motor will be small (500w), with extensive torque. It will contain a lithium-ion battery, which allows the bike to be fully charged within 2 hours.
Value Creation Is there any intrinsic value in the product that distinguishes it from other products or services? Does it solve a problem that consumers want to solve, and will it attract them to the product or service?	The intrinsic value is the fact the bike will “read” the rider and understand when they are struggling, and “kick in” the electric portion of the product quickly and easily. This means people in different kinds of shape will be able to use the bike.
Other Attributes List the key attributes, features, and functions that will be focused on and, in particular, those that reinforce or detract from the meaning.	Easy way to start exercising Time with family/kids Fewer cars on the road = doing your part for the environment Cost is less than a few car payments Requires no driver’s license or insurance
Points of Parity and Must-Haves (POPs) List the attributes, features, and functions that most of the products or services in a category usually have, including industry standards and legal requirements.	Suspension system Can go up to 30 MPH Pedal assist
Points of Difference and Differentiators (PODs) List the attributes, features, and functions of a product that distinguish it from the competition. This typically refers to a product or service that you are developing.	Greater torque Battery capacity Locking mechanism for securing the bike against theft Mechanical disc brakes
Blue Ocean Features and Exciters (BOFs) List the sunrise attributes, features, and functions that could be used to develop a new blue ocean market.	“Reading the rider” The ability to “learn” the rider’s habits and typical commute route Battery charging time and miles ridden on a charge MPH
Extinct and Vestigial Features (EXTs) List the sunset attributes, features, and functions that are no longer necessary or are on the verge of becoming extinct for the product or service. This typically refers to products and services that are already being sold.	Pedal assist Folding bikes Hybrid road and off-road bike combinations
Dissatisfiers (DISs) List the attributes, features, and functions that can cause some consumers to avoid using your product or your competitor’s product. This typically refers to products and services that are already being sold.	Ease of use Expense Complexity in assembly Complexity in use Lack of bicycle lanes Emerging personal transport culture/micro-mobility market is still lacking in many locations

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FAD Template

A tool for both considering all design aspects of a product or service and communicating those decisions to others within the organization.

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2. Strategy Canvas

Chan Kim and Renée Mauborgne developed another technique they call the strategy canvas to assist in identifying differentiators. One purpose of the strategy canvas is to understand where the competition is investing their time and resources and see where your own product stands out. Another purpose of the strategy canvas is to try to identify new customer segments in uncontested market spaces; recall that these are called blue ocean markets.

At its core, the strategy canvas is a visual representation of an industry's competitive landscape. It plots key factors—price, features, customer service, etc.—on a horizontal axis, with the level of investment by competitors on the vertical axis. This creates a clear picture of where competitors are focusing their resources. By plotting your own offering on the canvas, you can identify areas where you excel or fall short.

However, the strategy canvas goes beyond competitor analysis. By analyzing where the "curve" of competitor investment falls flat, it can unveil opportunities for innovation. These uncontested market spaces, dubbed "blue oceans," represent opportunities to create entirely new customer segments and value propositions.

The strategy canvas empowers businesses to move beyond simply outmaneuvering competitors. It fosters a strategic mindset that seeks to break away from the "red ocean" of fierce competition and discover untapped potential in the vast blue ocean of unmet customer needs.

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The strategy canvas is a complement to the FAD template, not a replacement. It is not a comprehensive list of attributes but focuses on the attributes that matter most and sees how each rate against the competition, putting the new product or service in the context of thorough market research for similar products or services.

To develop a strategy canvas, designers begin with the drafted FAD template and look for the differentiators and other key factors consumers use in comparing products or services, such as cost, performance, and availability. They create a table with a column for each of these factors.

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Key factors vary by industry. Ease of use and customer support are key factors for technological products. Size and weight are key factors for portable products. Attractiveness and trendiness are essential for clothing and accessories.

The table rows represent the attractiveness of a product to customers, from very low to very high. Note that in the case of cost, this means that lower costs are “very high,” because the placement reflects the competitive advantage, not the cost itself. Note that each of these measures the attractiveness to consumers. The cost column thus shows “very high” approval for lower cost and vice versa.

For the next step, the company’s own product is plotted or placed in perceived competitive advantage for each of these key factors. The competitors’ products are placed accordingly. See below for an example.

Gordon knows from his work in the auto industry that he should not leave these decisions to what he recalls from catalogs and bicycle shops, so he takes time to learn what bicycle companies are doing to implement the same technologies and/or to appeal to the same demographics he’s identified as potential blue markets. He pores over the company catalogs, follows bicycle community groups, reads user reviews, and so on, learning as much as possible not just about the products themselves, but public opinion. He gradually puts a strategy canvas together that shows areas his bicycle might be most competitive. For example, he knows he will not sacrifice cost for quality and also knows he can’t compete with overseas labor markets, but he sees he has an advantage in making street-safe bicycles. Most of the competitors are appealing to recreational cyclers and focusing on more rugged bicycles for trails.

Rating	Cost	Design	Quality	Availability	Low Maintenance	Connect to App	Street Safe	Trail Ready
Very High	Bartell	Gordon	Bartell Haag Gordon		Gordon	Gordon	Gordon	Bartell Haag
High	Haag	SBC			Bartell SBC	Bartell Haag		SBC
Average	Gordon	Bartell Haag	SBC Schaden	SBC Schaden			Bartell Haag	Schaden
Low	SBC	SBC Schaden		Bartell	Schaden	Schaden SBC	SBC Schaden	Gordon
Very Low	Schaden			Haag	Haag SBC
N/A

Gordon sees a blue ocean market in commuters, especially those who want to bicycle but have been anxious about riding in traffic. This leads him to the design strategy of focusing on this market and this use for the bicycle. He also learns that the regular complaint across all electric bicycle models is that they must be stored inside. Being weather-proof and theft-proof will be core requirements for a commuter bicycle, so he plans to invest more in developing these features. For example, the bicycle will send a notification to a rider’s phone if anyone tampers with the lock. He revises his FAD template to indicate where his own bicycle will be most differentiated.

The FAD template and strategic canvas can help designers see where differentiation and blue ocean markets exist. They can also see if they should change any factors to remain competitive or to better appeal to blue ocean markets. It can also be used to identify attributes or factors that could be eliminated because the product features are considered to be low value, extinct, or dissatisfiers.

It should also be noted that the approach can be used in conjunction with a PESTLE analysis to identify the major strengths and weaknesses in the design of existing and new products.

term to know

Strategy Canvas

A complement to the FAD template that compares and contrasts a product or service in development to the competition to help find and emphasize differentiators.

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3. Lateral Marketing

Lateral marketing is another complement to this process, where the product or service is not redesigned, but blue ocean markets are identified, usually by creative thinking about how the product can be used or sold. Lateral marketing involves developing strategies on how companies can create new markets with existing products.

Traditional marketing often focuses on refining products and targeting specific customer segments. However, lateral marketing offers a complementary approach for businesses seeking growth. Here, the focus shifts from product redesign to market innovation. Through creative exploration of existing product applications and distribution channels, lateral marketing identifies "blue ocean markets"—uncontested spaces with high growth potential.

By employing lateral thinking techniques, companies can unlock new customer segments and usage scenarios for their offerings. This strategic approach involves brainstorming alternative uses for the product, exploring unconventional sales channels, and forging strategic partnerships. The objective is to develop an entirely new market for the existing product, increasing sales and brand awareness without the costs associated with product development.

Lateral marketing leverages a company's existing assets to create new value propositions and capture untapped market opportunities. This innovative approach complements traditional marketing strategies, fostering sustainable growth and market leadership.

EXAMPLE

In the 1970s, a campaign by the Florida Orange Growers Association centered on the slogan “It’s not just for breakfast anymore,” a lateral marketing attempt to get people to drink juice instead of soda or other beverages with lunch and dinner. In this case, the lateral marketing didn’t require any new product design or redesign.

EXAMPLE

Also in the 1970s, Ray’s Kingburger—a local fast-food chain in the Southeastern United States—introduced the Country Ham Biscuit, a lateral marketing move to make a fast-food option for breakfast. The idea caught on, with other chains introducing their own morning menus. In this case, the lateral marketing move required minimal product development because biscuits and ham were already on the Kingburger menu.

EXAMPLE

Most over-the-counter medicine comes with child safety features. In the early 2000s, Johnson & Johnson—makers of Tylenol—realized that the product was used a lot to treat arthritis pain. Ironically, the arthritis pain also made the bottles hard to open. Johnson & Johnson started making “E-Z Open” bottles specifically marketed to people with arthritis and no small children in their home. This is an example where only a slight product change (to the packaging) was required.

The goal of lateral marketing is to help create new markets by:

• Reaching a new set of customers by radically changing the product features, either by adding or subtracting features
• Identifying substitute products or services that can compete with an existing product or service
• Identifying complementary products and services for existing lines
• Positioning a product by having it satisfy different needs for different market segments

The lateral marketing approach, along with the other ideas presented in this chapter, complements the blue ocean approach as a mechanism for identifying how product features can be added, subtracted, and adapted to create innovative products and services. Not all products and services introduced will be blue oceans; nevertheless, the approach using the FAD template and the strategy canvas will certainly provide useful tools for understanding the positioning of your products and your competitors.

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Lateral Marketing

The attempt to capture new markets for a product or service that may require new product development but may also require little or no product development.

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4. Market Research

Market research serves as a cornerstone for identifying key product attributes and uncovering lucrative marketing opportunities. This systematic process acts as a complement to the product development cycle, ensuring a proactive approach that goes beyond simply selling what is produced.

Through market research, companies gain valuable insights into consumer needs, preferences, and market trends. This knowledge empowers them to shape product development from the outset, focusing on features and functionalities that resonate with the target audience. By understanding the competitive landscape, market research can also identify gaps in the market, presenting opportunities for innovative product differentiation.

In contrast to a reactive approach, where marketing efforts scramble to promote a finished product, effective market research fosters a collaborative environment. It allows marketing and operations to work in tandem, ensuring that the final product aligns with market demands and possesses the attributes most likely to drive successful sales.

Market research is a complementary and systematic avenue for identifying key attributes and marketing opportunities for products and services. The literature describes a number of approaches for identifying what features are relevant to consumers:

• Brainstorm to identify a superset of existing and future product and service features
• Use focus groups and surveys to identify what products and features are relevant to consumers
• Use statistical analysis to disentangle and understand the relationships between customer wants and product features
• Look at consumer and editorial reviews and try to understand what features of a product or service appear to be attracting people

As you can see, marketing does not wait for operations to create a product, then figure out how to sell it. Ideally, the two units will be working closely together throughout the process of generating and selecting ideas while knowing and designing for a specific market.