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Product design groups are feeling the pinch at the moment, but creative joint ventures can enable you to weather the storm, says Patrick Hunt

As an established consultancy we at Therefore have seen the landscape of product design change dramatically over the past few years. During our early years we typically retained clients engaged in long-term new product development. Design was considered to be an investment that reaped commercial benefit in the marketplace.

Today, much has changed. Brands that are committed to design are having their sales margins squeezed and they are squeezing the design budget in response. To find ways to lessen the large investment needed for NPD our clients are turning to Far Eastern manufacturers, who are also offering cut-price product design services. Many competitive brands are challenging the old model of four times mark up from manufactured cost and replacing it with a cost plus model. In some cases, the plus may only be a few dollars, resulting in a £30 price tag on DVD players, for example.

The tectonic plates are indeed shifting, with the design business being hit on a second front by the power of celebrity. Brands seem willing to pay for a household name to ‘design’ their products, believing that this adds value to our everyday objects.

Where does this leave product design consultancy? One way forward is to turn your creativity on to the design process itself, which is what we have done at Therefore. The results are two initiatives that give us a much more pivotal role as designers.

We have formed joint ventures to get our own new product ideas to market and we have also developed a creative charging scheme, implementing royalty schemes that link us directly to the success of our products.

In our own NPD scheme we encourage our designers to bring product ideas to the table, from which they will directly and financially benefit when the sales profit outstrips our investment. In an attempt to show the way, I formed a new limited company two years ago, which has been a vision for many years. Presso was formed between Therefore and two partners responsible for distribution and manufacture.

Presso is a non-electric espresso maker that brings ritual and emotion to coffee-making. The aim was to produce a distinctive and simple product that matches the quality of high-end coffee-makers without the high price tag. After just one year on the market Presso has not only won four major design awards, but the device is also selling in volume in Britain, Canada, the US and New Zealand, and it is due to roll out to other major markets within the year.

Our other NPD ideas include a smart computer desk called Intellidesk and a new technology product called Imagini that interfaces with the printed page. The desk, created for the schools market, converts from a standard writing desk into a computer workstation. Our patented mechanism presents the keyboard, mouse and flat screen from a single latch. Intellidesk has been licensed to the educational IT supplier, Research Machines, which has been selling the desk to UK schools. We have also recently sold a license in the US to furniture giant Bretford.

Our other business model has been to assign our designs in return for royalties. Our first product launched along these lines was Fraim hi-fi furniture; it is manufactured and distributed by Naim Audio. We identified a gap in the hi-fi market for furniture aimed at discerning, high-end consumers and created a concept that would improve the acoustics of existing hi-fi separates. Simon Matthews, who conceived the idea, says, ‘Fraim has been selling for just over three years and Naim has generated additional sales of £2.5m from our idea. And this is for a product that didn’t even exist on their roadmap.’

The royalty model has proved popular with emerging technology companies that are keen to share some of the risk. We have been instrumental in the development of Digital Audio Broadcasting radios, where we discount our design fees for unit royalty income. This type of close collaboration with clients binds us together in a way not normally experienced in the standard fees model. We have designed more than 20 radios for 11 different brands and they have all seen strong sales.

Although we are investing in our own creativity, we are still at heart a product design consultancy, and a better one from our experience with these ventures. We have gained respect and feel a strong resonance with our clients by understanding the dynamics of bringing products to people.

Therefore’s greatest hits

• Presso coffee-maker

• Fraim hi-fi furniture, which decouples each unit acoustically from its neighbour, while anchoring them to the ground

• retro kitchen DAB radio for Bush

• kitchen DAB radio for Hitachi

• Intellidesk, which transforms from flat desk to computer workstation

Patrick Hunt is creative director of Therefore

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