Worksheet - What's So Important About Design?

Step 1 - Featuring in the design is ...................?

The design theories section of the factory outlines some of the features that are vital if a design is to become a successful product. What are they?

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Now think carefully about what each of these means, and how important they may be in the design of a hot-air balloon. Try ranking them according to their importance, starting with the most important as number 1.

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Use the space below to write a short justification of the first four features in the ranking. Why do you think these are the most important? (N.B. Think of it from the customer's point of view as well)

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Step 2 - Designer balloon means designer prices?

What would the design costs of a balloon be classified as? What sort of costs?

Clearly for a standard balloon, it only needs to be designed once! Also the design time is likely to be less than for a complex special balloon. Let's say that the design of a standard envelope costs £20,000 in design time, computing costs and testing. Fill in the table below to show what happens to that design cost as the number of balloons produced increases:

TOTAL DESIGN COST	NO. OF BALLOONS PRODUCED	AVERAGE DESIGN COST i.e. design cost per balloon
£20,000	5
£20,000	10
£20,000	15
£20,000	20
£20,000	25
£20,000	30

Plot the figures you calculated in the last column roughly on the axes below:

What will this mean for Cameron Balloons pricing policy for these balloons?

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However, a special shape balloon is a unique product. Rarely is more than one of the same design made. Combine this with the fact that the design costs will tend to be much higher, and you can see that designer balloons probably does mean designer prices.

Look up in your textbook or library to find out about the following pricing techniques:

Absorption costing

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Cost-plus pricing

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Contribution pricing

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Competition-based pricing

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Which of these methods do you think would be most appropriate to the pricing of special shape balloons? Why?

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