On the role of microeconomics, planning, and finances in product design

Abstract In this article it is claimed that in order to obtain the right composition, structure, and functionality for a new product, one needs to anticipate what the demand of the product will be and take into account all costs involved (associated manufacturing and supply chain). To obtain the demand, one needs a pricing model, which in turn relies on consumer preferences that are connected to the product composition, structure, and functionality. Thus, a model, including the varying characteristics of the product, the manufacturing capacity and site, the supply chain and ultimately, the markets, is proposed. I use a very simple case of insect repellent to illustrate how the best repellent, identified as the one that consumers will prefer the most, is not the most profitable one and how one can obtain the insect repellent composition that maximizes profit. © 2007 American Institute of Chemical Engineers AIChE J, 2007