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					Professor Dr. Peter Zec                    reddot institute	






         Designing value for people and brands
Barack Obama views Germany as a good role-model   reddot institute	






   “If Germany, a wealthy, highly
   unionized industrial nation, can
   generate fourty percent of its
   economy as export-based, then
   it seems to me that there is
   something we’re missing that
   they are doing right, and we
   have got to figure that out.”

   Barack Obama, 2009
Germany‘s export has become a main source of economic growth   reddot institute	






           46.8%
                                        Today, Germany’s exports equal
                                        46.8% of nominal GDP (Gross
                                        Domestic Product).
Export rate of Germany’s leading design brands     reddot institute	






          81 %                      77 %         60 %
Export rate of Germany’s leading design brands      reddot institute	






          79 %                      77 %         75 %
Export rate of Germany’s leading design brands      reddot institute	






          83 %                      79 %         76 %
Export rate of Germany’s leading design brands      reddot institute	






          88 %                      78 %         76 %
Design and Business                                                      reddot institute	





Thomas Watson Jr., former IBM President (1952-1971)




                                                      “Good design is
                                                       good business.“
Design and Business        reddot institute	






       Good design
        creates added value!
Tap water is important but affordable              reddot institute	






                      $ 0.0025 / 1 litre
                      tap water price in Germany
Cave H2O coming from Germany                     reddot institute	






                               $ 5.5 / 1 litre
VOSS artesian water from Norway                     reddot institute	






                                  $ 7.5 / 1 litre
Evian’s special edition by Issey Miyake                 reddot institute	






                                     $ 11.5 / 1 litre
Veen waters from Finland awarded “red dot” in 2009   reddot institute	






                                      $ 12.5 / 1 litre
The primacy of form                        reddot institute	






          Dominance
         Form is dominant. Form matters.
The primacy of form                       reddot institute	





The form of pasta determines its taste.
The primacy of form                        reddot institute	





With which airline do you prefer to fly?
The primacy of form                          reddot institute	





What a big mistake!




                      In 1997, British Airways adopted
                      a new livery painting: the world
                      image tails (a branding mistake).

                      British Airways used designs
                      from international artists to
                      represent countries on BA’s
                      route network.
The primacy of form.                                                                   reddot institute	





Design determines our buying decision.



         Brand
         Design




                    Automobiles                       Hi-Fi and TV        Fashion Design

Sources: VuMA 2010 (consumer & media analysis), Typology of Desire 2010
                            reddot institute	






Designing a premium price
Dyson Air Multiplier AM01 and AM02   reddot institute	






 Dyson driven by technology & design
“What doesn’t cost much isn’t worth much.”           reddot institute	






              $ 30-40                    $ 430-575
Good design makes you forget about the price tag.    reddot institute	






     like the price                      love the product
Dyson Airblade hand dryer vs. competitor from the US   reddot institute	






    bad function                      good design
Good design makes you forget about the price tag.   reddot institute	






       $ 365                            $ 1500
Dyson DC24 vacuum cleaner with ball technology vs. competitor   reddot institute	






        imitation                             original
Good design makes you forget about the price tag.       reddot institute	






       $ 400                                    $ 725
Dyson sales 2005-2009 (in million Sterling)            reddot institute	






      “Good design is good business.”
   1000


    750
                                                      770

                                         611   628
    500
                           515
              472
    250


      0
             2005          2006         2007   2008   2009
red dot design index                            reddot institute	






       Design creates value
      Design as a driving force for economic growth
Being awarded “red dot: design team of the year” is a very special honour.   reddot institute	


No designer and no company can apply for this unique tribute.                               reddot institute	






                                                            2012   Porsche Style
                                                            2011   Grohe Design Team
                                                            2010   Hilti Design Team
                                                            2009   Tupperware Worldwide Design Team
                                                            2008   Bose Design Team
                                                            2007   Design Team BMW Group
                                                            2006   LG Corporate Design Center
                                                            2005   Adidas Design Team
                                                            2004   Pininfarina Design Team
                                                            2003   Nokia Design Team
                                                            2002   Apple Industrial Design Team
                                                            2001   Festo Design Team
                                                            2000   Sony Design Team
                                                            1999   Audi Design Team
                                                            1998   Philips Design Team
                                                            1997   Michele De Lucchi Design Team
                                                            1996   Ideo Design Team
                                                            1995   Siemens Design Team
                                                            1994   Mercedes-Benz Design Team
                                                            ...    ...
The first decade | December 1999 - December 2009             reddot institute	






Stock Prices           Closing Prices   Closing Prices   Performance
Design Companies       December 1999     December 2009   First Decade


LG Electronics             10.79             14.70       + 36.2 %

Adidas                     18.63            37.77         + 102.7 %

Tupperware                 16.25            47.66         + 193.3 %

Apple                      24.75            145.50        + 487.9 %

Audi                       61.00            501.67        + 722.4 %
red dot design index                                                     reddot institute	





A stock basket of listed companies whose design teams have been awarded by reddot


                                                    2009
                                                    2007
                                                    2006
                                                    2005
                                                    2003
                                                    2002
                                                    2000
                                                    1999
                                                    1998
The lost decade | December 1999 - December 2009              reddot institute	






Stock Prices           Closing Prices   Closing Prices   Performance
Index                  December 1999    December 2009    First Decade

DOW JONES                11,497.12        10,428.05       - 9.3 %

DAX 30                   6,958.14         5,957.43        - 14.4 %

EURO-STOXX-50            4,904.46         2,966.24        - 39.5 %

NASDAQ                   4,069.31         2,269.15        - 44.2 %

NIKKEI                   18,934.34        10,546.44       - 44.3 %

reddot design index       100.00           175.00         + 75.0 %
The red dot design index consists of 13 awarded companies.   reddot institute	






                                   Adidas    Philips


                                    Apple    Pininfarina


                                     Audi    Porsche


                                    BMW      Siemens


                                  Daimler    Sony


                            LG Electronics   Tupperware


                                    Nokia
                                                                                                                reddot institute	





On average the red dot design index grows by nine per cent per year.



   +100 index points       reddot design index =
                           + 114.5 %
    +50 index points
                           until June 30, 2012


    Start Jan 1, 2000



    -50 index points




   Year / trading year   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   1. Hj. 2012

   reddot design index   -19.3% +8.5% -14.7% +19.0% +1.0% +37.1% +34.6% +26.2% -38.6% +21.6% +34.7% -7.1%      +9.9%
red dot design index in comparison with the DAX 30                                                                                  reddot institute	






   +100 index points       reddot design index =
                           + 114.5 %
    +50 index points
                           until June 30, 2012


    Start Jan 1, 2000



    -50 index points                                                                                      DAX 30 = - 7.79 %
                                                                                                          until June 30, 2012

   Year / trading year   2000     2001     2002     2003   2004     2005   2006     2007     2008     2009     2010     2011     1. Hj. 2012

   reddot design index   -19.3% +8.5% -14.7% +19.0% +1.0% +37.1% +34.6% +26.2% -38.6% +21.6% +34.7% -7.1%                          +9.9%

   DAX 30                -7.5%    -19.8% -43.9% +37.1% +7.3%        +27.1% +22.0% +22.3% -40.4% +23.9% +16.1% -14.7%               +8.8%

   DAX 30 close          6433.6   5160.1   2892.6   3965.2 4256.1   5408.3 6596.9   8067.3   4810.2   5957.4   6914.2   5898.4     6417.0
red dot design index in comparison with the EURO STOXX 50                                                                               reddot institute	






   +100 index points       reddot design index =
                           + 114.5 %
    +50 index points
                           until June 30, 2012


    Start Jan 1, 2000



    -50 index points
                                                                      EURO STOXX 50 = - 53.82 %
                                                                      until June 30, 2012
   Year / trading year   2000     2001     2002     2003     2004     2005     2006     2007     2008     2009     2010     2011     1. Hj. 2012

   reddot design index   -19.3% +8.5% -14.7% +19.0% +1.0% +37.1% +34.6% +26.2% -38.6% +21.6% +34.7% -7.1%                              +9.9%

   EURO STOXX 50         -2.7%    -20.3% -37.3% +15.7% +6.9% +21.3% +15.1% +6.8% -44.3% +21.0%                     -5.9%    -17.1%     -2.2%

   EURO STOXX 50 close   4772.4   3806.1   2386.4   2760.7   2951.2   3578.9   4119.9   4399.7   2451.5   2966.2   2792.8   2316.6     2264.7
                                                                                      reddot institute	





International stock indices compared with the red dot design index


   Indices                        1999        2010      +/- percentage     2011      +/- percentage
   in comparison                  close       close     2010 vs. 1999      close     2011 vs. 1999



   red dot design index   INT     100.00       210.10    +110.10 %         195.17      +95.17 %

   Hang Seng Index        HKG   16,962.10   23,035.45     +35.81 %       18,434.39      +8.68 %

   DOW JONES              USA   11,497.12   11,577.21      +0.70 %       12,217.56      +6.27 %

   DAX 30                 GER    6,958.14    6,914.19       -0.63 %      5,898.35      -15.23 %

   NASDAQ Composite       USA    4,069.31    2,652.87     -34.81 %       2,605.15      -35.98 %

   EURO STOXX 50          EUR    4,904.46    2,792.82     -43.06 %       4,904.46      -52.77 %

   NIKKEI 225             JPN   18,934.34   10,228.92     -45.98 %       8,455.35      -55.34 %
                               reddot institute	






Designing value for people & brands
Wrong timing & right timing: Newton Messagepad vs. iPhone 3G   reddot institute	






         no need                      revolutionary
Blackberry 8330 & Samsung i 7500 Galaxy vs. Apple iPhone 4   reddot institute	






    nice to have                      must have
Blackberry 8330 & Samsung i 7500 Galaxy vs. Apple iPhone 4   reddot institute	






  Guess what? Average selling price!
Average selling price of iPhone & Blackberry   reddot institute	





Quarterly revenues / quarterly unit sales




      Apple iPhone worth 2 Blackberry
Average selling price of iPhone & Samsung mobile phones   reddot institute	





Quarterly revenues / quarterly unit sales




         Apple iPhone worth 5 Samsung
Samsung shipped 25 million units of smartphones, Apple 40 million   reddot institute	






       Smartphone unit sales in 2010


                          25 m                    40 m
                          units                   units
Design value 2010 of Apple and Samsung   reddot institute	






  Pos 1            35.0 $ billion


  Pos 10              8.6 $ billion
Apple MacBook Pro and Apple iMac   reddot institute	






       Apple MacBook Pro and iMac
Apple MacBook Pro and Apple iMac   reddot institute	






  Guess what? Average selling price!
Apple MacBook Pro and Apple iMac             reddot institute	





Revenues / unit sales in 2010




           Average selling price in 2010!


                $ 1.248            $ 1.340
Average selling price (ASP)                                                   reddot institute	





Reported net sales / unit sales of desktop computer and notebooks




(ASP) Average Selling Price of Apple
                   $ 1.384                                          $ 1.279
  $ 1500




  $ 750
Average selling price (ASP)                                                   reddot institute	





Reported net sales / unit sales of desktop computer and notebooks




ASP of Apple and HP in comparison
                   $ 1.384                                          $ 1.279
  $ 1500




  $ 750
                   $ 795
                                                                     $ 634
Average selling price (ASP)                                                   reddot institute	





Reported net sales / unit sales of desktop computer and notebooks




ASP of Apple, Dell & HP in comparison
                   $ 1.384                                          $ 1.279
  $ 1500

                   $ 958
                                                                     $ 799
  $ 750            $ 795
                                                                     $ 634
Design value of Apple, Hewlett-Packard and Dell in 2010   reddot institute	






  Pos 1            35.0 $ billion

  Pos 4            16.3 $ billion

  Pos 6            11.2 $ billion
                                         reddot institute	






Managing Design Value


      Be aware of the knowledge, that on
                                         ly that
      can be managed which can be mea
                                        sured.
Design is not a cost factor, but an investment that pays off   reddot institute	






                                  Design Value
                                  Why?
Peter F. Drucker once came to the conclusion ...       reddot institute	






                                  "If you can't measure it,
                                   you can't manage it."
Elements of design value                                            reddot institute	





Design revenue based on EBIT = Earnings Before Interest and Taxes




                                Design Revenue
Elements of design value                                           reddot institute	





Design strength = Differentiation in comparison with the competition




                                Design Revenue
Design leadership by design strength                                   reddot institute	





Apple‘s all-in-one-computer




          Leadership by design strength




         Apple iMac G3        Apple iMac G4   Apple iMac G5   Apple iMac G5
         1998                 2002            2005            2007
Elements of design value                                          reddot institute	





Design continuity = Development and consolidation of the company’s identity




                                Design Revenue
Design continuity by design language                                   reddot institute	





Apple‘s product range




         Continuity by design language




         iMac and MacBook     iPhone 4 and iPod touch   Apple iPad 1
Elements of design value                          reddot institute	





Design assets = Rights and intangible assets




                                 Design Revenue
Elements of design value                                                    reddot institute	





(Design strength x Design revenue) + (Design continuity x Design revenue) + Design assets




                                    Design Revenue
Apple’s design value in 2010                  reddot institute	






  Design Value        35.0 $ billion   2010
Apple’s design value in 2010                   reddot institute	






  Design Value       35.0 $ billion     2010



   Peripherals       $ 1.8     =   5%
Apple’s design value in 2010                   reddot institute	






  Design Value       35.0 $ billion     2010


   iMac, iBook       $ 15.7    = 45 %
   Peripherals       $ 1.8     =   5%
Apple’s design value in 2010                   reddot institute	






  Design Value     35.0 $ billion       2010


   iPod              $ 11.9    = 34 %
   iMac, iBook       $ 15.7    = 45 %
   Peripherals       $ 1.8     =   5%
Apple’s design value in 2010                   reddot institute	






  Design Value       35.0 $ billion     2010

   iPhone            $ 3.8     = 11 %
   iPod              $ 11.9    = 34 %
   iMac, iBook       $ 15.7    = 45 %
   Peripherals       $ 1.8     =   5%
Apple’s design value in 2010                   reddot institute	






  Design Value       35.0 $ billion     2010
   iPad              $ 1.8     =   5%
   iPhone            $ 3.8     = 11 %
   iPod              $ 11.9    = 34 %
   iMac, iBook       $ 15.7    = 45 %
   Peripherals       $ 1.8     =   5%
Apple’s design value in 2010                     reddot institute	






  Design Value       35.0 $ billion     2010
   iPad              $ 1.8     =   5%
   iPhone            $ 3.8     = 11 %
   iPod              $ 11.9    = 34 %
   iMac, iBook       $ 15.7    = 45 %   45.0 %
   Peripherals       $ 1.8     =   5%
Design value contribution of Apple desktop and laptop computer   reddot institute	






  Value Driver            2009                    2010


                            36.4 %                  45.0 %
Design Value in US $ billions                                                            reddot institute	






 Company               Country   Branch                                  Design Value   Design Value
                                                                              2010          2009
  1. Apple              USA      Computer, Communication                      35.0           30.0
  2. Nokia              FIN      Mobile Communication                         21.7           23.2
  3. BMW                GER      Automobiles, Motorcycles                     17.5           13.9
  4. Hewlett-Packard    USA      Computer Industry                            16.3           16.4
  5. Mercedes-Benz      GER      Automobile Industry                          12.6           10.2
  6. Dell               USA      Computer Industry                            12.2           10.5
  7. LG Electronics     KOR      Home Appliances, Consumer Electronics        11.5           10.6
  8. Honda              JPN      Automobile Industry                          10.6           9.6
  9. Volkswagen         GER      Automobile Industry                          9.9            8.5
 10. Samsung            KOR      Home Appliances, Consumer Electronics        9.3            8.5
Computer manufacturer                                   reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2007
             LG Electronics        60 p.

             Samsung               50 p.

             Asus Tek              50 p.

             Apple                 38 p.

             Acer                  34 p.
Computer manufacturer                                                     reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2011
             LG Electronics        60 p.                Asus Tek          110 p.

             Samsung               50 p.                Dell              103 p.

             Asus Tek              50 p.                Apple              84 p.

             Apple                 38 p.                Hewlett Packard    70 p.

             Acer                  34 p.                Sony               18 p.
Computer manufacturer                                           reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2007-2011
                                                        84 p.




                                                        23 p.
Computer manufacturer Apple and HP in comparison                reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2007-2011
                                                        84 p.
                                                        70 p.


                                                        23 p.
Computer manufacturer Apple and Dell in comparison               reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2007-2011
                                                        103 p.
                                                         84 p.



                                                        23 p.
Computer manufacturer Apple and LG in comparison                reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2006-2011
                                                        84 p.
Computer manufacturer Apple and Samsung in comparison           reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2006-2011
                                                        84 p.
Computer manufacturer Apple and Lenovo in comparison            reddot institute	





Awarded desktop and laptop computer without tablet PC




     reddot design ranking 2006-2011
                                                        84 p.
What will the future of computer design look like?    reddot institute	






       Be aware of the right direction
                           Designing Innovation

                                  EXIT
                                  Price Competition
What will the future of computer design look like?   reddot institute	






       Be aware of the right direction
                           Designing Innovation
What will the future of computer design look like?    reddot institute	






       Be aware of the right direction


                                  EXIT
                                  Price Competition
Final remark                         reddot institute	






               “For the first time, design
               value demonstrates in a
               rational way that design is
               creating value and strategic
               potential for any company.”


               Hartmut Esslinger
Professor Dr. Peter Zec   reddot institute	






     Welcome to
     the world of
     design!

				
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