Abstract
M.B.A.
This study is an investigation on the return of investment for mass produced South African
consumer products. It resulted from trying to address an issue that industrial designers in
South Africa struggle to justify substantial fees, as their services are essentially intangible.
Their clients, who are generally the management of manufacturing companies, have a choice
of service consultants that provide some form of tangible benefit based on empirical evidence,
in return for fees. Thus, the need arose for an empirical study on the return on investment of a
consumer product, which is the tangible output of industrial design.
This is a pilot case study. Its objective was to establish a base-case model for the return on
investment gathered from empirical evidence in a single case study of a consumer product
developed in South Africa. In addition, this model had to replicate the cash flow diagram of the
investment and sales lifecycle of the product. Therefore, this study had to underpin the
concepts of ‘return on investment’ and the ‘development of a consumer product’ with theory.
The theory essentially confirms that the concept of profits from a shareholder perspective,
regards maximising shareholder wealth because they provide the investment. However, the
time value of money diminishes this wealth, thereby necessitating the use of discounted cash
flow techniques. The investment decision based on these appraisal techniques follows a
prescribed, sequential process. Unfortunately, the new product development process does
not follow this process. Therefore, the innovative aspect of this research was to match the
point of decision between the processes, as this has a direct effect on sunk costs and an
implication on the research questionnaire. Thereafter, the questionnaire had to consider the
system of innovation in order to determine the activities that have an incremental effect on
cash flow.
The research methodology for a case study design was used. A set of protocols was
established to replicate this study in future studies. A focussed interview was conducted with
industrial designers to confirm the issues, who in turn facilitated a meeting with their clients. A
client with a consumer product from the security sector was selected. The research
questionnaire was completed by the client and analysed by the researcher using Net Present
Value, Internal Rate of Return, Modified Internal rate of Return and the Discounted Payback
techniques. The solutions showed a significant increase in shareholder wealth as a result of
implementing the product. In addition, this information was translated into diagrams to make it
simpler for management to understand. Thereafter, a report was submitted to the client.
In conclusion, this study achieved its objectives within limitations. However, if the limitations
were addressed, there is potential to replicate this as a multi-study and provide a substantial
empirical case for industrial design in South Africa.