Platform valuation for product family design

The valuation of a product increases flexibility in decision-making for developing new products or redesigning existing products and affects product life cycles. Strategic adaptability is essential in capitalizing on future investment opportunities and responding properly to market trends in a dynamic environment. To identify the valuation of a platform in a product family, we investigate strategic module-based platform design using market-based decision-making. The objective of this chapter is to propose a financial model to evaluate design valuation for a platform based on market mechanisms in an uncertain market environment. Real options analysis is applied to value options related to introducing new modules as a platform in a product family. In the proposed model, we use design quality that is determined by customers’ preferences and performance utilities for products. To demonstrate implementation of the proposed model, we use a case study and numerical analysis involving a family of mobile products.