Platform valuation for product family design in an uncertain market environment

In uncertain market environments, assessing the value of different design strategies gives insight and flexibility to decision-makers when developing new products or redesigning existing ones. Strategic adaptability is essential for capitalizing on future investment opportunities and responding quickly to changing market trends in a dynamic environment. A successful product family depends on how well the trade-offs between the economic benefits and performance losses incurred from having a platform are managed. To identify the value of a platform design strategy in a product family, we investigate module-based platform design using market-based decision-making. The objective in this paper is to introduce a financial model to assess design value 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 within a platform in a product family. In the proposed model, we use design quality to estimate market demand, which is determined by customers' preferences and performance utilities for each product. To demonstrate the proposed model, we use a case study involving a family of mobile products. The limitations of the model and future work are also discussed.