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The Importance of Value Analysis in Product Development

January 27, 2016

Value Analysis in Product Development –

Manufacturing companies are already facing global competition, and have to put forward significant efforts to limit this pressure and stay in the leading edge of product development. New proposals need to have high perceived value and quality, and production needs to be completed as cost efficient as possible. At the same time, steady pressure has been prioritized to keep low-priced product, as consumers are increasingly price-savvy. These concerns affect all manufacturers, including companies here in Quebec.


A flexible and open to changes business is more likely of being able to stay competitive and relevant. Here is exactly where value analysis’ implementation can help tremendously. Value analysis seeks to examine all facets of a product to identify the relevance of each function, then determine how it can perform at the highest level while spending no more than is necessary to make that happen. As an assessment tool, a matrix approach is used to bring forward the relationship between cost, efficiency, and the value of the function. Value analysis objective:

  • Keep the product’s uniqueness,
  • Keep perceived value high,
  • Keep production costs down.

Value analysis’ approach focuses on new options for optimized solutions, new concepts and functions. These aspects are always considered in terms of how they fit into manufacturing costs’ ratio to perceived product value, since manufacturers strive to keep the price points of their products as fair as possible. Ultimately, models need to be categorized according to where they fit in a product range, which makes it easier to market each individual model.


When Merkur, a systems engineering firm, is asked to conduct a value analysis on a client’s methods, we go through several steps to ensure that the process is complete.

First, we will conduct a comprehensive evaluation of respective client’s needs.

Then, for each identified product, we’ll complete a functional analysis of each product and prioritize each function.

We typically start this phase by looking at a product’s basic function. We can illustrate this by a simplified example: the basic function of a table’s four legs is to support the top and any objects which may be placed on it. We will then look at its functional performance; to continue with the table example, a better performing table might have an extension option that slides out to increases its size.

We will also do our best to help our clients to be more innovative in their product development. Often, new function or product development is necessary. For instance, the same four legged table may seem classic and basic, there is nothing innovative about it, and therefore customers may not perceive much value. However, a sleek glass and steel table with automatic sliding extensions is innovative and will therefore have a higher perceived value.table_base_innovationFinally, changes will be implemented and monitored closely during transition.

Following value analysis’ result, a manufacturer may adjust its product offerings to include an innovative and cleverly designed extendable glass table, which offers additional functionality but still performs the same basic function.


Merkur is an engineering firm based near Montreal and Sherbrooke that has applied value analysis many times with many of our clients. Positive results were seen:

  • Systems cost reduction ( parts or modules assembly)
  • Operating costs optimisation
  • A more competitive positioning of the range on the market
  • Untouched or improved market shares

At Merkur, we employ specialists in mechanical engineering, industrial processes, advanced material and mechatronics to ensure that analysis are completed and our clients are fully supported throughout the process.

Get in touch with us today if your company is looking for experts who will conduct and guide you throughout value analysis process, help you with product development, or benefit from one of our other services.

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