In any new aircraft development program there are many important design decisions that determine profitability potential. The key to making new aircraft profitable is to design features that will command more money than the cost to provide them within the market's ability to absorb them. The business model in this paper shows how to predict or find: 1) the costs to provide various aircraft features; 2) the values that aircraft buyers place on these features; 3) the amount of money that buyers have to commit to them, 4) the open spaces in the market in which to place new designs and 5) the predicted profits from new designs. In this process, this paper extends previous work on the law of value and demand, which states that attributes determine value; value determines price; and that price determines demand. This four-dimensional, non-negative system hosts a business model that describes the features needed to enable aircraft designs to go from concepts to profitable assembly lines. Demand, cost and price, along with relevant constraints, form a market described by statistically significant equations bounded by technical, financial and legal limits. These equations predict producer and market responses given a set of aircraft attributes. Detailed market analysis reveals the market responsiveness to changes in attributes such as seating capacity, maximum cruising speed, maximum altitude, and range and cabin height. These customer responses may vary dramatically from the producer costs to provide them. Mapping these attributes shows open locations within the market. These are positions with the least possible competition. Given features designed to satisfy demonstrated buyer preferences, these regions, defined by a set of optimized product attributes, offer the best potential profit points for the producers.
PresenterDouglas Howarth, Lockheed Martin Advanced Development Co.Continue reading »