Discuss the significance of product development to AEV's future success.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [Knowledge] Definition of product development within Ansoff's Matrix framework, i.e. new product for existing market
2. [Knowledge] Definition of product development: the development and sale of new products or new developments of existing products
3. [Knowledge] Definition of research and development: scientific research and technological development. This will contribute to product development
4. [Knowledge] Benefits of product development:
5. [Knowledge] Competitive advantage
6. [Knowledge] Developing products to meet customer expectations
7. [Application] Significance of improvements in battery technology to gaining competitive advantage. R&D's contribution to increasing energy density
8. [Application] Reference to data in Fig. 1
9. [Application] R & D: $400 m in 2019 increased from $150 m in 2015
10. [Application] R&D has helped reduce battery costs by 75%
11. [Application] AEV4 model important to take AEV from a niche producer to a mass producer
12. [Application] Reference to developing electric truck
13. [Application] Move to profitability in 2019 is a result of R&D
14. [Analysis] As battery costs fall then price can be reduced increasing the competitiveness of AEV relative to competitors
15. [Analysis] Electric vehicle sales face constraint of range of vehicles on battery charge making them less desirable than alternatives due to difficulty of driving long distances
16. [Analysis] Increasing energy density will improve the product and can be used in promotion of AEV products to gain customer interest
17. [Analysis] Development of AEV4 broadened AEV's market appeal resulting in increased sales and profit
18. [Analysis] Enhance reputation as an innovative company increasing brand loyalty and sales
19. [Evaluation] Product development essential in this market as without it product unable to compete with existing technologies
20. [Evaluation] Cost of research is high and not guaranteed to be successful
21. [Evaluation] First mover advantage may be important
22. [Evaluation] Dynamic nature of the car market requires AEV to be constantly developing its products to maintain a competitive edge
23. [Evaluation] Other factors will be important to future success, e.g. government policy