With global markets increasingly competitive, companies are turning to design to give them an edge.

Sending coal to Newcastle used to be the by-word for a hard sell. Marketing water in Ireland was entrepreneur Geoff Reed's distinctive achievement at Ballygowan.

The lesson of both? Many products these days are commodities but there is always a way to be different and distinctive. In fact bottled water continues to be the modern equivalent of Newcastle coal, a by-word for being competitive in tough markets.

While sales of bottled water doubled globally between the mid-1970s and 1999, for market leader Evian they stalled. Evian faced problems that have become familiar to many major corporations.

Even in the high tech sector and in consumer electronics, it is increasingly difficult to differentiate a product based on its core features. With pure commodities like water, the difficult starts to look impossible.

By the late 1990s Evian was facing a new generation of small but numerous competitors attracted into this rapidly growing market, each chipping away at the brand leader. Owners Danone needed to revive brand sentiment and loyalty to improve the water's competitiveness.

But we are talking about water here, which in this part of the world is available on tap.

"Evian had noticed that awareness of hydration was growing," says Mike Paton, head of industrial design at PA Consultancy who were called in by Danone to help re-establish Evian's place in consumer affections. "Carrying a bottle of water was seen as important."

PA also noticed a peculiarity of the bottled water market that offered a key to turning Evian's business around.

Bottle design was driven by the needs of retailers rather than of customers, principally by the need to utilise shelf-space efficiently in retail stores. That made for uniform bottle design across brands.

PA came up with an alternative that focused on consumer lifestyles. "Evian made the bottle of water an accessory," says Paton, whose department devised a new looped bottle cap. Demand for on-the-move Evian in its core French market tripled in the year of the bottle's launch.

But it raises an important and contentious issue. When products start to look like commodities where does real innovation stop and marketing begin?

The Dyson vacuum cleaner is one of the most famous technological innovations in the 20th century consumer market, according to Damien McLoughlin, director of the Marketing Development Programme at UCD's Smurfit School of Business. It is a design classic, but not for the reasons you might think.

Yes its inventor James Dyson created a radical new technology, the dual cyclone action, but more importantly the Dyson allows customers to see the dirt it collects, providing the consumer with constant proof of it's effectiveness.

"Dyson is 100 per cent a marketing success," says McLoughlin. "It's a market leader even in Japan where they don't have carpets."

But Dyson chief executive Martin McCourt disagrees. "If we had been approaching this through marketing we would not have a product to this day," McCourt says, adding that focus groups which Dyson consulted really did not want a vacuum cleaner that demonstrated its functional superiority with a clear casing.

Dyson went ahead anyway, ignoring the market research. Why the product is successful in Japan, McCourt says, is that Dyson spent 10 years perfecting a digital motor that allowed them to miniaturise the product for the Japanese market.

So once again they've shifted consumer expectations. If Evian illustrates how small innovations can move markets, Dyson illustrates the power of deep technological design to transform them. This tension between apparently superficial design innovations and the hard won technological ones, however, is by no means clear cut.

Designers who can elevate the aesthetics of everyday objects are in great demand. London-based Australian designer Marc Newson has now designed airplane seating, interior and external livery, glassware, chairs, bicycles, watches, clocks and even a concept car. The ubiquity of designers seems to support the argument that design is an add-on or a marketing ploy.

Newson's designs for bike-maker Biomega, however, point to a new trend in design. Evian might capitalise in appearance and sentiment while Dyson is transforming products into mass premium market leaders, but consumers are also seeking broader lifestyle changes that design can facilitate. It is not about the superficial versus the technological.

According to Roberto Verganti, writing in the Harvard Business Review, design can be an interaction between the creative community and curious, responsive consumers. That means design is not rooted or contained within an R&D function.

"Rather, it comprises a free-floating community of architects, suppliers, photographers, critics, curators, publishers and craftsmen, among many other categories of professionals, as well as the expected artists and designers. The members of the community are prized as much for their immersion in a discourse as for their originality."

This discourse, says Verganti, means that "products, which at long last result from this process, point toward some new way of living - one that members of the community may already have started to embrace".

Unsurprisingly, Biomega founder Jens Martin Skibsted calls his urban bikes an instant icon. Without focus groups or consumer questionnaires, Skibsted anticipated the new environmental awareness of consumers, coupled to their health concerns, and delivered a new lifestyle experience based around non-motorised urban mobility.

Incidentally the bikes were designed by some of the world's leading industrial designers, including Newson, Ross Lovegrove, Skibsted himself, Karim Rashid and Beatrice Santicciolo, former colourist at Benetton.

"Industrial design is a superficial practice," acknowledges Skibsted. "You use your approach regardless of the project because there is no time for a deep understanding of a single product."

What Skibsted chose to do was develop a company that conveyed ethical principles with an everyday product: the bicycle.

Regardless of its technology, the Biomega range of bikes allows consumers to respond to their environmental concerns without sacrificing their preference for stylish living.

Biomega package bikes along with backpacks, lightweight rain-wear, special cycling shoes and bag holders: accessories that match the brand's overall styling. "The idea was for a brand that took interior aesthetics and used them outside," says Skibsted.

"Interiors have a common language which we don't see in the outside environment. I wanted to use this interior aesthetic," he says. That aesthetic allows Biomega to charge a premium for its bikes. They are now sold in over 20 countries and, along with a range Skibsted designed for apparel makers Puma, they have transformed the cycling market.

The growing importance of lifestyle and even luxury design might suggest that the performance of a product is diminishing in importance compared with its appearance. What Biomega have applied in their designs though is what Verganti calls basic sociological R&D. The products provide people with a way into fresher lifestyles that they feel are more appropriate for them.

Nonetheless appearance is becoming more important in relation to performance for valid technological reasons. "One of the problems for consumers today is function fatigue," says McLoughlin. "If you buy a mobile phone you use about 15 per cent of its features. Because you don't know how to use the other features, your view of the brand goes down."

For decades computer and consumer electronics companies sold products based on superior functions and capabilities. But the emphasis in consumer markets has now shifted from performance to consumer aspiration, which means that design is becoming more emotive across a wide range of products.

"Twenty-first century brands are moving towards designs that bring back brand loyalty," says PA's Paton. He concludes that design is as much about communication as it is about how a product performs. Communication is the link between the product and consumer aspirations. And it is true not just of consumer markets.

Martin Crotty, chief executive of Irish design house BFK has worked with Welsh start-up Deepstream ever since the company's inception four years ago, helping to communicate Deepstream's technical expertise. Deepstream produces diagnostic software for electronic products. "We've worked with Deepstream since the start to communicate the benefits of their products, even to the venture capitalists who invest in them," says Crotty, who believes that design is a total package.

Paton believes the new emotional aspect of the product has to be realised under increasingly competitive conditions. "Market dynamics have changed and there's a very small window to get products out and revenues in before competitors enter a market," says Paton.

"Right now the themes are environment and aging lifestyle trends that are signals for designers."

These wider trends suggest that the practice of design has to segment and unify different disciplines at the same time. There is technological design, brand design and sociological design, but all product innovation suggests there is an underlying technological change, an aesthetic interpretation and a message well communicated: the total package.

"There are very few companies here in Ireland can do that," says Ron Imminck, who heads up the Invent centre at Dublin City University. "There's not really the design awareness because of our over-dependence on multinationals, but design will soon become common sense - if you don't design, you don't compete. Full stop."

Perhaps the most important step the business community can make is to recognise that creating innovative products doesn't take place only in labs.

Apple iPod

The iPod is synonymous with the power of design to transform - in this case, transforming the fortunes of Apple Corp, its makers; competition in consumer electronics markets; the packaging of music; and the way we listen.

Six days before the iPod went on sale, Apple reported a 22 per cent drop in quarterly profits. Now it sells nearly nine million iPods a quarter, earning $1.6 billion: more than its quarterly sales from all products just prior to the iPod's launch.

The iPod, designed by Jonathan Ive (pictured left) became an instant icon because of its sleek but no nonsense design.