product & service design and development chap....

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Islamic University of Gaza - Palestine

Product & Service Design and DevelopmentChap. 4


Chapter 4: Learning Outcomes

• You should be able to:– Explain the strategic importance of product and service design

– List some key reasons for design or redesign

– Identify the key questions of product and service design

– Describe the different types of New products

– Explain the purpose and goal of life cycle assessment

– List many reasons why new products are very important

– Discuss the importance of legal, ethical, and sustainability considerations in product and service design

– Briefly describe the phases in product design and development

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• You should be able to:

– Discuss why do (NEW) products fail

– Explain the phrase “the 3 Rs”

– Discuss the importance of standardization

– Describe some of the main sources of design ideas

– Name several key issues in manufacturing design & in service design

– Name the phases in service design

– List the characteristics of well-designed service systems

– Name some of the challenges of service design

Chapter 4: Learning Outcomes (cont.)


Strategic Product and Service Design

• The essence of an organization (a company) is the goods and services it offers– Every aspect of the organization (company) is structured

around them

• Product and service design – or redesign – should be closely coupled to an organization’s strategy


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What Does Product & Service Design Do?

1. Translates customer wants and needs into product and service requirements

2. Filter existing products and services

3. Develops new products and services

4. Formulates quality goals

5. Formulates cost targets

6. Constructs and tests prototypes

7. Documents specifications

8. Translates product and service specifications into process specifications

(Involves Inter-functional Collaboration)


Types of New-Product Approaches

• Technology push

• Once the perceived value of technology is great, technology push usually result. When the new product is developed, marketing function becomes important.

• Market pull

• It is the result of market research and understanding the needs of users and development a new product to satisfy the needs. It caries the least business risk, because there is a chance that product will be sold.


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Product Development and Strategy in Business Marketing

• Product development is engineering responsibility.

• Marketing and sales personnel are frequently called on new product.

• It is the lifeblood of the industry; therefore, firms should spent time and effort to developing new product.

• However, it is a risky effort for every industrial firm.


Types of New Products

• Modifications: alterations/extensions in a company’s existing products, such as new models.

• Minor Innovations: items not earlier sold by a firm that have been sold by others.

• Major Innovations: items not sold before by any firm.


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Categories of New Products

• Incremental or unoriginal Products (Modification)

– Are hybrids or enhancements of existing products.

– Require minimal changes in design or process, allowing for quick development.

– Require fewer resources to develop new features or functions.

– Help ensure near-term cash flows by maintaining current market share.


Categories of New Products

• Next Generation or Platform Products (Minor Innovation)

– Represent new “system” solutions for customers.• Require more resources to develop.

• Are key to continued product revenue growth.

• Advance or Radical Products (Major Innovations)

– Create new product categories as core businesses.

– Require substantial design and process change.

– Render existing products obsolete in long-term.


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The Product Life Cycle

• The product life cycleproduct life cycle is a concept that seeks to describe a product’s sales, competitors, customers, and marketing emphasis from its beginning until it is removed from the market.

• Companies often desire a balanced product collection.balanced product collection.

• The life-cycle concept can be applied to a product class, a product form, and a product brand (Trade Name).


Life-Cycle Management (LCM)

“A flexible integrated framework of concepts, techniques and procedures to address environmental, economic, technological and social aspects of products and organizations to achieve continuous environmental improvement from a life-cycle perspective”


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• Understanding full product system

• See outside traditional boundaries– Beyond gates, after sales

– Beyond conformity

• Determine drivers

• Take responsibility

• Manage it as a business initiative – integrate it into business decision-making process

LCM – key elements


Importance of New Products

To ensure a firm’s survival, new products may:

• Offer differential advantages

• Lead to sales growth or stability

• Increase profits and control

• Reduce risk through diversity

• Improve distribution

• Use (new) technology

• Utilize waste materials

• Respond to consumer needs

• Be a result of a government mandate


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Ethical Considerations

• Designers are often under pressure to

– Speed up the design process

– Cut costs

• These pressures force trade-off (compromise/alternative) decisions

– What if a product has bugs (insects)?

• Release the product and risk damage to your report

• Work out the bugs and give up revenue


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Time

Sale

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Traditional Product Life Cycle and Advertising

Inform Influence Highly Competitive Reassess/ go back

Advertising Goals

Introduction Growth Maturity Decline


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Life Stage Strategies

• Introduction

– Consider trade-offs between eliminating ‘bugs’ and getting the product or service to the market at an advantageous time

– Accurate demand forecasts are important to ensuring adequate capacity availability

• Growth

– Demand forecasts are important to ensuring a continued adequate capacity availability

– Design improvements– Emphasis on improved product or service reliability and

lower cost


Life Stage Strategies (cont.)

• Maturity

– Relatively few design changes– Emphasis is on high productivity and low cost

• Decline

– Continue or discontinue product or service– Identify alternative uses for product or service– Continued emphasis on high productivity and low cost


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Maturity Stage in Life Cycle

Useful Strategies in Maturity::

1. Develop new uses for products

2. Develop new product features

3. Increase the market

4. Find new classes of consumers for present products

5. Find new classes of consumers for modified products

6. Increase product usage among current users

7. Change marketing strategy


Decline (Reject) Stage of Life Cycle

Questions to Consider When deciding to delete a product:Questions to Consider When deciding to delete a product:

1. Replacement Parts — Who will make them? How long will they be made?

2. Notification Time — How soon before the actual deletion will an announcement be made? Will distributors be alarmed early enough so they can line up other suppliers?

3. Warranties — How will warranties be honored? After they expire, how will repairs be done?


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• Competitors’ reaction

• Poor positioning

• Poor timing

• Poor quality

• Failure of promised benefits

• Too little marketing support

• Poor perceived price/quality

• Poor long-term planning

• Lack of a differential advantage

• Incorrect pricing and product placement

Why Do (NEW) Products Fail?


• Faulty estimate market potential and demand

• Faulty estimate of production and marketing cost

• Improper selection of distribution channels

• Unexpected change in the economy after introduction

• Lack of managerial synergy-marketing, engineering and production

• Inattention to the environment of marketing and audit sequences

• Marketing myopia (shortsightedness)

Why Do Products Fail? (cont.)


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• Reduce: Value analysis (cheaper part or material, functions is necessary, functions combination possible)

• Reuse: Remanufacturing of old products (XEROX - copiers, automobile, computers (50 % cheaper, unskilled workers, raw materials and fuel)

• Recycle: Recovering materials for future use (Reuse of paper, cost saving, environmental concerns and regulations)

• Design for Recycling (DFR)

The Three R’s


Advantages of standardization

– Dealing with fewer parts (inventory)

– Reduce training costs and time

– Long production runs and automation

– Perfecting design and high quality

– And others….

• Disadvantages

– Design maybe frozen

– High cost of design change

– Decreased variety

• Example: Keyboard

Importance of Standardization


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The Importance of New Product Failure

• Failure rate is 35% or more.

• Although careful planning, products may still fail.

• There is absolute failure and relative failure.


Types of Failures

• In absolute product failure, costs are not regained.

• In relative product failure, even though a profit may be earned, goals are not met.


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Reliability

• Reliability

– The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

– Failure• Situation in which a product, part, or system does not

perform as intended

– Normal operating conditions• The set of conditions under which an item’s reliability is

specified


Importance of Product Planning

• Increased Competition:

• Increased global and domestic competition.

• Resulting Demand:

• understanding consumer needs and wants.

• Increased buying Sophistication:• Seller analysis, value analysis and computer simulations.

• Labor Saving Requirements:

• Product planning to save labor cost.


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New-Product Planning Process

1. Idea

Generation

2. Product

Screening

3. Concept Testing

4. Business Analysis

5. Product

Development6.

Test Marketing

7.Commercialization

Long-term planning is required to launch a successful new

product.


Phases in Design & Development (another approach)

1. Idea generation

2. Feasibility analysis

3. Product specifications

4. Process specifications

5. Prototype development

6. Design review

7. Market test

8. Product introduction

9. Follow-up evaluation


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Designing for Production

• Concurrent engineering

• Computer-assisted design

• Designing for assembly and disassembly

• Component commonality


Concurrent Engineering (CE)

• CE Definitions: “The application of tools, techniques,

methodologies, and behavioral initiatives used to minimize product development timescales by maximizing the degree of overlap of design activities.”

• “A ‘buzz-phrase’ with a limited shelf life?”

• “Optimal design”


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Concurrent engineering (1)


Concurrent engineering (2)


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Concurrent Engineering (CE)

• CE means that there is a tight link between all participants in the product development process, such that they can perform much of their work at about the same time.

• It is not just a link between design and engineering.

• Industrial design (aesthetic) should work concurrently with manufacturing

• Sales strategies, mechanisms for delivering service after sale, methods of the disposal should be also concurrent with design and manufacturing.


Concurrent Product Design Approach

• How much overlap is good?

• How many products and prototypes are enough?

• When to draw the line of doing things too concurrently?


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The New Product Development (NPD) Process (cont’d)

• Quality Function Deployment (QFD)

– The process for translating customer requirements into a product’s design.

• Voice of the Customer

– Customer feedback is used in QFD process to determine product specifications.

– Customer attributes:

• Product needs

• Product preferences


• House of Quality

– The part of the QFD process that uses customer feedback for product design criteria.

– Use of QFD teams

• Identify important customer attributes.

• Design superior product.

• Shorten product design time.

• Facilitate interfunctional cooperation.

The New Product Development (NPD) Process (cont’d)


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Completed House of Quality Matrix for a Car Door


Process Analysis in Services

• Service Blueprinting

– The process of flowcharting for services that includes the customer:

• Identifying (mapping) processes

• Isolating fail points

• Establishing a time frame

• Analyzing profitability

• Line of visibility

– Above the line: stages in process, in direct contact with customer, that focus on providing good service.

– Below the line: stages in the process, not in contact with the customer, that focus on process efficiency.


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Service Blueprint for a Restaurant


Blueprint for a Corner Shoeshine


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Shoeshine Profitability Analysis


The Well-Designed Service System

• Characteristics

– Being consistent with the organization mission– Being user-friendly– Being robust if variability is a factor– Being easy to sustain– Being cost-effective– Having value that is obvious to the customer– Having effective linkages between back- and front-of-the-

house operations– Having a single, unifying theme– Having design features and checks that will ensure service

that is reliable and of high quality


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Operations Strategy

• Effective product and service design can help the organization achieve competitive advantage:

– Increasing emphasis on component commonality

– Packaging products and ancillary services to increase sales

– Using multiple-use platforms

– Implementing tactics that will achieve the benefits of high volume while satisfying customer needs for variety

– Continually monitoring products and services for small improvement opportunities

– Reducing the time it takes to get a new or redesigned product or service to the market
