Product Development Process - Assignment Example

PRODUCT DEVELOPMENT PROCESS Introduction As firms undertake the process of creating or manufacturing a new merchandise or item for consumption, every design project is considered distinct since the objective is to craft and produce a product (or a product variant) that does not yet exist. Moreover, the prospective work is shaped and affected by the differences in the context where it takes place, such as company organisation, strategies, procedures, market, legislation, society, technologies and knowledge, and the knowledge and experience of the team members (Blessing 2002). Moving into the 21st century, new challenges and opportunities have emerged driven by global markets, global competition, the global dispersion of engineering talent, and the advent of new information and communication technologies such as electronic mail, the world-wide web, and increased electronic bandwidth. The new vision of product development is that of an extremely disaggregated process with people and organisations spread throughout the world (Holmes 1999). At the same time, products are becoming increasingly intricate and multifaceted with typical electro-mechanical products requiring close to a million engineering decisions to bring them to market (Eppinger 1998). Even software products like Microsoft Word or Netscape require disaggregated, but coordinated processes involving hundreds of developers (Cusumano and Yoffie 1998). Competitive pressures mean that time to market has been projected as essential to new product success as has marketing's direction towards customer needs and customer satisfaction (Smith and Reinertsen 1998). Because products are marketed throughout the world, firms face the tradeoff between standardisation for cost reduction and variety for satisfying an extensive set of customers. This has stretched the need for marketing to look beyond the single product to focus on the product platform (Moore, Louviere and Verma 1999). Literature Review The Product Products are often referred to as anything -- object or service -- that can be offered to a market in order to satisfy a customer's want or need (Kotler et al. 1996; ENDREA 2001) and product development is made up of a wide-ranging and distinctive continuum of activities, which need to be cohesive and interrelated so as to achieve an adequate and an acceptable process. Ulrich & Eppinger (2003) stated it as the set of activities beginning with the perception of a market opportunity and ending in the production, sale, and delivery of a product. Aside from the activities, there are several components, such as design engineers or other practitioners, management and goal system, working means, tools and equipment, information system and environment, identified by Hubka & Eder (1992), which influence the product development process. However, product development work is even more complex, since there also are external aspects, facets that are not intrinsic in the organisation, to consider, like the market), legislation and society that affect the product development process (Blessing 2002). To support coordination and planning of all these activities and components, guarantee quality, identify possible problem areas or improvements, a suitable, well-defined product development process is needed (Ulrich & Eppinger 2003). Andreasen & Hein (1986) have inferred an ideal model for product development activities (Illustration 1). The Integrated Product Development model is based on the three elements -- market, design and production, and the results of their activities need to be unified. The market should be investigated and defined, and a product, which is intended to satisfy the market, should be designed and eventually manufactured by the second and third elements. Illustration 1 -- Model of Integrated Product Development (Andreasen & Hein, 1987) Ulrich & Eppinger (2003) likewise offered a model of integrated product development - a generic development process, which depicted the progression of activities or steps that marketing, design and manufacturing in a company may carry out in order to transfer a product from the planning phase, which precedes the actual product development process and whose output is the mission statement, to production stage. Developing flourishing and winning products necessitates the product developers to get to know the target group for whom they are designing [Margolin 1997; Preece 2002]. Hence, a clear definition of the target market, for instance, exactly who the intended users are and what customers' needs, wants and preferences are, before the project is approved, increases the prospects of a successful product (Cooper & Kleinschmidt 1990). It is also better to define the users in early design phases, even if the user group eventually is going to expand from the initial definition. Otherwise, the design work is likely to become vague when it comes to consideration of user aspects (Gould, 1995). If the product instead is designed for everybody or an average user, it may not suit any real users, since that average user does not exist (Friedman, 1971). Moreover, the risk of disregarding detail in the user task and environment, which is important when it comes to working with usability, is also increased when the design work is directed towards an average user (Buur & Nielsen 1995). Awareness of the importance of a user/customer focus has increased in recent years. However, there is a lack of support for handling this. Moreover, the enhanced technology of products and the increasing number of functions they contain may lead to more time and resources being needed for concentration on technological development, which competes with regard to the time that can be spent on working with user aspects. NPD and Marketing New product development has a long history in marketing which includes research on customer preferences (Green and Srinivasan 1990), product positioning and segmentation (Green and Krieger 1989a), product forecasting (Jamieson and Bass 1989), and test marketing (Urban, Hauser and Roberts 1990). The applications have been manifold and diverse and have led to a deeper understanding of how to gather and use information about the customer in the design, testing, launch, and management of new products. As it is, several integrative texts on product development from a marketing perspective have been published to review the issues, the methods, and the applications (Lehmann and Winer 1994). Illustration 2 -- A generic development process (Ulrich & Eppinger, 2003) Marketing, with its focus on the customer, has had great success. Approaches like conjoint and voice-of-the-customer analyses, perceptual mapping, intention scaling, portfolio optimisation, and lifecycle forecasting are now ordinarily employed by business organisations. In like manner, firms that persistently and efficaciously create and produce new products that are in tune with their end customers' needs and wants are more likely to succeed (Griffin and Page 1996). Evidently, direct communication with customers allows firms to know their customers better and learn from them, a knowledge which enable firms to modify and adapt their products to customer requirements. In line with the development of prescriptive tools, researchers have studied the correlates of new product success identifying communication between marketing and engineering as one of the most important factors in success (Griffin and Hauser 1996). As a consequence, organisational process tools such as cross-functional teams (Kuczmarski 1992), quality function deployment (Hauser and Clausing 1988), and co-location (Allen 1986) were crafted and enhanced to foster the sharing of ideas and the close assimilation of engineering decisions with customer needs. Currently, process oriented textbooks routinely consider marketing issues and the need to integrate engineering with the marketing function (Ulrich and Eppinger 2000). Without doubt, the ultimate effectiveness of the tools is moderated by the incentives, behavior and effectiveness of the people implementing those tools in the organisation. Product Development - End to End In the later part of the 1980s and early 1990s, a marketing focus on product development underscored customer contentment and approval. Marketing researchers were one in thinking that the key to entrepreneurial success was a better understanding of the voice of the customer and an improved capability to connect that voice to the engineering decisions that are made in launching a product. For instance, Menezes (1994) documented a case where Xerox moved from a focus on ROA and market share to a focus on customer satisfaction. Likewise, significant studies during that period covered novel methods of understanding the voice of the customer (Griffin and Hauser 1993), fresh approaches in developing optimal product profiles in the context of competition (Green and Krieger 1989a, 1991), more efficient preference measurements (Srinivasan 1988), and the facility to handle larger, more complicated customer information (Wind, Green, Shifflet, and Scarbrough 1989). At the same time, the quality movement focused product development engineering on improved reliability through continuous improvement such as Kaizen methods (Imai 1986), statistical quality control (Deming 1986), modified experimental design (Taguchi 1987), and design for manufacturing (Boothroyd and Dewhurst 1994). There have been several successes which included the turnaround of major US automobile manufacturers. In essence, many engineers came to believe then that a better-quality product is the key to business success. Further, during that time both marketing and engineering realised that time-to-market was extremely crucial. Marketing saw the phenomenon as that of rewards to early entrants (Urban, Carter, Gaskin, and Mucha 1986) while engineering saw, among other things, the lost profits due to rework and delays (Smith and Reinertsen 1998). Both customer satisfaction and time-to-market concepts became universal solutions that, if only the firm could achieve them, would guarantee success and profitability. An Integrated Process Today, both industry and academia view successful product development as an integrated process that must overcome many tradeoffs. Customer satisfaction, time-to-market, and cost reduction through total quality management are all imperative, but none is viewed as a guarantee of success. All things considered equal, a product will be more profitable if it delivers customer benefits better, is faster to market, costs less to produce, and costs less to develop. Basically, research should be directed to ensure that: (1) the firm is operating on the efficient frontier with respect to each of these strategic goals, and (2) the firm is making the best tradeoffs among these goals. Research must recognise that there are tradeoffs along the efficient frontier. For example, if the focus is just on two of the many goals of product development, then the efficient frontier in Illustration 3 suggest that there are tradeoffs between customer satisfaction and platform reuse. A firm can become too committed to either. That is, the significant reuse of components in platforms, software, and designs may get the product to the market faster and reduce Illustration 3 -- Tradeoffs in New Product Development (based on Smith and Reinertsen 1998) development costs (Witter, Clausing, Laufenberg and de Andrade 1994), but the firm may sacrifice the ability to satisfy customer needs and may miss out on ways to reduce product costs. Similarly, quality function deployment (QFD) may be an effective means to deliver customer benefits by improving communication and coordinating the efforts of multiple players in the NPD process, but some applications are too cumbersome reducing time-to-market and increasing development cost. Product Development Stages (Illustration 4 adapted from Cutting Edge Apparel Business website) Identifying / Understanding Customer Needs In developing a product, the first thing to think about is what the customer wants. Questions like -- what are customers buying now what will they want in the future what would they buy if it were available - must be addressed and lucidly answered. It is imperative to identify needs that prospective buyers/customers may not even know they have. Who would have thought 20 years ago that people would be wearing sandals that can be worn in water or hiking up a mountain Or that people would wear underwear that shows through their tops Successful product development addresses customer needs. The next logical step is a thorough research of the market -- what's being offered in the market who is offering it (i.e., the competitors) what are the existing consumer trends in color, styles, and lifestyle An assortment of ways and approaches can make meticulous and methodical research effortless. Undeniably research can help a firm owner determine how the product fills a gap in the market. However, research cannot guarantee 100% success of a product. It is just a step in the product development process. As it is, research can be conducted to identify customer needs through one's own initiative and effort or someone can be hired to do it. Or a business owner can also purchase data from research that has already been conducted. In whatever way that information is obtained, the objective is to make certain that someone needs the product and that these prospective purchasers know that the product is different from other items being offered. Idea Generation or Design A designer's work is to generate ideas. But contrary to many people's beliefs, ideas are not usually "flashes of brilliance" or intuitive creativity. Design is hard work. It requires the gathering and compilation of many ideas and trends, educated guesses, and trying out alternatives and options. Inspirations from art, architecture, nature, or the streets can help one generate multiple ideas. Included in the design process is the analysis of customer needs, definition of the design problem, ideating or generating ideas, selection of design criteria, implementation of one or several prototypes, the assessment of prototypes against design criteria. Practically, individual designers go through all these phases and employ all of these measures; nonetheless, they often develop an order or a method that works best for them. Several ways can be used to generate design ideas. Brainstorming is one of the simplest and most effective methods of causing ideas to emerge. One can start with an initial idea - for instance, that people have many electronic gadgets that they need an easy and a comfortable way to carry them. The ideas that will surface must all be written down. For example, in a pocket, in a bag, on the shoulder, on the wrist on the belt and on and on. For instance, in the field of clothes designing, Graphic 1 (courtesy of Cutting Edge Apparel Business) composed of sketches depicts the stages that need to be undertaken before a final idea can be pinpointed. Graphic 1 shows an initial sketch, 2nd sketch, final sketch and final design illustration As soon as an adequate list of options has been accomplished, one can start designing the clothing and accessories based on the ideas that have been generated. Brainstorming helps one to get lots of ideas and to consider each one's merits. A similar strategy is the mind map. Starting with the same need, one segregates the problem into different concepts. A group ideation session can be especially successful at producing notions/concepts that are innovative and "outside the box." Getting a group of people together to brainstorm or develop mind maps generates creative energy and way out ideas. Way out ideas sometimes identify a surprise kernel that sends one on the road to an innovative product design. In all ideation sessions, it is important to write down every idea, no matter how wacky. Then discuss the merits of each idea, taking into consideration how the design might look, how well it would carry, and so on. The best ideas can be developed further during group discussions. Experimentation with materials finishes, stitching, or draping can also be used to generate design ideas. For example, draping fabric on dress forms to create unique design variations, folding and stitching material to create texture, and painting or printing fabric inspired by color, nature, or street art. Product Concept: Adding Value to Product The product concept describes the value of the product idea to the customer while value proposition is the relationship of the product to the overall business objective. In the product concept stage, several crucial questions need to be asked to identify the value proposition of a product -- what extra value does the product bring to the marketplace how does the product create value for the customer how is the product different from what is offered in the marketplace will customers be interested in and willing to buy the product And how many customers will buy the product Or will they buy more than one Generally, there are four business processes where value can be added to a product. One can build an understanding of the product's value proposition by evaluating it against each process. *New product development process innovation by addressing a need, introducing new materials, design features, brand name value, workmanship, packaging, quality. This is the value proposition that most often comes to mind in entrepreneurship- being the first to offer an innovative product. It's always advisable to do thorough research on the market offerings and on whether consumers will like the product. A business based on this value proposition needs to know and be different from its competition. Customers should be able to describe the special features of the product that makes them buy it instead of another. Innovation should be added throughout the product's life cycle. Inventory management process lowers inventory or raw materials and finished goods. A company that can lower its inventory holdings and still offer a product in a timely manner has value based on reducing costs. A good example is a custom-made dress that is made to order with only enough fabric and trimmings purchased for the orders. Buying materials and producing goods "just in time" to fill the orders is another example. Technology and computer software is available to help an entrepreneur plan and organise his/her production to reduce inventory costs of materials and finished goods. Order-to-delivery-to-payment process - reduces the time and efficiency of taking orders, producing goods, and delivering. Streamlining the order-to-delivery-to-payment process can add value to a product. Some businesses offer products similar to others in the marketplace, but offer shorter lead time for production and faster delivery methods. Information technology is again the key. It offers efficient communications with customers and business partners that speeds up the production and delivery process. As off-shore and domestic options for production increase, time may make the difference in the decision to buy from one business rather than another. Customer service process builds an effective communication process with customers during initial inquiries, order and delivery, and post-purchase questions. Electronic communication, technical manuals, and repair and maintenance agreements can aid customer service. From easy shopping and ordering processes to life-time guarantees of products and generous exchange policies, customer service can be a successful business value proposition. Either by itself or in combination with another value proposition, customer service is increasingly used to differentiate product offerings. Prototype Development Prospective design solutions that correspond with the product concept should be constructed using the most likely materials. These first designs or models are called prototypes and the development of these prototypes is an exceedingly significant step. It should include a methodical and exhaustive assessment of materials, structure, surface design, and wear testing. Selecting materials and methods Prototypes give one the opportunity to test out a variety of materials, product structures and construction methods and surface design methods. Moreover, materials should be evaluated for functional characteristics such as stretch, water repellency, cleaning requirements, and wear. One should ask for the material specifications at time of purchase since the wrong material in a good design can lead to failure. Actually constructing prototypes in several materials and trims will help designer and everyone involved n the product's manufacture to evaluate the materials and the entire design. Both look and cost will determine the final decisions. Pattern development and fit Developing patterns sewn together or molds assembled to make a product that looks like what it should look like is another objective of prototyping. It often takes several tries to perfect a pattern that exactly represents the product idea. Testing a variety of construction methods or maybe stitch types (in the case of the garments industry) will also enhance the design and its durability. Fit should be considered from the production and consumer satisfaction perspectives. In most apparel businesses, they use standard sizes but also develop their own measurements for each size based on an "ideal" customer's figure. Skilled patternmakers, either as full-time employees or free-lancers, can help the garment business owner develop the fit. Consumer satisfaction with fit should be evaluated during wear testing. Surface design Several prototypes should be developed, not just one. The prototypes should vary in materials, product structures, and surface designs so that function and appeal of the prototypes can be compared. Color, print, and embroidery design options should be selected and tested during the prototype stage. What works in one color sometimes doesn't work in another. Once the prototypes are ready, they can be tried on, wear them around, and adjust obvious problems. Optimizing Product Design for Production When a final prototype of a product has been decided upon, one needs to communicate the information to others involved in buying materials and production. Most businesses use specification sheets for this purpose. The information necessary to buy the most suitable material in the right amounts can be indicated. For example, again in garment manufacturing, a picture of the product with the sewing operations, stitch types, and seam allowances is needed for the production department and sewing machine operators, likewise, the exact dimensions of the finished product and the acceptable tolerances (e.g., a seam allowance can be +/- 1/8" off) can help in quality assurance. The commercialization matrix To get a product to market, the entrepreneur needs to decide on the production method, cost position, volume and profit risk. Optimizing a product for production focuses primarily on the first three items -- production method, cost, and volume. Commercialization Matrix Production Method Cost Volume Profit Risk Custom High Few High risk Mass production Low High Medium risk Mass customization Medium Made to order Medium risk Production method The first decision to be made, once settled on a prototype design and material, one needs to prepare the design for production. This requires a product that can be easily manufactured in quantity and at a price that will be profitable. Taking again the example of garment products, the prototype patterns and methods often need to be modified by changing the shape of the seams to be more easily sewn, reducing the number and types of seams, choosing materials that are easy to cut and sew in volume, reducing the amount of fabric or fabric waste by adjusting the design. If one opts for custom production, one has to make individually designed and produced products. Basically, the prototype may not need changes before commercialization. The profit will come from high price rather than high volume. The objective of mass production is to make the production process cost effective by increasing volume while reducing material and labor costs. Also, modifying the prototype to accommodate volume and cost requirements is very important in a mass production setup. It requires standardising and simplifying the pattern pieces, seam allowances, and seam types. Mass customization is a relatively new business strategy that adds value as well as reduces the cost of the product by making products to customer specifications; involving customers in the design and delivery, using advanced technology. This unique approach requires technologies that can produce small numbers of similar products at a low cost. The production cost may be higher than mass production due to individualised design and small production lots. But the cost is lower than custom due to extensive technology use. Making products to order instead of as stock items, reduces inventory cost of finished goods to zero. Profitability depends on getting enough orders at a price that will pay for the technology and individual service. Cost and Pricing Cost is the second decision that needs to be made to optimize the product for a commercial market. Based on the product concept and business plan, one needs to produce at an appropriate cost level for the product. Then, price it to sell. There are several approaches to pricing that must be considered. Cost-based pricing starts with how much it costs to produce one unit or piece. The direct costs include materials, labor, and marketing. An overhead cost is calculated based on an annual rate for all design and production. This includes rent, lights, heat, and travel to trade shows, for example. The overhead cost can be calculated for each product unit as a percentage of the direct costs or as a dollar amount and added directly to the unit cost. The final variable is profit. The potential for market success and profit needs to be considered before production starts. Only those products that have the potential to sell in high enough volume to make profit should be commercialised. Commercialisation Evaluation of the profit risk is the final step in product commercialisation. Even if a product is optimised for commercialisation, it is still not clear that it should be produced and marketed. The choice of production method and estimated cost based on sales volume will help one test the market and evaluate the potential for the product's success. Commercialization Matrix Production Method Cost Volume Profit Risk Custom High Few High risk Mass production Low High Medium risk Mass customization Medium Made to order Medium risk At this stage, consumer research can evaluate the actual products one offers. Point-of-purchase surveys can provide information about the motivation behind a purchase (if the consumers fill them out). Consumer panel research has been an effective method for commodities such as health care products and cleaning supplies. A panel of consumers is identified that represents the target market. This is often done within designated geographical areas to make it easier to communicate directly with the consumers. They are paid to try out products and discuss their reactions, often in small groups or by recording their patterns of use. The same consumer panel can be hired for a series of product evaluations to make this form of research easier to conduct. In addition, panel members will benefit from the experience they gain over time. Observation methods sometimes uncover even richer descriptive information about product use. Trained researchers develop systems to categorise the ways consumers actually use products. For example, observing the way certain age and interest groups wear baseball caps - bill forward, sideways, or backwards - might lead a company to redesign the cap to fit the head better in these new wearing positions, or place the images or logos in different locations. Some consumer product companies actually send researchers into people's homes to follow them as they use their products. Likewise, products are also evaluated alongside competitors' products to find out which ones consumers prefer and why. The superior aspects of the product can be used to develop attractive claims about such product that can be used in advertising and to develop marketing strategies. Product Maintenance and Extension The product development process is not done with product commercialisation. A product's expected life cycle should be planned for from product launch to the last sale. Tradeoffs among Needs and Features: Conjoint Analysis After customer needs are identified and grouped, after critical features are identified and linked to customer needs, and after high potential concepts are developed, the PD team's next step is to focus on those features and concepts that are most likely to improve customer satisfaction and lead to profitable products. Developing methods to measure such tradeoffs among customer needs and/or features is, arguably, one of the most studied problems in marketing research. Identified are over 150 articles published in the top marketing journals on conjoint analysis in the last twenty years. Also, because they continue to be used by PD teams, included are self-explicated methods such as those reviewed in Wilkie and Pessemier (1973). Suppose that the PD team is developing a new laundry product and has identified the strategic needs of "cleans effectively," "safe for delicate clothes," "easy to use in all situations," "good for the environment," and "inexpensive." The team now wants to evaluate a series of product concepts, each of which stretches one of the five strategic customer needs. Conjoint analysis, applied to customer needs, is the general method to measure the customers' tradeoffs among those needs. By identifying and quantifying the tradeoffs, perhaps by customer segment, conjoint analysis helps to focus the PD team on those concepts that have the highest potential. Conjoint analysis can also be applied to product features; for example, the maker of a camera might want to know how highly customers value such features as 1-step vs. 2-step picture taking, styling covers, automatic vs. manual focusing, and automatic vs. controllable lighting. Conjoint analysis can tell the PD team which of the features is most highly valued (by which segment) and can associate a willingness to pay for those features. Conclusion Identifying market opportunities, creating unique product offerings, and bringing concepts successfully to market can be a daunting task. Organizations can often become bogged down in well meaning, but internally focused product development processes that fail to produce winning products. Despite the difficult nature of repeatable and successful product development, organizations eager to capitalize on emerging market opportunities must equip themselves with the tools and techniques necessary to produce leading edge products that map to both market and consumer needs. Fundamentally, companies without a precise and a distinct product development methodology are likely to suffer from quality problems and projects finishing late or going over their budget. The people in the company won't share a common view of the way they should be developing a product. The company will have problems with long cycle times, too many iterations of the design cycle, and too many engineering changes. It will always be trailing behind market-leading companies with regard to quality, cost and time-to-market of new and improved products. Often, such companies don't even realise they have problems until they've lost significant market share. Companies like these won't achieve the benefits they expect from their initiatives and all the effort they have exerted. The "spur-of-the-moment" indiscriminate and disorganised approach will prevent them from defining and optimising the process, so they won't be able to adapt the initiative to fit the process. Without a clearly defined methodology, nobody will know which systems and practices are most appropriate, in effect, the necessary integration of an initiative can not be determined properly and will be exceedingly tough to carry out. Any gains that come from use of an initiative in one place are likely to be lost in another place because a coherent solution hasn't been prepared. Product development has become the essential differentiator for both speed and cost with which novel and enhanced products are brought to the market. It's the activity where competitive advantage can be obtained in quality and performance. Firms that understand this and put in place a clear product development process supported by a well-defined development methodology have every chance of becoming market leaders. References Blessing, L. 2002. What is this thing called Design Research Annals of 2002 Int'l CIRP Design Seminar, Hong Kong Buur, J. 1990. A Theoretical Approach to Mechatronics Design. 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