CHAPTER 11 THE PRODUCT-INNOVATION PROCESS

THE THREE LEVELS OF A PRODUCT Core Product Installation Actual Product Packaging Brand Name Delivery / Credit Core Features & Options Benefit Augmented Product or Service After Sale Service Quality Styling Warranty

GOOD, SERVICE, & PRODUCTS Product : anything that an organization can offer to a market for attention, acquisition, use, or consumption that might satisfy a want or a need (good+service) Three Levels of a Product Core : essential benefit or service Actual : tangible parts - packaging, features and options Augmented : intangible part - life insurance, after-sale service Consumer product vs. Industrial product

DESIGNING SERVICES Attributes of services Intangibility Perishability Simultaneity Heterogeneity (다양성보장) Idea의 원천(기업 내) Vector marketing : latent demands service delivery system : network Types of service buyer (Fitzsimmons) : target Economizers Convenience seekers Personal care seeker Ethical/loyal customers

MATRIX OF SERVICE PROCESSES Customization Low High SERVICE FACTORY Airlines Trucking firm Hotel Resort and Recreation firm SERVICE SHOP Hospital Auto repair shop Other repair services Low Labor Intensity MASS SERVICE Retailers Wholesalers Schools Retail banking PROFESSIONAL SERVICES Doctors Attorney Accountant Architect High

AN OBJECT/LOCATION SERVICE CLASSIFICATION What is Serviced Person Thing TV viewing Employee training Swim lessons Pizza delivery Police protection Horse shoed Lawn care Computer repair Catering Garbage collection Customer’s Site Where Serviced Exercise clinic Loan deal Legal services Movie theater Health care services Beauty salons Dry cleaning Tax preparation Stock sales Pizza preparation Goods transportation Server’s Site

PRODUCT ARCHITECTURE ISSUES At the start of the product innovation process, top management must decide certain product architecture issues. Namely: How can a standardized product meet the core needs of targeted customers How Can a standard product comprised of a flexible set of optional functional modules satisfy the needs of buyers who want a customized product? How Can a product design be divided into separate modules? How should these modules interact with each other? How much technical risk should the design of each module take? How much reserve capacity should the design of the overall product and its modules have? Which of these modules should be designed by outside designer/suppliers.

PRODUCT STANDARDIZATION Mass manufacturing has long sought to make standard products from standard parts. In doing so, they sought to gain the following: Lower product design costs(common design, unwanted feature) Lower component design costs(vendor’s expertise) Lower production costs(large batch, inventory-efficiency) Lower delivery costs(transportation) Quicker deliveries(inventories sites near customers) Brand recognition economies of scale Simplified comparisons(mail-order purchase) Stronger consumer protection

MASS CUSTOMIZATION Mass customization seeks to achieve high levels of product customization while retaining the economies of scale of mass manufacturing. It seeks to do this by: Offering standard product with customized services Customize product at the point of delivery Assemble standard, modular components into customized final goods and services.

MODULA DESIGN Modular product designs Concentrate all function in a single, special-purpose unit Develop a module to perform each function Technology of different modules Modular Design Interface : Open architecture –vendor Technical Risk : Business decision Placement of reserve capacity in a modular design -capacity shortfall In-House VS. Outside Module-make or buy

SEQUENTIAL VS. CONCURRENT ENGINEERING Shortcomings of Sequential process much time(outdated), much cost(rush job) Quality problem(product recall) Communication(committees,paper 필요), perspective(customer) Concurrent engineering의 성공요인 Leadership Teamwork Communications Simultaneous development

ORGANIZING FOR WORLD-CLASS PRODUCT DEVELOPMENT The product development strategy Process Inputs Technology assessment and forecasting Market assessment and forecasting Technology strategy Product/market strategies Technology Strategy Technology Assessment and Forecasting Project Management and Execution Postproject Learning and Improvement Goals and Objectives Aggregate Project Plan Market Assessment and Forecasting Product/Market Strategy