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Development Product Service

Organizations in today's day and age know that timely, regular and effective new product/service development can act as core competence for its business. They know that for them to gain competitive advantage they have to be imaginative and also involve their consumers in this complex and all important decision of the introduction of a new product/service. How they go about this can determine the success or failure of any product/service introduced into the market. Organizations need to identify customer needs and wants, develop innovations to meet them and in order to be effective in doing this, they need to collect and act on customer-initiated feedbacks and inputs.

New Product Development (NPD) includes forms of business development which are not concerned with supplying existing products to existing markets (Ian Goulding, 2001). New product development process can be said to start with the identification of an opportunity in the market and ends with the successful launch of the product. It takes into account the various activities involved in this process e.g. develop and test the product concept, fully define and develop the product, source for suppliers etc. The job is not finished until it reaches the right consumer at the right time and the right volume.

A timely New Product Development scheme is very important for organisations that want to ensure continuity, as well as attain competitive superiority. Success in New Product Development (NPD), both in terms of market share and cycle time, has become a key indicator of organizational success (Wheelwright & Clark, 1995).

Nevertheless it is pertinent to note that the most successful organisations acknowledge consumer preferences when creating new products. However, a product appeal is most times validated at the last moment in the market place. Many authors have argued on the extent of consumer involvement in a NPD scheme, but most have agreed that very successful NPD project must include some sort of consumer information in the designing of their products or services.

This study seeks to explore the extent of consumer involvement in the new product development process, the various stages of involvement of consumers, the benefits of such involvement to the organisation at large. It also looks at the factors that determine successful new product development, why new products fail and the various phases of new product development. The research hopes to provide a strategic guidance to organization with the respect to the role/ involvement of consumers in the critical and important process of new product development.

Several studies have however been carried out on the NPD processes, as recent findings reports continuing difficulties in introducing successful products in spite of enormous company emphasis on new products. For years researches have therefore concentrated in explaining what constitutes new product success.

RESEARCH QUESTION

Is it effective to involve consumers in new product development process and if so how can the process be managed?

STUDY AIMS AND OBJECTIVES

Organisational NPD schemes are very tedious exercises and do require a lot of fore-planning and hard work at various stages of implementation. The Wall Street Journal (1992) had indicated that only about 10% of all NPD schemes results in success in the market. Hence a proper understanding of the NPD processes especially as regards consumer involvement is necessary for success in any NPD scheme.

The purpose of this research work is therefore to:

• Attempt to create an increased understanding of new product development process.

• Discover the extent of consumer involvement in a NPD scheme.

• Manage consumer involvement in the NPD scheme.

MERITS OF A NPD SCHEME

As stated earlier, organisations in a bid to sustain their competitive edge and ensure continued relevance in the market, embark on successive NPD schemes. New product development is essentially a means of improving corporate viability (Hayhurst, 1968). Once a company has carefully segmented the market, chosen its customers, identified their needs, and determined its market positioning, it is better able to develop new products (Kotler, 2002). Both academia and practitioners acknowledge that new product development (NPD) is a crucial activity to most companies in order for them to secure long term survival and growth. (Brown & Eisenhardt, 1995; Clark & Fujimoto, 1991; Craig & Hart, 1992). New product developments shape the company's future and maintain or build sales (Kotler, 2002).

Ian Goulding, 2001 has stated the following as merits of a successful NPD & diversification scheme:

• Utilisation of excess capacity and labor;

• Moderation of single market dependence;

• Reducing dependence on sub-contractors/suppliers;

• Increasing turnover and profits;

• Expanding range;

• Removing seasonality in production;

• Replacing obsolete products;

• Exploiting market opportunities.

Other reasons that companies engage in NPD are the revenue expectations from the new product, growth and balance of the organization, value and trend in new product introduction Although the aforementioned merits are not in any way exhaustive, it however points to the salient reasons why organizations embark on successive NPD scheme.

CONSUMERS AND THE NPD SCHEME

Successful NPD schemes do involve consumer inputs in the creating of new products. Consumer involvement in product development refers to the several interactions that occur between the consumers and the design process.

M.A Kaulo, 1998, identified two dimensionsof consumer involvement which stems from a study of client's relations to the organization.

• The Longitudinal Dimension- is seen at the points of interaction between the consumers and the different phases of the product development project. The phases of product development, he identified as;

• Specification

• conceptual development

• detailed design

• prototyping

• final product

• The Lateral Dimension- relates to how deeply the consumers are engaged in the design process. This spells out what role the consumers have when they interact with the design process and to what degree they partake in the design work.

In order to explain this dimension the categories “design for”, “design with” and “design by”, described by Eason (1992).were used.

• Design for - refers to where the products are designed on behalf of the consumers. Data on users, models of consumer's behavior are used as a basis for the design.

• Design with- This focuses on the consumers by utilizing data on the consumer preferences, needs and requirements as in a “design for” approach but it also includes a display of the different solutions/concepts so the consumers can react to different proposed design solutions.

• Design by- denotes a NPD scheme where consumers are actively involved and partake in the design of their own product.

CRITICAL FACTORS IN SUCCESSFUL NEW PRODUCT DEVELOPMENT SCHEME

The multi-dimensional nature of a new product development scheme introduces a significant number of variables which may or may not have a direct bearing on the outcome of the project. There are considerable problems in defining new product successes and even more in assessing the success rate (Crawford, 1991). But it is quite pertinent to note that every successful NPD scheme requires an in-depth understanding of the consumers, their situation, their needs and their wants (Karkainen et al, 2001; Lagrosen, 2001). Consumers will simply not buy any products that does not appeal to them in any way.

Craig & Hart (1992) have identified groups of similar success factors:

• Strategy: NPD as a part of corporate strategy, technology and marketing, product differentiation, synergy, risk taking.

• NPD Management: Top management support, balanced managerial orientation, top management involvement.

• Company characteristics: Organization- structure and design.

• NPD Process: Initial screening, marketing assessment, technical assessment, market study, business analysis, product development, in-house product test, test market, trial production, pre-business analysis, production launch.

• People: functional co-ordination, R/D / marketing, co-ordination, cross functional communication, organization structure, and project management.

• Information: functional co-ordination of information.

DEFINITION OF TERMS

• New Product Development (NPD) scheme: includes all processes of business development concerned with the making of new products or the re-engineering of existing products with an attempt to satisfy consumer needs.

• Consumer:also refers to customer or end users.

• Consumer involvement:refers to all type of interactions between the consumers and the design process

LITERATURE REVIEW

DEFINITION OF THE TERM- NEW PRODUCT

Several authors have attempted to describe what actually qualifies a new product. Sampson (1970) defined a successful new product as:

• Satisfying new (or hitherto unsatisfied) need, wants or desires;

• Possessing outstanding performance in such need satisfactions, compared to any other product;

• Benefiting from an imaginative combination of product and communication.

Sampson's definition includes an element of purposefulness, usefulness as well as newness or originality (Ian Goulding, 2001). Many products considered as new will in fact fall outside the above definition, since:

• Some companies, especially those with a heavy research bias, may develop a product based on technological applications for which there is no existing need (Davidson, 1976);

• successive minor improvements such as variations in formulation and range essentially fulfill the same needs as before, although more efficiently (Grohaug, 1976);

• companies may be concerned with developing products which are new in their experience though not to the customer (Buzzel & Nourse, 1967)

CONSUMER INVOLVEMENT MODELS IN A NPD SCHEME

A successful NPD scheme should involve active interaction between the organisation and their consumers. It is however necessary to consider how organisation should involve their consumers and what should be the extent of their involvement.

Many authors have described the methods and concepts of consumer involvement at the different phases in the new product development process:

• Quality Function Deployment (QFD): The dominating consumer involvement concept in a total quality management (TQM) organisation is the Quality Function Deployment (QFD). This method or rather methodology is described as “a system to assure that consumer needs drive the product design and production process” (Silluvian, 1986). The design process is guided by the “voice of the consumer” (M.A Kaulo, 2001). In this concept, consumer involvement occurs only in the initial phase of the product design process as consumer information in the final stages is not supported by QFD.

• User-Oriented Product Development: User-oriented product development is a human factors/ergonomics engineering approach to product design (Dahlman,1986;Rosenblad-Wallin,1983,1985,1988)

• The starting point in this concept is the analysis of the “use situation” which leads to the determination of “consumer requirement”.

• The “consumer requirements” is then converted into determinable design requirements.

• Prototypes of the final products are tested by the end users and are finally modified by the designers.

• Concept Testing: In this approach the consumers are involved in the conceptual design/evaluation phase. The end users are expected to be exposed to paper sketches of models and prototypes of the proposed product. Consumers are also engaged in verbal communication with the designers. Ideally, the presentation of a concept should offer a realistic description of the proposed product(s), in order to facilitate specific responses from consumers (M.A.Kaulo, 1998). This approach could be applied to consumer packaged goods, as well as industrial products.

• Consumer Idealized Design: Consumer idealized design is described as “process for involving consumers in the actual design of new manufactured goods or services”(Cinciannntelli & Magdison,1993) Consumers are usually involved in the early phases (conceptual design & requirement analysis phases) of the design process. Consumer representatives are carefully picked from the target market and are guided to identify basic requirements for the production and find new solutions to their problems and requirements.

• Lead User Method: This approach is described as a methodology composed of the lead user concept integrated with market research techniques (Herstatt & von Hippel, 1992; Urban & von Hippel, 1988). The aim is not, primarily, to establish requirements, but to elucidate specific “solution data” from lead users (M.A Kaulo, 1998). Lead users are “users who face needs that will be general in the market place- but face them months or years before the bulk of the market-place encounters them” and they are also positioned to benefit significantly by obtaining a solution to those needs” (Urban & von Hippel, 1988).

• Lead user identification indicators are stated.

• Lead user group are therefore identified.

• Products/concepts are designed with the lead users;

• The products or concepts are tested on other users.

• Participatory Ergonomics: Participatory ergonomics is an approach used in industrial ergonomics and architecture (Noro & Imada, 1991). This concept is mainly used as improvement in workplaces. The workers themselves generate ideas and actually design their own working environment. Hence the consumers/end users contribute to the solution of their problems.

• Beta Testing: Beta testing can be described as an approach applied in the later phases of the product design process and aims to determine if the product does what it is designed to do in the consumer environment. (Dolan & Matthews, 1993; Nielsen, 1993). The level of consumer satisfaction and the influence of the “user environment” on the products are determined by introducing prototypes of the proposed products to selected consumers. “Bugs” are removed and the products are refined further from the results of this test. Beta testing is ideal for software engineering. Nielsen, 1993 has also recommended that beta testing should not be the only method for feedback from consumers, because beta feedback would arrive too late to be of much use as results from earlier evaluation methods.

CONSUMER RELATIONSHIP AND AN NPD SCHEME

The need for end-users' input cannot possibly be over-emphasized in designing a new product. Gruner & Homberg (2000) have demonstrated that consumer interaction in new product development has a positive impact on new product success. Understanding consumers is usually regarded as being crucial for successful new product development (Lagrosen, 2001). It does not end in just understanding the consumer; they must be actively involved in some levels of the design process.

Hanna et al. (1995) has ranked the closeness to customers as one of the most important factors for new product development success in business markets. Furthermore, Hanna et al (1995) also suggestedthat customers are the most frequent source of new product ideas for business products. Informed companies are constantly learning how to best tap into this reservoir of ideas. Neale & Corkindale (1998) has also further argued that for new technology products, co-development is the best option.

Calantone & Cooper have shown that the most prominent reason why most NPD scheme ends in failure is that there is no real need or want for the new product in the market. Most new products fail even before they leave the drawing room. It is said that 1 out of every 2 new products fail within the launch year. Most of this failure has been traced to lack or insufficient consumer involvement.

REASONS ORGANISATIONS GIVE FOR NOT INVOLVING CONSUMERS IN THEIR NPD SCHEME.

Despite the immense benefits derived from a suitable consumer involvement in a NPD scheme, some organizations still argue against any level of involvement by the end users of their new products. The reason given includes the following:

• Their claim that consumers normally just compare the prices of the products on offer from the different suppliers. Information derived from such consumers will only result in insignificant changes while the designers want to be really creative.

• That their consumers do not normally have the required competence to be able to suggest any valuable development.

• Some companies just want to weigh up the benefits derived from a NPD scheme against the costs of the proposed new product. Since organizations aim at calculated profitability, they will want to know exactly what advantage the new product will give them. Consumer involvement entails considerable costs both directly and indirectly in the form of time (Stefan Lagrosen, 2005).

• It is difficult for organizations to convince consumers to spend time and money to facilitate their development process.

• Some companies claim that they have too few customers for appropriate NPD consumer involvement model and others say they have too many customers for formal tools to be feasible.

MOTIVES FOR CONSUMER INVOLVEMENT IN NPD SCHEMES

In deciding on a suitable NPD consumer involvement scheme in designing a product, it is important to attempt to explain why a consumer should partake in the scheme. Emerson, 1981 has elucidated that consumers will only participate in a NPD process, because they expect to derive some form of benefit. Such engagement could be considered beneficial if the benefit derived is more than the experienced effort. However, whether or not a consumer engages in virtual new product development depends on the individual's motivational state, their need to receive and capacity to give (Hirschman 1987, 99). The views of highly motivated consumers will easily be assessed, but this also depends on whether they possess the requisite technical know-how of the new product in question. Deci & Ryan, 1985 has identified two types of motivation:

Intrinsic Motivation: Intrinsic motivation can be noticed as interest, involvement, curiosity, satisfaction, or positive challenge (Amabile, 1996). Consumers who are intrinsically motivated may consider their involvement in the NPD process as enjoying and interesting and will look at it as beneficial instead of effort. It is not the outcome but the activity itself; creative consumers will derive benefit from. These types of consumer get their motivation from within themselves, and may not need any form of incentive to give their best to a NPD scheme. Individuals who enjoy their participation may sink in a state of flow- an optimal experience where they get absorbed by the activity, loosing any sense of time and space (Csikszentmihalyi, 2002). Under conditions of deep involvement, freedom self-control, attention, challenge, sense of mastery, competence and task enjoyment, consumers make easiest experience flow (Csikzentmihalyi, 2002). The reason for intrinsic motivation is an individual's very own need for feeling competent and self-determining in dealing with his or her environment (Deci & Ryan, 1985). For example, programmers report feeling competent, satisfied and fulfilled when they write code for open source software (Lakhani & Wolf, 2003). In general, cognitively engaging one in creative tasks is considered as being intrinsically interesting (Amabile, 1996).

• Extrinsic Motivation: Extrinsically motivated consumers are able to differentiate efforts used in getting involved in a NPD scheme from its contingent outcomes. Deci and Ryan distinguished two types of extrinsic motivation:

• Informational extrinsic motivations: that increase someone's sense ofcompetence, need for finding a creative solution, or prevailing task involvement are considered as additional bonus and activity encouragingreinforcing someone's intrinsic motivation, while ;

• Controlling extrinsic motivations: like status or job promotion confine self -determination and are considered as counterproductive as they undermine initial intrinsic motivation. (Deci & Ryan 2002; Deci & Ryan 1985)

To get consumers motivated extrinsically organizations introduce a form of reward, which may help to get their customers to make better contribution or attract more customers who may be interested in the topic. The disadvantage is that consumers who are not initially interested in the topic may suddenly participate because of the incentive and will not make any meaningful input. Secondly, consumers who were already intrinsically motivated may begin to reason that they can gain some sort of reward by selling their ideas. The individual's perceived locus of causality shifts from internal to external (Decharms, 1968).

Based on research on motivation on other fields, several authors have further sub-divided the intrinsic and extrinsic motives why consumers may engage in organizational NPD schemes. The following has been sub-identified as reasons why participants may engage in NPD schemes:

• Autotelic/ Playful Task: Consumers are self-motivated, they engage in the NPD scheme because they consider it rewarding. Consumers involved in innovation tasks. (Mittal, 1995) of a certain product category (Bloch, 1986), or brand (Coulter et al. 2003; Mittal & Lee 1988) may engage in virtual product developments.

• Curiosity-Exploration-Arousal Seeking: Consumers may view their engagement in a NPD scheme as a way to escape boredom. Curiosity may be defined as the desire for knowledge because of intrinsic reasons. (Berlyne, 1960).

• Achievement-Challenge-Self Efficacy: The opportunity to prove someone's self efficacy drives consumers to innovate on the Internet (Kollock & Smith, 1988). Consumers view their engagement in the NPD scheme as excitingly challenging.

• Skill Development-knowledge Acquisition: People are motivated to engage in the scheme because they striving to improve their skills and gain additional knowledge. Their motivation stems from a desire to acquire new skills and be better informed. von Hippel, 2002 has inferred that to advance their ideas consumers may participate in NPD consumer involvement scheme.

• Information Seeking: In a quest for beneficial information, consumer may get involved in NPD scheme. Consumers may engage in new products development because they are seeking for innovation or product related information (John Fuller, 2006).

• Recognition-Visibility: Some consumers participate in the scheme in order to get recognized by other participants and the designers. Online community members share their know-how and participate in activities connected to effort for ego gratification motives, fame, and reputation. (Hennig-Thurau et al. 2004). Consumers derive benefits from building up direct relationships with companies due to special treatment offered, self-esteem and reduction of uncertainty. (Gwinner et al. 1998). Strong brands provide additional benefits as they are relevant for consumers' self identity creation. (Fournier, 1998) and serve as a means to express someone's individual style.(Coultered et al.,2003)

• Altruism-Community Support: Altruism can be defined as “doing something for another at some cost to oneself” (Cozinga, 1995 p.5). Altruism is self-sacrificing. A lively debate is going on as how to define altruism (Takahashi, 2000). Altruism may motivate consumers to participate in a NPD scheme.

• Make Friends: Kozinets, 2002 has opined that consumers may engage in a NPD scheme because they want to meet people of like mind. Consumers interacting with companies interpret their relationship with employees as being similar to friendship (Gwinner et al, 1998)

• Personal Need-Dissatisfaction: Personal necessities sometimes lead end-users to innovate. Lead users develop their own products because they are dissatisfied with existing products available on the market and because they expect attractive innovation-related benefits from a solution to their leading-edge needs (von Hippel, 2002).

• Compensation- Monetary Reward: Immediate as well as delayed payoffs may be the reason why consumers engage in innovation activities (Lerner & Tirole, 2000). Monetary incentives like prize drawings, give-away, etc may motivate consumers to participate in a NPD consumer involvement scheme. The more time and effort consumers invest, the stronger will be their need for monetary compensation. (von Hippel, 2002), while monetary incentives may be detrimental for creativity. (Amabile, 1996), no negative effects on survey response quality have been found (Singer et al., 1999).

FACTORS DETERMINING SUCCESS / FAILURE OF A NPD SCHEME

New Product Development programmes are both expensive and risky with a large portion of product development budgets going towards new product failures. (Bjarne Jensen & Hanne Harmsen, 1993). Many research works are now focusing on factors that determine a successful/failed new product development schemes.

Despite the fact that the studies point to a fairly consistent list of success factors, it seems that only a few companies have implemented these identified success factors-indicated by the fact that recent studies show companies to make the same mistakes they did 30years ago (Bjarne Jensen & Hanne Harmsen, 2001).

Kotler (2002) has identified three types of new product failure: An “absolute product failure” the organization loses money when its sales do not cover variable costs, a “partial product failure” when sales cover all its variable cost but only some of its fixed costs and a “relative product failure” yields a profit that is less than the company's target rate of return.

Empirical studies that determine a new product performance have been divided into 3 overall categories:

• Studies that identify factors leading to success;

• Studies that identify factors leading to failure; and

• Studies that distinguish between success and failure with increased focus in recent years on the third category (Montoya-Weiss & Calantone, 1994).

The study of these categories have led to the identification of a number of determinants of new product performance, and most often researchers suggest normative implications of how to enhance the chances of success or how to avoid failures in NPD (Bjarne Jensen & Hanne Harmsen, 2001).

Bjarne Jensen & Hanne Harmsen, 2001 have identified “competence elements” (Leonard-Barton, 1992) that does not fit into any of Craig & Hart's group of success factors:

• Project Formulations and Action Plans: To ensure that the project's further progression, organizations will have to develop their ability to formulate projects and action plans. It is important that the project formulation and action plans are in writing as it helps all involved parties work toward the same goal(Bjarne Jensen & Hanne Harmsen, 2001). It involves the following;

• Draw up clear and measurable objectives.

• Culture acknowledging the importance of writing it down,

• Idea generation- co-operation across functions & creativity.

• Market-Orientation: Organization involve in NPD schemes should ensure that the new product should provide value to consumers. Hence it is paramount that the consumers, who are in fact the end users of the product, should be actively involved from the beginning when designing a new product. Idea generation should be based on consumer demands (Bjarne Jensen & Hanne Harmsen, 2001). It involves ;

• Put oneself in the place of the consumer.

• apply consumer demands as early as possible

• ability to perceive the relevance of market changes and demands in relation to strategy and objectives.

• Know-how and Market knowledge: This competence element is dominated by two other competence elements:

• Company's ability to analyze the market: Companies do not have the specialists that can conduct all market analyses necessary for a new product development so the company's ability to buy the necessary market analysis is critical to the success of the scheme. In this connection it is decisive that the company is able to find agencies with complementary competences (Bjarne Jensen & Hanne Harmsen, 2001).This involves;

• Segment the Market- Split and describe the market in segments with different profiles

• Prepare own Analyses- Analytical skills, translate market knowledge into NPD projects (involves creativity), prepare ad hoc analyses, prepare analyses on a continuous basis (involves observing products' market position, observe and evaluate consumer trends, by external market surveys)

• Individual consciousness of what one wants and how one analysis.

• Competence of the Product Manager: It is crucial that the product manager as project leader be adequately informed about the product and the process involve in the scheme. This involves;

• Product Managers' knowledge of Raw Materials: Personal experience with the product & co-operation with raw materials function.

• Product Managers' knowledge about the Process from idea to Market: Market orientation & Co-operation between marketing, production and product development (project management & build bridges between the three functions).

• Ability to set clear goals for Product Development-short-and-long term

This includes the following:

• Strategic understanding of the Product Managers

• Experience of the Project Manager: Employ experienced employees.

• Internal hands-on training

• Ability to evaluate the consumer relevance of individual projects.

• Ability to evaluate the relevance of individual projects in relations to strategy and objectives.

• Education and knowledge.

• Willingness to effect product development.

• Profitability of projects.

INNOVATION

Researchers are giving increase attention to the important role played by innovation for successful product development. Clearly innovation can be the core of competitive advantage for some firms and can be the vehicle for assaulting the market position of rivals (Dennis A. Rita, Frank Franzak & Lea Prerel Katsanis, 1996).

It is pertinent to note that the appeal of the new products to the consumers is the true test of any product innovation. von Hippel (2001) has however argued that by using user toolkits for innovation, companies can abandon their efforts to understand customer's needs and outsource need-related innovation tasks to their users. Wexiodisk has even argued that customer involvement hampers innovation. Consumer exclusion from new product innovation may be reasonable in few cases, but this is very rare. An innovative climate is considered necessary for all types of product development idea generation.(Ian Goulding, 2001). Sands & Warwick (1979) suggest this may be achieved by:

• making a clear statement that the new ideas are required;

• considering all suggestions on their merits;

• visible recognition of all efforts to provide ideas;

• avoiding chastisement if an idea fails;

• informing originators of the fate of their ideas;

• making monetary payment (where appropriate) for successful ideas.

Two levels of innovation have been widely accepted:

• Product Innovation: Here the emphasis is on the product. Innovation is applied to the new product or a re-engineered product. Three types of product innovation exists:

• Incremental Product Innovation: involves significant technical changes on the new product and this is expected to shift or delay marketing and industrial design activities to later in the process after a product application has been determined.

• Synthetic Product Innovation: Usually involves a combination of already existing technologies to create significantly new products.

• Discontinuous Product Innovation: Discontinuous innovation is a process different from continuous or dynamically continuous innovation. Often it is focused more on testing and validation than on idea generation (R.W.Veryzer, 2005). Discontinuous innovation usually originates in and is driven by R/D. The high degree of discontinuity inherent in such projects and the strong R & D orientation results in delayed involvement of marketing and industrial design. Discontinuous innovation does not include producing an already existing product.

• Process Innovation: Process innovations involve applying the principles of innovation in the different phases of design process of the new product. Most process innovation is only noticed through deferential cost or quality of the product in the market. As in product innovation, they also exist 3 types of process innovation:

• Incremental Process Innovation: Organizations find a way of lowering the cost of the product while also attempting to increase /revitalize its appeal to the consumers.

• Synthetic Process Innovation: Here the already existing production process is sharply increased in capacity.

• Discontinuous Process Innovation: The organization finds entirely different ways or methods of producing their products or services.

CHALENGES IN A NPD SCHEME

It may be very risky for organizations not to embark on successive NPD schemes. Because existing products are susceptible to shortened product life cycles, increased domestic and foreign competition, new technologies and changing consumer needs and tastes. More established companies create disruptive technologies that are cheaper and more likely to alter the competitive space (Kotler, 2002). Most times these established companies either completely ignore these trends or at best pay little attention to them, because of the fact that they threaten their investment. Such organizations eventually find themselves facing formidable new competitors; and many fail.

However, NPD schemes are very risky. Recent studies have put the failure rate at 95% in the United States and about 9 in every 10 fail in Europe. The following reasons were put forward by Kotler, 2002 on why new products fail:

• A high-level executive pushes a favorite idea through in spite of negative market research finding.

• The idea is good, but the market size is over-estimated.

• The product is not well designed.

• The product is incorrectly positioned in the market, not advertised effectively, or over-priced.

• The product fails to gain sufficient distribution coverage or support.

• Development costs are higher than expected.

• Competitors are fighting back harder, than expected.

Mc Math, 1998 have enumerated the following reasons on why new products fail:

• The value of a brand is its good name, which it earns over time. People trust it to deliver a consistent set of attributes.

• Me-too marketing is the number-one killer of new products.

• People usually do not buy products that remind them of their shortcomings.

• Some products are too different from the products, services or experience consumer normally purchase.

Kotler, 2002 has also identified the following factors that hinder product development:

• The cost of NPD schemes: For NPD schemes to be successful the organization must have to generate so many ideas to find just one worthy of development, and often faces R&D, manufacturing, and marketing costs.

• Shortage of important ideas: They may be few ways left to innovate on some basic products like steel, detergents etc.

• Social and Governmental constraints: New products have to satisfy consumer safety and environmental concerns.

• Fragmented markets: Companies have to aim their products at smaller market segments, and this can mean lower sales and profits for each product.

• Faster required Development Time: Companies must learn how to shorten development time by making use of new techniques, strategic partners, early concept tests and advanced marketing plan. Alert companies normally use concurrent new product development in which cross-functional teams collaborate to push new products through development to market.

• Shorter Product Life Cycles: When a new product is successful, rivals are quick to copy it. This will not give the original company enough time to make profit on their investment.

Cooper & Klienschmidt found that the number one success factor for new products is a unique superior product; such products he discovered succeed 98% of the time. Other success factors as identified by Kotler, 2002 include the following:

• Well- defined product concept prior to development. The company should carefully study the target market, product requirements and benefits before processing.

• Technological and marketing synergy.

• Quality of execution in all stages.

• Market attractiveness.

NEW PRODUCT DEVELOPMENT PROCESS

INTRODUCTION

Organizations must be fully persuaded of the aims of a particular NPD scheme, as well as a proper evaluation of their competences in all aspects of their operations, before embarking on the design of a new product. Such awareness is paramount for the successful execution of the techniques discussed here. Efficient new product development is basically the selection of a number of suitable concepts for new products and subsequent screening to retain those with favorable prospects (Kotler, 1976). Without objectives and related performance criteria, such a process is impossible (Ian Goulding, 2001)

Researchers have identified two types of NPD process- the four-phase NPD process and the seven-phase process. Their distinction only stems from the definition of the details in each step and the set of decisions and action required. We will concentrate on the seven-phase process. Toll (1969), has described the new product development process as comprising of the following phases:

• Planning (including identification of company assets, formulation of objectives) and broad definition of markets of interest;

• market exploration (including identification of potential growth areas) and existing products;

• search for product ideas;

• investigation of new ideas (including concept and product testing);

• evaluation of new ideas (including concept and product testing);

• selection of remaining favorable ideas based on financial considerations;

• implementation of test marketing and/or national launch.

IDEAS GENERATION

Source of new ideas are exhaustive. Kotler (1976) has suggested that a large numbers of new production ideas are necessary to produce one new product launch. Ideas could be derived from sources within the organization or from sources outside, and the NPD project implementation team must be able to effectively pool these resources. Some may arise naturally in a close inspection of the company's strengths and weaknesses whilst some may develop from experimental investigations of consumer perceptions and attitudes (Ian Goulding, 2001).

• Internal Sources of new Ideas

Individuals responsible for sales, marketing and new product development in organizations who contact regularly with the outside world are potential sources of new ideas. However to be able to properly pool and utilize these ideas, appropriate procedures for idea generation must be emplaced. Chisnall (1979) has said that creative ideas do not evolve in a vacuum; he has developed two semi-structured techniques to aid idea generation:

• Brainstorming Group: This technique requires interaction between groups of creative, carefully selected panelists. It is expected that every suggestions be actively & creatively debated, and the pros and cons delimited. While several authors are in support of the use of this technique, Broadbent (1980) disputes its validity since the ideas he argued does not relate to real-life constraints.

• Synectics: This technique involves group interaction between individuals with varying backgrounds. It is not strictly an internal source of ideas.

External Sources of new Ideas

Countless sources of creative ideas exist outside the confines of the organization. Companies stand to gain so much if they are able to successfully pool together these ideas. Firstly, are the diversity of ideas which may result, and also the flexibility of techniques that can be used to get those ideas. And all these at comparatively limited investment. The following has been identified as external sources of ideas:

• Customers: Eric von Hippel has proffered that the highest percentage of ideas originate from customers. The following are techniques of getting new ideas from customers:

• Studying lead Customers: Lead customers refer to those customers who make the most advanced use of the company products and who recognize the need for improvements before other customers do. (Kotler, 2002). Organizations can begin to innovate just by studying those customers.

• Brain-storming Customers: Group discussions with customers could be a means of getting new ideas. Sampson (1970) has shown how these group discussions with customers can be used successfully by increasing panel involvement and interaction reducing inhibitions and encouraging creative thinking mainly by a careful selection of panel members and introducing adequate constraints.

• Using iterative rounds /Synetics Technique: Involves integrating a mixture of creatively thinking company staffs and customers of varying backgrounds into problem-stating group on the one hand and problem-solving on the other hand. The proposed solutions are then tested immediately on the group of customers. (Cooper, 1998). The objective is to induce a psychological state conducive to creativity generally relating to a generic description of the problem. Because of the relation to the real problem this technique yields more reliable results than brain-storming.

• Researching Competitors' Products and Services: Organization may generate new ideas by finding out how much appeal competitors products/services have on their customers and decide to improve on it.

• Some organizations search for ideas in foreign markets and import such into local situations.

• Suppliers and agents or other organizations or individuals in the chain of distribution are active sources of ideas. These groups have first hand exposure to customers and are the first to learn about competitive developments (Kotler, 2002).

• Other external sources of ideas includes marketing research firms, industrial publications, industrial consultants, advertising agencies, patent attorneys, commercial and university laboratories. (Kotler, 2002).

It is important to note here that all ideas generated by an organization should be properlydocumented as some of these ideas may gain relevance in the future.

IDEAS SCREENING

The ideas acquired during the idea generating phase are typically very numerous. It is worthwhile for the NPD team to spend time on an idea-eliminating and idea-approval phase. This helps to further limit the failure margin of a new product and hence save company funds. The justification of a piece of research should be in terms of the financial return likely to be derived from it (Andrew, 1975).

Kotler, 2002 has suggested an initial constitution of an “idea committee” chaired by an “idea manager”, whose function is to sort the proposed ideas into “promising ideas”, “marginal ideas” and “rejects”. Each idea that falls into the “promising ideas” category is further researched by a committee member who reports back to the committee. And ideas that passes through this phase moves into a full-scale screening process.

Two types of error described by Kotler (1976) should be avoided in this phase:

• A go-error: occurs when the NPD team allows a poor idea move into development and commercialization.

• A drop-error: occurs when the company fails to develop a potentially good idea.

Screening of all proposed ideas helps the NPD team to drop bad ideas as early as possible in the development process. The product screening group must be able to ensure all successful ideas must satisfy the following criteria as enumerated by Kotler, 2002:

• Would it offer superior value?

• Can it be distinctively advertised?

• Does the company have the necessary know-how and capital?

• Will the new product deliver the expected sales volume, sales growth and profit?

Though the risk element inherent in introducing a new product can not be completely eliminated, NPD idea screening processes at the best will only help to reduce risk to the barest minimum.

CONCEPT DEVELOPMENT AND TESTING

In screening new product ideas, concept development and testing is the first step taken. Attractive ideas must be refined into testable product concepts (Kotler, 2002). It is however important to differentiate between a product idea and a product concept.

A product idea is a product described in objective functional terms (Ian Goulding, 2001) whereas a product concept is a particular subjective consumer meaning which the company tries to build into the product idea and will usually contain some indication of intended users, benefits and usage circumstances (Kotler, 1976). A concept description will relate more closely to specific consumer needs within the broader product group described by the idea (Ian Goulding, 2001). Consumers do not buy product ideas; they buy product concepts (Kotler, 2002).

• Concept Development: Product ideas may be developed into several concepts at a time. An organization may propose several concepts by obtaining answers from questions that borders on the type of appeal that the proposed product will have on the customers. Each of the derived concepts categorizes an aspect of the product's rivals. Once one of the concepts is selected, the proposed product is properly positioned between its nearest and distant rivals in the market. Next the product concept has to be turned into a brand concept (Kotler, 2002). The proposed product will have to be properly brand-positioned among existing brands. This positioning will help in determining the price and attributes of the proposed product relative to other brands in the market. Product brand positioning is done in order of superiority in the market.

• Concept Testing: Involves the process of presenting the product concept description to a group of potential end-users in order to obtain some response to the total concept and its specific attributes (Ian Goulding, 2001). The more the tested concepts resemble the final product or experience, the more dependable concept testing is. (Kotler, 2001).

Concept presentation to the customers may take different form-written description, verbal description, TV or film commercial, product prototype, drawing. Previously, creating physicalprototypes used to be a very tedious and expensive exercise but computer aided design programmes, have now made things a lot easier.

Some organizations are also using”virtual reality” to test product concepts. Virtual reality use computers and sensory devices to simulate reality (Kotler, 2002).

Kotler (2002) has listed some questions which respondents in a concept testing should attempt to respond:

• Are the benefits clear to you and believable?

• Do you see this product solving a problem or filling a need for you?

• Is the concept more appealing than the competitive products?

• Is the price reasonable in relation to the value?

• Would is the likelihood of purchase? Would you (definitely, probably, probably not, definitely not) buy the product?

• Who would use this product and when and how often will the product be used?

Response is elicited in terms of purchase propensity, similarities and differences when compared to other products, degree of substitutability and perceived circumstances of usage. (Ian Goulding, 2001).

There have been several researches regarding the reliability of this type of testing:

• The usefulness of data relating to purchase propensity is severely questioned (Ian Goulding, 2001). Tauber (1972) warns of “scaling up” such data due to the effects of zealous respondents with an inflated attitude towards the product, different interpretations of concept scale meanings and order effects in the presentation of concept descriptions. There are no apparent relationship between concept ratings and repeat behavior and it appears the exercise has some predictive validity in the estimation of trial purchase only (Ian Goulding, 2001). Bloom (1977), has also concurred that concept testing only measures the initial attractiveness of the concept and the concept acceptance comes before product trial. The risk of drop errors is high if concept ratings are used as the only screening measure; some products with low ratings may appeal to small market segments (Tauber, 1975). These products may however be worth developing because of their high volume consumption characteristics (Barker & Trost, 1973). For the above categories of product Bloom, 1977 has suggested a need for some integration of product and concept testing or some form of mock purchase experiment, so as to gain an insight into post-trial purchase behavior. This will help determine post-trial purchase behavior.

• Since there are a variety of ways in which the concept may be presented, concept ratings may reflect the effectiveness of the communication rather than the attractiveness of the product (Sherak, 1966). The higher ratings are given to visually rather than orally describe concepts although the ranked order of concepts was the same by both methods (Tauber, 1972; Ian Goulding, 2002). Roche et al (1970) further argued that all concepts involve a creative expression and that the attitudes towards the product must, at least in part, relate to this expression. Sherak (1976) has advocated the integrated approach that makes sure that the respondents are aided with as much information as possible to reduce the likelihood of misconception of product benefits.

• Concept testing is based on the premise that behavior is dependent on attitudes. However, Tauber (1974) has given two reasons why this may not be so:

• Attitudes are dynamic in nature, and the diffusion of innovation is frequently dependent upon the degree to which consumer's attitude change.

• Social interaction in product usage is more important in some products and this is not accounted for in concept testing. Social interaction not only reinforces attitudes but in some cases, it can alter them.

Although concept testing involves major problems concerning validity, its use in knowledgeable hands is certainly justified in reducing the number of products for further development. (Ian Goulding, 2002).

• Conjoint Analysis

Conjoint analysis is a technique used for measuring consumer preferences for alternative product concepts. A method deriving the utility values that consumer attach to varying levels of product attributes (Kotler, 2002).

A combination of varying contrasting levels of product concepts is presented before the respondents and they asked to rank them from the least preferred to the most preferred. The NPD management team can identify the most appealing offer and the estimated market share and profit the company might realize. (Kotler, 2002)

The marketing team uses statistical methods to determine the following:

• Consumer's utility functions for each attributes. Utility ranges between 0 and 1. The higher the utility the stronger the consumer's preference for that level of the attribute. (Kotler, 2002).

• The relevance of each attributes to the respondent- the difference between the highest & lowest utility level for that attribute. The greater the difference the more important the attribute (Kotler, 2002).

Conjoint analysis has taken the leading role in concept development and testing techniques.

• Product Testing

The overall objective of product testing in New Product development is to gain an insight into likely problem areas relating to the purchase and usage of the product, since misconstructions in the concept, product market mix and targeting can be costly if not identified at an early stage (Ian Goulding, 2002). The following are more specific objectives of product testing:

• Concept Validation: (Bloom, 1977)

This technique involves a comparison between the perceived properties of the concepts and those of the physical product after trial, making use of scales emphasizing different product attributes. The method reveals information on how the product can be reformed in order to reduce concept/product dissonance (Ian Goulding, 2001).

• Comparative Testing:

Clark, 1967 has suggested an indication of comparative product test when modifying existing products and the introduction of new brands. As there must be adequate similarities between the products being compared, this technique is applicable only to “evolutionary” new products. The consumer's preference is determined by an actual use of the items being compared. The respondents also help in identifying the differences between the products. It is however very important to establish the reason for preference. After an initial identification test a trial test is conducted on those respondents who were able to discriminate the products in question. In the trial test, the respondent is asked, firstly to discriminate by selecting the “odd one out” and secondly to indicate a preference (Ian Goulding, 2001).

Clark (1967) has suggested a further testing which involves a segmentation of respondent by usage rates of the product types under test. He argued that existing heavy users should have their opinions weighted since it is easier to lose existing customers than to gain new ones.

Comparative product tests may be conducted blind (i.e., in unmarked packs) or in branded packs (Ian Goulding, 2001). Broadbent (1980) has argued against the use of blind testing because the effects created by packaging could affect the consumer opinions of a product. While blind testing is impossible where the product themselves manifest the characteristics of the brand, the test is useful when the nature and quality of the product only are under scrutiny (Ian Goulding, 2001).

Daniels & Lawford (1974) have demonstrated that the first product tried gets a better rating. The solution to this problem includes a rotation of presentation order.

• Ingredients Cost and Purchase Appeal Optimization

This technique is restricted to formulated food products, and is most useful whensome of the ingredients are disproportionately more costly than others. (IanGoulding, 2001).

Respondents here assign magnitude factors relating to differences in attributes in the comparison of the new product existing brands.

Ian Goulding (2001) has described the following as stages in this technique:

• Sensory description of the product attributes;

• experimental formulation of the product;

• psychophysical magnitude scaling of new product and comparison product attributes;

• hedonic rating of new product and comparison products;

• product optimization.

• Range Selection

Some products come in different versions of the same brand. Ranges are distinguished in terms of flavor, color, size etc. Rothman (1967) has suggested that product testing plays a role in range formulation because the addition of a new product to an existing range may:

• takes sales from other versions in the range;

• enhanced sales of other versions in the range;

• have no effect on sales of other version.

It is apparent that ranges may be mutually supporting or non-mutually supporting (Ian Goulding, 2001). Problems in range selection stems mostly from the non-mutually supporting ranges.

MARKETING STRATEGY

After a successful concept testing, the NPD manager should develop a market strategy for introducing the new product into the market. The strategy should consist of three parts as described by Kotler, 2002:

• A determination of the target market size, structure and behavior; the planned product positioning and the sales market share, and profit goals set in the first years;

• Outline of the planned price, distribution strategy and marketing budget for the first year;

• A description of the long-run sales and profit goals and marketing-mix strategy.

BUISNESS ANALYSIS

Whether a NPD scheme is successful or not largely depends on how much profit the new product is able to generate for the firm. The general approach to this analysis is to compare alternative new product either with each other or with some in-company standard using criteria which give some indication of the future profitability (Ian Goulding, 2002).

Management needs to prepare sales; cost and profit projections to determine whether they satisfy company objectives. If they do, the concept can move to the development stage (Kotler, 2002).

• Investment Appraisal Techniques

A quantitative indication of the following variables described by Ian Goulding, 2001 are necessary for investment appraisal:

• Volume of sales with respect to time;

• investment required;

• cost of manufacturing and marketing.

One major problem in investment appraisal is in the uncertainty encountered in determining the volume of sales. And since the other variables are dependent on total sales, what one usually gets when appraising organization investment in NPD schemes are data whose reliability can be questioned. At the very best, it is only possible to account for the sensitivity of the end result to variations in the data used, so as direct attention to critical factors (Andrew, 1975). White (1976) has suggested the following as procedures for capital investment appraisal:

• Pay-back period: This is defined as the time required repaying the initial investment and is calculated by summing predicted successive yearly net profits until the original outlay is exceeded (Ian Goulding, 2001). Kotler, 2002 has suggested the use of break-even analysis in estimating the pay-backperiod. In the break-even analysis the management estimates how many units of the product the company would have to sell to break even with the given price and cost structure or the estimate may be in terms of how many years it will take to break even (Kotler, 2002). As this technique does not take into account the product estimate life cycle it cannot be a true measure of profitability.

• Return on Capital: This is the annual profit expressed as a percentage of net assets employed in the production of the product. The analysis is applied to each year of forecast life cycle, and provides a means of direct comparison with alternative investment options.

• Discounted Cash flow: This technique takes into account the time value of money which depends upon when they occur in relation to the initial investment (Ian Goulding, 2001). Capital generated in the later years of the product life cycle is considered less valuable than those received in the earlier stages. Since capital and operational costs are treated in this same manner, the technique is gaining universal acceptance as a means of investment appraisal (Ian Goulding, 2001).

Kotler, 2002 has also suggested:

• Risk Analysis: as a means of estimating profit. Here three estimates (optimistic, pessimistic, and most likely) are derived for each uncertain variable affecting profitability under an assumed marketing environment and marketing strategy for the planning period (Kotler, 2002). The computer simulates possible outcomes and computes a rate-of-return probability distribution showing the range of possible rates of returns and their probabilities (David Hertz, 1964).

PRODUCT DEVELOPMENT

Here the organization determines if the product can be transformed into a technically and commercially feasible product. This stage usually involves comparatively large capital than in the previous phases in new product development. The stage includes all processes involved in translating prospective user's requirements into a working prototype. Quality Function Deployment (QFD) is a set of methods that assists in incorporating consumer inputs in the design process into the final product. The methodology takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs) that the engineers can use (Kotler, 2002)

The major purpose of QFD is to facilitate the interaction between marketers, engineers and the designers of the product. The R&D department will produce a prototype that fully incorporates the main attributes described in the product-concept statement. The final prototype should conform to basic safety rules and is produced within the financial projections made in the investment appraisal.

Complex virtual reality technology is helping to speed up the process of producing prototypes. Companies can also by computer simulation achieve the flexibility to respond to new information and to resolve uncertainties by quickly exploring alternatives (Kotler, 2002). Effective prototyping may be the most valuable core competence an innovative organization can hope to have (Schrage, 1998)

During the production of the initial physical prototype, the lab scientist will have to imbibe into the final product those attributes the consumers want.

Kotler, 2002 has suggested that the final prototypes must be put through the following functional and customer tests:

• Alpha testing: is the name given to the series of test the product must be subjected to within the firm to check its performance under different conditions of use.

• Beta testing: After alpha testing the product is further is refined. At this stage it is subjected to beta testing. Target customers are made to use the prototype and give feed back. Beta testing is most useful when:

• the potential customers are heterogeneous;

• the applications are not fully known;

• several decision makers are involved in purchasing the product;

• and early adopters is sought (Kotler, 2002).

Consumer preferences can be measured in different ways as suggested by Kotler (2002):

• The rank-order method: The consumers place the items in order of preference. This method does not describe how intensely the consumer feels each item.

• The Paired-Comparison: Involves the presenting of pairs of items and asking the consumer which one is preferred in each pair. It is easier for people to state their preference between two items, noting their differences and similarities.

• The Monadic rating method: The consumer is asked to rate preferences of each product on a scale.

MARKET TESTING

Eassie, 1972 has defined test marketing as a research in which, using an area test or shop panel, the (new) product is tested in a way which involves the consumer purchasing in a normal shop situation. Before test marketing the NPD management must have carried out and be satisfied with results from the concept and product development. The new product is introduced into an authentic setting to learn, how large the market is and how consumers and dealers react to handling, using and repurchasing the product (Kotler, 2002). The main objective of test marketing, like other NPD process is towards risk reduction. Cadbury (1975) has suggested the following factors to help NPD teams decide whether or not to test market;

• The extent to which test marketing would increase the chance of a successful launch and subsequent profits.

• The investment required for the manufacture of the product; if it is not possible to make the product in small quantities without investment in large-scale production capacity, a major benefit of test marketing is lost.

• Test marketing delays national launch and if the product is successful, the company will suffer an opportunity cost during the intervening period. The amount of market testing may be severely reduced if the company is under great time pressure because the season is just starting or because competitors are about to launch their brands (Kotler, 2002).

One major advantage is that test marketing measures the overall consumer response in a real situation. Test marketing also removes the major problem in all product research that the consumer knows he or she is being studied and alters the response accordingly (Ian Goulding, 2001).

Kotler, 2002 has differentiated test market into two broad groups- Consumer-goods market testing and business-goods market testing:

• Consumer goods Market Testing: The organization expects to find the following at high levels-trial, first, repeat, adoption and purchase frequency. Four major methods of consumer-goods market testing has been identified by Kotler, 2002:

• Sales-Wave Research: Consumers who initially try the product at no cost are re-offered the product or a competing product as many as three to five times, but this time at slightly reduced prices. The company should note how many customers reselected the product and their level of satisfaction. Sales wave research can also be carried out on a number of advertising concepts to see how that advertising affect repeat purchase. Sale wave research does not indicate the brand's power to gain distribution, and does not show the trial rates that would be achieved with different sales promotion incentives.

• Simulated Test Marketing: 30 or 40 consumers are questioned on brand familiarity and preferences in a product category. These people are then invited to screen new and old advertisement concepts. The respondents are then invited into a store where they can buy any items. The number of customers that buy the new brand and those that buy the competing brand are noted. These customers are then asked to give reasons why they buy or did not buy. Those who did not buy the new brand are given a free sample and re-interviewed some weeks later to determine product attitudes, usage, satisfaction derived and repurchases intention. And they are given another opportunity to repurchase any products.

• Control Test marketing: Allows the company to test the impact of in-store factors and limited advertising on buying patterns. In this method a research firm monitors a number of stores that will carry the new products. The company states the number of stores and geographic locations it wants to test. The research firm delivers the product to the participatory stores and controls shelf position, number of facings, displays, and point-of purchases, promotions, and pricing. A sample of consumer can be interviewed later to give their impressions of the product.

• Business-Goods market testing: The following are ways proposed by Kotler, 2002 in market testing business goods.

• The new product could be introduced at trade shows/fairs and vendorsobserve how much interest buyers show in the product and how manyexpress purchase intentions or place orders.

• The products could also be tested in distributor and dealer display room,where they may be made to stand next to competing good and otherproducts from the manufacturer. This method yields preference and pricinginformation in the product's normal selling atmosphere. One disadvantage is unfilled orders respondents who may not represent the target market.

Ian Goulding (2001) has suggested that test marketing should provide useful data in the following areas:

• Prediction of National sales level.

• Assessment of the effect of marketing mix variables.

• Assessment of production logistics.

• Assessment of the effect on existing product lines.

• Development of a segmentation strategy.

COMMERCIALIZATION

This involves a full scale launch of new products into the national market. The following factors are considered when commercializing;

• Plant size

• Market entry timing- Is the new product replacing an existing product? Is the product seasonal?

• Where (geographical strategy).

• Target market prospects.

• Introductory marker strategy.

QUALITY FUNCTION DEPLOYMENT (QFD)

Introduction

Quality function deployment (QFD) is designed to integrate customer views or preferences into the standard NPD process. QFD is the dominating technique used in a total quality management (TQM). QFD is a structural approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those needs (Crow, 2002). The list of desired consumer attributes generated by market research is transformed into a list of parameters that the designing team can use. The “voice of the customer”, which describes these stated and unstated customer needs or requirements (Crow, 2002), drives the product design and production process (Siluvian, 1986). The methodology permits measuring the trade-offs and costs of providing the customer requirements (Kotler, 2002).

One major function of QFD is that it helps to improve the interaction between the various departments that make up the NPD team: Marketing, test engineers, design engineers, finance, product support etc. A sort of collaboration between these departments is required to the production of a superior product which will eventually meet the end-user expectations. A proactive involvement of these departments can lead to a balanced consideration of consumer inputs at the various phases in the NPD process and could also provide a platform for team members to relate previously hidden information.

Consumer's interests in the new product design are organized into a product planning matrix. The matrices help to convert consumer requirements needs (high level) into appropriate production techniques (lower level) with a sole aim to satisfy these needs. While the QFD matrices are a good communication tool at each step in the process, the matrices are the means and not the end in itself (Crow, 2002), in integrating consumer inputs into designing new products.

Consumer inputs and Organizational Requirements

Consumer interests in the evolving of a new product could be captured in varying ways, which normally include: field reports, warranty data, focus groups, surveys, direct discussion/interviews, customer specifications, observation etc. It is however pertinent to note that various type of consumer voice could be expressed in buying a unit: the voice of the procuring company, the voice of the end-user and the voice of the support/maintenance company. The challenge of the NPD team is on how best to integrate these diverse interests to producing superior products which will not only compete favorably with existing brands but will also enjoy high consumer appeal. One technique that is used popular in accomplishing this is to employ multiple columns for different priority ratings associated with each consumer voice in the product planning matrix.

NPD team should also recognize that consumers/respondents normally try to express their needs in terms of how the need could be fulfilled and not what the need really is. The team should be able to decipher the reason for the need until they get to what the real need is.

After consumer requirements are generated the team will need to organize them. The mass of interview notes, requirements documents, market research, and customer data needs are to be distilled into a handful of statements that express key customer needs (Crow, 2002). One good technique used in putting these consumer inputs into a more organized format is through affinity diagramming. Crow (2002), has suggested the following as a means of organizing consumer inputs:

• Brief statements which capture key customer requirements are transcribed onto cards.

• A data dictionary which describes these requirements is prepared to avoid any misrepresentation.

• The cards are organized into logical groupings or related needs.

The above will assist in eliminating or reduce data redundancy and helps in organizing the consumer needs used in preparing the first QFD matrix.

The NPD management team should also identify those needs or requirements which are not explicitly expressed by the customers. The set of needs do not normally feature in the QFD matrix except there is need to process one or more of these needs. Product engineers, marketers or consumer support representative can decipher these needs by observing how the customers use or maintain the products and hereby spot areas for improvement.

In the QFD process, there is a need to examine what type of relationship exists between consumer inputs and corresponding technical response. The organization must determine how actions taken in designing a new product based on consumer preference have on the overall consumer requirements. The QFD team should determine if there indeed exist a direct link relationship, indirect or no relationship at all. As the existence of a direct relationship helps to determine the strength of such relationship, such meeting point must be noted on the matrix diagram. The QFD team should also compare the consumer input-technical response relationship in a particular design process with those of existing competing brands. This will help the NPD team in producing highly competitive and superior product with great consumer appeal. QFD teams should endeavor to examine co-relationship among all technical requirements employed in designing a new product. This will help in resolving conflicts in organizational responses to the total generated consumer preferences.

The QFD Process

The basic QFD process consists of four basic phase that is carefully integrated into the NPD process. During each phase one or more matrices are prepared to help plan and communicate critical product and communicate critical product and process planning and design (Crow, 2002). QFD starts at product planning, continues to product design and process design and concludes at process control, quality control, testing, equipment maintenance, and training. The process therefore involves multi-functional disciplines, to be able to adequately take care of the diverse range of activities involved in the project. QFD is synergetic with multi-function product development teams. It can provide a structural process for these teams to begin communicating, making decisions and planning the product (Crow, 2002).

A great deal of time would have to be spent on fore planning to ensure every member fully understands what is expected of them and that they all agree on proposed technical requirements before the process starts.

• Product Planning: This involves building a matrix based on identified consumer needs. Crow, 2002 has outlined the sequence of preparing the product planning matrix to include the following:

• Organize and Prioritize Customer requirements

• Customer needs are prioritize on a 1 to 5 rating scale using ranking or paired comparison techniques

• The customer needs must also reflect desired market segment(s)

• Break down matrix into smaller modules when the number of requirements is more than 20 to 30 items.

• Analyzing Competitive opportunities

• Using feedbacks from market surveys, consumer brainstorming meetings or focus groups to evaluate product prototype against competing products. To get a balanced view include competitor's customers.

• Identify price points and market segments for products under evaluation.

• Identify areas of improvement based on warranty, service, reliability & consumer compliant problems.

• Develop a product strategy based on information derived from the above.

• Evaluate current strengths and weakness relative to the competition,

• Determine how these strengths and weakness compare to customer priorities, and identify definite areas of improvement and where no improvement will be made. This will help to focus attention on areas with the greatest payoff.

• Identify opportunities for breakthrough's surpassing competing goods.

• Organize technical characteristics/response to consumer requirements into categories. Such established response/characteristics should be meaningful, measurable and global.

• Develop relationships between customer inputs and technical response/characteristics, using symbols for strong, medium and weak relationships. Note those technical characteristics that do not relate to consumer needs

• Technical Evaluation of Competing Products.

This evaluation should help to determine technical benchmarking and should be based on the defined technical characteristics. Data like warranty/service, repair occurrences and costs should be obtained.

• Develop preliminary target values for product requirements or technical characteristics.

• Determine potential positive and negative interactions between stated technical characteristics using symbol for stronger or medium, positive or negative relationships. Too many positive interactions suggest potential redundancy when you have relatively few technical characteristics. Concentrate on the negative interactions considering product concepts to overcome this potential trade off's or consider tradeoffs in establishing target values.

• Determine importance ratings. Assign a weighting factor to relationship (9-3-1, 4-2-1, or 5-3-1). Multiply the customer importance rating by the weighting factor in each box of the matrix and add the resulting product in each column.

• Develop a difficulty rating on a 1-5 point scale. 5 being very difficult and risky for each technical characteristic. Consider technology maturity, personnel technical qualifications, business risk, manufacturing capabilities, supplier/subcontractor capabilities, cost and schedule. Avoid too many difficult/high risk items as this will delay development and exceed financial projections. Analyze the matrix and finalize the product development strategy and product plans. Determine line of action and area of focus and finalize target values. To maintain focus on “critical few” less significant items may be ignored with the subsequent QFD matrices. Maintain the product planning matrix as customer requirements or conditions change.

One should endeavor to keep the amount of information in each matrix at a manageable level for a successful QFD matrix. Larger and more complex product should be broken down into hierarchical levels. As this product plan/concept is based on initial market research, it is necessary to carryout feasibility studies to determine the feasibility of the concept.

• Concept Selection and Product design: After product planning phase there is need for a more detailed product specification. This specification together with the technical characteristics helps in concept development. Developed concepts are then analyzed and evaluated. A concept selection matrix is prepared to help with this evaluation process. Crow (2002) has outlined the process involved in the preparation and evaluation of a concept selection matrix to include the following:

• Technical characteristics are listed down the left side of the matrix. This will serve as evaluation criteria.

• Importance rating and target values are carried forward normalized from the planning matrix.

• List the product concepts across the top of the matrix.

• Using the QFD symbols for strong, moderate or weak, the product concepts are evaluated on how well they satisfy the technical characteristics on the left. And if the product concept does not satisfy the characteristics the column is left blank.

• Multiply the symbol weights (5-3-1) by the importance rating for each criterion.

• The weighted factors are added for each column.

• The concept with the highest total is the preferred concept.

• This concept selection technique could also serve as a design synthesis technique. For a concept with a blank or weak symbol other concept with strong or moderate symbol are analyzed to see if a new approach can be derived by making use of another concept approach to improve on the preferred approach.

• A product concept is selected.

• Selected product concept is represented with a design layout, from which critical parts could be identified. Criticality is determined in terms of effect on performance, reliability, and quality. Techniques like Failure modes and Effect analysis (FMEA) can be used to determine criticality from a reliability or quality view.

The product design or part deployment matrix is then prepared. The deployment matrix is prepared in a way that is similar to the product planning matrix. Crow (2002), has described the steps used in preparing a deployment matrix to include the following:

• The technical characteristics in the product planning matrix are listed down the left side of the part deployment matrix, along with priorities (based on the product planning matrix importance ratings) and target values.

• These technical characteristics are converted into critical subsystem or part characteristics. This conversion is based on the criticality of the subsystem as well as their characteristics from a performance perspective. This complements consideration of criticality from a quality and reliability perspective.

• Relationships are determined between technical characteristics and the critical subsystems or part characteristics.

• Importance ratings are calculated and target values for each critical subsystem or part characteristics are established.

• Process Design: The aforementioned concept selection matrix will help inevaluating/comparing several manufacturing process approach, thereby helping theorganization to choose a preferred approach. The consumer inputs now translates effectively into corresponding organizational response, and are used to plan the process for fabricating and assembling the product important processes and tooling requirements can be identified to focus efforts to control improve and upgrade processes and equipment (Crow, 2001). Additional matrices are also prepared to show process control, quality control, set-up, equipment maintenance and testing. The process step indicated on the process planning matrix serves as the basis for planning and determining specific process and quality control steps. The main reason for process planning is to ensure that manufacturing is focused on the important process that will have the greatest effect on producing a product that satisfies consumer needs.

Factors critical for a successful QFD process

• Multi-functional/multi-disciplinary team: QFD processes are very complex and normally require a high level expertise at all stages of the process. So the management team must get the best hands on the job from all departments involved. And since, it involves a variety of processes; the QFD management team must enhance cooperation from team members drawn from diverse disciplines. Team members must clearly understand what is expected of them and must strive to establish consensus at different stages of the process.

• Clear goals and scope of QFD process: The organization employing QFD must have a thorough knowledge of all the processes involved in the QFD methodology. It is also necessary but not compulsory for a previous experience in QFD application in the designing of a successful product. It may help not to use QFD on a large and complex project if possible. The company must also be clear on what extent that they intend to reach when applying QFD in the design process.

• Regular meetings: The QFD team should meet regularly for a proper evaluation of progress. This will help remove ambiguity in the final result and ensure roles and

interest of the various group are not conflicting.

• QFD hands-on training: A facilitator should be engaged to give team members hands-on training and exercises on the QFD methodology and to help guide the initial efforts. This should help to increase confidence of the team members and hence competence. It will also help in clearly define roles to be undertaken by the groups and individuals that make up the group.

• Avoid gathering perfect data (Crow, 2002): The team must make every effort to proper harness all customer insights and data that exists within the organization staffs. It is also necessary to spend time gathering all sorts of information from the customer before starting on the QFD process. Avoid technical ignorance and the belief that company personnel know more than the customer (Crow, 2002).

• Management commitment: The organization management should demonstrate commitment to the QFD process. Finances, organizational time, manpower, machineries etc. must be directed towards the process.

QUALITY FUNCTION DEPLOYMENT (QFD) AND CUSTOMER INVOLVEMENT

When designing a new product or service, that will eventually become successful in the market, organizations need to be able to adequately integrate some sort of end-users inputs into the design process. NPD is often viewed by many practitioners as a non-interactive and seller-dominated process. Consumers have therefore been involved rather sparingly in many NPD schemes, Consumer play only passive roles in the concept and market testing phase in some consumer involvement schemes. Organizations differ on the extent of consumer involvement in their NPD schemes. The number one reason why many new products fail is either a complete or a partial neglect of the consumer's voice in their design process. Integrating consumer inputs involves determining what is important to the consumers with respect to their actual needs and requirements and how the organization is able to translate these needs and requirements into concepts that would be meaningful to the designers of the products.

The QFD methodology ensures that consumer inputs actually guides most of the phases of the product development process. Consumer feedbacks in the latter stages of the design process are not explicitly supported by the QFD process. However, the voice of the customer captured in the early phase of product development could be adequately translated into specific plans to produce products that meet those needs. Also the company can also get other information peculiar to individual customers and get an idea of how many customers use their products and competitors products. This will help the organization to evaluate the position of their products in the market with respect to competing goods.

The Voice of the Customer.

Customer voices are diverse. They represent the wants and requirements of the customers expressed in the customer's own words. Customers normally express these needs in terms of how they want the needs to be satisfied. The company translate these needs into technical characteristics and finally into process parameters for the actual design.

Customer needs generated during the QFD process could be classified into:

• Primary needs:- These are the actual needs of the customers viewed from the customer's point of view. They could be used to set the strategic direction for the new product development process.

• Secondary needs: These indicate how the NPD team intends to satisfy the corresponding primary needs. This is viewed from the perspective of the organization. And other factors like financial projections, marketability, resources, etc. are considered actively.

• Tertiary needs: These are also referred to as operational needs. They consist of a list of attributes that the engineers and R&D team could use to satisfy the secondary needs.

THE QFD METHODOLOGY AND CUSTOMER INVOOLVEMENT

QFD have been described and categorized using the concepts of Longitudinal and Lateral dimensions of customer involvement.

The Longitudinal dimension refers to all points of interaction between the customers and the different phases of the design process. The phases, for the purpose of explanation includes: specification, conceptual development, detailed design, prototyping and final product.

In contrast, the lateral dimension, relates to how deeply the customers are involved in the design process. The dimension is related to what role the customers have when they interact with design process and to what degree customers partake in design work (Kaulo, 1998). Eason (1992) has described the “design for”, “design with”, and the “design by” category to explain this dimension.

Longitudinal dimension of customer involvement in the QFD process

The Longitudinal dimension relates to the customer involvement at the different phases of the NPD process. For QFD the initial requirements analysis and specification phase is the only contact point designers have with customers. Though consumer involvement is still practiced at the latter phases of the design process, the QFD does not really clearly support such consumer involvement. QFD offers an approach that supports structuring and representation of information on customer requirements, and especially how to link customer requirements to design characteristics (Kaulo, 1998).

Lateral dimension of customer involvement in the QFD process

Lateral dimension of customer involvement in the QFD process could be categorized into:

• The “Design for” strategy: Products are designed on behalf of the customers. QFD offers a clear definition of roles; the engineers who design the products play the mostprominent role. In this strategy consumer inputs are insignificant but are usually generated. The design process is guided data generated on the consumer by the organization. The approach focuses on an initial diagnosis and a deductive transformation of these initial requirements into performance measure (Kaulo, 1998).

• The “Design with” strategy: Represents an iterative approach to product design. This strategy presents a way of relating with customers. The designers get feedbacks from consumer reactions to several product concepts presented to them. At the latter stages of the design, models or prototypes are shown to customers, which are subsequentlyrevised to consumer specifications. Though conventionally, the QFD does not clearly require this sort of interactions with the customers, it could be suitably adapted by organizations to accommodate them.

• The “Design by” strategy: This strategy totally removes any distinction between the customers and the designers. Customers take part, not only by relating their problems, needs and wishes, but also by being actively included in the process of developing and selecting different solutions (Kaulo, 1998). The forum for design includes small group exercises, and not one-to-one interviews. The designer not only involves the customers in providing solutions to stated problems but also actively engaging them in the designing process. Several organizations are now adapting the QFD to achieve the aforementioned scenario.

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