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An Analysis of The Support Given to New Product Development in Various Industries

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Introduction

The traditional approach to new product development (NPD) can be described to start and end with the customer (Slack et al., 2004). However, the focus on NPD has evolved over the years, from having an internal company view to external market view.

The article titled, Customer Support and new product development (Goffin & New, 2001), takes us a step further in the approach to NPD. It discusses a study undertaken by the authors to understand the importance of evaluating the customer support requirements during new product development (NPD) stage. They stress how important it is to include customer support requirements at the beginning of the design process, rather than at the end.

The study was conducted with the help of five companies, each of which are in different industries, to identify how customer support is evaluated at design stage and its importance in NPD. The results show that customer support is highly important in different markets with vastly different products. Many companies use customer support not only as a means of gaining competitive advantage but also to increase their revenues.

The following seven key elements of customer support were identified for the study:

Installationii. User-trainingiii. Documentationiv. Maintenance and Repair v. Online Supportvi. Warrantyvii. Upgrades

The five companies which formed part of the study placed varying degree of importance to the above elements in the NPD process. This is evident from the fact that they are not only manufacturing different products but are in totally different industries.

Although previous studies were undertaken to assess the importance of customer support and NPD, no clear relationship could be established between them. In addition, no methodology was developed to evaluate the requirements of customer support.

This was the first study to understand the relationship between customer support and NPD and how customer support requirements can be evaluated to form part of product design and development.

The following report discusses the article (Goffin & New, 2001), in relation to the current practices in the field of NPD and customer support. In conclusion, the report discusses how it has helped in the advancement of theories in operations management.

Current Practices in NPD

Introduction of new products is a considerable risk for companies, and failure to design and present new products, or modification of existing ranges can lead to a loss in competitiveness and, in some cases eventual business failure. A successful product provides an organization to increase its income. A simple but typical design process for a new product is shown below in Figure 2.1 beginning with identification of customer or market needs, which are transformed into product specification leading to its design and development, and eventually its manufacture. Once in manufacture, the market must continue to be evaluated, resulting in the circular iterations of future redesign and developments (Forrester, 2004).

The report focuses on the box, Design and Development, which consists of a number of stages and processes in the NPD. All products or services can be considered as having three aspects (Slack et al., 2004):

Concept: The set of expected benefits that the customer is buying.

Package: Comprising of ‘component’ products and services that provide those benefits defined in the concept.

Process: Defines the relationship between ‘component’ product and services.

Organizations around the world are trying to meet and exceed customers’ “actual or anticipated expectations and needs” (Slack et al., 2004) in order to remain competitive in the market. Hence, it is essential for companies to understand customer’s present and also future needs. (Braham, J., 1996). The following few paragraphs discuss the above three aspects of NPD in further detail.

Concept

When customers buy products or services, they are essentially purchasing a set of expected benefits to meet their needs and expectations, which is known as the concept of product or service. It comprises not of the physical bits that they buy; but the perception of the customers, the organization and its staff in terms of the benefits gained from the products or services (Slack et al., 2004).

For example, when buying a car, they are purchasing a set of expected benefits which might include:

an attractive piece of machinery

that will provide the means of transportation

which is fast, flexible and reliable

over a long period of time

Many companies design their products or services with a view to provide such set of expected benefits to their customers. These are evaluated at the beginning of the NPD stage in order to create the right ‘package’, which provides such benefits.

Goffin and New (2001), suggest that end-users of many types of products, ranging from domestic appliance require customer support at some time – assistance to customers to gain maximum advantage and value from their purchases. This is an important element of the package. Traditionally customer support requirements have had a very little impact during the design stage of NPD, mainly because it not only requires allocation of additional resources but also delays the time-to market of product launch.

The product life-cycle curve highlights many important issues. An important consideration is the timely launch of new products because the life of a product is never infinite. A company’s ability to develop products quickly can have the greatest impact on boosting market share. Creating the right product at the right time requires product strategy and positioning, maintaining development focus, and close collaboration between engineers and marketers (Braham, 1996).

But before the company can begin to develop new products, they must understand their core competency and how it fits their corporate strategy. The company must be able to identify what differentiates their business – product leadership, operational excellence, or customer intimacy and then capitalize on it (Braham, 1996). This will help the company to precisely focus on the various elements of product design.

Goffin and New (2001) have identified the above factor in their research by suggesting that customer support requirement varies between not only industries but within different product categories. For example, a simple product like post-it notes requires practically no customer support (hence eliminating the need to assess and evaluate its requirements during design stage). On the other extreme are vending machines, which require extensive support throughout the life of the product.

The strength of the article (Goffin and New, 2001) lies in compiling some of the important benefits, which a company can gain in including customer support in NPD. Including customer support at design stage can affect both the competitiveness and revenues of an organization.

Package

The composition of products and services usually referred to as package, comprises of both core and supporting products and services. Core goods or services are the fundamental to any package, while supporting goods or services enhance the core. Customer support falls in the area of this supporting service.

Since the product design influences both the amount of support necessary and the means by which it is delivered, evaluating the customer support requirements at the beginning of the design stage will help in designing of these core and supporting products and services (Goffin and New, 2001). For example, decisions taken at the design stage affect product reliability and consequently how often products require maintenance and repair (Lele, 1986.) Similarly a modular approach to product design can reduce repair and upgrade costs (Hedge and Kubat, 1989) For example, new models of portable computers feature modular design allowing users to mix and match disk drives, CD-ROMs and extra batteries (Stephen, 1996). Products that have been designed for easy customer support have a strong differentiating factor in the market (Swink et al., 1996)

The current approach to component design does focus on the above aspect of modular design, with a view to reducing design complexities. The three most common approaches as described by Slack et al. (2004) are standardization (restricting variety – eg. Standard sizes for clothes), commonality (using same components across a range of products and services – as in automobile industry) and modularisation (making ‘sub-component’ products which can be used in different ways – as in university classes). This approach was drove the era for mass customisation of products and service, enabling customers to select, order, and receive a specially configured product – often choosing from among hundreds of product options – to meet their specific needs (Bourke and Kempfer, 1999).

“Superior” products are more successful than “me too” products, as they offer real and unique advantages to users. Innovation must be useful, and rapidly changing customer needs create opportunities for it (Braham, 1996). Sustained innovation gives sustained performance. But commercialising invention is not just about new product development – you need to support those new products, (Shepard, 2001).

Customer support requirements do change over the life of a product, which can have significant effects on long-term customer relationships. However, Goffin and New (2001) provide limited evaluation of how the changes in these requirements can be accommodated in NPD.

Process

This stage examines the processes in which the various components of a product or service are put together. In the past, this stage was delayed until the very end of the design process, causing problems in production when quality and cost constraints were not met. Concurrent consideration of these constraints during the design stage ensures that the products and services are ‘producable’ (Slack et al., 2004).

An important consideration that Goffin (1998) points out in customer support requirement in NPD is the need to make comprehensive evaluation. This early evaluation of product support at design stage has been termed as Design for Supportability (DFS-II). Hull and Cox (1994) suggest that involvement engineers and after-sales group in customer support during the development stage can add substantial value by making the equipment more ‘maintenance friendly’. However, very limited research has been conducted on how this evaluation can be done during NPD.

Hence, Goffin and New (2001) explored this need of evaluating customer support during NPD by researching on the followig issues:

Key elements of customer support in different industries and their relation to characteristics of typical products

Importance of customer support in simple vs. complex products.

Methods companies use in evaluating customer support during NPD.

An important result of their research was the classification of companies in 5 stages based on the degree to which companies evaluate customer support and how over time greater emphasis is put on this area (Goffin and New, 2001). This is summarized below:

Stage 1 Companies put little to no emphasis on customer support in product design. – poor product designs resulting in high maintenance and repair costs and dissatisfied customers.

Stage 2 Companies emphasise reliability and repair times setting quantitative goals on them with no emphasis on broader aspects of customer support.

Stage 3 Broader aspects of customer support are included in NPD by involving field engineers to cover installation times, upgrade times, fault diagnosis times, user training times, repair times/costs. However these take a long time to be integrated in the process

Stage 4 Companies place quantitative goals on all aspects of support during design stage and use lifetime cost models. These goals push development engineers to develop designs that are cheaper and easier to support than previous products.

Stage 5 Financial reporting mechanisms are used to ensure return on DFS investment is clearly visible to management. In addition, management teams recognise the importance of support and allocate sufficient resources and focus to this area.

Goffin and New’s (2001) classification of companies creates a benchmark for those considering customer support during NPD. Companies now have a basis to judge their progress.

There are some of important limitations of their research. First, it was limited to products i.e there the case did not look at how customer support affects service organizations and in design of services.

Second, the sample of companies studied for the research was small. The results show that each of the companies place varying degrees of importance to customer support and NPD. However, the results cannot be conclusively proved and more number of companies need to be researched.

Finally, the research has a very limited scope in terms of geography and aspects of customer support. The effects of customer support requirement in NPD need to be evaluated in global perspective. Since, consumers in different countries have varying degrees of customer support requirement and their dimensions are different, it will have considerable implications in NPD for companies operating on a global scale in producing a globally optimal product.

Conclusion

Goffin and New (2001) provided the first empirical evidence on how support is evaluated during NPD in different industries. It showed that leading companies invest significant resources to ensure that products are easy and economical to support. Previous studies showed that companies delayed the evaluation of customer support during NPD. However, this study revealed that the companies researched had evaluated customer support requirements during the design stage of NPD.

The research also has advanced operation management theory by suggesting methodologies in evaluating customer support requirement during NPD. The involvement of field engineers and after-sales support staff is crucial in determining the different importance of various aspects of support. In addition, the research also identified that companies use customer support as a means to gain competitive advantage and increase revenues.

The case opens up areas in for further research. Investigation can be done in the area of service design and customer support. What elements of customer support are present and how they can be evaluated during new service development? In addition, a methodology for quantifying the key elements of customer support can be investigated to enable proper evaluation during NPD.

Finally, investigation needs to be conducted in respect of financial gains achieved by companies evaluating customer support during NPD. The relationship that exists between revenues earned and costs incurred in the process.

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An Analysis Of The Support Given To New Product Development In Various Industries. (2019, March 12). GradesFixer. Retrieved October 22, 2021, from https://gradesfixer.com/free-essay-examples/an-analysis-of-the-support-given-to-new-product-development-in-various-industries/
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