Value Propositions and Customer Selection A/Prof Jeffrey Funk Division of Engineering and Technology Management National University of Singapore
Dec 06, 2014
Value Propositions and Customer Selection
A/Prof Jeffrey FunkDivision of Engineering and Technology Management
National University of Singapore
Business ModelValue proposition: what to offer and how to
differentiate Customer selection: whom to serve and not serveValue capture: dominant source of revenuesScope of activities: what activities to carry out and
what relationships to haveStrategic control: how to sustain profitability
Outline
Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methodsConclusions
Simple Definition of Marketing
To determine the NEEDS and wants of target market and deliver the desired satisfaction more effectively and efficiently than competitors
What is a Need?
Today’s Business
Customer Needs
Unarticulated
Articulated
Customer Types
Served Unserved
What is a Need? (continued)
Understand needs from perspective of:◦ Economic value◦ Functional value◦ Psychological value
Collecting data on customer needs◦Surveys◦Focus groups◦Analysis of buying patterns
What are the broad trends that impact on customer needs?◦Social networking◦Mobile lifestyles
Do People Know what they Need?
40 years ago did most people think they needed◦Mobile phone◦Internet-compatible phone◦Computer, digital camera◦Foreign vacations
Surveys in early 1980s suggested that users didn’t need/want mobile phones
But they ended up buying one and now, many say they can’t live without one
Part of the problem is that surveys didn’t take into account falling prices of mobile phones
What if we Look at their Purchasing Behavior?
Better than asking them, but still not perfect
Does a person buying a drill need a drill?No, they need a hole!Or maybe they need a way to connect to
items with◦A screw◦A screw and a bolt
What if we Look at their Purchasing Behavior? (2)
Do Westerners only like Western food?
Westerners used to only eat Western food
But now they eat many kinds of foods
How should we have interpreted their
purchasing behavior when they only ate
Western food?
What if we Look at their Purchasing Behavior? (3)
There are other reasons to be careful when generalizing about countries
Generalizations only reflect “averages” or “medians”
And we are interested in specific needs of specific people
If you can find unserved or unarticulated needs, you can be very successful
It’s not Just Consumers, it’s FirmsOrganizations do things inefficiently because
they◦have always done them this way or◦don’t know really understand what they need
30 years ago, many logistics people didn’t know they needed deliveries to assembly lines or retail floor, and not to loading docks!
Does NUS know that they need cloud computing? Or that Google mail is easier to use than NUS mail?
Part of the problem is that final users have little impact on many organizational decisions (e.g., purchasing computers or furniture)
As a Seller of Products & Services
You need to know who makes decisionsWho are the key decision makers?
◦Purchasing managers?◦Other managers?
Who are the key collaborators?◦Retail outlets and other distributors◦Suppliers of complementary products
Does your value proposition match their needs?
What does she
THINK AND FEELWhat really counts
Major preoccupationsWorries and aspirations
What does she
SEEEnvironment
FriendsWhat the market offers
What does she
HEARWhat friends sayWhat boss says
What influencers say
What does she
SAY AND DO?Attitude in public
AppearanceBehavior towards others?
PAINFears
FrustrationsObstacles
GAINWants/needs
Measures of successobstacles
Empathy Maps
Can you define empathy maps for a variety of different segments?
Define a representative user for each segment and define her characteristics, needs, and what she◦Says and does◦Hears◦Thinks and feels
Outline
Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methodsConclusions
Different market segments, i.e., users◦have different willingness to pay and demand different levels of
performance◦demand different types of features or performance◦make different tradeoffs between performance, features, price◦fundamentally want different products
These segments emerge over time◦Often difficult to specify them before products begin to diffuse◦Some markets have more segments (i.e., sub-markets) than
other markets◦Understanding the differences and similarities between
segments is critical for businesses
Market Segments and Diffusion
Segmentation
Categorize customers in groups that have distinct needs◦How many types of customers are there?◦What differentiates them, how are their needs
distinct?◦How valuable might they be (size of market and
potential profitability)?◦Which segments will be the first adopters of the
new technology?◦How will the definitions of the segments evolve?
Understand the differences between product and market segments
Targeting
Select the segment (s) that have the best short and long-term prospects for the firm◦If a new technology, they must be early
adopters of new technology◦have a large potential value (Present/Future)◦fit with the company’s core competency◦preferably not fit with the competitor’s core
competencyYou must justify your choice of target
segment(s)
Must Connect Customer Needs with Company’s Capabilities
Require the effective and efficient reconciliation of
any differences
Market Pull
What the market or segment indicates it needs/wants and is willing to pay for
Company Pull
What the firm is capable of and willing to provide to the market
Voice of the Market
Voice of the Firm
Market-
Based
Firm
Ideally, we would select not just a segment, but the first customers in that segment
In addition to whether the technology is appropriate for the targeted segment, ◦Do you have the connections with the right customers and the
decision makers for those customers? ◦Will these customers tell others about the new technology? ◦Will other customers listen to the first customers?
This an Iterative Process
1. Segment Market2. Identify needs in each market existing products in each market strengths and weaknesses of each product where are the opportunities? 3. Select segment (customer) and propose value proposition (and propose more than just a simple and clear statement, more below)
Outline
Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methodsConclusions
Value Proposition
Value to
the target market
Benefits tothe
target market
Price tothe
target market
=Relative
to
A simple and clear statement of the intended target market, the benefits of the offering, and the price
New technologies/products diffuse because they offer a superior value proposition to users
Value PropositionBut what constitutes a great value proposition?
◦Large benefits and low price
This requires innovation!
Let’s look at some examples (all of them can be
defined as discontinuities). For each of them
◦What is the value proposition?
◦What enables them to have a great value proposition?
◦To a lesser extent, what enabled them to be introduced at that
time?
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, touch screens◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
These Products Introduced New Types of Value
iPad and iPhone◦better user interface for accessing Internet◦touch screen that eliminated need for keyboard◦large number of apps, supported by well-
designed operating systemiPod
◦first portable MP3 player that actually worked◦excellent integration with online music site◦easy control with click wheel
Who were the Customers for these ProductsiPod
◦Music lovers◦Young people
iPhone◦Also young people, why?
iPad◦Many young people, but not those that use
computers for creating documents, Why?How about Apple’s laptops?
But not just final users, there are also other customers
iPod◦Music companies: cooperation with them was
needed for iPod to succeediPhone
◦Phone companies, application software providersiPad
◦Application software providers and also media companies
Multiple types of customers exist for many technologies
Timing (1)
What kind of changes determined their timing?
Was it social, technological, or regulatory changes?
Why weren’t these products introduced much earlier than they were?
Could they have been introduced years before they were?
Timing (2)
All of these products needed ◦Large memory storage◦Fast processors◦But could these products have been introduced
without so much memory or processors? What determined when ICs had sufficient memory
capacity and processor speed?iPad and iPhone needed touch displays
◦What determined the timing of the displays?
Looking to FutureWhat are limitations of Apple’s products?What do these limitations tell us about
potentially better value propositions, i.e., solutions, in the future?
Can improvements in memory and processor ICs or in touch displays lead to◦better products, ◦those with better value propositions? ◦Or might other improvements in other
technologies enable better value propositions?
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, touch screens◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
Touch Screens (1)Many kindsBut most are
variations of either◦Resistive ◦Capacitive (iPhone)
Depend on new materials that are deposited on top of an LCD display
Processors interpret the data
No “look” touch Interface◦ Existing screens require one to look carefully
at screen while touching specific place◦ Tactus offers overlay that
facilitates proper location of finger “Bubbles” rise out of display
when fingers touch display thus helping fingers find “right spot”
These bubbles are formed using MEMS (micro-electronic mechanical systems)
Studies have found that faster and more accurate typing are achieved with the Tactus overlay
How the Tactus System Works
Micro-channels are filled with fluid whose refractive index matches that of top polymer layerThus, transparency is even across surface
What about Customer Selection?
Who are the customers?Why might they want Tactus’ touch
screenWhat might they consider as they make
decisions about touch screen?How can we collect information about
what they consider?
Texture Touch DisplaysSensation of texture can provide more
information for usersThis can be done using changes in
vibration with ◦small motors or ◦transparent electrodes (Senseg), which provide information about texture, etc. http://www.youtube.com/watch?v=1oARSmw21rg (from 1 minute mark)
Early applications: 3D modeling or remote surgery can benefit from data on texture of materials or organs
What about Customer Selection?
Who are the customers?Why do they want Senseg’s touch
screenWhat will they consider as they make
decisions about touch screen?How can we collect information about
what they consider?
Applications for Touch Displays
Not just smart phonesBut also
◦Advertising displays at bus stops or MRT stations
◦Mall information displays◦Self checkout in stores◦Information counter in stores
◦Sony’s AtracTable is being developed for these applications
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
Microelectronic Mechanical Systems (MEMS)
Small feature devices or machines
Fabricated with techniques similar to those used
with integrated circuits
But use many different materials
◦Silicon
◦Polymers
◦Metals
◦Ceramics
Ratchet Mechanism Actuator Torsional Acutator Early Optical Switch Clutch Mechanism Anti-reverse mechanism
http://www.memx.com/
Source: MEMS Technology Roadmapping, Michael Gaitan, NIST Chair, iNEMI and ITRS MEMS Technology Working Groups Nano-Tec Workshop 3, 31 May 2012
Source: Clark Ngyuen, August and September 2011 Berkeley lectures; ppb: parts per billion; ppt: parts per trillion
For Each Application
Who are the customers?What is the specific value proposition for
each of them?How are MEMS better than the current
technology?◦In terms of performance◦In terms of price
MEMS for Inkjet Printers
MEMS are used to eject ink
Benefits
◦Smaller and thus higher resolution nozzles
◦Faster printing because print head covers width
of page
◦Less ink usage
◦Lower cost through IC-based technology
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
Gesture InterfacesKey Components
2D/3D Camera (image sensor)
Tracking, Recognition &
Gesture Understanding
Software
Key dimensions that need improvement are Accuracy, Throughput and Affordability
Leap has Generated Excitement
http://www.youtube.com/watch?v=_d6KuiuteIA
Leap uses multiple camera sensors to recognize gesturesWorkspace is about 3 cubic metersBetter sensors will enable larger work spaces$70 control system that plugs into any computerMIT’s Technology Review calls Leap, “The most important new technology since the smart phone…”
How about Microsoft’s Kinect? http://www.youtube.com/watch?v=o4U1pzVf9hY
For each of these technologiesWho are the customers?What is the specific value proposition for
each of them?How are MEMS better than the current
technology?◦In terms of performance◦In terms of price
Other Applications of Eye TrackingUse cameras to
track eye movements◦Monitor drivers or
other operators of machines
◦Help paralyzed people use computers
As cost of cameras fall◦Eye tracking might
become user interface for non-paralyzedSource: http://www.economist.com/news/technology-quarterly/21567195-computer-interfaces-ability-determine-location-persons-gaze
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
Type of Specs
Incandescent Lamp
Fluorescent lamp
LED OLED
Thickness Very Thick Very Thick 6.9 mm (for LED TV)
1.8 mm
Flexibility Very inflexible, and breakable
Very inflexible, and breakable
Some flexibility Most flexible
Danger to eyes Can’t stare at them
Can’t stare at them
Can’t stare at them
Okay to stare
Lifespan 500-700 hrs >10, 000 hrs 100, 000 hrs 15, 000 hrs
Price of 60 Watt bulb
A few USD <5 USD 70 USD Most expensive
Efficiency/ Brightness
300 USD/Year for 800 lumens
75 USD per year
30 USD per year Not yet efficient
Environmental friendliness
Low efficiency Contains mercury
Most efficient, no toxic chemical
Not yet efficient, no toxic chemical
Comparison of Lighting in 2012
Source: Group presentation in MT5016 module and http://electronics.howstuffworks.com/led4.htm
OLED Display Applications
Customer Types
Cu
stom
er
Needs
Unart
icula
ted
Art
icu
late
d
Served Un-Served
Consumers products display, e.g. TV, mobiles, tablets etc.
Automotive Lighting & Displays
Digital Wall
Transparent Monitor
Household Lighting
?
3D glass
Rollable Display
Build a stretchy
mesh with electronics
on thin islands
connected by springy
bridgesprint mesh
onto thin plastic which
holds the entire mesh
together
Even Greater Flexibility with Conformal Electronics
Build body-worn
stickers that
measure body
activity
Water-proof
Breath-able
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
http://www.siliconsemiconductor.net/article/69596-Efficient-mixing-in-milliseconds-with-lab-on-a-Chip.php
Another Type of Bio-Electronics:Simple form of MEMS with Micro-Fluidic Channels
Applications in Laboratories and in Homes are Emerging as Improvements are Made to Bio-Electronics
Labs:
Customers and Value PropositionsHospitals?Doctor Offices?Homes?
Would less training be needed to use these devices than current devices?
Can patients use them on their own?How about rural areas where there are few
doctors? Can chips and cartridges be placed inside
mobile phones?
Composition of a Bionic Eye
Source: Building the bionic eye: an emerging reality and opportunity, Lotfi B. Merabet (2011)
Source: Biomaterials 29(24–25): 3393–3399
MEMS-BasedElectrode
Electrode Implanted Into Retina
MEMS-based Electrode is Implanted into Retina
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
Fullerenes, Graphene, Carbon Nanotubes
Fullerenes: specific number of carbon atoms arranged as sphere Graphene: flat sheet of carbon atoms
Carbon Nanotubes: flat sheet is rolled so that sides are connected, thus creating tubemultiple walled tube containsmultiple tubes
Graphene A single layer of carbon atoms gives high specific surface
area (1000 -1800 m2/g) with theoretical maximum of 2,600 m2 per gram
Very low electrical resistance, high thermal conductivity (4,000 W/m-K), and high mobility (about 200,000 cm2/Vs at room temperature, compared to 1,400 in silicon and 77,000 in indium antimonide)
One of strongest materials, but yet flexible Unusual optical behavior: equally transparent to ultraviolet,
visible and infrared light Two current markets (composites for strength and electrodes
for conductivity) but also displays, computer chips, and solar cells
Very expensive! But cheaper than carbon nanotubes because less energy and lower purity gaseous feedstock are needed. Also more surface area per gram than carbon nanotube
Source: Segal, Michael (2009). "Selling graphene by the ton". Nature Nanotechnology 4 (10): 612–4Nature 483, S29 (15 March 2012). Also http://www.azom.com/news.aspx?newsID=11679
Improvements in Graphene (and other Materials)
Single layer of graphene with 30 inch diameterFabricate graphene in a roll to roll process in
futureNow there are more than 10 materials that are all
two-dimensional with complimentary properties that could be integrated with graphene to provide extra functionality.
Boron nitride is also one-atom thick and instead of being a conductor it is an insulator (of heat), the best insulator we know
Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3
Improvements in Graphene (and other Materials) - continued
If you go to three atoms thick we have another material called molybdenum disulfide which is a semiconductor, like silicon, but lighter and stronger.
These materials can then be combined in order to fabricate completely new material structures that don't exist in nature.
Source: CNN Home Page, April 29, 2013. http://edition.cnn.com/2013/04/29/tech/graphene-miracle-material/index.html?hpt=hp_c3
Carbon Nanotubes (1)
Diameters and axes impact on ◦levels of conduction and thus ◦whether the carbon nanotube is a conductor, semiconductor, or an insulator
Conducting nanotubes ◦1000 times higher conductivities than copper◦100 times higher current densities than superconductors
Strongest materials known in tensionHigh thermal conductivityBut hard to fabricate (Easier to make long
superconductors)
Potential Applications
Composites for structural materials (e.g., racing bikes)
Anti-fouling paint for shipsPrinted CNT transistors on polymer filmTransparent electrodes for displays,
solar cells
But which ones have the largest need for highest performance and the lowest price sensitivity?
OutlineCustomer needsMarket segments and customer selectionDefinition of value propositionExamples
◦Apple’s recent products, ◦Microelectronic mechanical systems (MEMS)◦Other human-computer interfaces◦Lighting and displays◦Bio-electronics◦Nano-technology, Superconductivity
Quantitative methodsConclusions
SuperconductivityCharacteristics of superconducting
materials◦zero electrical resistance◦expulsion of magnetic fields
Most superconducting materials do so at very low temperatures and thus phenomenon was not useful until recently
Recent Increases in Critical Temperature…
http://www.ccas-web.org/superconductivity/
ProblemsExpensiveOften brittleOnly operate at very low temperatures,
which require liquid nitrogen or even helium
Superconductivity disappears at high currents and/or magnetic fields
Which applications have the largest need for highest performance and the lowest price sensitivity?
Potential ApplicationsMagnetic Resonance Imaging (MRI)Energy usage and transmission
◦Transformers◦Motors and generators◦Cables◦Fault current limiters
Electronic devices (very fast and very low energy consumption) ◦Used in quantum computers
Magnetic levitating trainsFusion
More Information on these Technologies
Can be found in many places, but one place is my slideshare account
http://www.slideshare.net/Funk98/presentations
Slides on technology change from my MT5009 module◦Time series data on improvements◦Drivers of improvements◦Group presentations
OutlineCustomer needsMarket segments and customer
selectionDefinition of value propositionExamplesQuantitative methods
◦Strategy canvas, i.e., Blue Ocean Strategy◦Product development specifications
Conclusions
Previous SlidesProvided qualitative descriptions of value
propositions for technologies that are now considered far superior to previous ones
We would like to have quantitative data◦To show how technologies are superior or may
become superior to the old technologies◦To show this before or during the transition◦To also help us understand the niches that
many technologies occupy for short and long periods of time
The Strategy Canvas of Southwest Airline
LowPrice Meal
s
Lounges
Seating
Class
choices
Hub connectivity
Friendly service
Speed
Frequent
point- to-
point departure (new dimension)
High
Average Airline
Southwest
Car Transport
Mainframe Computers
Mini-computers
Strategy Canvas for Computers in late 1970s
LowPrice
Processing Speed
MemoryCapacity
SmallPhysical Size
User Interface
Customizability
Personal Computers
High
LowShortResponse Time
Personal Computers
Mini-computers
Mainframe Computers
High________________________________________________________________________________________
Premium Wines
________________________________________________________________________________________
________________________________________________________________________________________
Budget Wines
Strategy Canvas of U.S. Wine Industry in Late 1990s
Low________________________________________________________________________________________ Price
Enological terminology
Above-the-line marketing Aging
quality
Vineyard prestige & legacy
Wine complexity
Winerange
Source: W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy, Harvard Business School Press
Many of these factors are related to an elite image
Enological terminology: Tannins and OakAbove-the line marketingWine ComplexityAging QualityWine Range, i.e., Variety
The Four Actions Framework (Blue Ocean Strategy)
ReduceWhich factors should be reduced well below the industry’s standard?
EliminateWhich of the factors that the industry takes for granted should be eliminated?
RaiseWhich factors
should be raised well above the industry’s standard?
Create Which factors should be created that the industry has never offered?
A New Value Curve
Note: factors are price, features, and dimension of performance. You can also think about them as needs.
High_______________________________________________________________________________________________
Premium Wines
_______________________________________________________________________________________________
_______________________________________________________________________________________________
Budget Wines
The Strategy Canvas of Yellow Tail
Low______________________________________________________________________________________________
PriceEnological terminology
Above-the-line marketing
Agingquality
Vineyard prestige & legacy Wine
complexity
Winerange
EasyDrinking
Ease ofSelection
Fun andAdventure
Casella Wines: Yellow Tail
1. Wine maker or winery:2. Appellation: The country or region where the grapes for this wine were grown3. Vintage; 4. Variety5. Ripeness; 6. Estate bottling and winery information
The Strategy Canvas of Cirque du Soleil
LowPriceStar
performers
Animalshows
Aisleconcessio
nsMultiple
Showarenas
Unique
venue
Theme
RefinedWatchingenvironm
ent
High
MultipleProductions
ArtisticMusic and
dance
Fun And
humor
Thrills and
danger
Smaller RegionalCircuses
Ringling Bros. and Barnum &Bailey Value Curve
Cirque du Soleil Value Curve
New Dimensions
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Key Aspects of Strategy CanvasIdentify dimensions of performance (i.e.,
customer needs) for single market segmentIdentify existing products and their levels of
performance and price Quantify performance (and price)Find dimensions of performance that are
currently being ignoredConceptualize new types of products that
can provide new types of performanceThis is an iterative process
For Your Presentation
If you describe a strategy canvas in your presentation, you must justify your strategy canvas with data and/or logic
Outline
Customer needsMarket segments and customer selectionDefinition of value propositionExamplesQuantitative methods
◦Strategy canvas, i.e., Blue Ocean Strategy◦Product development specifications
Conclusions
Establishing Target Specs for ProductsChoose a specific segmentStart with customer needs for the segmentPrepare a list of metrics for the segmentCollect data on metrics for products in the
segmentSet ideal and marginally acceptable target
values for the specificationsReflect on the results and process
Start with the Customer Needs
# NEED Imp ST
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1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••5 The suspension preserves the steering characteristics of the bike.4 •••• •• • •• ••• •••••6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••7 The suspension is lightweight. 4 • ••• • ••• •••• •••••8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •
10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •11 The suspension works with fenders. 1 ••• • • • • •••••12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••
Met
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Metric Imp Units1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB2 2,6 Spring pre-load 3 N3 1,3 Maximum value from the Monster 5 g4 1,3 Minimum descent time on test track 5 s5 4 Damping coefficient adjustment range 3 N-s/m6 5 Maximum travel (26in wheel) 3 mm7 5 Rake offset 3 mm8 6 Lateral stiffness at the tip 3 kN/m9 7 Total mass 4 kg
10 8 Lateral stiffness at brake pivots 2 kN/m11 9 Headset sizes 5 in12 9 Steertube length 5 mm13 9 Wheel sizes 5 list14 9 Maximum tire width 5 in15 10 Time to assemble to frame 1 s16 11 Fender compatibility 1 list17 12 Instills pride 5 subj18 13 Unit manufacturing cost 5 US$19 14 Time in spray chamber w/o water entry 5 s20 15 Cycles in mud chamber w/o contamination 5 k-cycles21 16,17 Time to disassemble/assemble for maintenance 3 s22 17,18 Special tools required for maintenance 3 list23 19 UV test duration to degrade rubber parts 5 hours24 19 Monster cycles to failure 5 cycles25 20 Japan Industrial Standards test 5 binary26 20 Bending strength (frontal loading) 5 MN
Establish Metrics and Units
Link Metrics to Needs1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Need
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Min
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des
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tim
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Dam
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adju
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Max
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ess
at b
rake
piv
ots
Hea
dset
siz
es
Ste
ertu
be le
ngth
Whe
el s
izes
Max
imum
tire
wid
th
Tim
e to
ass
embl
e to
fra
me
Fen
der
com
patib
ility
Inst
ills
prid
e
Uni
t m
anuf
actu
ring
cost
Tim
e in
spr
ay c
ham
ber
w/o
wat
er e
ntry
Cyc
les
in m
ud c
ham
ber
w/o
con
tam
inat
ion
Tim
e to
dis
asse
mbl
e/as
sem
ble
for
mai
nten
ance
Spe
cial
too
ls r
equi
red
for
mai
nten
ance
UV
tes
t du
ratio
n to
deg
rade
rub
ber
part
s
Mon
ster
cyc
les
to f
ailu
re
Japa
n In
dust
rial S
tand
ards
tes
t
Ben
ding
str
engt
h (f
ront
al lo
adin
g)
1 reduces vibration to the hands. • • •2 allows easy traversal of slow, difficult terrain. •3 enables high speed descents on bumpy trails. • • •4 allows sensitivity adjustment. •5 preserves the steering characteristics of the bike. • •6 remains rigid during hard cornering. • •7 is lightweight. •8 provides stiff mounting points for the brakes. •9 fits a wide variety of bikes, wheels, and tires. • • • •
10 is easy to install. •11 works with fenders. •12 instills pride. •13 is affordable for an amateur enthusiast. •14 is not contaminated by water. •15 is not contaminated by grunge. •16 can be easily accessed for maintenance. •17 allows easy replacement of worn parts. • •18 can be maintained with readily available tools. •19 lasts a long time. • •20 is safe in a crash. • •
Benchmark on Customer Needs
# NEED Imp ST
Trit
rack
Ma
nira
y 2
Ro
x Ta
hx
Qu
ad
ra
Ro
x Ta
hx
Ti 2
1
Ton
ka P
ro
Gu
nh
ill H
ea
d S
ho
x
1 The suspension reduces vibration to the hands. 3 • •••• •• ••••• •• •••2 The suspension allows easy traversal of slow, difficult terrain. 2 •• •••• ••• ••••• ••• •••••3 The suspension enables high speed descents on bumpy trails. 5 • ••••• •• ••••• •• •••4 The suspension allows sensitivity adjustment. 3 • •••• •• ••••• •• •••5 The suspension preserves the steering characteristics of the bike.4 •••• •• • •• ••• •••••6 The suspension remains rigid during hard cornering. 4 • ••• • ••••• • •••••7 The suspension is lightweight. 4 • ••• • ••• •••• •••••8 The suspension provides stiff mounting points for the brakes. 2 • •••• ••• ••• •• •••••9 The suspension fits a wide variety of bikes, wheels, and tires. 5 •••• ••••• ••• ••••• ••• •
10 The suspension is easy to install. 1 •••• ••••• •••• •••• ••••• •11 The suspension works with fenders. 1 ••• • • • • •••••12 The suspension instills pride. 5 • •••• ••• ••••• ••• •••••13 The suspension is affordable for an amateur enthusiast. 5 ••••• • ••• • ••• ••14 The suspension is not contaminated by water. 5 • ••• •••• •••• •• •••••15 The suspension is not contaminated by grunge. 5 • ••• • •••• •• •••••16 The suspension can be easily accessed for maintenance. 3 •••• ••••• •••• •••• ••••• •17 The suspension allows easy replacement of worn parts. 1 •••• ••••• •••• •••• ••••• •18 The suspension can be maintained with readily available tools. 3 ••••• ••••• ••••• ••••• •• •19 The suspension lasts a long time. 5 ••••• ••••• ••••• ••• ••••• •20 The suspension is safe in a crash. 5 ••••• ••••• ••••• ••••• ••••• •••••
Benchmark on Metrics
Met
ric #
Nee
d #s
Metric Imp Units ST
Trit
rack
Man
iray
2
Rox
Tah
x Q
uadr
a
Rox
Tah
x T
i 21
Tonk
a P
ro
Gun
hill
Hea
d S
hox
1 1,3 Attenuation from dropout to handlebar at 10hz 3 dB 8 15 10 15 9 132 2,6 Spring pre-load 3 N 550 760 500 710 480 680
3 1,3 Maximum value from the Monster 5 g 3.6 3.2 3.7 3.3 3.7 3.44 1,3 Minimum descent time on test track 5 s 13 11.3 12.6 11.2 13.2 115 4 Damping coefficient adjustment range 3 N-s/m 0 0 0 200 0 0
6 5 Maximum travel (26in wheel) 3 mm 28 48 43 46 33 387 5 Rake offset 3 mm 41.5 39 38 38 43.2 39
8 6 Lateral stiffness at the tip 3 kN/m 59 110 85 85 65 1309 7 Total mass 4 kg 1.409 1.385 1.409 1.364 1.222 1.1
10 8 Lateral stiffness at brake pivots 2 kN/m 295 550 425 425 325 650
11 9 Headset sizes 5 in1.0001.125
1.0001.1251.250
1.0001.125
1.0001.1251.250
1.0001.125 NA
12 9 Steertube length 5 mm
150180210230255
140165190215
150170190210
150170190210230
150190210220 NA
13 9 Wheel sizes 5 list 26in 26in 26in26in
700C 26in 26in
14 9 Maximum tire width 5 in 1.5 1.75 1.5 1.75 1.5 1.515 10 Time to assemble to frame 1 s 35 35 45 45 35 85
16 11 Fender compatibility 1 list Zefal none none none none all17 12 Instills pride 5 subj 1 4 3 5 3 518 13 Unit manufacturing cost 5 US$ 65 105 85 115 80 10019 14 Time in spray chamber w/o water entry 5 s 1300 2900 >3600 >3600 2300 >360020 15 Cycles in mud chamber w/o contamination 5 k-cycles 15 19 15 25 18 35
21 16,17 Time to disassemble/assemble for maintenance 3 s 160 245 215 245 200 425
22 17,18 Special tools required for maintenance 3 list hex hex hex hexlonghex
hex,pin
wrnch23 19 UV test duration to degrade rubber parts 5 hours 400+ 250 400+ 400+ 400+ 250
24 19 Monster cycles to failure 5 cycles 500k+ 500k+ 500k+ 480k 500k+ 330k25 20 Japan Industrial Standards test 5 binary pass pass pass pass pass pass
26 20 Bending strength (frontal loading) 5 MN 55 89 75 75 62 102
Assign Marginal and Ideal Values
Metric Units Mar
gina
l Val
ue
Idea
l Val
ue
1 Attenuation from dropout to handlebar at 10hz dB >10 >152 Spring pre-load N 480 - 800 650 - 7003 Maximum value from the Monster g <3.5 <3.24 Minimum descent time on test track s <13.0 <11.05 Damping coefficient adjustment range N-s/m 0 >2006 Maximum travel (26in wheel) mm 33 - 50 457 Rake offset mm 37 - 45 388 Lateral stiffness at the tip kN/m >65 >1309 Total mass kg <1.4 <1.1
10 Lateral stiffness at brake pivots kN/m >325 >650
11 Headset sizes in1.0001.125
1.0001.1251.250
12 Steertube length mm
150170190210
150170190210230
13 Wheel sizes list 26in26in
700c14 Maximum tire width in >1.5 >1.7515 Time to assemble to frame s <60 <3516 Fender compatibility list none all17 Instills pride subj >3 >518 Unit manufacturing cost US$ <85 <6519 Time in spray chamber w/o water entry s >2300 >360020 Cycles in mud chamber w/o contamination k-cycles >15 >3521 Time to disassemble/assemble for maintenance s <300 <16022 Special tools required for maintenance list hex hex23 UV test duration to degrade rubber parts hours >250 >45024 Monster cycles to failure cycles >300k >500k25 Japan Industrial Standards test binary pass pass26 Bending strength (frontal loading) MN >70 >100
Set Final SpecificationsMETRIC Units Value
1 Attenuation from dropout to handlebar at 10hz dB >122 Spring pre-load N 6503 Maximum value from the Monster g <3.44 Minimum descent time on test track s <11.55 Damping coefficient adjustment range N-s/m >1006 Maximum travel (26in wheel) mm 437 Rake offset mm 388 Lateral stiffness at the tip kN/m >759 Total mass kg <1.4
10 Lateral stiffness at brake pivots kN/m >425
11 Headset sizes in1.0001.125
12 Steertube length mm
150170190210230
13 Wheel sizes list 26in14 Maximum tire width in >1.7515 Time to assemble to frame s <4516 Fender compatibility list Zefal17 Instills pride subj >418 Unit manufacturing cost US$ <8019 Time in spray chamber w/o water entry s >360020 Cycles in mud chamber w/o contamination k-cycles >2521 Time to disassemble/assemble for maintenance s <20022 Special tools required for maintenance list hex23 UV test duration to degrade rubber parts hours >45024 Monster cycles to failure cycles >500k25 Japan Industrial Standards test binary pass26 Bending strength (frontal loading) MN >100
Quality Function Deployment(House of Quality)
technicalcorrelations
benchmarking on needs
customerneeds
engineeringmetrics
target and final specs
relativeimportance
relationships betweencustomer needs andengineering metrics
Differences and Similarities of Setting Target Specs and QFD
Like marketing analysis and strategy canvas, there is a focus on ◦customer needs◦existing products in each market◦strengths and weaknesses of each product
There is also an iterative processDifferences, “setting product specifications”
focuses ◦a single market segment◦relative importance of different needs and setting
detailed specifications for not only products, but not parts and processes
Level of Detail in Analysis
You must make decision about level of detail to include in analysis
Some needs are more important than others to customers and thus require more analysis
Some needs are easier to quantify than others and thus quantitative data is more applicable and necessary for your presentations
But remember why someone buys a drill – because they want a hole!
Conclusions (1)Successful products (including technological
discontinuities) provide users with superior value proposition
A superior value proposition providers users with more value in some way◦Lower price, New dimension of performances◦New features, New forms of access/distribution
These superior value propositions often involve ◦New concepts◦New categories of customers
Conclusions (2)Finding new concepts and understanding when they
might be technological feasible are difficult tasksFinding new concepts
◦New technical concepts are often widely available from researchers in laboratories
◦But determining the form that concepts will take is more difficult, particularly when concepts involve art/aesthetic design
Understanding when new concepts might become technically feasible is also difficult◦Sometimes technological trends help us such as those
represented by Moore’s Law (covered extensively in MT5009)
Conclusions (3)Finding new dimensions of performance or new features
is often the key factor in success◦Or at least finding ones that have been underemphasized
Another key factor is finding customers who value these dimensions of performance, new features
How can firms find these new value propositions and these unmet needs?◦By thoroughly investigating the needs of customers in many
segments◦By understanding the technological and other changes that are
making new value propositions possible
Conclusions (4)
Finding new dimensions of performance, new features, and new customers is only the first step
Then a firm must◦define the product’s specs, scope of activities, and methods of
value capture and strategic control (some of this covered in later sessions)
◦develop and promote the product (not covered in this module)◦make the product available to customers (not covered in this
module)◦firms must be good at both identifying and implementing new
value propositions