Hand In Midterm… Please Place Your Group’s paper and Evaluations in the Envelopes in Front and Hand Them In to Me…

Hand In Midterm…Hand In Midterm…

Please Place Your Group’s paper and Evaluations in the Envelopes in Front and Hand Them In to Me…

Open FloorOpen Floor

Midterm Discussion… What Went Well? What Was Difficult? Suggestions/Questions?

Guest Speaker Thoughts… Characteristics Topics

Preview…Preview…

Concept Evaluation (Chapters 8-12)

Concept Eval System Concept Testing Full Screen Sales and Forecasting Product Protocol

Group Concept Evaluation Discussion (Time Permitting)

PART THREEPART THREE

CONCEPT/PROJECT EVALUATIONCONCEPT/PROJECT EVALUATION

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

Concept/Project EvaluationConcept/Project EvaluationFigure III.1

CHAPTER 8CHAPTER 8

THE CONCEPT EVALUATION SYSTEMTHE CONCEPT EVALUATION SYSTEM

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

The Evaluation SystemThe Evaluation SystemFigure 8.1

Cumulative Expenditures Cumulative Expenditures CurveCurve

% ofexpenditures

Time Launch

Many high-techproducts

Many consumerproducts

Figure 8.2

Risk/Payoff Matrix at Each Risk/Payoff Matrix at Each EvaluationEvaluation

Cells AA and BB are “correct” decisions. Cells BA and AB are errors, but they have

different cost and probability dimensions.

Decision AStop the Project Now

BContinue to Next Evaluation

A. Product would fail ifmarketed AA BA

B. Product would succeed ifmarketed AB BB

Figure 8.3

Planning the Evaluation System: Planning the Evaluation System: Four ConceptsFour Concepts

Rolling Evaluation (tentative nature of new products process)

Potholes People Surrogates

Rolling Evaluation (or, Rolling Evaluation (or, "Everything is Tentative")"Everything is Tentative")

Project is assessed continuously (rather than a single Go/No Go decision)

Financial analysis also needs to be built up continuously

Not enough data early on for complex financial analyses

Run risk of killing off too many good ideas early

Marketing begins early in the process Key: new product participants avoid

"good/bad" mindsets, avoid premature closure

PotholesPotholes

Know what the really damaging problems are for your firm and focus on them when evaluating concepts.

Example: Campbell Soup focuses on:

1. Manufacturing Cost2. Taste

PeoplePeople

Proposal may be hard to stop once there is buy-in on the concept.

Need tough demanding hurdles, especially late in new products process.

Personal risk associated with new product development.

Need system that protects developers and offers reassurance (if warranted).

SurrogatesSurrogates

Surrogate questions give clues to the real answer.

Real Question Surrogate Question

Will they prefer it? Did they keep the prototype product we gave them

after the concept test?

Will cost be competitive? Does it match our manufacturing skills?

Will competition leap in? What did they do last time?

Will it sell? Did it do well in field testing?

An A-T-A-R Model of Innovation An A-T-A-R Model of Innovation DiffusionDiffusion

Profits = Units Sold x Profit Per Unit

Units Sold = Number of buying units

x % aware of product

x % who would try product if they can get it

x % to whom product is available

x % of triers who become repeat purchasers

x Number of units repeaters buy in a year

Profit Per Unit = Revenue per unit - cost per unit

Figure 8.5

The A-T-A-R Model: DefinitionsThe A-T-A-R Model: Definitions

Buying Unit: Purchase point (person or department/buying center).

Aware: Has heard about the new product with some characteristic that differentiates it.

Available: If the buyer wants to try the product, the effort to find it will be successful (expressed as a percentage).

Trial: Usually means a purchase or consumption of the product.

Repeat: The product is bought at least once more, or (for durables) recommended to others.

Figure 8.6

A-T-A-R Model ApplicationA-T-A-R Model Application

10 million Number of owners of video cellphonesx 40% Percent awareness after one yearx 20% Percent of aware owners who will try productx 70% Percent availability at electronics retailersx 20% Percent of triers who will buy a second unitx $50 Price per unit minus trade margins and discounts ($100) minus unit cost at the intended volume ($50) = $5,600,000 Profits

Points to Note About A-T-A-R ModelPoints to Note About A-T-A-R Model

1. Each factor is subject to estimation.

Estimates improve with each step in the development phase.

2. Inadequate profit forecast can be improved by changing factors.

If profit forecast is inadequate, look at each factor and see which can be improved, and at what cost.

Getting the Estimates for A-T-A-R Getting the Estimates for A-T-A-R ModelModel

xx: Best source for that item.x: Some knowledge gained.

Figure 8.7

Item MarketResearch

Concept Test Product UseTest

ComponentTesting

Market Test

Market Units XX X X XAwareness X X X XTrial XX X XAvailability X XXRepeat XX XConsumption X X X XXPrice/Unit X X X X XXCost/Unit X XX

CHAPTER 9CHAPTER 9

CONCEPT TESTINGCONCEPT TESTING

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

Many Ideas Are Eliminated Before Many Ideas Are Eliminated Before Concept TestingConcept Testing

PIC eliminates most new product ideas even before they are developed into concepts.

Ideas of the following types are excluded: Ideas requiring technologies the firm does not

have. Ideas to be sold to customers about whom the

firm has no close knowledge. Ideas that offer too much (or too little)

innovativeness. Ideas wrong on other dimensions: not low cost,

too close to certain competitors, etc.

Market Analysis and Initial Market Analysis and Initial ReactionReaction

Market analysis: in-depth study of market area that the PIC has selected for focus.

Conducted immediately after PIC approval. Initial reaction: preliminary, inexpensive

assessment of concepts, which may be flowing very quickly at this point.

Avoid “bazooka effect” (quickly blasting out concepts without forethought)

Do not include idea source in initial reaction. Respect the “fragility of ideas” -- have more than a

single person involved. Use more than pure intuition -- keep records and

stay objective.

Suggested Questions for the Suggested Questions for the Initial ReactionInitial Reaction

Market Worth: what is the attractiveness of the new product to the targeted customer population?

Firm Worth: Is the new product project viewed positively by management? Does this new product project enhance the firm’s competencies?

Competitive Insulation: Can the product’s advantage be maintained against competitive retaliation?

Concept Testing Cautions and Concept Testing Cautions and ConcernsConcerns

If the prime benefit is a personal sense (aroma, taste).

If the concept involves new art and entertainment.

If the concept embodies a new technology that users cannot visualize.

If concept testing is mishandled by management, then blamed for product failure.

If customers simply do not know what problems they have.

What Is a Product Concept What Is a Product Concept Statement?Statement?

A statement about anticipated product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available.

Example: “A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market.”

Recall the importance of getting responses to product concepts and not simply ideas (Chapter 4).

Note: Discuss ACR Category Info Here…

Purposes of Concept TestingPurposes of Concept Testing

To identify very poor concepts so that they can be eliminated.

To estimate (at least crudely) the sales or trial rate the product would enjoy (buying intentions, early projection of market share).

To help develop the idea (e.g. make tradeoffs among attributes).

Procedure for a Concept TestProcedure for a Concept Test

Prepare concept statement Clarify specific purposes Decide format(s) Select commercialization Determine price(s) Select respondent type(s) Select response situation Define the interview Conduct trial interviews Interview, tabulate, analyze

Some Key Issues in Concept Some Key Issues in Concept TestingTesting

Concept statement: narrative, drawing, model?

Respondent group: Lead users? Large users? Response situation: Where? How? Interviewing sequence: Believable?

Important? Interesting? Would it work? What problems do they see? Would they buy?

Test procedure, change and implement, study findings.

Mail Concept Test -- Verbal Mail Concept Test -- Verbal DescriptionDescription

Here is a tasty, sparkling beverage that quenches thirst, refreshes, and makes the mouth tingle with a delightful flavor blend of orange, mint, and lime.

It helps adults (and kids too) control weight by reducing the craving for sweets and between-meal snacks. And, best of all, it contains absolutely no calories.

Comes in 12-ounce cans or bottles and costs 60 cents each.

1. How different, if at all, do you think this diet soft drink would be from other available products now on the market that might be compared with it?

Very different ( ) ( ) ( ) ( ) Not at all different

2. Assuming you tried the product described above and liked it, about how often do you think you would buy it?

More than once a week ( ) ( ) ( ) ( ) ( ) ( ) Would never buy it

Figure 9.1

Mail Concept Test -- SketchMail Concept Test -- SketchFigure 9.2

Co

mfo

rt

Fashion

Segment 2 Segment 3

Segment 1x

xx x xx

x xx

x

x

xx

x x

xx

x x xx

xx

x

xx

x

x xxx

x x xx

xx

x xx

x

x x

Benefit Segmentation in Swimsuit Benefit Segmentation in Swimsuit MarketMarket

Figure 9.3

Aqualine

Islands

Splash

Molokai

Sunflare

23

1

FashionC

om

fort

Joint Space Map Showing Ideal Joint Space Map Showing Ideal PointsPoints

Figure 9.4

Aqualine

Islands

Splash

Molokai

Sunflare

Benefit Segment 2

Benefit Segment 1

Overall

Fashion

Co

mfo

rt

X

Joint Space Map Showing Ideal Joint Space Map Showing Ideal VectorsVectors

Figure 9.5

CHAPTER 10CHAPTER 10

THE FULL SCREENTHE FULL SCREEN

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

The Full ScreenThe Full Screen

A step often seen as a necessary evil, yet very powerful and with long-lasting effects.

Forces pre-technical evaluation, and summarizes what must be done.

Methods range from simple checklists to complex mathematical models.

Purposes of the Full ScreenPurposes of the Full Screen

To decide whether technical resources should be devoted to the project. Feasibility of technical accomplishment -- can we do it? Feasibility of commercial accomplishment -- do we want

to do it? To help manage the process.

Recycle and rework concepts Rank order good concepts Track appraisals of failed concepts

To encourage cross-functional communication.

Screening AlternativesScreening Alternatives

Judgment/Managerial Opinion Concept Test followed by Sales

Forecast(if only issue is whether consumers will like

it)

Scoring Models

A Simple Scoring ModelA Simple Scoring Model

ValuesFactors: 4 Points 3 Points 2 Points 1 PointDegree of FunNumber of PeopleAffordabilityCapability

MuchOver 5EasilyVery

Some4 to 5ProbablyGood

Little2 to 3MaybeSome

NoneUnder 2NoLittle

Student's Scores: Skiing Boating HikingFun 4 3 4People 4 4 2Affordability 2 4 4Capability 1 4 3 Totals 11 15 13

Answer: Go boating.

Figure 10.2

Note: Look at “cars” Excel spreadsheet

Source of Scoring Factor ModelsSource of Scoring Factor ModelsFigure 10.3

A Scoring Model for Full ScreenA Scoring Model for Full Screen

Note: this model only shows a few sample screening factors.

Factor Score (1-5) Weight Weighted Score

Technical Accomplishment:Technical task difficultyResearch skills requiredRate of technological changeDesign superiority assuranceManufacturing equipment...

Commercial Accomplishment:Market volatilityProbable market shareSales force requirementsCompetition to be facedDegree of unmet need...

Figure 10.4

The ScorersThe Scorers Scoring Team: Major Functions (marketing, technical, operations, finance) New Products Managers Staff Specialists (IT, distribution, procurement, PR, HR)

Problems with Scorers: May be always optimistic/pessimistic May be "moody" (alternately optimistic and pessimistic) May always score neutral May be less reliable or accurate May be easily swayed by the group May be erratic

IRI Scoring ModelIRI Scoring Model

Technical success factors:

Proprietary Position Competencies/Skills Technical Complexity Access to and Effective

Use of External Technology

Manufacturing Capability

Commercial success factors:

Customer/Market Need Market/Brand Recognition Channels to Market Customer Strength Raw

Materials/Components Supply

Safety, Health and Environmental Risks

Source: John Davis, Alan Fusfield, Eric Scriven, and Gary Tritle, “Determining a Project’s Probability of Success,” Research-Technology Management, May-June 2001, pp. 51-57.

Figure 10.5

Alternatives to the Full ScreenAlternatives to the Full Screen

Profile Sheet Empirical Model Expert Systems Analytic Hierarchy Process

A Profile SheetA Profile Sheet

Figure 10.6

Criteria Based on the NewProd Criteria Based on the NewProd StudiesStudies

Must-Meet Criteria (rated yes/no):

Strategic alignment Existence of market need Likelihood of technical feasibility Product advantage Environmental health and safety policies Return versus risk Show stoppers (“killer” variables)

Figure 10.7

Criteria Based on the NewProd Criteria Based on the NewProd StudiesStudies(continued)(continued)

Should-Meet Criteria (rated on scales): Strategic (alignment and importance) Product advantage (unique benefits, meets

customer needs, provides value for money) Market attractiveness (size, growth rate) Synergies (marketing, distribution, technical,

manufacturing expertise) Technical feasibility (complexity, uncertainty) Risk vs. return (NPV, IRR, ROI, payback)

Figure 10.7(cont’d.)

Products 1, 2, 3, and 4

Goal: Select Best NPD Project

Market Fit Tech. Fit Dollar Risk Uncertainty

Product Line

Channel

Logistics

Tim ing

Price

Sal es Force

Desi gn

Materials

Suppl y

Mfg. Tech.

Mfg. Tim ing

DifferentialAdvantage

Payof fs

Losses

Unmit igated

Mi tigated

Product Line

Products 1, 2, 3, and 4

Goal: Select Best NPD Project

Market Fit Tech. Fit Dollar Risk Uncertainty

Product Line

Channel

Logistics

Tim ing

Price

Sal es Force

Desi gn

Materials

Suppl y

Mfg. Tech.

Mfg. Tim ing

DifferentialAdvantage

Payof fs

Losses

Unmit igated

Mi tigated

Product Line

Analytic Hierarchy Process Analytic Hierarchy Process (AHP)(AHP)

Figure 10.9

Ranking of Alternatives:Project Overall WeightP1 0.381 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

P2 0.275 xxxxxxxxxxxxxxxxxxxxxxxxxxxx

P3 0.175 xxxxxxxxxxxxxxxxxx

P4 0.170 xxxxxxxxxxxxxxxxx

Abbreviated Output from AHPAbbreviated Output from AHP

Figure 10.9

CHAPTER 11CHAPTER 11

SALES FORECASTING SALES FORECASTING AND FINANCIAL ANALYSISAND FINANCIAL ANALYSIS

McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.

Why Financial Analysis for New Why Financial Analysis for New Products is DifficultProducts is Difficult

Target users don’t know.

If they know they might not tell us.

Poor execution of market research.

Market dynamics. Uncertainties about

marketing support.

Biased internal attitudes.

Poor accounting. Rushing products

to market. Basing forecasts

on history. Technology

revolutions.

Forecasters Are Often RightForecasters Are Often Right

In 1967 they said we would have: Artificial organs in humans by 1982. Human organ transplants by 1987. Credit cards almost eliminating currency by 1986. Automation throughout industry including some

managerial decision making by 1987. Landing on moon by 1970. Three of four Americans living in cities or towns by

1986. Expenditures for recreation and entertainment doubled by

1986.

Figure 11.1

Forecasters Can Be Very WrongForecasters Can Be Very Wrong

They also said we would have: Permanent base on moon by 1987. Manned planetary landings by 1980. Most urbanites living in high-rises by 1986. Private cars barred from city cores by 1986. Primitive life forms created in laboratory by

1989. Full color 3D TV globally available.

Figure 11.1(cont’d.)

Source: a 1967 forecast by The Futurist journal.

Note: about two-thirds of the forecasts were correct!

Commonly Used Forecasting Commonly Used Forecasting TechniquesTechniques

Technique Time Horizon Cost Comments Simple Regression Short Low Easy to learn Multiple Regression Short-medium Moderate More difficult to

learn and interpret Econometric Analysis

Short-medium Moderate to high Complex

Simple time series Short Very low Easy to learn Advanced time series (e.g., smoothing)

Short-medium Low to high, depending on method

Can be difficult to learn but results are easy to interpret

Jury of executive opinion

Medium Low Interpret with caution

Scenario writing Medium-long Moderately high Can be complex Delphi probe Long Moderately high Difficult to learn

and interpret

Figure 11.2

Handling Problems in Financial Handling Problems in Financial AnalysisAnalysis

Improve your existing new products process. Use the life cycle concept of financial analysis. Reduce dependence on poor forecasts.

Forecast what you know. Approve situations, not numbers (recall Campbell

Soup example) Commit to low-cost development and marketing. Be prepared to handle the risks. Don’t use one standard format for financial analysis. Improve current financial forecasting methods.

Forecasting Sales Using Purchase Forecasting Sales Using Purchase IntentionsIntentions

Use top-two-boxes scores obtained in concept testing, appropriately adjusted or calibrated.

Example: Recall for hand cleanser from Chapter 9: Definitely buy = 5% Probably buy = 36%

Based on history, calibrate as follows: 80% of “definitelies” actually buy 33% of “probablies” actually buy

Forecasted market share = (0.8)(5%) + (0.33)(36%) = 16%.

Forecasting Sales Using Purchase Forecasting Sales Using Purchase Intentions (continued)Intentions (continued)

The 16% forecast assumes 100% awareness and availability.

Adjust downwards to account for incomplete awareness and availability.

If 60% of the market is aware of the product and has it available, market share is recalculated to (0.6) (16%) = 9.6%.

Forecasting Sales Using A-T-A-R Forecasting Sales Using A-T-A-R ModelModel

Assume awareness = 90% and availability =67%. Trial rate = 16% (16% of the market that is aware of the

product and has it available tries it at least once). RS = proportion who switch to new product = 70%. Rr = proportion who repeat purchase the new product

= 60%. Rt = Long-run repeat purchase = RS /(1+Rs-Rr)

= 63.6%. Market Share = T x Rt x Awareness x Availability

= 16% x 63.6% x 90% x 67% = 6.14%.

The following bar chart shows this procedure graphically.

0.9

0.603

0.0965 0.0614

0%10%20%30%40%50%60%70%80%90%

100%

Aware Available Trial Repeat

A-T-A-R Model Results: Bar Chart A-T-A-R Model Results: Bar Chart FormatFormat

Figure 11.3

Bass Model Forecast ofBass Model Forecast ofProduct DiffusionProduct Diffusion

Figure 11.4

The Life Cycle of AssessmentThe Life Cycle of AssessmentFigure 11.5

Calculating New Product’s Calculating New Product’s Required Rate of ReturnRequired Rate of Return

Risk

% ReturnReqd. Rateof Return

Cost ofCapital

Avg. Riskof Firm

Risk on Proposed Product

Figure 11.6

Hurdle Rates on Returns and Hurdle Rates on Returns and Other MeasuresOther Measures

Figure 11.8

Hurdle RateProduct Strategic Role or Purpose Sales Return on

InvestmentMarket Share

IncreaseA Combat competitive entry $3,000,000 10% 0 PointsB Establish foothold in new

market$2,000,000 17% 15 Points

C Capitalize on existingmarkets

$1,000,000 12% 1 Point

Explanation: the hurdles should reflect a product’s purpose,or assignment. Example: we might accept a very lowshare increase for an item that simply capitalized on ourexisting market position.

Hoechst-U.S. Scoring ModelHoechst-U.S. Scoring Model

Key Factors Rating Scale (from 1 - 10)1 ………. 4 ………. 7 ………. 10

Probability of TechnicalSuccess

<20% probability >90% probability

Probability of CommercialSuccess

<25% probability >90% probability

Reward Small Payback < 3 yearsBusiness-Strategy Fit R&D independent of R&D strongly supports

business strategy business strategyStrategic Leverage "One-of-a-kind"/ Many proprietary

dead end opportunities

Source: Adapted from Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschmidt. Portfolio Managementfor New Products, McMaster University, Hamilton, Ontario, Canada, 1997, pp. 24-28.

Figure 11.9

Specialty Minerals Scoring ModelSpecialty Minerals Scoring Model

Management interest Customer interest Sustainability of competitive

advantage Technical feasibility Business case strength Fit with core competencies Profitability and impact

Manufacturing Firm Scoring Model Manufacturing Firm Scoring Model (disguised)(disguised)

Net Present Value Internal Rate of Return Strategic Importance of Project (how

well it aligns with business strategy) Probability of Technical Success

Note: how in each of these examples, the model contains financial as well as strategic criteria.

CHAPTER 12CHAPTER 12

PRODUCT PROTOCOLPRODUCT PROTOCOL

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A Marketing-R&D ConversationA Marketing-R&D ConversationMKTG: We’re going to be needing a solar-powered version of our standard garage door opener, soon.

R&D: How reliable should it be? Should it be controllable from inside the house? Should we use new electronics technology? Should it be separate from the collector system already installed?

MKTG: Well, you’re the technical people, make some recommendations.

R&D: In other words, you don’t know what you want.

MKTG: Cripes, do we have to tell you everything? What do you do for a living? How should we know where the collectors should be located?

R&D: If we go electronic, you’ll say it’s too expensive. If we go electric, you’ll say we’re living in the 1930s. Wherever we put the collectors you will say we are wrong. If we guess, you second-guess.

MKTG: OK. Put the collectors on the garage roof.

R&D: That probably can’t be done.

Figure 12.1

Why Have A Protocol?Why Have A Protocol?

Also known as product requirements, product definition, etc.

Doesn’t it seem obvious and simple? Actually is one of the top success

factors distinguishing winning from losing projects.

Maybe because it involves more than technical aspects.

Purposes of ProtocolPurposes of Protocol To determine what marketing and R&D groups need to do

their work. Think concept life cycle: this is more than a simple concept

statement, yet less than we will have when the first prototype is available.

Try to identify the key deliverables at this point. To communicate essential to all players and integrate their

actions, directing outcomes consistent with the full screen and financials.

To set boundaries on development process or cycle time. To permit the development process to be managed (i.e., what

needs to be done, when, why, how, by whom, whether).

Contents of a Product ProtocolContents of a Product Protocol

Target market Product positioning Product attributes (benefits) Competitive comparison Augmentation dimensions Timing Marketing requirements Financial requirements Production requirements Regulatory requirements Corporate strategy requirements Potholes

Narrow Version of Protocol: End-Narrow Version of Protocol: End-User “I Want” ListUser “I Want” List

This is the “I Want” list for a new lawn leaf blower /vacuum. These are benefits -- how they are achieved is determined during development. Manufacturer stands behind product -- two year full warranty. Electrically and mechanically safe. Good value and lasts a long time --

top quality component parts, state-of-the-art manufacturing. Makes yard clean-up easier -- most powerful blower you can buy. Converts from blower to vacuum without tools. Electrical cord does not come loose. Can be used with existing extension cord. Easy to maneuver. Clog-free vacuuming. Tubes go together and stay together.

A Sample Protocol: Trash Disposal A Sample Protocol: Trash Disposal SystemSystem

Must automate trash disposal at factory cost not to exceed $800. Clean, ventilated, odor-free, no chance of combustion. Must be safe enough to be operated by children; outside storage

safeguards against children and animals. Size must be small enough to work as kitchen appliance, to provide

easy access and eliminate need for double handling of trash. Simple installation Decor adaptable to different user tastes. If design requires opening of exterior walls, structural integrity and

insulation against elements must be maintained. User-friendly, automatic operation, easy to maintain by technical

servicepeople.

Figure 12.3

Quality Function Deployment Quality Function Deployment (QFD)(QFD)

A technique designed to insure that customer needs are focused on throughout the new product project.

First step is the House of Quality (HOQ): gathers desired attributes from customers and translates them to engineering characteristics.

Requires inputs from marketing and technical personnel; encourages communication and cooperation across the functional areas.

Technologies in QFD ExampleTechnologies in QFD Example

Postscript compatible Resolution Edge sharpness Duplex printing Hours training required Speed (text) Speed (graphics)

QFD and Its House of QualityQFD and Its House of Quality

Figure 12.4

Tradeoffs in QFD ExampleTradeoffs in QFD Example

Improving resolution slows down text printing and really slows down graphics printing.

Increasing edge sharpness slows down both text and graphics printing.

Duplex printing speeds up text and graphics printing.

Postscript compatibility improves resolution and edge sharpness.

House of Quality:

Source: Adapted from John R. Hauser and Don Clausing, “The House of Quality,” Harvard Business Review, May-June, 1988.

Customer Attributes Engineering Characteristics

Engineering Characteristics Parts Characteristics

Parts Characteristics Process Operations

Process Operations Production Requirements

Parts Deployment:

Process Planning:

Production Planning:

Converted to:

Converted to:

Converted to:

Converted to:

Moving to Later Stages of Moving to Later Stages of QFDQFD

Figure 12.5

QFD RealitiesQFD Realities

Substantial cost and time commitment. Only mixed results in some applications. Requires top management support and

commitment. Must be viewed internally as an investment. Requires good functional integration. May work better if the team members have a

successful track record of working together before.

Improving QFD EfficiencyImproving QFD Efficiency

Concentrate on only some of the Engineering Characteristics: the most critical, or the ones where improvements are easy to accomplish.

Organize the Engineering Characteristics into groups, and designate responsibility to functional areas.

Do cost-benefit analysis on each Engineering Characteristic to determine which provide the greatest benefit relative to cost of improvement.

Review…Review…

Concept Evaluation (Chapters 8-12)

Concept Eval System Concept Testing Full Screen Sales and Forecasting Product Protocol

Preview…Preview…

Development (Chapters 8-12)

Design Development Team Mgmt Product Use Testing

Next Week Midterm II… Concept Eval/Development

Discussion…Discussion…

Concept Evaluation for Our Group… Direction/Customer Questions Possible Potholes