Rapid prototyping...

Even the biggest yacht ever built requires a scale 1 prototype.

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Car racing and NPD

The Importance of Framing in Product Choice

Dan Ariely, a behavioral economist from Duke, has done some pretty interesting research to show how consumer preferences can be manipulated by the way choices are framed. He makes an argument that most consumers don't know their absolute preferences, but rather only their relative preferences.

Here is his TED talk on the subject, which gets into the implications for product choices at about 11:10 into the video.

Presumably well-designed conjoint would not be subject to confounding by Assymetric Dominance, as long as it had enough variation and options.

Better Place Best Practices

Company Background

Better Place was founded in 2007 and is headquartered in Palo Alto. The company is creating and deploying electric vehicle (EV) services, systems and infrastructure across the world. Better Place plans to first launch its services in Israel in 2011, followed by Denmark, Japan, Australia, United States and Canada. For the past 2.5 years Better Place has been in the process of developing EV charge spots, switching stations and software with a strong emphasis on consumer needs.

Product Development Mindset

In an interview with a Better Place representative I learned that Better Place is attempting to offset consumer’s aversion to change by taking an extreme focus on familiarity needs. Better Place is asking people to take a large leap of faith on a technology that many view with some skepticism. By taking on such a mammoth task the company has realized along the way that they must take an extremely focused approach on ease of use for the consumer. This focus on customer needs is reflected in the creation and design of the Better Place Switching Station seen here: http://www.youtube.com/watch?v=KKA4GhVn0a4&feature=player_embedded.

Switching Station Product

The company has decided to create the switching station in order to allow those users who want to drive long distances without recharging at a parked charge spot to have the ability to drive longer and further. In discussing the need for this service, I learned that Israel is roughly the size of New Jersey and that an overwhelming majority of Israeli drivers do not drive far enough in one day to exhaust an EV battery’s charge. However, Better Place recognized that the handful of days out of the year when a driver will actually drive 100+ miles in a day will be at the forefront of consumer’s minds when they are deciding to buy an EV and find there is no solution for rapid charging on the go when the battery is dead. This thought process bred the creation of the idea of a switching station where EV drivers can drive into a car wash-like structure and swap their low charge battery for a fully charged battery. Since the switching station is essentially a substitute for the petrol car’s gas station, Better Place went to a considerable effort in designing the switching station in such a way that it can complete the battery switching process and get the driver back on the road in 80 seconds. Since buying an EV vehicle and opting into the Better Place network requires a behavioral shift on the part of the consumer, Better Place wanted to make sure the process of switching the battery was as easy, if not easier, than filling up your car at the gas pump.

Switching Station Product Development

In developing the concept and design of the switching station, Better Place has taken a number of steps to build their product. Initially the company came up with the idea of building the switching station by observing the status quo and driver’s expectations around driving. The company refined the product by enlisting the help of a small pilot group of Israeli drivers in Jerusalem to take part in testing their products and services. Participants in this pilot program have played a large role in determining the customer needs for the switching station. In addition, Better Place identified the heaviest users of switching stations to be taxis and has agreed to a partnership with Tokyo’s largest taxi operator to test a switching station in Tokyo to help refine the product specifically for their biggest target customer.

-Brent Perez

Sony as Best Practice Company

Television production is an important business for Sony. After identifying European customer needs to have more energy efficient television by observing and interviewing customers, Sony Japan invented outstandingly environmentally friendly televisions. On the basis of the interview with a former employee of Sony, I will report how Sony successfully translated the customer needs into the new televisions. The below practices for this television case are used in many other cases at Sony, although not for all.

Brainstorming

Sony is well known for coming up with innovative idea including portable CD players and Beta (video). Sony’s practices of brainstorming make Sony excel in this area. What were some practices of the brainstorming at Sony for the television case? First, the brainstorming was conducted by diverse team members. The team included former engineers, designers, marketing employees, employees with the knowledge for international markets, and employees at the product safety division. Men and women as well as senior managers and junior employees equally contributed to the discussion. Indeed, Sony ended up realizing second-year junior employee’s idea of using sensors to switch-off televisions when nobody is in front of the televisions. This is rare in the Japanese senior-oriented society, where junior employees typically do not make strong comments in front of senior managers. Second, to enhance the diversity, each employee was assigned a different task before the brainstorming. Because of this, different employee brought different ideas and thoughts on the day of the brainstorming. Third, there were principles for the brainstorming such as: defer judgment (not criticize ideas at the brainstorming); focus on a small section of the product at a time; and sketching ideas (be visual). Please note that these principles are similar to those of IDEO. Another principle was to focus intensively for two entire days to generate a large number of creative concepts, get rid of weak ideas, and draw pictures of the concepts. This is similar to the Deep Dive approach at IDEO.

As a result of the brainstorming, the team came up with a large number of ideas to enhance the energy efficiency including: using sensors to switch off the televisions when nobody is in front of the televisions; a technology to reduce energy consumption of stand-by mode; and replacing lamps at the back of liquid crystal televisions with more energy efficient lamps. Using its market data which was gathered through its television business, Sony narrowed down the ideas and came up with its initial product concept.

Concept Testing

Sony is good at testing its innovative concepts. In the television case, Sony used its concept testing method similar to what we learned in the class. Specifically, it showed its prototype to customers and systematically asked the following questions:

1. Would you buy this product? Please rate it on 5 scales.

2. How much do you think you would like or dislike the product?

3. How would you rate the product in terms of being new and different from other products currently available?

4. How well would the product solve a problem or fulfill a need for you?

5. Would the product solve a problem or fulfill a need for you better than, not as well as or about the same as others?

6. How do you feel about the believability of the product?.

Interestingly, Sony did not show a potential price to its survey participants. According to its former employee, Sony did not believe customers’ opinions on price. Instead, they believed the opinion of its distributors (dealers and retailers) because the distributors’ opinion is based on their data. In addition, Sony did not use the conjoint analysis in this case.

Sony also conducted depth interview to customers, presenting its prototype. As a result of the concept testing survey and interview, Sony modified its prototypes and completed its innovative energy efficient televisions with the sensors to switch off the televisions when nobody is in front of the televisions.

Yohei

JCI - Translating Customer Needs Into Outstanding Products

Johnson Controls (JCI) are a global market leader in Automotive Experience, Building Efficiency and Power Solutions. For over a century, JCI has been working to find new ways to improve the places where people live, work and travel. Their primary success factor is their understanding of their customers' core needs and focus on innovation. Capitalizing on the strong global demand for energy efficiency and sustainability, JCI's goal is to make it easy for their customers to go green, and this is the position that informs their NPD decisions.

Essentially, JCI’s competitive advantage comes from being able to deliver eco-friendly solutions that also maximize their customer’s ability to achieve their key business goals. The types of products Johnson Controls manufactures and sells also have a high profile in their customers’ sustainability. For example, JCI offer car seats that are offering 100% recyclable car seats, requiring less foam than traditional seats that are also more comfortable. This enhances consumer preference, surpasses vehicle manufacturer requirements, ultimately, providing a better product to their customers. JCI’s building efficiency products can also be a component of a Leadership in Energy and Environmental Design (LEED).

Their successful translation of customers’ needs into outstanding products and services is due to their intensive focus on innovation and extensive investment in research and development. They combine innovative, advanced customer research methods with investment in unique laboratories and highly-streamlined operational processes to allow them to develop and disseminate new products as effectively as possible. JCI’s culture is focused on continuous cost-reduction and quality, which has led to the development of robust and disciplined innovation and new product processes. They believe it is essential to get the product right first time and, through this, they have managed to shave 18 months off the design and development process

Their years of experience in the sectors that they operate have also helped them to develop an in-depth understanding of their customer’s primary business needs; this is augmented by extensive consumer research using advanced research methods to assess major trends in society, population, and technology and apply them to the various sectors that JCI operate in. JCI evaluate current consumer groups and future target groups. They assess the impact of brands on product perception. They test new product concepts for future market success. Then, collaborating with teams of designers and engineers, they translate market and consumer intelligence into new product developments. For example, they can identify key areas of interior improvement and better support automakers in the development process. Their Consumer Research Methods Include:
Trend Research, Target Group Research, Brand Research, Product Evaluation, Concept Research

A key component to JCI’s success is the effective manufacturing and delivery of their new products. They invest in business practices that are as innovative as the products they manufacture. In their car interior manufacturing business (which is the largest revenue source), they use various tools and systems to achieve and maintain levels of craftsmanship and consistency for their customers. These include standardized work, Six Sigma, quick changeover, one piece flow, Kaizen, and 5S. All of these operational requirements must be taken account of during the product development stage and, as such, they design many of their car interior products to be modular, standardizing parts wherever possible.

Wiki Refresher

A wiki Refresher has been created for the New Product Development class.

The Refresher is now open and can be updated and revised by anyone.

To make changes, simply follow the steps below:

1. Navigate to http://new-product-checklist.wikispaces.com/NPD+Refresher
2. Browse the Refresher using the links on the left hand side
3. Select a page or section you would like to update
4. Click the “edit” button in the top right hand corner
5. Make changes
6. Then click the “save” button in the top right hand corner

To insert photos:

1. Click the "edit" button in the right hand corner
2. Select the “insert images and files” button in the editor toolbar
3. Select the “upload files” tab
4. Upload a saved (jpg) photo from your computer
5. Select the “inset files” tab
6. Locate and click the file you recently uploaded

ZARA | Identifying Customer Needs in Fashion

IDENTIFYING CUSTOMER NEEDS IN FASHION
• Target consumers are young, fashionable city dwellers.
• Their taste in clothing changes rapidly and is hard to forecast.
• “In vogue” styles can emerge rapidly based upon, for example, what a rock star wears at a concert.
• Traditional fashion companies have lead times of between 6 to 9 months from designing items to getting the item in store.
• ‘Spontaneous’ fashion needs of urban city dwellers are therefore not being 100% fulfilled by traditional fashion designers.

MEETING CUSTOMER NEEDS
• Zara’s vertically integrated manufacturing capabilities allow it to constantly introduction new products and cuts lead time down to 3 weeks.
• Large group of people called “commercials” are responsible for traveling the world and observing trendsetters in order to identify hot fashion trends.
• “Commercials” were allowed great discretion in deciding what items to produce, and an item could be designed, manufactured, and in stores within 3 weeks.
• Zara pioneered concept of “disposable fashion”, manufacturing items that are sold at low price points allowing consumers to “keep up with the latest trend” by purchasing Zara clothes intended to “be worn 10 times”.
• Could respond directly to shifts in consumer taste and deliver trendy items to stores while the item was still “hot” allowing consumers to always be in the “latest trend”.

** Information in this document provided in part by “Zara: IT for Fast Fashion” case published by Harvard Business School. September 6, 2007.

Need-finding and the Harlem Children's Zone

Tirzah Enumah

NPD Section 2

Best Practice Assignment - Harlem Children’s Zone

The Harlem Children’s Zone (HCZ) is a non-profit organization that provides a comprehensive set of services designed to support low-income children in Harlem (a neighborhood in New York City) from birth through college. Behind HCZ is the philosophy that “it takes a village to raise a child.” As a result, HCZ takes on a holistic approach in mitigating, and ultimately erasing, the effects that poverty has on children in Harlem.

HCZ’s “products” are the services it offers to children and their families in Harlem. The founder and director of HCZ, Geoffrey Canada, develops the programs he offers to his community based on a thorough understanding its needs, both as defined by the community and by poverty research, and this is where I think he and Harlem Children’s Zone excels.

Canada looked at some of the realities in his community: low high school graduation rates, high imprisonment rates, high occurrence of single-parent (and therefore single-income) families, and high unemployment relative to the national average (although that gap may be slightly narrower due to the recession). Many of these are present in other impoverished communities, but there is a lot of controversy around how poverty works and why it affects people the way it does. Canada’s approach to product development uses the more liberal views on poverty, which maintains that poverty is the cause of lower “success” rates (I’m using “success” in the traditional sense here, which means steady job/two-parent family/comfortable income).

The programs HCZ offers attack specific mechanisms in which poverty affects children. For example, there is a lot of research on how language development affects children’s analytical cognitive abilities and their performance in school. There is also research that shows that by the time they are 4 (a whole year before they enter school!) children in middle-class families have significantly better language skills than do children from low-income families. Part of the reason for this is a difference in parenting style—middle-class parents tend to talk to their children more than do lower-income parents. To combat this, then, Canada and his team developed a parenting program for expecting parents and parents of children ages 0-3. (Pricing information is not important to this particular assignment, but all of HCZ’s programs are offered free of charge, and HCZ aggressively markets its programs to the community to increase parents’ access to the programs). The program, called Baby College, is a series of workshops that helps new/expecting parents build a toolkit of parenting methods that are effective in developing the language skills and cognitive abilities of their children.

Similarly, Canada developed an all-day pre-kindergarten, Harlem Gems, so parents who work all day have child-care (and free education) for their kids. However, pre-kindergarten doesn’t start until age 4, so there was still a year in which children in Harlem were not being served by HCZ. Canada gathered feedback from the community (and particularly from parents) that showed interest in programming for children ages. In addition, however, Canada saw research that showed that children still had a lot of potential to gain cognitive skills between the ages of 3 and 4, and that this particular year is another critical time in which the achievement gap can widen between middle-class students and their low-income counterparts. As a result, Canada developed the Three Year Old Journey, a program targeted at filling (yet another) gap in services that his community gets.

Canada mostly finds the needs of his community by doing community outreach (HCZ has a large community outreach corps) and combining that need-finding with academic research on the conditions (poverty) that affect his community. He combines those to create programs like Baby College and Harlem Gems, in addition to the numerous other programs that HCZ offers. It’s a fantastic program and the first that provides a comprehensive web of support to children and their families. The results have been incredible and, so far, children in HCZ perform several orders of magnitude better in school than children in similar circumstances but not enrolled in any HCZ program.

Best Practices: Launch and Marketing of New Products at Trader Joe’s

Is there any other high-volume retail food store that has an iconic product associated with it like Trader Joe’s “Two-Buck Chuck?” If you think about it, Trader Joe’s has a quite different relationship with its product mix and its customers from most retail supermarket chains. Because of its private-label strategy, its “value” brand, its limited selection, its store layout, and it’s fun, quirky atmosphere, Trader Joe’s has created the perfect atmosphere to launch new (and occasionally radically new) food products into the mainstream market. Why is Trader Joe’s the perfect launchpad for products? Let’s explore the key factors.

The Brand/Retail Environment

When he founded Trader Joe’s in 1967, Tom Coulombe, a Stanford GSB alum, aimed to create a retail concept that would bring gourmet food to the masses by offering premium quality food and value prices. Inspired by the book Trader Horn and his own experiences trying new foods on vacation, he wanted to create a space that brought the fun and adventure of vacation to the food shopper (1). The Hawaiian shirts, thatch hut motif, blackboard signage, and friendly employees are all designed to engage the customer in a more pleasant experience and prime them to be more adventurous about their food selections. In essence, this sense of adventure is the perfect atmosphere in which to launch new products.

Private Label Implications: Control and Flexibility

From a product standpoint, everything starts with the fact that over 80% of Trader Joe’s products are private label, compared to 16% of products in the rest of the industry (2). That changes the retailer’s scope from one of channel sales and promotion to a more integrated product development process, because they have much more upstream influence and control. In addition to developing and testing their own products in the test kitchen at the company headquarters, Trader Joe’s is often approached by its suppliers who use the retailer as a channel to test new product ideas. This is largely because Trader Joe’s focuses on maintaining good relations with its suppliers and works hand-in-glove with them, even maintaining confidentiality between companies. As one food industry consultant put it, "Their suppliers simply don't talk to anyone about the company," ... They love the company. They are great to work with and pay their bills on time. They don't tell the outside world they have Trader Joe's as a customer.” (2) Because of its upstream control in product development, the company has the ability to move more quickly and more flexibly to incorporate market and customer feedback into their product offerings.

Regional Autonomy

Every store manager has control and responsibility for the product mix in his or her store, as well as the customer experience. With local autonomy, Trader Joe’s can more effectively collect customer feedback, as well as test products regionally first that may or may not end up working at a national level.

Promote Trial, Trial, Trial

Everything in a Trader Joe’s store is set up to promote trial by its customers. There is always a free sample of at least one product, and every employee working on the floor is empowered to open a new container of food to allow a customer to try it. Finally, prices are low and product sizes are small to incentivize purchase – particularly of impulse products.

Store Layout

Finally, TJ’s maintains complete control over the footprint and layout of their stores by refusing to participate in the retail coop system that rules other supermarkets. Instead, they have control over product placement, and they are able to easily move products around according to their performance. When they introduce a new product that lends itself to impulse purchase, they can easily move it to front of store and make those decisions quickly and nimbly based on sales performance rather than product spend. This allows the successful products to rise to the top more quickly.

Conclusion

“Two-Buck Chuck” is more than a catchy name. It represents a mentality of experimentation and iteration in the supermarket retail space that allows Trader Joe’s to continue to stay on the forefront of consumer tastes and work with their suppliers to develop and launch regularly successful new products into their stores.

(1) The Trader Joe’s Adventure, Len Lewis, Kaplan Publishing, 2005: http://books.google.com/books?id=BLPZ_tHDy3kC&source=gbs_navlinks_s

(2) Business Week, “Trader Joe’s Recipe for Success,” February 21, 2008: http://www.businessweek.com/print/magazine/content/08_09/b4073058455307.htm

(3) Fast Company, “Leading Listener: Trader Joe’s,” December 19, 2007: http://www.fastcompany.com/magazine/87/customer-traderjoes.html