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The management challenge in product functional specifications is to find a balance between detailed and graphic representations of the product, which are often time consuming and expensive to produce, and an inexpensive and workable qualitiative model or prototype of the product that can be tested with customers and users. Engineers will sometimes go too far in detailing a product before its feasibility and customer value are established, spending valuable time defining tolerances, risk analyses, design options, and networks of a product that may not survive the test of customer and business value.

Commercialization Analysis

Here is where the product is looked at in terms of how it will be commercialized. Commercialization embodies the successful volume production, distribution, marketing, sales, and support system required to be a winner in the commercial sense. A strategy for commercialization will require a marketing plan and a partnering agreement with other companies in the supply and delivery chain, defining direct and indirect costs and barriers to market success, and identifying the capacity of the company to bring the product to customers and support it over time.

Here is where logistics costs and opportunities are identified, including distribution channels, trends in economic and social developments that might impact on logistics, e.g., availability of a labor base, and competitive forces that might inhibit free flow of the product pull to the customer.

Competitive Analysis

Competitive analysis is the search for competition, competitive differentiation, and value unique to the company in this product concept. Differentiation is the value of the product and the company's capacity to deliver and support it, as compared to the competition. It is relational, based on the opposition. It requires some speculation on how the competition is planning to meet the customer need, and where the competition is in the new product development process.

This analysis relates directly to the company's strategic plan and risks, threats, and opportunities assessment. The analysis also looks at what is liable to happen after a product is made public; that is, how the market will react to the product in terms of competition, barriers, and risks. Technological developments are reviewed here because new product development often spurs technology development and the generation of new companies—even new industries.

Sometimes this means looking for partnering opportunities early to offset potential competitive forces. It may make sense to sit down with the competition to work out a partnership in a growing or new market.

Table 4-5 shows what a competitive analysis might look like.

Finding drivers of competition

What are the drivers or key forces of competition, and what are the key sensitivities in the market that open up opportunities for competition? Drivers of future competition include all the critical success factors and forces that combine to create competition for the target product market. For a new plastic grocery sack, the driver might be capacity to distribute the sacks just-in-time. Any firm might be able to make the sack, but few firms have the distribution and support capacity to get it to stores when they need it. The value in identifying such drivers is that they can be monitored and, in some cases, offset by effective product development and marketing approaches. Drivers include:

■ Technology development. New products create technology challenges that many companies cannot handle, thus a major force in competition is the relative technological strength of other companies in the industry.

■ Visibility of future markets. Future markets may not be visible to competitors, depending on the effectiveness of their marketing activity.

■ Timing. Some competitors will not be a position to take advantage of new markets, even if visible, because of inconsistencies and timing of their own competitiveness.

TABLE 4-5 Competition Analysis

Competition

Pros and cons

Potential response

Potential contingency

Comments

XWZ Company

Has a product in development like ours, but its performance is suspect over time

Competitor is liable to get out of this market if challenged

Partner or merge

■ Financing. New product development requires funding, often from venture capitalists, thus the availability of financing, e.g., interest rates, determines entry for many companies.

■ Scale. The scale of the markets—and the costs of entry—may be too large for many competitors to enter.

Working Out Customer/Client/User Expectations, Needs, Wants, and Requirements

This is process of pinning down the potential customer base, e.g., a marketing function. The phase must define the "pull" of the customer or client for the product or system, as opposed to a process of "pushing' a product at a customer to induce demand. The pull concept is a function of different forces from the push concept. Customers expect a product to perform in a way sometimes different from their needs; in other words, customer expectations are driven by past experience plus customers' vision of success. Customers need a product because of a functional gap, but they may not see that need. Needs is a functional term, one that results from a functional analysis of the customer's environment. Wants are customers' emotional attachment to a given product or system, derived from their wish list of how the world ought to operate. And requirements are functional attributes, e.g., features, that a customer may be looking for.

The way a product is connected to customer needs and expectations is key to this first phase—how will the product under review integrate with customer expectations, needs, wants, and requirements? Again, customers are analyzed in terms of:

■ Expectations—the users' "sense" of what they would really like to see in the product category, what they would embrace if cost was not a factor.

■ Needs—an analysis of what the user needs from a marketing perspective, our judgment of what the user needs, e.g., performance requirements, given their expectations.

■ Wants—a listing of what the customer/user says they want, which might be different from what they expect, need, or require.

■ Requirements—product performance specifications and later, design requirements, more technical product criteria.

This analysis identifies the customer voice by determining what customers/ consumers want in a superior, differentiated product or system enhancement. A user needs and wants study is conducted to produce information on how the new product matches with customer expectations, needs, wants, and requirements. Table 4-6 presents the approach for each study. Its basic output is a vision for the future, based on customer feedback and articulated wants and needs. Studies are conducted regionally to yield customer insights in the context of local and regional settings and cultural characteristics. A summary analysis

TABLE 4-6 User Needs and Wants Study Template (Sample)

Steps

Questions

Analysis

Implications for market growth

Comments

Customer interview group

Define focus group characteristics.

Review focus group data for customer characteristics and transferability.

Must be a representative group or results are misleading

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