PART THREE
CONCEPT/PROJECT EVALUATION
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Concept/Project Evaluation
Figure III.1
8-2
Chapter 8
The Concept Evaluation System
8-3
The Evaluation System
Figure 8.1
8-4
Cumulative Expenditures Curve
Figure 8.2
% of
expenditures
Many high-tech
products
Many consumer
products
Time
Launch
8-5
Risk/Payoff Matrix at Each Evaluation
Figure 8.3
Decision 
A
Stop the Project Now
B
Continue to Next Evaluation
A. Product would fail if
marketed
AA
BA
B. Product would succeed if
marketed
AB
BB
• Cells AA and BB are “correct” decisions.
• Cells BA and AB are errors, but they have different
cost and probability dimensions.
8-6
Planning the Evaluation System: Four
Concepts
• Rolling Evaluation (tentative nature of new
products process)
• Potholes
• People
• Surrogates
8-7
Rolling Evaluation (or, "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
8-8
Potholes
Know what the really damaging problems
are for your firm and focus on them when
evaluating concepts.
Example: Campbell Soup focuses on:
• 1. Manufacturing Cost
• 2. Taste
8-9
People
• 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).
8-10
Surrogates
• Surrogate questions give clues to the
real answer.
Real Question
Will they prefer it?
after
Will cost be competitive?
Will competition leap in?
Will it sell?
Surrogate Question
Did they keep the prototype
product we gave them
the concept test?
Does it match our
manufacturing skills?
What did they do last time?
Did it do well in field testing?
8-11
An A-T-A-R Model of Innovation Diffusion
Figure 8.5
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
8-12
The A-T-A-R Model: Definitions
Figure 8.6
• 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.
8-13
A-T-A-R Model Application
10 million
x 40%
x 20%
x 70%
x 20%
x $50
Number of owners of video cellphones
Percent awareness after one year
Percent of aware owners who will try product
Percent availability at electronics retailers
Percent of triers who will buy a second unit
Price per unit minus trade margins and
discounts ($100) minus unit cost at the
intended volume ($50)
= $5,600,000 Profits
8-14
Points 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.
8-15
Getting the Estimates for
A-T-A-R Model
Item
Market Units
Awareness
Trial
Availability
Repeat
Consumption
Price/Unit
Cost/Unit
Market
Research
XX
Concept Test
X
X
XX
Product Use
Test
X
X
X
X
X
XX
X
X
Figure 8.7
Component
Testing
X
X
X
X
X
X
Market Test
X
X
X
XX
X
XX
XX
XX
xx: Best source for that item.
x: Some knowledge gained.
8-16
Chapter 9
Concept Testing
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Many Ideas Are Eliminated Before Concept
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.
9-18
Market Analysis and Initial Reaction
• 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.
9-19
Suggested Questions for the Initial 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?
9-20
Concept Testing Cautions and Concerns
• 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.
9-21
What Is a Product Concept 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).
9-22
Purposes 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).
9-23
Procedure 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
9-24
Some Key Issues in Concept Testing
•
•
•
•
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.
9-25
Mail Concept Test -- Verbal Description
Figure 9.1
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
9-26
Mail Concept Test -- Sketch
Figure 9.2
9-27
Benefit Segmentation in Swimsuit
Market
x xxx x
x
x x
x
x x x x
x
Segment 2
x
Figure 9.3
x xx x
x x
x
x
x xx x x
Segment 3
x
x xx x
x
Segment 1
x x
x
x x x x
x
Fashion
x
9-28
Joint Space Map Showing Ideal Points
Aqualine
Islands
Comfort
Figure 9.4
3
2
1
Molokai
Fashion
Splash
Sunflare
9-29
Joint Space Map Showing Ideal Vectors
Figure 9.5
Aqualine
X
Islands
Molokai
Fashion
Sunflare
Splash
9-30
Conjoint Analysis in Concept Testing: EZPass
• Key attributes: number of accounts to
open, how to apply and pay for an
account, number of EZPass lanes at each
toll plaza, etc.
• 11-minute video of product in action and
its effectiveness in reducing congestion.
• Respondents all received the video, a
questionnaire, and scenario cards showing
combinations of attributes.
9-31
Chapter 10
The Full Screen
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
The 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.
10-33
Purposes 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.
10-34
Screening Alternatives
• Judgment/Managerial Opinion
• Concept Test followed by Sales
Forecast
(if only issue is whether consumers will like it)
• Scoring Models
10-35
A Simple Scoring Model
Figure 10.2
Factors:
Degree of Fun
Number of People
Affordability
Capability
Student's Scores:
Fun
People
Affordability
Capability
Totals
4 Points
Much
Over 5
Easily
Very
Skiing
4
4
2
1
11
3 Points
Some
4 to 5
Probably
Good
Boating
3
4
4
4
15
Values
2 Points
Little
2 to 3
Maybe
Some
Hiking
4
2
4
3
13
1 Point
None
Under 2
No
Little
Answer: Go boating.
10-36
Source of Scoring Factor Models
Figure 10.3
10-37
A Scoring Model for Full Screen
Figure 10.4
Note: this model only shows a few sample screening factors.
Factor
Score (1-5)
Weight
Weighted Score
Technical Accomplishment:
Technical task difficulty
Research skills required
Rate of technological change
Design superiority assurance
Manufacturing equipment...
Commercial Accomplishment:
Market volatility
Probable market share
Sales force requirements
Competition to be faced
Degree of unmet need...
10-38
The 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
10-39
Industrial Research Institute Scoring Model
Figure 10.5
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.
10-40
Alternatives to the Full Screen
•
•
•
•
Profile Sheet
Empirical Model
Expert Systems
Analytic Hierarchy Process
10-41
A Profile Sheet
Figure 10.6
10-42
Criteria Based on the NewProd Studies
Figure 10.7
• 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)
10-43
Criteria Based on the NewProd Studies
(continued)
Figure 10.7
(cont’d.)
• 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)
10-44
Analytic Hierarchy Process (AHP)
Figure 10.9
Goal: Select Best NPD Project
Market Fit
Tech. Fit
Dollar Risk
Uncer tainty
Prod
P
roduc
u ct tLi
Line
ne
Desi gn
P ay of fs
Unmit igated
Channel
Mat erials
Los ses
Mi tigat ed
Logis tic s
S uppl y
Tim ing
Mf g. Tec h.
P ric e
Mf g. Tim ing
S al es Force
Diff erential
A dv antage
Products 1, 2, 3, and 4
10-45
Abbreviated Output from AHP
Figure 10.9
Ranking of Alternatives:
Project Overall Weight
P1
0.381
P2
0.275
P3
0.175
P4
0.170
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10-46
Chapter 11
Sales Forecasting and Financial Analysis
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Why Financial Analysis for New Products 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.
11-48
Forecasting the Demand For Satellite Radio
• In 2000: forecast for 2007 was 36 million
subscribers.
• In 2001: forecast revised to 16 million.
• By end of 2006: actual number of
subscribers = 11 million.
Source: Sarah McBride, “Until Recently Full Of Promise, Satellite Radio Runs Into Static,”
Wall Street Journal, August 15, 2006, pp. A1-A9.
11-49
Forecasters Are Often Right
Figure 11.1
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.
11-50
Forecasters Can Be Very Wrong
Figure 11.1
(cont’d.)
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.
Source: a 1967 forecast by The Futurist journal.
Note: about two-thirds of the forecasts were correct!
11-51
Commonly Used Forecasting Techniques
Figure 11.2
Technique
Simple Regression
Multiple Regression
Time Horizon
Short
Short-medium
Cost
Low
Moderate
Econometric
Analysis
Simple time series
Advanced time
series (e.g.,
smoothing)
Jury of executive
opinion
Scenario writing
Delphi probe
Short-medium
Moderate to high
Short
Short-medium
Medium
Very low
Low to high,
depending on
method
Low
Medium-long
Long
Moderately high
Moderately high
Comments
Easy to learn
More difficult to
learn and interpret
Complex
Easy to learn
Can be difficult to
learn but results are
easy to interpret
Interpret with
caution
Can be complex
Difficult to learn
and interpret
11-52
Forecasting Satellite Radio Sales Using Purchase
Intentions
•
•
•
•
•
•
•
•
•
In 2000, 213 million vehicles in U.S.
95% availability, 40% awareness.
Market potential = 213 million x 95% x 40% = 81 million.
Assume half can afford satellite radio = 40.5 million.
Percentage that will be among the first to try the new
technology = 16%.
Forecast for first year = 40.5 million x 16% = 6.4 million.
Projected yearly growth rate = 10%.
Assuming this growth rate, by end of 2006, expected
total sales = about 10 million.
Note: not too far from the attained number = 11 million!
11-53
Handling Problems in Financial Analysis
• 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.
11-54
Forecasting Sales Using Purchase
Intentions
• 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%.
11-55
Forecasting Sales Using Purchase
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%.
11-56
Forecasting Sales Using A-T-A-R Model
• 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.
11-57
A-T-A-R Model Results:
Bar Chart Format
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Figure 11.3
0.9
0.603
Aware
Available
0.0965
0.0614
Trial
Repeat
11-58
Bass Model Forecast of
Product Diffusion
Figure 11.4
11-59
The Life Cycle of Assessment
Figure 11.5
11-60
Calculating New Product’s
Required Rate of Return
Figure 11.6
% Return
Reqd. Rate
of Return
Cost of
Capital
Risk
Avg. Risk
of Firm
Risk on
Proposed
Product
11-61
Hurdle Rates on Returns and Other
Measures
Figure 11.8
Product
A
B
C
Strategic Role or Purpose
Sales
Combat competitive entry
Establish foothold in new
market
Capitalize on existing
markets
$3,000,000
$2,000,000
Hurdle Rate
Return on
Investment
10%
17%
$1,000,000
12%
Market Share
Increase
0 Points
15 Points
1 Point
Explanation: the hurdles should reflect a product’s purpose,
or assignment. Example: we might accept a very low
share increase for an item that simply capitalized on our
existing market position.
11-62
Hoechst-U.S. Scoring Model
Figure 11.9
Key Factors
Probability of Technical
Success
Probability of Commercial
Success
Reward
Business-Strategy Fit
Strategic Leverage
1
……….
<20% probability
<25% probability
Small
R&D independent of
business strategy
"One-of-a-kind"/
dead end
4
Rating Scale (from 1 - 10)
……….
7
……….
10
>90% probability
>90% probability
Payback < 3 years
R&D strongly supports
business strategy
Many proprietary
opportunities
Source: Adapted from Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschmidt. Portfolio Management
for New Products, McMaster University, Hamilton, Ontario, Canada, 1997, pp. 24-28.
11-63
Specialty Minerals Scoring Model
•
•
•
•
•
•
•
Management interest
Customer interest
Sustainability of competitive advantage
Technical feasibility
Business case strength
Fit with core competencies
Profitability and impact
11-64
Manufacturing Firm Scoring Model
(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.
11-65
A Tool for Concept Evaluation
Figure 11.10
Strategic Fit
Does the concept fit with corporate vision?
Customer Fit
Does the concept allow the customer to better meet consumer needs?
Consumer Fit
Does the concept satisfy an unmet consumer need?
Market Attractiveness
Is the concept unique relative to competition?
Technical Feasibility
Is the concept feasible and protectable?
Financial Returns
Will the project break even soon?
Source: Erika B. Seamon, “Achieving Growth Through an Innovative Culture,” in P. Belliveau, A.
Griffin, and S. M. Somermeyer, The PDMA Handbook 3 For New Product Development, Wiley,
2004, Ch. 1.
11-66
Chapter 12
Product Protocol
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
A Marketing-R&D Conversation
Figure 12.1
MKTG: 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.
12-68
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.
12-69
Purposes 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).
12-70
Contents 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
12-71
Narrow Version of Protocol: End-User “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.
12-72
A Sample Protocol: Trash Disposal System
Figure 12.3
• 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.
12-73
Example of Difficulty of Translating Idea Into
Product: Morton Hot Salt
• The Voice of the Customer (VOC) might
suggest this is a great idea.
• But how to translate it into a product? How
spicy? How different from regular chili
powder? Flavored more like cayenne or
chipotle?
• Without specific, precise information, food
engineers are left just to guess.
12-74
Quality Function Deployment (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.
12-75
QFD and Its House of Quality
Figure 12.4
12-76
Benefits in QFD Example
•
•
•
•
Compatibility
Print quality
Ease of use
Productivity
12-77
Technologies in QFD Example
•
•
•
•
•
•
•
Postscript compatible
Resolution
Edge sharpness
Duplex printing
Hours training required
Speed (text)
Speed (graphics)
12-78
Tradeoffs 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.
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Moving to Later Stages of QFD
Figure 12.5
House of Quality:
Engineering Characteristics
Customer Attributes
Converted to:
Parts Deployment:
Parts Characteristics
Engineering Characteristics
Converted to:
Process Planning:
Parts Characteristics
Process Operations
Converted to:
Production Planning:
Process Operations
Production Requirements
Converted to:
Source: Adapted from John R. Hauser and Don Clausing, “The House of Quality,” Harvard Business
Review, May-June, 1988.
12-80
QFD 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.
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Improving 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.
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