Faculty of Economics and Business

The University of Sydney

Individual Assessment Cover Sheet
Electronic submission
Last name: Kummer

First Name: Danny

ID Number: 310110734

Email: DannyKummer@web.de

Unit code: MKTG6004___ Unit name: New Product Development_________________________

Tutor’s name (if applicable): Dr Michael Allen____________Tutorial day/time: Wednesday, 6-9 pm

Full assessment title: What lessons are there in WWGD for new product development (2 ideas)?

Word count of assessment: 1205_______________________________________________

Due date: 27/04/2010 Time & date submitted: 10.47am & 27/04/2010

Academic Honesty
All forms of plagiarism and unauthorised collusion are regarded as academic dishonesty by the University,
resulting in penalties including failure of the unit of study and possible disciplinary action. If you are in
doubt about academic honesty, please consult with the unit coordinator.

Declaration
Tick each box
X I have completed the online academic honesty module (if applicable)
X I have read and understood the University of Sydney Student Plagiarism: Coursework Policy and Procedure,
which is published by the University online at http://www.usyd.edu.au/senate/policies/Plagiarism.pdf;
X I understand that failure to comply with the above can lead to the University commencing proceedings against
me for potential student misconduct under Chapter 8 of the University of Sydney By-Law 1999 (as amended).
X I certify that this work is substantially my own, and where any part of this work is not my own, I have
indicated as such by acknowledging the source of that part or those parts of the work.
X The assessment has not been submitted previously for assessment in another unit
X The assessment conforms to the requirements in the Unit of Study Outline.
X I have retained a duplicate copy of the assessment
X The Faculty may reproduce this assignment, provide a copy to another member of faculty, and/or communicate
a copy of this assignment to a plagiarism checking service (which may then retain a copy of the assignment on
its database for the purpose of future plagiarism checking).

Please type name in place of signature. Danny Kummer_________________________

By filling out and using this cover sheet, you approve of the information contained. Filling out
and then using this coversheet as part of an electronic submission operates in the same way as if
you had physically signed a paper copy of the cover sheet.
Approved by Economics and Business Learning and Teaching Committee 9 June 2009
Customer Involvement – Talking to the Customers’ Guts

Customers are becoming more selective and discerning, demanding products not only to fit
their basic needs but also to deliver benefits, which are frequently even oblivious to the
customer himself. In the traditional system the customer was a target but not a real member
of the development process (Prahalad and Ramaswamy, 2004). A more innovative approach
is performed by Google, involving the consumer, letting him have a dive in the Google
world, allowing him to co-create the product it consumes. In this way, customers become
creators, evaluating ideas and participating in the whole design process (Campbell et al.,
2007).

The development process can be subdivided into five stages – ideation, concept development,
product design, product testing and product launch (e.g. Ulrich and Eppinger, 2004; Urban
and Hauser, 1993). A company has to engage in a persistent dialogue with the consumer,
creating interfaces to accurately incorporate the consumer’s needs in the final product
(Prahalad and Ramaswamy, 2004).

The idea generation and the concept development phase are the initial stages. Potential
customers can be engaged in these stages through virtual platforms, such as Suggestions
Boxes or Virtual Communities (Sawhney et al., 2005). A company’s task is to give potential
customers a chance to express themselves and after that to listen carefully and learn from
them. For Example, Starbucks established an online community for customers, called
“MyStarbucksIdeas”, where consumers can make suggestions for new products, flavours or a
store’s design. According to Sawhney et al. (2005) these platforms enable customers to share
their experiences and engage in highly motivated conversations. Furthermore, companies
should use Market-Intelligence Services in order to monitor Blogs and watch out for
customer conservations on personal Web Sites. For instance, Dell was able to enhance its
customer satisfaction and service levels by participating in the online world (Jarvis, 2009).

In the next step, companies should build up virtual Labs or interactive platforms. Ducati, a
motorcycle manufacturer, closely tracks its customers’ posted statements and installed
another tool, the “Tech-Cafe”. There, customers have the unique opportunity to show how
they personalize their motorcycles. They can upload graphics and exchange suggestions for
future designs and technical features of Ducati’s motorcycles. Hence, Ducati is capable of
staying in touch with the customer in the design phase, conveying his voice through the
whole development process (Sawhney et al., 2005). A method of User-Design, a web based
drag-and-drop option, is used by Swarovski, encouraging the customers to participate in a
design competition, evaluating and creating new designs for their products (Füller and
Matzler, 2007). Adidas is using a mass customization approach, called “miadidas”, where
customers can design their individual sneakers.

The following product testing phase is important in order to receive feedback and to remedy
certain shortcomings before launching the product. For example, Google tested different
website layouts in real life, allowing the customer to state which one it prefers (Jarvis, 2009).
Companies can also use virtual prototypes in an iterative way to get feedback. Another way,
which combines the testing and launching of a product, is the use of functional worlds, such
as Second Life or Online-Browser Games. Füller and Matzler (2007) indicate that Second
Life is a great way to launch products in a fictional world.

Approved by Economics and Business Learning and Teaching Committee 9 June 2009
Figure 1 gives an overview over these innovative methods, which control for high customer
involvement. It also shows during which stages each can be applied in the overall
development process.

The key to make a company prosper is to be innovative and don’t only entangle in standard
market research methods. Catch the customer’s inner soul and collaborate with him. Be
interactive with your potential customers and co-create. Figure 2 shows the resulting benefits
of such an approach.

Approved by Economics and Business Learning and Teaching Committee 9 June 2009
Customers might feel more compelled, connected and loyal to a company and its product
portfolio, because they took part in the development. A company can create a relationship of
mutual trust and commitment (Füller and Matzler, 2007).

In addition to this, a company is able to enhance its performance, reacting faster to demand
shifts because their customer knowledge is higher (Urban and Hauser, 2004). Due to the
involvement of the customer less redesign cycles are needed, shortening the development
time. This also implies cost savings and a lower failure rate for new products (Dahan and
Hauser, 2002).

Considering the new product, the fit with the customers’ demands is higher. The product is
more differentiated and innovative, encompassing the customer’s voice, thus standing out
against competitive brands (Füller and Matzler, 2007).

Differentiation – Puzzling through the Fragments

Companies are faced with a fragmented, highly individualized market. Therefore, they have
to find a way to differentiate their products, attuning individual requirements of their
customers to their product offerings. Differentiation can be related to the physical product, to
the price, to emotional attributes of a product or even through different ways of distributing it
(shown in figure 3).

Coughlan et al. (2008) depict six service outputs – bulk breaking, assortment and variety,
customer service, spatial convenience, information provision and waiting time. These service

Approved by Economics and Business Learning and Teaching Committee 9 June 2009
outputs affect the channel design of a company and represent a differentiation opportunity,
addressing different customers. For instance, H&M, a clothing company, has its own clothing
stores but also offers clothes through an online channel. Considering the service outputs, the
online channel is spatially more convenient because customers can order clothes online.
Besides, purchasing online is associated with a longer waiting time, however also implies
renouncing personal customer service. Hence, the establishment of a multi-channel approach
allows a company to attract different customer fragments.

Another way to differentiate products in order to address different segments is the emotional
or hedonic positioning of a certain product. A brand can be associated with a broad range of
distinct characteristics, thus distinguishing itself from other products. The car brand BMW is
perceived as luxurious, dynamic and cultivated (Sattler and Völckner, 2007). Therefore,
building up such an image for a product provides it with unique associations, a multi-faceted
and unique veil. Advertising and promotional activities help a company to position products
in these distinctive ways.

Price is an important product attribute and offers the opportunity to discriminate. Diller and
Koehler (2007) describe several methods of price differentiation, such as regional, temporal
or quantitative. In the Mobile Phone Industry customers are frequently faced with a broad
variety of contract options. Thus, they can design an individual package consisting of
different options, choosing a certain amount of minutes and SMS, a flatrate to certain friends
and so on.

Physical Characteristics and product features are often diversified. In order to increase the
customer reach, companies avail oneself of product platforms or modular products. Product
platforms empower a company to create product families consisting of products that differ in
design, features or certain characteristics (Crawford and Benedetto, 2008). Customers can
select the product, which is the most appealing to them. For example, Beer is often
differentiated through slight changes in packaging. It is a common strategy in the car industry
as well, where different models are designed to attract various segments.

To summarize, in order to cope with the increasing number of niche markets, a company is
challenged to satisfy various needs. By employing differentiation techniques, it is able to
puzzle itself through the fragments, achieving a broader customer reach.

Approved by Economics and Business Learning and Teaching Committee 9 June 2009
Reference List
Campbell, R.I., De Beer, D.J., Barnard, L.J., Booysen, G.J., Truscott, M., Cain, R., Burton,
M.J., Gyi, D.E., Hague, R., (2007). Design evolution through customer interaction with
functional prototypes. Journal of Engineering Design, 18 (6), pp. 617-635.

Crawford, M., Benedetto, A., 2008. New Products Management. 9th ed. McGraw-Hill.

Dahan, E., Hauser J.R., 2002. The virtual customer. Journal of Product Innovation
Management, 19 (5), pp. 332-353.

Diller, H., Koehler, R., 2007. Preispolitik. 4th ed. Stuttgart: Kohlhammer.

Füller, J., Matzler K., 2007. Virtual product experience and customer participation - A chance
for customer-centred, really new products. Technovation, 27 (6/7), pp. 378-387.

Jarvis, J., 2009. What would Google do?. 1st ed. New York: Harper Collins.

Prahalad, C.K., Ramaswamy, V., 2004. Co-Creation experiences: The next practice in value
creation. Journal of Interactive Marketing, 18 (3), pp. 5-14.

Sattler, H., Völckner, F., 2007. Markenpolitik. 2nd ed. Stuttgart: Kohlhammer.

Sawhney, M., Verona, G., Prandelli, E., 2005. Collaborating to create: The internet as a
platform for customer engagement in product innovation. Journal of Interactive Marketing,
19 (4), pp. 4-17.

Ulrich, K., Eppinger, S., 2004. Product Design and Development. 2nd ed. Boston: McGraw
Hill Irwin.

Urban, G., Hauser, J., 1993. Design and Marketing of New Products. Englewood Cliffs, NJ:
Prentice Hall.

Urban, G., Hauser, J.R., 2004. “Listening in” to find and explore new combinations of
customer needs. Journal of Marketing, 68 (April), pp. 72-87.

Approved by Economics and Business Learning and Teaching Committee 9 June 2009