End User Needs in the
New Product Development Process
Bridging the gap between the product as expected and perceived by consumers
4
End User Needs in the
New Product Development Process
Bridging the gap between the product as expected and perceived by consumers
© 2006 Rahan Farshad
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the copyright owner.
Author Rahan Farshad Student number S1227262 Date August 2006 Faculty of Management & Organisation Technology management
Rijksuniversiteit Groningen First supervisor
Dr. P.C. Muller Second supervisor Prof. Dr. Ir. F.P.J. Kuijpers
Faculty of Management & Organisation Business Development
Rijksuniversiteit Groningen Supervising manager Ir. N. Haisma
Philips Applied Technologies
Preface
This graduation thesis is part of my research project for the study Technology Management at the faculty of Management and Organisation at the University of Groningen. The research project has been conducted at Philips Applied Technologies in Eindhoven under supervision of the University of Groningen.
At this point I would like to seize the opportunity to thank everybody that was involved in this research project. First of all, I thank my supervising manager at Philips Applied Technologies Nicoline Haisma, who provided me with the opportunity to finish my studies at Royal Philips Electronics in exactly the field of my interest and who provided me with the necessary support and feedback. Also, I would like to thank my first supervisor Peter Muller for asking precisely the right questions with which he guided me in the right direction during my research. Furthermore, I thank my second supervisor Frans Kuijpers for not only fulfilling his role as reviewer but also as a guide in the early stages of the research.
Finally, I would like to thank Jochem Reijndorp, Martijn Spit, Natasja Leurs and Yvo Verschoor for their input, effort and pleasant working environment during the almost seven months that I have joined their team and all other colleagues at Philips around the world for the input they provided.
Last but not least I would like to thank my parents and brother for their support during my studies and in the additional activities I undertook along the years.
Enschede, August 2006
Rahan Farshad
6 Contents
Preface...3
Contents...6
Summary...8
Chapter 1 Royal Philips Electronics...9
1.1 Introduction...9
1.2 History and strategy ...9
1.3 Philips’ divisions...10
1.4 Philips Applied Technologies ...11
1.5 Summary ...12
Chapter 2 Problem definition ...13
2.1 Introduction...13
2.2 Problem description ...13
2.3 Research objective ...15
2.4 Design theory...16
2.5 Theoretical framework ...17
2.6 Conceptual model...19
2.7 Research questions ...23
2.8 Research method ...24
2.9 Summary ...25
Chapter 3 First design initiative...26
3.1 Introduction...26
3.2 Design requirements...26
3.3 User need concepts ...29
3.4 Satisfying requirements ...32
3.5 Conclusions ...34
Chapter 4 Lead user concept ...35
4.1 Introduction...35
4.2 Lead user theory...35
4.3 Lead user experience ...37
4.4 User centred innovation ...40
4.5 Conclusions ...41
Chapter 5 Internet-based collaboration...42
5.1 Introduction...42
5.2 Product development continuum...42
5.3 Realising Internet-based collaboration ...44
5.4 Conclusions ...49
Chapter 6 Design ...51
6.1 Introduction...51
6.2 Brand equity ...51
6.3 Innomediation ...51
6.4 Generating traffic ...53
6.5 The process ...54
6.6 Requirements compliance...56
Chapter 7 Trial project ...57
7.1 Introduction...57
7.2 Planning and deliverables ...57
7.3 Leadusers.nl ...58
7.4 Conclusions ...62
Chapter 8 Conclusions and recommendations ...64
8.1 Conclusions ...64
8.2 Recommendations ...66
References...69
Appendices ...73
8 Summary
Understanding the unmet needs and wishes of customers is the starting point for the innovation and product creation processes. Customer input in the new product development process of Philips Applied Technologies is usually provided by the business units that have insight in the wants and needs of the end users. Since the business unit Consumer Health & Wellness is new to the consumer health and wellness market, the business unit is not able to provide these consumer insights. This research therefore aims to provide Philips Applied Technologies with a method with which they can gain insight in the market of consumer health and wellness.
Literature study is conducted in the field of new product development and the involvement of end users in the new product development process. Several people within the organisation are contacted to learn about their ideas about and experience with the involvement of end users in the new product development process. Based on the requirements that are set at the beginning of the research, which result from the management problem, the users of the system being designed and the context in which the system has to operate, a design is created based on the continuous design of one system.
The design is based on two user need concepts that satisfy the requirements. These are the Lead user concept and the Internet. Both concepts are intensively treated to learn about the different interpretations of the concepts and their advantages and disadvantages. As a result of the elaboration a design is created that satisfy the requirements and that can be used in a trial project. Based on this trial project, recommendations are given to further improve the design.
The design is believed to provide insight in the needs of (potential) end users. Because lead users face needs months or years before the bulk of the marketplace encounters them the design is able to provide these insights in such an early stage that products can be developed before the window of opportunity closes. Because lead users are users at the leading edge of the target market, or users in other markets that face similar problems in a more extreme form the aid of lead users will most likely result in the development of disruptive innovations. Because lead users can be users in other markets that face similar needs and because of the use of a separate website the Lead user concept might lead to the development of products that are able to fulfil needs in the target market for which solutions might be found outside of that target market.
Due to the use of a lead user community which is self-generating, -selecting and -
renewing the design is able to switch its focus in a relatively short amount of time and
allows for collecting user needs at relatively low tariffs. The use of a website which is
disconnected from the corporate website prevents harming the Philips brand because of
bad expressions to or bad experience with (potential) end users and allows for contact
with end users outside the consumer base of Philips. Because of the intensive
involvement of lead users the design most likely leads to the development of products
that fit into the brand promise of Philips of sense and simplicity (designed around you,
easy to experience and advanced).
Chapter 1 Royal Philips Electronics
1.1 Introduction
The purpose of this chapter is to provide insight in the context of the research conducted within Philips Applied Technologies. In this chapter an introduction of Philips is given.
The development that Philips has gone through along the years and the different activities that Philips is currently carrying out are discussed. Furthermore a description of the Philips Applied Technologies organisation is given.
1.2 History and strategy
The foundations for what was to become one of the world's biggest electronics companies were laid in Eindhoven, the Netherlands. Anton and Gerard Philips founded Philips in 1891. Philips began by making carbon-filament lamps and, by the turn of the century, was one of the largest producers in Europe. In the 20
thcentury Philips diversified its product range through the development of major innovations like the medical X-ray tube, television, radio, electric shaver, compact disc and what proved to be the fastest growing home electronics product in history: the DVD. The 1990s was a decade of significant change for Philips. The company carried out a major restructuring program to return it to a healthy foothold, simplifying its structure and reducing the number of business areas.
Moving into the 21st century, Philips has continued to change and grow. In 2004 the new brand promise of “sense and simplicity” has been delivered. Long aware that for many people Philips is no more than a consumer electronics producer, Philips has dedicated itself to projecting a new and more representative image that reflects the products it offers in the areas of Healthcare, Lifestyle and Technology. By following this up in 2004 with a massive advertising campaign to unveil its new brand promise of 'sense and simplicity', the company confirmed its dedication to offering consumers around the world products that are advanced, easy to use and designed to meet their needs.
Royal Philips Electronics is now one of the world's biggest electronics companies, as well as the largest in Europe, with almost 160.000 employees in over 60 countries and sales in 2005 of Euro 30.4 billion (Annual report 2005). Active in over 60 businesses, and with more than 115,000 registered patents, Philips is currently number 1 in the global markets for lighting, electric shavers and DVD recorders, and number 2 in medical diagnostic imaging worldwide (Royal Philips Electronics, 2006).
It is the aim of Philips to grow healthcare as part of the Philips’ portfolio, to further
transform into a market-driven, customer-centric organisation in order to achieve higher
levels of customer satisfaction resulting in more profitable growth and to continue the
focus on innovation by developing first of kind products (Annual report 2005). The new
brand promise is believed to help to take Philips forward as a healthcare, lifestyle and
technology company, into new emerging and exciting markets (Royal Philips Electronics,
2006).
10 1.3 Philips’ divisions
Philips’ activities are organised on a divisional basis (see figure 1), with each division being responsible for the management of its businesses worldwide.
Philips Medical Systems
With over 30,000 employees and a presence in more than 100 countries around the world, Philips Medical Systems is firmly established as a worldwide leader in many of the markets it serves. Medical Systems operates in four main business groups: cardiac and monitoring systems, digital imaging systems, medical IT and ultrasound.
Philips Domestic Appliances & Personal Care
Philips Domestic Appliances & Personal Care (DAP) employs some 8,200 people, runs manufacturing operations in 7 countries and maintains more than sixty individual national sales organisations around the globe. Its activities are grouped into 5 business units: Shaving & Beauty, Oral Healthcare, Home Environment Care, Food & Beverage and Consumer Health & Wellness.
Philips Consumer Electronics
Employing 17,000 people worldwide, Philips Consumer Electronics is a global leader in connected displays, home entertainment networks and mobile infotainment. Its product range includes televisions, DVD players and recorders, audio systems, telephones, computer monitors, home theatre systems, set top boxes and accessories.
Philips Lighting
Philips Lighting is number 1 in the global lighting market and employs 44,000 people worldwide, with manufacturing operations in Europe, the United States, Latin America and Asia. It operates in four lines of business: Lamps, Luminaires, Lighting Electronics and Automotive, Special Lighting and Ultra High Performance. Its products can be found in approximately 30 per cent of offices, 65 per cent of the world's top airports, 30 per cent of hospitals, 35 per cent of cars and 55 per cent of major football stadiums.
Figure 1. The six divisions of Royal Philips Electronics and the subdivision of the ‘Other activities’
Philips Semiconductors
Philips Semiconductors is a leading supplier of silicon system solutions for mobile communications, consumer electronics, digital displays, contact less payment and connectivity, and in-car entertainment and networking. It is one of the top ten global semiconductor manufacturers, employing more than 35,000 people, 6,000 of whom are engineers or software engineers. As a global organisation, it operates twenty manufacturing sites and maintains sales organisations in sixty countries around the world.
Other activities
The sector “Other activities” comprises various activities and businesses not belonging to one of the five operating divisions and employs approximately 19000 people. It consists of the following main groups of activities: Corporate Technologies, Corporate Investments, Philips Design, Global Service Units and Miscellaneous. Philips Applied Technologies is one of the organisations within Corporate Technologies. Since the research being conducted is performed from within this organisation, Philips Applied Technologies is the subject of the next paragraph.
1.4 Philips Applied Technologies
Philips Applied Technologies is part of Royal Philips Electronics and supports Philips, its partners and suppliers as well as a selected number of companies outside Philips by applying technologies. Philips Applied Technologies is the new name for two organisations that have integrated in the beginning of 2005: Philips Digital Systems Labs (PDSL), which has been working on the development of mainly consumer products for years, and Philips Centre for Industrial Technology (Philips CFT), that for more than 35 years has been realising solutions for the Philips product divisions and external customers via process technology and mechatronics (engineering that deals with combined mechanical, electronic and software systems). Philips Applied Technologies helps customers transform initial ideas into competitive products and cost-efficient manufacturing solutions within healthcare, lifestyle and technology (Philips Applied Technologies, 2006).
Figure 2. Philips Applied Technologies’ position within Philips
12 The services of Philips Applied Technologies play an important role within the Philips product divisions and for external customers. Where Philips Research and other research institutes provide new ideas, Philips Applied Technologies translates these ideas into processes, equipment and/or manufacturable products by applying the invented technologies.
The applied technologies range from complete and integrated technology solutions to realisation of first-of-a-kind products or cost reductions. Since Philips Applied Technologies is active in a variety of markets and familiar with various technology developments, it can make its knowledge available for its customers by reapplying knowledge and technologies. More complete and richer solutions are the result. Many of the solutions are beneficial for multiple customers and are therefore joined into programs that are recognised by the stakeholders.
Philips Applied Technologies has a strong cooperation with Philips Research and Philips Design, and works with renowned know-how providers, partners and suppliers. This helps in building up high-tech competencies. With a highly skilled staff of about 1,200 people including many technological experts, Philips Applied Technologies makes sure these competencies are available for its customers. Philips Applied Technologies has nine labs located throughout the world, all close to major Philips locations.
1.5 Summary
Royal Philips Electronics exists of five operating divisions and one division where other
various activities and businesses not belonging to one of the five product divisions are
placed. Philips Applied Technologies is situated in this division, within the group
Corporate Technologies. Philips Applied Technologies helps customers transform initial
ideas into competitive products and cost-efficient manufacturing solutions within
healthcare, lifestyle and technology. The applied technologies range from complete and
integrated technology solutions to realisation of first-of-a-kind products or cost
reductions. Since Philips Applied Technologies is active in a variety of markets and
familiar with various technology developments, it can make its knowledge available for
its customers by reapplying knowledge and technologies.
Chapter 2 Problem definition
2.1 Introduction
This chapter starts with the treatment of the problem situation as it was presented to the researcher at the beginning of this research. As a result of a description of the problem situation (§ 2.2) the research objective is presented (§ 2.3). Next, the design theory and theoretical framework are discussed in paragraphs 2.4 and 2.5 respectively, which leads to the creation of the conceptual model (§ 2.6). The conceptual model provides the researcher with the ability to define the main research question and research sub- questions in paragraph 2.7. In paragraph 2.8 the method in which the research is performed is elaborated upon. This chapter ends with a reader guide to illustrate the structure of this report.
2.2 Problem description
This paragraph begins with a description of the new business unit Consumer Health &
Wellness that has been created in September 2004 and plays an important role in the motives for this research. After this the initial assignment is presented. Subsequent to this the trial project is discussed, which originated from the initial assignment and led to the eventual objective of this research.
Consumer Health & Wellness
In the agenda for 2005 the management of Philips committed themselves to grow healthcare as part of the Philips portfolio. In the latest annual report (Annual report 2005) Philips was able to report that healthcare indeed has been the fastest growing part of the entire portfolio, which is attributable to a high introduction rate of innovative new products and the Philips Medical System’s successful growth strategy for Asia. However, the focus of Philips on the healthcare market goes beyond the scope of merely Philips Medical Systems. In September 2004 a new business unit Consumer Health & Wellness has been created within the product division Domestic Appliances & Personal Care. The aim of this new business unit is to develop products for consumers who are concerned about their health and wish to prevent potential health problems. Philips’ aspires to realise rapid growth in this new market. Partly due to acquisitions, like the intended acquisition of Lifeline Systems in the U.S. at the beginning of 2006. Partly by developing products that offer the consumers the possibility to be in charge of their health and wellness. Before the beginning of 2008 the business unit is expected to realise a turnover of 1 billion Euros (Lurvink, 2005).
Philips is believed to have an excellent starting position to become a large player in this emerging market. On one side Philips has a product division that has plenty of know how of the professional medical world. On the other side Philips has product divisions that are developing and marketing consumer products and are experienced in transferring products and services that are successful in the professional market into products accustomed to consumers (Philips News Centre, 2005).
The interest in the consumer health and wellness market is not new. In some of the
consumer health and wellness markets Philips has business activities like dental care
and baby care. In a number of other areas, like hearing aids and air treatment, Philips
has been active but for some reason decided to withdraw from these markets. The
14 current scope of activities of Philips in the personal and consumer health and wellness markets is rather limited. Available experience in other areas from the past still can be found but is 4 to 10 years old and as such must be considered outdated. This results in a situation where there are plenty of opportunities that can be addressed from the technology side, but were solid quality market input is missing.
Initial assignment
Understanding the unmet needs and wishes of customers is the starting point for the innovation and product creation processes. In 2005 this focus resulted in the introduction of many innovative new products and solutions reflecting the “sense and simplicity”
brand promise. Furthermore Philips has stepped up its efforts to reconstruct its business models to get closer to the customers. This approach enables Philips to come up with new products based on real consumer insight, which, in turn will help to grow faster and realise better margins. Philips believes that by combining market focus with innovation it can and will achieve further growth. In 2005, 49% of the sales came from products introduced in the last three years, up from 39% in 2004 (Annual report 2005).
Within Philips Applied Technologies most products are developed by using a technology push strategy, instead of the desired shift to a more market oriented approach. Only a small part of Philips Applied Technologies tries to develop new ideas by looking at the needs of the (potential) end users. Customer input in the new product development process of Philips Applied Technologies is usually provided by the business units that have insight in the wants and needs of the end users. However, since at the beginning of the research it was not yet clear what the focus of Consumer Health & Wellness would become and because Consumer Health & Wellness was new to this market as well, the business unit was not able to provide any consumer insights. In addition Philips Applied Technologies was not yet actively involved in the exploration of the consumer health and wellness market. Because the Philips Applied Technologies team concerned did not want to wait until these three issues were solved, they decided to adopt a more proactive role and to gain user insights by conducting market research themselves.
The team decided that the focus of the market research would be the consumer health and wellness market for the elderly. In view of the ageing population in many countries and the shifting trend in healthcare from the hospital to the home, Philips sees tremendous potential for growth in this area (Annual report 2005). To strengthen the team they decided to employ an intern to perform the assignment. The objective of the initial assignment, which is completely described in appendix I by Philips Applied Technologies, was to use the Lead user concept (Von Hippel, 1986) to get solid quality market input for the development of solutions to increase the quality of life of seniors.
Lead users are described as those who combine two characteristics: (1) they face needs
that will be general in a market place - but face them months or years before the bulk of
that marketplace encounters them, and (2) are positioned to benefit significantly by
obtaining a solution to those needs (Von Hippel, 1986). The task for the researcher
would be to work with the project team to accomplish two project objectives. First, to
create a lead user network that provides consumer insights in the area of consumer
health and wellness. Second, to identify high value product-market propositions that
show an excellent fit between consumer needs and the capabilities of Philips Applied
Technologies.
Trial project
In the period between 1994 and 1997 a number of lead user projects were carried out at the, at that time called, Advanced Systems and Applications lab of Philips Consumer Electronics. These projects were conducted in order for Philips to learn more about the Lead user concept and its use in a business-to-consumer environment, since up till then examples of lead user practices could only be found in a business-to-business environment.
Based on an interpretation of these past experiences with the Lead user concept the team started a trial project a few weeks before the researcher joined the team. The outline of this project is fully described in appendix II. The aim of the project was to learn about the use of the Lead user concept by selling videophones to senior citizens in Nuenen, near Eindhoven. Because senior citizens are perceived as less mobile and have a need for realistic communication, they were seen as lead users with respect to innovative communication methods. The product was sold on the Internet site www.leadusers.nl, especially created for this purpose.
Early in the beginning of the trial project it became clear that the proposed approach and therefore the objective to gain end user insight in the market of consumer health and wellness through the use of the Lead user concept was problematic. Using the Internet to sell a product to potential lead users in a small geographical area did not seem to work, since no potential lead users signed up to buy the product although people did visit the website and the product demonstrations that were organised.
2.3 Research objective
From the trial project as discussed above it became clear that the utilised approach was not a satisfycing method to get solid quality market input. Therefore it was decided that the initial research objective as it was outlined at the beginning of the research had to be altered. Prior to giving an answer to what the needs of end users in the consumer health and wellness market are, one needs to conduct research on the method with which these needs can be mapped. The research objective would no longer be to provide market input, but to provide a method with which this is possible. Since, as presented in the next paragraph, there are many more approaches other than the Lead user concept it seemed that it might be beneficial to broaden the research scope.
The research objective gives an answer to the question why the research is being conducted (Verschuren, 1999).
To provide Philips Applied Technologies with a method with which they can gain insight in the needs of the potential end users in the target market of consumer health and wellness.
The research objective and the research questions are interrelated by the conceptual
model. The conceptual model is used to formulate the research question and research
sub questions that are answered in this research. To construct the conceptual model the
design theory and the theoretical framework are presented in the next paragraphs.
16 2.4 Design theory
In methodological terms this research can be characterised as problem solving and design research (De Leeuw, 1996). Problem solving is what can be seen as the prototype of managerial research: there is a short distance between the researcher and the client, the problems are being mapped integrally and solutions are being provided to solve these problems. In addition, as can be seen from the research objective as formulated in the previous paragraph, the intended result is to provide a method with which Philips Applied Technologies can gain insight in the needs of the potential end users in the target market of consumer health and wellness. In methodological terms one can therefore speak of design research.
As a result of the characterisation of this research a research approach needs to be chosen. For this research the DOV-model by De Leeuw (1996) is used. This model is suitable to conduct problem solving and design research. This model distinguishes three separate phases: diagnosis, design and change.
Diagnosis
The research starts with a first indication of a problem situation; the initial assignment or an indication of existing complaints (De Leeuw, 1996). In the diagnosis phase it is necessary to gain insight in the underlying problems.
Design
In the design phase a method is developed that is able to provide a solution to the problem(s). A good design objective has to be clear, precise and complete on what has to be designed, which quality requirements shall apply on the system being designed and within which boundary conditions the design should remain (De Leeuw, 1996). By specifying the requirements in a good manner these conditions can be met.
The design process is divided into four steps and is in short described below (De Leeuw, 1996):
1. Specification
The system that is being designed is being seen as a black box. Next it is the design assignment to find out how the black box should be designed in order to reach the specified and desired external conduct. The result of the specification phase is the design requirements. These requirements can be formulated by conducting research on the matters mentioned below:
The management problem: which problem needs to be solved?
The users: what are the demands, wishes and boundary conditions of the users of the system being designed?
The context: in which environment does the system has to function and what are the possibilities and constraints of this environment?
2. Design
The design step can be divided into two phases. The first part of the design step comprehends the generation of alternative designs. Another possibility is experimental designing; the continuous development of one system (De Leeuw, 1996). The second phase of the design step is to evaluate alternatives and to decide on one solution. This can be further subdivided in:
Evaluating the alternatives or the experimental designed system
Testing the design with the requirements
Choosing an alternative
Work out design in further details
3. Realisation
When a decision is made on which design satisfy the criteria most it is used in a trial project.
4. Evaluation
In the final step the design will be evaluated on its performance in practice and improved when necessary.
Change
At the end of the research a well-founded and tested method is delivered, which can be implemented in the organisation.
2.5 Theoretical framework
To be able to construct a conceptual model for this research a theoretical framework is presented in this paragraph. The characteristics of the presented theories are discussed and the relevance of these theories for this research is explained. Successively user need concepts, the Servqual model and consumer roles will be discussed.
User need concepts
As mentioned earlier, understanding the unmet needs and wishes of customers is the starting point for the innovation and product creation processes. Understanding the unmet needs and wishes however is not something that happens without considerable effort of the organisation. To help organisations systematically identify and understand end user needs a number of concepts are available, beside the earlier mentioned Lead user concept. These user need concepts might form the foundation of the method that will be designed in this research. These user need concepts include (Tidd and Bodley, 2002):
Survey and focus groups – where a similar product exists surveys of end users’
preferences can be a reliable guide to development. Focus groups allow developers to explore the likely response to more novel products where a clear market segment exists.
Customer developers – in some cases new products are partly or completely developed by end users. In such cases it is the issue how to identify and acquire such products.
Industry experts or consultants – who have a wide range of experience of different user need. The danger is that they may have become too immersed in the users’ world to have the breadth of vision required to assess and evaluate the potential of the innovation.
Extrapolating trends – in technology, markets and society to guess the short to medium term future needs.
Building scenarios – alternative visions of the future based on varying assumptions to create robust product strategies. Most relevant to long term projects and product portfolio development.
Market experimentation – testing market response with real products, but able to
adapt or withdraw rapidly. Only practical where development costs are low, lead
times short and end users tolerant of product underperformance or failure.
18 Sometimes referred to as expeditionary marketing or more modestly test marketing.
Problem analysis – will lead to better predictions of end user behaviour as well as to the development of consumer products and marketing programmes by understanding end user problems (Fornell and Menko, 1981).
Consumer roles
Most of the concepts discussed above assume that end users are an external source for new product development. The promise of the consumer as an external resource for new product development has been recognised in theory and in practice for a long time.
Organisations can understand end user needs by involving the end users in the development of new products. Within NPD processes, consumers can adopt different roles (Nambisan, 2002), namely the consumer as resource, as co-creator and as user.
In the first role customers act as a source of new product ideas. Customers can also play a valuable role as co-creators of new products, in which their participation ranges from product design activities to product development activities. As primary recipients and users of goods and services, customers can play a highly productive role in product and prototype testing and are able to provide product support for other users.
Servqual
Not being able to fulfil the end user needs can be one of the reasons for the fact that the end users are not satisfied with the products they receive. According to Parasuraman, Zeithaml and Berry (1988) end users’ dissatisfaction is a result of an incongruity between customers’ perceptions and expectations, which consecutively is a result of several factors of which fulfilling end user needs is only one.
A tool that takes the discrepancy between customers’ perceptions and expectations in consideration is Servqual. Servqual is an instrument for measuring customer perceptions of service quality (Parasuraman, Zeithaml and Berry, 1988). The approach was adopted to seek to measure service quality, where service quality as perceived by customers, stems from a comparison of what they feel service firms should offer (i.e. their expectations) with their perceptions of the performance of firms providing the services.
Perceived service quality is therefore viewed as the degree and direction of disagreement between customers’ perceptions and expectations.
The model is based on the assumption that customers are able to articulate their expectations of the general characteristics and determinants of service quality and also distinguish these from their perceptions of actual, current service quality for a specific individual service provider. The originators of Servqual argue that although any service industry is unique in some aspects, there are five broad dimensions of service quality that are applicable to any service organisation. These dimensions are:
Tangibles: physical facilities, equipment, personnel, communication material
Reliability: the ability to perform the promised service dependably and accurately
Responsiveness: the willingness to provide appropriate service and generally to help customers
Assurance: the knowledge and courtesy of employees and their ability to inspire trust and confidence
Empathy: the caring, individual attention organisations are able to provide the
customer
The original Servqual instrument consists of 22 statements, each of which is related to one of the five major dimensions. Each statement appears in two forms: one designed to measure customer expectations (E) about organisations in general in the service area being examined and the other to measure customer perceptions (P) about the particular organisations whose service quality is assessed. The perceived service quality, or gap score, is then calculated for each statement (Wisniewski and Donnelly, 1996). The gap calculated in this manner is presented in figure 3 as the blue dotted arrow.
2.6 Conceptual model
In the previous paragraph the theoretical framework has been presented. In order to create the conceptual model of this research the theoretical framework is applied to the situation at Philips Applied Technologies.
Servqual
So far the Servqual model has been discussed as a model that can be used as an instrument for measuring service quality as perceived by the consumer. Some of the dimensions of the Servqual model might however be applicable to the world of products as well. Furthermore these dimensions should not merely be seen as dimensions with which it is possible to measure quality, since in addition they can be thought of as important design dimensions. Therefore an interpretation of these dimensions in the world of products is given here and the extend in which these dimensions can be influenced by Philips Applied Technologies is discussed. Moreover, from this can be seen if fulfilling end user needs (the empathy dimension) is the only factor that influences the discrepancy or if one of the other four dimensions might be relevant and therefore should be taken into account as well.
Tangibles
Since services are intangible in their nature there are only few tangible aspects that can be distinguished, which are the physical facilities, the equipment, personnel and communication material. In the case of Philips there is no face-to-face interaction with the consumer, because products are sold via the retail channel. As a result tangibles can only be translated into everything that has to do with communication, such as the TV- commercials presenting the brand promise of “sense and simplicity”, the Philips internet site and other “above the line” and “below the line” communication expressions.
Naturally the products are tangible themselves but these are not clustered within this dimension. Philips Applied Technologies is therefore not able to influence the tangible dimension.
Figure 3. Servqual, measuring service quality (Parasuraman, Zeithaml and Berry, 1988)
20 Responsiveness
Responsiveness is mainly about the willingness of an organisation to provide appropriate service and generally to help consumers when they are experiencing problems or having certain requests. Besides the Philips customer service that can be reached by phone, also the opportunity is provided to find information about all Philips products on the internet site. Consumers can even register all their Philips products in order to stay informed on new updates and relevant additional products. Because responsiveness is mainly about after sales contact with the end users, Philips Applied Technologies is not able to influence this dimension.
Assurance
Assurance is about the extend in which the organisation is able to instil confidence in consumers, will be consistently courteous with consumers, has the knowledge to answer consumer questions and the extend in which consumers will feel safe in their transactions. Also with respect to the assurance dimension it is mostly about direct contact with the consumer. Philips Applied Technologies is therefore not able to influence the assurance dimension.
Empathy
Empathy is about the degree in which an organisation has the customers’ best interests at heart and understands the specific needs of its customers. This dimension can be easily translated into the world of products, because fulfilling end user needs is alike for intangible as well as physical goods.
When it comes to capturing end user needs or insights it is important to record what end users are actually saying. Information that can be captured by an organisation as a result of contact with end users should have the form of “we have heard”, “we have seen” or “we have read” and not “we think” (Shore and Struyck, 2004). Some good examples of well known consumer insights that have lead to the development of successful products are:
1. I love my CD collection, but wish I could take it with me when I leave the house.
Unfortunately I can only carry a limited amount of CDs at once.
2. When I use fabric conditioner on my family’s clothes, the smell always fades during drying and ironing. I wish there was a way to top-up the smell before wearing them.
3. Sometimes I want a freshly brewed cup of coffee, but I do not want to make a whole pot which is wasteful of coffee and time. Why can I not make just enough for me?
4. I do not like to shave. I wish shaving would provide me with a fresh and pleasant feeling so that shaving is no longer a burden.
Reliability
Reliability is defined as the ability of a product to fulfil its intended purpose for a certain period of time under stated conditions. Brombacher (2000) has argued that, especially for innovative high-volume consumer products, the intended purpose for a user is different from that for a manufacturer. When a product works according to its technical specifications but a user is not content with the functionality, the user will be dissatisfied with the reliability. The reason of dissatisfaction is not because the product is violating its technical specifications but because the product only fulfils part of the customer requirements.
For increasingly complex products, customers more and more ignore product
specifications and judge the reliability on the ability of this product to meet with their,
often implicit, requirements and expectations (Brombacher, 2000). As a result, reliability is redefined as: the fulfilment of the customer requirements over time and under stated conditions, were fulfilling the customer requirements is reached when the product is safe, works, complies with the specifications and meets customer expectations (Baskoro, 2006). In this definition reliability has much resemblance with the dimension empathy, since it is about knowing what the end user needs are.
Conclusion
As initially assumed and as a result of the interpretation of the dimensions as elaborated upon above, the empathy dimension is regarded as the most significant design dimension that can be influenced by Philips Applied Technologies. Empathy has the highest amount of influence on the gap between the product solution as expected and as experienced by the end users where empathy focuses on the early beginning of the product development process where opportunities are being identified and explored founded on end user needs.
Consumer roles
In the theoretical framework the consumer roles have been discussed superficially with respect to the phases of the NPD process. In order to precisely assign the consumer roles to the different phases of the NPD process the process at Philips Applied Technologies needs to be discussed.
UXDI
Because Philips Applied Technologies is developing products in cooperation with her clients, the NPD process that is being used is the process as documented by the product division. For example the product division Consumer Electronics is using the so called SPEED process, while Philips Lighting and Medical have introduced DFSS (Design for Six Sigma) as their process standard. The NPD process that is being used at Philips Applied Technologies when not using the process of the client or not working for a client is called the User eXperience Driven Innovation (UXDI) process and can be divided into six stages as presented in figure 4.
At the start of the UXDI process is decided what the key objectives, primary deliverables, target users and context are. Furthermore a timescale and budget is determined.
After this an investigation is started on the range of opportunities to be considered, the opportunities to be recommended for further development and the criteria that a successful solution should meet. Depending on if it is required or not several activities can be included, such as a review of relevant application knowledge available internally and in the public domain, a review of competitor products, systems or services, interviews with stakeholders and experts, and an investigation of the users and usage. In addition the "near future landscape" is defined and key value propositions for the target groups based on the investigation are developed.
Figure 4. New product development process at Philips Applied Technologies
22 During the opportunity exploration phase user behaviour, motivators, attitudes, aspirations, and expectations in relation to the opportunity options are explored. The ways in which users are expected to interact with possible systems are outlined and simulations are build and evaluated with users as required. Comparable solutions are evaluated on interaction technologies, usage model and usability and design features.
In the proof-of-concept demonstration phase more detailed user research takes place in relation to the solution for the opportunity selected. The key engineering requirements with respect to the architecture and platform are identified and an user interface is created. The deliverable is a demonstration of a preferred concept.
A definition of the key usage scenarios and personas is provided in the first-of-a-kind solution phase. Furthermore a demonstration of the solution that incorporates the proposed user interface solution is delivered. The demonstration does not necessarily needs to use technologies intended for the actual solution, but should provide a realistic representation of how the intended solution will perform in practice.
Implementing the solution is the last activity executed within Applied Technologies organisation prior to handing the solution over to the product division. The user interface is further improved and a prototype is build, which is evaluated with users. After the product division has industrialised, produced and marketed the product the selected solution for the opportunity is evaluated on the suitability of the solution in practice from technological and usage standpoints.
Applying consumer roles
Now that the UXDI process has been treated the potential roles of the consumers in the Philips Applied Technologies’ new product development process can be discussed.
Adopting the role of resource, consumers act as a source for innovation. Consumers can provide information about their needs and provide input into the NPD process through which the organisation can identify and explore opportunities. Adopting the role of co- creator, consumers become part of the organisation’s activities and can be actively involved in the proof of concept demonstration and first-of-a-kind solution and product implementation phases. Nambisan (2002) interprets the “consumer as user” as a consumer who tests a product or provides product support to other less experienced users. In this report the consumer as user is interpreted slightly different. The consumer as user is acting with a product that is either in the market introduction process or in its commercial life cycle (Spoor, 2004) therefore extending the role of the consumer as co- creator. The consumer as user provides product feedback to other users in the form of reviews and to the organisation in the form of complaints and suggestions. This feedback can be used to make the necessary mutations in the product itself or to identify new opportunities. The roles of the consumer during the new product development process are illustrated in figure 5.
Figure 5. Consumer roles and the new product development process
Conceptual model
The information discussed so far can be represented in a conceptual model (figure 6).
The conceptual model is used to explain and clarify the situation with respect to bridging the gap between the product as expected and perceived by the end user.
As discussed, the dominant dimension that can be influenced by Philips Applied Technologies is the empathy dimension. Although consumer insight is needed all through the NPD process it is especially in the early phases during which it is all about gaining end user needs on the basis of which new products can be developed. The focus of the research therefore is on the opportunity identification and opportunity exploration phases of the NPD process, where the end user adopts the role of resource.
It is assumed that the withdrawing of the user needs in these phases with the system being designed, will provide valuable consumer insights as input of the UXDI process and will eventually lead to the bridging of the gap between the product as expected and as perceived by the consumer. As can be seen the perceived product solution has been excluded from the research, since it is not the aim of the research to find out how consumers perceive certain product solutions but merely to conduct research on the gap. The system is designed based on the design requirements and the available user need concepts.
2.7 Research questions
The research question indicates which question will be answered by conducting the research. The main research question that stems from the research objective and the conceptual model is defined as follows:
Which method can be used by Philips Applied Technologies to bridge the gap between the product as expected and as perceived by the consumer in the target market of consumer health and wellness?
The research question can be divided into several sub questions that are logically derived from the conceptual model.
1. What are the requirements of the design that can be used in the new product development process?
Figure 6. Conceptual model, the gap between the product as expected and perceived by the consumer
24 2. Which user need concepts that can provide end user insights early in the NPD
process are available and satisfy the requirements most?
3. How can the satisfycing user need concepts be implemented into one system?
4. How is the system functioning in practice and what are the improvements that can be made based on these practices?
In the glossary (appendix III) is explained which terms have which meaning in the context of the research. Definitions are necessary from the point of view of consistency.
Furthermore definitions play an important role in determining the boundaries of the research. By far the most important reason to precisely describe definitions is to state clear what will be the subject of research (Verschuren, 1999).
Preconditions
The preconditions of the research provide the constraints of the research results. The following preconditions apply to this research:
The research is conducted within the scope of the writing of the final thesis for the Masters degree in Technology Management, which is supposed to have a duration of 6 months.
The research is conducted from within Philips Applied Technologies in Eindhoven
It is not allowed to use the Philips brand in exposure to the (potential) end users of Philips
The focus of the research is on the business-to-consumer market
The intended users of the design are Philips Applied Technologies, the several product divisions of Philips and at a higher aggregation level Royal Philips Electronics as a whole.
2.8 Research method
The problem solving and design process started with a first indication of a problem situation. In this research this first indication concerned the objective to use the Lead user concept to get solid quality market input for the development of solutions to increase the quality of life of seniors. Several people within Philips were contacted and interviewed in the diagnosis phase to gain insight in the underlying problems of the current product development process. Furthermore the trial project was conducted as described earlier. An extensive literature study was performed to obtain understanding of particular subjects in this research project and to be able to explain, found and validate statements. This diagnosis resulted in the eventual research objective of this research.
In the design phase a method is developed that is able to provide end user insights. This is done according experimental designing; the continuous development of one system.
First the requirements for the design are set based on the requirements of Philips
Applied Technologies. Desk research is conducted in the field of product development
and on several user need concepts that are available and of which some were
mentioned earlier. When a decision is made on which concepts satisfy the requirements
most they are developed into one system. The designed method is than used in a trial
project. Based on the evaluation of this project it is possible to come to a final decision
on the method being designed.
At the end of this research a well-founded and tested method is delivered. If the method is actually implemented in the Philips Applied Technologies organisation is not up to the researcher. Therefore this research ends with the conclusions and recommendations with respect to implementing the proposed design.
2.9 Summary
In this chapter the problem definition has been presented. The problem definition started with a description of the new business unit Consumer Health & Wellness that has been created in September 2004. After this the initial assignment, to use the Lead user concept to get solid quality market input for the development of solutions to increase the quality of life of seniors, was presented. Subsequent to this the trial project was discussed, which originated from the initial assignment and led to the eventual objective of this research. The objective of this research is no longer to provide Philips Applied Technologies with market input for the development of solutions to increase the quality of life of seniors, but is:
To provide Philips Applied Technologies with a method with which they can gain insight in the needs of the potential end users in the target market of consumer health and wellness.
In the theoretical framework the Servqual model, user need concepts and consumer roles were taken into consideration which led to the development of the conceptual model. The conceptual model was used to explain and clarify the situation with respect to bridging the gap between the product as expected and perceived by the end user by using one or several user need concepts and led to the definition of the research question and sub questions. The question that will be answered in this research is:
Which method can be used by Philips Applied Technologies to bridge the gap between the product as expected and as perceived by the consumer in the target market of consumer health and wellness?
In chapter 3 the requirements for the design are set and the user need concepts are discussed. Based on the extend in which the concepts satisfy the requirements a selection is made, providing a first design initiative. In chapter 4 and 5 the selected satisfycing concepts are elaborated upon. In chapter 6 the design is treated and in chapter 7 the trial project that took place during the second half of this research is discussed. The conclusions and final recommendations are the subjects of chapter 8.
This can be summarised as illustrated in figure 7.
Figure 7. Readers guide
26 Chapter 3 First design initiative
3.1 Introduction
In paragraph 2.5 the design theory has been discussed. Based on this theory, the requirements for the design are set in paragraph 3.2. In paragraph 3.3 the several concepts with which it is possible to gain end user insight are described. A selection of several of these concepts provides a first design initiative.
3.2 Design requirements
In this paragraph the first step of the design process, the specification step, will be discussed. The result of this discussion is the design requirements that will serve as the starting point of the system being designed. The management problem is treated and the users and the environment of the system being designed is analysed. This will form the foundation of the final design.
Management problem
A management problem is the professional judgment of the functioning of the system that is shared by the management of the organisation. In chapter 2 the problem situation has been described, which resulted in the research question of which the answer should provide a solution to the management problem. Empathy is regarded as the most significant design dimension that can be influenced by Philips Applied Technologies, with the highest amount of influence on the gap between the product solution as expected and as experienced by the end users. Two design requirements for the design stem from this. The design should:
provide the ability to understand the needs of the (potential) end users of the products of Philips
be able to provide these insights in the field of consumer health & wellness
Users
The users of the design are Philips Applied Technologies, the several product divisions of Philips and at a higher aggregation level Royal Philips Electronics as a whole.
Philips Applied Technologies
Philips Applied Technologies supports Philips, its partners and suppliers as well as a selected number of companies outside Philips by applying technologies and help them transform initial ideas into competitive products and cost-efficient manufacturing solutions within healthcare, lifestyle and technology. Their strength therefore is to combine knowledge and technologies from different fields into one product. The design should be able to look outside the scope of the target market for which a product is being developed and should therefore lead to the development of products that are able to fulfil needs for which solutions might be found outside of the target market. This will help Philips Applied Technologies to remain in its unique position within the Philips organisation.
Philips divisions
The product divisions of Philips are the clients of Philips Applied Technologies. They provide Philips Applied Technologies with input about their focus and fields of interest.
Since this focus (i.e. target market, product portfolio) may change during the years the
design should be able to handle these changes and also do this in a relatively short amount of time.
Royal Philips Electronics
There are several requirements that can be deducted from the objectives of, or issues within, Royal Philips Electronics. The objectives/issues and the derived requirements are discussed here.
Time-to-market
The consumer industry is subject to pressures of globalisation, increasing product complexity and shortening product life cycles. The time it takes for new technologies to penetrate the market has decreased drastically as can be seen in figure 8.
Furthermore the product life cycles have become shorter and consequently price erosion has increased as well. This is illustrated in figure 9.
Figure 8. Market penetration new technologies (Presentation Philips Applied Technologies, 2005)
Figure 9. Product life cycles and price erosion (Minderhoud and Fraser, 2005)
