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Chapter 4 Product and Service Design

Product and service design or redesign should be closely tied to an organization

strategy. It is a major factor in cost, quality, time to market, customer satisfaction
and competitive advantage.

Various activities and responsibilities of product and service design

1. Translate customer wants and needs into product and service requirements
2. Refine existing product and services
3. Develop new product and or services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specification

The driving forces for product and service design or redesign are market
opportunities or threats:
1. Economic- low demand, the need to reduce cost
2. Social and Demographic- Population shifts, aging baby boomers
3. Competitive- New or changed products and services, new
4. Cost or Availability- raw materials and labor
5. Technological- processes, product components

VALUE ANALYSIS- Examination of the function of parts and materials in an effort to

reduce the cost and/or improve the performance of a product (reduce cost and

VALUE is the amount that buyers are willing to pay for what a firm provides them
and is measured by total revenue

Common questions used in value analysis

Could a less expensive part of material be used?
Is the function necessary?
Can the function of two or more parts be performed by a single part?
Can a part be simplified?
Could product specifications be relaxed?
Could standard parts be substituted for non-standard parts?

The main focus of product and service design is customer satisfaction. It is essential
for designers to understand what customer wants and design with that in mind.
Marketing is the primary sources of this information.

Quality is a high on the list of priorities in product and service design but for many
electronic products high tech appearance is a design factor. Designing for operation
taking into account the capabilities of the organization in designing goods and
services in addition legal, environmental and ethical considerations can influence
the design function.
Legal Considerations
Product liability- The responsibility a manufacturer has for any injuries or
damages caused by as faulty product. Some of the associated costs:
Litigation (the process of taking a case through court), Legal and insurance
costs, Settlement costs, Costly product recalls, Reputation effects.
Uniform Commercial Code- Under the UCC, products carry an implication
of merchantability and fitness (a product must be usable for its intended

Ethical (normative) Behavior

Produce designs that are consistent with the goals of the organization. Do not
compromise on quality, or cut corners, even in areas that are not apparent to
the customer
Give customers the value they expect
Make health and safety a concern. Do not place employees, customers, or
third parties at risk because of faulty products and services
Consider potential to harm the environment


LIFE CYCLES-Incubation, growth, maturity and decline

1. Introduction- it may be treated as a curiosity. Demand is low because

potential buyers are not yet familiar with the item.
2. Growth- The demand increases because awareness of the product and
services increases.
3. Maturity- there are few, design changes and demand levels off.
4. Decline- Market becomes saturated demand decline.

(Additional Information)

LIFE CYCLE ASSESSMENT-The assessment of the environmental impact of a

product or service throughout its useful life; Focuses on such factors as: Global
warming, Smog formation, Oxygen depletion and Solid waste generation.

LCA procedures are part of the ISO 14000 environmental management procedures.

The ISO 14000 family addresses various aspects of environmental management. It

provides practical tools for companies and organizations looking to identify and
control their environmental impact and constantly improve their environmental
performance. ISO 14001:2004 and ISO 14004:2004 focus on environmental
management systems. The other standards in the family focus on specific
environmental aspects such as life cycle analysis, communication and auditing.
Sustainability- refers in using resources in ways that do not harm ecological
systems that support human existence. Key aspects of designing for sustainability:
Life cycle assessment, Reduction of costs and materials used, Re-using parts of
returned products, Re-cycling.

STANDARDIZATION- Extent to which there is absence of variety in a product,

service or process. Standardized service implies that every customer or item
processed receives essentially the same service.
1. Fewer parts to deal with in inventory & manufacturing
2. Reduced training costs and time
3. More routine purchasing, handling and inspection procedures
4. Orders fillable from inventory
5. Opportunities for long production runs and automation
6. Need for fewer parts justifies increased expenditures on perfecting designs
and improving quality control procedure
1. Designs may be frozen with too many imperfections remaining.
2. High cost of design changes increases resistance to improvements
3. Decreased variety results in less consumer appeal.

MASS CUSTOMIZATION- A strategy of producing basically standardized goods or

services, but incorporating some degree of customization in the final product or
service; Facilitating Techniques are:
1. Delayed differentiation- The process of producing, but not quite completing,
a product or service until customer preferences are known. It is a
postponement tactic (Example: Produce a piece of furniture, but do not stain
it; the customer chooses the stain)
2. Modular design- A form of standardization in which component parts are
grouped into modules that are easily replaced or interchanged
Advantages: easier diagnosis and remedy of failures, easier repair and
replacement, simplification of manufacturing and assembly
Disadvantages: Limited number of possible product configurations,
Limited ability to repair a faulty module; the entire module must often be

RELIABILITY-The ability of a product, part, or system to perform its intended

function under a prescribed set of conditions; It has an impact on repeat sales,
reflect on the products image and it also create legal implication if it is too low.
Failure- Situation in which a product, part, or system does not perform as
Normal operating conditions- The set of conditions under which an items
reliability is specified

ROBUST DESIGN- A design that results in products or services that can function
over a broad range of conditions.
Taguchis Approach- Japanese engineer Genichi Taguchis approach is based on the
concept of robust design. The central feature of Taguchis approach is parameter
design. This involves determining the specification settings for both the product and
process that will result in robust design.


Product or service design changes:
Modification of an existing product or service
Expansion of an existing product line or service offering
Clone of a competitors product or service
New product or service
The degree of change affects the newness of the product or service to the market
and to the organization.
For organization
Low level of newness can mean a fairly quick and easy transition to producing
the new product
High level of newness can mean slower and more difficult and more costly,

For the market

Low level of newness would mean little difficulty with market acceptance, low
profit potential
High level of newness would mean more difficulty with acceptance and rapid
gain in market share with high potential for profits.


1. Idea Generation- product development begins with idea generation. Ideas
can come from a variety of sources.
2. Feasibility Analysis- Entails market analysis, Economic analysis, and
technical analysis. It requires collaboration among different departments of
the organization.
3. Product Specification This involves detailed description of what is needed
to meet customer wants and requires collaboration between legal, marketing
and operations.
4. Process Specification- Alternatives must be weighted in terms of cost,
availability of resources, profit potential and quality. This involves
collaboration between accounting and operations.
5. Prototype Development- One (or few) units are made to see if there are
any problems with the product and process specifications.
6. Design Review- Make any necessary changes or abandon. Involves
collaboration among marketing, finance, engineering, design and operations.
7. Market Test- A market test is used to determine the extent of consumer
acceptance. If unsuccessful return to the design review phase. This phase is
handled by marketing.
8. Product Introduction- Promote the product. This phase is handled by
9. Follow-up Evaluation- Determine if changes are needed and refine
forecasts. This phase is handled by marketing.

IDEA GENERATION- Ideas comes from a variety of sources.

1. Supply-chain based- Customers, suppliers, distributors, employees and
maintenance and repair personnel can provide insights.
2. Competitor based- By studying how a competitor operates and its products
and services, many useful ideas can be generated. Reverse engineering-
Dismantling and inspecting a competitors product to discover product
3. Research based- Research and Development (R&D)- Organized efforts
to increase scientific knowledge or product innovation
Basic research- Has the objective of advancing the state of
knowledge about a subject without any near-term expectation of
commercial applications
Applied research- Has the objective of achieving commercial
Development- Converts the results of applied research into useful
commercial applications.
Concurrent engineering- Bringing engineering design and manufacturing
personnel together early in the design phase to simultaneously develop the
product and process for creating the product. This concept may include
marketing and purchasing personnel and the views of suppliers and
customers may also be sought.
Computer Aided Design (CAD)- Product design using computer graphics
Advantages: increases productivity of designers, 3 to 10 times; creates a
database for manufacturing information on product specifications; provides
possibility of engineering and cost analysis on proposed designs
CAD that includes Finite Element Analysis (FEA) can significantly reduce time
to market. It enables developers to perform simulations that aid in the
design, analysis, and commercialization of new products.
Production Requirements- Designers must take into account production
capabilities: Equipment, Skills, Types of materials, Schedules, Technologies,
Special abilities.
Forecasts of future demand can be very useful, supplying information on the
timing and volume demand and information on demands for new products
and services.
Manufacturability-is a key concern for manufactured goods: Ease of
fabrication and/or assembly it has important implications for Cost,
Productivity, Quality.
Design for manufacturing (DFM)- The designing of products that are
compatible with an organizations abilities
Design for assembly (DFA)- Design that focuses on reducing the number
of parts in a product and on assembly methods and sequence
Recycling- Recovering materials for future use. It applies to manufactured
parts and to materials used during production. Companies recycle for a
variety of reasons including: Cost savings, Environmental concerns,
Environmental regulations
Design for Recycling (DFR)-referring to product design that takes into
account the ability to disassemble a used product to recover the recyclable
Remanufacturing- Refurbishing used products by replacing worn-out or
defective components. It can be performed by the original manufacturer or
another company
Design for disassembly (DFD)- Designing a product to that used products
can be easily taken apart
Component Commonality-When products have a high degree of similarity
in features and components, a part can be used in multiple products
Benefits: Savings in design time, Standard training for assembly and
installation, Opportunities to buy in bulk from suppliers, Commonality of parts
for repair, Fewer inventory items must be handled

KANO MODEL- can be an interesting way to conceptualize design characteristics in

terms of customer satisfaction.
Basic quality- Refers to customer requirements that have only limited effect
on customer satisfaction if present, but lead to dissatisfaction if absent
Performance quality- Refers to customer requirements that generate
satisfaction or dissatisfaction in proportion to their level of functionality and
Excitement quality- Refers to a feature or attribute that was unexpected by
the customer and causes excitement

Service- Something that is done to, or for, a customer
Service delivery system- The facilities, processes, and skills needed to
provide a service
Product bundle- The combination of goods and services provided to a

System design involves development or refinement of the overall service package.

1. The physical resources needed
2. The accompanying goods that are purchased or consumed by the customer
or provided with the service.
3. Explicit service- the essential feature of service such as tax preparation
4. Implicit service- extra feature such as friendliness, courtesy.

Service package- the physical resources needed to perform the service, the
accompanying goods and the explicit and implicit services included.


It begins with a choice of service strategy, which determines the nature and focus of
the service, and the target market. Key issues in service design: Degree of variation
in service requirements and Degree of customer contact and involvement.


1. Products are generally tangible; Services are generally intangible.
2. Services are created and delivered at the same time.
3. Services cannot be inventoried
4. Services are highly visible to consumers and must be designed with that in
5. Some services have low barriers to entry and exit
6. Location is often important to service design with convenience as a major
7. Services systems range from those with little or no customer contact to those
that have a very high degree of customer contact.
8. Demand variability alternately creates waiting lines or idle services resources.


Service Blueprinting- A method used in service design to describe and analyze a
proposed service


1. Establish boundaries for the service and decide on the level of detail needed.
2. Identify and determine the sequence of customer and service actions and
3. Develop time estimates for each phase of the process as well as time
4. Identify potential failure points and develop a plan to prevent or minimize
them as well as a plan to respond to service errors.


1. Being consistent with organization mission
2. Being user friendly
3. Being robust if variability is a factor
4. Being easy to sustain
5. Being cost effective
6. Having value that is obvious to customers
7. Having effective linkages between back of the house operations (no contact
with the customer) and front of the house operations (direct contact with
customers). Front operations should focus on customer service while back
operations should focus on speed and efficiency.
8. Having a single, unifying theme such as convenience and speed
9. Having design features and checks that will ensure service that is reliable and
of high quality.


1. There are variable requirements
2. Services can be difficult to describe
3. Customer contact is usually much higher in services
4. Services design must take into account the service counter encounter.
1. Define the service package in detail.
2. Focus on the operation from the customer perspective.
3. Consider the image that the service package will present both to customers
and prospective customers.
4. Recognize that designer familiarity with the system may give them a quite
different perspective than that of the customer
5. Make sure that managers are involved and will support the design once it is
6. Define quality both tangibles and intangibles.
7. Make sure that recruitment, training and reward policies are consistent with
service expectations.
8. Establish procedures to handle both predictable and unpredictable events.
9. Establish systems to monitor, maintain and improve service.