TOPIC FOUR

PRODUCT AND SERVICE

DESIGN
 Objectives of Product and
Service Design
• The main focus of product and service design is
 
customer satisfaction. Hence, it is essential for
designers to understand what the customer wants and
design with that in mind. Marketing is the primary
source of this information.
It is important to note that although profit is generally
the overall measure of design effec­tiveness, because
the time interval between the design phase and profit
realization is often considerable, more immediate
measures come into play.
 What Does Product and Service
Design Do?
The activities and responsibilities of product and service design include
the following (functional interactions are shown in parentheses):
• Translate customer wants and needs into product and service
requirements. (marketing, operations)
• Refine existing products and services. (Marketing)
• Develop new products and/or services. (marketing, operations)
• Formulate quality goals. (Marketing, operations)
• Formulate cost targets. (accounting, finance, operations)
• Construct and test prototypes. (operations, marketing,
engineering)
• Document specifications.

Product and service design involves or affects nearly every

functional area of an organization. However, marketing and
operations have major involvement.
 Reasons for Product or Service
Design or Redesign
• Product or service design has strategic
implications for the success and prosperity of an
organization
• it has an impact on future activities.
• The main forces that initiate design or redesign
are market opportunities and threats
• The factors that give rise to market
opportunities and threats can be one or
more changes:
 Factors that give rise to market
opportunities and threats
• Economic (e.g., low demand, excessive warranty claims,
the need to reduce costs).
• Social and demographic (e.g., aging baby products,
population shifts).
• Political, liability, or legal (e.g., government changes,
safety issues, new regulations).
• Competitive (e.g., new or changed products or services,
new advertising/promotions).
• Cost or availability (e.g., of raw materials, components,
labor).
• Technological (e.g., in product components, processes).
Legal, Ethical, And Environmental Issues
In Product Design
• Designers must be careful to take into account a wide array of legal
and ethical considerations.
• potential to harm the environment
• Product liability means that a manufacturer is liable for any injuries
or damages caused by a faulty product because of poor
workmanship or design
• implied warranties created by state laws under the Uniform
Commercial Code, which says that products carry an implication of
mer­chantability and fitness; that is, a product must be usable for its
intended purposes.
• The suits and potential suits have led to increased legal and
insurance costs, expensive settlements
• increasing customer awareness of product safety can adversely
affect product image and subsequent demand for a product.
Organizations generally want designers to
adhere to the following guidelines :
• Produce designs that are consistent with the goals of the
organization.

• Give customers the value they expect.

• Make health and safety a primary concern. Consider

potential to harm the environment.
 Other Issues to be considered In
Product And Service Design
• Product or service Life Cycles
– At introduction stage demand is generally low
– When potential customers have recognized the presence of the
product the demand increases-growth stage
– At maturity stage there is less improvement and design
– In the last stage of a life cycle, some firms adopt a defensive
research posture whereby they attempt to prolong the useful life of
a product or service by improving its reliability, reducing costs of
producing it (and, hence, the price), re­designing it, or changing the
packaging
 Product or service life cycle
4-12 Product and Service Design

Life C yc le s o f Pro d u c ts o r Se rvic e s

Saturation

Maturity
Dem and

Decline
Growth

Introduction

Time
 Conti…………..other issues

• Standardization
– Standardization refers to the extent to which there is
absence of variety in a product, service, or process.
– Standardized products are made in large quantities of
identical items;
– Standardized service implies that every customer or item
processed receives essentially the same service.
– Standardized products are immediately available to customers.
– Standardized products mean interchangeable parts, which
greatly lower the cost of production while increasing productivity
and making replacement or repair relatively easy compared with
that of customized parts.
– Design costs are generally lower.
 Conti………….other issues

• Designing for Mass Customization

• Reliability-ability of a product, a part, a service,
or an entire system to perform its intended
function under a prescribed set of conditions.
• Robust Design ability for a product to perform
as designed over a much broader range of
conditions
• Concurrent Engineering- brings many people
together in the early phase of product design in
order to simultaneously design the product and
the process
 THE PRODUCT DESIGN
PROCESS
•Idea generation,
•Product screening,
•Preliminary design and testing, and
•Final design.
Product designs are never finished, but
are always updated with new ideas.
 1. Idea Development

• All product designs begin with an idea. –

• The idea might come from a product manager who spends time with
customers, from an engineer with a flare for inventions, or from anyone else
in the company.
• To remain competitive, companies must be innovative and bring out new
products regularly’
• Sources of ideas includes the following
– Customers,
– Competitors,
– Suppliers
– Competitors
– Reverse Engineering- disassembling competitors the product and
analyze its parts and features.
– R & D (research and development)
 2. Product Screening

Evaluation of the product idea to determine its likelihood

of success. issues to consider includes
– Operations, What are the production needs of the proposed new
product and how do they match our existing resources? Will we
need new facilities and equipment? Do we have the labor skills
to make the product? Can the material for production be readily
obtained?
– Marketing, What is the potential size of the market for the
proposed new product? How much effort will be needed to
develop a market for the product and what is the long-term
product potential?
– Finance The production of a new product is a financial
investment like any other. What are the proposed new product's
financial potential, cost, and return on investment?
 Break-Even Analysis is tool for Product Screening
 Break-Even Analysis is tool for Product
Screening

This technique computes the quantity of goods a company needs to

sell just to cover its costs, or break even, called the "break-even"
point. When evaluating an idea for a new product its helpful to
compute its break-even quantity. An assessment can then be made
as to how difficult or easy it will be to cover costs and make a profit.
Product Screening Tool – Break-Even Analysis

• Computes the quantity of goods company

needs to sell to cover its costs
QBE = F/ (SP - VC)
– QBE – Break even quantity
– F – Fixed costs
– SP – selling price/unit
– VC – Variable cost
 Product Screening Tool –
Break-Even Analysis
• Break-even analysis also includes calculating
– Total cost – sum of fixed and variable cost
Total cost = F + (VC)*Q

– Revenue – amount of money brought in from sales

Revenue = (SP) * Q

Q = number of units sold

 Break-Even Analysis: Graphical Approach

• Compute quantity of goods that

must be sold to break-even
• Compute total revenue at an
assumed selling price
• Compute fixed cost and variable
cost for several quantities
• Plot the total revenue line and the
total cost line
• Intersection is break-even
• Sensitivity analysis can be done to
examine changes in all of the
assumptions made
 3. Preliminary Design and Testing

• At this stage, design engineers translate general

performance specifications into technical
specifications.
• Prototypes are built and tested.
• Changes are made based on test results, and
the process of revising, rebuilding a prototype,
and testing continues.
• For service companies this may entail testing the
offering on a small scale and working with
customers to refine the service offering.
 Final Design

• This is where final product specifications are

drawn up.
• The final specifications are then translated into
specific processing instructions to manufacture
the product, which include selecting equipment,
outlining jobs that need to be performed,
identifying specific materials needed and
suppliers that will be used, and all the other
aspects of organizing the process of product
production.
 SERVICE DESIGN
• Service refers to an act, something that is done
to or for a customer (client, patient, etc.). It is
provided by a service delivery system, which
includes the facilities, processes, and skills
needed to provide the service
• unlike manufacturing, where production and
delivery are usually separated in time, services
are usu­ally created and delivered
simultaneously
System design involves development or refinement of
the overall service package

• The physical resources needed.

• The accompanying goods that are purchased
or consumed by the customer, or provided with
the service.
• Explicit services (the essential/core features of
a service, such as hair styling, lawn mowing).
• Implicit services (ancillary/extra features, such
as friendliness, courtesy).
 Differences between Service Design and
Product Design
• Products are generally tangible; services are generally
intangible. Consequently, service design often focuses
more on intangible factors (e.g., peace of mind,
ambiance) than does product design.
• In many instances services are created and delivered
at the same time (e.g., a haircut, a car wash). In such
instances there is less latitude in finding and correcting
errors before the customer has a chance to discover
them. Consequently, training, process design, and
customer relations are particularly important.
• Services cannot be inventoried. This poses restrictions
on flexibility and makes capacity issues very important.
 CONTI….difference between
service and product design
• Services are highly visible to consumers and
must be designed with that in mind; this adds
an extra dimension to process design, one that
usually is not present in product design.
• Some services have low barriers to entry and
exit. This places additional pressures on ser­
vice design to be innovative and cost-effective.
• Location is often important to service design,
with convenience as a major factor. Hence,
design of services and choice of location are
often closely linked.
 Phases in the Service Design
Process
• Conceptualize
– Idea generation
– Assessment of customer wants/needs (marketing)
– Assessment of demand potential (marketing)
• Identify service package components needed
(operations and marketing)
• Determine performance specifications (operations and
marketing)
• Translate performance specifications into design
specifications
• Translate design specifications into delivery
specifications
Characteristics of Well-Designed
Service Systems
• Being consistent with the organization mission.
• Being user friendly.
• Being robust if variability is a factor.
• Being easy to sustain.
• Being cost-effective.
• Having value that is obvious to customers.
• Having effective linkages between back-of-the-house operations
(i.e., no contact with the customer) and front-of-the-house
operations (i.e., direct contact with customers). Front operations
should focus on customer service, while back operations should
focus on speed and efficiency.
• Having a single, unifying theme, such as convenience or speed.
• Having design features and checks that will ensure service that is
reliable and high quality.
 Using an example of your choice
explain the challenges faced when
designing a service as opposed to
designing a product