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Competitive products and delighted customersPart one and part two

March 2, 2014

Juhani AnttilaInternational Academy for Quality (IAQ)Helsinki, Finlandjuhani.anttila@telecon.fi ,ww.QualityIntegration.biz

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under the Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0

(Mention the origin)

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xxxx/20.6.2012/jan

Main parts and themes of the presentation:

Part one

1. Extended product concept

2. Product characteristics and quality

3. Needs and expectations and customer satisfaction

Part two

1. Striving for customer satisfaction

2. Technological challenges

3. Product and corporate brands

Aiming at competitive products and delightedcustomers in the time of recession

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2318/1.10.2013/jan

Quality perception

Indifference

Dissatisfaction

High

High

SatisfactionLow

Low

The opposite of satisfaction is not dissatisfaction. It is indifference.The opposite of dissatisfaction is not satisfaction. It is indifference.

Indifference means unimportance, apathy, or lack of care, concern or interest. You can’t see any difference.

4

2070/4.6.2000/jan

Measuring customer satisfaction, A typical case

(Ref. R Kordupleski)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Poor Satisfactory Good Excellent

Overall satisfaction

5

2068/4.6.1999/jan

Only excellence in customer satisfaction is enough

Customers’overall satisfaction

20 excellent

60 good

15 satisfactory

5 poor

Total 100 customers

Lost customers

1

20

10

5

36 customers

(Ref. R Kordupleski)

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Experienced dissatisfaction erode the goodwillreserve

Satisfaction / Dissatisfaction

Experienced dissatisfaction

Goodwill Badwill

Expectationsexceeded

4285/17.1.2014/jan

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How can I understand whether a customer is satisfied or not?

1199/17.7.2001/jan

• When asked, the reply is ”Yes”

• Says he is even not asked

• Tells this to his friends

• Buys more of what he is satisfied

• Buys something else, too

Situation consists of a complex mixture of rational, non-rational (emotional)and irrational human phenomena:

– satisfaction, dissatisfaction, indifference

– confidence, trust

– goodwill / badwill balance

– to buy or not to buy

81181/15.11.2008/jan

Buyer’s choice- negation principle

1. Buyers like choose a product without any risks.They do that on the basis of their own subjective sentiments and emotions.They don’t use logical advantage comparisons. (Later they may explain their choice byrational arguments)

2. They don’t have any wide preference scale, e.g. covering 9 to 10 product characteristics.

3. One can recognize at most 10 characteristics.

(Ref.: S. Rinne, 1989)

A product to be chosen must not include any of the major negations recognizedby the buyer, and it should have at least one clearly good feature.

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Custom life cycle

3716/20.1.2014/jan

10

Focus on Customer

Complyingstated

requirements

Satisfyingcustomer

needs

(Ref.: B. Gale: Managing Customer Value)

Excellentperformance of

goods and services

Excellent customer

value

Effective-ness

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Stated requirements

Implied needs Market needs Customer value

Focus of management

Operational performance management- reactive and rational approach

Strategic performance management- proactive and creative approach

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Fishbowl techniques

2090/16.2.2001/jan

1. Know the need for a customer visitation

(Ref.: Shiba)

5. Analyze what you observed

3. Observe and seewhat is going on

2.

4.

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Recognized professional approaches:

Kano modelA theory of customer satisfaction and product development that identifies productqualities based on how they affect the customer's perception of the product (NoriakiKano 1980)

QFD (Quality Function deployment) A method to transform user demands into design quality, to deploy the functions

forming quality, and to deploy methods for achieving the design quality intosubsystems and component parts, and ultimately to specific elements of themanufacturing process (Yoji Akao 1966)

Kansei engineeringA method that aims the development or improvement of products and services bytranslating customer's psychological feelings and needs into product's designparameters (Mitsuo Nagamachi in the early 1970’s)

Lean startup approachCreative innovations through “minimum viable products”, and “validated learning”through hypothesis testing for success: (1) Value hypothesis and (2) Growth hypothesis(Eric Ries 2011)

Linking product characteristics with customerpreference and satisfaction

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Perceived satisfaction

Satisfyingfactors Must-be

factors

Attractivefactors

Degree ofcontents

+-

(Ref.: Prof. N. Kano)

Customer’s satisfaction

Perceived disssatisfaction

Indifference

140901/14.5.2008/jan

Customer satisfaction classification(for product development / improvement)

Product functional per a productcharacteristic

1. I enjoy it that way, or I like it that way2. It is a basic necessity,or I expect it that way3. I am neutral4. I dislike it, but I can live with it that way5. I dislike it (that way), and can’t accept it

1. I enjoy it that way, or I like it that way2. It is a basic necessity,or I expect it that way3. I am neutral4. I dislike it, but I can live with it that way5. I dislike it (that way), and can’t accept it

Product dysfunctional per a productcharacteristic

(Ref.: Prof. Kano)

Searching for usersSearching for users’’ perception of the different product features: perception of the different product features:

150902/14.5.2008/jan

Evaluation table (Kano methodology)

Productcharacteristic

Functional 1. like

2. must-be

3. neutral

4. live with

5. dislike

Dysfunctional

1. like 2. must-be 3. neutral 4. live with 5. dislike

Customer A: Attractive O: One-dimensional perception M: must-be Q: Questionable result dimension: R: reverse I: Indifferent

QRRRR

AIIIR

AIIIR

AIIIR

OMMMQ

160903/14.5.2008/jan

Tabulation of survey results (Kano methodology)

Productcharacteristic

Functional

1. like

Dysfunctional1.

like2.

must-be3.

neutral4.

live with5.

dislike

O2. must-be

3. neutral

4. live with

5. dislike

Productcharacteristic# 1functional

Productcharacteristic# 1dysfunctional

1. I like it that way.2. It must be that way.3. I am neutral.4. I can live with it that way.5. I dislike it that way.

1. I like it that way.2. It must be that way.3. I am neutral.4. I can live with it that way.5. I dislike it that way.

Pr.Ch. A M O R Q I I total grade

1.

2.

3.

4.

(1) Questionnaire

(2) Kano Evaluation Table

(3) Tabulation of Surveys

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Customer-focused product and process development

VOE: Voice of Engineer,Engineering view-points andexpressions to the product

Product and process development

VOC: Voice of Customer,User’s view-points andexpressions tothe product

Marketingarguments

Competitorcomparison

Priorities

Matching

(Ref.: QFD)

Customers may be internal or external recipients of the products. Customer-focus isrequired in the both cases and relating to all business processes. Developing products tothe needs and expectations of external customers is particularly responsibility of theproduct development process.

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0599/15.12.2008/jan

From customer’s needs to product specificationsand process plans (QFD methodology)

Processindicators

Processspecification

Prod

uct

spec

ifica

tion

Customer’sactivity

Process control planning

Productcharacteristics

Productspecification

Cus

tom

er’s

nee

dsProduct developmentProduct developmentshould be extended toshould be extended tothe design of the otherthe design of the otherproduct relatedproduct relatedprocesses (production,processes (production,pricing, selling,pricing, selling,delivering, etc.)delivering, etc.)

All this developmentAll this developmenttakes place in thetakes place in theproduct developmentproduct developmentprocesses.processes.

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Kansei engineering process:

Kansei / affective engineering

KE = KanseiengineeringKansei = Needs andwants (psychologicalfeelings and needs inmind)SD = Semanticdifferentials

(Ref.: Mitsuo Nagamachi)

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Different business situations:

Products from a single organization:- Gaps in the organization‘s business processes impact on the customer‘s perception. Thephenomenon is described by the ServQual model that was developed in the mid-1980s byZeithaml, Parasuraman & Berry. We have modified the model for the extended product andprocess concepts.

- QFD methodology may also be extended to the business process design.- “Service design” methodology focus on service process and structure realization.

Products from business networks and ecosystems:- Product (and in particular service) is not produced only by one organization’s processes

but by many organizations’ processes operating in a business network or an ecosystem.Different networks and ecosystems compete with each other. However, one organization hasthe commercial relationship with the customer.

Products from a networked community:- A customer is an independent and collaborating member of a network. He or she and also

all the other network members produce something to and get something from the othernetwork members. A network product is a cumulative result from network member’s valuecreating interactions with all other members. Network members also get value from the wholenetwork through the general recognition or privileges of the network.

Linking customer’s perception with business processesand structures

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”Gaps” within business activities

Currentneeds

PERCEIVED PRODUCT(goods and services)

Communication,market input

Communication,market output

Former information

Other information

Product andprocess

development

Product and process specification

Product needs and expectations

GextG1

G6

G2

G4

CUSTOMER

(Ref. Parasuranam et al.)

Product producing, delivering and receiving processes

SUPPLIERG3

Challenges for business excellence Strategic business plansGint

Customer’s aims and operations

Gmgt

Operations

G5

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Quality of a network network based on multiple win / win

Quality of a network “v”, Qvm:“Degree to which a set of inherentcharacteristics of the network fulfilsneeds and expectations of the involvednetwork members”:- Number of members (m) in the network- Each member gets something useful(Si) from the other network members butalso loses something (Ai) of its own.

4331/15.3.2014/jan

Networkmember i

Networkmember j

S

A A

S

i

j

Metcalfe’s Law: A network increases in value as the square of the numbers of its users.

A network “v”

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Quality in business and society (“Quality diffusion”)

0245/28.4.2014/jan

Quality awareness in society

StructureManagement ResourcesOrganization culture

Overall organizational performance (Quality management)

People Materials, knowledgeProcesses

Operational performance

Quality in products

(Ref. Dr. Seghezzi EOQ ’88 Moskova)

Culture InfrastructureCivilization

Goods Services

Quality in performance of people, organizations and societies

Organizations

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Linking product quality with the supplier’s businesssuccess, Customer satisfaction index (CSI)

CustomersatisfactionIndex, CSI

Perceivedquality

Perceivedvalue

Expectations

Complaints

Loyalty

Drivers

CONSEQUENCES: Business success

(+)

(+)

(+)

(+)

(+)

(+)

(-)

(+)

(+/-)

(Ref. A. Westlund 1996)0503/23.2.2013/jan

Results

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New technologies have essential impacts onproduct characteristics and the effectivenessand efficiency of the related processes. Thesetechnologies include: Information technology Biotechnology Nano- and microtechnology Optical technology Energy technology Social technology Wellbeing technology Etc.

Technological challenges

We have been involved with the followingexamples of the ICT (information andCommunication technology):

Radio frequency identification (RFID) Robotics Ubiquitous information technology,

Internet internet of things (IoT), andmachine-to-machine applications

Open source information and services Mobile payment technology Cloud services Mashup products. “Big data” analyzing and crowd-

sourcing activity

In addition to the impact on quality of products, the new technologies also have challenginginfluence that also are strongly related with customer perception e.g. on environmental, social,safety and security performance, including: Environmental protection Information security Health risks

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• Brand value: The overall value statement to the user

• Brand authority: Excellence aspects

• Brand personality: Rational brand characteristics Emotional brand characteristics

• Brand benefits: Concrete value features in use

• Brand service: Service provision to the user

Product brand and its consistency with corporate brandin market communication

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Corporate brandCorporate brand

Product brandProduct brand

ConsistencyConsistency

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Attractiveness and consistencyof the corporate and product brands

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Apple Apple

Lumia 920Lumia 920 Galaxy S III 4 G

Samsung Samsung

iPhone 5iPhone 5

NokiaNokia