Impact of structured product definition on market success

Abstract

Siemens recently launched a new product, the MAGNETOM Avanto, onto the market. The initial customer reaction was tremendous. The product definition followed a structured process and state‐of‐the‐art tools like quality function deployment (QFD) and conjoint analysis were applied. This paper analyses the impact of all these efforts in product definition on market success. It retrospectively summarizes the benefits from various tools and methods. The medical equipment market, its mechanisms and special features are introduced in a case study of magnetic resonance imaging equipment developed at Siemens Medical Solutions. The decision‐making or purchasing process in this market is very complex. Therefore dedicated market research approaches using a variety of different methods were required. Focus groups, conjoint analysis, broadband surveys and face‐to‐face interviews were all useful. In addition, an astute segmentation of the individual groups that influence a purchasing decision had to be made. From all these market research activities a company normally ends up with an immense amount of contradicting requirements. The article shows how these requirements were converted into a clear system specification and new technological solutions. The Siemens MAGNETOM Avanto has been very successful in the market. Customer reaction and feedback indicates that the product has many unique selling points, best performance in many aspects, and no major weaknesses. Siemens believes that this is due to the very systematic and comprehensive approach of the product definition.

A model of brand switching by lead users of high-tech capital equipment

“…This assessment determines whether more features can be added, or if the product is reaching its utmost capacity, and switching to a new brand is the only solution to sustaining a competitive advantage (Hogan and Armstrong, 2001). Determining the attractive features to include in capital equipment is a challenging task for suppliers (Krieg, 2004;John et al, 1999) because technology is changing rapidly and users' preferences are difficult to predict (Bhattacharya et al, 1998). Thus, product designs that incorporate the widest range of features associated with high performance are expected to provide more incentive to switch.…”

“…The decision-making process used to purchase a new MRI product is complex (Krieg, 2004). It begins by establishing a special committee that includes different members of the medical imaging department.…”

“…Magnetic resonance imaging (MRI) equipment is the example studied in our research. In addition to costs that range into the multiple millions of dollars, MRI equipment is characterised by rapid technological change, technology heterogeneity, absence of a standard design (Anderson and Tushman, 1990), and significant differentiation between brands (Krieg, 2004).…”

Purchasing manages and optimises existing product variance

“…The challenge here is that an enormous increase in product variance has a serious impact on the value creation processes throughout the supply chain and cause the company an enormous effort in terms of costs (Krumm and Schopf, 2014). In order to meet this challenge is an agile supply chain strategy necessary which is defined through flexibility by adapting quickly, effectively to rapidly changing customer needs (Krieg, 2004) and a cost optimisation approach across the procurement chain (Huang et al, 2002;Christopher and Towill, 2000;Droege, 1999). One important approach of cost optimisation across the procurement chain is the elimination of waste in form of reduction of unnecessary product variants (Douglas et al, 2015;Christopher, 2005;Droege, 1999;Liker, 2004, Wang et al, 2011.…”

Predicting success for new flavors with information known pre-launch: A flavored snack food case study

“…The biggest challenge is 52 the tedious job of collecting all necessary information from the consumer marketplace and 53 knowing which requirements are the most critical to consumers for success. Because consumer 54 needs often change slowly it is possible to collect the necessary information from the consumer 55 and then only update or confirm the information previously collected (Krieg, 2004). …”