Study Guide

Study Guide 1. What is commoditization? What factors contribute to commoditization? What are the typical firms’ reactions to commoditization? Commoditization is the process by which goods that have economic value and are distinguishable in terms of attributes end up becoming simple commodities in the eyes of the market or consumers. The factors that contribute to commoditization are when consumers can buy the same product or service from different small or large businesses. Price is the only distinguishing factor in commoditized products, because there is no significant difference in quality or in how consumers use these products. Reactions include: 1. Reduce Cost, 2. Reduce consumer knowledge,3. Innovate 2. New products may fail for many different reasons. List the most common failure scenarios for new products. 28%: Unwanted, better mousetrap, 24% “me-too” trivial new product, 15% technical dog, 13% competitor reactions, 13% price, 7% other 3. What is the macro-level reason for the failure of new products? Carrying capacity: The max number of products that can profitably exist in a market. Competitive overcrowding: When the number of available products exceeds the carrying capacity of the market. 4. The latest research provides little evidence of a pioneer advantage. What are the reasons that could potentially negate the pioneer advantage? Technology vintage effects and protracted development and adoption. 5. The latest research provides little evidence of a pioneer advantage. There are several reasons why pioneer may not achieve market dominance, and these reasons might be the real causes of enduring market leadership. Describe these reasons. Envisioning the market, managerial persistence, financial commitment, relentless innovation, asset leverage. 6. Describe Voice of the Customer Table (VoCT), and its purpose. Ask about needs, not solutions. Flesh out usage context. Used for exploration and discovery of customer needs and is used to flesh out usage context. This helps identify who, what, when, where, why, and how they do something or want something. 7. When we interview consumers, they may describe their needs and offer solutions. How should we treat or handle their needs and solutions? Focus mostly on the customer's needs, less on their proposed solutions. "Be cautious of their solutions" -Yang. Many times, they can't imagine all the possibilities. "If i asked people what they wanted they would have said faster horses" - Henry Ford 8. What’s problem detection analysis? What are the pros and cons of problem detection analysis? How could we avoid its limitations? Focusing on problems instead of benefits. Ask: What did you dislike about the product/feature/attribute. Ask about problems = more specific/episodic Ask about benefits = known/generic 9. Describe laddering, reverse laddering, and their purposes. Laddering: A part of the interview process, ask the consumer questions about a product or feature and what they like/dislike about it. Then ask why. And again. Write down all the consumer responses to understand the "base" level of their needs/desires. Reference Maslow's Hierarchy of Needs. Reverse laddering: This approach allows you to guide you from the base of laddering motivations back to product design. Look for additional features that can address higher level needs/motivations of the consumer. 10. Describe consumer idealized design (CID), and its purpose. The process of actually collaborating with the customer on the design of a product. Ignore feasibility of your designs! Uncover the unarticulated needs. More creative and unique. What’s the purpose of CID? Look for needs reflected in the design. Ask “why”. 11. Describe lead-user analysis. Lead users develop products. Their needs are ahead of the market. Lead users create a solution when there is no commercial solution available. 12. Why do consumers have unarticulated needs? Describe the reasons. Consumers don't know what they don't know. Consumers are not fully conscious and aware of their expectations and needs. Consumers aren't experts or informed enough to come up with solutions and innovate- so they just develop a work around. "Functional Fixedness"- the human tendency to fixate on the way products are normally used. Most consumers are unable to imagine alternative functions. 1. Customers become accustomed to current conditions (throwing a tennis ball before chuck it). 2. Customers develop workarounds. 3. Self Blame. 4. Difficulty articulating their needs. 13. Describe the potential advantages of observation (versus inquiry). Inquiry may not be effective in understanding unarticulated needs. Trained observers can see solutions to unarticulated needs. Using the actual product or a prototype or engaging in the actual activity for which an innovation is being designed, stimulates comments about such intangibles as smells or emotions associated with the product's use. Interrupts normal activities less than questioning does. Observers in the field often identify user innovations that can be duplicated and improved for the rest of the market. 14. One method advocated for contextual inquiry is the “master-apprentice approach”. Describe this approach. "Explain by doing" (No need to think - talk while demonstrating). Allows designers to observe, pose questions elicit responses about unconscious actions, offer solutions, get feedback. Consumer is 'master’ Designer is 'apprentice' Allows designer to pose questions, elicit responses about unconscious actions, offer solutions and get feedback 15. During the early exploration phase, starting out with a survey may not be a good idea. Describe the reasons. Surveys have pre-set questions that do not explain why the customer feels a certain way. Unable to "drill down" and ask why, why, why. Consumers are unable to identify solutions that do not already exist. Does not identify personal concerns, and provide more generalized feedback. 16. A direct outcome of using various inductive methodologies is a massive amount of qualitative data. Describe how you would analyze qualitative data. An Affinity Diagram is a tool that gathers large amounts of language data (ideas, opinions, issues) and organizes them into groupings based on their natural relationships. Sift through large volumes of data. Encourage new patterns of thinking. Don't use if you have less than 15 pieces of information. The process - Sticky notes. Generate ideas. Display ideas. Sort ideas into groups. Create header cards. 17. Describe three market experimentation strategies. 1. Darwinian - Experiment with multiple models in the market simultaneously and see which one the market favors 2. Product Morphing - Launch a product, get feedback and then use feedback to develop next model 3. Vicarious Experiments - Wait for other firms to launch a product and then learn from their mistakes (cheapest) 18. Describe trend extrapolation and its purpose. Try to extrapolate all trends including societal, technological, environmental, economic, and political in order to predict consumer needs in the future. Most difficult part is the timing. You know people will need your technology but you don't know when. Don't know when you have enough users or complementary products. Misdirection of timing can kill the firm. 19. Describe the key components of Strategy Canvas. Identify the players: the players can be a product category, firm or industry. Identify the attributes or the factors that these players compete on. Create a value curve: the value curve allows you to rate the performance of each player on each attribute. 20. In creating new value curves, firms should ask themselves four questions. Describe these questions. Four Actions Framework Reduce - Which factors should be reduced well below the industry's standard? Raise - Which factors should be raised well above the industry's standard?

Eliminate - Which factors that the industry takes for granted should be eliminated? Create - Which factors should be created that industry has never offered? 21. Describe the potential limitations of group-based brainstorming. How could we avoid these limitations? Production Blocking-attention paid to one idea, Evaluation Apprehension-natural self-censorship, Undercurrents of Politics-brown nosing, Free Riding-People not contributing. Avoid these limitations by creating a safe, nonjudgmental and non criticizing environment, welcome wild ideas or in a group setting you could encourage everyone to generate ideas on their own, write them down anonymously and silently then review the ideas as a group 22. When we generate solutions, should we aim for quantity or quality? Why? Go for quantity. More ideas = more good ideas. Quality promotes self-censorship. Need to generate lots of ideas to find good ones. 23. What are the three inventive templates? Describe how to apply each template. 1. Attribute Dependency. The voice of the product. Basic assumptions: Creativity is facilitated by restricted scope. Function follows form (FFF). Without dependency: A change in one attribute is not naturally associated with a change in another attribute For example: diapers that change color when wet to indicate when the diaper needs changing. Step by step attribute dependency: Identify internal attributes (attributes within firm's control), Identify external attributes (attributes outside the firm's control), Construct "forecasting matrix", Explore dependencies between pairs of attributes, Function follows form (FFF). 2. Replacement. Assign new functionality to an existing component. Step by step: Identify internal attributes (in firm's control), Identify external attributes (out of firm's control), Can one attribute (either external or internal) fulfill the function of another attribute? Example: Mopping slippers, Coor's Cooler box 3. Displacement. Removing a useful component from a product along with its function. Ex: removing a car roof to get a convertible. Step by step: Identify internal attributes (in firm's control). Identify the function of each attribute. Remove an attribute with its associated function. Function follows form (FFF) 24. Describe why concept tests are needed. Incorrect understanding of consumer needs. The needs are not properly reflected in the concept. Needs/Preferences have shifted. Consumers react negatively to product features in the context of the larger product. 25. How would you tell whether a set of Purchase Intention scores is good or bad? A concept should get 80-90% favorable answers (definitely + probably) to justify further pursuit. Recent research shows average norms for 'definitely will buy' to be 19% and 'probably will buy' to be 64% - totaling 83% → making this a good set of scores. If definitely + probably <80%, then consider changing the product or starting over. 26. Describe the supplemental measures often used in concept testing. Uniqueness - whether the concept is uniquely attractive. Purchase Frequency - everyday routine versus special occasion; be careful of interpretation. Other Diagnostics - target consumer, price. 27. List the potential benefits of good designs. Good design can help raise utility (via ergonomics). Get noticed (via visual differentiation). Create Product "Identity" (via styling). Design can also communicate information about the consumer. Ex: fashion industry; car industry. Can create positive affect (via aesthetics). Ex: mini cooper. Can create positive affect (via usage) 28. What are the major barriers to User-Centered Design? Legitimate: Everything requires tradeoffs - better design may be more costly, Users are not buyers - buyers rely on price and other considerations rather than function and experience, Time pressure - some product categories are highly dynamic. Semi- Legitimate: Creeping featurism - there is a tendency to add features but not reduce usage complexity accordingly, Dealing with complexity: Restraint, Module, Hierarchy, Horror Vacui (kenophobia) - the tendency to favor filling blank spaces with objects and elements over leaving spaces blank or empty. Not Legitimate: Insensitivity to design - managers (especially MBAs) are design-illiterate. Some designers are technicians and have little interest in interacting with consumers Lack of empathy - designers use knowledge from their head, whereas first-time users require knowledge from the world. Designers fall pretty to the 'curse of knowledge' 29. What is “curse of knowledge”? How to overcome it in the context of product design? When an expert at a subject writes a manual and assumes that the consumer knows as much as he/she does. 30. Describe at least three fundamental principles of User-Centered Design. Discoverability - Make it easy for customers to discover what actions are possible (Example: Mouse Pad on Laptop). Feedback - Provide full and continuous information about the results of actions and the current state of the product or service. (Example: Loading Icon on Computer) Affordance - Provide proper affordances to make the desired actions possible (Example: Doors, Vegetable Peeler). Constraint - constraints are the set of limits on the possible action a user can have with the product (example: computer battery). Mapping - Create an intuitive relationship between controls/behaviors and their effects (Example: Seat Recliner button in car). 31. Describe the lean start-up approach. Methodology that favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional "big design up front" development. Instead of executing business plans, operating in stealth mode, and releasing fully functional prototypes, young ventures are testing hypotheses, gathering early and frequent customer feedback, and showing "minimum viable products" to prospects. This new process recognizes that searching for a business model (which is the primary task facing a startup) is entirely different from executing against that model (which is what established firms do). 32. What is project premortem? Hypothetical opposite of post-mortem, at the beginning of the project instead of the end. So, the project can be improved instead of an autopsy. Prospective hindsight (imagining that an event has already occurred) improves the ability to identify reasons for future outcomes by 30%. Instead of asking what might go wrong, assume that the project failed and ask what did go wrong. -Team members write down every reason they can think of (individually). Makes it safe and legitimate to speak up about weaknesses. 33. Describe test market and its pros and cons. Pros: Finding out how the entire market will react, Learning how to improve the marketing plan, Learning about implementation problems, Lower in cost than a full roll-out, Maybe the only method you can trust. Cons: Time and money requirements, Measurement is difficult, No flexibility/diagnostics ("it is what it is"), Forewarns the competition, Sabotage. 34. Describe the qualitative determinants of diffusion. Relative advantage - Better than the product it replaces? Compatibility - Consistent with existing standards, values and experiences. Complexity - Difficult to use and understand? Observability - Are product benefits tangible and visible? Trialability - Can consumers experiment with the product? 35. New products may require behavior change on users’ end. Analyze the possible scenarios of new products based on the degree of product improvement and the degree of behavior change required. Top: Easy Sells - Limited product changes and behavior changes. Bottom: Sure Failures - Limited product changes, significant behavior changes. Top: Smash Hits - Significant product changes, limited behavior changes. Bottom: Long Hauls - Significant product changes and behavior changes. 36. There might exist considerable resistance to technologies. List three dimensions or sources of resistance. 1. Affective Resistance: More negative effect (emotions evoked by tech). 2. Cognitive Resistance: Worse understanding (consumer knowledge). 3. Motivational Resistance: Greater incompatibility with values (violations of personal values/ social norms). 37. Describe the Chasm View of product diffusion. Not continuous - gap between early market and main stream market Products hinge on their ability to cross this 'chasm'