Product Service Design

Offerings

Relative

Benefits

Target Customers

Competitors

Importance

Sought

Organization*

Q

R

S

T

Expected

Actual

Actual

Actual

Actual

Actual

9

Moisturizes

5

3

4

2

5

1

9

Cleans

5

4

2

3

2

5

6

Scent

3

4 J

2

3

4

1

3

Size

3

3

3

2

4

Note: Relative importance. 1—Not important, 10—Very important Performance ratings: 1—Weak, 5—Strong

Source: "Arrow Guide—Design Analysis," The Arrow Group, Ltd., New York, NY, 2008. Used here with permission.

A blank version of this page can be downloaded from www.trumpuniversity.com/marketing101 and customized for your personal use. For any other use, contact Don Sexton at Marketing101@ thearrowgroup.com.

Possible Design Gap

Note: Relative importance. 1—Not important, 10—Very important Performance ratings: 1—Weak, 5—Strong

Source: "Arrow Guide—Design Analysis," The Arrow Group, Ltd., New York, NY, 2008. Used here with permission.

A blank version of this page can be downloaded from www.trumpuniversity.com/marketing101 and customized for your personal use. For any other use, contact Don Sexton at Marketing101@ thearrowgroup.com.

• Estimate the performance for each benefit expected by the target customer.

• Evaluate the actual performance of your organization and each competitor on each benefit.

You need to bring customers into your design deliberations by considering what they expect to obtain from your product or service and comparing those expectations with what you and your competitors are currently providing.

This analysis builds on the results of an Actual Value Analysis (discussed in Chapter 6) by adding information as to what your target customer expects as regards the performance on each benefit.

Design Analysis — Soap Example

Suppose you have developed a soap that you would like to market to 35- to 50-year-old women. You have done some research by asking women in that age range what benefits they would like in a soap, how important they are, and on a 1 to 5 scale, how would their ideal soap score on each benefit. You have also looked at some competing brands of soap to see what they offer.

Compared with the Actual Value Analysis (see Chapter 6), the new information in this analysis is what level of performance for each benefit does your target customer want and expect. These would be ideal values—what your customers hope to receive from your product or service. You find out these expectations by asking customers—either in person or through surveys.

Again, all information regarding benefits, priorities, perceived values, and expected values, if at all possible, must come from the customers themselves. You can start the analysis with your own opinions, but it is very important to check your opinions with those of your customers. When a conflict occurs, use your customers' opinions.

Exhibit 17.1 shows that your target customers have high expectations regarding performance of those benefits of most importance to them— moisturizes and cleans. You need to compare your actual performance with these expectations to determine whether you might be successful with this group of customers. If their expectations are different from the actual value you provide them, then there are design gaps that you may want to consider filling. For example, Exhibit 17.1 shows that your actual performance on both "moisturizes" and "cleans" falls short of the expectations of these target

Product Design: LifeSavers

Product design must be based on what your customers want. That's why LifeSavers candy asked consumers to vote on which flavors should be included in a five-flavor roll. The choices included the traditional flavors, pineapple, cherry, orange, lemon, and lime, and new flavors, raspberry, watermelon, blackberry, tangerine, mango, and melon/tangerine. The winners: Pineapple, cherry, raspberry, watermelon, and blackberry. Andrew Burke of Kraft Foods explained: "We said, 'Let's give [the customers] a chance to voice their opinion and help us pick the new face for a classic.' . . . Tastes change, and everything else changes."

Source: "LifeSavers Introduces New Candy Flavors," National Petroleum News, 95 (October 2003), p. 11.

customers. You may want to reformulate your soap to better meet their needs. If your performance does not meet your customers' expectations and there is a competitor that is more successful in meeting these expectations, and if you do nothing, you can expect your customer base to shrink.

If your performance does not meet your customers' expectations and there is a competitor that is more successful in meeting their expectations, and if you do nothing, you can expect your customer base to shrink.

Product Space

You can also detect design gaps by plotting the information in Exhibit 17.1 on a graph of what is known as product or service space (Exhibit 17.2). Each axis refers to a different benefit and shows how each competitor performs on that benefit. Usually you begin by plotting the positions of your organization and those of your competitors on the two most important benefits to your target customers. If there are other benefits you feel you need to examine, simply make a new graph with those pairs of benefits. There are ways to place more than two benefits on the same graph, but they are rather cumbersome. It is usually easier to graph just two benefits at a time and develop as many graphs as needed.

Besides the positions of your organization and those of your competitors, you also locate the expected values for your target customers on the benefits. This point is known as the ideal point because it should describe the product or service that these customers would like to purchase. If you have the position closest to the ideal point for customers in a given segment, then you should be able to win that segment—if that benefit is important to the target customer and if the customer accurately perceives your performance on that benefit.

Exhibit 17.2 Product or Service Space—Soap: Benefits 1 and 2

Benefit 2 Cleans

Benefit 2 Cleans

Design Gap

Benefit 1 Moisturizes

Design Gap

Weak

Benefit 1 Moisturizes

Strong

Strong

1 Weak

Expected performance (ideal point). Actual performance.

Expected performance (ideal point). Actual performance.

Product Space—Soap Example

In Exhibits 17.2 and 17.3, you can see how your soap compares with both what 35- to 50-year-old women want and what your competitors provide.

In Exhibit 17.2, overall, your soap is closer to your target market's ideal point than any other competitor. There are two competitors, Q and S, that do better than you do on the "moisturizes" benefit but are not as good on the "cleans" benefit. You may want to consider filling your design gaps on both the

Exhibit 17.3 Product or Service Space—Soap: Benefits 3 and 4

Benefit 4 Size

5 Large

Benefit 3 Scent

Weak

Strong

1 Small

Expected performance (ideal point). Actual performance.

Expected performance (ideal point). Actual performance.

"moisturizes" and "cleans" gap if it is possible—especially because competitors Q and S might be trying to improve their performance in regard to cleaning.

The less important benefits are shown in Exhibit 17.3. You do reasonably well but could improve your position by cutting back on the scent in your soap.

Product Space—Other Segments

The Product Space Analysis can be expanded to help you evaluate whether you would like to try to design your product or service to appeal to other

Exhibit 17.4 Product or Service Space—Soap: Other Market Segment

Weak

Benefit 2 Cleans

5 Strong

1 Weak

Benefit 1 Moisturizes

Strong

Strong

Expected performance (ideal point). Actual performance.

market segments. To do that you would add to your graph the ideal points for the customers in the other segments.

For example, Exhibit 17.4 includes the ideal point for 20- to 34-year-old-men who might have higher expectations for the cleaning power of a soap and not care much about moisturizing. Competitor T seems targeted toward them.

You can do one more thing with the product space graph that will help you decide the positioning for your organization. You can make the areas of the

Exhibit 17.5 Product or Service Space—Soap: Size of Market Segments

Benefit 2 Cleans

5 Strong

Weak

5 Strong

Benefit 1 Moisturizes

Strong

1 Weak

Expected performance (ideal point).

^^ Actual performance.

Circles for expected performance in proportion to segment sales potential.

circles showing the segment ideal points larger or smaller depending on the size of that market segment.

In Exhibit 17.5, the market consisting of 35- to 50 -year-old women is shown as larger than the market consisting of 20- to 34-year-old men. Although size is not the only characteristic that makes a market attractive, the difference in sizes of the segments might persuade you to continue to target your soap to women, although you might consider developing another soap for men at some other time.