**4. New product development and meeting customer needs or requirements (CRs)**

Competition in global market is quite high which makes businesses to give more concern to meeting customer needs. It is really difficult for businesses to be successful in global market by depending only on high-volume production and low cost. Having a desirable position in highly competitive markets requires making effort to produce products (NPD) which will meet the customer needs and satisfy them. There are several models created to be useful for businesses to understand customer requirements (CRs) [11]. Some models categorized below promote innovation during NPD's first stage (generating idea) and therefore are useful at making cost-effective decisions:

**1. Product-service system (PSS):** This model is first presented by Goedkoop et al. to make more benefits from integration of new product development with related services. It is defined as an integrated system of products, services, networks of players and supporting infrastructure which come together to satisfy customer needs, to be competitive and to have less environmental impacts than traditional business models. Some specialized versions of PPS were also created such as technical PSS and industrial PSS. How PSS is designed is given below [12]:

• **(O) One-dimensional:** If these attributes are included in the product, customers will notice satisfaction. If not met, customers will be dissatisfied. These attributes have to be included in products at the level that their absence will not have a negative effect on customer satisfaction (neutral point). From this point, more attributes may be added for meeting cus-

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• **(A) Attractive:** These attributes are defined as 'bonus' which increase satisfaction if they are

• **(I) Indifferent:** These attributes have no effect on customer satisfaction. There will be no

• **(R) Reverse:** These attributes affect customer satisfaction negatively; therefore, they need

**3. Conjoint analysis:** This model is used to examine the relative importance of customer needs vis-à-vis product features and attributes with a multiattribute preference analysis. It is useful to understand what will the position of new product be against products currently sold in the market by competitors. For this purpose, first, all feature and price combinations for a given product are listed. Second, a sample group of potential customers are asked to rank these combinations. Third, a statistical analysis is done to rank and weigh the combinations according to the responses to find the best combination and decide to produce it. This model is used generally in market research and preferred usually for high-consuming products [14].

**4. The product value matrix:** This model is used to create a market requirement specification (MRS) for new product and put product development tasks in order according to their priority. It assures that the needs of all parts involved in supply chain of new product consisting of customers, suppliers, retailers and so on are met. In this model, it is assumed that the sales and marketing team know all the participants and their needs in the supply

**5. Quality function deployment (QFD):** This model aims to represent customer requirements in new product design and specifications and therefore make new product attractive to the customers. QFD increases quality, while it decreases production cost and development time. QFD suggests to use resources for producing new product according to customer requirements rather than business management. There are three groups of customer requirements which need to be understood well by product development team.

• **First group:** The basic customer requirements are found out using market research methods such as interviews, focus groups and surveying. These requirements are usually unclear or undefined such as 'a fast car'; therefore, they must be defined more to include measurable characteristics. Usually, some attributes such as 'safety specifications of car' about the product are neglected or not expressed by assuming they are already included in the product by the customers during market research. To have a high customer satisfaction, the product must include all expressed and not expressed basic requirements along with high performance.

included in the product, but there is no significant effect when it is not included.

difference in the customer's purchase decision whether they are included or not.

tomer satisfaction.

to be avoided.

chain of the given product [14].

These groups are [15]:


Attributes are categorized into five different groups by the Kano model. These groups are [13, 14]:

• **(M) Must-be:** This kind of attributes meets the basic needs which are not to be noticed by customers when met, but it will have a quite strong effect if not met.

**Figure 6.** The Kano model assumptions. Source: Szymczak and Kowal [13].

• **(O) One-dimensional:** If these attributes are included in the product, customers will notice satisfaction. If not met, customers will be dissatisfied. These attributes have to be included in products at the level that their absence will not have a negative effect on customer satisfaction (neutral point). From this point, more attributes may be added for meeting customer satisfaction.

infrastructure which come together to satisfy customer needs, to be competitive and to have less environmental impacts than traditional business models. Some specialized versions of PPS were also created such as technical PSS and industrial PSS. How PSS is de-

• **Customer analysis:** First, PSS designers find out the CRs and then identify the functional requirements (FRs) and engineering characteristics (ECs) of the product and service by assessing the CRs. Modeling of interrelations of CRs, FRs and ECs can be done with

• **PSS conceptual design:** Conceptual ideas are developed by using CRs, FRs and ECs such as case-based reasoning and knowledge reasoning. The most semantically similar

• **PSS detailed design:** PSS designers distribute selected ideas within a detailed structure after defining the referenced ideas. Then, specifications of PSS details are explained to

**2. The Kano model**: The Kano model categorizes attributes of new product into various groups according to effects of attributes on customer satisfaction. Model assumptions are

Attributes are categorized into five different groups by the Kano model. These groups are [13, 14]:

• **(M) Must-be:** This kind of attributes meets the basic needs which are not to be noticed by

customers when met, but it will have a quite strong effect if not met.

**Figure 6.** The Kano model assumptions. Source: Szymczak and Kowal [13].

conceptual ideas will be referenced for the specific CRs.

signed is given below [12]:

understand PSS better.

shown in **Figure 6** [13].

mapping.

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• **Second group:** These are fundamental customer requirements which are found out by assessing the use of products by customers and customer behaviors. For instance, customers may require banks to work outside 9–5 shift. This request may be provided by working longer hours or by Internet and telephone banking.

**1. Product launch decisions:** Product launch decisions are about brand choice and product line length (also called product assortment) which are used to decide, the new product's position in the market for determining which customer needs are better satisfied to have high profit and the relative quality of product determining which new product solves cus-

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**2. Price launch decisions:** Price of new product determines product's position among competitors, and it may be a measure for customers to assess the product's quality. Price decision is not made only for launch price including discounts and promotions, but it also involves a choice between skimming and penetrating in long term. Skimming is preferred often for high technological products because of high profit gain. Penetrating price is advised to benefit from increasing economies of scale and hindering competitive products when new product has a typical diffusion curve as sales increase along with

**3. Promotion launch decisions:** There are several activities done while introducing new product to the market such as public relation, advertising, sales promotion and personal selling. It has been suggested that if there is low awareness about a new product, a pull strategy in advertising and promotion is better to be followed rather than push

**4. Place launch decisions:** Distribution indicates the acceptance and sales of a new product in the market because it shows how new product is available to the customers. The distribution channels must have the highest availability in the target market and reflect the target

NPDs were more often introduced to the markets that have an early stage in the productmarket life cycle. There are several advantages of early entry, but they are not given automatically as there are technological and market uncertainties inherent in the development of new products. Original new products if they are an early follower may be more profitable than

'The apparent lack of consensus regarding whether new products will be more successful if launched early into markets which are more likely to grow (and not later, into markets with established competition and less growth potential) may be at least partly due to the failure to recognize that different tactics can be successfully deployed for a new product launch in both

The interrelation of the market environment, new product strategy and development process that influences the success of a new product. When new product concept is developed, the introduction of it to the market has to be made in an effective and efficient way. For this purpose, organizational factors such as inter-functional coordination, structure and leadership

the growth and maturity phases of product-market development' [17].

**6. Success and failure in new product development**

must be involved in the process heavily [18].

tomer problems better.

diffusion.

strategy.

market's buying behaviour.

being the first in the market:

• **Third group:** These requirements are called 'new features' and defined as 'delight' because they are unexpressed and most of the time unknown by customers and excite customers when they are found in the product unexpectedly. They are not known by the customers because customers may be unaware of technical abilities of these products or used to standard products. Even though some new features become available by technological developments, some of them can be provided by understanding customer behaviors and product uses with conducting market research and new product development.
