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Engineering Management Notes Quality, Marketing, R&D, Design
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QUALITY MANAGEMENT
Operations Management
Refers to the management of the production system that transforms inputs into finished
goods and services.
o Production system: the way a firm acquires inputs then converts and disposes
outputs.
o Operations managers: responsible for the transformation process from inputs to
outputs.
Operations management seeks to increase the quality, efficiency, and responsiveness of the
firm.
o Seeks to provide a competitive advantage.
The Purpose of Operations Management
Operations Management Concepts
Quality: goods and services that are reliable and perform correctly.
o Quality allows customers to receive the performance that they expect.
Efficiency: the amount of input to produce a given output.
o
Less input required lowers cost and waste. Responsiveness to customers: actions taken to respond to customer needs.
o Firm can react quickly and correctly to customer needs as they arise.
Improving Responsiveness to Customers
Without customers, organizations cease to exist.
o Non-profit and for-profit firms all have customers.
o Managers need to identify who the customer is and their needs.
What do customers want? Usually customers prefer:
A lower price to a higher price.
High quality over low quality.
Fast service over slow service.
o
Also good after sale support.
Many features over few features.
Products tailored to their specific needs.
Price Attributes
Firms offering high quality, fast service and other customer desires, often must raise price.
o Customers must tradeoff price for attributes.
Operations management tries to push the price/attribute curve to the right with better
production.
Provides more attributes at the same cost.
By enhancing the price/attribute relationship, the firm can increase its competitive position.
Customer Responsive Production Systems
An outputs attributes is determined by the production system.
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o Firms must strike a balance between cost and attributes
Improving Quality: can apply to firms producing goods and services.
o A firm that provides higher quality than others at the same price is more responsive
to customers.
o Higher quality can also lead to better efficiency.
Impact of Increased Quality on Organizational Performance
Production Operations
Major focus of production operations is on efficiency and effectiveness of processes
Production operations often include substantial measurement and analysis of internal
processes
Quality
Meeting the Requirements, Needs, and Desires of the Customer
Measurable
Each Persons Responsibility
Quality management
Quality broadly is a concept as subjective as glamour, beauty or attractive.
The standardized definition refers to all those features of a product or a service which are
required by the customer.
Quality Management means what the organization does to ensure that its products conform
to the customers requirements.
Quality Management Model
Factors affecting TQM: Customer Focus, Process improvement and Total involvement
Enablers: Leadership, processes, human resources, policies/procedures and people
management
Results: Customer satisfaction and impact on society
Two Quality Approaches
Quality management systems (QMS)o Represented mainly by the ISO 9000 standard family
o Benefits of implementing qms: Commercial, Financial, Legal & Image
Total quality management(TQM)
o Total organization using Quality thinking and methods to Manage.
o Represented by Excellence Prizes as the Deming Prize and the Malcolm Baldrige
Award( Ref: NORM APME)
The 8 ISO 9001:2000 Quality Management Principles
1. Customer focus
a. Organizations depend on their customers and therefore should understand current
and future customer needs, should meet customer requirements and strive to exceed
customer expectations.
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b.
Main benefits:
i. Increased revenue and market share obtained through flexible and fast
responses to market opportunities.
ii. Increased effectiveness in the use of the organization's resources to
Enhance customer satisfaction.
iii.
Improved customer loyalty leading to repeat business.2.
Leadership
a. Leaders establish unity of purpose and direction of the organization. They should
create and maintain the internal environment in which people can become fully
involved in achieving the organizations objectives.
b. Main benefits:
i. People will understand and be motivated towards the organizations goals
and objectives.
ii. Activities are evaluated, aligned and implemented in a unified way.
iii. Miscommunication between levels of an organization will be minimized.
3. Involvement of people
a.
People at all levels are the essence of an organization and their full involvementenables their abilities to be used for the organization's benefit.
b.
Main benefits:
i. Motivated, committed and involved people within the organization.
ii. Innovation and creativity in furthering the organization's objectives.
iii. People being accountable for their own performance.
iv.
People eager to participate in and contribute to continual improvement.
4.
Process approach
a. A desired result is achieved more efficiently when activities and related resources are
managed as a process.
b. Main benefits:
i.
Increased revenue and market share obtained through flexible and fastresponses to market opportunities.
ii.
Increased effectiveness in the use of the organization's resources to
enhance customer satisfaction.
iii.
Improved customer loyalty leading to repeat business.
5. System approach to management
a. Identifying, understanding and managing interrelated processes as a system
contributes to the organization's effectiveness and efficiency in achieving its
objectives.
b.
Main benefits:
i.
Integration and alignment of the processes that will best achieve the desired
results.
ii. Ability to focus effort on the key processes.
iii. Providing confidence to interested parties as to the consistency,
effectiveness and efficiency of the organization.
6.
Continual improvement
a. Continual improvement of the organization's overall
b. performance should be a permanent objective of the organization.
c. Main benefits:
i.
Performance advantage through improved organizational capabilities.
ii.
Alignment of improvement activities at all levels to an organization's
strategic intent.
iii. Flexibility to react quickly to opportunities.
7.
Factual approach to decision making
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a. Effective decisions are based on the analysis of data and information
b. Main benefits:
i. Informed decisions.
ii. An increased ability to demonstrate the effectiveness of past decisions
through reference to factual records.
iii.
Increased ability to review, challenge and change opinions and decisions.8.
Mutually beneficial supplier relationships
a. An organization and its suppliers are Interdependent and a mutually beneficial
relationship enhances the ability of both to create value
b. Main benefits:
i. Increased ability to create value for both parties.
ii.
Flexibility and speed of joint responses to changing market or customer
needs and expectations.
iii. Optimization of costs and resources.
Implementation ISO 9001: Quality Management System
Identify the goals you want to achieve Identify what others expect of you
Obtain information about the ISO 9000 family
Apply the ISO 9000 family of standards in your management system.
Obtain guidance on specific topics within the QMS
Establish your current status, determine the gaps between your QMS and the requirements
of ISO 9001:2000
Determine the processes that are needed to supply products to your customers
Develop a plan to close the gaps in step 6 and develop the processes in step 7
Carry out your plan
Undergo periodic internal assessment
Do you need to demonstrate conformance ? If yes, step 12. If No, Step 13 Undergo independent audit
Continue to improve your business.
WHY implement QMS
Might be costly but it exists ways to avoid it by working together
More efficient management system
Better quality productsNo cost for return of defect products
Legal protection . Obey European Directives
More market shares
Image benefit
Strategic tool leading to sustainable development
Background Total Quality Management
Deming
Juras
Crosby
Baldrige Award
Process for Improvement
Plan
Do
Check Act
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TQM Prizes Malcolm Baldrige Assessment
Organizations must submit details showing their achievements and improvements in seven key
areas:
leadership,
strategic planning, customer and market focus,
information and analysis,
human resource focus,
process management,
results
The Deming Cycle 14 Points
Keep the course of your mission by constantly improving the products and the services
Adopt the new philosophy of management and lead the change of a firm hand
Do in a manner that the product quality asks for only a minimum of controls. Integrate
quality from the design
Give up the low price purchase rule. Rather seek to reduce the total cost. To reduce to a
minimum the number of suppliers per article, by establishing with them long-term relations
of honesty and confidence
Improve constantly all processes of planning, production and service, which will involve a
reduction of the costs
Institute a continuing education for all the personnel of the company
Institute a modern form of authority (leadership) having for goal to facilitate the work of the
men and the machines
Made fear disappeared, so that each one can contribute to the success of the company
Reverse the barriers between services. The tea work will avoid problems which can appearduring the development and the product us.
Remove exhortations, slogans and objectives which require from the employees to reach the
"zero defect" and to increase the productivity
Remove quotas of production, the method known as "management by objectives" (DPO)
and any form of management by figures
Remove obstacles which prevent the employees, the engineers and the executives from
being proud of their work
Institute a vigorous program of education and personal improvement
Make work all forces of the company to achieve the transformation
Malcolm Baldrige Quality Award Criteria
Leadership
Strategic Planning
Customer and market focus
Measurement, analysis, and knowledge management
Human resource focus
Process management
Business results
ISO 9000
Requires an organization to create processes in all functional areas that focus on customer needs
and reasonable expectation and that validate requirements of quality
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Baldrige/ISO Difference
Baldrige criteria focuses on results
and continuous improvement
ISO helps determine what is needed
to maintain efficient qualityconformance system
Management commitment
Focus on customer
Continuous improvement of
processes
Utilization of entire work force
Performance measures for the
processes
Total Quality Management
Seeks improvement in the quality of a firms goods or services.
o Stress that all activities be directed to this goal.
o TQM is really a company-wide management philosophy developed by Dr. Edwards
Demming.
Japanese firms were the first to use TQM.
TQM results have been outstanding in many firms.
o
Xerox has reduced defects and problems dramatically. TQM can fail when managers do not really support it.
Successful TQM Implementation
Successful firms have followed these steps:
o 1)Build organizational commitment to quality.
All employees must embrace TQM concepts.
Focus on the customer as definition of quality.
Find ways to measure quality.
o Easy in manufacturing areas but harder in service jobs.
Set goals and create incentives to be reached.
Solicit input from employees.o Quality circles: groups of employees meeting to discuss how to increase quality.
Managers must respect employee opinion.
Identify defects and trace to source.
o Managers must find out why the defect happened.
Introduce Just-in-Time (JIT) inventory systems.
o Inventory is the stock of raw materials. JIT has parts arriving in the plant just when
needed and not stored in advance.
o KANBAN: Japanese name for JIT that seeks to avoid stockpiles of costly inventory.
Work with suppliers. You need good parts to make great products.
Design products for easy manufacture.
Remove barriers between departments.
Managers and TQM
Managers are critical to a successful TQM system:
o Functional managers carry the responsibility for most of the 10 steps to success.
o For TQM to work, functional managers must totally embrace TQM.
Top management must also show their strong support.
o They need to arrange training for all managers (including themselves).
o Reward functional managers that move TQM forward.
Improving Efficiency
Labor productivity allows labor comparisons between organizations. Improved efficiency
leads to lower costs and better performance.
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TQM and Efficiency: TQM can lead to much higher labor productivity. When quality rises,
less time is wasted on scrap.
Flexible manufacturing and efficiency: reduces the set-up costs for production systems.
o Facilities layout: seeks to design the machine-worker interface to increase
production efficiency.
Facilities Layouts
Product layout: work stations arranged in sequence.
o Mass production systems are a common example.
Workers are stationary and a belt moves work to them.
Process Layout: work stations are self-contained and not in a fixed sequence.
o Well suited to making a wide variety of products tailored to customers.
Provides flexibility to change products quickly
Fixed-position layout: product stays in a fixed spot, components produced at remote
stations and brought to final assembly.
o Good for jet aircraft assembly.
Efficient Manufacturing
Most firms face major expense when setting up to produce a product.
o These costs must be paid before production begins.
The more often products to be built change, the higher setup costs become.
o Flexible Manufacturing reduces setup costs.
Just-in-Time (JIT) inventory, while developed for TQM, also adds to efficient production.
o Many costs are reduced including warehousing, holding costs and inventory
tracking.
Firm does not have a supply of parts, but can be vulnerable to strikes or
supply problem
Self-managed teams boost efficiency by allowing for a flatter organization structure.
o The team takes the role of the supervisor.
o Teams working together often become very skilled at enhancing productivity.
Kaizen: Japanese term for a management philosophy the stresses the need for continuous
improvement.
o Better operations can come from many, small, continuous improvements.
Focus on what adds value to the product and try to eliminate steps that do
not add value (such as inspection for defects).
Reengineering
Process Reengineering: the fundamental rethinking and radical redesign of the business
process.
o Can boost efficiency by directing efforts to activities that add value to the good or
service produced.
o While Kaizen focuses on continuous enhancements, process reengineering considers
wholesale change.
Top managers must support operations enhancement tools for them to be accepted by
workers.
o Usually, a successful operations change means a complete change in the
organizational culture.
o Without a supporting culture, change will not succeed.
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MARKETING
Introduction
Basic functions of an enterprise: Marketing and Innovation - special roles for engineers!
Marketing: Provide products/services meeting the needs and wants of customers, Focusing
on basic marketing concepts and applications
Innovation: Strengthen the firms competitive marketing position and sustain profitability by
technology, supply chains, product design, etc.
Marketing definition
The social and management process that aims to provide service and add value to customer,
eventually make a profit for the business.
Build a long term relationship by creating and delivering value for customers and capture
value by return.
Marketing Function Selling Versus Marketing
Marketing Orientation
Customer Focus - Understand needs, create value, and serve to assure customer satisfaction,
with inter-functional teamwork
Competitor Focus - Seek advantages relative to competitors, monitor behavior and respond
to strategic moves (foes or friends)
Profit Focus - Manage to assure short- and long-term profitability
Marketing Process
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Marketing Five step Processes
1)
Market place research
a.
Consumer behaviour is affected by
i. Culture, Social, Personal, &Psychology.
b.
Business market behaviour as:-
i.
Fewer but professional buyers.
ii. Consumers are more geographically concentrated.
iii. Demand often more elastic and fluctuate more quickly.
iv.
Analyse and further research environment at micro level (suppliers,
consumers, competitors, public and internals) and macro (demographic,
economic, natural, technological, political & cultural).
2)
Customer driven marketing strategy.
a.
It is important to know strategic planning as it is the process for developing and
maintaining strategic fit between organisation goals and its changing market
opportunities. To satisfy this, we need to do:
i.
Define the company mission where it should be a) realistic, b) Specific, c)
Market, oriented d) Motivating e) fit the market environment.
ii. Set Goals/objectives, i.e. accomplish the mission.
iii. Design business portfolio, develop growth strategy and decide on
investment.
iv. Plan functional and operational strategies
b. As part of step 2, it is anticipated to design a strategy that include following key
tasks:
i. Divide the market into different segments.
ii. Target and choose the best segment to serve.
iii.
Positioning products and brands.
3) Construct marketing program (Marketing MIX)
a. To implement a marketing program:
i. Product and service design, building a strong brand.
ii. Price, create real value and different pricing decisions. New products by a)
Market skimming when quality image support high pricing and competitor
cannot enter easily. B) Market penetration, enter new product quickly and
attract buyers to win big share. c) Other Psychological and promotional
pricing, these are customer driven and often temporary.
iii. Place of distribution, Manage demand & supply.
iv.
Promotion, Communicate the value proposition.
4)
Build profitable relationship and create customer delight
a. Customer relationships management: Build strong relationships with chosen
customers.
b.
Partner relationship management: Build strong relationships with marketing
partners.
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5)
Capture Value
a.
The last step in the marketing process is capture value from customers in return.
i. Capture value from customers to create profits and customer equity.
ii.
Create satisfied, loyal customers.
iii.
Capture customer lifetime value.iv.
Increase share of market and share of customers.
Levels of Marketing Strategy
Corporate Level: Set future direction of what businesses to pursue (product, service, total
solution, etc.) and what value to be emphasized
Business Level: Bring products/services to the marketplace and achieve/maintain
competitive advantages
Operational Level: Plan marketing program and implement/control marketing efforts
Marketing Effectiveness Diagram
Total Success: High profitability at
maximum possible rate
Partial Success: New customers replace
lost customers
Partial Failure: Sales slow or fall due to
a lack of new customers
Total Failure: Sales fall as customers
leave
Key Elements in Marketing
Market (size, growth rate, location)
Environment (competition, entry barriers, constraints)
Customers (who, why, when, where how, what)
Marketing Mix
Market Forecast
Demand forecast is critically important
1.
Define the market - Total Sales revenue per year of all products delivering similar benefits to
customers regardless of physical and functional features
2. Segment the market - Subdivide total market into homogeneous customer subgroups with
similar buying behavior and preferences
3.
Conduct sensitivity analyses - assess risks and check assumptions
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4.
Determine segment drivers and predict their changes - key factors affecting the segment
growths
Application examples:
a. Industrial product- Segments based on industries with individual segment growth
rates as drivers, assuming product demand is proportional to growth and businesslevels involved
b. Electricity- segments of industrial, commercial and residential; drivers are: business
climate and industrial growth rate for industrial; Internet sales increase, consumer
confidence, stock market performance for commercial; new home sales, change in
home size and energy efficiency of appliances for residential
c. Uncoated white paper- segments based on end users: business forms, commercial
pricing, reprographics, envelops, stationary/ tablets and books; drivers include
growth of electronic means, white collar workers, level of economic activity, price
reduction of personal printers, paying bills online, and demand growth due to price
reduction
Environment
Market study is needed to assess:
a. Competition (market share distribution, technology, brand strength, marketing
position, customer loyalty, etc.)
b. Barriers of entry (capital, technology, supply chains, distribution channels,
governmental regulations, etc.)
Customer Orientation
Define needs through research (real value of a product to customer - prestige, convenience)
Define market segments (groups with similar needs to facilitate product customization)
Differentiate products and communications (e.g., Dude selling Dell computers)
Create differentiated advantages for customers
Customers
Who(Profile, who buy from competitors, who does the buying, for whom is the buying
done)
Why(Reasons for product preference: price, product performance, convenience, product
styling, service, packaging)
What (What for, what value benefit, what they really want? what needed in the future?)
Where(where to get product information, where is buying decision made, where to buy
from: Retail store, mail order, via internet, department store, discount store )
How(How to decide, how to compare)
When (When to buy, weekly, monthly, special occasions, etc.)
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Who Makes What Decisions for Whom?
Market Segmentation
Purpose
o Divide consumers into groups having similar product/service preferences
(divide/conquer)
o
Value to Company: (1) Match products/ service better to the groups, (2) Create
suitable channels of distribution to reach them, (3) Uncover new consumer groups,
not being served sufficiently in the past, (4) Focus on niches being neglected by
competition
Segmentation
1.
Develop suitable marketing strategies
2. Formulate better-fitting marketing programs
3. Track changes of buying behavior over time
4.
Evaluate companys competitive position in these segments
5. Achieve improved effectiveness in utilizing marketing resources
Segmentation Steps
o Classification of Consumers: (1) Individual consumers (profile, location, life-style,
family life cycle), (2) Institutional Consumer (Business type, needs), (3) Others
(attitude toward brands, usage levels, product knowledge, type of use)
o Situational Factors: (1) Availability, (2) Application, (3) Timing
o Benefits Sought: (1) Psychological, (2) Price, (3) Functional
Requirements for Effective Segmentation
o Measurability(groups are identifiable)
o Homogeneity(similar buying preference and behavior)
o Accessibility(reachable by promotion and distribution means)
Size(big enough to justify going after it)
o Growth Rate(large enough to assure long-term profitability)
Prerequisites for Implementing Segmentation Strategy
o Attractiveness(expected sales volume, profitability, growth)
o Skills(required skills to serve the segment in order to compete)
o
Synergies/dis-synergieswith other products of the company (existing distributionnetworks, acceptability in the marketplace)
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Pitfalls
o Over-Segmentation(small sizes, fragmented segments difficult for company to
serve -scale of economy) - Newer supply chains allows build-to-order strategies to
serve smaller segments (Dell, Custom beer, Chinese foods, etc.)
o
Over-concentration(lack of balance between segments)
Marketing Mix
Product Strategy: Functional attributes,
compatibility to customer needs,
distinguishable features over competition,
product-line strategy, product/market fit
Promotion/Communication Strategy:
How to promote, adopt pull/push, which
media to use, fit promotion to marketsegment selected
Pricing Strategy: Skimming or penetration based pricing, value-added pricing, target pricing, pricing fit to market
segment
Placement (Distribution) Strategy: Intensive, exclusive or selective distribution, relationship with intermediaries
(retailers, wholesalers), changes in distribution logistics and technologies
Product Strategy
Nature of Products
o Customers Perception: Bundles of Benefits satisfying specific wants and desires. Different products
providing the same or similar benefits are equivalent (substitution products)
o Producers Perception: Physical embodiments created by labor, materials, technologies and investment to
perform specific functions
Life Cycle of Products
New Product Development Process
Product Failure (Rate, Reasons)
Summary
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Product Strategy Options
Optimize product value(price, function features, quality, serviceability, ease of use, package) to create
differentiation to users - opportunities for engineers to make major contributions
Sequential introduction of new productsto sustain high levels of profitability (company needs frequent product
innovations
Product Positioning
What product features to include and emphasize - critically important
Selection of product featuresto place new (or existing) products in a favorable position with respect to
competition - customer preferences and gap created by existing products in marketplace
Product Life Cycle
Every Product goes through a number of phases: (1) Initiation(product development, testing, market
development, advertising), (2) Growth(product promotion, market acceptance, profit growth), (3) Stagnation
(price competition, substitution, new technologies), (4) Decline(cash cow strategy, product withdrawal)
Product Supply Curve
Product supply curve describes the market behavior of companies -- supplying larger quantity of products in the
product price is raising to higher levels in search of higher profits
Product innovations -- better products or lower product price, causing demand to increase and downward shift
of supply curve
Impact of Product Innovation
Brands
A Distinct identity that differentiates a relevant, enduring and creditable promise of value associated with a
product, service or organization that indicates the source of that promise. It represents all images and
experience customers have of and with the organization.
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Brand Pyramid
Brand Classes
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Product Strategy Engineering Contributions
Product strategy - key element in marketing mix with the entire marketing program built around products
Engineers are most qualified to contribute in the critical aspects of product design, production, quality
assurance, cost control, functional reliability, serviceability maintainability, and time-to-market aspects
Pricing Strategy
Pricing Options
o Skimming Strategy- Set premium price initially to capture high profitability from affordable
customers and then reduce price in time to reach additional customers in the marketplace (e.g., new
books, ginger)
o Penetration Strategy- Set price low to penetrate the market rapidly for setting barrier of entry to
late-coming competitors (e.g., Microsoft Office 2000, Japanese motor cycles)
Factors affecting Price
Pricing Methods
o Cost: Price = Cost + Markup (e.g., 30% of cost)
o
Profit: Price = Cost + Profits (e.g., ROI)
o Market: Set price to what the buyers are willing to pay (imperfect information distribution, the next
best alternative available to buyer)
o Value: Set price in proportion to products value added to buyer (application know-how)
o Competition: Set price at level charged by competition (Target Pricing)
o It is legal to price a given product differently at different time (end of season periods, holidays) to
different groups of customers, based on economic/business factors (e.g., purchase volume,
geographic markets, companys positioning strategy in specific segments - steel, food, chemical, etc.,
and inventory status).
Target Pricing
Setthe selling price based on customer inputs and market survey and determinepertinent product features
Adda gross margin that company must have
Obtain the Cost of Goods Sold (CGS) that must not be exceed
Definematerial/parts, design, product development, and production method to meet CGS target
Key Features of Target Pricing:
o Concurrent team to define price and product features - minimize design changes during
implementation
o Detailed cost analyses (material, activities) before product development
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o Innovation under the gun
o Assure market success and company profitability
Pricing and Psychology of Consumption
Consumption leads to repurchase
Frequent reminder of cost of a product tends to encourage buyers to consume the product -Time-
payments better than lump-sum
Sunk-cost Effect - Consumers feel compelled to consume product they have paid for to avoid the
guilty feeling that they have wasted their money
Marketing Communications
Communicator: Spokesperson (Bob Doe for Viagra, Tiger Wood for golf products) -Associating the
personal reputation of the communicator to the value of the product being communicated about
Message: Ring Around the Collar, Where is the Beef, Army, Be All You Can Be, You are What You
Know, We Measure our Performance One Investor at a Time Channels: Advertising (print, TV, web-based), personal selling (sales people calling on customers), direct
mail marketing, sales promotion (extra 15% off, free samples, interest-free loans, discount coupons),
interpersonal exchanges (shared experience in users group), news articles, sources perceived to be
neutral (Consumers Reports)
Audience: Buyer profile, media habits, product knowledge
Effect of Communication: Short-term (recall, recognition, awareness, creating purchase intention), long-
term (purchase decisions, brand loyalty), Influencing factors (timing, product availability, competitive
activity, bundle of values)
Promotion Strategy
Pull: Through advertising, products are pre-sold to users, who ask for these products, thus pull them
through the supply chain
Push: Through incentives programs (sales quota, factory rebates, discount coupons, interest-free loans),
products are being pushed onto the users
Internet Enabled Communications Options
Business to Business: Manufacturers Intranet for intermediaries
Business to Consumer: Web portals of distributors for selling to consumers Direct: Manufacturer web sites (Dell, Gateway), buyers portals (Covisint, ChemConnect)
Virtual Market: Third party search portals (Yahoo), auction site (e-Bay), e-marketplace
Contextual Marketing
Bringing marketing messages directly to customer at the point of need (hitting the iron while it is hot)
Johnson & Johnson - Banner ads for Tylenol, when stock market drops more than 100 points
Google - List ads ahead of list of hits
Dell - Product Specs in CNET and ZDNET
Distribution Strategy
Channels of Distribution
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Functions of Distribution Channels
o Transportation(overcoming the spatial gap between producers and users)
o Inventory(Overcoming the temporary gap between production and usage)
o Allocation(Assigning quantity and lot size)
o Assortment(Grouping compatible products for the convenience of users)
o Financing(Facilitating timely possession of products)
o Communications(Transmitting information and customers feedback)
Types of Distribution
o Intensive: Stock goods in many outlets for wide distributions (consumer products such as books,
CDs, films, calculators, electric fans, home appliances)
o Exclusive: Only through qualified outlets (autos, PCs)
o Selective: Through selected intermediaries (technical representatives for instruments, equipment,
software products)
Impact of E-Commerce on Distribution
o Internet reduced the value contributed by some wholesalers and retailers: (1) Speed and enriched
contents of communications between producers and users, (2) Order processing, (3) Direct
distribution by logistic providers from producers to users
o E-Commerce reduced the final product prices and product delivery time to users
Other Factors Affecting Marketing Success
Alliance and Partnership: Competition in todays marketplace requires competence and skills not always
timely available in house, leading many companies to pursue alliances and partnerships for the purposes
of formulating win-win marketing and production strategies to focus on creating superior customer
value
Customer Interactions and Loyalty:
o Customer experience with a company affects directly its business success (motivated employees
along with the required support infrastructure to satisfy customers needs)
o
Profitability - Customer loyalty - Trust - Effective customer interactions
o Five determinants of Customer Loyalty: (1) Quality customer support, (2) on-time delivery, (3)
compelling product performance, (4) convenient and reasonable priced shipping and handling,
and (5) clear and trustworthy privacy policies.
Organizational Effectiveness: Less rigidly structured organizations are more likely to become customer-
focused
R&D
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Product Life Cycle
Research and Development
Basic Research
Applied Research
Development
New Product Strategies
First-to-market
Follow-the-leader
Me-too
Application engineering
Intellectual Property
Ideas and inventions (products of the mind)
Patents, Copyrights and Trademarks are methods of protecting intellectual property.
Lawyers in this fields referred to as: intellectual property lawyers, patent lawyers, patent agents, or
patent attorneys.
Patent Types
Design Patents
o a fixed design or look of an object
Utility Patents
o composition of matter, process, method or apparatus
Plant Patents
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Criteria for Patentability
Novelty
Usefulness
Non-obvious to someone skilled in the art
Disclosure Types
Full, formal disclosure to Technology Transfer Manager
Bound laboratory notebooks with third party corroboration
Completion of Disclosure Checklist
Include drawings and sketches
Joint Inventorship Legally Speaking
Two or more persons who have contributed to the inventive acts of an invention
Group research often results in joint inventorship, however, it is critical to document evidence of joint
inventorship in laboratory notebooks
Laboratory Notebooks Legally Speaking
The best primary record of invention is numbered, bound laboratory notebooks
Pages skipped or not completely filled in by writing have a line drawn through the unwritten portion(s)
Contemplated or planned experiments are written out as precisely as possible, with results recorded as
soon as they are obtained
Each page is initialed and dated by the person who directs the experiments
Each page is initialed and dated by the person who conducts the experiments
By following these rules, a complete and timely record of the experimental work, in a manner which islegally recognized as highly probative evidence will be obtained
Document the Date of Conception
Make numbered and dated comprehensive sketches and written description of the concept.
Sign and date all documents with the inventor and two witnesses who are:
o not the inventor
o fully understand the idea
o expected to be around years later to testify in court if necessary
Document Diligence
Record progress (or failure) using lab notebooks and project reports
At least once a month, all of the inventors and two technically competent witnesses should sign and date
the entries
Always use actual dates... never backdate or predate
Patent Infringement
Patent is infringed when the invention covered by the patent is used without the permission of the
inventor during the time that the patent is in force
Patent owner has the right to sue the infringer in the federal courts and collect compensation for past
infringement can cause the infringer to cease and desist all infringing activity
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Trademarks
A distinguishing symbol, design, mark or word used by a manufacturer to identify his product from his
competitors
A mark, character or symbol by which another entity is recognized or associated
Copyrights
A copyright is a grant, by the United States, to an author for the right to exclude others (for a limited time) from
reproducing his/her work
Types of Copyrights
o Literary works
o Musical works
o Dramatic works
o Choreographic works
o Pictorial works
o
Motion Pictures/Videos
o Sound Recordings
Creativity Process
Preparation
Frustration
Inspiration or illumination
Verification
Creativity Techniques
Brainstorming
Nominal Group Technique
Attribute-listing
Mind mapping
Characteristics of Creative People
Self-confidence and independence
Curiosity
Approach to problems
Personal: loners, game players, creative writing
Kinds of People Needed for Technological Innovation
Idea generator
Entrepreneur
o One who undertakes effort to transform innovation into product
Gatekeeper
Program managers
Sponsor or Champion
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MANAGING ENGINEERING DESIGN
New Product Development
Approval to expend resources and agreement on work to be done
Accomplishment of work on stage Complete results
Proposed plan for next stage
Reviewformal or informal
Engineering Problem Solving Approach
Define the problem
Collect and analyze the data
Search for solutions
Evaluate alternatives Select solution and evaluate the impact
New Product Development Stages
Conceptual
Technical Feasibility or Concept Definition
Development
Commercial Validation
Production
Product Support
Disposal Stage
Concurrent Engineering
Set of methods, techniques, and practices, that:
Consideration within design phase of factors from later in cycle
Produce design of processes
Facilitate reduction of time required to translate design into products
User ability to meet users needs
Engineers Must Communicate
Drawings
Specifications
Financial Estimates
Written Reports
Oral Presentations
Sales
Control Systems in Design
Drawing Release
Configuration Management
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Design Review Board
Special Considerations in Design
Product liability
o Designer foresee unlikely conditions
o Product contains adequate warnings
o
Risks reduced to greatest extent possible
o Meets users reasonable expectations of safety
Safety
o Safeguards to Reduce or Eliminate Accidents Influenced By:
Design
Proven materials and components
Proven manufacturing methods
Clear instruction
Reliability
o Probability that the product will perform a specified function
o Under specified conditions
o For a stated period of time
Maintainability
o Administrative and preparation time
o Logistics time
o Active maintenance time
Availability
Ergonomicso Human Factors engineeringo Science of designing machines, products, and systems to maximize the safety, comfort, and
efficiency of the people who use them
o One of primary goals is prevention of workplace illness and accidents
Productibility
Value Engineering
What is it?
What does it do? What does it cost?
What is it worth?
What else might do the job?
What do alternatives cost?
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