affecting profitability under an assumed marketing environment and marketing strat-
egy for the planning period. The computer simulates possible outcomes and computes
a rate-of-return probability distribution showing the range of possible rates of returns
and their probabilities.^21ANAGING THE DEVELOPMENT PROCESS:
DEVELOPMENT TO COMMERCIALIZATIONPRODUCT DEVELOPMENT
If the product concept passes the business test, it moves to R&D or engineering to be
developed into a physical product. Up to now it has existed only as a word descrip-
tion, a drawing, or a prototype. This step involves a large jump in investment that
dwarfs the costs incurred in the earlier stages. At this stage the company will deter-
mine whether the product idea can be translated into a technically and commercially
feasible product. If it cannot, the accumulated project cost will be lost except for any
useful information gained in the process.
The job of translating target customer requirements into a working prototype is
helped by a set of methods known as quality function deployment (QFD). The method-
ology takes the list of desired customer attributes(CAs) generated by market research
and turns them into a list of engineering attributes (EAs) that the engineers can use.
For example, customers of a proposed truck may want a certain acceleration rate (CA).
Engineers can turn this into the required horsepower and other engineering equiva-
lents (EAs). The methodology permits measuring the trade-offs and costs of provid-
ing the customer requirements. A major contribution of QFD is that it improves
communication between marketers, engineers, and the manufacturing people.^22
The R&D department will develop one or more physical versions of the product
concept. Its goal is to find a prototype that consumers see as embodying the key at-
tributes described in the product-concept statement, that performs safely under
normal use and conditions, and that can be produced within the budgeted manu-
facturing costs.
Developing and manufacturing a successful prototype can take days, weeks,
months, or even years. Designing a new commercial aircraft takes several years of de-
velopment work, yet sophisticated virtual reality technology is speeding the process.
By designing and testing product designs through simulation, for example, compa-
nies achieve the flexibility to respond to new information and to resolve uncertain-
ties by quickly exploring alternatives.■ Boeing At Boeing, the all-digital development of the 777 aircraft made use
of a computer-generated “human” who would climb inside the three-di-
mensional design on-screen to show how difficult maintenance access would
be for a live mechanic. Such computer modeling allowed engineers to spot
design errors that otherwise would have remained undiscovered until a per-
son began to work on a physical prototype. By avoiding the time and cost
associated with building physical prototypes at several stages, Boeing’s de-
velopment process has acquired the flexibility to evaluate a wider range of
design options than previously thought possible.^23Even developing a new taste formula can take time. Maxwell House discovered
that consumers wanted coffee that was “bold, vigorous, and deep tasting.” Its labo-
ratory technicians spent over four months working with various coffee blends and
flavors to formulate a corresponding taste that turned out to be too expensive to pro-
duce. The company cost-reduced the blend to meet the target manufacturing cost.
The change compromised the taste, and the new brand did not sell well in the mar-
ket.
With the rise of the World Wide Web, there is a need for more rapid prototyping
and more flexible development processes. Michael Schrage, research associate at MIT’sDeveloping
Marketing(^344) Strategies
M