The Augmented Service Offering: A Conceptualization and Study of Its Impact on New Service Success

Unlike companies that produce tangible goods, service firms typically cannot rely on product advantage as a means for ensuring the success of a new service. Developing a competitive response to a tangible product may require significant investments of time and effort. In many cases, however, competitors can easily duplicate the core elements of a firm's new service. This fundamental difference between new products and new services means that managers who hope to find the keys to new-service success must look to factors other than sustainable product advantage. Chris Storey and Christopher Easingwood suggest that managers must understand the totality of the service offering from the customer's perspective. They explain that the purchase of a service is influenced not only by the service itself, but also by such factors as the service firm's reputation and the quality of the customer's interaction with the firm's systems and staff—in other words, by the augmented service offering (ASO). Using the results of a study they conducted in the consumer financial services industry in the U.K., they identify the components of the ASO, and they examine the relative contributions of these components to the success of new services. In their model, the ASO comprises three elements: the service product, service augmentation, and marketing support. The core of the ASO—the service product—includes such dimensions as product quality, product distinctiveness, and perceived risk. The study's results suggest that improvements in the service product open up new opportunities for the firm, but have only modest effects on sales and profitability. Rounding out the ASO model are service augmentation and marketing support. Service augmentation encompasses such dimensions as distribution strength, staff-customer interactions, and reputation. The customer recognizes and responds to these elements of the ASO, but they are not part of the product core. Marketing support involves those marketing and management actions that affect the quality of the product and its augmentation, even though customers typically are not aware of them. These elements include knowledge of the marketplace, training of contact staff, and internal marketing. Enhanced service augmentation has significant effects on profitability and sales for the firms in this study, but it does not offer enhanced opportunities. The marketing support elements contribute significantly to all aspects of performance for the firms in this study.     

Links between Internal and External Cooperation in Product Development: An Exploratory Study*

While there is an overwhelming amount of publications on cooperation in product development projects, they mainly focus on cooperation between business functions within an organization (internal cooperation) or on cooperation between organizations (external cooperation). Yet the relationship between internal and external cooperation has received only scarce attention. This article studies how internal and external cooperation relate. Following an extensive literature study and 12 exploratory interviews with managers in eight organizations, a case‐research design was set up. More specifically, six product development projects were studied in depth, combining data from interviews, questionnaires, and information from secondary sources. Based on these cases, the authors present four different links between internal and external cooperation: (1) Internal cooperation may serve as a mechanism to coordinate external cooperation; (2) Internal cooperative norms are similar to external cooperative norms; (3) External cooperation may stimulate internal cooperation; and (4) Internal cooperation may be an essential part of organizational learning from external partners. The results of this exploratory study prove the interaction between internal and external cooperation to be a subject worthy of investigation and demonstrate that in order to appreciate fully the quality of a firm's external cooperation efforts, they should be studied in combination with the firm's internal interfaces. The authors also show the managerial implications of these links, as well as some directions for further research.     

Customer Involvement in New Service Development: An Examination of Antecedents and Outcomes*

Customer involvement has been recognized as an important factor for successful service development. Despite its acknowledged importance, a review of the literature suggests that there is little empirical evidence about the effectiveness and outcomes of interacting with customers while developing new services. Similarly, the extant literature shows mixed views about the effect of technological uncertainty on customer involvement and the effectiveness of customer involvement at different stages of the new service development process. Against this backdrop, the present study has three objectives: (1) to investigate the effects of customer involvement on operational dimensions (i.e., innovation speed and technical quality) and market dimensions (i.e., competitive superiority and sales performance) of new service performance; (2) to examine the effect of technological novelty and technological turbulence on customer involvement; and (3) to explore the moderating effect of the stage of the development process on the relationships among technological novelty, technological turbulence and customer involvement, and customer involvement and new service performance. A total of 807 firms with 75 or more employees in a varied set of industries were selected from the Dun & Bradstreet's 2004 listing of Spanish service firms. A questionnaire was mailed to the person in charge of new service development at each company. A total of 102 complete questionnaires were returned. Findings reveal that whereas customer involvement has a positive direct effect on technical quality and innovation speed, it has an indirect effect on competitive superiority and sales performance through both technical quality and innovation speed. The study also finds a positive effect of technological novelty as well as technological turbulence on customer involvement. Contrary to expectations, the study does not find any moderating effects of the stage of the development process. This study has several theoretical and managerial implications. In terms of theoretical implications, the study supports the role of technological uncertainty (novelty and turbulence) as an antecedent to customer involvement. It also provides empirical evidence of the impact of customer involvement on operational and market dimensions of new service performance. In terms of managerial implications, the study offers critical insights on how customer involvement in new service development translates into improved new service performance. Furthermore, it reveals that the importance of customer involvement in technologically uncertain contexts and its impact on new service performance are independent of the stage of the development process, suggesting that managers should involve customers throughout the entire development process.     

Evaluating Customer Support During New Product Development—An Exploratory Study

Anyone who has struggled with a balky computer understands the importance of product support. Useful support for a high-tech product may take various forms, including installation, documentation, field service, user training, and product upgrades. All these forms of support share a common goal: achieving customer satisfaction with the product. To increase the likelihood of customer satisfaction with a high-tech product, a firm must carefully consider the product's support requirements during the design stage of the new-product development (NPD) effort. As Keith Goffin points out, however, relatively little research has been published about the manner in which product design influences product support. He suggests that firms may benefit from considering product support requirements during the design stage, in much the same way as design for manufacturability (DFM) techniques enable firms to increase ease of manufacture. In a survey of high-tech firms, he explores the ways in which companies evaluate product support requirements during the design stage. The study also examines whether firms use quantitative goals to focus the design team's attention on a product's support needs. To provide deeper understanding of the interrelationship between support requirements and product design, he also presents a case study involving Hewlett-Packard's development of a complex medical device. With responses from 66 companies, the survey offers the first empirical data on how companies plan for product support. Whereas DFM techniques involve consideration of manufacturability during the early stages of design, more than two-thirds of the companies in the study begin planning for support during the second half of the product development process. Only slightly more than one-half of the respondents report the use of a formal product support plan, although use of this type of document is more prevalent among the computer firms in the study. The companies in this study do not consider all aspects of support during product planning. The respondents also do not set quantitative goals for all aspects of support during the design stage. They typically set quantitative goals for service-related aspects of support—for example, product reliability targets such as annual failure rate—rather than for such support areas as user training. The survey responses identify a range of measures which could be used for performing a more comprehensive evaluation of support requirements during the design stage.     

Identifying the Key Success Factors in New Product Launch

Effective product launch is a key driver of top performance, and launch is often the single costliest step in new product development. Despite its importance, costs, and risks, product launch has been relatively underresearched in the product literature. We reviewed the extant literature on product launch to identify the most critical strategic, tactical, and information-gathering activities influencing the launch success. We then used a retrospective methodology to gather managerial perceptions regarding launch activities pertaining to a recent new product launch, and the product's performance in terms of profitability, market share, and relative sales. A mail survey of PDMA practitioners elicited data on nearly 200 recent product launches. Successful launches were found to be related to perceived superior skills in marketing research, sales force, distribution, promotion, R&D, and engineering. Having cross-functional teams making key marketing and manufacturing decisions, and getting logistics involved early in planning, were strategic activities that were strongly related to successful launches. Several tactical activities were related to successful launches: high quality of selling effort, advertising, and technical support; good launch management and good management of support programs; and excellent launch timing relative to customers and competitors. Furthermore, information-gathering activities of all kinds (market testing, customer feedback, advertising testing, etc.) were very important to successful launches. We conclude with observations about current product launch practice and with recommendations to management. Logistics plays a key role in successful strategy development and should receive the requisite amount of managerial attention. In particular, activities involving logistics personnel in strategy development showed much room for improvement. We also find that the timing of the launch (i.e., when the launch is conducted from the point of view of the company, the competition, and the customer) is just as important as whether the activities are performed. More managerial attention should be devoted to launch timing with respect to all of these viewpoints in order to improve the chances of success.     

Drivers of Outsourced Innovation: An Exploratory Study*

The outsourcing of innovation has been on the rise for years, but research in this area lags behind industry practice. Interviews with managers and a theory base grounded in transaction cost analysis are used to guide the development of an exploratory model that details potential drivers of the outsourcing of innovation activities. Using industry‐level data, the proposed model is partially tested using two distinct regression analyses that reveal significant effects both contemporaneously and persisting over time. Several of the proposed drivers of outsourced innovation are shown to be significant, including exploratory research performed and profit margin. The finding that exploratory research performed is significantly related to the outsourcing of innovation activities represents a significant contribution to the innovation and organizational learning literatures. As well, finding a relationship between margins and organizational sourcing fills a gap in the business to business marketing literature. Managerial implications are drawn for both managers of the innovation process in traditional firms and those in firms wishing to garner outsourced innovation contracts. The drivers found to be significant in this study should allow for better resource planning from innovation managers in traditional firms as well as better targeting of perspective clients from firms seeking contract innovation business.     

服务外包动因机制分析及发展趋势预测 --美国服务外包的验证

20世纪90年代以来，随着信息技术的迅速发展，许多企业都把非核心服务活动交给外部企业执行，服务外包得到蓬勃发展。本文以美国服务外包情况为例，依据投入产出表和其他相关数据对服务外包的发展动因、影响服务外包各种力量的强弱，以及对服务外包的发展趋势进行实证分析和预测，以期对服务外包内在变动机制进行详细而较为全面的研究和阐释。     

The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market‐driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross‐functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer's perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can, therefore, change as product experience and learning increase. From a firm's perspective, it is unclear how to be customer‐oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics. A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm's strategic decisions in developing and launching really new products. The framework is based on in‐depth interviews with high‐tech product managers across several sectors, focusing on the business‐to‐business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm's product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers' customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.     

新服务开发的发展趋势研究

新服务开发已成为企业和社会关注的焦点,与企业的热情相对照,实践中新服务开发的效果却令很多企业失望。文章对新服务开发的发展趋势进行探讨,以期为企业提供实践的参考方向。     

Achieving Customer Satisfaction through Integrated Products and Services: An Exploratory Study

Complex products such as manufacturing equipment have always needed maintenance and repair services. Increasingly, leading manufacturers are integrating products and services to generate increased revenues and achieve customer satisfaction. Designing integrated products and services requires a different approach to new product development and a clear understanding of how customers perceive the value they obtain from actual usage of products and services—so‐called value‐in‐use. However, there is a lack of research on integrated products and services and how they impact customer satisfaction. An exploratory study was undertaken to understand customers' views on integrated products and services and the value‐in‐use derived from such offerings. As value‐in‐use and its impacts are complicated concepts, a technique from psychology—Repertory Grid Technique—was used to gather data in 33 interviews. The interviews allowed a deep understanding of customer views on integrated products and services to be obtained, and a systematic analysis identified the key attributes of value‐in‐use. In order to probe further, the data were then analyzed using Honey's procedure, which identified the impact of the attributes of value‐in‐use on customer satisfaction. Two key attributes—relational dynamic and access—were found to have the most influence on customer satisfaction. This paper contributes to the innovation field by identifying customer needs for integrated products and services and how these impact customer satisfaction. These are key points and need to be fully considered by managers during new product and service development. Similarly, the paper identifies a number of important areas for further research.     

An Exploratory Study of the Innovation Evaluation Process

In their search for the keys to successful product innovation, product managers and researchers typically focus on trying to identify the most effective organizational processes, strategies, and structures. Surprisingly, little or no effort is directed toward understanding the process that consumers use for evaluating an innovation. By gaining insight into this evaluation process, a firm can present an innovative product in a more effective manner and thus increase the likelihood that consumers will respond favorably to the innovation. Richard W. Olshavsky and Richard A. Spreng provide insight into this process by describing the results of an experiment in which subjects were asked to evaluate several innovative concepts. From their observations, they develop a model of the detailed information-processing steps that these consumers employed in order to evaluate the new products. Consistent with previous research, they found that judgment was the predominant evaluation strategy, particularly for the most innovative concepts. Various subjects also used a categorization strategy, though none used categorization for more than four of the nine concepts that were evaluated. Contrary to expectations, none of the evaluations relied solely on the manufacturer's reputation or the recommendation of a friend. In a simplified model of the evaluation process, when presented with an innovative concept, consumers first attempt to categorize the product. In other words, an innovation may be rejected simply because consumers somehow link it to an existing category that has a negative connotation. If consumers cannot categorize the product, they then employ a judgment process based on some evaluative criteria. Based on the data collected in this study, this simplified model is extended to include four other cognitive processes that strongly influence the evaluation process: forming evaluative criteria, forming expectations about the innovative concept, assessing satisfaction with an old product, and comparing the new and old products. When faced with a highly innovative concept, consumers may find it difficult to form their own evaluative criteria and expectations concerning that innovation. Consequently, managers may have an opportunity to shape the judgment process by educating consumers about the appropriate evaluative criteria or by clearly communicating the product's attributes, benefits, and appropriate use.     

An Interim Report on Measuring Product Development Success and Failure

This article represents findings of a PDMA task force studying measures of product development success and failure. This investigation sought to identify all currently used measures, organize them into categories of similar measures that perform roughly the same function, and contrast the measures used by academics and companies to evaluate new product development performance. The authors compared the measures used in over seventy-five published studies of new product development to those surveyed companies say they use. The concept of product development success has many dimensions and each may be measured in a variety of ways. Firms generally use about four measures from two different categories in determining product development success. Academics and managers tend to focus on rather different sets of product development success/failure measures. Academics tend to investigate product development performance at the firm level, whereas managers currently measure, and indicate that they want to understand more completely, individual product success.     

Using Exploratory and Exploitative Market Learning for New Product Development*

While the need for research on the market‐learning efforts of a firm in relation to its new product development is continuously emphasized, the empirical results on this issue reported so far have been mixed. The current study contends that the inconclusive nature of the empirical evidence is mostly due to the existence of different dimensions of organizational market learning—exploratory and exploitative—and to possible different routes by which these learning dimensions are linked to new product performance. More specifically, this study argues that exploratory market learning contributes to the differentiation of the new product because it involves the firm's learning about uncertain and new opportunities through the acquisition of knowledge distant from existing organizational skills and experiences. By contrast, this study posits that exploitative market learning enhances cost efficiency in developing new products as it aims to best use the currently available market information that is closely related to existing organizational experience. This study provides empirical support for this two‐dimensional scheme of organizational market learning and its consequent effects on two components of new product advantage: new product differentiation and cost efficiency. Further, given that the effectiveness of firms' strategic efforts is contingent upon the nature of the market environment, the current study examines the moderating effects of environmental dynamism and market competitiveness for this market learning—new product advantage relationship. This study is based on survey data from 157 manufacturing firms in China that encompass various industries. The empirical findings support the two‐dimensional market learning efforts that increase new product differentiation and cost efficiency, respectively. The study confirms that exploratory market learning becomes more effective under a turbulent market environment and that exploitative market learning is more contributive when competitive intensity is high. It also suggests that because of their differential direct and moderating effects on new product advantage either exploratory or exploitative market learning may not be used exclusively, but the two should be implemented in parallel. Such learning implementations will help to secure both the feature and cost‐based new product advantage components and will consequently lead to the new product success. The current study attempts to contribute to greater clarity and better understanding of how market learning influences new product success as it theoretically identifies and empirically validates the two forms of new product advantage as the conceptual mediator between market learning and new product performance.     

Department Status: An Exploratory Investigation of Direct and Indirect Effects on Product Development Performance

To date only a limited number of product development studies have examined the construct of department status. These studies mostly report that departments can reflect different levels of status among themselves during product development activities and that often the marketing department reflects greater status. These studies do not clarify the role that department status may pose for product development performance and product management performance. Some research would suggest that department status has a direct effect on performance, while other research would suggest that department status has an indirect effect on performance. The present study investigates whether the bestowing of department status is important to product development performance and product management performance, and, if so, how? Based on empirical results from a cross‐industry study involving 668 marketing, manufacturing, and R&D managers, department status is found to have a significant indirect effect on product development and product management performance. Results further show that equal status among the three departments of marketing, manufacturing, and R&D correlates with higher levels of interdepartmental collaboration, which in turn manifests the benefits of higher levels of performance. Interdepartmental collaboration is therefore shown to be a mediating variable between department status and performance. The empirical results of this study suggest that no one department should dominate the product development effort and/or product management effort. While study data tend to correspond with prior studies in that the marketing department tends to reflect higher status compared to R&D and manufacturing, simply bestowing more status to marketing (or to another department for that matter) does not appear to be a proper course for facilitating interdepartmental collaboration nor for manifesting higher product development performance. Rather, equal status across marketing, manufacturing, and R&D departments appears to represent the proper course of action to establish collaboration between these three departments and subsequently to reap the benefits of higher performance. Given the exploratory nature of this study, subsequent study is warranted. Avenues for future research along with tentative managerial implications are discussed.     

Selecting Influential Business-to-Business Customers in New Product Development: Relational Embeddedness and Knowledge Heterogeneity Considerations

This study examines how the most influential business‐to‐business (B2B) customers, both existing and potential, involved in providing input to a new product development (NPD) project influence new product advantage. As the relational literature suggests, involving customers who have had close and embedded relationships with a firm's new product organization, such as a firm's largest customers, and customers who have been involved in past collaborative activities, should lead to the development of superior products. To the contrary, the innovation literature suggests that a firm may become too close to its large, embedded customers resulting in less innovation and in lower performing products. Also, the relationship between the heterogeneity of the knowledge of the most influential customers and new product advantage is examined. A contingency perspective is hypothesized such that the degree of product newness sought in the project moderates the effects of both relational embeddedness and knowledge heterogeneity on new product advantage. Empirical findings from a sample of 137 NPD projects support this contingency view. For projects seeking to develop incremental products, where the product being developed is an extension or an enhancement to an existing product, new product advantage tended to be higher in projects using embedded or homogeneous customers. For incremental projects, projects using less‐embedded or heterogeneous customers tended to have lower product performance. For projects following a highly innovative product strategy, new product advantage tended to be higher in projects that involved heterogeneous customers. These heterogeneous customers provided NPD projects with a diversity of perspectives, competencies, and experiences that fostered significant product innovations. The study contributes to the literature by empirically testing relational and innovation theories in NPD projects and by providing evidence on the importance of relational embeddedness and knowledge heterogeneity in selecting influential customers in NPD projects.     

Marketing/R&D Interaction in New Product Development: Implications for New Product Success Rates

A growing body of literature has evolved which deals with the interaction between marketing and R&D in new product development. Much of this research, unfortunately, fails to associate various variables with new product success levels. Thus, it cannot suggest consensus guidelines for marketing's involvement to increase the performance levels of new products in the market place. Richard Hise, Larry O'Neal, A. Parasuraman and James McNeal report results of their analysis of the new product development procedures of 252 large manufacturing companies. The authors conclude that collaborative efforts between marketing and R&D during the actual designing of new products appear to be a key factor in explaining the success levels of new products, that management effort should focus on the design stage of the new product development process rather than on the earlier and later stages and that R&D's contributions cannot be ignored while decisions are made about marketing's role in developing new consumer and industrial products.     

Collective Bargaining,Inter‐Sectoral Heterogeneity and Competitiveness: A Cross‐National Comparison of Macroeconomic Performance

Research on the performance effects of bargaining remains inconclusive. One reason for this is neglect of heterogeneity of the bargainers, namely differences in exposure to world markets and their implications for international competitiveness. Since the effects of bargaining on competitiveness depend on coping with productivity differentials between the exposed and sheltered sector, we discuss how distinct bargaining structures interact with these differentials. Exposed‐sector pattern setting is predicted to be the only bargaining structure that is sensitive to productivity differentials. The findings from time series cross‐sectional analysis corroborate the expected impact on labour costs and the current balance, whereas no employment effects are discernible.     

PDMA Success Measurement Project: Recommended Measures for Product Development Success and Failure

Success is not just elusive; it is also multifaceted and difficult to measure. A firm can assess the success or failure of a development project in any (or all) of many terms, including customer satisfaction, financial return, and technical advantage. To complicate matters, success may be measured not only at the level of the individual project, but also at the program level. With so many variables to consider and so many stakeholders involved, managers face a difficult challenge just deciding which measures are useful for measuring product development success. Recognizing that no single measure suffices for gauging the success of every product development project, Abbie Griffin and Albert L. Page hypothesize that the most appropriate set of measures for assessing project-level success depends on the project strategy. For example, the objectives (and thus, the success criteria) for a new product that creates an entirely new market will differ from those of a project that extends an existing product line. Similarly, they hypothesize that the appropriate measures of a product development program's overall success depend on the firm's innovation strategy. For example, a firm that values being first to market will measure success in different terms from those used by a firm that focuses on maintaining a secure market niche. To test these hypotheses, product development professionals were presented with six project strategy scenarios and four business strategy scenarios. For each project strategy scenario, participants were asked to select the four most useful measures of project success. For each business strategy scenario, participants were asked to choose the set of four measures that would provide the most useful overall assessment of product development success. The responses strongly support the idea that the most appropriate measures of project-level and program-level success depend on the firm's project strategy and business strategy, respectively. For example, customer satisfaction and customer acceptance were among the most useful customer-based measures of success for several project strategies, but market share was cited as the most useful customer-based measure for projects involving new-to-the-company products or line extensions. At the program level, firms with a business strategy that places little emphasis on innovation need to focus on measuring the efficiency of their product development program, while innovative firms need to assess the program's contribution to company growth.     

Dual Kriging: An Exploratory Use in Economic Metamodeling

Sensitivity analysis of capital investments can be effectively carried out by employing a metamodel approach and experimental designs. Although polynomial regression metamodels are popular and straightforward, they do not consider spatial relationships among the data. Dual kriging is an estimation technique that allows the incorporation of spatial correlation into the interpolation or estimation process and has been used primarily in geophysical statistical analysis. This article investigates the dual kriging approach as an alternative technique to polynomial regression and artificial neural networks for metamodel analysis of capital investments. It is observed that dual kriging shows potential in performing sensitivity analysis as its accuracy is as good as, or better than, other techniques, and, while model building and interpretation is more complicated than that of polynomial regression, it is significantly more straightforward than that of neural networks. Furthermore, this is the first known work of using kriging in the field of engineering economics; there may be other useful applications such as in cost estimation.     

An Exploratory Study of Company Turnaround in Australia and Singapore Following the Asia Crisis

There has been little research into company turnaround practices in Asia. This paper investigates the role of retrenchment, replacement of chairman or chief executive and ownership change in the turnaround process, using a sample of 60 listed companies in Australia and Singapore. Conclusions are drawn that overall, transparency of the regulatory environment and other governance issues are a stronger influence on turnaround practices than are cultural issues. This may make Singapore, which has transparency and governance risk indicators at similar low levels to Australia, a unique business environment in Asia.