The document discusses how organizations can aim for competitive products and satisfied customers during an economic recession. It emphasizes focusing on the essentials like producing high-quality goods and services, creating value for customers, and refining business processes. The recession presents challenges but also opportunities to critically examine practices and courageously learn and innovate new approaches. Quality methods should concentrate on the basics and utilizing systematic practices.

1. Aiming at competitive products and delighted
customers in the time of recession
Juhani Anttila Kari Jussila
International Academy for Quality (IAQ) Aalto University, School of Science
Helsinki, Finland Espoo, Finland
juhani.anttila@telecon.fi , kari.jussila@aalto.fi
ww.QualityIntegration.biz
1 March 21, 2013 These pages are licensed
under the Creative Commons 3.0 License
http://creativecommons.org/licenses/by/3.0
(Mention the origin)

2. Aiming at competitive products and delighted
customers in the time of recession
Main themes of the paper:
1. Extended product concept
2. Product characteristics and quality, and customer satisfaction
3. Processes and technologies
4. Product and corporate brands
5. Challenges at the time of recession
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3. Processes and product in a Business Connection
Organizations in business connection:
Customer (Product recipient)
Supplier (Product producer)
Product
(Goods + Service)
Supplier’s business processes
Customer’s business processes
Business interface
(business interactions)
Partner
Process is activity and product its result.
3 Product use and perception reveal value and satisfaction.
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4. Understanding the concept “product”
Product:
”result of a process”
 Normally many processes are involved in producing a product,
and processes may be in different organizations.
 A product includes always service, and may also include goods.
Service
”result of processes performed at the interface between the supplier and the customer”
 Service is the essential part of all products, or factually all products are composite
products consisting of goods and services.
 There is no justification to use a phraseology ”products and services” or ”products
or services” that factually means “goods and services”.
 Value of goods may only be achieved through using the goods. Hence, also goods
may be seen as service providers.
The value of a product is co-created by both the supplier and the customer.
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5. A product consists of goods and services
Product = Result of processes Pure goods
= Goods + Services 100% 0%
Value provided for the customer is based on
both goods and services. The role of service
is dominant, and especially today increasing.
Goods Service
The goods value may be achieved only by using value value
the goods. Hence, also goods may be seen as a to customer To customer
type of service provider.
0% 100%
Pure service
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6. Three elements of a composite product
producing value to the customer
The product is composed of three elements that create value to the customer (“Value
adding channels”):
- G: Goods service: Value from using the goods element
- H: Human service: Value from human services
- A: Automatic service: Value from automatic or mechanical services
G
Each point within the The composite product and its
triangle represents elements co-create added-value P
a particular product. to the user with his/her process(es):
P = uH + vA + wG
v u, v, and w are contributory portions of
different product elements to the value
P u
Tendency
w
6
H A
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7. What is the product,
and what are the processes involved?
Essential questions:
1. What is the product, incl.
a) The service, and
b) The goods?
2. How the customer value is
being created, through
a) The value creating
processes, and
b) The structures
supporting the
processes?
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8. Service is result of processes, Examples
• Tourist service • Health care service
– Memorable experience – Health, well-being
• Restaurant service • Telecom service
– Well-nourished, fullness – Completed phone call
• Entertainment service • Transport service
– Emotional response – Material, people transported
• Design service • Maintenance service
– Product specifications, prototype – Equipment repaired
• Training /education service • Lawyer service
– Skills, competence – Trial supported
• Financial service • Consulting service
– Loan – Development supported
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9. General systematic grouping of inherent characteristics
of any product (7E+3S)
Effective- Ergo- Serve- Social per-
ness & nomics ability(*) Security Esthetic Ethics formance Ecology Economy
Efficiency
Quantitative
sufficiency
Environmental
compatibility
Dependability The product performance
characteristics may be
Reliability designed systematically and
performance objectively by the product
Maintainability developer but they are always
performance perceived comprehensively
All product characteristics
Maintenance support and subjectively by the
are interlinked with each others
performance product user.
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10. Quality  Grade (of a product)
quality (of a product)
- degree to which a set of inherent characteristics (of the product) fulfils requirements
grade (of requirements)
- category or rank given to the different requirements for the products having the same
functional use
Note:
- requirement (generated by an interested party): need or expectation that is
stated, generally implied or obligatory
- interested party: person or group having an interest in the performance or
success of an organization (a product)
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0017/30.11.2008/jan (Ref.: ISO 9000)

11. Customer perception
Low High
Satisfaction
Indifference
Dissatisfaction
High Low
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12. How can I understand whether
a customer is satisfied or not?
• When asked, the reply is ”Yes”
• Says he is even not asked
• Tells this to his friends
• Buys more of what he is satisfied
• Buys something else, too
Situation consists of a complex mixture of rational, non-rational (emotional)
and irrational human phenomena:
– satisfaction, dissatisfaction, indifference
– confidence, trust
– goodwill / badwill balance
– to buy or not to buy
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13. Linking product characteristics with customer
preference and satisfaction
Recognized professional approaches:
 Kano model
A theory of customer satisfaction and product development that identifies product
qualities based on how they affect the customer's perception of the product (Noriaki
Kano 1980)
 QFD (Quality Function deployment)
A method to transform user demands into design quality, to deploy the functions
forming quality, and to deploy methods for achieving the design quality into
subsystems and component parts, and ultimately to specific elements of the
manufacturing process (Yoji Akao 1966)
 Kansei engineering
A method that aims the development or improvement of products and services by
translating customer's psychological feelings and needs into product's design
parameters (Mitsuo Nagamachi in the early 1970’s)
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14. Linking customer’s perception with business processes
Different business situations:
 Products from a single organization:
- Gaps in the organization‘s business processes impact on the customer‘s perception.
The phenomenon is described by the ServQual model that was developed in the mid-
1980s by Zeithaml, Parasuraman & Berry. We have modified the model for the extended
product and process concepts.
 Products from business networks and ecosystems:
- Product (and in particular service) is not produced only by one organization’s
processes but by many organizations’ processes operating in a business network or
an ecosystem. Different networks and ecosystems compete with each other. However,
one organization has the commercial relationship with the customer.
 Products from a networked community:
- A customer is an independent and collaborating member of a network. He or she and
also all the other network members produce something to and get something from the
other network members. A network product is a cumulative result from network
member’s value creating interactions with all other members. Network members also
get value from the whole network through the general recognition or privileges of the
network.
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15. Linking product quality with the supplier’s business
success, Customer satisfaction index (CSI)
Perceived
(+) Complaints
quality
(+) (-)
(+) Customer
Perceived (+/-)
(+) satisfaction
value Index, CSI
(+) (+)
Loyalty
Expectations (+)
Drivers Results
CONSEQUENCES: Business success
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16. Technology challenges
New technologies have essential impacts on We have been involved with the following
product characteristics and the effectiveness examples of the ICT (information and
and efficiency of the related processes. These Communication technology):
technologies include:  Radio frequency identification
 Information technology (RFID)
 Biotechnology  Ubiquitous information technology
 Nano- and microtechnology Internet internet of things (IoT) and
 Optical technology machine-to-machine applications
 Energy technology  Mobile payment technology
 Social technology  Cloud services
 Etc.  Mashup products.
Traditional technological progress in products took place due to the sustaining technology,
but today disruptive technology innovations present greater challenges.
In addition to the impact on quality of products, the new technologies also have challenging
influence e.g. on environmental, social, safety and security performance, including:
 Environmental protection
 Information security
16  Health risks
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17. Product brand and its consistency with corporate brand
in market communication
• Brand value:
 The overall value statement to the user
• Brand authority:
 Excellence aspects
• Brand personality:
 Rational brand characteristics Corporate brand
 Emotional brand characteristics
• Brand benefits: Consistency
 Concrete value features in use
• Brand service:
 Service provision to the user Product brand
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18. Attractiveness and consistency
of the corporate and product brands
Nokia Apple Samsung
Lumia 920 iPhone 5 Galaxy S III 4 G
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19. Conclusion: Aiming at competitive products and
delighted customers at the time of recession
The time of recession causes problems and Challenges for the time of recession in
troubles in organizations: organizations:
 Business competition becomes tougher  More competitiveness through flexibility,
 Uncertainty and difficulty increase in effectiveness and efficiency, and related
getting new capital managerial skills are required.
 People and organizations decrease  Organizations need to address themselves
spending money on consumer and into essential issues and strive for lean
investment products solutions.
 Revenue of firms declines  Quality approaches should be concentrated
 Organizations encounter difficulties in on the basics, and systematic practices are
not only to grow but to maintain beneficial.
profitability • Producing competitive goods and
 Self-sustaining negative attitude drives services
to giving in to the business challenges • Creating overpowering customer value
and satisfaction
• Refining business process
performance
The recession is always a threat and an opportunity. Recession is the time of
considering critically the old and courageously learning and innovating the new.
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