The Total Design Concept By
Raji Srinivasan University of Texas, Austin Gary L. Lilien Arvind Rangaswamy The Pennsylvania State University Gina M. Pingitore Daniel Seldin J.D. Power and Associates
ISBM Report 08-2008
Institute for the Study of Business Markets The Pennsylvania State University 484 Business Building University Park, PA 16802-3603 (814) 863-2782 or (814) 863-0413 Fax www.isbm.org,
[email protected]
THE TOTAL DESIGN CONCEPT Raji Srinivasan* Gary L. Lilien** Arvind Rangaswamy** Gina M. Pingitore*** Daniel Seldin***
December 2008
* Raji Srinivasan is Associate Professor at The University of Texas, Austin. ** Gary L. Lilien is Distinguished Research Professor of Management Science and Arvind Rangaswamy is the Anchel Professor of Marketing at The Pennsylvania State University. *** Gina Pingitore is Chief Research Officer and Dan Seldin is Senior Manager, Marketing Sciences, J.D. Power and Associates, 2625 Townsgate Road, Westlake Village CA 91361, United States Address correspondence to Raji Srinivasan, CBA 7.248, The University of Texas at Austin, TX 78712. Tel: 512-471-5441; Fax: 512-471-1034; Email:
[email protected]. The authors thank Abbie Griffin, Rajesh Chandy, Joann Peck, Christophe Van den Bulte, Robert Veryzer, Stefan Wuyts, and seminar participants at Arizona State University and at the Product Design Conference at University of Texas Austin in Fall 2007 for useful suggestions on the research.
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THE TOTAL DESIGN CONCEPT
ABSTRACT As traditional sources of competitive advantage shrink, firms seek new ones. One such source is product design. To generate insights on how product design can be leveraged to realize competitive advantage, we introduce an integrated, customer-experience perspective of product design that we call the Total Design Concept (TDC). We define a product’s TDC as consisting of three elements, functionality, aesthetics, and meaning, each of which are comprised of more elemental product characteristics. We develop the structure of the TDC, its three elements, and the link between those elements and customers’ perceptions of a product. We provide an illustrative application of the TDC in the US automotive industry. The findings support the proposed three dimensional view of the TDC, and demonstrate heterogeneity both in the TDC’s structure and its effects on customer experiences. The TDC and the supporting empirical findings generate implications both for research and for product design practice.
Keywords: customer experience, product design, customer satisfaction, aesthetics, functionality,
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INTRODUCTION Design can unlock the technological performance we build into a product and help the consumer see it, touch it. Good design is serious business. --- Alan G. Lafley, Chief Executive Office, Procter and Gamble, 2002. We keep reminding ourselves that almost every vehicle out there -- old, new, big, small, passenger cars, sports utility, roadster, minivan -- fulfills the basic transportation function, and they all fulfill it roughly equally well. Yet people go for the new. They go for the good-looking vehicle. That's why advanced product design is the core of our business strategy. --- Bob Lutz, Vice-Chairman, Daimler-Chrysler-Benz, 2002. Design DNA is all the rage as car makers try to make their vehicles stand for something --- Money magazine, Jan 13, 2006. For companies worldwide, design has become strategic, the very core of their efforts to differentiate what they make and do. ---- Business Week, July 10, 2006.
As technological capabilities become more universally available, firms are exploring other venues when seeking a competitive advantage. One such venue is that of product design. Although both scholars (Kotler and Rath 1984; Venkatesh and Meamber 2006) and practitioners (Nussbaum 2006) have acknowledged the importance of design as a strategic marketing issue there is little in the marketing literature that aids in understanding the role of design in creating that competitive advantage. As the Marketing Science Institute (2003) noted “The relationship between marketing and design, and the marketing and design functions, is often complex. Both these aspects of product development play a critical role in determining the success or failure of new products, yet there is ample room for improvement in the role(s) design plays in new product development, in how marketing and design are integrated in new product development...” We introduce the Total Design Concept (TDC), an integrated, customerexperience based view of product design, to generate insights about how product design can be leveraged to realize competitive advantage. In what is generally regarded as a seminal idea in marketing, Levitt (1980) proposed the Total Product Concept’ (TPC) to include the generic product, the expected product, the
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augmented product and the potential product. Urban and Hauser (1980) conceptualized their Product Design Concept (PDC) to include physical features and how those features are perceived by customers (relative to competitors). However, functionality, by itself, is not sufficient for successful differentiation in today’s increasingly competitive markets (Vogel, Cagan, and Boatwright 2005), and there have been calls for an integrated view of product design, as customers experience products holistically (Bloch 1995; Veryzer 1995). As Veryzer (1995; p. 642) noted, “it is important for consumer researchers to adopt a conceptualization of design that acknowledges the different aspects of product design (i.e., functional, communicative, and aesthetics)” a perspective we adopt in this paper. Some firms, like Harley Davidson Inc., have leveraged superior product design for competitive advantage. Consider the Harley Davidson’s Dyna Super Glide FDXI motorcycle (Figure 1) which has an easily replicable set of features (engine, fuel system, transmission etc). However, it has a unique, teardrop gas tank, oversized speedometer, and a hard tail which projects distinctive and aggressive visual aesthetics. The FDXI has a distinctive sound even when idling and the rev of its exhaust, according to some, sounds like “potato, potato”1 which reinforces its distinctive appearance. Beyond its functionality and aesthetics, the motorcycle projects the now-popular maverick American image, reflecting driving freedom for riders with a rebellious spirit. The market has rewarded Harley Davidson, which has focused on product design as a source of differentiation, with high customer satisfaction and loyalty, high resale value, and customers who appear content to wait for product delivery (Grant 2006). While the Harley example illustrates that a firm can extract rents from superior product design, such practice is far from common today. 1
Harley Davidson Inc. went so far as to file a trademark application for this characteristic sound in 1996. However, other firms filed oppositions to the filing of this trademark and the application was ultimately overturned.
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---- Insert Figure 1 here ---We propose an integrated representation of product design, which we term the Total Design Concept (TDC), consisting of three elements: (1) functionality, which arises from the product’s features and related benefits for customers, (2) aesthetics, comprising the product's sensorial characteristics, including, its appearance, touch, smell, taste and sound, and (3) meaning, involving the associations of the product in the minds of its customers. Further, we propose that a product’s various characteristics map onto to the TDC’s three design elements. In our proposed customer-centric view of product design, we suggest that customers may differ significantly both in how they map product characteristics onto the three design elements and in how those design elements affect customer experience. We proceed as follows. We first develop the TDC and relate it to extant ideas in the marketing literature. Then, we discuss the structure of the TDC’s design elements and their effects on customer experience. Next we demonstrate the validity of the proposed TDC, its design elements and their effects on customers’ experiences, using data on product ratings and customer satisfaction from 47,885 US vehicle owners. The empirical findings support the structure of the proposed TDC, the presence of customer heterogeneity in the mapping of product characteristics onto the design elements, and the differential effects of design elements on customer experience. We conclude with a discussion of the TDC’s implications for product management practice, marketing theory, and further research. THE TOTAL DESIGN CONCEPT (TDC) IN CONTEXT Scholars in several fields, including industrial design (Norman 2004), manufacturing (Hauser and Clausing 1988), production management (Krishnan and Ulrich 2001) and marketing (Levitt 1980; Urban and Hauser 1980) have explored issues related to product design. Not 3
surprisingly, the variance in goals and methods in the different areas has produced divergent definitions. For example, researchers in production and operations management define product design, as a process within the firm. Krishnan and Ulrich (2001, p. 9) define product design as “the detailed design phase which constitutes the specification of design parameters, precedence relations in product assembly, and the detailed design of the components including materials and process selection.” Marketing scholars (Levitt 1980; Urban and Hauser 1980 as noted earlier) have focused on product design, as a description of products’ characteristics. Adopting this approach, The Center for Universal Design at North Carolina State University (http://www.design.ncsu.edu/cud/about_ud/udprinciples.htm) has proposed seven principles of universal design to enable products and environments to be usable by all people to the greatest extent possible: equitable use, flexibility in use, simple and intuitive use, perceptible information, tolerance for error, low physical effort and size and space for approach and use. In this paper, like Urban and Hauser (1980), we use the term ‘product design’ to describe the product. The TDC Defined A fundamental premise in marketing is that a product’s functionality, resulting from its features, is a necessary, but not sufficient condition for effective differentiation. Experiential marketing scholars (Berry, Carbone and Haeckel 2002) suggest that both tangible and intangible product characteristics are intrinsic to the totality of what a product is. Accordingly, we propose that an accurate representation of the TDC includes, but is not limited to functionality. Second, because products are designed for customers, we integrate both firm and customer perspectives in the TDC. Third, Gestalt theorists in cognitive psychology argue that the mind perceives objects as being more than the sum of their parts (Koehler 1947). Thus, when we see three lines
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and three angles, we see one entity, a triangle. Likewise, we propose that an integrated, holistic representation of product design is both essential and natural. The words of an industrial designer (Coates 2003) provide insight here: “it is impossible, in fact, to design a watch that tells only time. Knowing nothing more, the design of a watch alone—or of any product—can suggest assumptions about the age, gender and the outlook of the person who wears it.” Hinting at this holistic representation of product design, automotive industry executives refer to a vehicle’s “design DNA.” According to Mark Conforzi (2005), a Ford Motor Company designer, “When we talk about a car’s DNA, it’s not just about styling cues. DNA can include colors, trim names, performance feel, exhaust note, even the feelings, and the emotions a car evokes.” (p. 44). We note three properties of the proposed TDC. First, the unit of analysis is a specific product (e.g., Apple iPod, Logitech track ball mouse) and not the product category (e.g., multimedia players, mice). Second, we conceptualize the TDC’s three design elements as latent factors that specific product characteristics map onto. Third, the TDC merges the firm’s various activities beyond those specific to new product development activities. The TDC’s functionality arises from a product’s features which deliver the associated benefits to customers. The TDC’s aesthetics arise from the product’s sensorial characteristics, including its appearance, sound, touch, smell, and feel. Some (e.g., Santayana 1896) argue that beauty is an inherent property of objects and that certain proportions, shapes, and colors are universally attractive. However, there is widespread agreement now that socio-cultural factors (e.g., Berlyne 1971; Csikszentmihalyi and Robinson 1990) and individual characteristics (Bloch, Brunel, and Arnold 2003) influence customers’ aesthetic responses. Our conceptualization of aesthetics acknowledges the interaction between the product and the perceiver (or user) and thus
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encompasses both the product’s objective properties and how those properties are perceived by customers. The TDC’s meaning is the associations of the product held by its customers. A product’s meaning is co-produced by the firm (through its product, marketing and communications programs) and its customers (through their interpretation of the product and its related marketing programs, and even its user community). A product’s meaning is specific to a market segment; it is not universal, since the concept is based on “me and my tribe” versus others which may include outside reference groups (Fournier 1998). We illustrate the TDC’s three design elements using Herman Miller’s Aeron Chair (Figure 2) (Vogel, Cagan, and Boatwright 2005). ---- Insert Figure 2 here ---Herman Miller Inc. introduced its Aeron office chair in 1994. The chair’s functionality is derived from several features that provide a superior seating experience. Dymetrol, the Du Pont’s synthetic material used in the Aeron chair’s back and seat pan, provides a breathable mesh interface between the user’s body and the chair. Its steel, gray frame creates a smooth transition from the open mesh to the frame, strongly supporting the user’s body and enabling the user to shift positions comfortably for different tasks. The Aeron chair’s spring-cushioned seat enables kinesthetic motion, lowering spinal compression and reducing chances of stress injuries. The Aeron chair’s dark gray frame and black open, woven synthetic material of its seat, which create an elegant, skeletal and yet a welcoming, comfortable look, create its aesthetics. The natural finish of its materials and its light, open design create a post-modern visual sensibility. The Aeron chair’s meaning shifts the traditional emphasis in organizations, on hierarchy, to users’ comfort. While most office chairs are designed based only on organizational hierarchy, with 6
senior managers getting larger chairs, Aeron chairs are offered in three sizes corresponding to the physical sizes of users, not to their organizational rank, creating the perception that the Aeron chair supports a flat, democratic organization. The TDC’s Relationship to Other Product Concepts The proposed TDC builds upon and extends two product concepts in the marketing literature—Levitt’s (1980) TPC and Urban and Hauser’s (1980) PDC (Table 1). ---- Insert Table 1 here ---As is evident in the title of Levitt’s paper “Marketing Success through Differentiation of Anything”, the basis of his Total Product Concept (TPC) was product differentiation to obtain competitive advantage in commoditized markets. The TPC includes the generic product, the expected product, the augmented product and the potential product. According to Levitt, the generic product is the rudimentary, substantive “thing” that motivates customers’ purchases. The expected product represents the minimal purchase conditions needed for customers to complete the purchase transaction. The augmented product refers to aspects that are beyond customers’ expectation and includes those aspects that can hold customers. Finally, the potential product includes everything that may be done to attract and hold customers, typically exceeding their expectations. Motivated to improve new product development processes, Urban and Hauser (1980, p. 155) define the Product Design Concept (PDC) “as the designation of key benefits the product is to provide, the psychological positioning of these benefits versus competitive products, and the fulfillment of the product promises by physical features.” Since the TDC decomposes the product concept into three design elements arising from the product’s characteristics, it is consistent with the TDC’s and the PDC’s multi-level product
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representations. Like Levitt’s TPC, which identifies differentiation advantages when there is parity on the core product, the TDC identifies differentiation advantages where there is parity not only on core product functionality, but also on overall expected product functionality. Like Urban and Hauser’s PDC, the TDC incorporates the product’s marketing mix and competition explicitly through the meaning design element and implicitly through their effects on how customers structure their perceptions of the three design elements. However, the TDC goes beyond the TPC and PDC in several ways. First, the TPC and the PDC focus exclusively on functionality while the TDC incorporates aesthetics and meaning. Second, Levitt’s TPC, although not the PDC, has a hierarchical structure, where the generic product is embedded within the expected product, which is embedded within the augmented product, and which, in turn, is embedded within the potential product. The TDC’s structure imposes no such hierarchy and assumes no primacy of any design element. Third, the TPC and the PDC have been developed from the product perspective, and are independent of the product’s customers, which preclude them from accommodating customer heterogeneity. In contrast, the TDC integrates product and customer perspectives, a theme we develop below. CONCEPTUAL FRAMEWORK Following the discussion above, we propose a conceptual framework that provides a structure for the TDC and then relates it to customer experience (Figure 3). Note that the framework incorporates heterogeneity across customers in the mapping of product characteristics on the three design elements, and in their effects on customer experience. ---- Insert Figure 3 here ---Product Characteristics and Design Elements
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Accounting for heterogeneity in customers’ tastes, needs, and preferences has long been fundamental tenet in marketing (e.g., Frank, Massey and Wind 1972), requiring firms to develop distinctive products, and associated marketing strategies to serve the diverse needs of customers. Consider, for example, that Toyota Motor Corporation sells numerous brands and models within brands (e.g. Lexus LS460, Lexus IS 250, Camry, and Scion xA), each of which has different product characteristics. These differently designed products with different marketing program induce heterogeneous customer responses, including in their search (Beatty and Smith 1987; Punj and Stewart), and information processing (Bettman, Johnson and Payne 1991; Richins and Bloch 1992) of products. These arguments suggest that we should expect heterogeneity in the customer-experience based mapping of product characteristics to the TDC’s three design elements. Design Elements and Customer Experience Customer experiences arise from their comparisons of the rewards and costs of the purchase (Oliver 1980). In particular, the product’s functionality is positively related to customer satisfaction (Churchill and Surprenant 1982), an overall effect we expect through our conceptualization. In addition, customers differ in their responses to products and those differences should extend to the design domain. Customers’ responses to products vary by their personal relations to products (Richins and Dawson 1992), visual versus verbal processing abilities (Houston, Childers, and Heckler 1987), cognitive innovativeness (Venkatraman and Price 1990) and need for uniqueness (Snyder and Fromkin 1980). With respect to aesthetics, Bloch, Brunel and Arnold (2003) report individual differences in the centrality of visual product aesthetics (CVPA) which they defined as the level of 9
significance that visual aesthetics holds for a particular customer in his/her relationships with product. Creusen and Schoormans (2005) found that the influence of a product’s appearance (e.g., shape, color and size) on customers’ assessment of product value varied significantly across customers. Finally, a product’s meaning, which is both imbued in it by the firm and is also coproduced by the product’s customers, varies different customer communities that define themselves in relation to a focal product (e.g. Kozinets 2001; Schouten and McAlexander 1995). Thus, a given product may have multiple meanings created through several interpretive communities, so that the effects of meaning on customers’ responses to the product are heterogeneous across customers (Fournier 1998). Integrating these ideas suggests that the effects of a product’s three design elements on customer experience will vary across customers. EMPIRICIAL ILLUSTRATION IN THE US AUTO MARKET Exploring the proposed TDC with data from managerial practice would be useful in establishing its validity. However, the richness of the TDC framework does not permit holistic testing with readily available data. Hence, we seek an environment where we can identify data that corresponds, roughly, to our conceptual framework and enables us to evaluate the face validity of that framework. Consistent with the TDC’s customer-based perspective, we seek customers’ ratings of a product and their experiences with it. We obtained access to one such source: customer experience data collected by J.D. Power and Associates (JDPA) in their Vehicle Quality Survey (VQS) in the US automotive market. The VQS includes customers’ ratings of vehicles’ product characteristics and their satisfaction with the vehicles, within 90 days of their purchase of a new vehicle. We use customer satisfaction in the VQS data to represent customer experience.
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The Data The VQS data we used for this analysis covered vehicle 47,885 owners in 2006, including 15 corporations (e.g., American Honda Motor Company, Volkswagen of America, Inc.), 35 makes (e.g., Acura, Honda, Subaru) and 263 make-models (e.g., Nissan Xterra, Buick Lacrosse). See Appendices A1 and A2 for an overview of the VQS methodology and the associated measures respectively. The VQS measures that ask customers to rate the vehicle’s tangible product characteristics (e.g., fuel efficiency), intangible product characteristics (e.g., appearance) and communicative aspects (e.g., ruggedness, prestige), correspond roughly to functionality, aesthetics and meaning respectively and, are therefore, consistent with our conceptualization. Given the very large number of product characteristics (over 60) in the VQS survey, the JDPA methodology (details in Appendix A1), aggregates ratings using product sub-categories (e.g., exterior and interior corresponding to aesthetics) to simplify interpretation. We adopt these subcategories in our analyses. Thus, we mapped the following sub-categories of product characteristics onto the functionality design element (Appendix A2): 1. Storage and space: storage and space usage, ease of getting in and out of the vehicle, leg and head room, storage spaces in the vehicle and in the trunk area. 2. Driving dynamics: driving dynamics including ride smoothness, responsiveness of steering and braking system, handling and stability. 3. Fuel efficiency: fuel economy and the driving range between stops. 4. Engineering/transmission: engineering and transmission including the performance during rapid acceleration from stop, passing power at high speed and smoothness of gear shift operations. 5. Safety: visibility and driving safety including visibility from driver’s seat, effectiveness of headlights, ease of controls, displays while driving. 6. Seating: Seat belt comfort and adjustability, flexibility of seat configurations, and quality of seating materials.
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7. Heating, ventilation, air conditioning: heating and air conditioning including ability to maintain desired temperature, controls and ability to defrost/defog the interior glass. 8. Audio system: overall quality of audio system including sound clarity, ease of controls and quality of sound including bass and impression of surround sound. We mapped the following two sub-categories of product characteristics onto the aesthetics design element: 1. Exterior: the vehicle’s exterior’s attractiveness including the styling of the front, side and rear profiles, appearance of paint and wheels, and sound of doors when closing. 2. Interior: the vehicle’s interior’s attractiveness including the attractiveness of the instrument panel and dashboard, look and feel of steering wheel, ability to rest arms, and smell of vehicle interior. For the meaning design element, we used data on seven characteristics of the vehicle’s image (see Appendix A2). To reduce dimensionality, we used factor analysis and identified two factors using the eigenvalue criterion (Eigen value > 1), which we identified as prestige and ruggedness. VQS measures Customer Satisfaction with the vehicle as the owners’ overall rating of the vehicle on a 10-point scale (mean = 8.24 standard deviation = 1.63). Results Three-Factor Structure of TDC. We examine the appropriateness of the proposed TDC’s 3-element conceptualization by estimating alternative confirmatory factor models.2 First, we estimated a one-factor model where all product characteristics load onto a single design element, which in turn affects customer satisfaction. We then estimated three two-factor models: (1) where the functionality- and aesthetics- related product characteristics load onto one factor and the meaning-related product characteristics map into a second, and (2) where the aestheticsrelated and meaning-related product characteristics load onto one factor and the functionality-
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For identification purposes, one product characteristic for each design element (storage for functionality, exterior for aesthetics and prestige for meaning) is set equal to 1.
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related product characteristics map into a second factor, and (3) where the functionality-related and meaning-related product characteristics map onto one factor, and aesthetics-related product characteristics map onto the second factor. Finally, we estimated a 3-factor model where the functionality-related product characteristics map onto the first factor, the aesthetics-related characteristics map onto the second factor, and the meaning-related characteristics map onto the third factor.3 The three-factor model outperformed the other models on the Bayesian Information Criterion (BIC). All of the factor loadings for the product characteristics on to the three design elements were positive and statistically significant (p < .01). The factor correlations between the three design elements are as follows: (ρ (functionality, aesthetics) = .556; ρ (aesthetics, meaning) = .434; and ρ (functionality, meaning) = .289) supporting the TDC’s holistic conceptualization with the three design elements of functionality, aesthetics, and meaning. The TDC’s Structure and its Effects on Customer Satisfaction. We then applied our conceptual framework to the automobile data by developing and estimating a structural model that relates product characteristics to the three product design elements (latent factors), that, in turn, are related to customer satisfaction. We included two control variables (the number of problems encountered and the vehicle’s price) and four customer demographics (age, gender, household income and education) in the model relating the TDC’s design elements to customer satisfaction. We permit heterogeneity by using a finite mixture structural equation modeling approach (Jedidi, Jagpal, and DeSarbo 1997) that directly identifies latent segments on the basis of inferred relationships between customer satisfaction and the underlying three latent factors. 3
Due to multicollinearity of ratings of product characteristics, all of which are provided by one respondent, we were unable to estimate a model where all the product characteristics directly influenced customer satisfaction.
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We control for dependencies across observations of a given vehicle using a random effects formulation at the make-model level. See Appendix A3 for an outline of the estimation approach. We also include nine psychographic factors to profile the latent segments: four factors pertaining to customers’ preferences in buying a vehicle (distinctiveness, economy and safety, conservativeness, and American centricity) and five factors pertaining to their choice of vehicle (comfort, reliability, large vehicle, environmental consciousness, and value consciousness. We estimated the model in Mplus 4.2 software. The 3-segment model (entropy = .934) outperformed the models with 1, 2, and 4 segments based on the Bayesian Information Criterion. Segment 1 has 34,329 respondents (72% of the population), Segment 2 has 12,121 respondents (25%), and Segment 3 has 1,434 respondents (3%). We provide the results of the 3-segment, structural equation model in Table 2. Overall, the results support heterogeneity in the mapping of the product characteristics on to the three design elements (Factor Model: Stage 1) and in the effects of the three design elements on customer satisfaction (Path Model: Stage 2), which we next discuss in detail. ---- Insert Table 2 here ---The Mapping of Product Characteristics in Defining the Design Elements (Stage 1). Based on Wald tests of the parameter estimates of the relative loadings of product characteristics on the design elements, for customers in Segment 1 (Column 2 of Table 2), the vehicle’s storage and space, driving dynamics, engineering transmission, safety, seating, air-conditioning and audio system mapped on more strongly to the functionality design element than its fuel efficiency (all at p < .01). The vehicle’s interior features loaded more strongly onto the aesthetics design element than did its exterior features (p
