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Can't Marketing And Engineering Just Get Along?September 14, 2011Category:Marketing
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- How consumers will form preferences toward each product in the line.
- Potential for cannibalization among the products in the line.
- How competitors and retailers will respond to a line's launch.
- The feasibility and robustness of each product in the line.
- The cost synergy across the line.
- Results of a study in which 740 power tool users were given 18 choice sets, each with two products and a no-choice option.
- Engineering parameters, such as a requirement that motor temperature never exceeds 125°C under any usage situation.
- Knowledge that the dominant retailer is typically highly selective in accepting a manufacturers' products into its assortment.
When a manufacturer creates a new product line—say, a range of power tools to be sold at retailers like Home Depot—marketers and engineers approach its design from very different vantage points.
Marketers want to know:
Engineers, meanwhile, care about:
Because of this, a marketer's definition of "optimal product line" is unlikely to resemble that of an engineer's. "Therefore," notes USC Marshall Assistant Professor Lan Luo, "in the design of an optimal or near-optimal product line, the marketing and engineering requirements often cannot be pursued separately or even sequentially."
To demonstrate the benefits of cooperative development, Luo introduced a procedure of product line optimization where the marketing and engineering criteria are considered concurrently in the search for a profit-maximizing product line. Luo implemented this procedure in a case study with real-world data obtained from a large US power tool manufacturer. She illustrates that the proposed method leads to a more profitable product line than alternative approaches that consider requirements from these two domains separately.
Thrown into the mix were:
In her study, the manufacturer is expected to achieve a long-term profit of $52.8 million when engineering and marketing worked together on development—a substantial improvement on the expected results for marketing-first ($46.5 million) and engineering-first ($48.3 million) approaches.
The Bottom Line: "When designing a line of consumer durable products," says Luo, "firms need to tackle the combinatorial challenge of accounting for not only the interrelationships between consumer preferences and engineering feasibility/restrictions in the design of each individual product, but also the revenue and cost interactions across the products in the product line. This research provides an effective solution to this challenging problem."
Lan Luo is an Assistant Professor in Marketing at the Marshall School of Business. Learn more about Professor Luo and her research on new product designs and marketing on her faculty webpage and on her Marshall Faculty Spotlight. The research reported here is based on Professor Luo's article titled "Product Line Design for Consumer Durables: An Integrated Marketing and Engineering Approach", Journal of Marketing Research, Vol. 48 (1), 128-139.