Product, Customer, and Competitive Advantage

1. 6 Product, Customer, and Competitive Advantage

2. Table 6.1Otis Elevator’s Repair Service

3. Table 6.1Otis Elevator’s Repair Service CUSTOMER Building owners and people who use elevators

4. Table 6.1Otis Elevator’s Repair Service PRODUCT Elevator maintained in good operating condition Timely elevator repair History of service for each elevator

5. Table 6.1Otis Elevator’s Repair Service • BUSINESS PROCESS • Major Steps: • Receive call about a problem • Dispatch mechanics • Perform repair steps • Track progress until the elevator is fixed • Update records • Rationale: • Direct all calls for service to a centralized dispatching office. Use handheld terminals to maintain contact. Maintain records for anticipating and solving future problems.

6. Table 6.1Otis Elevator’s Repair Service PARTICIPANTS Trained operators who answer calls for service Local mechanics INFORMATION Notification of problem Current status of all calls for service Maintenance history of each elevator Qualification and availability of mechanics TECHNOLOGY Computer at headquarters Handheld terminals Commercial wireless network

7. Figure 6.1Viewing products as a combination of information, physical, and service components

8. Figure 6.2Information systems built into automobiles

9. Figure 6.3Directions for improvement in a traditional résumé processing system

10. Figure 6.4Opportunities to increase customer benefits across the customer involvement cycle

11. Table 6.2Common Roles of Information Systems in Improving the Product of a Work System • COST • Typical measures: • Purchase price • Cost of ownership • Amount of time and attention required • Common information system roles: • Reduce internal cost of business process or increase productivity, making it easier to charge or allocate lower prices to customers • Improve product performance in ways that reduce the customer’s internal costs • QUALITY • Typical measures: • Defect rate per time interval or per quantity of output • Rate of warranty returns • Perceived quality according to customer • Common roles: • Insure the product is produced more consistently • Make it easier to customize the product for the customer • Build information systems into the product to make it more usable or maintainable

12. Table 6.2Common Roles of Information Systems in Improving the Product of a Work System • RESPONSIVENESS • Typical measures: • Time to respond to customer request • Helpfulness of response • Common roles: • Improve the speed of response • Systematize communication with customers • Increase flexibility to make it easier to respond to what the customer wants • RELIALBILITY • Typical measures: • Average time to failure • Failure rate per time interval • Compliance to customer committment dates • Common roles: • Make the business process more consistent • Make the business process more secure • Build features into the product that make it more reliable on its own right • CONFORMANCE TO STANDARDS AND REGULATIONS • Typical measures: • Existence of nonconformance • Rate of complaints about nonconformance • Common roles: • Clarify the standards and regulations so that it is easier to determine whether they are being adhered to • Systematize work to make the output more consistent

13. Table 6.3Competitive Approaches in Different Industries • AUTOMOBILE A • Solid car at reasonable price • Good for families • Good service • Long warranty • AUTOMOBILE B • Flashy foreign car • Excellent power and handling • Image associated with youth and wealth • Reasonably good repair record • Reputation for having the newest features • HOSPITAL A • Best service and best doctors • Excellent food • High ratio of nurses to patients • Pleasant rooms • Long-term success in difficult heart operations • HOSPITAL B • Lowest cost for the patient • High volume general care • Few complex cases • Cooperative with local ambulance companies

14. Figure 6.5Extended value chain for a manufactured product

15. Figure 6.6How Otis Elevator improved and expanded its product

16. Figure 6.7Internal costs versus costs borne by the customer

17. Figure 6.8Three ways to make reservations

18. Figure 6.9Advertising on the Web

19. Table 6.4Supporting the Sales Process for an Industrial Product • DESIGN THE SALES PROGRAM AND SUPPORTING MATERIALS • Provide information and tools for analyzing strengths and weaknesses of past and current sales processes • Customize sales materials for specific groups of customers • IDENTIFY, PRIORITIZE, AND CONTACT PROSPECTS (POTENTIAL CUSTOMERS) • Create lists of prospects from commercially availabile mailing lists or from internal customer lists • Obtain information about individual prospects prior to sales calls • MEET WITH PROSPECTS TO QUALIFY THEIR INTEREST, EXPLAIN THE PRODUCT, AND COUNTER OBJECTIONS • Use communication technology to set up meetings • Use computers to demonstrate product options or stimulate product operation • Use databases to provide information for justifying the purchase or countering objections

20. Table 6.4Supporting the Sales Process for an Industrial Product • NEGOTIATE PRICING AND DELIVERY OPTIONS • Perform pricing calculations while exploring the customer’s options • Link to corporate databases to find current product availability and delivery options • TAKE THE ORDER • Perform the recordkeeping related to taking the order and conveying it to the delivery department • FOLLOW UP TO MAINTAIN THE CUSTOMER RELATIONSHIP • Maintain customer database • Perform cutomer surveys • Store and analyze warranty and repair data

21. Figure 6.10Direct customer participation in customizing an information product

22. Figure 6.11LevilLink services in the retailing cycle

23. Figure 6.12Handheld terminal used to speed the process of returning rental cars

24. Figure 6.13Ford’s Service Bay Diagnostic System

25. Figure 6.14How elements of a business combine to determine competitive outcomes