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  <front>
    <journal-meta />
    <article-meta>
      <title-group>
        <article-title>Value Chain vs Life Cycle Approach for Product Extensions</article-title>
      </title-group>
      <contrib-group>
        <contrib contrib-type="author">
          <string-name>Gaetano Cutrona</string-name>
          <email>gaetano.cutrona@unimore.it</email>
          <xref ref-type="aff" rid="aff0">0</xref>
        </contrib>
        <contrib contrib-type="author">
          <string-name>Andrea Margini</string-name>
          <email>andrea.margini@unimore.it</email>
          <xref ref-type="aff" rid="aff0">0</xref>
        </contrib>
        <contrib contrib-type="author">
          <string-name>Cesare Fantuzzi</string-name>
          <email>cesare.fantuzzi@unimore.it</email>
          <xref ref-type="aff" rid="aff0">0</xref>
        </contrib>
        <aff id="aff0">
          <label>0</label>
          <institution>University of Modena</institution>
          ,
          <addr-line>and Reggio Emilia, DISMI</addr-line>
        </aff>
      </contrib-group>
      <abstract>
        <p>-The methodology presented in this paper aims at supporting the whole needs and the Stakeholder Requirements definition in product development or product extension projects. To achieve that goal, the methodology forces to take into account the relevant Stakeholders and the Product Life-Cycle phases they impact on for that product. The paper shows a practical example taken from a real product extension project where the methodology was used. Since the main inputs for product extensions usually come from the marketing department, it resulted to be very effective in broadening the perspective. Thus it ended up in a holistic list of requirements, covering the needs of all the Stakeholders. Requirements frame the development problem, hence, as more they are complete as less failure risks there are. The methodology requires further experiments in other industries to prove its generality. Nonetheless it is expected to provide great support in product extension activities by lowering failure risk and by helping in satisfying all the Stakeholder needs.</p>
      </abstract>
    </article-meta>
  </front>
  <body>
    <sec id="sec-1">
      <title>I. INTRODUCTION</title>
      <p>An artifact that is produced by a company and fulfills needs
of some stakeholders is called Product. It consists of a series
of interconnected features or functionalities and it is identified
within a context and applicable in specific value chain. A
product, like any other evolving thing, is characterized by a life
cycle that starts with the conceptualization and development
and finishes with the decline phase passing through growth
and maturity (Figure 1). As shown in the figure the maturity
phase is usually characterized by a maximum in sold units
followed by a declining trend. Thus companies are very
interested in keeping the growing trend as long as possible.
For this reason in the maturity phase it is possible to see a
product renewal that can consist of extensions of the product
functionalities/features.</p>
      <p>The product extension is usually needed because, even if the
general product concept could remain valid from a marketing
perspective, the change comes from the market in terms of
new requirements or needs from customers (e.g. improved
performances, side functionalities, user or technology maturity,
etc.). The market requirements are the starting base to make
considerations on the product evolution. However a structured
engineering methodology is useful to secure that all the
requirements from all the identified sources are captured and
addressed.</p>
      <p>
        The presented methodology aims at enabling the analysis
and development of a list of criteria and drivers to understand
the future evolution of the product. The methodology is
requirements driven and puts in correlation the product life
cycle phases and the company value chain. The output of
the methodology application is a list of requirements mapped
on the company value chain and product life cycle. From
the analysis of the map it is possible to derive the product
evolution and to address the solution to the right direction. The
extended product shares with the parent one the same reference
architecture and functionalities. Thus this methodology might
be integrated with others for the Architecture Management of
the product [
        <xref ref-type="bibr" rid="ref2">2</xref>
        ]. In the following chapters the methodology is
described and applied in a real industrial case. At the end of
this paper conclusions and way forward are also described in
detail.
      </p>
    </sec>
    <sec id="sec-2">
      <title>II. RELATED WORK</title>
      <p>
        The associative network model, explained by Ref. [
        <xref ref-type="bibr" rid="ref3">3</xref>
        ], can
help firms in deciding whether to expand the brand or the
products. According to the model, every product is represented into
the mind of the potential customers by some nodes. Every node
corresponds to a specific aspect or value of the product. By
interacting with the product, consumers associate the product
to the nodes. Stronger is the associations, more of that aspect
is embodied into a product. Thus the study of the associations
supports marketing experts in managing and planning products
and products and brands extensions. However, besides the
pointing of a general direction for products extensions, Ref.
[
        <xref ref-type="bibr" rid="ref3">3</xref>
        ] did not provide suggestions on how to accomplish it. The
product extension theme was studied by Ref. [
        <xref ref-type="bibr" rid="ref4">4</xref>
        ] as well. They
focused on how firms should expand on the market through
the customization of established and affirmed core products.
Nonetheless, the term customization referred to product line
extensions from core product [
        <xref ref-type="bibr" rid="ref4">4</xref>
        ]. Accordingly, core products
are products with a strong presence in the market, in the
mature phase of their life cycle. It is given that mature products
are exploited to generate incomes until the decline phase either
by extending its functionalities or by siding it with a product
sharing the same brand and/or architecture. However, their
work did not provide suggestions or guidance on how to extend
a product.
      </p>
      <p>
        Many authors agreed on the risks related to such practice,
though the product extensions resulted to be less risky than
the brand one. Nonetheless, it is expected that those risks
are similar, though with a different magnitude, in both cases.
Diluting the brand/product image, undesirable associations
and cannibalization of the existing portfolio resulted to be
the top of the list ([
        <xref ref-type="bibr" rid="ref5">5</xref>
        ], [
        <xref ref-type="bibr" rid="ref6">6</xref>
        ], [
        <xref ref-type="bibr" rid="ref7">7</xref>
        ]). Ref. [
        <xref ref-type="bibr" rid="ref6">6</xref>
        ] deeply studied
the cannibalization phenomenon. They presented a method to
calculate the amount of cannibalization.
      </p>
      <p>
        Ref. [
        <xref ref-type="bibr" rid="ref8">8</xref>
        ] provided a list of suggestions to deal with the main
risks a firm extending the portfolio has to face. However, the
cited authors focused on the brand and marketing side of the
matter. Thus a gap was found in terms of how to extend a
product in its maturity life-cycle phase. On the other hand,
strategic importance of the new product and its consumer fit
(i.e. the contribution to the consumer needs satisfaction) were
considered by both Ref. [
        <xref ref-type="bibr" rid="ref8">8</xref>
        ] and this paper.
      </p>
      <p>
        Finally Ref. [
        <xref ref-type="bibr" rid="ref5">5</xref>
        ] argued that there are market segments where
product extensions are competitive reality. Thus companies
have to adapt their portfolio to these conditions. Nonetheless,
this also helps firms in managing and introducing innovation
[
        <xref ref-type="bibr" rid="ref5">5</xref>
        ]. That means that in such markets companies are highly
invited in extending their products by new product use addition
[
        <xref ref-type="bibr" rid="ref3">3</xref>
        ]. It is also expected that such manoeuvre helps in surviving
into that dynamic environments and in posing blocks and
obstacles for competitors [
        <xref ref-type="bibr" rid="ref5">5</xref>
        ]. Moreover it is expected that
product extensions contribute to the enhancement of the brand
visibility because the extended and parent products share
the same brand name [
        <xref ref-type="bibr" rid="ref5">5</xref>
        ], [
        <xref ref-type="bibr" rid="ref3">3</xref>
        ], [
        <xref ref-type="bibr" rid="ref7">7</xref>
        ]. All those are known
reasons justifying and pushing companies towards the product
extension practice.
      </p>
    </sec>
    <sec id="sec-3">
      <title>III. VALUE CHAIN VS PRODUCT LIFE CYCLE</title>
      <p>METHODOLOGY</p>
      <p>The introduction of a new product or the extension of
an existing one is usually driven, from a generic point of
view, by the marketing department. They provide the list of
needs that usually in later stages of the product development
activity are translated into requirements. The main source of
those inputs comes from customer, market and competitor
intelligence activities. In order to have the full list of needs,
other points of view should be taken into consideration (e.g.
Customers service, legal department, supply chain, etc.).</p>
      <p>The proposed methodology helps in providing structure to
the needs mapping into the Product lifecycle phases while
considering different points of view in the company value
chain. It is composed by the following macro steps:
High Level Needs identification
Extendable Platform Product choice and its relevant life
cycle stages identification
Stakeholders matching with LC phases
Needs further detailing in requirements</p>
      <p>1) High Level Needs Identification: The first stage of
the methodology consists on the identification of the needs
(internal or external) that are the reason to start the product
extension. In general the needs considered in this stage are
results of marketing department activities aiming at scouting
and analyzing new business opportunities or strengthening
the existing ones (e.g provide more appealing cars by
introducing infotainment technologies or improving smart-phones
performances by introducing new generation hardware) as per
Figure 3. The result is created by using marketing tools like
interviews, scouting of competitors or similar businesses (e.g
food and pharmaceutical for packaging business), business
intelligence simulations for trends, etc.
2) Extendable Platform Product Choice and its relevant life
cycle stages identification : In this stage the methodology is
divided in two sub-activities:</p>
    </sec>
    <sec id="sec-4">
      <title>Extendable Platform Product Choice</title>
      <p>Relevant life cycle stages identification</p>
      <p>The first activity is simple in theory but critical from the
company point of view. In fact in this activity the project
selects the platform of the product to extend. The choice is
really dependent on how the company organized its products
and related portfolio as well as its development operations. The
output of this activity are the platform of the product (Figure 3)
to be extended and the related list of stakeholders (Figure 4).
It is important to highlight that by selecting the platform and
generating the list of stakeholder we are implicitly considering
the company value chain.</p>
      <p>The second activity is the identification of the relevant life
cycle stages of the product. We are speaking about “relevant”
because maybe not all the product life cycle stages could be
involved in the product extension. In Figure 5 the common
product life cycle stages are indicated.
3) Stakeholders matching with LC phases: In this step
we put in relation the product life cycle stages with the
stakeholders in order to understand and match where in the
life cycle of the product there is a stakeholder’s need to be
documented. The result is the SHLC matrix in Figure 6.
As shown in the example not all the stakeholders could be
involved into the extension. Moreover it is not given that
all stakeholders are interested in every life cycle phase. The
formalization of the needs starts at this point of the process.
4) Needs further detailing in requirements: Last part of
the methodology supports the need collection by extracting
them from the stakeholders vs lifecycle matrix. The outcome
results in a list of needs per stakeholder and lifecycle phases.
A sample need list can be seen in Figure 7.</p>
      <p>Once the list is complete the project can start analyzing
each need and develop the proper requirements linked to it,
according to the analysis phase in the Systems Engineering
process.</p>
    </sec>
    <sec id="sec-5">
      <title>IV. CONCLUSION</title>
      <p>The presented methodology puts in correlation the product
life cycle phases and the company value chain. The output is a
list of needs mapped on the company value chain and product
life cycle. From the analysis of the map it is possible to address
correctly next project activities like the requirements analysis.
This simple best practice can be helpful for both new products
and product extension. It guides the project team to avoid
loosing information during the needs collection and before
developing the project requirements. The figures shown in this
paper as example are taken from a real industrial context where
the methodology was applied in order to develop requirements
for an extended product.</p>
      <p>Another application not yet fully explored consists of
product extensions in the shape of new services to be integrated
in existing products. That is because it gives a structured way
to collect and manage information that can be applicable to
any type of requirements definition problem. In general the
methodology can contribute to reduce the risk of inconsistent
or non relevant information in the initial phases of any product
development project.</p>
      <p>Fig. 7.</p>
      <p>Example of needs captured from the customer correlated with the LC stage of the product</p>
    </sec>
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