=Paper=
{{Paper
|id=Vol-1728/paper3
|storemode=property
|title=Value Chain vs Life Cycle Approach for Product Extensions
|pdfUrl=https://ceur-ws.org/Vol-1728/paper3.pdf
|volume=Vol-1728
|authors=Gaetano Cutrona,Andrea Margini,Cesare Fantuzzi
|dblpUrl=https://dblp.org/rec/conf/ciise/CutronaMF16
}}
==Value Chain vs Life Cycle Approach for Product Extensions==
https://ceur-ws.org/Vol-1728/paper3.pdf
Value Chain vs Life Cycle Approach for Product
Extensions
Gaetano Cutrona Andrea Margini Cesare Fantuzzi
University of Modena University of Modena University of Modena
and Reggio Emilia, DISMI and Reggio Emilia, DISMI and Reggio Emilia, DISMI
Email: gaetano.cutrona@unimore.it Email: andrea.margini@unimore.it Email: cesare.fantuzzi@unimore.it
Copyright © held by the authors.
October 28, 2016
Abstract—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 Fig. 1. Example of Product Life Cycle from profit and sold units perspectives
failure risk and by helping in satisfying all the Stakeholder needs. [1]
I. I NTRODUCTION The presented methodology aims at enabling the analysis
and development of a list of criteria and drivers to understand
An artifact that is produced by a company and fulfills needs the future evolution of the product. The methodology is
of some stakeholders is called Product. It consists of a series requirements driven and puts in correlation the product life
of interconnected features or functionalities and it is identified cycle phases and the company value chain. The output of
within a context and applicable in specific value chain. A the methodology application is a list of requirements mapped
product, like any other evolving thing, is characterized by a life on the company value chain and product life cycle. From
cycle that starts with the conceptualization and development the analysis of the map it is possible to derive the product
and finishes with the decline phase passing through growth evolution and to address the solution to the right direction. The
and maturity (Figure 1). As shown in the figure the maturity extended product shares with the parent one the same reference
phase is usually characterized by a maximum in sold units architecture and functionalities. Thus this methodology might
followed by a declining trend. Thus companies are very be integrated with others for the Architecture Management of
interested in keeping the growing trend as long as possible. the product [2]. In the following chapters the methodology is
For this reason in the maturity phase it is possible to see a described and applied in a real industrial case. At the end of
product renewal that can consist of extensions of the product this paper conclusions and way forward are also described in
functionalities/features. detail.
The product extension is usually needed because, even if the
general product concept could remain valid from a marketing II. R ELATED W ORK
perspective, the change comes from the market in terms of The associative network model, explained by Ref. [3], can
new requirements or needs from customers (e.g. improved help firms in deciding whether to expand the brand or the prod-
performances, side functionalities, user or technology maturity, ucts. According to the model, every product is represented into
etc.). The market requirements are the starting base to make the mind of the potential customers by some nodes. Every node
considerations on the product evolution. However a structured corresponds to a specific aspect or value of the product. By
engineering methodology is useful to secure that all the interacting with the product, consumers associate the product
requirements from all the identified sources are captured and to the nodes. Stronger is the associations, more of that aspect
addressed. is embodied into a product. Thus the study of the associations
supports marketing experts in managing and planning products intelligence activities. In order to have the full list of needs,
and products and brands extensions. However, besides the other points of view should be taken into consideration (e.g.
pointing of a general direction for products extensions, Ref. Customers service, legal department, supply chain, etc.).
[3] did not provide suggestions on how to accomplish it. The The proposed methodology helps in providing structure to
product extension theme was studied by Ref. [4] as well. They the needs mapping into the Product lifecycle phases while
focused on how firms should expand on the market through considering different points of view in the company value
the customization of established and affirmed core products. chain. It is composed by the following macro steps:
Nonetheless, the term customization referred to product line • High Level Needs identification
extensions from core product [4]. Accordingly, core products • Extendable Platform Product choice and its relevant life
are products with a strong presence in the market, in the cycle stages identification
mature phase of their life cycle. It is given that mature products • Stakeholders matching with LC phases
are exploited to generate incomes until the decline phase either • Needs further detailing in requirements
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.
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 ([5], [6], [7]). Ref. [6] deeply studied Fig. 2. Workflow description
the cannibalization phenomenon. They presented a method to
calculate the amount of cannibalization. A. Workflow Description
Ref. [8] provided a list of suggestions to deal with the main
risks a firm extending the portfolio has to face. However, the 1) High Level Needs Identification: The first stage of
cited authors focused on the brand and marketing side of the the methodology consists on the identification of the needs
matter. Thus a gap was found in terms of how to extend a (internal or external) that are the reason to start the product
product in its maturity life-cycle phase. On the other hand, extension. In general the needs considered in this stage are
strategic importance of the new product and its consumer fit results of marketing department activities aiming at scouting
(i.e. the contribution to the consumer needs satisfaction) were and analyzing new business opportunities or strengthening
considered by both Ref. [8] and this paper. the existing ones (e.g provide more appealing cars by intro-
Finally Ref. [5] argued that there are market segments where ducing infotainment technologies or improving smart-phones
product extensions are competitive reality. Thus companies performances by introducing new generation hardware) as per
have to adapt their portfolio to these conditions. Nonetheless, Figure 3. The result is created by using marketing tools like
this also helps firms in managing and introducing innovation interviews, scouting of competitors or similar businesses (e.g
[5]. That means that in such markets companies are highly food and pharmaceutical for packaging business), business
invited in extending their products by new product use addition intelligence simulations for trends, etc.
[3]. It is also expected that such manoeuvre helps in surviving
into that dynamic environments and in posing blocks and
obstacles for competitors [5]. 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 [5], [3], [7]. All those are known
reasons justifying and pushing companies towards the product
extension practice.
III. VALUE C HAIN VS P RODUCT L IFE C YCLE
M ETHODOLOGY
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 Fig. 3. Example of identified High Level Need (green brackets) and Product
activity are translated into requirements. The main source of to be extended (yellow brackets)
those inputs comes from customer, market and competitor
2) Extendable Platform Product Choice and its relevant life 3) Stakeholders matching with LC phases: In this step
cycle stages identification : In this stage the methodology is we put in relation the product life cycle stages with the
divided in two sub-activities: stakeholders in order to understand and match where in the
• Extendable Platform Product Choice life cycle of the product there is a stakeholder’s need to be
• Relevant life cycle stages identification documented. The result is the SHLC matrix in Figure 6.
The first activity is simple in theory but critical from the As shown in the example not all the stakeholders could be
company point of view. In fact in this activity the project involved into the extension. Moreover it is not given that
selects the platform of the product to extend. The choice is all stakeholders are interested in every life cycle phase. The
really dependent on how the company organized its products formalization of the needs starts at this point of the process.
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.
Fig. 4. Example of product platform stakeholders
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.
Fig. 6. Example of SHLC matrix
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.
Fig. 5. Example of common product life cycle stages 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.
IV. C ONCLUSION
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.
Another application not yet fully explored consists of prod-
uct 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.
R EFERENCES
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Fig. 7. Example of needs captured from the customer correlated with the LC stage of the product