How Designed Communication Supports New Product & Service Development

doi:10.4236/ib.2013.53B003

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iBusiness, 2013, 5, 10-17

http: //dx.doi.org/10.4236/ib.2013.53B003 Published Online September 2013 (http://www.scirp.org/journal/ib)

How Designed Communication Supports New Product &

Service Development

Olaf Gaus1, Bernd Neutschel2, Matthias G. Raith1, Sándor Vajna2

1Faculty of Economics and Management, Otto-von-Guericke-University, Magdeburg, Germany; 2Institute for Machine Design In-

formation Technologies in Mechanical Engineering, Otto-von-Guericke-University, Magdeburg, Germany.

Email: [email protected]

Received May, 2013

ABSTRACT

Design is communication. In a traditional sense of design theory this idea is based on a product related perspective,

stating that good design must speak a language that is understood by the recipient. The aesthetics of the design catches

his interest and opens his mind as a prerequisite for his willingness to enter into a dialogue. From symbols and images

an argument is derived, rationally understandable, convincing and finally condensed in a message. This process is trig-

gered by the product design. It communicates a value proposition for the recipient combined with a demand to buy the

product it refers to. At the moment of the purchase decision a transformation takes place and the value proposition turns

into a benefit, the design into the product utility and the recipient into a customer. It will be argued that this process

retains its validity even if communication itself is considered as a product.

Keywords: New Product & Service Development; Designed Communication; Value Added Support

1. Introduction

Over the last decade the subject areas of product devel-

opment and entrepreneurship research have converged

constantly. Both disciplines have benefited greatly from

the production of knowledge during the research-inten-

sive 1980s. Based on these methodological foundations

we observed a diversification of topics within the disci-

plines in the 1990s coupled with an applied research ap-

proach for industrial needs. Considering the methodo-

logical foundations precisely, it can be said that in the

engineering science the product and process development,

based on the introduced standards of New Product De-

velopment [1] and Design for Manufacture and Assem-

bly (DFMA) [2], still plays the crucial role. From a

cross-discipline point of view a methodological parallel

with the entrepreneurship research is evident. The dis-

tinctive characteristics believed to be associated with

entrepreneurship like “growth” and “innovation” [3, 4]

and came to their foundations also in the 80s. A temporal

exception is the “entrepreneurial process” that has been

put on the research agenda after the turn of the millen-

nium [5]. However, in both fields of science a shift in

research interest is recognizable since the 1990s, charac-

terized by a preferred orientation towards application-

oriented problems, coupled with a strong focus on prod-

uct development. As much as this decision is under-

standable in favour of a product-oriented industry with a

high demand for problem solving, so little has been in-

vested in New Product Development for the service

economy as a whole [6, 7] that increasingly grew in con-

junction with the global knowledge society since the end

of the last century and became more and more important

− socially, culturally and in terms of economic growth.

As a conclusion from this trans disciplinary analysis the

idea developed of using the theoretical foundations of the

product and process optimization in combination with

entrepreneurial tools and methods to design service-ori-

ented university start-ups.

2. A Strategy of Pre-Entrepreneurial Value

Creation

To promote the promising synergies arising from the

collaboration of young and elderly entrepreneurs, the

University of Magdeburg in Germany initiated the pro-

ject titled “Senior- & Junior preneurship“(SeJu), which is

funded by the Ministry of Science and Economics of the

State of Saxony-Anhalt. By accessing an educational

platform for inter-generational interaction, senior pre-

neurs have the opportunity not only to engage in lively

interactions concerning their entrepreneurial ideas, but

also to benefit from personal standpoints, current aca-

demic knowledge in technology and business, and, last

but not least, from the enthusiasm of future entrepre-

neurs.

How Designed Communication Supports New Product & Service Development 11

SeJu is a university-based project that facilitates tech-

nically oriented start-ups of founders with a professional,

yet non-entrepreneurial background. Specifically, SeJu

offers the possibility to develop product ideas technically

while, at the same time, constructing a business plan for

a firm to successfully implement a mature product on the

market. The project extends the intensive collaboration

since the year 2005 at the University of Magdeburg in

Germany between the chair of Information Technologies

in Mechanical Engineering (Sándor Vajna) of the Faculty

of Mechanical Engineering and the chair of Entrepre-

neurship (Matthias Raith) of the Faculty of Economics.

Taking advantage of the synergies already mentioned,

participants obtain the opportunity of learning how to

create high-growth start-ups.

To get the process started a senior preneur actively has

to be determined by acquisition who offers a technical

based product idea to SeJu that is going to be proved as

well as assessed by the project team concerning its im-

plementation options. Once the test results confirms a

high level of technical and economic quality of the idea it

comes to a procedural process that helps to consider

whether one may expect an entrepreneurial opportunity

in case of a product launch.

To get an idea of how the development process pro-

ceeds at SeJu, it can be briefly described as follows

(Figure 1):

- A seniorpreneur is applying with a technical prod-

uct idea.

- The idea is evaluated with the knowledge of the

participating science departments and checked for viabil-

ity.

- After having accepted the project an interdiscipli-

nary team of students is put together and joined with the

seniorpreneur.

Figure 1. SeJu development process.

- Technical product development and business plan

design are running in parallel.

- Experts monitor the progress of the project.

- Product concept and business plan are developed.

- The results are evaluated by members of the scien-

tific staff.

- By working together on a development task that is

meant to be technically and economically realized, par-

ticipants grow as an entrepreneurial team despite the dif-

ferences in knowledge and age.

In addition to business plans and product prototype a

multi-disciplinary entrepreneurial team has been built,

ready to start a well planed and promising product-to-

market strategy.

The product creation process is based on the principles

of Integrated Product Development (IPD) [8]. IPD re-

quires a consistent vision of the entire product life cycle,

meaning that the interaction between product and process

is paramount. As a consequence, the product developer is

faced with the task to synchronize the creation of a

product with the production process all in one. The de-

rived goal is to create a consistent product, while ensur-

ing a demand-oriented production, use and disposal.

These principals are based on different views on the

product to be developed. This allows the creation of all

the essential features of the product and its required

forms. On the functional sector all key items are perma-

nently controlled with a view to criteria like form, func-

tion, performance, manageability, reliability and security,

value for money, manufacturing ability, maintainability

and sustainability.

This necessarily requires engineering design methods

and tools as Blanchard [9] describes it with special ref-

erence to its integration in process simulation. The em-

bedded process was generally described by Clark, Fuji-

moto [10] by regarding four major stages of development:

concept development, product planning, product engi-

neering, and process engineering as well as the critical

linkages within and across them. The special feature of

SeJu is that the process just described is duplicated and

connected in parallel in terms of running the product and

business development at the same time are taken into

account the critical linkages [11].

3. Same Procedure? From Product to

Service Development

According to the above-mentioned literature one could

hardly answer the question how to design communication

processes in order to develop a marketable intangible

good like e.g. public or private services. The underlying

methodological approach assumes to understand service

as a product that can be developed and optimized in the

same way. This means that communication is related to

service like design does towards a product. Out of this

How Designed Communication Supports New Product & Service Development

follows the assumption that the development process in

both cases behaves the same or at least similar and

methods can be applied equally. This is in accordance

with the probably best-known New Service Development

Model (NSD) Gustafsson and Johnson came up with in

2003. They adapted and modified the New Product De-

velopment Stage-Gate Process [12] by adding further

“gates” for cultural and organizational change.

Unlike Cooper’s linear stage-gate process the NSD

model by Gustafson and Johnson [13] suggests that addi-

tional criteria should be implemented which are called

“cultural fit”, “organizational change fit” and “strategy

fit”. These criteria are considered to have the function of

a gate too in order to verify whether an idea will move to

the next stage of new service development. Finally, the

NSD model also considers the customer’s needs and

therefore incorporates a needs-identification stage la-

beled “Immerse Yourself in Customers”. From the per-

spective of the communication approach that is empha-

sized in this paper, the NSD model by Gustafsson and

Johanson can be optimized by the following modifica-

tions:

- The NSD model remains static and hierarchically

structured according to a top down pattern similar to

Cooper.

- There are no feedback loops between the various

gates/stages scheduled, neither intern the model nor in

exchange with externals, such as suppliers or customers.

- There is neither a discourse nor an interaction be-

tween suppliers and customers; also the supply chain is

not integrated into the model.

A designed communication approach depends on inte-

grating the following elementary components to develop

a high-value generating NSD model [14]:

- The starting “focus” needs to discuss the service

idea in terms of a valuable entrepreneurial opportunity.

- This discussion takes place in all “fitting elements”

on the strategy, change and cultural level of the model

and is extended to other business-related stakeholders as

there are: the bank, investors, business angels, suppliers,

competitors, future employees, prospective customers on

regional, national and international markets, think tanks

(e.g. universities as a future R&D resource), etc.

On the level of the “Market Test & Launch” of the

NSD model it is necessary to feed back all data and con-

clusions to the level of “Strategy Fit”: In case, the market

test leads to the conclusion that there is indeed a demand

for the offered service, but a market penetration seems to

be too costly for the initiating enterprise then new strate-

gies for the commercialization of the entrepreneurial op-

portunity should be found. One example for a possible

alternative utilization is joint ventures with competing

enterprises. However, this can be a reasonable strategic

decision since it is known that entrepreneurial designed

concepts on the basis of new knowledge is the strongest

indicator for economic growth.

4. Value Innovation Depends on

Communication

The above mentioned SeJu project has led to the result

that a portfolio of product prototypes has emerged. They

are ready to be prepared for a recovery in the market.

Since they parallel have been equipped with cus-

tom-made business plans a decision can be made either

to bring them into the market by initiating a start-up or to

commercialize the product by selling it to an existing

enterprise operating in a relevant field of the market. By

discussing the pros and cons of this decision it becomes

apparent that almost any product in the portfolio invites

the developers to think about how to create a value-added

service with its own value function which implies that

according to any product a service concept would have to

be created.

This challenge raises the question again of whether to

develop a service concept the same process can be used

as for product development. Referring back to the New

Service Development discussion in the late nineties of

the last century up to the beginning of the new millen-

nium [15-19] the idea came up that a service concept

plays a key role in service design and development. The

service concept in detail should define the how and what

Figure 2. Modified NSD model in accordance with gus-

tafsson and johanson [13].

How Designed Communication Supports New Product & Service Development 13

Figure 3. SeJu product portfolio and resulting se r v ic e s.

of service design, and helps to mediate between customer

needs and organizations’ strategic intend [20]. This credo

still describes the business requirement for a high-value

service concept. It indeed inspires the question if and

how NSD sets up new concepts for service offerings. Is it

the customer’s viewpoint or the offerer’s perspective that

affects the priorities in the creation of a service concept

most significantly? This question is relevant to the cus-

tomer’s decision to buy or not to buy a specific service

due to his idea of value innovation.

As a consequence of this one can state that the service

concept brings strategic intent into service design plan-

ning. A major guideline for constructing such a concept

is to understand what customers want and expect. This

leads to two neglected questions in service design re-

search: How should a communication strategy be inte-

grated into a service concept and how is the latter to be

considered best as a harmonious part of design. However,

if you call yourself the mentioned service design process

to mind and look at it from the position of the customer

there occurs a “service in the mind” [21] as the cus-

tomer’s expectations of what and how a service should

be as well as a critical appraisal if the customer’s needs

may be fulfilled. Three main criteria are playing a lead-

ing role: How is the service communicated? (How does it

feel to interact?) Does the offered service meet my needs?

(Am I the right customer?) Is the service worth the price?

(Are there better, cheaper and nicer services available in

order to satisfy my needs?). Summing up all these ques-

tions, there are two strategic requirements for the design

of a service concept (Figure 4): First, on the communi-

cation level the utility function of the service and its su-

periority in the competition must be accurately and com-

prehensible described for the customer. This operation

requires to appealing to the intellect of the customer with

rational arguments in first instance. Second, the value

perception needs to address the customers’ sense of aes-

thetics by offering a combination of pleasant personal

touch and desireable images via communication.

Figure 4. Design approache s for communication proce sses.

The Importance of Customer Feedback

Revisiting the “cultural fit”, Gustafsson and Johanson

came up with in their reflections on a modern NSD ap-

proach it seems to be quite obvious that every successful

service concept has to deal with interaction strategies.

The literature on market orientation and customer ori-

ented service development argues for customer input

throughout the whole development process [22-24]. At

the same time there is evidence in part of the NSD lit-

erature that customer interaction can increase service

success [25, 26]. A more or less open question still is, at

what stages of the NSD the customer should be obtained.

In the by the authors of this paper modified model of

Gustafsson and Johanson the customer interaction is

called “feedback”.

It is located between the stages of the “Market Test”

and the “Strategy Fit”. The substantiation for this modi-

fication does not rule out that there may be reasons for

further “feedbacks” on other stages within the process.

The selection of this stage is due to the observation that

the customer mainly decides on the basis of rational ar-

guments on the one hand and the touch of the customer’s

sense of aesthetics via communication on the other hand.

During the NSD process the service design is completed

not before the “Strategy Fit” is planed. However, since

the strategy depends on the quality of the empirical data,

as far as the assessment of the market and the customers

is concerned, all necessary information (feedback) has to

be collected in this moment before the service is placed

on the market.

The collecting of information is a critical momentum

from the perspective of the entrepreneur. But - and this is

important - not from the customer's perspective. The in-

formation-deficit model of behavior change (knowledge-

deficit model) contends that poor decisions are made

because people lack the information that would enable

them to make a better choice. However, both marketing

and the behavioral sciences have shown that the informa-

tion-deficit model is obviously flawed. Instead of this

How Designed Communication Supports New Product & Service Development

behavioral economists and neuroscientists attributes

these ‘limitations’ in human decision-making to two dis-

tinct types of thinking: automatic and reflective [27]. The

‘automatic system’ is fast, effortless and often emotion-

ally charged. Because people have little control over their

thoughts in the state of the ‘automatic system’, there is

also little control over the behaviors that are occurring in

this state of mind. Decisions are made, so to say, without

thinking. Also the intensity of thought reflection is de-

clining [28].

In contrast to that the ‘Reflective System’ is signifi-

cantly slower, effortful and consciously monitored as well

as deliberatively controlled [27]. The ‘Reflective System’

is also able to monitor the activity of the ‘Automatic

System’. A rational economic thinker would always

consult his ‘reflective system’, but most people prefer to

rely on their ‘automatic system’ in everyday life [29].

With this in mind it is quite likely that the NSD proc-

ess would profit from being designed under the consid-

eration of the above suggested strategy. In order to

communicate the value innovation to the customer suc-

cessfully it seems to be promising to use the findings of

neuroscience. Economists have further developed Kah-

neman’s system and it suggests that there are two oper-

ating dimensions when it comes to decision-making, dis-

tinguishing between a cognitive one in terms of rational

thought or reason and an affective one that concentrates

on feelings or emotions.

5. The Commercialization of Services

Innovation is presumed to be the sole province of service

producing enterprises, even though the interaction with

the customer – as described above – is an important part

of the service innovation process and, of course, a key

success factor of new services [30, 31]. This suggests

that new NSD models should incorporate the mechanism

of customer-producer interactions as well as strategies to

be successfully implemented [32] within value innova-

tive new services.

As being said in the foregoing paragraphs the interest-

ing methodological tools for creating a highly workable

service process (Figure 5) can be derived from various

scientific disciplines such as economics, especially be-

havioral economics and marketing, psychology, espe-

cially neuroscience and finally, what has not been dis-

cussed yet, the research coming from entrepreneurship

and innovation. In this context one of the core insights is

that technology innovation is not a prerequisite for value

innovation. The task is to answer two questions: Is the

customer being offered radically superior value? And is

the price level accessible to a sufficient number of cus-

tomers in the targeted market? [33]. Of course these

questions belong to the basics of business planning but

nevertheless they depend on having analyzed the innova-

tion potential of a service idea. This is the moment when

research and development comes into play.

Any successful utilization depends on the communica-

tion with transfer partners. Innovative products or ser-

vices are not taken up by companies without reason.

Promising co-operations have to be analyzed in advance,

especially regarding the willingness and the ability of a

product-to-market strategy. This is important because not

only a product has to be innovative in order to be suc-

cessful, but also the market. In other words, the customer

wants to understand why a product innovation is a value

innovation (is a buy worth the money?).

If this condition is fulfilled for the customer, a care-

fully selected transfer partner would be able to use his

company’s resources, e.g. production, sales and market-

ing, to realize a value creation process in short time. Re-

gardless of which form of transfer is chosen, an experi-

enced entrepreneur or manager is always required to de-

sign and implement the described process of value-add-

ing support.

6. The Aesthetic Impression Dominates the

Buying Interest

In order to test the exceptional utility of a product or a

service due to the customer’s response it became more

and more common sense in entrepreneurship literature

that a “Buyer Utility Map” [34] would be necessary in

order to timely carry out a complete customer needs

analysis. From the perspective of the offered there are six

utility levers to be considered to satisfy the customer’s

needs: Customer productivity, simplicity convenience,

risk, fun and image and environmental friendliness.

Moreover, the seller has to keep in mind that his cus-

tomer regards every mentioned utility lever through the

eyes of the six stages of the buyers experience cycle:

Purchase, delivery, use, supplements, maintenance and

disposal. Taking these utility levers and stages of the

buyer experience cycle back to value innovation Kim and

Mauborgne explicitly point out that “Value innovation is

Figure 5. Interdisciplinary set of value creation tools.

How Designed Communication Supports New Product & Service Development 15

not the same as technology innovation.” Rather, it is im-

portant “to create a strategic profile that passes the initial

litmus test of being focused, being divergent, and having

a compelling tagline that speaks to buyers.”

This request rejects directly to the importance of

communication between the product or service on the

one hand and the customer on the other hand. The first

acquaintance between a product or service and a poten-

tial customer usually takes place in the media. This very

first moment of awareness is embossed on the side of the

buyer – in this moment still at the stage of a interested

observer - through a bounded rationality. This means that

instead of a pure logical and rational model of decision

the importance of the influence of a “gut feeling” [35] is

underrated. Decisions are therefore intuitively mainly

made on the basis of rules of thumb, which the rational

decision-making strategies are followed later on. Against

this background, it is to be understood that the visual

perception of a product or service has its own aesthetic

importance in the development of interest in buying or

making a purchase decision. Strictly speaking, product or

service aesthetics created by a product’s appearance,

influenced by material, color, proportion, size or shape

not only determines the relationship between the poten-

tial buyer and the product or service [36] and decides on

the proverbial "first impression" for potential customers.

These aesthetic qualities can measurably influence cus-

tomers’ preference judgments and choice [37,38].

In respect of the before mentioned findings concerning

the NSD process, especially the addition of feedback

loops between supplier and customer in the model of

Gustafsson and Johanson (Figure 2) we developed a

product service we developed a product service that was

assigned to the product “WildPen” from the Seju product

portfolio (Figure 3, Writing Instruments, Service: Gift

selling). In order to give a first proof to our hypothesis

that there definitely exists a significant influence of aes-

thetic qualities and customers’ preference judgments and

choice we conducted a pre-test, in which we asked for

the basic willingness to buy a product as a gift for some-

one else.

Basis for the decision of the respondents was a framed

advertisement (Figure 6). The pre-testing was inspired

by the criteria of the two best-known tests to measure

visual aesthetic sensitivity as there are the Test of Aes-

thetic Judgment Ability [39] and the Centrality of Visual

Product Aesthetics Scale (CVPA) [37]. The concept for

the advertisement has been taken from the business plan

was written concurrently with the product design of the

WildPen. The image-forming criteria for this product

were thus:

- conservative customer based on values and tradi-

tions

- write-esthete

Figure 6. Influence of aesthetic qualities and customers’

preference judgments.

- middle to older aged

- design-oriented

- self-confident

- image-conscious

- brand conscious

The issues the respondents were confronted with allo-

cated into the two areas “aesthetic impression” and

“product benefits”. In order to meet the image-forming

criteria of the WildPen the product designers made the

pen look like a cigar. From a perspective of visual prod-

uct aesthetics this decision had a negative impact on the

overall assessment of the experimentees who should de-

cide on a Likert scale from 1 (applies exactly) to 5 (ap-

plies not at all) if they would buy the WildPen as a gift

for someone else. The respondents answered the follow-

ing six questions:

- I will buy the WildPen as a gift mainly because of

the aesthetic impression of the product presentation.

- I will buy the WildPen as a gift mainly because of

the convincing product benefits.

- I will buy the WildPen as a gift because of both, the

aesthetic impression of the product as well as the con-

vincing product benefit.

- I will not buy the WidlPen as a gift because the

aesthetic impression of the product presentation does not

touch me.

- I will not buy the WildPen as a gift because the

product benefits do not convince me.

- I will not buy the WildPen as a gift because neither

the aesthetic impression of the product presentation

touches me nor the product benefits appear to be con-

vincing.

The result of the pre-testing shows that all respondents

did not feel encouraged by the advertising and by the

aesthetic impact of the presentation to buy the WildPen

as a gift (Figure 7). This result is not only to explain

with the changing buying perspective (I do not buy for

myself, but it's a gift for someone else) but also on the

associated psychological reflection (I do not know any-

one who likes a pen that looks like a cigar). Although the

How Designed Communication Supports New Product & Service Development

Figure 7. Selection of the pre-test results.

image-forming criteria have been adequately addressed

in the advertising the respondents gave the clear feed-

back that the image of a cigar as such is considered very

negative. It dominates the therewith associated product

and does not support a buying decision, but a rejection of

the purchase.

7. Conclusions

The value of an entrepreneurial service innovation pro-

motes the growth of a company. This results in an as-

sumed value, which is appreciated at the time of sale on

the basis of a current and carefully developed business

plan. A research goal is, on the one hand, to use evalua-

tion models for value taxation, and, on the other hand, to

develop cooperative negotiation models, which allow

differentiated solutions and support. Methodological

knowledge of this type pays off when it comes to negoti-

ating and enforcing best value strategy. From case to

case it may be advisable to opt for different negotiation

objectives. For instance, an exit strategy may be useful if

a product innovation is to be sold for one-time payment

under the assignment of all rights. But more important is

the use of scalable business models that allow for invest-

ments in research and development driven companies.

In terms of business opportunities that can be recog-

nized both for the development of products and services

for a value creation opportunity, it is essentially impor-

tant to involve the customer perspective as early as pos-

sible into the product or service development as well as

into the business planning. Since this study primarily

considers the service development and customization of

the design process to improve the value adding opportu-

nity it should be noted, first, that the NSD process re-

quires an earlier, systematic and better quality of cus-

tomer feedback. Second, the integrative interaction of

service and business plan design can be optimized in

terms of feedback processing and adjustment of the value

proposition. Third, and finally, the influence of the aes-

thetic perception of a product or service on the purchase

decision of a potential customer is not sufficiently ex-

plored. As discussed in this study, the pre-testing has

shown the influence of the perception of design as a very

powerful communication and decision-factor. It is there-

fore important that the available tests for assessing aes-

thetic ability may be integrated systematically as early as

possible in the product, service and business plan devel-

opment. This is still a desideratum of research.

8. Acknowledgements

The project „Senior- & Junior preneurship“ (SeJu) is

funded by the European Social Fonds (ESF) and the

Ministry of Science and Economics of the State of

Saxony-Anhalt, Germany. Key considerations on the

issue of a “Entrepreneurial University” are due to the

cooperation with the project “Universities as Enterprises”

(Uni:prise) funded by the Ministry for Education and

Research of the Federal Republic of Germany.

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