Catering to more hedonistic customers

Catering to more hedonistic customers

Roy Goni, Contributor, Jakarta

For almost two decades, American car manufacturers have been
struggling to narrow the quality gap with their competitors.

A consumer report in Auto Survey 2001 revealed that the level
of the defect ratio in the American automotive industry from 1980
to 2001 had reached an alarming figure of close to 80 percent.

The Big Three of the country had been facing tough
competition, especially from Japanese car manufacturers from
almost every quality aspect.

Although American car manufacturers have taken a number of
strategic steps, such as making improvements to built-in quality
at the shop's floors, elimination of extravagance during new
product development and speeding up its process, they still fall
behind their Japanese counterparts in certain aspects, such as
speed to market, design quality, product design
manufacturability, various costs and better productivity.

Many analysts and observers have time and time again reminded
these giant-sized manufacturers that the competitive edge lies in
the integrated and holistic process of product designing,
manufacturing, marketing, financing, purchasing and the other
business functions.

Some American car manufacturers have tried to solve problems
related to quality defects by using the Quality Function
Deployment or the Taguchi Method.

In the 1990s, Chrysler even restructured its manufacturing
organization by combining a functional team with a number of
project specialists to overcome some of the functional problems.
Some substantial improvements were made, but due to the limited
time contributed by each member of the new team, other problems
emerged, such as the depth of knowledge and its ideal fusion
within the team.

Meanwhile, General Motors (GM) made a breakthrough with its
six steps during new product development. The first step was the
creation of a new electronic database for new ideas, which was
evaluated by a team of specialists from various functions in the
company. Once the idea was approved, the engineering team was
then assigned to conduct the relevant tracking and follow-up.

The second step was "internal selling". Here the inventor was
required to convince the decisionmakers in the corporation about
the viability of his idea.

GM's third step was the creation of a new department: Design
and Technology Fusion, which was needed to narrow down the
available new ideas to match with the required manufacturing
technology and to follow them up further.

The fourth step was the physical production of a prototype of
the approved and evaluated idea.

The fifth step was media coverage during this development
stage, which, obviously, was meant to communicate the company's
upcoming new product, including its unique or superior features
while at the same time enhancing the company's image.

The sixth step, which resulted from the previous step, was
analyzing the consumers' reactions as well as observers'
comments, preparation of cost estimates, sales figures and a
forecast of profitability.

The seventh step consisted of further improvements to the
first prototype, which was again followed by media coverage and
other promotional efforts that included the physical appearance
of the product in specially organized exhibitions for final input
from the market prior to actual mass production.

Japan's car manufacturer, Toyota, also relies on a highly
integrated process of its new product development, which consists
of six mechanisms or, in simple terms, six steps. Every
precaution is taken to keep the entire mechanism at a high degree
of flexibility.

The first step, called mutual adjustment, is a coordination
that includes written communication, meetings and personalized
"face-to-face" discussions.

The second step is direct supervision, which includes
mentoring supervision by the working engineers who also have an
important role in the coordination.

Third is integrative leaders where chief engineers also act as
lead designers. These first three steps are also part of an
integrative social process that is stable and offers long-term
employment in characteristic.

The fourth step is standardizing skills that are enhanced by
intensive mentoring. Job rotation at regular intervals is part of
this step.

The fifth step is standardizing the entire work process among
all related departments to produce consistency and keep
hindrances to the minimum.

The sixth step is the design standards that include a
checklist of every new finding by the engineer for future
application in new product development.

The main spirit of these six steps is a continuous high level
of standardization that indirectly also makes it possible to gain
new knowledge and profit from new discoveries.

The coordination mechanism at the Toyota Production System is
entirely focused on consumers' tastes and requirements, while
internally, great care is taken to keep communication and
transfer of knowledge much smoother.

The above examples serve to illustrate the differences in how
American and Japanese car manufacturers approach new product
development.

Based on the consumer report in Auto Survey 2001 in relation
to the currently more competitive Japanese car manufacturers in
comparison to their American counterparts, the American producers
certainly have to pay attention to certain areas.

Today, the word "quality" in consumers' minds covers more than
"defective products". It is interpreted to include more
attributes, such as greater comfort, better performance, tangible
amenities, a sense of esthetics, just to name a few.

Like most consumer goods, the prerequisites cater to more than
the basic human needs, and also appeal to other human traits,
such as status and perhaps a kind of sensuality as well.

In this context, automobile manufacturers in Japan seem to be
more responsive to today's more hedonistic customers.

The writer is a lecturer on marketing at the school of economics
of Unika Atma Jaya University, Jakarta.