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Fred Feinberg
  Fred Feinberg

Using ATC to Coordinate Marketing and Engineering Design Problems

10/2/2006 --

In developing complex products, formally linking marketing and engineering design decisions early on produces superior results.

ANN ARBOR, Mich.—Fostering effective, ongoing communication between marketing design and engineering design is critical for the eventual success of product-development projects, a Stephen M. Ross School of Business researcher contends.

In a recent article, the Ross School's Fred Feinberg and colleagues Panos Papalambros of the University of Michigan's College of Engineering and Jeremy Michalek of Carnegie-Mellon University propose using a new approach called "analytical target cascading" (ATC) to formalize the process of coordinating marketing-design and engineering-design problems in a way that leads to optimal product designs.

"Even with full information and broadly validated modeling frameworks, miscommunication can lead to suboptimal product designs," says Feinberg, the Mary Kay and Michael R. Hallman Fellow and associate professor of marketing at the Ross School. "This problem is particularly pronounced in the development of high-technology products where the marketing-design and engineering-design activities are widely separated."

Writing in the Journal of Product Innovation Management, the researchers describe ATC as a broad, powerful methodology for systems optimization. Firms often use a "toss it over the wall" approach when designing complex products: Marketing says "this is what consumers want," then tosses it to engineers, who come back with "this is what we can make," tossing it back to marketing, ad infinitum. The process is iterative, slow and costly.

By contrast, with ATC, overall targets are passed to all groups involved in the design process, they say. These groups then allow their best models to intercommunicate. All of this takes place in software, with each division—marketing and engineering design—enforcing its own constraints and promoting its own goals.

ATC is advantageous, the researchers say, because it allows marketing and engineering to formulate their own sub-models and methods, linking them "outside the system," so that an optimal joint product-design solution can be reached. This joint process is speedier and more profitable than the alternative of solving marketing and engineering design problems in a sequential, toss-it-back manner.

To demonstrate the joint marketing and engineering design approach, Feinberg and colleagues applied ATC to the design of a standard household dial-readout bathroom scale. On the marketing-design side, a number of critical product characteristics (weight capacity, aspect ratio, platform area, tick-mark gap, number size and price) were identified. Using a powerful technique called "conjoint analysis," the researchers assessed the preferences of a large group of consumers, who made choices among simulated scale designs in an online-purchase environment. On the engineering-design side, 14 technical design variables were identified (for example, spring tension and dial diameter), which produced complex technical constraints, but ensured scale designs that could actually be built.

Once all these formal relationships were encoded in equations, ATC allowed the researchers to determine the productís optimal characteristics, along with the marketing and engineering variables allowing it to be profitably produced. Their results suggest using ATC in the product-design process for the bathroom scale would boost market share and profit significantly, and yield other marketing and engineering benefits, such as shorter development cycles and the ability to focus on key drivers of consumer preference.

"For the marketing community, ATC allows marketers to dispense, at least initially, with questions of what can be made and to focus instead on what they do best, which is discerning what consumers value most," Feinberg says. "For the engineering-design community, ATC helps to contextualize design decisions within the larger framework of the firm and how it satisfies its customer base. Thus, instead of resolving engineering tradeoffs purely in terms of technological or physical possibility, this method allows such decisions to be tied directly into the firm's overall object of producing a successful, profitable product."

Written by Claudia Capos

For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847